Asia - Economic Data & News 01 (Jun 08 - Jun 16)

[kennynah]

HH : thanks for the concise perspective

pls post more

Hopefully i can , might be flying all over the place in the upcoming months.

i think internet is borderless

[winston]

Strategy

Tread carefully round the dragon


- by Chiou Yi CHANG / Seng Wun SONG / Quan Jian CHING

The peak-to-trough for the MSCI Far East ex Japan in post-1997 downturns spanned 17.3 months on average.

The current downtrend has lasted 12 months and more weakness is expected.

We expect false starts and market weakness in 1Q12 but a more positive outlook thereafter.

We expect up to 14% upside for the ASEAN-4 markets in 2012 as a moderate economic turnaround in 2H12 should catalyse equity markets.

We maintain an Overweight on Indonesia and Thailand, Neutral on Malaysia and Underweight on Singapore.

Source: CIMB

[winston]

Really ?

Euro Zone Woes Cannot Sink Asia: Expert
Wednesday, 18 Jan 2012

By: Michael Hasenstab

The recent weakness in asset markets in Asia shows that investors now believe Europe’s woes will put the region at risk. But whether this fear is justified depends on two possible scenarios – a breakup of the euro zone or a European recession.

Those who believe in the first scenario have reason to be worried. A euro zone breakup involving any of the major economies would have an impact worse than the one seen after the Lehman collapse.

We would see a domino effect on sovereign debt defaults and foreign exchange markets would be plunged into chaos by the sudden disappearance of the world’s second most important reserve currency.

However, the second scenario of a painful deleveraging in many European banks and anemically weak European growth is possible. This outcome would be bad for Europe, but not bad enough to undermine the outlook for stronger parts of the global economy, especially emerging Asia.

Here’s why. Europe was not the main engine of the global economy to start off with, and it remains a relatively closed economy. A European recession, especially if deeper and more protracted, would dampen world trade, including Asian exports, but nothing on the scale seen in 2008.

But trade only provides part of the linkage. The more important linkages come via the capital markets. The European Banking Authority’s requirement for banks to reach a tier 1 capital ratio of 9 percent by June of this year will require broad based deleveraging. As raising fresh capital is extremely difficult, one other avenue could be to shed assets, including assets abroad. Asia and other emerging markets, however, should not suffer unduly.

Most foreign banks are present in Asia via wholly owned subsidiaries, which cannot simply take capital back to their parent companies. Many of these subsidiaries are some of the most profitable parts of their businesses, and growing profits provides one important way to recapitalize.

Furthermore, a plan to temporarily exit and re-enter may not be possible, as a foreign company that leaves town during hard times would not be quickly welcomed or permitted back.

Meanwhile, the ECB has launched its version of quantitative easing, which now augments the extraordinarily loose monetary policy of the U.S., Japan and U.K. We now see the most aggressive printing of money in modern times. While this aims to address domestic conditions, capital cannot be contained within national borders.

Abundant global liquidity will continue to flow into Asian markets blessed with strong macro fundamentals—particularly as the region’s currencies still appear largely undervalued.

Also, strong economic and political fundamentals support Asia. Unlike Europe or the U.S., Asia has built up plenty of room to provide fiscal stimulus and to lower interest rates in response to a worsening external environment.

For example, the South Korean government’s debt levels have been slashed over the last decade and international reserves now well exceed levels seen before the global financial crisis.

And the largest countries like China, India and Indonesia can count on a robust and resilient domestic demand to counter external demand weakness.


http://www.cnbc.com/id/46049692

[winston]

Net foreign buying of US$14 bn YTD. Are we now overbought?

We do not believe so. The most-often asked question during our previous week’s visit to Hong Kong investors was whether the current rally was another “suckers rally”.

With Euribor spreads (our proxy for contagion to the European banking system) falling from a high of 100 bps on 27 December 2011 to 74 bps currently, we do not think so.

A key factor contributing to this concern is the degree of net foreign buying in recent weeks.

As Figure 2 overleaf highlights, net foreign buying so far this year has now reached US$14 bn, with Korea associated with US$7 bn, followed by India on US$3.45 bn and then Taiwan with US$2.4 bn.


â–  We prefer to look at net foreign buying as a % of market capitalisation.

While net foreign buying so far this year of US$14 bn looks large particularly given net foreign selling for all of 2011 of US$16 bn, we prefer to look at net foreign buying as a % of market capitalisation.

Figure 1 highlights that on a rolling 12-month basis, net foreign buying has just turned positive at 0.1% of market capitalisation. This compares with 2.2% of market capitalisation in April 2010 and 1.6% of market capitalisation in January 2011.

â–  Taiwan looks oversold and the Philippines overbought on this measure.

On a rolling 12-month basis, the Philippines looks the most overbought at 1.1% of market cap followed by Indonesia on 0.4%. In contrast, Taiwan looks the most oversold at -0.9% of market cap.

Source: CS

[winston]

Is It Time to Look Beyond China and India Stocks? By: Zhi Ying Ng

With economic growth slowing in both China and India and policymakers facing increasing challenges, analysts tell CNBC that investors should look beyond these two countries for profitable returns in 2012.

"Indonesia in particular is the result of strong performance from last year, and concerns right now that some key sectors will be affected if China sees a major slowdown," Gill told CNBC.

"Malaysia might face some political uncertainties ahead of a general election that is expected some time in coming months."

Despite these challenges, Gill is bullish on the region and says there are a number of companies that have returns on equity of 25 to 30 percent.

http://www.cnbc.com/id/46790896

[winston]

Super-rich in Asia to 'reach 2.67 mn by 2015'

The number of super-rich in Asia is set to reach 2.67 million people by 2015, with a total net worth of an estimated $16.7 trillion, Swiss private bank Julius Baer said on Tuesday.

The findings in the bank's 2012 Wealth Report focusing on Asia, indicated that the region's so-called High Net Worth Individuals (HNWIs) were largely immune from the economic ills affecting the rest of the world.

This was because of Asia's economy, which continued to grow thanks to "domestic demand supported by robust job growth", the bank said in a statement.

Announcing the survey, which focuses on wealth creation in 10 of Asia's biggest economies, Julius Baer also said its HNWI estimate for 2015 represented a compounded annual growth rate of 30 percent from 2010 estimates.

China could be home to 1.46 million super-rich by 2015 with assets of $9.3 billion, the report showed.

Indonesia was on course for a 25-percent compounded annual rise in HNWIs -- the highest across Asia, thanks to its "flourishing domestic business environment".

In India, wealth creation was driven by labour moving out of agriculture and by improvements in infrastructure, the report said, while China continued to see growth by redistributing its economic activity.

The report, which also looked at how much it costs to live in luxury in Hong Kong, Shanghai, Singapore, and Mumbai, showed an 8.8 percent rise in prices since the last estimates.

This "shows clearly that the cost of living in luxury in Asia continues to substantially outpace conventional consumer price index (CPI) measures, which stood at approximately 6% for the same time period", it said.


Source: AFP Global Edition

[winston]

Foreign funds seek redemption, cash out on SE Asia By Nishant Kumar

HONG KONG, Dec 18 (Reuters) - A record month of redemption from equity mutual funds invested in Southeast Asia suggests a boom in these markets could be over as money managers look elsewhere for value with their sights set on China and India.

Pricy share valuations in Southeast Asia are steering the funds to cheaper markets after a bull run in which the Philippines and Thailand were some of the best performers in the world.

Investors cashed out a record net $505 million from equity mutual funds investing across Southeast Asia in October, a Reuters analysis of Lipper data shows.

It marked a major turning point. They had been net buyers each month this year up to July, before pulling out a slight $1 million in August and $2 million in September and then cashing out in earnest in October.

Net flows into offshore funds investing in Indonesia, which had attracted about $1 billion earlier in 2012, turned into outflows on a year-to-date basis in October.

"There are a lot of great companies in ASEAN. But as a market, the region is looking pretty fairly valued," said Bill Maldonado who oversees about $80 billion as the chief investment officer in Asia-Pacific for HSBC Global Asset Management.

"We believe very strongly that targeting growth at the expense of a focus on valuation is not a winning strategy," said Maldonado, whose fund company has gone underweight on Southeast Asian shares and overweight on China.

The IBES MSCI China and India indexes are trading 18 percent and 2 percent below their 10-year median forward 12-month price-to-earnings ratio, a measure of relative value.

Similar ratios for the Philippines and Thailand are 25 percent and 11 percent above the median, respectively.

Southeast Asia's relatively small equity markets make them vulnerable to shifts in foreign investment flows. The market capitalisation of the Philippines' share market, for example, is smaller than China Mobile <0941.HK> or PetroChina <601857.SS>.

Of some 60 funds focused on Southeast Asia, the top three by size manage more than half of the total assets under management.

These three funds had net outflows worth about $600 million in the last two months. The biggest, Fidelity Funds-ASEAN, had estimated net outflows of $350 million, Lipper data show.

Southeast Asian markets are unlikely to outperform in 2013 but fund managers do not expect a regional meltdown, citing support from local investors, especially in Malaysia and Indonesia, and relatively strong regional economies.

Flows into pan-Asia funds, particularly exchange-traded funds, would also mean some allocation to Southeast Asia as seen recently with flows into Asia for week ended Dec. 12 at $2 billion, the highest since 2010, data from Citigroup showed.

Source: Reuters

[winston]

Long Term ASIA: OVERWEIGHT

We recommend taking profit in interest rates and domestic economic sensitive stocks within ASEAN that have rallied strongly post the surprise decision to delay Fed tapering. We see this as a temporary reprieve for ASEAN that will not alter, substantially, the fundamental divergences that are beginning to emerge relative to North Asia.

The Fed has given ASEAN policy makers a stay of execution in order to implement structural reform without the added headwind of rising rates and weaker currencies. We are looking for a combination of further fiscal reform (Malaysia, Indonesia), rate hikes/currency stabilizing measures (Indonesia) or for markets to trade outright cheap (together with a reset lower of near term growth and earnings expectations) if we are to take more than a tactically positive stance. Stay long North Asia and sell the ASEAN rally.

Look through the “noise”
Markets have been distracted by political events. A near term resolution should shift the focus back to fundamentals which are gradually improving across the developed world.

Tapering delay short-lived
The premium that defensive stocks and markets within Asia still command (~40-60%) suggests that a strong economic recovery is not necessary to close the valuation gap further. The desire to remain (rotate back) into expensive ASEAN defensive growth/rate sensitive stocks has been fundamentally altered even if the “recovery” falters given the concerns over weak external balances.

Buy consumer discretionary (auto, gaming, retail), industrials (Singapore/Korea capital goods) and selected materials (Australia, China), take profit on REITs, Indonesia and Malaysia.

Five factors for ASEAN underperformance
Domestic demand headwinds are coming from tightening policy, government handouts/spending cuts, high household leverage and inflation and rates upcycles. Structurally, the pluses of the rising middle-income class, low unemployment and infrastructure demand are intact.

Thus far, foreign capital outflows remain moderate (except Thailand), external balances and tapering risks persist and valuations are still not cheap with ASEAN trading at an even higher premium over the APxJ compared to the five-year average. We are Underweight on Malaysia, Indonesia and India.

Source: CIMB

[behappyalways]

Can Asia Survive a Strong Dollar?
http://www.bloombergview.com/articles/2 ... -economies

[winston]

Goldman Sachs' latest Asia-Pacific selected stocks list (Table)

Goldman Sachs released a global equity strategies report for Apirl, with an Overweight rating for the global equity market given the positive profit growth of companies and the expectations that all regions will record return in local currency terms.

The broker listed the selected stocks across the region. (All rated Buy)

HK-listed stocks
Stock / Target Price
CHINA MOBILE (00941.HK) +0.700 (+0.637%) Short selling $406.44M; Ratio 13.586% / HK$113
AIA (01299.HK) +0.100 (+0.186%) Short selling $281.95M; Ratio 11.566% / HK$52
PING AN (02318.HK) +6.000 (+6.104%) Short selling $1.42B; Ratio 26.199% / HK$97
TENCENT (00700.HK) +1.900 (+1.188%) Short selling $880.46M; Ratio 14.831% / HK$150

Other stocks
South Korea - Hyundai E&C(000720.KP)
MediaTek (2454.TT)
State Bank of India (SBIN.IS)
Taiwan - TSMC (2330.TT)
India - Tata Consultancy Services(TCS.IS)
India - Larsen & Toubro(LT.IS)

Source: AAStocks Financial News