MICA (P) 081/12/2011 Ref No: RM2012_0165 1 of 17 Regional Market Focus 24 August 2012 Morning Market Commentary - STI: +0.23% to 3056.4 - MSCI SE Asia: +0.56% to 827.8 - Hang Seng: +1.23% to 20132.2 - MSCI APxJ: +0.78% to 429.9 - Euro Stoxx 50: -0.96% to 2429.2 - S&P500: -0.81% to 1402.1 MARKET OUTLOOK: The S&P500 pared gains on Thursday over doubts on whether the Fed might indeed introduce QE fairly soon (i.e. Sept). From a chart perspective, the S&P 500 seems to be developing a “triple top reversal” pattern which is not complete yet - pending a support break. We are of the view that while the US economy is still sluggish (no strong economic rebound), it is not sufficiently weak enough to warrant further QE in September (but perhaps by the end of this year). We opine that this “additional monetary accommodation” (alluded in the FOMC minutes) might also that the form of extending of the current late-2014 rate guidance. The recent summer rally was largely buoyed by hopes for synchronised policy stimulus from major central banks). We caution that market might not be able to sustain its momentum against a still fragile macroeconomic backdrop. In fact, markets should be positioning for some disappointments and could sell off over the next few weeks, pending (i) Bernanke’s clarification at the Fed Jackson Hole meeting next week and (ii) ECB’s ability to deliver (which is increasingly constrained by domestic politics in Germany). Chancellor Merkel and President Hollande met on Thursday, ahead of meetings with Greek PM Samaras. However, there was no official word as to whether Merkel and Hollande intend to agree to Greece’s request for an extension of two years (to 2016) to implement reforms and slash the deficit to achieve the troika’s targets. There is also uncertainty as to whether Greece will receive its next instalment of aid –without which Greece is likely to default on its debt and possibly exit from the EZ. Nonetheless, as we have reminded our readers, any form of ECB intervention will come with strings attached (i.e. conditionality) -a key ECB/German requirement. The global economic trajectory is in a broad slowdown. Flash August PMI readings were mixed. Manufacturing PMIs in the US (expansionary mode) and EU (remained in contraction mode) registered mild improvement while the Chinese HSBC manufacturing PMI slumped to a 9-mth low owing to a sharp decline in new export orders (See Macro Data). Asia's export data has been abysmal with a big disappointment from China - NE Asia economies are suffering due to China's slowdown. EZ is for all intents and purposes in recession and a program of austerity is going to hold it back this year and next. As for the US, core capex new orders are falling, below average employment and incomes and an impending fiscal cliff make us believe in a below consensus recovery. Our SG Sector Strategist likes defensives (SCI, Comfort, Singtel), and is sector overweight Aviation Services (SIAEC, STE, SATS), and the REITS. PORTFOLIO OUTLOOK: From a medium-longer term portfolio stance we are neutral at best for stocks till 1q13 as we think absolute returns could prove fleeting due to a global slowdown and fiscal uncertainty in the US. But within the stock space we prefer & Overweight ASEAN markets - the KLCI, JCI, SETI, PSEI, STI - to be relatively more resilient. For the first 4, domestic demand and pro-growth govt policy counteracts a weak external environment. As for the STI: +60% earnings exposure to ASEAN & Emerging Markets, high dividend yields in strong business moats, and the SGD's relative safe haven status, makes the STI an attractive buy in these yield starved times. Despite the recent selloff in Treasuries as US data picked up, we are still overweight Fixed Income (ETF tickers in brackets) over Stocks, Commodities, as we think macro headwinds remain considerable. In any case, as rates are repressed in the traditional safe havens of Treasuries (TLT: NYSE), Bunds, Gilts, SGS (A35:SGX), portfolios hard pressed for yield will likely have to explore beyond the traditional safe havens, thus within the bond space we're overweight dollar denominated EM sovereigns (EMB:NYSE), dollar denominated Asian Sovereigns & Corporates (N6M:SGX and O9P:SGX), and US Corporate Debt (VCLT:NYSE). REPORTS: Global Macro, Asset Strategy: 26 July Singapore Sector Strategy: 1 Aug Singapore Sector Reports: Banks / Transport / Telcos / Property / REITS / Thematic Regional Strategy: China, 23Aug/ Indon, 17 July / HK, 22 June / Thai, 18 June / S'pore, 8 June / M'sia, 30 May
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MICA (P) 081/12/2011 Ref No: RM2012_0165 1 of 17
Regional Market Focus
Phillip Securities Research Pte Ltd
24 August 2012
Morning Market Commentary
- STI: +0.23% to 3056.4 - MSCI SE Asia: +0.56% to 827.8 - Hang Seng: +1.23% to 20132.2 - MSCI APxJ: +0.78% to 429.9 - Euro Stoxx 50: -0.96% to 2429.2 - S&P500: -0.81% to 1402.1 MARKET OUTLOOK: The S&P500 pared gains on Thursday over doubts on whether the Fed might indeed introduce QE fairly soon (i.e. Sept). From a chart perspective, the S&P 500 seems to be developing a “triple top reversal” pattern which is not complete yet - pending a support break. We are of the view that while the US economy is still sluggish (no strong economic rebound), it is not sufficiently weak enough to warrant further QE in September (but perhaps by the end of this year). We opine that this “additional monetary accommodation” (alluded in the FOMC minutes) might also that the form of extending of the current late-2014 rate guidance. The recent summer rally was largely buoyed by hopes for synchronised policy stimulus from major central banks). We caution that market might not be able to sustain its momentum against a still fragile macroeconomic backdrop. In fact, markets should be positioning for some disappointments and could sell off over the next few weeks, pending (i) Bernanke’s clarification at the Fed Jackson Hole meeting next week and (ii) ECB’s ability to deliver (which is increasingly constrained by domestic politics in Germany). Chancellor Merkel and President Hollande met on Thursday, ahead of meetings with Greek PM Samaras. However, there was no official word as to whether Merkel and Hollande intend to agree to Greece’s request for an extension of two years (to 2016) to implement reforms and slash the deficit to achieve the troika’s targets. There is also uncertainty as to whether Greece will receive its next instalment of aid –without which Greece is likely to default on its debt and possibly exit from the EZ. Nonetheless, as we have reminded our readers, any form of ECB intervention will come with strings attached (i.e. conditionality) -a key ECB/German requirement. The global economic trajectory is in a broad slowdown. Flash August PMI readings were mixed. Manufacturing PMIs in the US (expansionary mode) and EU (remained in contraction mode) registered mild improvement while the Chinese HSBC manufacturing PMI slumped to a 9-mth low owing to a sharp decline in new export orders (See Macro Data). Asia's export data has been abysmal with a big disappointment from China - NE Asia economies are suffering due to China's slowdown. EZ is for all intents and purposes in recession and a program of austerity is going to hold it back this year and next. As for the US, core capex new orders are falling, below average employment and incomes and an impending fiscal cliff make us believe in a below consensus recovery. Our SG Sector Strategist likes defensives (SCI, Comfort, Singtel), and is sector overweight Aviation Services (SIAEC, STE, SATS), and the REITS. PORTFOLIO OUTLOOK: From a medium-longer term portfolio stance we are neutral at best for stocks till 1q13 as we think absolute returns could prove fleeting due to a global slowdown and fiscal uncertainty in the US. But within the stock space we prefer & Overweight ASEAN markets - the KLCI, JCI, SETI, PSEI, STI - to be relatively more resilient. For the first 4, domestic demand and pro-growth govt policy counteracts a weak external environment. As for the STI: +60% earnings exposure to ASEAN & Emerging Markets, high dividend yields in strong business moats, and the SGD's relative safe haven status, makes the STI an attractive buy in these yield starved times.
Despite the recent selloff in Treasuries as US data picked up, we are still overweight Fixed Income (ETF tickers in brackets) over Stocks, Commodities, as we think macro headwinds remain considerable. In any case, as rates are repressed in the traditional safe havens of Treasuries (TLT: NYSE), Bunds, Gilts, SGS (A35:SGX), portfolios hard pressed for yield will likely have to explore beyond the traditional safe havens, thus within the bond space we're overweight dollar denominated EM sovereigns (EMB:NYSE), dollar denominated Asian Sovereigns & Corporates (N6M:SGX and O9P:SGX), and US Corporate Debt (VCLT:NYSE). REPORTS: Global Macro, Asset Strategy: 26 July Singapore Sector Strategy: 1 Aug Singapore Sector Reports: Banks / Transport / Telcos / Property / REITS / Thematic Regional Strategy: China, 23Aug/ Indon, 17 July / HK, 22 June / Thai, 18 June / S'pore, 8 June / M'sia, 30 May
Regional Market Focus
24 August 2012
2 of 17
Macro Data
In US, manufacturing output continued to expand with August flash Markit PMI inching up 0.5pt m-m to 51.9. Initial jobless claims rose rose 4,000 last week to 372,000 (seas-adj). Nonetheless, the 4-week moving average of jobless claims dipped slightly. These recent US macro data reinforces our view that that the 2H economic outlook for the US is likely to be subdued at best.
In Euro zone, advance reading for composite PMI registered 46.6 in Aug, barely changed from July’s 46.5, marking a contraction of the region’s business activities for a seventh straight month. Advance manufacturing PMI improved slightly to 45.3 from July’s 44.0, still indicating relatively severe declines and advance service PMI fell to 47.5 from July’s 47.9, also signaling contractions. Preliminary reading for France’s manufacturing PMI improved to 46.2, from July’s final 43.4, and service PMI advanced slightly to 50.2 from earlier 50.0. Advance reading for Germany’s Aug manufacturing PMI improved to 45.1 from July’s final reading of 43.0, while service PMI fell to 48.3 from earlier 50.3. A separate report shows that Germany’s GDP advanced 0.3% q-q in 2q12, after the 0.5% q-q gain in 1q12. The gain was majorly attributed to the growth in private consumption and export, which advanced 0.4% q-q and 2.5% q-q respectively, comparing to their paces of 0.1% q-q and 1.2% q-q in 1q12. Even though outperforming its neighbors, the nation’s growth prospect would likely remain challenging in the second half of the year due to the prolonged debt crisis. The European Central Bank, which in July cut borrowing costs to a record low of 0.75 percent, said on Aug. 2 that it’s ready to purchase government bonds in tandem with Europe’s rescue funds to fight the turmoil, but Germany’s Bundesbank in its monthly report on Aug. 20 stepped up its criticism of the ECB plan, saying any government bond purchases would “entail significant stability risks.” In China, the preliminary HSBC PMI for Aug fell to 47.8, the lowest since last Nov, after an improvement to 49.3 in July, indicating a faster contraction in business activities. The fall is likely attributable to a significant fall in the sub index of new orders. The weak performance would likely to push the government to consider further loosening. Despite the central bank has been using reverse repo as a monetary loosening tool recently, the PBOC governor Zhou Xiaochuan has implied that further cuts in benchmark rate and bank reserve requirement ratio would not be ruled out. Taiwan’s industrial production fell for a fifth month in July, by 0.02% y-y, after a fall of 2.23% y-y in June, but outperforming the market estimated 2.08% y-y decline. As reported earlier, export orders declined for a fifth month in July as Europe’s debt crisis and a slowdown in China hurt demand for the island’s goods. The government has cut its growth forecast for the year to 1.66 % from an earlier estimate of 2.08 %.
In Singapore, headline inflation moderated to 4.0% y-y in July, down from 5.3% in the preceding month. While accommodation and private transport costs eased, these 2 items continued to contribute around two-thirds of headline inflation in July. MAS Core Inflation -which excludes these two components- also inched down 0.3%-ppt m-m to 2.4%. For 1H12, headline CPI has already risen by 5.1%. As we have guided in our Singapore regional strategy report, we expect headline inflation to moderate gradually in 2H12, partly on high base effects as well as a subdued macroeconomic outlook. However, accommodation cost will remain elevated as leasing contracts (particularly for the HDB segment) are likely to be renewed at significantly higher rental rates. Furthermore, notwithstanding LTA’s recent measures, private road transport cost pressures will persist on the back of relatively tight COE supply.
Source: Phillip Securities Research Pte Ltd
Regional Market Focus
24 August 2012
3 of 17
Singapore STI rose 0.23% on Thursday to end at 3056. STI trim early gains after economic
data disappoint. Both China and Europe PMI came out weaker than expected. It corroborates our view that macro econ is not getting better any time soon. Volume was relatively high at 1.76 billion shares with value of $1.14 billion. There were 225 gainers vs 132 decliners. Genting SP was the top gainer among the index stocks, rising 3.7%.
Market is in momentum trading mode inspired by “anticipation of-“/ “lack-of” easing measures. Today seems to be a “lack-of” day and will likely head lower. We remain cautious of the market and overweight in the defensives.
Thailand Thai stocks traded in the green throughout the session on Thu. The SET index
rose as much as 9 points at one time during the session before gains were pared to 3.5 points after the main index finished the session at 1237.64 points. Trading volume was heavy. Gains were led by telecom shares on progress in the 3G license auction.
Inching closer towards a 1247-point target could raise the risk of profit taking in the SET index. Sentiment in Asia is also under pressure on Fri following overnight losses in US and European equities after St. Louis Fed President James Bullard, a non-voting member of the FOMC said US data has been somewhat better since the Jul 31-Aug 1 Fed meeting, dampening hopes of a quick stimulus action or QE3 from the US Federal Reserve. However, US economic data, which came out yesterday remained mixed. US manufacturing improved only slightly in Aug and sales of new single family homes rose in Jul, matching April’s two-year high but the number of Americans filing new claims for jobless benefits unexpectedly rose last week. Under this circumstance, US economic data will still bear close watching to see whether stimulus action from the Fed is possible next month. In Europe, hopes remain for further negotiations to lower Spain borrowing costs. In the latest developments, the favored option being discussed is that the existing European rescue fund, the EFSF would purchase Spanish debt at primary auctions while the European Central Bank would intervene in the secondary market to lower yields. Nonetheless, it still awaits more clarity on the above options. Overall we believe the SET index is likely to trade choppy with a downward bias today but the downside appears limited on the back of the ongoing hopes.
The short-term strategy is to book profits at resistance levels. Resistance on the main index is pegged at 1240-1247 and support at 1232-1226
today.
Close +/- % +/-SET INDEX 1237.64 3.50 0.28P/E (x) 17.24P/Bv (x) 2.18
3.58Dividend Yield
STOCK EXCH OF THAI INDEX
800
900
1000
1100
1200
1300
1400
8/23 11/23 2/23 5/23 8/23
Source: Bloomberg
Indonesia
Most stocks listed on the Indonesia Stock Exchange clung onto positive zone Thursday (23/08) - the first trading day after the long weekend observing the Eid al-Fitr - as optimism over US dan China’s central bank stimulus bolstered markets across Asia. The Jakarta Composite Index edged 2.151 points or 0.05% up to 4,162.659. The advance included eight of the nine major industry groups, with basic industry the best performer and miscellaneous industry the worst. But LQ 45 – the index trailing Indonesia’s blue-chip shares, traded slightly lower to 718.118. More than 120 shares rose, 92 shares fell, and other 92 shares remained unchanged Thursday on the Indonesia Stock Exchange, where 2.445 billion shares worth IDR 3.986 trillion traded on the regular board. Foreign investors posted net purchases totaling IDR 142.57 billion.
The JCI will likely trade lower today, following the US market lower the hope of another round of quantitative easing from the Fed dimmed. We expect the JCI to trade with the support at 4,116 and resistance at 4,206 today.
Close +/- % +/-JCI Index 4162.66 2.15 0.05P/E (x) 18.29P/Bv (x) 2.78
2.15Dividend Yield
JAKARTA COMPOSITE INDEX
3000
3200
3400
3600
3800
4000
4200
4400
8/23 11/23 2/23 5/23 8/23
Source: Bloomberg
Regional Market Focus
24 August 2012
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Sri Lanka The market unwrapped the 4th day of the week by continuing the yesterday’s
momentum. Index values were gradually increased in the first half and began to fall down gradually in latter part of the day. ASPI & SP SL20 closed the trading day recording positive closures and MPI closed the day within the negative region. The ASPI closed the day recording 5,038.15; gaining 10.75 points and S&P SL20 Price Index up by 15.80 points to close at 2,847.50. The liquid MPI closed the day dropping 01.17 points to end the day at 4,692.82. The market capitalization stood at LKR 1.926Tn.
250 counters were traded during the day to record a turnover of LKR 634.8Mn which is a reduction of 19% comparing to the previous day, The best performing sectors for the day were Diversified Holdings (LKR 256.5Mn) and Bank Finance Insurance (LKR 168.6Mn) correspondingly. The total traded volume for the day was 34Mn. This is a 26% reduction against the previous day. The market recorded a net foreign inflow of LKR 134.5Mn.
Close +/- % +/-CSEALL Index 5038.15 10.75 0.21P/E (x) 10.47P/Bv (x) 1.61
2.72
Dividend Yield
SRI LANKA COLOMBO ALL SH
4500
5000
5500
6000
6500
7000
7500
8/23 11/23 2/23 5/23 8/23
Source: Bloomberg
Australia
The Australian share market on Thursday closed firmer as strong gains among mining and gold stocks pushed the broader market higher. The benchmark S&P/ASX200 index closed up 7.7 points or 0.18 per cent to 4,383.7.
The Australian market looks set to open lower after Wall Street fell with blue-chip stocks Boeing and Hewlett-Packard helping give the market its worst day so far this month. The SFE Futures 200 is pointing downwards, 26 points or 0.59 per cent to 4,342. In economic news on Friday, Reserve Bank of Australia (RBA) governor Glenn Stevens is due to appear before the House of Representatives Standing Committee on Economics.
Close +/- % +/-S&P/ASX 200 INDEX 4383.70 7.66 0.18P/E (x) 15.67P/Bv (x) 1.75
6.47Dividend Yield
STANDARD & POORS/ ASX 200 INDEX
3800
4000
4200
4400
4600
8/23 11/23 2/23 5/23 8/23
Source: Bloomberg
Hong Kong
Local stocks climbed. The HSI and HSCEI rose 244 points and 137 points to 20132 and 9836 respectively. Market volume was 44.715 billion.
China Telcom (728) announced M&A action with the parent company, stock price rose 6.7%, closed at 4.45 HKD, the peers China Unicom (762) also followed the trend and rose 4%, closed at 13.02 HKD.
Technically, with the QE3 expectation, the HSI gained a support from the 20 SMA (19955) and closed over the 20000 points yesterday. However, we reaffirm our short term bearish view, investors are suggested to stand on sideline and wait for a clear trading signal.
We peg resistance for the HSI at 20300 and support at 20000 Close +/- % +/-
HSI INDEX 20132.24 244.46 1.23P/E (x) 9.84P/Bv (x) 1.38
3.59Dividend Yield
HANG SENG INDEX
16000
17000
18000
19000
20000
21000
22000
23000
24000
8/23 11/23 2/23 5/23 8/23
Source: Bloomberg
Regional Market Focus
24 August 2012
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Thailand Padaeng Industry – Company Results Recommendation: NEUTRAL Previous close: Bt12.20 Fair value: Bt12.40
Net loss widened 343.58% y-y to Bt126.47mn in 2QCY12 as a result of slumping zinc prices and escalating costs. In 2HCY12, global economic uncertainty and nearly one million tons of global zinc inventories may keep the recovery of zinc prices in
check. PDI plans to spend about Bt500mn to improve production and energy efficiency and strengthen the stability of raw materials supply
as part of its strategic improvement roadmap. We keep our forecast for PDI’s CY12 loss before FX at Bt229.05mn. We reiterate a ‘NEUTRAL’ stance on PDI with a target price of
Bt12.40/share.
Bangkok Dusit Medical Services – Company Update Recommendation: ACCUMULATE Previous close: Bt100.50 Fair value: Bt109
In 1HCY12, revenue grew 34.93% y-y thanks to (1) consolidation of Phayathai and Paolo Memorial hospital groups and (2) patient volume growth and higher intensity cases.
We revise upwards our CY12 core business profit outlook for BGH to Bt5,644.80, representing a growth of 44.48% from Bt3,906.96mn in CY11. Including a Bt1,795mn gain on the fair value adjustment of investment in BH, full-year net profit is estimated to be Bt7,439.80mn. We also forecast its core business profit to rise further to Bt6,278.72mn in CY13.
We raise our target price for BGH to Bt109/share to reflect higher earnings expectations. At current prices, we rate BGH shares a ‘ACCUMULATE.’
Sales at CPV grew at a CAGR of 19.8% over the past four years on the back of growth in feed and swine sales. Slumping meat prices are expected to drag earnings at Vietnam operations lower in 2HCY12, just like in Thailand. Feed sales volume
is also projected to fall by 5%-10% as a consequence of a collapse in meat prices. CPF plans to increase shrimp production to meet rising export growth. We rate CPF shares an ‘ACCUMULATE’ with a target price of Bt38/share.
The company’s gross margin increased substantially by 157% in H1 2012 year-on-year, and net profit increased by 38.7%. While operation turnover only rose by a narrow margin, the gross margin and net profit of company both realized great growth, which proves the company profitability has substantially risen.
The company has formed business alliance with Guangdong Sinopec, and downstream channel will expand to over 1700 sales networks of Guangdong Sinopec. In addition, both parties will jointly widen the businesses of the oil product and natural gas , further uplifting market share.
The substantial increase in the Company profitability was attributed to transformation of its LPG business structure. The Company stepped up its channel widening of end market to get more profit margin brought by end sales.
Traditional high-pollution energy will take increasingly small proportion among industrial users, and as clean energy, LPG still has big market prospects. Furthermore, rigid energy demand of housing users is also increasing. it is predicted that the Company LPG sales will continue to maintain a substantial growth.
Under strong expectation of further expansion of the Company business scope and continuous strengthening of the market position, we give the Company 6-month target price HKD2.16. In combination with the expected dividend per share of 3.9 cents, the Company 6-month overall yield rate will reach 23.8%, hence “buy” rating granted.
We cautiously apply 0.9-time P/B, 21% less than the 10-year average P/B of 1.14 times. Corresponding to the expected net asset per share at the end of 2013, 12-month target price will be HKD16.3, a 25% premium over the current price, hence “buy” rating granted.
US American incomes declined more in the three-year expansion that started in June 2009 than during the longest recession since the Great
Depression, according an analysis of U.S. Census Bureau data by Sentier Research LLC. Median household fell 4.8 percent on an inflation-adjusted basis since the recession ended in June 2009, more than the 2.6 percent drop during the 18-month contraction, the research firm’s Gordon Green and John Coder wrote in a report today. Household income is 7.2 percent below the December 2007 level, the former Census Bureau economic statisticians wrote. (Source: Bloomberg)
Jobless claims rose by 4,000 for a second week to reach 372,000 in the period ended Aug. 18, Labor Department figures showed today in Washington. Consumer confidence dropped last week to the lowest level since January, according to the Bloomberg Consumer Comfort Index. Companies are keeping payrolls lean as a weaker global economy and lack of clarity on U.S. tax policy next year cloud the demand outlook, one reason the Federal Reserve may be closer to further monetary stimulus. Residential real estate is a source of strength for the expansion, according to a report that showed new-home sales matched a two-year high in July. (Source: Bloomberg)
Singapore Finally, some relief on the inflation front but with a caveat.Singapore's headline inflation eased to 4 per cent year on year in July - down
from 5.3 per cent in June - on the back of slower increases in the cost of accommodation, private road transport and oil-related items, the government said yesterday. But overall inflation for the year could still surpass expectations if car prices pick up pace, it cautioned. Core inflation - excluding accommodation and private road transport costs, which together accounted for 60 per cent of July's headline inflation - dipped 0.3 of a percentage point to 2.4 per cent in July. Core inflation could moderate further by year end, leaving room for the easing of monetary policy against the backdrop of slowing economic growth, economists said. (Source: BT Online)
Hong Kong China's manufacturing sector contracted at its sharpest pace in nine months in August, according to a survey showing falling export
orders and rising inventories, a signal that more policy stimulus may be needed to engineer a second half pick-up in growth. As calls grew louder from analysts and investors for further measures from Beijing to support the economy, China's central bank yesterday completed its largest weekly injection of funds into the financial system in seven months - a move traders saw as a substitute for a cut in banks' required reserve ratio. The HSBC Flash China manufacturing purchasing managers index (PMI) - a preliminary read-out that provides an early peek at data for August - fell to 47.8 this month, its lowest level since November and well down from July's final figure of 49.3. (Source: BT Online)
Guangdong Communist Party Secretary Wang Yang, vying for a spot on China’s top decision-making body, won approval for a program
aimed at cutting red tape as part of his push to reduce central control of the economy. Government approval won’t be needed in cases when “individuals and companies can make their own decisions” and industries can regulate themselves, the State Council said yesterday in a statement. The reforms are aimed at the economy, smaller businesses and private investment, the State Council said, without giving further detail. “Guangdong is at the frontier of reform and opening up,” the State Council said. “Carrying out the pilot reform program in Guangdong has important significance for pushing forward the reform of the administrative system.” (Source: .Bloomberg)
Thailand Foreign investors turned net sellers of Thai equities worth Bt1,047.05mn on Thu. (Source: Bisnews) The UDD said red shirts plan a mass rally on Sep 15 to mark the sixth anniversary of the Sep 19, 2006 military coup. (Source: Bisnews) Total ad spending in Thailand rose 12.60% to a year high in Jul after a recovery in TV ad spending. In the first seven months of 2012, ad
spending totaled Bt67bn as automakers increased ad budgets to launch new car models. (Source: Krungthep Turakij) Banks plan to raise mortgage interest rates for new home loans by at least 35 bps in the fourth quarter of this year to cover the higher
cost of funds resulting from furious deposit mobilization but the impact appears minimal as bank clients would pay only Bt350more per monthly installment on Bt1mn loan. (Source: Krungthep Turakij)
Indonesia The Indonesian government plans to draw IDR 45.9 trillion (USD4.88 billion) and pay IDR 58.4 trillion in foreign debt installments in 2013
or a deficit of IDR 19.5 trillion in foreign loan account. The foreign loans will include IDR 6.5 trillion in program loans and IDR 39.4 trillion in project loans, according to a financial note and draft state budget for 2013. The loan funds will include IDR 29.2 trillion to finance spending by ministries and other government agencies, IDR 3.2 trillion to be given as grants for regional administrations and IDR 7 trillion to be lent out to state companies and regional administrations. The plan to draw the loans has gone through process of financing plan and the amount is still below the maximum level set for foreign loans. The plan, therefore, is still in line with the government policy to control financing with foreign debts. The World Bank and the Asian Development Bank are expected to be among the main providers of program loans as a source of cash financing. (Source: Antara News)
Finance Minister said the government would be focused on controlling the budget deficit set at IDR 150.2 trillion in the 2013 draft budget
Regional Market Focus
24 August 2012
7 of 17
or 1.62 percent of the gross domestic product. The world economies are currently slowing down as several countries are suffering current account deficits, rising inflation and currency depreciation against the US dollar. In view of that Finance Minister said Indonesia must be alert as indirectly the situation could affect the country`s budget deficit and reduce investment which would be one of the main drivers of growth in 2013. The minister said what he meant by structural reform was improving infrastructural means, accelerating implementation of land clearing regulation and harmonizing local and central government regulations. To maintain fiscal sustainability and health the minister said the government would control the budget deficit to remain at a safe level and the debt ratio to GNP at a manageable level. The targets would be achieved by optimally developing sources of state revenues while maintaining the business climate, discipline in budget use and implementing a prudent borrowing policy. To boost the national budget`s role as a development stimulus he said the government would improve the quality of state spending by increasing efficiency through reducing unproductive spending, financial leakages, smoothing budget for infrastructure and increasing the budget for infrastructure development to spur growth. (Source: Antara News)
Sri Lanka In accordance with State Debt Office Sri Lanka's 12-month Treasuries yields has risen by 05 basis points to 13.27 percent at
Wednesday's auction, while the 3-month rate was flat at 11.36 percent. The 6-month yield rose 07 basis points to 13.02 percent. The debt office confirmed that 1.7 billion rupees of 3-month bills, 8.6 billion rupees of 6-month bills and 1.3 billion rupees of 12 month bills were sold. The state offered 13 billion rupees of bills for roll-over but only 12.7 billion rupees of bids were accepted from the market, the debt office said. (Source: LBO)
Containers handled at Sri Lanka’s ports have fallen down by 1.8 percent to 1.718 million twenty foot equivalent units in the first five
months of the year, though there was recovery in transshipment volumes in May. In May transshipment container volumes rose 9.8 percent to 266,668 reversing a downward trend in earlier months, though total volumes in the first five months were still down 5.1 percent to 1.237 million TEUs. Domestic container volumes fell 3.8 percent to 81,866, a trend that has continued for the third month running, data published by the Central Bank shows. Sri Lanka's external trade has slowed in 2012 partly due to currency depreciation and higher interest rates. Last year imports were driven to unsustainable levels with more than 200 billion rupees of central bank credit (printed money). In May 2012, 342 ships had called at Sri Lanka's ports down from 361 a year earlier. Up to May 1715 ships had called, down from 1,794 a year earlier. Total cargo discharged rose 5.5 percent to 16.6 million metric tonnes up to May 2012, though total cargo loaded fell 3.5 percent to 10.25 million tonnes. (Source: LBO)
Australia The Australian dollar fell close to three-quarters of a US cent on weak Chinese data and concerns about the domestic mining
industry. At 7am AEST the local unit was trading at 104.41 US cents, down from 105.14 US cents on Thursday. Bank of New Zealand currency strategist Mike Jones said that weak manufacturing figures from China and bad news from Australia's biggest mining companies had overwhelmed earlier optimism. “For the Aussie, optimism about the US Fed (Federal Reserve) easing has given way to worries about Chinese data and discussion about the health of the Aussie resources sector,'' he said. “So, the Australian dollar has been the whipping boy in financial markets in the last 24 hours. Most other major currencies are still riding high on the weaker US dollar following the Fed meeting.” (Source: The Australian)
Reserve Bank governor Glenn Stevens says the nation's resources investment boom still has several years to run. Mr Stevens told the
House of Representatives Economics committee today that the Australian economy was growing at close to trend, and the dampening impact of the high Australian dollar had begun to wane. But he said global risks were “weighted to the downside” and while he was optimistic about the future of the Australian economy, “bad things can happen”. Mr Stevens said inflation was low and unemployment contained, while house prices “may have stopped their earlier gentle decline”. A day after Resources Minister Martin Ferguson declared the mining boom over, Mr Stevens said investment in the sector was yet to peak. “Looking ahead, the peak of the resource investment boom as a share of GDP - the highest such peak in at least a century - will occur within the next year or two,” he said. (Source: The Australian)
Is the mining boom over? The growth of mining investment, which will be very strong this year, is expected to fall away to nothing over
the next two years. For the Resources Minister, Martin Ferguson, that is as good an occasion as any to declare the end of the boom, to pre-empt the political melodrama that otherwise would accompany every piece of evidence that investment growth was slowing. But it is a potentially misleading description of the situation. Investment will continue at close to its record level for several years yet, and the second phase of the mining boom – the surge in export volumes – is still revving up. Deloitte Access Economics forecasts that export volumes will grow about 20 per cent over the next two years. That’s a hefty boost to economic growth. In the process, Australia should recover some of its lost productivity growth. As John Edwards, Reserve Bank board member and economist-member of the Fair Work Act review, said yesterday, an important cause of the fall in total-factor productivity growth is the massive increase in the mining sector’s capital stock that has not yet resulted in a commensurate increase in output. There also should be some good news for manufacturers and other trade-exposed industries. Mining investment won’t be crowding them out to quite the same extent. (Source: The Financial Review)
Regional Market Focus
24 August 2012
8 of 17
Dollar Index +0.04% Gold 1,670.60 -0.11%
Crude oil -1.04% US Treasury 10yr Yield 1.687 +0.01%
DJI -0.88% S&P 500 INDEX 1,402.08 -0.81%
SHCOMP +0.25%
Source: Bloomberg
10000
11000
12000
13000
14000
Aug-11
Oct-1
1
Dec-11
Feb
-12
Apr-1
2
Jun-1
2
70
75
80
85
Aug
-11
Oct-1
1
Dec-1
1
Feb-1
2
Apr-1
2
Jun-1
2
1200
1400
1600
1800
2000
Aug-11
Oct-1
1
Dec-11
Feb
-12
Apr-1
2
Jun-1
2
70
80
90
100
110
120
Aug-11
Oct-1
1
Dec-11
Feb
-12
Apr-1
2
Jun-1
2
1.51.61.71.81.9
22.12.22.32.42.5
Aug-11
Oct-1
1
Dec-11
Feb
-12
Apr-1
2
Jun-1
2
2000
2300
2600
2900
Aug-11
Oct-1
1
Dec-11
Feb
-12
Apr-1
2
Jun-1
2
1000
1100
1200
1300
1400
1500
Aug-11
Oct-1
1
Dec-11
Feb
-12
Apr-1
2
Jun-1
2
Regional Market Focus
24 August 2012
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Source: Bloomberg
Major World Indices
JCI 0.05% 4,162.66
HSI 1.23% 20,132.24
KLCI -0.04% 1,651.61
NIKKEI 0.51% 9,178.12
KOSPI 0.38% 1,942.54
SET 0.28% 1,237.64
SHCOMP 0.25% 2,113.07
SENSEX 0.02% 17,850.22
ASX 0.18% 4,383.70
FTSE 100 0.04% 5,776.60
DOW -0.88% 13,057.46
S&P 500 -0.81% 1,402.08
NASDAQ -0.66% 3,053.40
COLOMBO 0.21% 5,038.15
STI 0.23% 3,056.37
Regional Market Focus
24 August 2012
10 of 17
Singapore
Top 10 Value Last % Chg Chg Value ('k) Top 10 Volume Last % Chg Chg Volume ('k)