Economist and Hedge Fund Manager Shayne Heffernan of
www.livetradingnews.com takes a look at ASEAN Markets including Siam Cement,
Philippines, DBS Singapore, Japfa Comfeed, Sapura Kencana
Leading world economies pressed
the United States on Sunday to act decisively to avert the fiscal cliff,
calling it the biggest short-term threat to global growth.
The market’s reaction was muted
to data showing the pace of growth in the U.S. services sector slowed modestly
in October. Data from the Institute for Supply Management showed new orders
slipped, but employment improved.
Market participants may also have
to deal with interpreting economic data that could soon start to show the
impact of Hurricane Sandy on the economy after battering the U.S. Northeast
last week.
The 112th session of the Canton
Fair, China’s largest trade fair, witnessed a decline in both participants and
turnover, according to the event’s closing press conference on Sunday.
Statistics from the fair’s
organizer show that, as of Saturday, 188,145 overseas participants from 211
countries and regions have signed into the fair, said spokesman Liu Jianjun.
The figure was 10.26 percent
lower than the last session, in spring, and 10.5 percent lower than the
corresponding period last year, he said.
The declining number of overseas
buyers at the fair — a barometer of China’s export situation — indicated weak
global demand amid a sluggish recovery, compounded by a more recent eurozone
debt crisis, according to insiders.
And regular customers and exhibitors
comprised a major portion of over 73.3 percent of all participants in the fair,
Liu added.
The fair has also seen a fall in
its turnover of 32.68 billion U.S. dollars, a 9.3-percent decrease compared to
the spring session.
Orders from the traditional
market of European countries and Japan dropped considerably, while those from
emerging markets showed minor declines.
Indonesia
Japfa Comfeed Indonesia, one of
the country’s largest chicken breeders and animal feed producers, posted big
earnings growth in the first three quarters of the year, reflecting national
demand for meat.
In a filing to the Indonesia
Stock Exchange on Friday, the company showed that its net income rose 74
percent to Rp 925 billion ($96.2 million) in the January-to-September period
this year compared to the same period a year earlier. Revenue rose 13 percent
to Rp 13.4 trillion.
Historically, most of Japfa’s
income comes from its poultry division, which includes the production of
poultry feed, day-old chicken breeding and commercial farming.
Ivan Chamdani, an analyst with
Trimegah Securities in Jakarta, said in a note to clients that the company’s
nine-month net income had surpassed his estimate of Rp 886 billion for the full
year. Japfa’s net income reached 97 percent of the consensus of analyst
estimates.
But Ivan said the big growth in
net income was helped by non-operational earnings, such as foreign exchange
gains. The company’s financial statement shows that in the nine-month period,
Japfa posted Rp 19.3 billion in foreign exchange gain, compared to a Rp 2.57
billion loss a year earlier. Its interest income also more than doubled to Rp
38.7 billion.
On a quarterly basis, for the
July-to-September period, net income stood at Rp 344 billion, up 58 percent
from the same period last year, Trimegah’s calculations show.
At the end of last week, the
shares were trading at Rp 4,950, an increase of 29 percent since the start of
the year.
Malaysia
SapuraKencana Petroleum is buying
the rigs business including the full tender rig organisation from Seadrill Ltd
for an enterprise value of US$2.9bil.
Seadrill said on Monday the total
enterprise value included US$363mil in remaining capital expenditures linked to
the newbuilds programme and all the debt in the tender rig business including
existing bank facilities of about US$800mil as Dec 31, 2012.
“Seadrill will, to support this
position, receive a minimum of US$350mil in new shares of SapuraKencana. This
comes in addition to the 6.4% stake that Seadrill presently owns in
SapuraKencana,” it said.
Both companies had entered into a
non-binding memorandum of understanding to combine and integrate both
companies’ tender rig businesses. Seadrill said the enlarged tender rig
business under SapuraKencana would comprise, 16 tender rigs in operation, and
an additional five units currently under construction.
“In addition SapuraKencana would
also be offered the right to be the manager for three further tender rigs which
are not part of the transaction,” it said.
Seadrill said the operating rigs
and the newbuilds were currently contracted under long-term fixed price
contracts with Chevron, Shell, PTTEP, and Petronas Carigali.
“The total order backlog amounts
to US$1.55bil as of end of October 2012. The majority of the operating rigs are
currently deployed in Southeast Asian waters. Of the 15 operating rigs, nine
are barges and six are semi-tenders, which are capable of operating in water
depths of up to 6,500 feet,” it said.
Seadrill said one of the main
objectives of the transaction is to develop a strong leading player in the Far
East market.
Singapore
DBS Group Holdings Ltd ,
Southeast Asia’s biggest lender, posted a 12 percent rise in third-quarter net
profit, beating expectations on a sharp drop in bad debt charges and on
double-digit growth in income from its core lending business.
The bank’s net profit
surprisingly exceeded its second-quarter figure as well, bolstered by strong
fee and commission income amid gains in investment banking and wealth management.
The outlook for Singapore’s
banking sector is challenging as new government measures to cool the property
market will likely slow demand for mortgages, while low interest rates are
expected to hit margins.
Singapore authorities expect GDP
growth this year of between 1.5 and 2.5 percent, down from 4.9 percent last
year and below what they believe is the economy’s trend growth of 3-5 percent.
Philippines
The contribution of exports to
the Philippine economy may shrink in the years ahead given the bleak growth
prospects in major export markets, the Bangko Sentral ng Pilipinas said Monday.
However, it said the Philippines
was expected to hit its medium-term growth targets despite a slowdown in
exports.
The BSP said the crisis that
continued to grip the eurozone and the lackluster performance of the US economy
would continue to drag Philippine export earnings.
The adverse effects of anemic
exports on the economy’s growth are seen to be offset by higher spending by
Filipino households and businesses. As such, the Philippines was still poised
to achieve its growth targets in the coming years, the monetary agency added.
“The export sector remains an
important driver of economic growth and provider of jobs. However, given the
difficult global markets, it would be a big challenge for exports to sustain
its role in the economy,” BSP Deputy Governor Diwa Guinigundo told the
Inquirer.
“[But] domestic demand will be an
important element in a rebalancing effort in sustaining the growth momentum of
the economy,” he added.
Exports account for roughly 30
percent of the Philippines’ gross domestic product (GDP).
The National Statistics Office
earlier reported that the country’s exports fell 9 percent year on year to $3.8
billion in August. Falling export earnings of the Philippines and other
emerging markets were attributed largely to the economic problems of the United
States and the eurozone, two of the biggest export markets.
Exports in August brought the
total for the first eight months of the year to $35.28 billion, up year on year
by 5.4 percent.
Export industry players in the
Philippines said that latest developments indicated that the 10-percent export
growth target for this year was no longer attainable.
The government has set an
economic growth target of between 5 and 6 percent this year, 6 and 7 percent in
2013, and at least 7 percent in the succeeding years.
According to the BSP, inflation
was expected to remain manageable and within the target range of 3 to 5 percent
until 2014. Relatively stable consumer prices allow interest rates to stay low
as well.
The central bank said it believed
an environment of low inflation and low interest rates would encourage people
to spend and businesses to purchase capital and invest more.
It expressed confidence that the
favorable economic fundamentals of the country would help encourage more
foreign direct investments and infusions from local firms.
“Private investments not only in
[infrastructure projects under the] PPP but also in other sectors like
manufacturing, construction and agro-industries could be the other
counterweight to weak [export earnings],” Guinigundo said.
The Public-Private Partnership,
or PPP, is a program in which private firms are invited to invest in public
infrastructure projects.
Thailand
Siam Cement Group (SCG) is
seeking the Philippine government’s support to further promote sustainable
development in the country, a ranking official of the firm said Monday.
Pramote Techasupatkul, chairman
of SCG’s sustainable development committee and president of SCG Cement, said in
an interview that the Philippine government should work closely with the
private sector in establishing sustainable development practices.
Sustainable development is a
global agenda being pushed by concerned companies and is determined by the
resulting balance in the economy, society and environment.
SCG is willing to share its
knowledge in sustainable development with the Philippine government. Manila
officials can then use these guidelines to encourage local businesses to adopt
a sustainable development policy, Techasupatkul said during the SCG Asean
Sustainable Development Symposium held in Bangkok, Thailand.
“In the Philippines, we also need
the support of the government. We can show the authorities [how] we did it,
[but] we also need their support to invite other industries to join us,” the
Thai executive said.
SCG maintains a presence in the
Philippines through kraft paper manufacturer United Pulp and Paper Co. Inc.
(UPPC), ceramic tiles and bathroom fixtures producer Mariwasa Siam Ceramics
Inc., concrete roof tiles manufacturer CPAC Monier Philippines Inc., SCG
Trading Philippines Inc., Green Siam Resources Inc., Green Alternative
Technology Specialist Inc. and SCG Marketing Inc.
Green Alternative is a
joint-venture company involved in waste management. The company turns municipal
solid waste into alternative fuel.
Also, UPPC uses state-of-the-art,
eco-friendly technology in manufacturing its products.
The Dow Jones Sustainable Indexes
considers SCG to be a world leader in the building materials and fixtures
sector.
The Dow Jones index is a benchmark
used by investment funds that incorporate sustainability in their portfolio for
better returns.
In order to ensure consistency
within an organization, SCG established a sustainable development committee to
enact and implement eco-friendly guidelines for each business unit.
Yesterday in Asia
Tokyo fell 0.48 percent,
or 43.78 points, to 9,007.44, Seoul closed 0.55 percent, or 10.5 points, lower
at 1,908.22 but Sydney finished up 0.31 percent, or 14.0 points, at 4,474.1.
Hong Kong fell 0.47
percent, or 104.93 points, to 22,006.40 and Shanghai ended 0.14 percent, or
3.02 points, lower at 2,114.03.
Taipei fell 0.35 percent,
or 25.11 points, to close at 7,185.36.
Leading smartphone maker HTC
dropped 1.52 percent to Tw$194.0 while Taiwan Semiconductor Manufacturing Co.
was 0.44 percent higher at Tw$90.3.
Manila rose 0.61 percent,
or 33.31 points, to 5,457.82.
Metropolitan Bank and Trust
gained 3.16 percent to 98 pesos while Benguet Corp. rose 50 percent to 22.65
pesos.
Wellington lost 0.15
percent, or 5.81 points, to end at 3,908.27.
Telecom fell 1.0 percent to
NZ$2.40, while Fletcher Building added 0.1 percent to NZ$7.00 and The Warehouse
rose 0.6 percent to NZ$3.14.
Singapore was down 0.30
percent, or 9.06 points, to 3,031.69.
Keppel Corp. added 1.89 percent
to Sg$10.80 while Singapore Telecommunications fell 0.63 percent to Sg$3.18.
Jakarta fell 0.83 percent,
or 35.95 points, to 4,302.94.
Cigarette maker Gudang Garam
dropped 2.5 percent to 46,650 rupiah, car maker Astra slipped 1.9 percent to
7,750 rupiah and state-owned lender Bank Negara Indonesia was down 2.6 percent
at 3,700 rupiah.
Kuala Lumpur closed 2.09
points lower, or 0.13 percent, at 1,654.04.
Public Bank lost 1.7 percent to
15.54 ringgit, Bumi Armada eased 1.3 percent to 3.85 and RHB Capital shed 0.8
percent to 7.50.
Bangkok edged up 0.01
percent or 0.10 points to 1,306.70.
Banpu lost 0.26 percent to 389
baht, but PTT Plc gained 0.94 percent to 322 baht.
Mumbai ended flat, closing
up 0.04 percent, or 7.42 points, at 18,762.87.
Drug giant Dr.Reddy’s Labs rose
1.36 percent to 1,794.7 rupees while Jet Airways rose 4.19 percent to 376.6
rupees.
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