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ASEAN STOCK WATCH Asean Affairs  6 September 2012

ASEAN Equity Preview

By Shayne Heffernan Ph.D.

Central Bank sources told Reuters the ECB was ready to waive seniority status on government bonds it buys under a new program which it is set to agree on at Thursday's Governing Council meeting.

Bloomberg earlier reported that the ECB would, with broad support from its council members, unveil an unlimited, sterilized program of bond purchases. The ECB has been expected to be cautious about disclosing the size of its bond-buying, given opposition from Germany's central bank.

Further details of the plan will be revealed by ECB President Mario Draghi after Thursday's meeting, but some analysts cautioned the ECB may opt to wait until after the German constitutional court rules on the region's bailout funds on September 12 to announce any new steps.

"These reports are helping the market turn around despite FedEx, but while some of the rhetoric coming out of Europe has been positive, we'll need to see follow-through in actions now," said Grohowski, who helps oversee $171 billion in client assets.

Equities seesawed between positive and negative territory throughout the session but in general held steady on media reports European policymakers would unveil a bond-buying plan to bring down crippling borrowing costs in debt-troubled euro zone economies.


Singapore has maintained its position as the world's second most competitive economy, missing out on top spot to Switzerland which kept the title for the fourth year running, the World Economic Forum (WEF) said in its annual survey on Wednesday.

The study by the WEF, best known for running the annual meeting of world business leaders at the ski resort of Davos, ranks 144 countries by examining 113 indicators culled from official data sources and a poll of 15,000 executives who opine on the country where they do business.

Switzerland pipped Singapore to the top spot thanks to strong scores in areas such as innovation, labour market effiency and effective public institutions.

The US fell from fifth spot to seventh because of political and economic problems that detracted from its status as a global powerhouse of innovation, the study said.

"We see this development as a result of the growing macroeconomic imbalances in the country but also due to the political deadlock that has been augmenting the problem of macroeconomic imbalances," said Ms Margareta Drzeniek, a senior economist at the Geneva-based organisation.

"There does seem to be an inability to take decisions on the political side." Rather than a big shake-up in the rankings, the 2012 survey found deepening divides, she said.


The Bank of Thailand (BoT) kept its policy rate unchanged at 3.0 percent, as expected, saying the domestic economy remained robust despite a higher drag on activity from slower global demand.

Two of the members of the Monetary Policy Committee voted to cut the policy rate by 25 basis points while three members voted to maintain the rate, which has been unchanged since January, when it was cut by 25 basis points. Last month two members also voted to cut rates.

The bank’s policy rate hit a recent peak in October last year at 3.50 percent and have been heading lower since November when the first cut in rates came.

“The MPC viewed that the impact of slower global demand on the Thai economy had increased to some extent. Nonetheless, domestic demand remained robust and current monetary conditions were accommodative enough to support continued economic expansion. Credit growth in some sectors had been rapid and warranted close monitoring,” the BoT said.

Thailand’s economy expanded by 3.3 percent in the second quarter for an annual growth of 4.20 percent, a sharp improvement from first quarter’s 0.4 percent expansion.

The Thai central bank, which has been under pressure by the government to cut interest rates, said the domestic economy grew at a faster rate in the second quarter than previously forecast and strong momentum in consumption and investment was likely to sustain the trend, along with the positive contribution of government stimulus measures.

“Nonetheless, the impact of slowing global demand on Thai exports would become more apparent and it was possible that export growth this year would be lower than expected,” the bank said.

It added that inflation was expected to moderate further and remain within the bank’s target.

The inflation rate in Thailand was steady in August at an annual rate of 2.7 percent. The BoT targets inflation of 3.0 percent.

KLCI index lost 13.10 points or 0.79% on Wednesday. The Finance Index fell 0.51% to 14706.95 points, the Properties Index dropped 1.15% to 1042.33 points and the Plantation Index down 1.55% to 8522.76 points. The market traded within a range of 12.89 points between an intra-day high of 1653.90 and a low of 1641.01 during the session.

Actively traded stocks include INGENS, JCY, NEXTNAT, IDEAL, THHEAVY, LUSTER, ASIABIO, THHEAVY-WA, INGENS-WA and UTOPIA. Trading volume increased to 1354.10 mil shares worth RM1700.24 mil as compared to Tuesday’s 1335.57 mil shares worth RM1422.47 mil.

Lagging Movers were IOICORP (-15 sen to RM5.04), CIMB (-3 sen to RM7.74), PETCHEM (-11 sen to RM6.38), PPB (-58 sen to RM13.28) and TENAGA (-7 sen to RM6.73). Market breadth was negative with 156 gainers as compared to 669 losers.


Golden Energy Mines, a coal unit of Sinar Mas Group, reported a 10.4 percent decline in net income in the first half of this year on falling coal prices amid rising costs.

The company said that profit in the first half fell to Rp 146 billion ($15.25 million) this year from Rp 163 billion last year. Revenue rose to Rp 2.09 trillion in the January to June period this year from Rp 1.23 trillion in the same period last year, the company said in a press statement on Tuesday.

Fuganto Widjaja, president of the company, said that the decline in coal price and the increase in production costs has affected the company’s performance.

“Coal production has been good but falling coal prices coupled with rising production affected our profitability,” Fuganto said in the statement.

Many Indonesian coal makers, such as Tambang Batubara Bukit Asam (PTBA), reported a decline in net income late last week. Net income at PTBA fell 3 percent to Rp 1.56 trillion in the first half of this year from Rp 1.61 trillion in the same period last year.

PTBA attributed the fall in the net income to the falling price of coal in the global market.

Fuganto said that coal production rose 67 percent to 3 million metric tons this year from 1.8 million metric tons last year, but falling prices had pushed the company to start cost-cutting measures.

Golden Energy sold 15 percent of its shares through an initial public offering last November, raising a total of Rp 2.2 trillion.

The company set up GEMS Coal Resources in Singapore in July. GEMS will handle the company’s overseas coal sales.

Golden Energy Mines is controlled by the Widjaja family via its listed unit Dian Swastatika Sentosa.

Golden Energy owns 10 coal mining areas in Indonesia, which exports more thermal coal used in power stations than any other country.

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The Philippines

Philippines leaped 10 notches in the global competitiveness ranking for the year to 65th spot out of 144 countries.

The country’s latest performance followed a similar 10-notch jump to the 75th spot last year, resulting in an overall 20-notch jump so far under the Aquino administration.

“The Philippines makes important strides this year in improving competitiveness—albeit often from a very low base—especially with respect to its public institutions,” The World Economic Forum (WEF) said in its 2012-2013 Global Competitiveness Report, which was released Wednesday worldwide.

The WEF said the Philippines was one of the few countries that registered a double-digit improvement in ranking this year.

The Philippines landed on the 65th spot after it registered an overall score of 4.23 points (out of 7 points) across all 12 categories considered by businesses as major areas for determining a country’s competitiveness.

Guillermo Luz, cochairman of the Philippines’ National Competitiveness Council (NCC), said at a press conference Wednesday that this year was the first time the country landed on the upper 50 percent of countries ranked in the global competitiveness survey.

He said the NCC was targeting the Philippines to join the upper one-third of the global competitiveness rankings by 2016, the end of the Aquino administration.

12 pillars

The survey on global competitiveness, which taps businesses as respondents, grades countries based on the following 12 categories or “pillars.”

These are the following: [government] institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.

Luz said the Philippines registered improvements in 11 out of the 12 categories.

Huge gain in institutions

The Philippines gained the most in the “institutions” category, where it jumped 23 places to the 94th spot from last year’s 117th.

In the “infrastructure” category, the country improved its ranking by seven places to 98th; for “macroeconomic environment,” up 18 places to 36th; for “higher education” and training, up seven places to 64th; for goods market efficiency, up two places to 86th; for labor market efficiency, up 10 places to 103rd; for financial market development, up 13 places to 58th; for “technological readiness,” up four places to 79th; for “market size,” up one place to 35th; for “business sophistication,” up eight places to 49th; and for “innovation,” up 14 places to 94th.

Drop in health, primary education

The only category where the Philippines registered a slippage was in “health and primary education,” where it fell six places to 98th.

The country’s favorable performance in the “institutions” category reflects the success of the Aquino administration in convincing the business sector that there has been an improvement in governance, Luz said.

Of the 15,000 businesses that responded to the global competitiveness survey for this year, 132 came from the Philippines.

On macroeconomic environment, Luz attributed the country’s improved ranking to the country’s favorable economic performance.

The Philippine economy grew 5.9 percent in the second quarter from a year ago, making the country one of the fastest-growing economies in Asia. This brought its average growth rate for the first semester to 6.1 percent, making the government’s full-year growth target of 5 to 6 percent attainable.

Infra spending low

But Ramon del Rosario Jr., chairman of the Makati Business Club, said a lot of work still had to be done in several areas to help ensure that the Philippines reaches the upper-third rankings in 2016.

To reach the upper upper third, the country must improve significantly on infrastructure development and market efficiency, particularly labor market efficiency, Del Rosario said.

Despite increases in government spending on infrastructure this year, infrastructure investment in the Philippines remains one of the lowest in the region.

Infrastructure spending in the country is estimated to be equivalent to less than 3 percent of its gross domestic product, below the 5 percent average for Southeast Asia.

“Despite these very positive trends, many weaknesses remain to be addressed. The country’s infrastructure is still in a dire state, particularly with respect to sea and air transport, with little or no progress achieved to date,” Del Rosario said at the press conference.

He said businesses considered infrastructure a vital area in deciding whether to invest in a country.

With its improved performance this year, the Philippines has beaten Vietnam, which enjoyed better rankings in the previous years. This year, Vietnam ranked 75th.

The Philippines, however, continues to lag behind other major Asian economies in the competitiveness rankings.

Hong Kong ranked 9th, Taiwan 13th, South Korea 19th, Malaysia 25th, China 29th, Thailand 38th, Indonesia 50th and India, 59th.

Singapore remained the highest ranking among Asian countries, landing on the second spot, the same as its last year’s ranking.

Switzerland was again named the most globally competitive country.

Yesterday in Asia

Tokyo fell 1.09 percent, or 95.69 points, to 8,679.82, the lowest close in a month, while Seoul slipped 1.74 percent, or 33.10 points, to 1,874.03.

Hong Kong tumbled 1.47 percent, or 284.84 points, to 19,145.07 and Shanghai was off 0.29 percent, or 5.97 points, to 2,037.68.

Sydney closed 0.57 percent, or 24.7 points, lower at 4,278.8 after figures showed the Australian economy grew slower than expected in April-June.

Regional markets took their cue from Wall Street, which returned Tuesday after a long weekend to figures highlighting the ongoing problems with manufacturing, a key driver of the world’s biggest economy.

– Taipei fell 1.13 percent, or 83.91 points, to 7,367.44.

Taiwan Semiconductor Manufacturing Co. lost 2.38 percent to Tw$82.0 while Hon Hai Precision was 1.22 percent lower at Tw$88.8.

– Manila fell 0.48 percent, or 25.06 points, to 5,150.81.

Real estate company Megaworld slipped 2.25 percent to 2.17 pesos but Alliance Global Group rose 0.33 percent to 12.06 pesos.

– Wellington slipped 0.17 percent, or 6.38 points, to 3,669.65.

Fletcher Building fell 0.61 percent to NZ$6.48 while Telecom rose 1.24 percent to NZ$2.46.

– Singapore closed down 0.52 percent, or 15.65 points, at 2,995.90.

City Developments fell 1.57 percent to Sg$11.27 and agribusiness group Wilmar International shed 1.27 percent to Sg$3.11.

– Kuala Lumpur dipped 13.10 points, or 0.79 per cent, to 1641.01.

Regional universal bank CIMB Group lost 0.4 percent to 7.74 ringgit while UEM Land dove 2.2 percent to 1.82 ringgit.

– Jakarta ended down 0.7 percent, or 29.9 percent, at 4,075.35.

Coal company Bukit Asam was down 2.8 percent at 13,850 rupiah, and consumer goods producer Unilever dropped 5.4 percent at 26,500 rupiah.

– Bangkok fell 0.20 percent, or 2.47 points, to 1,233.84.

KBANK rose 1.17 percent to 172.50 baht, while energy giant PTT lost 1.49 percent to 331 baht.

– Mumbai fell 0.73 percent, or 127.53 points, to 17313.34.

Bharat Heavy Engineering slid 4.98 percent to 208 rupees while Jindal Steel fell 4.78 percent to 336 rupees.

Shayne Heffernan Ph.D.  

Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408 Fax: +65 6329 9699
Email :
Suite 53 Athenee Tower
63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330
New York 347 5th Avenue, Suite 1402-508 NY, NY 10016


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This year in Thailand-what next?

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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