SINGAPORE - Southeast Asia is becoming one bright spot in a world of gloomy
corporate earnings, with strong profit growth powered by a population of 600
million people increasingly willing, and able, to spend in their fast growing
economies.
Southeast Asian companies are
expected to report on average a 16.2 percent increase in quarterly profit from
a year ago, Morgan Stanley said in a report this month.
That compares to dreary corporate
profits in China and others in the Asia-Pacific region, like Australia, that
depended heavily on the now weakened buying power of major economies such as
China.
"Economic growth in the
region is expected to be underpinned by domestic consumption, induced by fiscal
spending, private investments and an increase in wages. This trend is notable
in Thailand, Indonesia, Malaysia and the Philippines," said Ronald Chan,
head of equities in Asia at Manulife Asset Management.
"The domestic demand story
is structural in nature and has yet to run its course."
The Morgan Stanley report pointed
to strong performances by companies including Indonesia's top gas distributor
Perusahaan Gas Negara, Thailand's top energy firm PTT Pcl and Philippine
conglomerate San Miguel Corp.
The robust profits contrast with
the story in China, once the darling of emerging-market investors.
Last week, Chinese telecom
equipment maker ZTE Corp flagged a third-quarter loss that would erase its
profit earlier in the year. China Life Insurance Co Ltd also issued a profit
warning.
Analysts have cut estimates for
Chinese companies in the MSCI China index every month since June 2011,
according to Thomson Reuters I/B/E/S. September's revisions were the worst in
2-1/2 years after grim first-half report cards.
After years of heady growth,
export-orientated economies that benefited from Chinese demand are now
suffering as orders from China slide.
"We've seen some atrocious
earnings numbers from Hong Kong, and Taiwan, and Australia as well. This
clearly reflects either a China link or a developed market link," said
John Woods, Citi Private Bank's chief investment strategist for Asia Pacific.
SOUTHEAST ASIA LEADS THE WAY
Companies in Indonesia, the
Philippines and Thailand rank high on StarMine's Analyst Revision Score, which
measures changes in analyst sentiment. Australia, China, South Korea and Taiwan
fare poorly.
Investors have taken note.
China, whose economy has slowed
for the seventh consecutive quarter, is the worst performing stock market in
Asia. By contrast, Thailand and the Philippines are the top performers as they
double the gains on broad regional and world indexes.
And while analysts are cutting
full year earnings estimates, the smallest cuts are reserved for companies in
Southeast Asia, partly because of the region's strong private consumption, data
from Thomson Reuters StarMine shows.
Analysts have reduced estimates
for Thailand by just 0.2 percent over the past month, by 0.3 percent for the
Philippines and by 0.4 percent for Malaysia.
By contrast, they lowered
estimates for Australia by 2.9 percent, by 2.5 percent for both Taiwan and
South Korea, and by 1.9 percent for China.
The operating environment is much
stronger in countries like the Philippines, Malaysia, Indonesia, or even India,
Citi's Woods said.
Indonesia attracted a record $5.9
billion in foreign direct investment in the third quarter, signalling that
Southeast Asia's biggest economy remains a hot favorite despite a dismal global
outlook and concerns about corruption and corporate governance.
Companies in the region are also
aggressively chasing acquisition targets within Southeast Asia to boost growth.
A Singapore-listed hotel and
property firm backed by Indonesia's Lippo Group said last week that it may
launch a takeover bid for conglomerate Fraser & Neave Ltd, challenging a
$7.2 billion offer by companies controlled by Thailand's third-richest man.
Anshuman Daga
Reuters
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. Since we are currently changing the platform of www.yourvietnamexpert.com, you may contact us at: sbc.pte@gmail.com, provisionally. Many thanks.
No comments:
Post a Comment