MCI (P) 137/11/2012 Ref No: RM2012_0247 1 of 16 Regional Market Focus 21 December 2012 US US: 2013 Macro Strategy The search for yield continues amid LSAPs (large-scale asset purchases) - Table summary of US Asset Strategy Pg4, with equity sector preference via ETFs Pg 5. In 2013, global demand is likely to remain sluggish with G2 economies continuing to deleverage and kick the can (fiscal woes) further down the road. Nonetheless, we remain constructive of the investment climate in 2013. We think investors should stand ready to shift OWs from fixed income into equities. The cue will come once we see a sustained pick up in yield (correspondingly price decline) in high yield debt, indicative of funds moving out of that space. We expect the US Treasury yield curve to bear steepen, with long-term bond yields rising faster. Though the rise in rates (for the 10y and above) will be capped by sluggish (albeit improving) US economy owing to fiscal withdrawals and lingering uncertainties on the EZ front. Fixed Income The search for yield still goes on, especially after the December FOMC. While corporate as well as high yield debt should continue to outperform, returns will be significantly lower in view of limited price appreciation. Instead, higher coupons will be the main source of return now. We maintain our OWs on high-yield US corporate bonds (HYG), Mortgage Backed Securities (VMBS, MBG) and Treasury inflation-protected securities (TIP). On balance, low yields in US make fixed income elsewhere (particularly emerging markets) more attractive, especially with risk appetite returning. On account of favourable external balances, monetary policy rates, fiscal stability, foreign exchange rates as well as yields, EM/ Asia local currency bonds offer an attractive value proposition. Equities One of our preferred trades is long positions in iShares S&P U.S. Preferred Stock Index Fund (PFF). With equity risk premium likely at multi-decade high, we would have an inclination for equities. But equities as an asset class is still confronted with lingering fiscal uncertainties. Still, a long position in iShares S&P U.S. Preferred Stock Index Fund (holdings comprise of Diversified financials: 40%, Banks: 25%) is in line with our OW on financials and will allow investors to gather a decent dividend yield of around 6% monthly. We are still are neutral on US equities on absolute terms but upgrade it to marketweight on relative terms. Our preferred sectors are still Healthcare (XLV), Financials (XLF) and Homebuilders (XHB). We upgraded Industrials (XLI) from low conviction to neutral in view of improved global manufacturing activity. In our note, we also detailed (i) Downsides to our “Preferred” call on Financials as well as (ii) Upsides to our “Neutral” call on Technology (XLK). Currencies From a medium-term horizon, the USD will hold its ground against the EUR as well as the JPY. Apart from growth differentials (which favour the US compared to Europe & Japan), Europe is still mired with structural challenges possibly warranting further monetary easing ahead and JPY will be subjected to downward pressure (with the ruling LDP being vocal about aggressive monetary easing). However, any upside in USD will be tempered by the Fed’s QEternity. Against most Asian currencies (buoyed by excellent macro fundamentals and external balances), we expect the USD to come in a tad weaker. Thailand Bangkok Expressway – Company Update Recommendation: TRADING BUY Previous close: Bt32.50 Fair value: Bt36.75 BECL reported daily traffic volume hit a record high at 1.14mn vehicles. Total traffic volume for the first two month in 4QCY12 rose 14.63% y-y while revenue grew 27.75% y-y. BECL will buy shares of TTW from CK in an effort to increase its stakeholding in TTW by 11% to 20.24%. After that, TTW will become BECL’s affiliate that BECL will be able to book revenue based on equity method instead of dividend which offered lower amount. Traffic volume in the near future appears to increase significantly driven by the government’s first car tax rebate whi ch has spurred a number of new vehicle registrations in Bangkok. The increase in TTW’s shareholding to 20.24% will help raise valuation in BECL. Our CY13 target price is adjusted up from Bt33 to Bt36.75 and dividend is expected to increase to Bt1.45/share. We rate BECL a ‘TRADING BUY’.
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MCI (P) 137/11/2012 Ref No: RM2012_0247 1 of 16
Regional Market Focus
Phillip Securities Research Pte Ltd
21 December 2012
US
US: 2013 Macro Strategy The search for yield continues amid LSAPs (large-scale asset purchases) - Table summary of US Asset Strategy Pg4, with equity sector preference via ETFs Pg 5.
In 2013, global demand is likely to remain sluggish with G2 economies continuing to deleverage and kick the can (fiscal woes) further down the road. Nonetheless, we remain constructive of the investment climate in 2013. We think investors should stand ready to shift OWs from fixed income into equities. The cue will come once we see a sustained pick up in yield (correspondingly price decline) in high yield debt, indicative of funds moving out of that space.
We expect the US Treasury yield curve to bear steepen, with long-term bond yields rising faster. Though the rise in rates (for the 10y and above) will be capped by sluggish (albeit improving) US economy owing to fiscal withdrawals and lingering uncertainties on the EZ front.
Fixed Income
The search for yield still goes on, especially after the December FOMC. While corporate as well as high yield debt should continue to outperform, returns will be significantly lower in view of limited price appreciation. Instead, higher coupons will be the main source of return now. We maintain our OWs on high-yield US corporate bonds (HYG), Mortgage Backed Securities (VMBS, MBG) and Treasury inflation-protected securities (TIP).
On balance, low yields in US make fixed income elsewhere (particularly emerging markets) more attractive, especially with risk appetite returning. On account of favourable external balances, monetary policy rates, fiscal stability, foreign exchange rates as well as yields, EM/ Asia local currency bonds offer an attractive value proposition.
Equities
One of our preferred trades is long positions in iShares S&P U.S. Preferred Stock Index Fund (PFF). With equity risk premium likely at multi-decade high, we would have an inclination for equities. But equities as an asset class is still confronted with lingering fiscal uncertainties. Still, a long position in iShares S&P U.S. Preferred Stock Index Fund (holdings comprise of Diversified financials: 40%, Banks: 25%) is in line with our OW on financials and will allow investors to gather a decent dividend yield of around 6% monthly.
We are still are neutral on US equities on absolute terms but upgrade it to marketweight on relative terms. Our preferred sectors are still Healthcare (XLV), Financials (XLF) and Homebuilders (XHB). We upgraded Industrials (XLI) from low conviction to neutral in view of improved global manufacturing activity. In our note, we also detailed (i) Downsides to our “Preferred” call on Financials as well as (ii) Upsides to our “Neutral” call on Technology (XLK).
Currencies From a medium-term horizon, the USD will hold its ground against the EUR as well as the JPY. Apart from growth differentials (which favour the US compared to Europe & Japan), Europe is still mired with structural challenges possibly warranting further monetary easing ahead and JPY will be subjected to downward pressure (with the ruling LDP being vocal about aggressive monetary easing). However, any upside in USD will be tempered by the Fed’s QEternity. Against most Asian currencies (buoyed by excellent macro fundamentals and external balances), we expect the USD to come in a tad weaker.
Thailand
Bangkok Expressway – Company Update Recommendation: TRADING BUY Previous close: Bt32.50 Fair value: Bt36.75 BECL reported daily traffic volume hit a record high at 1.14mn vehicles. Total traffic volume for the first two month in 4QCY12 rose
14.63% y-y while revenue grew 27.75% y-y. BECL will buy shares of TTW from CK in an effort to increase its stakeholding in TTW by 11% to 20.24%. After that, TTW will become
BECL’s affiliate that BECL will be able to book revenue based on equity method instead of dividend which offered lower amount. Traffic volume in the near future appears to increase significantly driven by the government’s first car tax rebate which has spurred a
number of new vehicle registrations in Bangkok. The increase in TTW’s shareholding to 20.24% will help raise valuation in BECL. Our CY13 target price is adjusted up from Bt33 to
Bt36.75 and dividend is expected to increase to Bt1.45/share. We rate BECL a ‘TRADING BUY’.
UOB expected to continue delivering strong results amid the uncertainty in the macro-economy Maintain “Accumulate” rating, based on FY13F BVPS of S$15.52, higher P/B multiple of 1.35X, deriving new Target price of S$20.95 Hengyang – Update Recommendation: BUY (Maintain) Previous close: S$0.197 Target price: S$0.27 New facility impact revenue/margins. IPT: 40% disposal of 2 new projects. Valuation switched to RIV method but discounted by 47% artificial dilution of share base. Execution risks aside, distributable earnings ~ 60% of current share price. Hu An Cable – Update Recommendation: BUY (Maintain) Previous close: S$0.115 Target price: S$0.164 Copper price & project delays continue to impact earnings. Sold more copper rods, underperformed peers. Taiwan & debt-leverage bash share price. RIV values it S$0.203 but reduce target price to S$0.163, artificially diluting share base by unsecured debt. BUY, at S$0.115 or below.
Strategy Views
- Country Strategy: US, 21 Dec / China & HK, 19 Dec / Thai, 19 Dec / ASEAN, 5 Dec - Global Macro, Asset Strategy: Update, 25 Oct
- STI: +0.54% to 3175.5 - MSCI SE Asia: +0.17% to 867.6 - Hang Seng: +0.16% to 22659.8 - MSCI APxJ: -0.07% to 465.4 - Euro Stoxx 50: +0.14% to 2658.3 - S&P500: +0.55% to 1443.7 MARKET OUTLOOK: By Ng Weiwen, Macro Analyst Will we see a 'Santa Claus' rally during the last week of December? Well, it depends whether the US manage to avert its dreaded fiscal cliff. At this juncture, it seemed more of gridlock and stalemate amid a political game of chess. But even if the US manage to avert the year-end fiscal cliff (a boost for near-term growth prospects), it still has to address longer-term fiscal sustainability issues (though that is not the main concern of markets now). At the time of this writing, the House will be voting on Republican House Speaker John Boehner's 'Plan B' -tax increases for those earning more than US$1m (extension of tax cuts for income less than the US$1m threshold), although Obama had previously indicated that he will reject such a plan. Gold tumbled and closed below its 200dma (key technical support). Looking ahead, we expect further downside for gold, albeit in a corrective swing down. With regard to gold, markets "sold the news", booking profits after the Fed announced that asset purchases will continue (to the tune of US$85bn/mth) even after Operation Twist expires by the end of this year, with the asset mix as US$40bn in MBS and US$45bn in Treasuries (long-dated, unsterilised) per month until there is substantial improvement in the labour market. Note we have been negative/underweight gold on absolute/relative terms since Oct. We think the market is re-thinking the USD and thus Gold. Our stance takes into account the following: (i) Apart from growth differentials (which favour the US compared to Europe & Japan), Europe is still mired with structural challenges possibly warranting further monetary easing ahead and JPY will be subjected to downward pressure (with the LDP being vocal about aggressive monetary easing). This lends support to the USD which is generally not great for gold. (ii) From a technical view point, gold failed to break through the strong resistance at $1800 level after forming a third lower high in a possible ‘triple top reversal pattern’ in Oct. Notwithstanding the perceived weaker link in currency debasement, gold is still an important hedge within a portfolio. Major drivers such as (i) easing by major central banks which result in rising inflation expectations as well as (ii) escalating debt levels in the advanced economies (US and EZ) are likely to continue to lend support to gold prices. Gold ETF available for trading: SPDR Gold ETF (O87:SGX or GLD:AMEX) MACRO DATA: In US, we are increasingly seeing signs of green shoots. 3Q12 GDP growth was revised upwards from 2.7% q-q annualised to 3.1%, on account of a modest expansion in personal consumption. Initial jobless claims rose 17,000 wk-on-wk to 361,000 for the week ending Dec 15. The housing market recovery continues to gain traction, which probably also received a boost from re-construction efforts following Hurricane Sandy. Existing home sales rose 5.9% to 5.04 mn saar in Nov. On the manufacturing front, the Philadelphia Fed survey headline surged from -10.7 to 8.1 in Dec. In UK, retail sales stay unchanged in Nov while the market was predicting a 0.4% m-m gain, after the 0.8% m-m fall in Oct. Retail sales excluding auto fuel rose by 0.1% m-m, also trailing the market estimated 0.4% m-m pace, after prior 1.7% m-m drop in Oct. Inflation held at a five-month high of 2.7% in Nov, remaining above the Bank of England’s 2% target. The Bank of England has decided to maintain its target for quantitative easing this month as officials forecast “broadly flat”growth along with continued strains from the crisis in Europe. In Taiwan, export growth surge to 11.12% y-y in Nov, far above the 3.85% pace expected by the market and 3.16% y-y growth in Oct. Export to US rose by 20.33% y-y, compared to 9.32% y-y growth in Oct. Export to China rose by 9.64% y-y, compared to 1.20% y-y pace in Oct. Export to Europe rose by 9.54% y-y, compared to the 2.75% y-y drop in Oct. Taiwan’s economy shows signs of bottoming out, driven by the rising demand from China and US. As announced earlier, the central bank has held the benchmark rate unchanged at 1.875% for a sixth straight policy review meeting. In New Zealand, GDP rose by 0.2% q-q in 3q12, slower compared to the market expected 0.4% q-q pace, after 0.6% q-q growth in 2q12. On y-y basis, GDP grew by 2.0% y-y, slower compared to the market expected 2.5% y-y pace and 2.6% y-y growth achieved in 2q12. A separate report shows that the nation’s business confidence fell to 22.7 in Dec from earlier 26.4% in Nov, indicating a weakening sentiment. The central bank forecasts that growth will slow to less than 2% early next year before accelerating to 3.1% by the end of 2013.
Regional Market Focus
21 December 2012
4 of 16
Singapore The benchmark STI closed higher to 3,175.5 (+0.54%). The 2.0bn shares traded
were worth S$1.3bn. Prior to market opening, Fincantieri announced a Pre-Conditional offering for
STX OSV at S$1.22. The offer price represents a discount of approximately 12.9 percent to the last traded price of S$1.400.
Our top picks for the Singapore Market are SIAEC, SATS & Capitaland. SIAEC & SATS are yield plays that benefit from strong underlying business trends. Capitaland would be a beneficiary of the stabilisation of property prices and bottoming out of economic conditions in China.
Thailand Thai stocks traded in a tight band on Thu. Sporadic bouts of profit taking kicked
in along the way but losses were limited while investors still kept a close watch on progress in US fiscal cliff talks.
The market’s main focus remains on US budget talks to avert steep tax increases and spending cuts early next year. In the latest developments, fiscal cliff talks stalled as US President Barack Obama failed to find common ground with Republicans. What remains to be seen is whether US policymakers could finally reach a compromise on the fiscal cliff with an agreement expected before the end of the month. Even though foreign buying spree continued in the Thai stock market, foreign investors increased their net short positions in derivatives market, seen as a sign of a possible profit taking to come in equities. Yesterday foreign investors held net short positions of more than 2,900 contracts in futures. Trading is also expected to be subdued next week ahead of New Year holidays. Under this circumstance, investors should watch out for an elevated level of volatility and a sporadic bout of short-term profit taking along the way. In our view, more wild swings could be in the cards in the Thai stock market but the SET index is expected to remain stuck in a range of 1370-1385.
In the near term, any rise could give opportunity for investors to book partial profits to reduce risk exposure and then buy back on dips. The strategy is still to be selective in stocks and investors should look mainly for domestic consumption/year-end spending plays.
Resistance on the main index is pegged at 1385-1390 and support at 1370-1365 today.
Close +/- % +/-SET INDEX 1377.40 -1.00 -0.07P/E (x) 17.14P/Bv (x) 2.35
3.23Dividend Yield
STOCK EXCH OF THAI INDEX
900
1000
1100
1200
1300
1400
12/20 3/20 6/20 9/20 12/20
Source: Bloomberg
Indonesia
Most stocks listed on the Indonesia stock exchange finished lower Thursday (20/12), amidst flat to higher closes on Asia markets, following the retreat on US markets overnight. The Jakarta composite index shed 21.043 points, or 0.479%, to close at 4,254.816. The decline included six of the 9 major industry groups, with consumer goods plunged 2.40%, miscellaneous industry lost 2.34%, and construction fell 0.81%. Indonesia’s blue-chip stocks were also mostly down, as the LQ45 index that tracks them trimmed 5.398 points, or 0.74%, to close at 726.356. More than 160 shares declined, 79 shares advanced, and 230 shares stayed unchanged Thursday, where 3.148 billion shares worth IDR 3.198 trillion changed hands on the regular market. Foreign market participants posted net purchases worth IDR 141.348 billion.
The JCI will likely trade higher today, following positive closes on US markets overnight. We expect the composite index to trade with support at 4,229 and resistance at 4,294.
Close +/- % +/-JCI Index 4254.82 -21.04 -0.49P/E (x) 16.67P/Bv (x) 2.79
2.14Dividend Yield
JAKARTA COMPOSITE INDEX
3400
3600
3800
4000
4200
4400
4600
12/20 3/20 6/20 9/20 12/20
Source: Bloomberg
Regional Market Focus
21 December 2012
5 of 16
Sri Lanka The investor positive sentiment seemed to have sustained with the bourse further
appreciating the value of the indices. Both of ASPI and MPI stayed in the green space throughout the day amidst the noteworthy price appreciations and higher turnover of the blue chip counters such as JKH, SPEN, CTC, COMB, BUKI, and LLUB. ASPI index up by 14.70 points to close at 5,527.36. Milanka Index also moved to the same direction to increase by 9.76 points to end the day at 5,030.62. The S&P SL20 also increased 12.87 points.
The reported daily turnover was LKR 811.94Mn and 9.86Mn shares were changed in hand during the day . Today also foreigners became net buyers and recorded net foreign inflow was LKR 532.6Mn extending the year to date total net foreign inflow to LKR 37.52Bn.
Close +/- % +/-CSEALL Index 5527.36 14.70 0.27P/E (x) 11.65P/Bv (x) 1.46
2.72
Dividend Yield
SRI LANKA COLOMBO ALL SH
4500
5000
5500
6000
6500
12/20 3/20 6/20 9/20 12/20
Source: Bloomberg
Australia Today, the Australian share market is set to continue its strong run on Friday, with
Wall Street higher as investors wait for a resolution to budget talks in the US. With no economic news scheduled for release on Friday, trading volumes on the local
market are expected to be light. The local market continued to rise on Thursday, hitting new highs for 2012. The
benchmark S&P/ASX200 index added 16.3 points or 0.35 per cent to 4,634.1.
Close +/- % +/-S&P/ASX 200 INDEX 4634.11 16.33 0.35P/E (x) 17.97P/Bv (x) 1.84
6.07
STANDARD & POORS/ ASX 200 INDEX
Dividend Yield
3800
4000
4200
4400
4600
4800
12/20 3/20 6/20 9/20 12/20
Source: Bloomberg
Hong Kong
The China market swung from gain and lost, the Shanghai Composite rose 0.3 % to 2,168.35 at the close, the highest since Aug. 10. The trading volume also increased 6% d/d. We expected there is some room to further increase especially for the urbanization related sector, such as Natural gas and solar energy.
For the Hong Kong market, due to the hot capital inflow the HSI rose to a record high, the capital swap from low risk sector (such as REIT) to mid- high risk sector, indicating investors are willing to take risk and change to high beta related stock. The HSI swung from 22483 to 22661, rose 36 points to 22659 at market close, trading volume dropped 3.1% d/d to HKD 60.91 billion.
Technically, the HSI is expected to consolidate at around 22,000 with near term support and resistant at 22,600 and 23,000 respectively.
Close +/- % +/-HSI INDEX 22659.78 36.41 0.16P/E (x) 11.64P/Bv (x) 1.52
3.12Dividend Yield
HANG SENG INDEX
17000
18000
19000
20000
21000
22000
23000
12/20 3/20 6/20 9/20 12/20
Source: Bloomberg
Regional Market Focus
21 December 2012
6 of 16
Market News
US The sudden boom in US oil and natural gas production could eventually lead to a shift in relations with the Middle East as the United
States becomes a net exporter of energy, President Barack Obama said in an interview published on Wednesday. The United States is on track to surpass Saudi Arabia as the world's top oil producer by 2017. As early as 2016, the government has said, the US could be a net exporter of natural gas, and the Obama administration is weighing whether to allow exports to a broader range of destinations. (Source: BT Online)
The US economy grew at a 3.1 per cent annual rate in the third quarter, more than previously reported, reflecting the first gain in state and local government spending in three years, more consumer purchases and a smaller trade gap. The revised gross domestic product reading exceeded the highest projection in a Bloomberg survey and compared with a previously estimated 2.7 per cent gain, according to Commerce Department figures released yesterday in Washington. The median estimate of economists called for a 2.8 per cent advance. (Source: BT Online)
Singapore The Personal Data Protection Act (PDPA) will kick in on Jan 2 next year, alongside a newly formed Personal Data Protection
Commission (PDPC) and its advisory committee, the Ministry of Communications and Information (MCI) said yesterday. From the time the Act kicks in, companies will have at least 18 months - until mid-2014 - to comply with the PDPA. This Act, which was passed in Parliament on Oct 15, 2012, is aimed at preventing the misuse of personal information. It will govern how businesses collect, use, protect, correct and provide access to personal data. (Source: BT Online)
More employers here are going beyond statutory requirements to provide family-friendly benefits for their staff, a survey by the Ministry of Manpower found. The survey covered 3,500 establishments in both the private and public sectors. Some 41 per cent of employers surveyed this year offered at least one form of work-life arrangement to employees, including part-time working, flexi-time and staggered hours. Roughly 41 per cent of full-time employees were entitled to at least 15 days of paid leave. While 71 per cent of management and executives were entitled to 15 days' paid leave, only 22 per cent of rank-and-file employees were entitled to the same privilege.
Some Singapore companies are positive about employment prospects in the future even though concerns about rising costs and global economic uncertainties have pulled business sentiment down. Three of the 10 Singapore companies polled in the Thomson Reuters/Insead Asia Business Sentiment Survey indicated that they were positive about increasing hiring in the next six months. One of these Singapore companies was from the property sector here, even though all three Singapore property companies surveyed reflected a neutral stance on business sentiment. A Singapore company from the airline sector also indicated that it was positive about increasing employment opportunities despite its negative outlook on the future. The third Singapore company upbeat about its hiring in the future comes from the resources sector, said Matt Driskill, senior editor in charge of the survey for Thomson Reuters.
Hong Kong
China will increase the movement of yuan exchange rate “appropriately” to handle the new round of quantitative easing by the world’s central banks, the official Xinhua News Agency said in an editorial. The government of Asia’s biggest economy will ensure “reasonable” monetary-base growth and keep sufficient liquidity to allow businesses to obtain loans, according to the editorial, also posted on China’s main central-government website. “The long-run policy of the Chinese government is to increase flexibility of the renminbi, so it’s still an open question whether this will signify any major change in practices,” Mark Williams, chief Asia economist at Capital Economics Ltd., said by phone from London. “The government’s view seems to be now that the renminbi is close to its fair value, there are lower risks allowing more movement.” (Source: Bloomberg)
China’s rapid GDP growth must translate into higher income for ordinary people, Vice Premier Li Keqiang said, as the incoming leadership signals a shift in priorities for the world’s second-largest economy. Li, No. 2 in the Politburo standing committee, said China will lower barriers to private investment and delegate more power to local governments to approve projects, the People’s Daily, the mouthpiece of China’s ruling communist party, reported on its website yesterday. Li was appointed last month and is set to become premier next year. (Source: Bloomberg)
China’s stocks rose, sending the benchmark index to the highest level in four months, as brokerages rallied on speculation financial industry reforms and economic growth will boost profit. Citic Securities Co. climbed 2 percent, extending gains to 12 percent over the past week, after the China Securities Journal reported the government may let foreign funds trade stock-index futures. Real-estate shares advanced for the first time in four days, extending the biggest gains among industry groups in the Shanghai Composite (SHCOMP) Index this year. Huaxia Bank Co. led a slide for lenders after Bank of Communications Co. said banks may report slowing profit growth next year. (Source: Bloomberg.)
Thailand
Foreign investors remained net buyers of Thai shares worth Bt1,650.47mn on Thu. (Source: Bisnews) Thailand’s vehicle output in Nov 2012 hit the highest level in 51 years at 256k units, up as much as 982% y-y, according to the
Federation of Thai Industries (FTI)’s Automotive Industry Club. (Source: Krungthep Turakij) Shares of DNA 2002, the entertainment and media distributor will begin trading on the MAI today at an IPO price of Bt1.90/share.
Indonesia Indonesia's economy next year will face risks of rising inflation due to an increase in the minimum wage, deterioration of external balance
which potentially lowering the exchange rates, and the weakening of commodity prices. The Global Markets Research of Deutsche Bank AG, expected investments and consumptions to be the main drivers of economic growth in 2013. The risk of domestic economic
overheating is reflected by rising inflation, rising property prices, inefficiency of investment, and the decreasing exchange rate. In 2013 strong consumer spending will be one of the drivers of economic growth, which automatically will be followed by higher production and rising wages. (Source: Indonesia Finance Today)
Indonesia's stock market may still have large growth space in the future. President Director of Indonesia Stock Exchange said the growth in Gross Domestic Product (GDP) is one of the accelerating forces of Indonesia’s economic growth that will help drive the domestic stock market’s development. Indonesia is now one of the countries with GDP of over one percent – 1.45 percent to be exact, of the world’s total GDP of USD 78,969 billion. Indonesia is ranked 15 of 19 countries with GDP of over one percent out of the world’s total. (Source: Indonesia Finance Today)
Sri Lanka Sri Lanka's economy grows 4.8-pct in third quarter. According to the State statistics, Sri Lanka's economy has expanded 4.8 percent in
the third quarter of 2012 slowing from 8.5 percent a year earlier with agriculture contracting 0.5 percent. Sri Lanka's gross domestic product was estimated to have grown 8.3 percent in 2011 and is expected to slow to around 6.7 percent this year. Industry has grown by 7.3 percent (down from 10.8 percent a year earlier) and services has grown 4.6 percent down from 7.8 percent. Import trade shrinking 1.2 percent compared with a 14.2 percent growth last year and Export trade has contracted 0.9 percent and domestic trade has expanded 6.1 percent against a 6.7 percent growth last year. Hotels and restaurants continued to grow by a strong 25.3 percent on top of a 27.2 percent growth last year, post and telecommunications has grown 13.7 percent up from 8.4 percent last year. (LBO)
Sri Lanka tourist arrivals overtake Maldives. Sri Lanka's tourist arrivals which rose 16.5 percent to 883,353 in the 11 months to November 2012 from a year earlier, has outstripped that of Maldives which welcomed 866,310 tourists up only 2.4 percent.(LBO)
Sri Lanka lowers economic growth to 6.5% this year. Sri Lanka's Central Bank has lowered the country's 2012 economic growth estimate to 6.5 percent from an earlier 6.8 percent due to its tight monetary and fiscal policies. In September, the Central Bank lowered the 2012 economic growth estimate to 6.8 percent from an earlier 7.2 percent due to the prolonged drought that destroyed the paddy harvest and forced the power sector to use more expensive thermal power due to lack of hydropower capacity. (Colombo Page)
Australia China’s military expansion is changing the balance of power in the Pacific, posing a direct challenge to Australia's strategic weight in the
region. And a draft of next year's defence white paper, obtained by The Australian, also warns that technological advances have reduced the warning time Australia would have against an enemy. "Despite the defensive advantages of our geography, the proliferation of long-range strike and power projection capabilities in the Indo-Pacific region, and emerging capabilities in areas such as cyber, increases the risk of a potential aggressor being able to directly attack Australia with little or no warning time," it says. (Source: The Australian)
Labor’s budget strategy is in disarray with the prospect of deficits for at least the next two years and Wayne Swan conceding that he cannot meet his self-imposed target for returning to surplus. The Treasurer's admission that his promised surplus this year was "unlikely" after a $3.9 billion shortfall in revenue in the first four months of the financial year triggered a political firestorm. Tony Abbott seized on the statement as proof Labor could not be trusted to run the economy. (Source: The Australian)
A paper from the Reserve Bank of Australia backs the view that cutting interest rates is less effective in boosting the economy than it used to be and says this is because more people depend on income from deposits. Lower rates can help the economy as they cut repayments for families with debt. But a research paper entitled Households’ interest-bearing assets” by RBA economists Ellis Connolly, Fiona Fleming and arkko Jääskelä says a growing number of people depend on income from interest-earning assets such as term deposits and so lose out from rate cuts. (Source: Financial Review)