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ASEAN STOCK WATCH Asean Affairs  28 September 2012

ASEAN Market Preview

By Shayne Heffernan Ph.D.

Stocks were advancing before Spain's announcement on hopes that China would take steps to spur its slowing economy.

China has severely underestimated this year's global economic slowdown, and further cuts to Chinese interest rates or bank reserve requirements will hinge on any new deterioration in the external environment, a central bank adviser said on Thursday.

The comments underlined the view that global central banks were in lockstep with regards to stimulating their economies, after monetary easing plans were put in place by the European Central Bank and the Federal Reserve.

U.S. economic data was mixed. A report showed initial jobless claims dropped by 23,000 to 359,000, significantly more than the decline of 4,000 that had been expected.

But the final read on second-quarter gross domestic product showed growth of just 1.3 percent, weaker than an expected 1.7 percent. And August durable goods orders tumbled 13.2 percent, much more than the expected drop of 5 percent.


Thailand

Sawang Export Public Company Limited reported earnings results for the second quarter and six months ended June 30, 2012. For the quarter, the company has posted net profit of THB 2.05 million or THB 0.09 per share against THB 7.25 million or THB 0.30 per share a year ago. Revenue decrease of THB 15.4 million in second quarter of 2012. For the six months, the company has posted net profit of THB 2.26 million or THB 0.09 per share against THB 7.51 million or THB 0.31 per share a year ago. Revenue decrease of THB 23.7 million in six months of 2012. The lower in revenues and profits were caused by low global demand and from the Eurozone economic crisis.

Sawang Export Public Company Limited manufactures and distributes precious stones and jewelry in Thailand and internationally. The company offers jewelry products, including semi precious and precious stone jewelry, and gold and silver jewelry sets with diamonds, as well as rings, earrings, and pendants. It also specializes in color stones, such as ruby, and blue sapphire and yellow sapphire. The company was incorporated in 1972 and is based in Bangkok, Thailand.


Malaysia

Malayan Banking Bhd, Malaysia's largest commercial bank, is keen to complete its regional expansion in Southeast Asia by possibly having a domestic retail and commercial banking presence in Thailand.

"In the case of Thailand, our presence is now limited to be the No. 1 biggest brokerage in that country, which is Maybank Kim Eng, and they are doing well.

"But I think it will be great if we can have a domestic retail and commercial banking presence in Thailand," Maybank President and Chief Executive Officer Datuk Seri Abdul Wahid Omar said during an interview on CNBC today in Singapore.

Maybank is present in all Southeast Asian economies except Laos.

"We've always been interested in Thailand," he said in response to a query whether Maybank was keen to buy General Electric's 33 per cent equity in the Bank of Ayudhya Pcl. GE is said to be considering plans to sell its US$2.2 billion (RM6.8 billion) stake in BoA to cut losses suffered during the financial crisis.

Newsreports speculated that GE's sale in Bank of Ayudhya would give the bank a chance to claim a foothold in Southeast Asia's second largest economy.

Abdul Wahid, who said Maybank was always interested in an acquisition that can complement its current Thai affiliate, Maybank Kim Eng, however did not indicate whether the bank was interested in GE's stakes in the Bank of Ayudhya.

"We believe in the future of Asean and that's why we believe in expanding across Asean," he said.

Asked whether there was any indication of non-performing loans (NPLs) creeping up in the financial system, he said: "No. the good thing is that NPLs are coming down not just in percentage terms but also in absolute terms, so it's quite encouraging."

To another question on what would be the future drivers to Maybank's growth, he said the bank would always strive to achieve a balanced portfolio in pursuing growth in interest and non-interest income.

"In the non-interest income space, we've been very encouraged with the good performance of our investment banking division.

"We've been out there with a big mandate and with Maybank Kim Eng now operating regionally, the numbers have just been improving," he added.

Singapore

 Keppel Land Limited (Keppel Land) has garnered several awards in recognition of its efforts towards corporate excellence and sustainability.  These international accolades include the Euromoney Real Estate Awards, Global Real Estate Sustainability Benchmark (GRESB) and Green Mark Awards by the Building and Construction Authority (BCA) of Singapore, as well as being part of the Dow Jones Sustainability Asia Pacific and World Indices 2012/2013.

Mr Kevin Wong, Group CEO of Keppel Land, said, "These awards reflect Keppel Land's commitment to create hallmark quality properties of enduring value for the community. Looking ahead, we will continue to differentiate ourselves, driving excellence to improve financial performance as well as advancing our efforts in sustainability for the long term future."

Keppel Land clinched five awards at the prestigious Euromoney Real Estate Awards 2012. It was named the Best Office Developer in Singapore for the fifth consecutive year, as well as the Best Residential Developer and Best Mixed-use Developer in Vietnam. The Company also came in second in the Overall Developer category in Singapore and third in the Office Developer category in Vietnam.

The Euromoney awards recognise the best in the global real estate industry. The results were based on an annual real estate survey among real estate developers, advisors, financial institutions, investors and corporate end users worldwide.

Meanwhile, Keppel Land continues to be at the forefront of sustainable practices. The Company is once again listed on both the Dow Jones Sustainability Asia Pacific and World Indices 2012/2013. This means that Keppel Land now ranks among the top 154 sustainable companies in the Asia Pacific region and is also among the top 340 sustainable companies globally. The Dow Jones Sustainable Indices follow a best-in-class approach, including companies across all industries that outperform their peers in numerous sustainability metrics.

The Company is also named Regional Sector Leader (Office) in the GRESB 2012. The GRESB evaluates the sustainability performance of real estate portfolios based on data gathered from almost 450 property companies and funds globally.

In Ho Chi Minh City, Vietnam, Keppel Land's mixed-use development, Saigon Centre (Phase 2) and condominium development, Riviera Point, were conferred the Green Mark Gold (Provisional) Award by the BCA. This brings the total number of Green Mark Awards garnered by Keppel Land to 30.

Saigon Centre comprises a mix of retail and office spaces as well as serviced residences. Phase 2, which is currently under construction, will feature amongst others low-emissivity double-glazed glass façade, energy efficient air-conditioning, integration of Variable Speed Drive technology into pumps and cooling tower for modulating water usage as well as the installation of water-saving fittings that meet Singapore PUB's Water Efficient Labeling System Excellent Rating. Dedicated "green" corners will also be set up to educate and raise awareness of sustainability among staff, tenants and shoppers. Saigon Centre Phase 2, which will see Takashimaya come onboard as an anchor tenant, is expected to be completed in 2015.

The 2,400-unit waterfront development, Riviera Point, will feature the latest eco-friendly technology including low-emissivity glass for solar heat reduction, photovoltaic panels as a renewable energy source and extensive use of recycled contents during the course of construction. To be developed in phases over several years, Phase 1A of Riviera Point is expected to be completed in 2015.

For its continuous efforts and commitment towards CSR and sustainability, Keppel Land has also received a Special Mention under the Green Champion category at the Singapore Compact CSR Award 2012.

Indonesia

Progress has been slow in acquiring land for five toll roads, the Public Works Ministry said, despite the fact that the five companies granted concessions for the projects, all affiliated with the Bakrie Group, have also received loans from the Public Service Agency to facilitate land acquisition.

“Despite having received BLU [Public Service Agency] loans, land acquisition for the five projects has been suspended since early this year,” said Herry Marzuki, head of land procuring at the Directorate General of Spatial Planning and Development at the Public Works Ministry.

The five companies are Pejagan Pemalang Toll Road, which secured a toll road section from Pejagan to Pemalang in Central Java; Marga Setia Puritama (Batang to Semarang in Central Java); Trans Jawa Pro (Pasuruan-Probolinggo in East Java); Trans Jabar Toll (Ciawi-Sukabumi in West Java) and Cimanggis Cibitung Tollways (Cimanggis-Cibitung in West Java).

Herry said land acquisition for the Pejagan-Pemalang section reached only 29 percent, while acquisition for Batang-Semarang and Ciawi-Sukabumi was even lower, at 3.34 and 6.6 percent respectively. Cimanggis-Cibitung and Pasuruan Probolinggo had zero progress in land acquisition.

BLU gives loans to toll road builders to acquire land, however funds must be returned once the land acquisition phase is completed.

Philippines

Starwood Hotels and Resorts Worldwide Inc., the world’s biggest operator of high-end business and leisure accommodations, has taken the first step to re-enter the booming Philippine market, signing a preliminary agreement with Resorts World Manila on a five-star hotel project at the latter’s Pasay City development.

In an interview with the Inquirer, Starwood president and CEO Frits van Paasschen said his group signed on Thursday a letter of intent with Resorts World to explore the possibility of building a hotel under the Sheraton brand at Newport City, adjacent to the existing casino-hotel-mall complex and across from Terminal 3 of the Ninoy Aquino International Airport.

“The Philippine market is very attractive to us. Businesses are booming and the government is fiscally strong,” he said. “This will also mark the re-entry of Sheraton in the Philippines after an absence of many years.”

Van Paasschen declined to disclose specific investment figures for the proposed project but said that, on the average, hotel rooms of the Starwood group cost anywhere between $350,000 and $500,000 to build.

Matthew Fry, Starwood Hotels Asia-Pacific senior vice president for acquisitions and development, added that the group would enter a particular market with an initial operation of between 300 and 350 rooms per hotel. At this level, a Starwood-Resorts World partnership for the new high-end Sheraton Hotel would be worth between $105 million and $175 million.

Starwood operates more than 1,000 properties in 100 countries. Its nine brands are St. Regis, The Luxury Collection, W Hotels, Westin, Le Méridien, Sheraton, Four Points by Sheraton, Aloft and Element. In addition to hotels, Starwood operates premier time-share ownership resorts.

According to Van Paasschen, his group has noted the growing demand from their existing clientele for accommodations in the Philippines, both from business travelers and tourists.

In particular, he said he admired the country’s track record in the booming business process outsourcing business, the manufacturing sector, the growing level of raw materials and agricultural exports, and even the increasing affluence because of remittances from overseas workers.

“This is a time when the economic environment appears to be [favoring] the Philippines for sustained growth,” the Starwood chief explained. “And the fiscal situation, the government debt—the perception we have, at least—the relationship between business and government today suggests to us that this is a very optimum time.”

Fry said the group was also looking at new hotel operations in Cebu and Boracay to meet the demand for resort hotels from their clients. According to Starwood, it was experiencing “unprecedented growth,” having emerged from the global economic crisis with a lean cost structure and a strong balance sheet.

In addition to gaining market share, it opened a record 250 hotels in the past three years and an additional 300 are under construction. Both W and St. Regis have doubled their footprint and Aloft became the fastest and first global launch of any new hotel brand.

Starwood’s biggest brand, Sheraton, also underwent a $6-billion revitalization program and was now seeing the best performance in its 75-year history.

Yesterday in Asia

Shanghai surged 2.60 percent, or 52.15 points, to 2,056.32 after it closed at a 44-month low on Wednesday.

Hong Kong added 1.14 percent, or 234.56 points, to 20,762.29, Tokyo gained 0.48 percent, or 43.17 points, to 8,949.87, Sydney added 0.52 percent, or 22.6 points, to 4,384.2 and Seoul rose 0.42 percent, or 8.26 points, to 1,988.70.

– Singapore rose 0.42 percent, or 12.75 points, to 3,059.43.

Singapore Telecom was flat at Sg$3.20 and Asia Pacific Breweries (APB), the subject of a takeover bid by Dutch beer brewer Heineken, finished at Sg$52.9 on the eve of a shareholders meeting widely expected to approve the offer.

– Taipei closed 0.18 percent, or 14.17 points, higher at 7,683.80.

Taiwan Semiconductor Manufacturing Co. rose 1.39 percent to Tw$87.6 while HTC fell 3.32 percent to Tw$291.0.

– Wellington was flat, giving up 0.30 points to 3,809.03.

– Manila closed 0.17 percent higher, adding 8.86 points to 5,301.49.

Bloomberry Resorts gained 2.38 percent to 11.16 pesos while Philippine Long Distance Telephone eased 0.43 percent to 2,780 pesos.

– Kuala Lumpur ended 0.53 percent, or 8.54 points, higher at 1,627.84.

AirAsia gained 3.5 percent to 2.95 ringgit, while Malayan Banking added 0.8 percent to 9.02 ringgit. Genting Malaysia lost 0.3 percent to 3.37 ringgit.

– Jakarta added 1.07 percent, or 44.86 points, to 4,225.02.

Coal company Bumi Resources surged 9.0 percent to 730 rupiah, mining company Antam rose 1.5 percent to 1,350 rupiah, and car maker Astra International jumped 1.39 percent to 7,300 rupiah.

– Bangkok climbed 0.91 percent, or 11.61 points, to 1,286.11.

Coal producer Banpu edged up 0.51 percent to 392 baht, while oil company PTT added 0.30 percent to 329 baht.

– Mumbai fell 0.28 percent, or 52.67 points, to 18,579.50.

Sterlite Industries, the local unit of global resources Vedanta group, fell 2.93 percent to 97.75 rupees while TCS, India’s biggest software outsourcer, fell 1.33 percent to 1,269.3 rupees.

Cash-strapped Kingfisher Airlines rose 8.03 percent to 16.96 rupees.

Shayne Heffernan Ph.D.  

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ASEAN  ANALYSIS

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AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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