ASEAN - ASEAN Market Preview, Trimegah, Philippines GDP, F&N, Takaso, Olam

The debt ceiling issue – the same one that provoked a showdown in 2011 that led to a downgrading of the U.S. credit rating – has become intertwined with the fiscal cliff debate over the past three weeks, thanks in part to Obama’s insistence that Congress give him enhanced power to raise the debt limit, which needs to be raised again in the spring.

Senate Minority Leader Mitch McConnell has said in response that not even Democrats would support giving Obama greater flexibility, and the Republican has been pushing for a vote in the Senate to prove it.

When Senate Majority Leader Harry Reid went ahead and scheduled a vote on Thursday, confident that he had enough support to win on a straight majority vote, the Republicans then backed down, with McConnell demanding that 60 votes be required for passage, more than the Democrats can muster.

US Stocks posted minor gains mostly lead by an AAPL rebound.

No new vote was scheduled. While the measure could come up again, it was dead for the moment.

China is set to achieve 8.2 percent annual GDP growth in 2013, higher than the predicted 7.7 growth for 2012, the Chinese Academy of Social Sciences said in its “blue book” report.

GDP growth for next year ‘to beat 2012′

China is set to achieve 8.2 percent annual GDP growth in 2013, higher than the predicted 7.7 growth for 2012, the Chinese Academy of Social Sciences said in its “blue book” report.

Predicted GDP growth for 2012 will be the lowest since 2000 because of sluggish export demand and the subsequent slowdown in industrial production, the report said.

The report also suggested that a decade from now, GDP growth will remain robust and record average annual rates of between 7.5 and 8 percent.

GDP growth was 9.3 percent in 2011 and 10.4 percent in 2010, according to the National Bureau of Statistics.

Malaysia

Takaso Resources Bhd’s shares surged in active trade on Thursday, prompting Bursa Malaysia Securities to issue an unusual market activity (UMA) query.

At the close, Takaso’s share price had jumped 21.5 sen to 47 sen, the highest since Aug 29, 2011. It was the most active with 88.25 million shares done.

Takaso-WB rose 2.5 sen to 16 sen with 64.11 million warrants done.

The FBM KLCI closed up 2.44 points to 1,616.23. Turnover was 881.16 million shares valued at RM1.24bil. Turnover was 881.16 million shares valued at RM1.24bil.

Bursa Securities advised investors to take note of the company’s reply to the UMA query which would be posted on the Bursa Malaysia website.

In the financial year ended July 31, 2012, it posted net loss of RM2.13mil on the back of RM42.65mil in revenue. Its net asset per share was 30 sen.

Singapore

The Olam Vs Muddy Waters battle will resume today in Singapore, Olam had a soft day yesterday but still holds the lead.

Most believe the Muddy Waters accusations to be exaggerated, however Olam must put their best foot forward over the coming weeks. The rights issue was a good move, gaining the support of Temasek was a brilliant move but now the company needs to get them selves out knocking on the doors of banks and funds with the hard core facts that disprove Muddy Waters and brings big buyers back to market.

The trading action so far is neutral to positive in Olam’s favor, but they can not rest on that, they must do more to bring in on market buyers by selling the idea that rights offer is a great investment.

Muddy Waters has his publicity machine in full swing and I am sure we will here more noise from his camp in the coming week

Will Olam collapse? No, Temasek is not your regular investment fund Muddy Waters so easily scare, Temasek have wider responsibility, one to the Sovereign Nation of Singapore and it’s people. Temasek could stand to lose 10′s of billions if Olam were to fail and the Singapore Financial Hub, Singapore Stock Exchange left tarnished. It will not happen.

As far as the technicals go on Olam’s chart there is no doubt it is in dangerous territory, but the key number that Muddy Waters will be pushing for is a break below the rights issue price, under $1.30 and Olam will have trouble.

They must draw a line in the sand there and be buyers of what ever comes to market.

Thailand

We think the Thai group is likely to raise its offer for F&N, since it is keen to expand beyond its domestic market. F&N has a property portfolio worth more than S$8 billion, as well as a business in soft drinks that are popular in Singapore and Malaysia.

“Walking away is unlikely because the Thais recognized that F&N gives them the regional platform for cross-selling opportunities,” said Goh Han Peng, an analyst at DMG & Partners Securities.

“They acquired most of the F&N stake at S$8.88 each, and they might not want to gain just a few percent and sacrifice a long-term opportunity,” he added.

The Thai group is F&N’s biggest shareholder with a 33.6 percent stake, the majority of which was bought from Singapore’s OCBC group for S$8.88 a share in July. It had also received acceptances from F&N shareholders representing a further 1.4 percent stake.

The Overseas Union group’s bid is conditionally backed by Japan’s Kirin Holdings Co Ltd, F&N’s second-biggest shareholder with a stake of around 14.8 percent.

Charoen, through TCC Assets and Thai Beverage PCL, made a $7.2 billion bid in September to buy shares of F&N that he did not own, valuing the Singapore property and drinks company around S$12.8 billion.

The Thais have extended their offer three times from the original Oct. 29 deadline.

A group led by Singapore property firm Overseas Union Enterprise Ltd set a Jan. 3 deadline for its S$13.1 billion ($10.8 billion) offer to buy Fraser and Neave Ltd, as it waits out a Dec. 11 deadline for a rival bid from a Thai billionaire.

The Overseas Union-led consortium last month offered S$9.08 per share for F&N, 2.25 percent higher than an S$8.88-a-share bid from companies linked to Thailand’s third-richest man, Charoen Sirivadhanabhakdi.

The market is expecting a bidding war to unfold between the two, with F&N’s shares holding roughly between S$9.30 and S$9.50 in the three weeks since the Overseas Union group announced its bid — well above both bid prices.

Indonesia

Private equity fund Northstar Equity Partners III has bought a 49 percent stake in Indonesian brokerage Trimegah Securities in a Rp 200 billion ($20.8 million) deal that the company says is a vote of confidence in the nation’s asset management prospects.

Northstar, partly controlled by entrepreneur Patrick Walujo, made the acquisition through its subsidiary, Advance Wealth Finance, the company said in a statement on Tuesday. Northstar bought 1.7 billion shares in Trimegah at Rp 117.7 a share from funds managed by Spinnaker Capital Limited and Spinnaker Asset Management.

“Northstar believes in the strong macroeconomic outlook for the brokerage and asset management business in Indonesia, and sees long-term potential for Trimegah,” Northstar said in the statement. “It is confident that the existing management team will be able to take the company to the next level.”

In September, Northstar, a subsidiary of TPG Capital, had flagged a plan for a separate part of its organization, Northstar Pacific Capital, to buy a 25 percent stake in Trimegah. That plan has been superseded by the latest announcement.

Earlier this week, Trimegah appointed Stephanus Turangan as president director, replacing Omar S. Anwar. Stephanus, who earned an MBA in international business management from Baldwin Wallace University in Ohio, has been in the finance business for more than a decade.

Trimegah, established in 1990 and listed on the Indonesian Stock Exchange (IDX) in 2000, provides equity capital markets, debt capital markets, investment banking and asset management services to both corporate and retail clients from a network of 18 offices in 14 major cities.

Northstar is a private equity firm managing $1.2 billion in committed equity capital dedicated to Southeast Asia with an emphasis on Indonesia. The company claims to have a solid track record of growing the businesses of its investee companies.

Northstar has invested in more than 20 companies across various sectors, including banking, insurance, retail, oil and gas, coal and mining services, oil palm and telecommunications. Northstar has invested close to $2 billion with co-investors in several Southeast Asian countries.

Philippines

The government spent P622 billion in the first 10 months of the year to pay debts, as part of the administration’s commitment to improve the country’s credit profile and secure an investment rating for the Philippines.

Data from the Bureau of the Treasury said the debt payment as of October was P2 billion more than the P619.86 billion spent in the same period last year.

Of the debt payment as of October, P355.36 billion was used to pay principal obligations while interest payments accounted for the rest.

Finance officials said the regular payment of obligations and other debt-management strategies, combined with efforts to shore up tax collection, have allowed the government to significantly trim its debt burden to a comfortable level.

The government’s outstanding debt of P5.2 trillion as of the end of September is equivalent to about 50 percent of the country’s gross domestic product.

The debt-to-GDP ratio, a closely watched indicator of creditworthiness, has been brought down over the years from a peak of 74 percent in 2004, when the Philippines was said to be on a brink of a fiscal crisis.

According to international standards, a debt-to-GDP ratio of a maximum of 50 percent is “manageable.”

Finance officials expect the ratio to fall below 50 percent next year, citing rising revenue collection and debt-management strategies.

Following several positive ratings actions for the country over the past two years, the Philippines is now rated just a notch below investment grade by all three major international ratings agencies, namely Fitch Ratings, Moody’s Investors Service and Standard & Poor’s.

Citing robust economic growth and the declining debt burden, officials said the Philippines was poised to get an investment rating by 2013.

In the third quarter, the Philippines economy grew by 7.1 percent year on year, the fastest in Southeast Asia during the period.

An investment grade is expected to help attract substantially higher amounts of foreign direct investments (FDIs) and thus help the Philippines catch up with its neighbors as far as cornering job-generating FDIs is concerned.

Currently, the Philippines lags behind most of its Southeast Asian neighbors when it comes to FDIs.

Yesterday in Asia

Tokyo ended 0.81 percent, or 76.32 points, to 9,545.16, Sydney fell 0.25 percent, or 11.1 points, to close at 4,509.3 and Seoul gained 0.13 percent, or 2.58 points, to 1,949.62.

Hong Kong ended flat, dipping 21.10 points to end at 22,249.81.

Shanghai shares lost 0.13 percent, or 2.67 points, to 2,029.24 – the index surged almost three percent on Wednesday after hitting a near four-year low earlier in the week.

Taipei fell 0.34 percent, or 25.79 points, to 7,623.26.

Hon Hai Precision fell 0.53 percent to Tw$94.5 while TSMC was 0.31 percent lower at Tw$96.6.

Manila closed 1.34 percent higher, adding 75.92 points to 5,763.64.

Philippine Long Distance Telephone gained 2.76 percent to 2,610 pesos while Philippine Seven Corp., local operator of the 7-Eleven convenience stores, rose 8.33 percent to 78 pesos.

Wellington climbed 0.40 percent, or 16.11 points, to 4,023.36.

Air New Zealand climbed 2.34 percent to NZ$1.31, Contact Energy fell 0.75 percent to NZ$5.32 and Telecom added 0.44 percent to NZ$2.28.

Singapore’s Straits Times Index closed up 0.07 percent, or 2.28 points, to 3,078.20.

Olam International was down 4.29 percent to Sg$1.45 while Jardine Cycle and Carriage gained 2.19 percent to Sg$48.16.

Jakarta ended up 5.77 points, or 0.13 percent, to 4,292.61.

Cigarette maker Gudang Garam rose 0.92 percent to 54,800 rupiah, telecommunications provider Telkom jumped 1.14 percent to 8,900 rupiah, while nickel and gold miner Aneka Tambang fell 2.38 percent to 1,230 rupiah.

Kuala Lumpur shares climbed 2.44 points, or 0.15 percent, to close at 1,616.23.

Malayan Banking gained 0.2 to 9.09 ringgit while Public Bank added 0.3 percent to 15.60. YTL Power International slid 1.3 percent to 1.51 ringgit.

Bangkok rose 9.82 points, or 0.74 percent, to close at 1,339.88.

Coal producer Banpu gained 1.29 percent to 392 baht while energy giant PTT Plc edged up 0.31 percent to 328 baht.

Mumbai’s Sensex index rose 0.49 percent, or 94.94 points, to 19,486.80.

Tata Consultancy Services was down 1.14 percent at 1,282.40 rupees and Jet Airways was down 0.32 percent at 540.20 rupees.

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