Asia - Economic Data & News

Re: Asia - Economic Data & News

Postby winston » Mon Jul 28, 2008 1:53 pm

Goldman cuts Asia growth forecast

Goldman Sachs Group cut its economic growth forecast for Asia, saying exports are weakening and higher interest rates will discourage domestic investment.

"The impressive resilience of Asian exports this far in this cycle is starting to wane,'' Michael Buchanan, Goldman's chief economist for Asia excluding Japan, wrote in a report out today. "Exports to the European Union are weakening quite dramatically.''

Asia excluding Japan will grow 8 percent in 2008, slower than the 8.2 percent predicted previously and also weaker than the region's 9.4 percent expansion last year, Goldman said.

The investment bank also cut its Asian growth forecast for 2009 to 7.6 percent from 8.2 percent.

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Re: Asia - Economic Data & News

Postby winston » Mon Jul 28, 2008 2:52 pm

China, Taiwan may gain among emerging markets, JPMorgan say

China and Taiwan are among emerging markets that may outperform in the second half of this year, JPMorgan Chase said, as inflation concerns ease.

Share prices in China and other countries investors have shunned in the first half may "move rapidly,'' JPMorgan analysts led by Adrian Mowat said.

An Emerging Portfolio Fund Research survey at the end of June showed more fund managers had cut their North Asian holdings, the brokerage said, suggesting a recovery might be around the corner.

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Re: Asia - Economic Data & News

Postby winston » Tue Jul 29, 2008 8:52 am

Fund flows hold first sign
Benjamin Scent
Tuesday, July 29, 2008

Investors should pay close attention to fund outflows in coming months when deciding where to put their money.

With fund flows expected to be volatile, investors may want to keep a close eye on blue-chip property and banking names, which could be hit hardest if global investors start to retreat.

"The period from September to October is quite critical," said Tung Tai Securities associate director Kenny Tang Sing-hing. "Most of the players think after a rebound in August, there may be some heavy retracement in September."

Inflows to offshore Asian funds resumed recently. But this is not going to help ease the selling pressure Asian funds are facing, given their cash weights remain at the low level of 2.5 percent, Citi analyst Elaine Chu said.

KGI Asia chief operating officer Ben Kwong Man-bun said he would not be surprised to see a decrease in the amount of funds flowing into the region.

"Previously, markets were just driven by liquidity created by credit expansion and leveraging. Now we are talking about deleveraging," he said.

Hong Kong has seen US$280.7 million (HK$2.19 billion) leave since the start of the year, according to EPFR Global. China funds have seen a net outflow of US$866.8 million.

"We expect fund flows to become volatile in the months ahead when the bulls fight with the bears," Chu said.

Selling pressure remains, with redemptions from Asian funds continuing to run at billions of US dollars in total this month, she said.

Net sales of mainland stocks last month was the highest in the region. Because they have already hit low levels, such plays in Hong Kong may not see much further selling.

"The sentiment in the China plays is better than some of the traditional blue chips," Tang said.

Blue-chip stocks with a heavy weighting in the Hang Seng Index are the first target of speculative funds flowing in because of their highly liquid nature. So, these blue chips will be hit the most when funds leave.


Resources play such as Aluminum Corporation of China (2600), also known as Chalco, could also see some speculative money pull out because of high volatility in commodity prices.
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Re: Asia - Economic Data & News

Postby winston » Tue Aug 12, 2008 3:37 pm

FUND VIEW-Fidelity SE Asia fund favours Thailand, Singapore

By Kevin Lim SINGAPORE, Aug 12 (Reuters) - Fidelity International's Southeast Asia fund is overweight on Thailand on expectations growing investments and consumer demand will outweigh concerns about the political environment.

Gillian Kwek, portfolio manager of Fidelity's $886 million ASEAN Fund, said Thai firms continue to invest and consumers are still spending, despite protests in Bangkok and uncertainty sparked by former Prime Minister Thaksin Shinawatra's decision to flee to Britain. "There is always political risk in Thailand, it's been so for the last 20 years," she told Reuters on the sidelines of a conference on Tuesday.

"There is a lot of noise but over the next two to three years, we still see lots of growth," she said, citing Siam Commercial Bank and media firm BEC World as her top picks.

Kwek said she liked Siam Commercial because of its strong capital ratios and rising market share.

Fidelity International is the international affiliate of Fidelity Investments, the world's biggest mutual fund manager. As at end-June, the Fidelity ASEAN fund has 15.3 percent of its assets invested in Thailand compared with 13.4 percent for the benchmark MSCI AC Southeast Asian index.

The fund is also overweight Singapore and has 44.4 percent of its portfolio in the city-state's stocks against the benchmark's 42.9 percent.

The Fidelity ASEAN fund is up 4.5 percent in the 12 months to June, excluding initial fees, compared with a 0.6 percent fall in the benchmark.

According to Kwek, Fidelity favours large Singapore firms such as Singapore Telecommunications and the city-state's banks, which provide defensive options in an uncertain environment.

The strong Singapore dollar is another plus for Fidelity, which measures its performance in U.S. dollar terms.

Although SingTel reported a surprise 5.3 percent fall in first quarter net profit on Tuesday , Kwek said the Singapore telco remained one of her top picks because of its exposure to the region's fast-growing mobile phone markets.

"Telcos are more defensive in this current environment. You don't have to invest as much to get economies of scale, and capex (capital expenditure) costs are going to fall because of technological improvements," she said.

As for DBS Group , United Overseas Bank and Oversea-Chinese Banking Corp , she said the Singapore lenders are the best capitalised in the region.

Interest rates in Singapore have not risen much, she added, which helps put a cap on the bank's running costs.
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Re: Asia - Economic Data & News

Postby winston » Fri Aug 15, 2008 4:14 pm

Morgan Stanley cuts Korea, India, Turkey equities

Aug 15 (Reuters) - Morgan Stanley downgraded Korea, India and Turkey equities and upgraded Israel, Hungary and Egypt as part of its global emerging markets equity strategy.

The investment bank downgraded Korea to "equal-weight" from "overweight," and India and Turkey to "underweight" from "equal-weight."

It upgraded Israel to "overweight" from "equal-weight," and Hungary and Egypt to ""equal-weight" from "underweight."
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Re: Asia - Economic Data & News

Postby winston » Mon Aug 18, 2008 4:10 pm

Asia Brings Share Value Unfathomable to Vanguard (Update1)
By Michael Tsang and Chen Shiyin

Aug. 18 (Bloomberg) -- Vanguard Group Inc., Fidelity Investments and Capital Group Cos. are finding stock bargains in India, Taiwan and Japan that would make Benjamin Graham proud.

The world's three largest mutual fund managers are buying after a bear market erased $2.3 trillion from Asian stocks this year and cut the value of State Bank of India, Hon Hai Precision Industry Co. and Toyota Motor Corp. by 25 percent or more. The declines, spurred by the fastest inflation in a decade and rising borrowing costs, reduced share prices in the MSCI Asia Pacific Index to 13.9 times profit, the cheapest in at least 13 years and the lowest versus the Standard & Poor's 500 Index since 2002, according to monthly data compiled by Bloomberg.

Earnings growth, which along with low prices provides the margin of safety recommended by Graham and David Dodd in their 1934 investment manual ``Security Analysis,'' averages 5 percent among Asian companies at a time when profits in the U.S. are falling amid the worst housing slump since the Great Depression.

``We are looking to add and that includes most of the Asian markets,'' said Virginie Maisonneuve, who co-manages the $18.4 billion Vanguard International Growth Fund and is the head of global and international equities at Schroders Plc in London. ``People are going to start going back and saying, `Wait a minute. I still can find companies that are growing.' We're starting to see some very attractive valuations.''

The fund increased its holdings in Mumbai-based State Bank of India since February and bought more shares of Toyota and Tokyo-based Honda Motor Co. in the second quarter, according to Vanguard's Web site and data compiled by Bloomberg. Maisonneuve declined to comment on the fund's holdings.

Hardest Hit

Asian stocks plummeted the most since global equities climbed to a record in October, losing 27 percent. In the U.S., the S&P 500 dropped 16 percent, while the Dow Jones Stoxx 600 Index of European companies declined 25 percent in dollars. All 14 markets in the MSCI Asia Pacific Index, except Singapore, tumbled 20 percent or more this year.

The declines accelerated as the biggest increase in commodity prices in three decades fueled concern rising import costs will squeeze profit margins and force central banks to raise borrowing costs. Exports slowed in Japan, Singapore and Taiwan after the collapse of the U.S. mortgage market saddled the financial industry with more than $500 billion in losses and put the world's largest economy on the brink of a recession.

Asian financial firms, which have accounted for less than 5 percent of global credit losses, slid 25 percent this year, the biggest drop among 10 MSCI Asia Pacific industry groups. The decline reduced prices to 12.6 times average earnings, 77 percent below financial stocks in the S&P 500. The difference is the biggest on record going back to 1995.

Throwing Out the Baby

State Bank of India, the nation's largest by assets, suffered the worst first-half retreat since at least 1991, and touched a three-year low of 6.4 times earnings in July. The bank last month reported a 15 percent increase in first-quarter profit as fees from selling mutual funds and insurance in the world's second-fastest growing major economy almost tripled.

``There's been some throwing out of the baby with the bath water,'' said David Darst, the New York-based chief investment strategist at Morgan Stanley's wealth management unit, which has $734 billion in client assets. ``A lot of them out there have managed to avoid, through management prudence or geographical distance, some of the worst of what's happened.''

The Vanguard International Growth Fund increased its holdings in so-called covered warrants of State Bank of India expiring in January 2009 to 2.43 million at the end of the second quarter, from about 2 million at the end of February, according to the company's Web site.

Value Traps

Capital Group's $8.76 billion American Fund Insurance International fund purchased 75,480 global depositary receipts in State Bank of India in the second quarter, according to data compiled by Bloomberg.

Gordon Tan at JPMorgan Private Bank isn't convinced Asian stocks are a buy even at historically low prices. He says investors risk falling into so-called value traps, especially in markets like Japan, where the economy shrank at a 2.4 percent annual rate last quarter and more than 60 percent of the 4,004 listed companies have market values that are less than their net assets, data compiled by Bloomberg showed.

``While valuations in Japan are looking pretty reasonable, there's no growth catalyst,''
said Tan, Singapore-based global investment specialist who helps oversee $400 billion. ``With the economy still sliding, it's not a market we want to focus on.''

Investor Exodus

Overseas investors led the exodus. In six of eight markets in Asia that disclose the data, foreigners sold more shares than they purchased this year. They're set to withdraw funds from India, Taiwan and Japan for the first time this decade, according to data compiled by Bloomberg. Collectively, overseas investors have pulled out $69.4 billion, the most on record.

Some fund managers are still finding bargains among Asian technology shares, which were battered as the U.S. slowdown raised concern demand for consumer electronics will decrease.

The $2.24 billion Fidelity Advisor Diversified Stock Fund increased its shareholdings of Hon Hai, which makes iPhones and iPods for Apple Inc., by 17 percent to 3.5 million shares as of the end of June. The Taipei-based company lost as much as a third of its market value this year, driving its price-earnings ratio to 10.97 last month, the lowest since at least 1997.

Its PEG ratio, which compares the stock's price-earnings ratio with projected profit growth, fell to 0.4 last month based on estimated earnings, a third the average of S&P 500 technology companies. The lower the number, the cheaper the stock.

`Dominant Companies'

``There are a number of dominant companies that will come out of this just fine,'' said Dan Chamby, 48, who runs the $53 billion BlackRock Global Allocation Fund in Plainsboro, New Jersey. He declined to identify individual Taiwan companies because his fund is currently buying some of their shares.

Automakers are also attracting investors after some of the steepest share declines in over a decade. Capital Group's $59.7 billion American New Perspective Fund bought 2.8 million shares of Toyota in the second quarter, boosting its holding by 42 percent to 9.49 million shares, data compiled by Bloomberg show.

Toyota, the world's biggest automaker by value, had its biggest first-half retreat since 1995. That helped pushed prices to 8.25 times the Toyota City, Japan-based company's earnings, the cheapest since at least 1999, data compiled by Bloomberg showed. Honda, which Maisonneuve's fund bought, after declining as much as 30 percent this year, traded at a price-earnings ratio of 6.88 in March, the lowest in at least a decade.

``If you love the stock and it's down 50 percent, put a little bit in,'' she said. ``If it goes down further, add a little bit more.''
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Asia - Economic Data & News

Postby ishak » Tue Aug 19, 2008 9:39 pm

Asian stocks at 2-year low as credit fears bite
Reuters, 19 August 2008

Asian stocks fell to a two-year low on Tuesday, led by exporter shares, on fears the US government will have to bail out the top mortgage finance companies, further destabilizing the financial sector.

Wall Street tumbled and shares of Fannie Mae and Freddie Mac fell to the lowest in nearly 20 years after an article in Barron's said a government bailout could wipe out existing holders of the two companies' common stock with other asset holders also suffering losses.

The news seemingly put the bottom in the worst housing crisis since the Great Depression further out of reach, and confounded those expecting a US recovery, at a time when the euro zone and Japanese economies are shrinking and could be lumbering toward recession.

Worries about the global economy bolstered government bond prices, while the dollar was largely steady -- taking a break from its sharp gains over the past two weeks.

"There's a bit of a down draft from what happened in the US overnight and commodities are a bit weak, too," said Michael Heffernan, a strategist and senior client adviser at Austock Securities in Sydney.

Japan's Nikkei share average tumbled 2.65 percent to a one-month low. Shares of index heavyweights Fast Retailing Co Ltd, a clothing retailer, and Canon Inc were among the biggest drags.

The MSCI pan-Asia equities index fell 1.7 percent to its lowest since July 2006, down 22 percent this year, while the MSCI's Asia-Pacific ex-Japan index fell for a third straight session to a 17-month low.

South Korea's Kospi fell 2.15 percent, led down by consumer technology giant Samsung Electronics Co Ltd and the world's fourth-largest steelmaker Posco.
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Re: Asia - Economic Data & News

Postby winston » Wed Aug 20, 2008 10:07 pm

Coast isn't clear for Asian equities

But bright spots in the fraying landscape remain as some funds retain value amid market turbulence, reports GENEVIEVE CUA

ASIAN equities have suffered a severe beating this year, thanks to a crescendo of negative factors such as slowing growth, inflation concerns and heightened risk aversion. But the coast is not yet clear, say fund managers and strategists.

Inflows into Asian equity funds as tracked by EPFR Global continue to shrink. In the current year to August 13, Asia ex Japan funds have seen net outflows of roughly $30 billion - almost exactly the net inflows it attracted for the whole of 2007.

Says a chief investment officer of a fund management group: 'Valuations in the medium term look attractive ... but not ultra-cheap. My sense is that while there are good opportunities, markets could go lower because the environment is slowing and there is no clarity on when it will pick up.'

Fidelity's associate investment director Catherine Yeung last week told an audience of advisers that there is evidence that fund managers' cash holdings have increased. 'In the long term, growth is definitely there, especially for the market leaders. Valuations have come off, but they could get cheaper.'

An August 15 report by Citi Investment Research points to the continuing downward revision in earnings forecasts for Asia ex Japan stocks. But while 2008 forecasts have been revised, 2009 expectations still look too high. 'Our call remains that EPS (earnings per share) growth will be negative come year-end, and on a year-on-year basis, remain so until the second half of 2009.'

'The region is very well positioned to take over economic and market leadership from the developed markets.'

- Lee King Fuei, Schroders' Asian equity fund manager

Still, there are bright spots in the fraying landscape. There are funds, for example, that manage to preserve value at a time when their peer group losses may be between 20 and 35 per cent in the current year. Asian equity fund manager Lee King Fuei of Schroders, for one, is investing with a view to high dividend yields, a strategy that has historically proved rewarding.

A study that he has done of the dividend yield strategy over more than 10 years has found that there were three periods when the strategy under-performed. One was just before the Asian financial crisis; the second was just prior to the bursting of the tech bubble. The third was more recently in 2007, which alerted him to market irrationality.

This led him to take on defensive positions, which he says has helped in the current slide. The Schroders Asian Equity Yield fund has chalked up a negative return of 12.7 per cent in the current year to August 8, compared with its peer group average loss of 25 per cent. It is the top performing fund in the Asia Pacific ex Japan sector in the current year-to-date, based on Lipper data.

Says Mr Lee: 'The typical dividend yield strategy is based on value investing and on fundamentals as well. Companies that are willing to share shareholder value creation via dividends are rewarded. But when the market doesn't reward companies for doing that, but starts to reward companies that promise earnings three to five years down the road, that are unpredictable, that's indicative of a very irrational way of investing.'

The fund screens for stocks with a high dividend yield, but more than that, the research team crunches through fundamental data to forecast earnings and dividends in the future. The portfolio has a forward dividend yield of between 4.5 and 5 per cent, and turnover tends to be low.

Mr Lee is optimistic about Asia in the medium to long term. 'The region is very well positioned to take over economic and market leadership from the developed markets. To benefit from this kind of change, long term investors should be positioned in Asia. People with a long term view should use this correction to build their positions.'

He adds that his study of the dividend yield strategy finds that after a bubble has burst, the strategy tends to deliver strong and sustained outperformance over a long period. 'That is driven by the fact that when people are not focused on this asset class, the inefficiency is quite high, and there is an opportunity to take advantage of the inefficiency.'

Another Schroders fund that has outperformed is the Asia Total Return fund, which is marketed to accredited investors. The fund returned 2.5 per cent in the current year, against its peer group loss of 22 per cent. It is the top fund in the Asia Pacific fund sector.

The fund, says Mr Lee, was launched in November last year, and aims to beat the three month USD Libor. The fund is able to hedge long stock positions through derivatives or stock index futures.

When the fund started last November it was just 25 per cent invested. 'We couldn't find enough opportunities or stocks that we believed would give us an absolute positive upside over three to five years.'

Today, the fund has a net long position of 65 per cent. 'We have been very defensively placed and hedging market risk until a couple of months ago. As stocks started to look more attractive, we have been buying.'

In an August 4 report on emerging markets strategy, BCA Research said technical indicators suggest that the bear market is in a late stage. 'However, the factors that are required to propel share prices sustainably higher are not yet fully in place ... Growth momentum has crested globally and is downshifting. Therefore, we cannot expect an acceleration in profit growth to boost share prices.'

BCA lists a number of conditions that would suggest that it is time to hold stocks: A further correction in oil prices; falling bond yields in G7 and emerging markets; a recovery in 'early cyclicals' such as technology and semiconductors; and a halt in the freefall of US and European financial stocks.
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Re: Asia - Economic Data & News

Postby winston » Sat Aug 23, 2008 8:17 am

Here's to Hoping Nouriel Roubini Is Proven Wrong: William Pesek

Aug. 22 (Bloomberg) -- It's hard to forget your first Nouriel Roubini experience.

Fifteen months ago, I watched an Asian Development Bank audience in Kyoto squirm and fidget as the chairman of Roubini Global Economics LLC gave his bleak, contrarian opinion that the global financial system was about to hit a wall.

``After listening to you, I feel like I need a drink or a hug or something,'' I joked to him afterward. Roubini gets a lot of such quips, and as his direst predictions about a once-in-a- lifetime bust in the U.S. economy come ever closer to reality I find myself hoping he'll be proven wrong.

Hats off to Roubini. How many times in the past year did we hear people say ``this credit crisis is containable'' or ``the worst is over'' or ``subprime-loan problems won't spread to other asset classes,'' and the like?

Roubini didn't waver, and he took considerable flack for it.

That said, Asia had better hope Roubini's economic fears are proven wrong. Ditto for the gloomy predictions of Oppenheimer & Co. analyst Meredith Whitney, who recently was toasted on the cover of Fortune magazine.

Perhaps the magazine-cover curse will kick in and the attention being tossed at Roubini, profiled last week by the New York Times, and Whitney means the worst really is over. Of course, they might say it's just a matter of public perception catching up with the reality -- a financial system in tatters.

Subprime System

One reason to think Roubini won't be proven wrong is his argument that the problem isn't the subprime mortgage market -- it's a subprime U.S. financial system. Fixing the problems sending financial contagion around the globe will require tough decisions in Washington and reforms in Wall Street's securitization system. And that's hardly happening.

How far Wall Street's reputation has fallen since the collapse of Bear Stearns Cos. was revealed by the Aiful Corp. saga. Japan's biggest consumer lender by assets threatened to sue Lehman Brothers Holdings Inc. in June after analyst Walter Altherr called Aiful ``arguably insolvent'' in a report.

Lehman retracted the report earlier this month, yet not before Japan's investment community had a good chuckle. The fourth-largest U.S. securities firm, with a share price down 79 percent this year, calling another institution shaky? Talk about the proverbial pot calling the kettle black.

`Muddle Along'

Even the best-case scenario for Asia looks gloomy. As analysts like Mark Matthews of Merrill Lynch & Co. in Hong Kong point out, the next few years will see Asia-Pacific markets excluding Japan ``muddle along.'' Wasn't it just a year ago that investors were claiming Asia had decoupled from the U.S. economy?

The reasons Asia should hope Roubini eats some crow are many.

For one, the region remains too reliant on exports. While Asia made some progress boosting domestic demand, slowing U.S. growth will chip away at living standards from Seoul to Jakarta. For another, emerging markets may slide further if global investors become even more risk adverse.

Mark Mobius, executive chairman of Templeton Asset Management, may indeed be right to call the decline in emerging- market stocks ``overdone.'' Still, a deep recession in the world's biggest economy could accelerate those losses.

Asia central banks amassed trillions of dollars of currency reserves in recent years, a move that won't seem illogical if Roubini is proved correct. That cash will be needed to provide insurance to global investors that the region won't see a repeat of its 1997 crisis.

U.S. Contagion

A decade ago, Asia was exporting financial contagion potent enough to send the Dow Jones Industrial Average down hundreds of points here and there. These days, the U.S. is returning the favor, just as Diwa Guinigundo, deputy governor of the Philippine central bank, predicted to me a year ago. Hats off to Guinigundo; he was absolutely right.

Where do we stand now? ``One year later, in the U.S. the lack of improvement in the money markets is still taking center stage,'' Roubini said yesterday. And the Federal Reserve, on top of cutting its benchmark interest rate 325 basis points, continues to expand its liquidity facilities ``without significant impact on credit creation.''

That's affecting emerging markets. For example, Roubini said, ``the global credit crisis has exacerbated home-grown liquidity squeezes in countries like South Korea.''

The question is how Asia would weather further weakness in the U.S. China's boom has provided some cushion, yet officials in Beijing are busily working to tame inflation. It also would be a mistake to think a U.S. recession won't slam China.

So here's to Roubini for having a good couple of years of economic prognosticating. And here's to hoping he'll be less right in the future. Asia's prosperity may depend on it.
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Re: Asia - Economic Data & News

Postby ishak » Mon Aug 25, 2008 2:16 pm

Listed Asian bourses brace for headwinds
Poor trading volumes, fall in new listings set tone for weaker second half
Business Times, 25 August 2008

The sharp drop in stock market volumes and listings have left stock exchanges in the Asia-Pacific reeling with an earnings slump in the quarter ended June 30.

These bourses, whose lifeline is in market volumes, are set for more headwinds as risks in market and economic conditions are heightened.

'They are all tarred with the same brush,' said Hugh Young, Aberdeen Asset Management Asia's managing director. 'If things turn around, shares of these exchanges will be excellent plays but the market obviously hasn't turned around.'

Mr Young noted that while the balance sheets of these exchanges remain strong, they fall victim to market conditions far more than any other corporates.

Over the past two weeks, most listed stock exchanges in the region - Singapore Exchange (SGX), Bursa Malaysia and Hong Kong Exchanges & Clearing (HKEx) - reported earnings decline. Poor trading volumes and fewer capital raisings are now setting the tone for a weaker second half.

Asia's largest listed bourse, HKEx posted a 6 per cent fall in earnings for the second quarter to HK$1.32 billion on flagging trading volumes and investment income.

Its rival SGX reported a 48.7 per cent slump in net profit to S$90.4 million for its fiscal fourth quarter from a year ago as income from securities business fell on lower trading volumes and fewer listings. For the full year ended June 30, SGX's net profit rose 13.4 per cent to S$478.3 million.

In a sombre tone, Bursa Malaysia said last week that it expects to miss its full-year targets, after its profit plunged 56 per cent to RM28.6 million (S$12 million) in the second quarter ended June.

It noted that the weak performance of the Malaysian market - which has fallen more than a fifth so far this year - will likely persist. Though these exchanges are beefing up their derivatives business, this market segment is not able to fully pick up the slack from the equities side as yet. Their diversification efforts into new products will also take some time, analysts say.

Prompted by the poor showing, analysts have scaled back their earnings projections. Morgan Stanley and Credit Suisse cut their earnings forecasts for SGX by 5 per cent for FY09. Credit Suisse reduced its earnings forecast for HKEx by 2 per cent each for FY08 and FY09.

Bursa saw the biggest earnings downgrades, with CIMB-GK shaving its estimates for FY08-10 by 10-20 per cent and downgrading its rating from 'trading sell' to 'underperform'. Citi cut its earnings forecasts for Bursa by 8 per cent for FY08-10.

Bucking the trend, Australian Securities Exchange (ASX) - Asia-Pacific's second-largest listed stock exchange - posted a 2.7 per cent rise in net profit for second-half ended June 30 to A$178.5 million (S$218.5 million) and a 16.9 per cent jump for its full fiscal year to A$365.9 million. This prompted Credit Suisse to raise its earnings forecasts for ASX by about 4 per cent for FY09.

But ASX had joined its regional rivals in predicting a challenging year ahead.

'The earnings of the ASX generally hold up better than other Asian exchanges as volumes are less volatile due to the mix of business,' said Andrew Mattock, a fund manager with Henderson Global Investors. ASX listings are predominated by energy and resources-related plays.

Exchanges, due to their monopoly status, generally trade on large price-to-earnings premiums. But they offer an attractive proposition at the right price, Mr Mattock said.

'Unfortunately the markets in Asia are going through a de-rating in terms of the price people are willing to pay for companies,' he added.

That de-rating is being seen in their share-price slump. Year-to-date, the market values of SGX, HKEx and Bursa have more than halved while ASX shed some 43.6 per cent in its market cap. Most are still trading above bear market lows of 2001 and 2004, with the exception of Bursa which was only listed in 2005.

With further volatility seen in their earnings, that element could continue to be reflected in their share prices.

Stocks in Asia-Pacific, as measured by the MSCI AC Asia-Pacific ex-Japan index, have fallen 27 per cent this year. IPO volumes in Asia ex-Japan totalled $22.8 billion in the first half of the year, a 42 per cent drop from the year- ago period, according to Thomson Reuters.

'We expect markets to remain erratic but ultimately weak as investors discount a protracted US recession, slowing regional growth, earnings disappointment and general uncertainty persists,' Morgan Stanley said in a report.
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