Nov 27, 2012

ASEAN - ASEAN Market Preview

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ASEAN, Philippine Peso, ABM Investama, Genting, Global Logistic Properties, Thoresen Thai

U.S. lawmakers have made little progress toward a compromise to avoid the “fiscal cliff,” according to a top Senate Democrat who was interviewed over the weekend.

Indications of progress in talks, or just political willingness to negotiate, were part of the reason why the market rallied last week.

In the other major worry for the market, euro zone finance ministers and the International Monetary Fund made their third attempt in as many weeks to agree on releasing emergency aid for Greece, with policymakers saying a write-down of Greek debt is off the table for now.

Major indexes ended last week with gains of 3 to 4 percent, with the Dow above 13,000 and the S&P above 1,400 for the first time since Nov. 6.

Foreign investors have started rebuilding their China equity portfolios, tempted by low valuations after two years of market underperformance and signs economic growth may be stabilizing.

They have pumped nearly $4 billion into Chinese equity funds in the past two months alone, trying to get in early on what they hope will be a sustained rally.

But sentiment looks to be running ahead of fundamentals. There are clear risk signals for the Chinese market — including sluggish earnings, rising corporate debt and retail investors looking for other opportunities — even if the broader economy gathers strength.

Economist and Hedge Fund Manager Shayne Heffernan of takes a look at ASEAN, Philippine Peso, ABM Investama, Genting, Global Logistic Properties, Thoresen Thai


Global Logistic Properties Ltd. , a warehouse operator majority-owned by a Singaporean sovereign wealth fund, is looking to raise up to $1.5 billion by listing some of its properties in Japan, in what could be the second-biggest initial public offering in that country this year, a person with knowledge of the deal said Friday.

The Singapore-listed company, which is 50.6%-owned by the Government of Singapore Investment Corp., plans to complete the IPO for its Japanese real-estate investment corporation–also known as a J-REIT–by the end of this year, subject to market conditions, shareholder and regulatory approvals, the person said.

The proposed J-REIT IPO, if successful, would be the second-largest in Japan this year after Japan Airlines Co.’s (9201.TO) $8.5 billion flotation in September.

GLP’s plan comes amid a bout of strength in Japan’s property-related stocks, which have outperformed the broader equities market there. The Tokyo Stock Exchange REIT Index is up 27% in the year to date, compared with the Topix index’s 3.2% rise over the same period. The Topix real-estate subindex meanwhile has risen 49% in the year to date.

As part of the deal, GLP plans to sell 30 of its Japanese properties to the J-REIT, which it will partly own and manage, for about 209 billion yen ($2.6 billion), the company said in a Thursday statement.

The company, Asia’s largest provider of modern logistics facilities, will keep Y100 billion in cash proceeds mainly for investments in China and Japan, where it operates a $14 billion portfolio that includes 446 warehouses across 36 cities.


Thoresen Thai Agencies Public Company Limited (TTA) has announced today three deals for its 57.14 per cent owned subsidiary, Mermaid Maritime Public Company Limited (Mermaid). Mermaid is a Singapore-listed leading provider of subsea and drilling services for the offshore oil and gas industry.

In a deal concluded last month, a new joint venture between Mermaid and Zamil Offshore Services Company (Zamil), the largest offshore and marine services provider in the Middle East, was awarded a five-year Inspection, Maintenance and Repair (IMR) contract, worth at least US$530 million over five years (with a two year extension option) by Saudi Aramco.

Mermaid’s share of revenue from the contract is expected to be in the range of 60-70 per cent over five years. The contract calls for full diving services, including air/mixed gas diving, saturation diving, ROV intervention, inspection, and routine offshore field repair and maintenance.

Saudi Aramco has contracted for the deployment of four offshore support vessels and one dedicated saturation dive support vessel. Mermaid will relocate Mermaid Asiana to Saudi Arabia to service the contract. In addition, Mermaid and its Middle East-based subsidiary, Subtech Ltd, will provide up to 110 divers, three remotely operated vehicles, and scuba replacement packages.


Genting Hong Kong Ltd, an 18.4% unit of Genting Malaysia Bhd, will start physical works soon on phase one of its US$1.1bil (RM3.41bil) Resorts World Bayshore , a project that is set to be three times the size of the existing Resorts World Manila.

“Following the success of Resorts World Manila, we hope to do the ground-breaking soon for the first phase of Resorts World Bayshore. We have already signed up Westin as one of the hotels there,” Genting Hong Kong president David Chua said at a roundtable with international media recently.

“But we are not going to rush into it. We will do it our way and not the Macau or Singapore way.”

It is understood that construction is scheduled to begin next year with a target to finish the first phase by 2016 involving 16ha and an initial US$550mil (RM1.7bil) investment.

When completed, Resorts World Bayshore will hold two upscale hotels with 800 rooms, a grand opera that seats 3,000, a mall, and residential towers centred around a casino that is two times larger than Resorts World Manila’s. Both integrated resorts are 20 minutes apart.

Resorts World Bayshore forms part of an ambitious push by the Philippines government and spearheaded by its Philippines Amusement and Gaming Corp to build a 100ha gambling and leisure haven to rival Macau and Las Vegas, dubbed Entertainment City.

The development will take up eight sq km of reclaimed land on Manila Bay.

Four concessions have been granted to private developers including Genting Hong Kong’s joint venture company, Travellers International Hotel Group Inc, to provide 5,000 hotel rooms that can accommodate up to a million tourists annually as well as more than a million sq m of retail, entertainment and gaming.

The now three-year-old Resorts World Manila, which houses three hotels, a mall, theater, cinema and 24-hour casino in the Newport City area near the Philippine capital, was cruise ship operator Genting Hong Kong’s first land-based attraction.

Genting Hong Kong had partnered local magnate Andrew Tan’s Alliance Global Inc, one of the Philippines’ largest conglomerates, to set up the 10ha Resorts World Manila.


ABM Investama, an integrated coal miner and power company, has snared a new contract with a Singaporean trading company that will boost its coal sales.

Through its unit Tunas Inti Abadi, ABM will sell an additional three million metric tons of coal to Avra Commodities over the next five years, the company said in a statement on Thursday.

This brings ABM’s total contracted sales with Avra to 18 million tons through TIA, a subsidiary of ABM’s coal mining unit Reswara Minergi Hartama.

The contract was signed on Tuesday, the statement said. The company did not disclose the value of the contract.

The new coal deal will give ABM some optimism amid a dire coal market.

“TIA coal sales through its contract with Avra Commodities confirm that market interest in our coal remains high. We are optimistic that the coal industry will fully recover soon and will be accompanied by surges in demand,” Harry Asmar, president director of Reswara, said in the statement.

“Despite the challenges in the coal sector at the moment, this new deal is another confirmation of the strong demand for TIA coal,” said Andi Djajanegara, president director of ABM Investama.

Previously, TIA signed a contract with Avra to sell 15 million tons of coal with a level of 4,100 kilocalories GAR (gross as received) or 5,500 kilocalories ADB (air-dried basis) until 2017.

“TIA coal has high demand in Asian markets such as China, Thailand, Taiwan and now the Philippines. In addition to appropriate specifications, TIA coal has a well-protected standard of quality backed by strong company logistics,” said Bob Kamandanu, president director of Avra Indonesia.

The new sales contract is in line with Avra’s commitment to supply 1.5 million tons per year to Huadian Power International Corporation, China’s third largest and the world’s seventh largest electrical development company.

Reswara is aiming to sell 5.5 million tons of coal this year and had reached 3.5 million tons by June.


The peso closed at its highest level in 56 months against the dollar on Monday on the back of rising remittances from overseas Filipinos and improved sentiment on the global economy following reports of rising consumer spending in the United States.

The local currency closed at its intraday high of 41 against the greenback, up from 41.05 on Friday. The last time the peso closed stronger than this rate was on March 7, 2008, when it hit 40.85 against the dollar.

The intraday low settled at 41.025:$1. Volume of trade amounted to $655.09 million, down from $733.7 million last Friday.

Jonathan Ravelas, market strategist for Banco de Oro, said the growing remittances due to the coming Christmas holidays helped boost the value of the peso against the dollar.

Ravelas said expectations that the Philippine economy would post another favorable growth in the third quarter (official growth figures will be announced Tuesday) after expanding by 6.1 percent in the first semester boosted the appetite for peso-denominated securities.

He added that reports on the impending merger between Bank of the Philippine Islands (BPI) and Philippine National Bank (PNB) led to a favorable outlook on the domestic banking sector and boosted the appetite for publicly listed stocks in the country.

“There has been renewed interest [among portfolio investors] in the banking sector. The story of consolidation in the banking industry and optimism on the economic growth performance in the third quarter aided in higher purchases of stocks,” Ravelas told the Inquirer.

Other market players said the rise of the peso, which came with the appreciation of other Asian currencies, came following favorable reports on consumer spending in the United States. Traders said an increase in consumption in the world’s biggest economy has a positive impact on export earnings of countries like the Philippines.

According to a report from a group of US retailers, Americans spent 13 percent more during the last four-day Thanksgiving weekend compared with that in the same period last year.

The Bangko Sentral ng Pilipinas had said that it would continue keeping an exchange rate policy that provided for the exchange rate to be largely market-determined, but allowed the BSP to intervene to prevent a sharp and sudden rise or fall of the peso.

The BSP said the extreme volatility of the exchange rate would be bad for businesses and the economy.

Market players said that were it not for the central bank’s dollar-buying in the market, the peso could have appreciated at a much faster rate.

BSP Assistant Governor Ma. Cyd TuaƱo-Amador also said that the BSP would allow the peso to appreciate if such movement would be fueled largely by foreign direct investments. However, she said the BSP would exercise its flexibility to intervene in the market if the appreciation pressure would come from speculative investments.

Yesterday in Asia

Tokyo rose 0.24 percent, or 22.14 points, to 9,388.94, Sydney gained 0.25 percent, or 11.2 points, to close at 4,424.2 but Seoul ended 0.15 percent, or 2.82 points, lower at 1,908.51.

Hong Kong closed down 0.24 percent, or 52.17 points, at 21,861.81 while Shanghai slid 0.49 percent, or 9.92 points, to finish at 2,017.46.

Taipei was up 81.36 points, or 1.11 percent, at 7,407.37.

Leading smartphone maker HTC added 4.58 percent to Tw$251.0 while Hon Hai Precision was 0.87 percent higher at Tw$92.8.

Manila rose 0.49 percent, or 27.08 points, to close at a record high of 5,579.42.

Philippine Long Distance Telephone added 0.4 percent to 2,510 pesos and Philippine National Bank increased 1.9 percent to 85.90 pesos.

Singapore closed 0.51 percent, or 15.22 points, higher at 3,004.50.

Singapore Telecom rose 0.64 percent to finish at Sg$3.16 and property developer CapitaLand ended 0.59 percent higher at Sg$3.43.

Jakarta ended up 0.61 percent, or 26.361 points, at 4,375.169.

Retailer Ramayana Lestari Sentosa jumped 11.63 percent to 1,440 rupiah and tin firm Timah rose 2.94 percent to 1,400 rupiah.

Kuala Lumpur fell 0.40 percent, or 6.44 points, to end at 1,607.88.

Axiata Group shed 2.0 percent to 5.75 ringgit, while CIMB Group Holdings dropped 1.2 percent to 7.58.

Bangkok gained 0.71 percent, or 9.15 points, to 1,290.85.

Coal producer Banpu jumped 5.35 percent to 394 baht, while Siam Cement lost 0.77 percent to 387 baht.

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