ASEAN Markets to Rally
In China
China’s
economy is expected to stay on a steady course in the second half of this year
after key economic data over the weekend brought some relief to jittery
markets.
The
latest data from the world’s second largest economy show that it is not heading
towards a hard landing as earlier expected.
Still,
analysts warn that the jury is still out, as any potential headwinds from
Europe may hamper overall economic growth globally.
Industrial
output, fixed asset investment and retail sales data paint a more positive than
negative picture of China’s economy.
But
export in May leaped 15.3 per cent from a year earlier, up from April’s rise of
4.9 per cent.
Analysts
said they didn’t expect a rebound so soon but believe the data will boost
investor confidence.
Vasu
Menon, head of Content & Research Wealth Management at OCBC, said: “I think
the general take is China is not headed for gloom and doom. Overall, China is
still continuing to enjoy growth although growth is slowing down. I think
that’s the key message that came out of the data. The market has taken the comfort
on the fact that there’s a slow down and there’s no hard landing.”
Analysts
believe that measures taken by Beijing to support growth are working and the
interest rate cuts announced last Thursday underscored China’s commitment to do
what is necessary to ensure its growth.
They
also expect China to further loosen its monetary policy in the coming months.
This
may include more cuts in reserve requirement ratio and interest rates.
All
these will help prop-up its economy in the second half of the year and achieve
the forecast 8.3 per cent full-year growth.
Experts
also warned that China alone do not determine the prospects of other Asian
economies.
Pu
Yonghao, chief investment strategist at UBS Wealth Management, said: “I don’t
think China will do the big stimulus. Neither is the US in position to do the
same. In that case, I think everybody is trying to find the way to generate
growth… and not to rely too much on external demand.”
Looking
ahead, China’s economy remains vulnerable to the Eurozone debt crisis just like
other global economies.
Singapore
Singapore’s
economy grew by 1.6 percent year-on-year in the first quarter of 2012, slower
than 3. 6 percent growth in the preceding quarter, Singapore’s Ministry of
Trade and Industry announced on Thursday.
On a
quarter-on-quarter seasonally-adjusted annualised basis, the economy expanded
by 10.0 percent, reversing the 2.5 percent contraction in the previous quarter,
it said.
The
improved growth momentum was largely attributable to the upturn in the
manufacturing sector. On a sequential basis, the manufacturing sector expanded
by an annualised rate of 19.8 percent, reversing the 11.1 percent contraction
in the previous quarter.
The
ministry said this turnaround was driven by increased production across all key
manufacturing clusters, notably electronics and precision engineering.
On a
year-on-year basis, however, the sector contracted by 1.0 percent due to a high
base a year ago.
The
construction sector grew by 7.7 percent on a year-on-year basis, an improvement
from the 2.9 percent growth in the preceding quarter.
On a
sequential basis, the sector rebounded by an annualised rate of 32.1 percent,
largely due to increased construction activities in the residential and
institutional building segments.
The
wholesale and retail trade sector contracted by 0.3 percent on a year-on-year
basis, following the marginal growth of 0.9 percent in the preceding quarter.
On a sequential basis, the sector contracted by an annualised rate of 2.3
percent.
The
weak performance was mainly attributable to a decline in re-export volume which
negatively affected the wholesale trade segment.
The
transportation and storage sector continued to see moderate growth, at 3.5
percent compared to a year ago and 1.5 percent ( annualised) on a sequential
basis.
Growth
in the finance and insurance sector moderated to 0.8 percent on a year-on-year
basis, from 3.5 percent in the preceding quarter. On a sequential basis, the
sector contracted for the second consecutive quarter, by 3.4 percent
(annualised), partly due to sluggishness in fund management activities.
In
contrast, the business services sector posted a faster year- on-year growth of
3.5 percent and a strong sequential gain of 12.7 percent (annualised), largely
due to a pick-up in real estate transaction volume.
Supported
by healthy visitor arrivals, tourism-related sectors continued to expand. The
accommodation and food services and other services industries (which include
arts, entertainment and recreation activities) grew by 4.0 and 5.1 percent
respectively, compared to a year ago.
Thailand
Thailand’s
parliament delayed debate on a constitutional amendment bill on Tuesday,
lowering the heat on an issue that has brought rival protest groups into the
street and threatened to reignite political violence.
“I will
not let even a single Thai shed their blood for this issue,” said Somsak
Kiatsuranon, parliament’s speaker, adding the debate would not go ahead during
the current session.
A
parallel debate on a reconciliation and amnesty bill has also been postponed
and preparations were being made to end the parliamentary session, Somsak told
reporters.
The
constitution was drafted under a military government following a 2006 coup that
ousted the then prime minister, Thaksin Shinawatra. The current prime minister,
Yingluck Shinawatra, is his sister.
A
former telecoms tycoon, Thaksin has chosen to live in exile since 2008 to avoid
a two-year prison sentence for corruption, which he called politically
motivated.
His
opponents say the amnesty bill and push to change the constitution are designed
to allow him to come home without serving jail time.
The
royalist “yellow shirts”, who oppose Thaksin, surrounded parliament and forced
the postponement of a debate on the reconciliation bill on June 1. The “red
shirts”, who back him, have said they would protest if the various bills were
shelved.
Malaysia
KLCI
index lost 2.34 points or 0.15% on Tuesday. The Finance Index fell 0.02% to
14125.27 points, the Properties Index up 0.02% to 990.79 points and the
Plantation Index down 0.32% to 8352.5 points. The market traded within a range
of 4.44 points between an intra-day high of 1576.97 and a low of 1572.53 during
the session.
Actively
traded stocks include LUSTER-WA, LUSTER, NICORP, GASMSIA, MTRONIC, AGLOBAL,
PERMAJU, YTL, SKPETRO and JCY. Trading volume decreased to 707.44 mil shares
worth RM1072.72 mil as compared to Monday’s 732.91 mil shares worth RM1373.45
mil.
Leading
Movers were MAXIS (+11 sen to RM6.59), PBBANK (+4 sen to RM13.74), AXIATA (+1
sen to RM5.37), PETDAG (+18 sen to RM21.30) and UMW (+4 sen to RM8.17). Lagging
Movers were GENTING (-8 sen to RM9.50), GENM (-7 sen to RM3.46), BAT (-120 sen
to RM54.80), TENAGA (-4 sen to RM6.44) and IOICORP (-2 sen to RM5.08). Market
breadth was negative with 271 gainers as compared to 370 losers.
Myanmar
Gunshots
rang out and residents fled blazing homes in western Myanmar on Tuesday as
security forces struggled to contain deadly ethnic and religious violence that
has killed at least a dozen people and forced thousands to flee.
The
conflict pitting ethnic Rakhine Buddhists against stateless Rohingya Muslims in
coastal Rakhine state marks some of the worst sectarian unrest recorded in
Myanmar in years. President Thein Sein has declared an emergency and warned
that the spiraling violence could threaten the democratic reforms tentatively
taking shape in Myanmar after half a century of military rule.
On
Tuesday in the regional capital, Sittwe, police fired live rounds into the air
to disperse Rohingyas who could be seen burning homes in one neighborhood.
Hordes of people ran to escape the chaos.
“Smoke
is billowing from many directions and we are scared,” said Ma Thein, an ethnic
Rakhine resident in Sittwe, where dark smoke from numerous fires covered the
skyline into the late afternoon. “The government should send in more security
forces to protect both communities.”
Truckloads
of security forces have been deployed in Sittwe for days, and much of the port
city was reported calm, including its main road. But homes were burning in
three or four districts that have yet to be pacified.
In one,
police fired skyward to separate hundreds-strong mobs wielding sticks and
stones; in another, soldiers helped move 1,000 Muslims by trucks to safer
areas.
Ma
Thein said that some people were running short of food and water, with banks,
schools and markets closed. Some small shops opened early Tuesday to sell fish
and vegetables early in the morning to residents who braved the tense streets.
Vietnam
Vietnam’s
real-estate market is expected to receive a new infusion of money following a
deposit interest-rate cut to 9 per cent from 12-13 percent by the State Bank of
Viet Nam and a subsequent fall in loan interest rates.
This
was the fourth time during the last three months that the central bank has
decided to reduce the dong interest-rate on deposits.
The
central bank’s move yesterday resulted in a decrease in interest rates on loans
with various terms at commercial banks.
At
Vietcombank, last week the bank decided to slash the interest rate of termed
loans to 12-13 per cent.
Experts
said that with such lending interest rates, enterprises’ financial burdens
created from high capital costs would ease significantly, thus encouraging them
to invest in production.
The
lower interest-rate cap of deposits also means that depositing money at banks
was no longer an attractive investment channel.
These
changes have prompted many people to shift from depositing their savings into
the banking sector to other investment channels that they believe will bring
profit in the future.
Real
estate, along with other sectors, is still popular among long-term investors
since property developers, who have been thirsty for capital, have cut prices
by 30-40 per cent.
According
to many real estate offices in HCM City, within one month, the number of
clients who came to buy houses increased significantly, but the number of
transactions was still modest.
Trinh
Xuan Bac in Tan Phu District said that, although the real estate market
remained sluggish, investment in real estate products would bring profits in
the long term.
Previously,
Bac had deposited money at a bank while he waited for real estate prices to
drop even more.
However,
he believes that the current interest rate is not attractive enough to deposit
money in banks and that now is the right time to invest in property when the
prices are low.
Huynh
Anh Minh, director of a real estate company in District 2, said the number of
people seeking to buy land plots and apartments had increased slightly in
recent days, and the number of successful transactions had increased by 20 per
cent compared with previous months.
Investors
were especially interested in land plots in outlying districts such as Binh
Chanh and Cu Chi, Minh said.
Real
estate developers have said that the rapid interest-rate reduction had greatly
affected investors and individuals who want to buy a home. The lowering of the
deposit interest-rate cap to 9 per cent and the banks’ commitments to slash the
lending interest rate to 13 or 14 per cent have led people to believe that the
property sector would warm up again.
Ngo
Dinh Han, director of the ACB real estate trading floor, said the recent
interest-rate reduction had not yet created a significant impact on the real
estate market.
But he
was confident that more money would be pumped into the market, thus improving
its liquidity in the future.
The market’s
real changes would likely take place in the third quarter of the year, Han
said.
Pham
Thanh Mai, general director of the Viet Nam Real Estate Association, said the
domestic real estate market would continue to meet capital-related difficulties
in the near future.
Thus,
real estate developers should use mobilised capital resources effectively and
efficiently.
Mai
said that real estate companies should prepare long-term investment strategies
while reducing their risks to ensure available cash flows for important
projects.
Indonesia
Inflation
in Indonesia picked up to a seven-month high of 4.5 percent in April from a
year earlier but eased slightly in May. Reflecting slowing global demand, April
exports fell to create the country’s first trade deficit in nearly three years.
Yet
domestic demand remains buoyant, with retail sales up 10.5 percent in April and
bank loans growing by nearly 26 percent from a year earlier.
Remarkably,
retailers are confident about sales in coming months, reflecting the economy’s
resilience to global woes that made the country an emerging market investor
favorite in recent years and led rating agencies to lift it to investment grade
credit status.
Nervous
investors, however, have turned to selling rupiah assets this year, making the
currency the worst performer in Asia. The rupiah was little changed after the
central bank announcement at 9,440 per dollar, down 0.5 percent on the day and
4 percent this year.
Bank
Indonesia will soon start issuing dollar term deposits in an effort to relieve
a local scarcity of the US currency which has weighed on the rupiah, and said
on Tuesday it will maintain sufficient market liquidity to stabilize the
currency.
Philippines
Net
inflow of foreign direct investments (FDIs) into the Philippines grew sharply
in the first quarter in what monetary officials claimed was due to the
country’s favorable economic performance.
The
Bangko Sentral ng Pilipinas reported that net inflow of FDIs amounted to $850
million from January to March, up 72 percent from $493 million in the same
period last year.
Gross
inflow of FDIs for the three-month period reached $936 million while outflows
amounted to $86 million.
Economist
Shayne Heffernan of www.livetradingnews.com Market Outlook
Business & Investment Opportunities
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