MICA (P) 081/12/2011 Ref No: RM2012_0213 1 of 17 Regional Market Focus 2 November 2012 Morning Market Commentary - STI: -0.39% to 3026.6 - MSCI SE Asia: -0.26% to 842.6 - Hang Seng: +0.83% to 21821.9 - MSCI APxJ: -0.11% to 442.7 - Euro Stoxx 50: +1.21% to 2533.9 - S&P500: +1.09% to 1427.6 MARKET OUTLOOK: By Ng Weiwen, Macro Analyst Global growth (particularly in China) is showing signs of bottoming out and we should see a modest pickup in 4q12, barring downside risks on the G2 fiscal front. Our view takes into account the following: (i) Globally, manufacturing PMIs have registered improvements in new orders and the decline in inventories suggest that the inventory adjustment cycle is about to end. This suggest possible gains in manufacturing output in the coming months, barring a sharp deterioration in final demand. (ii) The US Treasuries yield curve has steepened, suggesting that US has emerged from the doldrums and recovery is gaining traction. The yield on 3-mth shed around 2bps, while yields on 10-yr and 30-yr gained around 3bps and 4bps respectively. Furthermore, US manufacturing output continued to expand on the back of increased spending by US consumers who are more confident about the economy as the value of their properties continue to rise. (iii) In China, both the official NBS PMI as well as the HSBC PMI (which focuses more on export-oriented SMEs) continued to register improvements. Specifically, the official NBS PMI suggests that manufacturing activity in Oct has expanded and sub-components of the PMI hints of stabilisation in the Chinese economy. Seen along with the m-m uptick in Sept retail sales as well as FAI data, we are reassured that growth is bottoming out on China's macro front. Consequently, markets soared overnight with S&P 500 forming a bullish 'marubozu' and NASDAQ-100 bouncing up to perch just above the key 200dma support level. Tonight's release of US nonfarm payrolls data (around 8.30pm SGP time) – the final jobs report prior to the Nov 6 presidential election- will the key risk event for US trading session today. Portfolio Watch: (1) We reiterate our main investment theme, which is long Asia/EM Debt (Asia Bond ETFs: N6M:SGX, N6L:SGX, O9P:SGX | EM Bond ETFs: EMB:AMEX, LEMB:AMEX, EMHY:AMEX) – global risk on or risk off, portfolios will have to explore beyond traditional safe havens- which yield too low to protect purchasing power, and have doubtful credit ratings. Asia/EM nations on the other hand mostly have nominal GDPs compounding faster than debt and higher yields to boot, are likely to increasingly feature as core-fixed income holdings. (2) Long China – H-shares 2828.HK, A-shares 83188.HK (prefer A-shares). Positive on China A-shares (FTSE China A50 Index CFD) and the HKCEI (H Shares Index CFD). There are increasingly more signs of bottoming out in the Chinese economy, with the m-m uptick in Sept FAI, retail sales as well as yesterday's improvement in the NBS &HSBC PMI. Market has previously overpriced the macro downside and with China underperforming for a long while, it stands a good chance of outperforming in the near term as investors switch focus from the US and ASEAN. (3) Accumulate on weakness CIMB ASEAN40 ETF (QS0:SGX or M62:SGX). While we are neutral on equities -as an asset class-given the lacklustre macro fundamentals, we continue to prefer and Overweight the ASEAN region on account of its resilient domestic demand and massive infrastructure expenditure which will mitigate sluggish external demand. Within the ASEAN space we prefer Singapore (ES3:SGX), Thailand (LG7:SGX) and Philippines (N2E:SGX). REPORTS: - Singapore Sector Reports: Banks, 1 Nov / Transport, 10 Sept / Telcos, 16 May / Property, 28 Aug / REITS, 5 Sept - Country Strategy: US, 24 Oct/ China, 22 Oct / HK, 8 Oct / Thai, 5 Oct / Indon, 27 Sept / S'pore, 3 Sept / Malaysia, 31 Aug - Global Macro, Asset Strategy: 9 Oct/ Update, 25 Oct
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MICA (P) 081/12/2011 Ref No: RM2012_0213 1 of 17
Regional Market Focus
Phillip Securities Research Pte Ltd
2 November 2012
Morning Market Commentary - STI: -0.39% to 3026.6 - MSCI SE Asia: -0.26% to 842.6 - Hang Seng: +0.83% to 21821.9 - MSCI APxJ: -0.11% to 442.7 - Euro Stoxx 50: +1.21% to 2533.9 - S&P500: +1.09% to 1427.6 MARKET OUTLOOK: By Ng Weiwen, Macro Analyst Global growth (particularly in China) is showing signs of bottoming out and we should see a modest pickup in 4q12, barring downside risks on the G2 fiscal front. Our view takes into account the following: (i) Globally, manufacturing PMIs have registered improvements in new orders and the decline in inventories suggest that the inventory adjustment cycle is about to end. This suggest possible gains in manufacturing output in the coming months, barring a sharp deterioration in final demand. (ii) The US Treasuries yield curve has steepened, suggesting that US has emerged from the doldrums and recovery is gaining traction. The yield on 3-mth shed around 2bps, while yields on 10-yr and 30-yr gained around 3bps and 4bps respectively. Furthermore, US manufacturing output continued to expand on the back of increased spending by US consumers who are more confident about the economy as the value of their properties continue to rise. (iii) In China, both the official NBS PMI as well as the HSBC PMI (which focuses more on export-oriented SMEs) continued to register improvements. Specifically, the official NBS PMI suggests that manufacturing activity in Oct has expanded and sub-components of the PMI hints of stabilisation in the Chinese economy. Seen along with the m-m uptick in Sept retail sales as well as FAI data, we are reassured that growth is bottoming out on China's macro front. Consequently, markets soared overnight with S&P 500 forming a bullish 'marubozu' and NASDAQ-100 bouncing up to perch just above the key 200dma support level. Tonight's release of US nonfarm payrolls data (around 8.30pm SGP time) – the final jobs report prior to the Nov 6 presidential election- will the key risk event for US trading session today. Portfolio Watch: (1) We reiterate our main investment theme, which is long Asia/EM Debt (Asia Bond ETFs: N6M:SGX, N6L:SGX, O9P:SGX | EM Bond ETFs: EMB:AMEX, LEMB:AMEX, EMHY:AMEX) – global risk on or risk off, portfolios will have to explore beyond traditional safe havens- which yield too low to protect purchasing power, and have doubtful credit ratings. Asia/EM nations on the other hand mostly have nominal GDPs compounding faster than debt and higher yields to boot, are likely to increasingly feature as core-fixed income holdings. (2) Long China – H-shares 2828.HK, A-shares 83188.HK (prefer A-shares). Positive on China A-shares (FTSE China A50 Index CFD) and the HKCEI (H Shares Index CFD). There are increasingly more signs of bottoming out in the Chinese economy, with the m-m uptick in Sept FAI, retail sales as well as yesterday's improvement in the NBS &HSBC PMI. Market has previously overpriced the macro downside and with China underperforming for a long while, it stands a good chance of outperforming in the near term as investors switch focus from the US and ASEAN. (3) Accumulate on weakness CIMB ASEAN40 ETF (QS0:SGX or M62:SGX). While we are neutral on equities -as an asset class-given the lacklustre macro fundamentals, we continue to prefer and Overweight the ASEAN region on account of its resilient domestic demand and massive infrastructure expenditure which will mitigate sluggish external demand. Within the ASEAN space we prefer Singapore (ES3:SGX), Thailand (LG7:SGX) and Philippines (N2E:SGX). REPORTS: - Singapore Sector Reports: Banks, 1 Nov / Transport, 10 Sept / Telcos, 16 May / Property, 28 Aug / REITS, 5 Sept - Country Strategy: US, 24 Oct/ China, 22 Oct / HK, 8 Oct / Thai, 5 Oct / Indon, 27 Sept / S'pore, 3 Sept / Malaysia, 31 Aug - Global Macro, Asset Strategy: 9 Oct/ Update, 25 Oct
Regional Market Focus
2 November 2012
2 of 17
Macro Data
In US, manufacturing activity continued to expand. Specifically, the US ISM manufacturing index registered a reading of 51.7pts in Oct, gaining 0.2pts m-m. In particular, the new orders index rose 1.9 pts m-m to 54.2. The Conference Board consumer confidence index surged 3.8pts m-m to 72.2pts in Oct- the strongest reading since the recovery. On the labour front, initial jobless claims declined 9,000 wk-on-wk to 363,000 for the week ending Oct 27. We should see some distortion in the jobless claims data for the coming weeks owing to disruptions caused by Hurricane Sandy. In Indonesia, exports continued to slump 9.4% y-y in Sept but slower than the steep pace of contraction of 24% in the preceding month. Manufacturing activity -based on HSBC PMI- also continued to expand to a 19 month-high (Oct: 51.9, +1.4pts m-m), with forward-looking new orders rising too. Inflation inched up to 4.61% y-y, from 4.31% in the preceding month. With inflation print ytd well within the central bank’s year-end target range of 3.5 to 5.5%, we expect Bank Indonesia to continue to stand pat on the back of lower inflation expectations as well as resilient domestic demand. As we have guided previously, a rate cut is unlikely as such a dovish stance would further exacerbate the weakness in rupiah (IDR) in view of Indonesia’s deteriorating external balances. In Thailand, inflation remained almost unchanged at 3.32% in Oct, compared to 3.38% in the preceding month. Core inflation- which excludes energy and fresh food prices- dipped to 1.83%, from 1.89% in Sept, within the central bank’s target range of 0.5%-3%. Looking ahead, in view of the benign inflation as well as pre-emptive Oct rate cut, we expect BoT to stand pat unless economic activity substantially slows down. In UK, house price rose by 0.6% m-m sa in Oct, after a 0.4% m-m sa drop in Sep. The reading fell by 0.9% y-y, compared to a 1.4% y-y decline in Sep. A separate report shows that the nation’s manufacturing PMI fell to 47.5 in Oct from 48.1 in Sep, indicating a faster contraction in manufacturing activities. Bank of England policy makers will decide next week whether to extend quantitative easing beyond their 375 billion-pound ($606 billion) target after they complete their current round of asset purchases. In China, official PMI returned to above 50 the dividing line between expansion and contraction, reporting 50.2 in Oct, after the 49.8 reading in Sep, adding signs the nation’s manufacturing is bottoming out. The improvement is aligned with HSBC PMI, which improved to 49.5 in Oct from 47.9 in Sep, indicating only a slight contraction. In Taiwan, HSBC manufacturing PMI rose to 47.8 in Oct from 45.6 in Sep, indicating a slower contraction in manufacturing activities. In Hong Kong, retail sales value rose by 9.4% y-y in Sep, faster than the 4.6% y-y gain in August. Retail sales volume rose by 8.5% y-y, faster than 3.2% y-y gain in August. With China showing signs of bottoming out, Hong Kong economy would likely be stabilizing. In Australia, performance for manufacturing index rose slightly to 45.2 in Oct from 44.1 in Sep, indicating a slightly slower contraction. Sub reading for production fell to 45.2 from 45.5. Sub reading for new orders fell to 43.9 from 44.3. Both indicate worsening activities. Sub reading for employment rose to 46.7 from 40.7. A separate report shows that import price index fell by 2.4% q-q in 3q12, after a 2.4% q-q gain in 2q12. Export price index fell by a significant 6.4% q-q in 3q12, after a 0.9% q-q gain in 2q12, due to weak commodity prices. In South Korea, inflation reported 2.1% in Oct, compared to 2.0% in Sep. On m-m basis, CPI fell by 0.1% m-m in Oct, after a 0.7% m-m gain in Sep. The Bank of Korea lowered its forecast for 2012 inflation to 2.3 percent on 0ct. 11, highlighting the room policy makers have to ease further should economic conditions worsen. A separate report shows that the nation’s total export rose by 1.2% y-y in Oct, after a 2.0% y-y drop in Sep. Import rose by 1.5% y-y in Oct, compared to a 6.1% y-y drop in Sep.
Source: Phillip Securities Research Pte Ltd
Regional Market Focus
2 November 2012
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Singapore The Singapore Market was little changed with the STI closing at 3,026.6 (-
0.39%). The 1.4bn shares traded were worth S$1.1bn. For the stocks under our coverage, there had been an even spread between
outperformers and underperformers in this results season (Positive: 46%, Negative: 54%). As highlighted earlier, we are generally more bearish than consensus on profits and we have been right thus far, as results continue to underwhelm market estimates (Positive: 30%, Negative: 70%).
The market looks a little toppish in the near term and the lack of positive news flow could cap upside. We would advise our clients to stay nimble for now and expect earnings reports from the upcoming results season to drive stock prices. Close +/- % +/-
Thailand Thai stocks traded in a tight range, seesawing between positive and negative
territory throughout the session on Thu. Telecoms shares succumbed to selling pressure and led the market’s decline in the face of uncertainty over 3G license issuance but buying in bank and building materials counters helped limit the market’s downside.
Overall risk sentiment improves today amid positive mood in regional bourses, which received a boost from better-than-expected US economic data yesterday. US consumer confidence jumped in Oct to its highest in more than four years and data from payrolls processor ADP showed US companies added 158,000 workers in Oct, the fastest pace in eight months. The above numbers raised optimism about US non-farm payrolls and unemployment reports due out tonight. Yesterday foreign investors also turned net buyers of Thai equities for the first day in eight sessions to the tune of more than Bt1.5bn. Overall we think there is potential for the SET index to climb back above a key psychological level of 1300 but volatility is likely to remain high along the way. Heading into the final stretch of the US presidential election which will be held on Nov 6, we expect the SET index to trade in a range of 1290-1308 today.
For short-term strategy, we advise investors to look for earnings plays. Resistance on the main index is pegged at 1300-1308 and support at 1290-1283
today.
Close +/- % +/-SET INDEX 1297.99 -0.88 -0.07P/E (x) 17.39P/Bv (x) 2.26
3.44Dividend Yield
STOCK EXCH OF THAI INDEX
800
900
1000
1100
1200
1300
1400
11/3 2/3 5/3 8/3
Source: Bloomberg
Indonesia
Most Indonesian stocks declined Thursday (01/11), despite higher closes on regional Asia markets after China’s data indicated improvement in its manufacturing sector. The Jakarta Composite Index shed 14.929 points, or 0.34%, to close at 4,335.362. The decline included six of the 9 major industry groups, with miscellaneous industry lost 1.43%, property and construction sector declined 0.93%, and infrastructure sector fell 0.59%. Most of the blue-chip stocks also ended lower, as the LQ45 index trimmed 3.433 points, or 0.46%, to 747.688, with 18 of its 45 components closed in negative territory. Indonesia’s central bureau of statistics reported inflation accelerated to a 13-month high in October. Consumer prices climbed 4.61% from a year earlier last month, after rising 4.31% in September. More than 130 shares declined, 90 shares advanced, and 242 shares remained unchanged Thursday on the Indonesia Stock Exchange, where 3.896 billion shares worth IDR 4.533 trillion traded on the regular board. Foreign investors posted net sales worth IDR 842.85 billion.
The Jakarta composite index will likely move higher today, as sharp rally on US markets overnight provides lead to markets in Asia this morning. We expect the JCI to trade with support at 4,288 and resistance at 4,360.
Close +/- % +/-JCI Index 4335.36 -14.93 -0.34P/E (x) 17.81P/Bv (x) 2.90
2.08Dividend Yield
JAKARTA COMPOSITE INDEX
3000
3200
3400
3600
3800
4000
4200
4400
4600
11/3 2/3 5/3 8/3
Source: Bloomberg
Regional Market Focus
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Sri Lanka As the market unwrapped the third consecutive day of trading all three indices
retained in the extreme red territory purely due to the continuous selling pressure in the market. Which triggered the panic selling by retailers, this too contributed towards the negative closures. The All Share Price Index (ASPI) dropped a marginal 19.10 points to close the day at 5,494.54. The more liquid MPI stood at 5,016.28 loosing 21.49 points. The S&P SL20 Price Index lost 13.90 points to close at 2,974.15. The total market capitalization as at end of trading was LKR 2.10Tn.
The turnover for the day (LKR 138.44Mn.) was a 70.99% decrease compared to the previous day, which was the lowest turnover recorded in 17 weeks. Bank Finance & Insurance and Diversified Holdings were the best performers under the sectorial review who contributed 38.3 Mn & 26.2 Mn respectively. The day recorded 3,363 trades resulting in 11.3 Mn shares changing hands, which was a 34% reduction over the previous day’s volume. The price losers outnumbered the price gainers by 120:67. The foreign investors were net buyers for the day with a net inflow of LKR 13.3Mn, extending the year to date net foreign inflow to LKR 33.96Bn.
Close +/- % +/-CSEALL Index 5494.54 -19.10 -0.35P/E (x) 11.35P/Bv (x) 1.69
2.55
Dividend Yield
SRI LANKA COLOMBO ALL SH
4500
5000
5500
6000
6500
7000
11/3 2/3 5/3 8/3
Source: Bloomberg
Australia
The Australian stock market lost more than 1 per cent on Thursday, despite an encouraging pick-up in Chinese manufacturing activity, as concerns about the state of the global economy weighed on investor sentiment. The benchmark S&P/ASX200 index fell 59.4 points or 1.3 per cent to 4457.6.
Today the local bourse is expected to open higher following strong gains on Wall Street due to signs of increased economic activity in the United States. The SFE Futures 200 is pointing upwards 39 point or 0.87 per cent to 4,475.
On the local economic news front we have the ABS producer price index for September quarter, HIA Trades report for September
Close +/- % +/-S&P/ASX 200 INDEX 4517.00 31.31 0.70P/E (x) 17.44P/Bv (x) 1.79
STANDARD & POORS/ ASX 200 INDEX
Dividend Yield
3800
4000
4200
4400
4600
4800
11/3 2/3 5/3 8/3
Source: Bloomberg
Hong Kong
The China’s October PMI was announced yesterday, the data came in 50.2, above the 50 level thresholds. The local market was bolstered by the PMI data. The HSI increased 180 points to 21,821. Trading range was between 21,832 and 21,506. Market volume rebounded to HKD 586.96 billion.
The China’s October PMI bottomed out and above the 50 level thresholds, which eased the market’s wary of “Hard-Landing” of the Chinese Economic. We expected the improvement of PMI would bolster the cyclical industrial sector and the marine transportation sector. Anhui Conch (914.HK) rose 4.9%, CNBM (3323.HK) gained 5.1%, while steel manufacturer Maanshan Iron (323.HK) and Angang Steel (347.HK) advanced 5.5% and 2.4%.
Technically, the HSI is expected to consolidate at around 21,500 level before challenging 22,000 resistance level again with near term support and resistant at the 21,200 and 21,600 respectively.
Close +/- % +/-HSI INDEX 21821.87 180.05 0.83P/E (x) 10.88P/Bv (x) 1.46
Reported 3Q12 revenue of $237.7mn (+20%y-y), PATMI $34.6mn (+9%y-y)
Shenyang project obtained TOP in the quarter, erased earlier losses
We expect sales in Singapore projects to remain slow which will continue to weigh down its earnings
Maintain Neutral with fair value increased to $1.15 DBS Group – Results Recommendation: Neutral Previous close: S$13.80 Fair value: S$15.10
3Q12 net profit of S$856 million beat expectations on lower loans provision. NIMs and loans growth disappoint, while Fees and Commission improved significantly.
Maintain Neutral with unchanged target price of S$15.10 based on lowered P/B of 1.16X.
TTA announced capital increase at a ratio of 1:1 for a price of Bt14/share. The new shares will be allotted to existing shareholders. XR will be posted on Dec 21, 2012 and exercise period between Dec 15, 2012 and Jan 21, 2013. TTA will seek shareholders’ approval on Dec 14.
If the capital increase goes as planned, the proceeds will be around Bt9,912mn that will be used to acquire used vessels of about 15 units during the downtrend prices in used vessel to accommodate foreseeable industry growth in 2014-2015.
MML appears to see bright prospect in the near future as the company already secured offshore service contract with local investors. Further, its affiliate AOD (33.75% stake) will receive a jack-up rig where the company already inked a service contract. Both contracts have total value of US$727mn.
Given a successful capital increase, our CY13 target price will be revised down to Bt18.40 and we rate an ‘ACCUMULATE’ call on TTA.
Benefiting from the double-festival effect of the Mid-Autumn Festival and National Holiday this year, passenger transport of China Eastern Airlines (CEA) in September continued the two-digit growth, with RPK up by 11.5% yoy. Further, due to the freight rise of electronic products driven by iphone5 marketing, freight traffic recovered, up by 4%. The Company passenger transport declined by 11.6% mom due to the end of the summer busy season, but iphone5 boosted freight traffic by 9% from August. Demand from domestic routes is the principal drive for flight volume growth.
From operating efficiency, seat kilometer utilization of CEA rose fastest in September, up by 1.25 ppts yoy to 80.37%, exceeding 80.3% of China Southern Airlines, narrowing the gap with 81.8% of Air China. Load factor still maintained a fairly high level of the industry, up by 3 ppts yoy to 67.4%, by far more than 61.6% of Air China and 58% of China Southern Airlines.
The Company Q3 financial report shows Q3 gross operating income reached RMB25.126 billion, up by 2.8% YoY, and operating cost rose by 3.8% to RMB22.66 billion, while net margin reached RMB2.635 billion, down by 20.4% yoy. EPS was RMB0.2336, and performance decline substantially narrowed down from the interim report. The performance slide was mainly attributed to foreign exchange loss. Affected by RMB depreciation, the Q3 net exchange loss of Company reached RMB143 million, compared to gains of RMB685 million a year before. Excluding the non-recurring items, the Company main business gains increased by some 6% yoy.
CEA suffered most from the Sino-Japanese tensions since late September as its Japanese route took the largest share, at 25%, or 4.6% of capacity and 7% of income. The Sino-Japanese route operated by the Company may continue to bear the slack market demand pressure in Q4, which will affect overall performance of the Company international routes.
Recent oil price falls and renminbi exchange rate new highs eased the Company’s fuel cost and exchange loss pressure, which served as a catalyst of recent share price rebound. The strong RMB momentum is expected to continue in a short period, and it is a big-probability event that fuel price will remain low in H2.
In summary, we predict the Company EPS for 2012 and 2013 will be RMB0.35 and RMB0.51 respectively, converted to HK$0.43 and HK$0.63. We cautiously grant it 5x P/E, corresponding to expected EPS for 2013, and 12-month target price is HK$3.14, 14.6% more than the current price HK$2.74, hence “accumulate” rating granted.
US Manufacturing expanded more than forecast, consumer confidence rose to a four-year high and fewer Americans filed claims for
unemployment benefits, pointing to resilience in the U.S. economy heading into the fourth quarter. The Institute for Supply Management’s factory index rose to a five-month high of 51.7 in October from 51.5, the Tempe, Arizona, group reported today. The Conference Board’s sentiment index increased to 72.2, the highest since February 2008. Applications for jobless benefits fell by 9,000 to 363,000 in the week ended Oct. 27, the Labor Department said in Washington. “We’re getting a sense of stabilization, we’re no longer slipping,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. (Source: Bloomberg)
Oil traded near the highest level in almost two weeks after U.S. crude stockpiles unexpectedly declined and reports signaled the nation’s economic growth may be accelerating. Futures were little changed, heading for the first weekly gain in three weeks. Crude inventories slid 2 million barrels last week, the Energy Department said yesterday. Analysts surveyed by Bloomberg News forecast an increase of 1.8 million. The Institute for Supply Management’s factory index climbed to a five-month high and the Conference Board’s consumer sentiment reading advanced to the most since February 2008. (Source: Bloomberg)
Gold is poised to gain before a report that may show U.S. unemployment increased last month, indicating that the world’s largest economy is struggling to pick up. Silver is set for the best week since September. Gold for immediate delivery was little changed at $1,716.35 an ounce at 8:39 a.m. in Singapore. It’s set to advance 0.3 percent this week in the first climb since Oct. 5. Bullion for December delivery was little changed at $1,716.60 an ounce on the Comex, also up 0.3 percent this week. (Source: Bloomberg)
Singapore The rate of job creation may be halved as Singapore moves to grow its economy through a more productive workforce, said labour chief
Lim Swee Say yesterday. In fact, the government wants to see jobs created at the rate of 2 per cent or less per year from 4 per cent yearly over the last decade, said Mr Lim, who is also Minister in the Prime Minister's Office. The cut in job creation is a "new reality" that companies must adapt to. Said Mr Lim: "If we were to continue that rate of growth of 4 per cent a year, come 2020 we can expect to see a workforce of more than four million, and it could be as high as 4.5 million. It's very obvious that that rate of growth is not sustainable, both from the economic angle as well as the social angle." (Source: BT Online)
Manufacturing will remain an important pillar of Singapore's economy even as it evolves, Prime Minister Lee Hsien Loong said yesterday. The sector provides good jobs, integrates well with services and innovation, and broadens the Republic's economic base such that it is not overly dependent on any single sector. Mr Lee made these points at an event to mark the anniversaries of two of GlaxoSmithKline's (GSK) pharmaceutical plants here. The UK pharmaceutical giant celebrated the 30th year of its Jurong site and the 40th year of its Quality Road plant at a joint commemoration ceremony. In his speech, Mr Lee said it was not possible for Singapore to be present in every industry as some would not fit. (Source: BT Online)
The economic slowdown, pushed along by increased uncertainty, is starting to bite into workers' pay. Some 11 per cent of employers have frozen - or are planning to freeze - pay this year, up from 3 per cent in 2011, according to a poll of 141 companies. The quarterly poll taken by the Singapore Human Resource Institute (SHRI) and Remuneration Data Specialists (RDS), a firm specialising on compensation, shows that one per cent of the employers have or are planning to cut wages. There were none last year. In any case, with inflation tipped to rise 4.5 per cent and total wages up just 1.1 per cent , real pay is in for a drop of around 3.4 per cent, according to the poll. (Source: BT Online)
Thailand Foreign investors turned net buyers of Thai shares worth Bt1,513.76mn on Thu. (Source: Bisnews) Thailand’s consumer price index (CPI) for Oct 2012 was up 3.32% on year and 0.13% on month, according to data from the Ministry of
Commerce. For the first 10 months of 2012, average headline CPI inflation was up 2.99% on year. (Source: Krungthep Turakij)
Hong Kong China, the world’s biggest producer and user of coal, is suspending operations at smaller mines in a bid to improve safety before the
nation’s once-in-a-decade leadership transition this month. Ahead of the 18th Party Congress, which begins Nov. 8 in Beijing and runs for at least a week, the State Administration of Work Safety has sent inspectors to mines to “spot hazards” and accelerate shutdowns over the next month, it said in an Oct. 24 statement on its website. The congress is where China’s next generation of leaders will be formally anointed. (Source: www.bloomberg.com.)
The Hong Kong government’s toughest efforts yet to curb a growing asset bubble in the city’s property market probably won’t be the last as record-low mortgage rates drive demand for the world’s priciest homes. Policy makers last month imposed an extra 15 percent tax on all home purchases by companies and non-permanent residents, adding to steps to boost the supply of housing and tighten lending as an influx of buyers from other parts of China underpin soaring prices. Untouched is the major stimulant fuelling prices: borrowing costs tied to the U.S. because of the Hong Kong dollar peg and growth linked to China. (Source: www. bloomberg.com.)
Macau casino revenue rose 3.2 percent to reach a record last month as promotions over the eight-day Golden Week holiday attracted more Chinese tourists to the world’s biggest gambling hub. Casino revenue in the Chinese city increased to 27.7 billion patacas ($3.5 billion) in October, topping a record 26.85 billion patacas in the same month a year earlier, according to data from Macau’s Gaming Inspection and Coordination Bureau today. (Source: www. bloomberg.com.)
Indonesia The trade balance surplus in August 2012 is expected to continue into September due to reduction in import. September’s trade is
projected to weaken due to the influence of global economy. Export remains weak due to the majority of export commodity prices falling.
Coal export falls sharply by 30 percent (year-to-date) due to lower production. The decline in prices is the impact of the global economic slowdown and the abundant supply from various countries, such as the United States and Canada. The prices of rubber and crude palm oil (CPO) fall 10 percent and seven percent (year-to-date). According to Anton, the decline in September was offset by the rising export of cocoa which is expected to rise 64 percent due to the additional demand ahead of Christmas and New Year. (Source: Indonesia Finance Today)
The realization of state budget for both the central and local governments as of October 23, 2012 has reached 66.1 percent from IDR 1,548.30 trillion (USD 161.02 billion) budget ceiling. Deputy Minister of Finance, said the budget absorption is higher than the same period in 2011 with IDR 522.985 trillion or 57.6 percent of the ceiling. Domestic revenue reached IDR 974.32 trillion or 71.8 percent of the targeted IDR 1357.38 trillion. Meanwhile, the 2012 State Budget and Expenditure Amendment (APBN-P) the state revenue and grants are targeted to reach IDR 1358.20 trillion. The spending realization of central government reached IDR 654.92 trillion or 61.1 percent of the targeted IDR 1069.53 trillion. The largest realization still comes from personnel spending with IDR 162.56 trillion or 76 percent. Expenditure of goods amounts to IDR 82.66 trillion or 44.3 percent and capital expenditure IDR 69.97 trillion, or 41.5 percent. Ministry of Finance, said that capital expenditures by year-end is estimated to reach 90.93 percent of the target, resulting in economic growth of 6.4 percent. Capital expenditure and investment are projected to sustain economic growth to reach above two percent. (Source: Indonesia Finance Today)
Sri Lanka Headline inflation eased to a five month low in October with the Colombo Consumers’ Price Index (CCPI) increasing 8.9 percent year-on-
year from 9.1 percent in September. On a year-on-year basis, the highest contribution to the overall increase of around 59 percent came from non-food commodities which increased by 5 percent in October 2012. Among the food commodities, rice, vegetables and fish and sea food, which have significant weights in the CCPI basket, recorded price increases on a year to year basis. Under the non-food category, the prices of kerosene oil, petrol, diesel and gas rose by 74 percent, 19 percent, 49 percent and 10 percent respectively. Inflation on an annual average basis increased to 6.8 per cent in October 2012 from 6.5 per cent in September 2012 while core inflation increased both on a year-on-year and annual average basis to 6.8 per cent and 5.4 per cent, respectively, in October 2012 from 6.2 per cent and 5.3 per cent, respectively, in September 2012. Core inflation excludes price sensitive items such as food and fuels and is used to gauge underlying price movements of an economy. (Source: island.lk)
Australia The author of the landmark 1989 report on Australia’s future in Asia has warned that mining companies and the Gillard government have
overestimated China’s future demand for coal and iron ore, leaving shareholders and the budget exposed. Noted economist and Labor government adviser Ross Garnaut told The Australian Financial Review he welcomed the Asian Century white paper released this week because “I think we have to lift our game”. But he said its forecasts “really duck the issue” by having low, medium and high scenarios on commodities “so wide apart that it doesn’t say anything”. New data showed China’s demand for thermal coal had fallen sharply due to Beijing’s rapid switch to low-emissions hydro, wind, nuclear and solar energy. “In China thermal [coal] is in deep shit,” Professor Garnaut said. Demand for coal used in steel- making would also slow and iron ore prices would drop in the long term – a view backed by a top BHP Billiton executive. (Source: Financial Review)
Skyrocketing debt accumulated under Labor could threaten the very existence of an independent Northern Territory government, according to a panel appointed by the new conservative administration to examine public finances. Net debt will balloon from $2.7 billion to $6.2bn over the forward estimates, close to 100 per cent of current total revenue, according to the panel's report released yesterday. (Source: The Australia)
Australia’s biggest resources development, the $43 billion Gorgon LNG project in Western Australia, has quietly struck a deal with the federal government to import 150 semi-skilled foreign workers, in a move that will anger unions and Labor MPs who want Julia Gillard to restrict the use of overseas labour. US energy giant Chevron said its newly inked agreement would allow it to hire foreign workers during construction of the Gorgon plant, assuming it could not source workers locally. (Source: The Australia)
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Dollar Index +0.16% Gold 1,714.25 +0.15%
Crude oil +0.99% US Treasury 10yr Yield 1.724 +0.03%
DJI +1.04% S&P 500 INDEX 1,427.59 +1.09%
SHCOMP +1.72%
Source: Bloomberg
10000
11000
12000
13000
14000
Nov-11
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep-12
70
75
80
85
Nov-1
1
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep
-12
1200
1400
1600
1800
2000
Nov-11
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep-12
70
80
90
100
110
120
Nov-11
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep-12
1.4
1.6
1.8
2
2.2
2.4
2.6
Nov-11
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep-12
2000
2300
2600
Nov-11
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep-12
1000
1100
1200
1300
1400
1500
Nov-11
Jan-1
2
Mar-1
2
May-1
2
Jul-1
2
Sep-12
Regional Market Focus
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Source: Bloomberg
World Index
JCI -0.34% 4,335.36
HSI 0.83% 21,821.87
KLCI 0.16% 1,675.69
NIKKEI 0.21% 8,946.87
KOSPI -0.71% 1,898.44
SET -0.07% 1,297.99
SHCOMP 1.72% 2,104.43
SENSEX 0.30% 18,561.70
ASX -1.31% 4,457.65
FTSE 100 1.37% 5,861.92
DOW 1.04% 13,232.62
S&P 500 1.09% 1,427.59
NASDAQ 1.44% 3,020.06
COLOMBO -0.35% 5,494.54
STI -0.39% 3,026.61
Regional Market Focus
2 November 2012
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Singapore
Top 10 Value Last % Chg Chg Value ('k) Top 10 Volume Last % Chg Chg Volume ('k)
GOLDEN AGRI-RESO 0.62 -1.60 -0.010 74,704 YHM GROUP LTD 0.02 -6.25 -0.001 134,306