Asian Market Update by Aberdeen Asset Mgnt. (via DollarDex)
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Asian markets fell last week on the back of rising food and oil prices. Thailand and Taiwan led the declines.
With fiscal balances under strain, Taiwan will hike fuel prices, while Indonesia has cut subsidies and, as a net oil importer, will pull out of OPEC. In contrast, Thailand lowered fuel prices. In Thailand, cabinet minister Jakrapob Penkair quit after he was accused of insulting the king, amid growing anti-government street protests in Bangkok. First-quarter GDP rose year-on-year in India, buoyed by construction activity; in Malaysia and Thailand, boosted by a rebound in consumer spending; and in Taiwan, which was aided by strong exports.
Japan's economy appears to be slowing; unemployment hit a seven-month high in April, while industrial production and household spending fell.
Australia: In full-year earnings, Programmed Maintenance's net profits rose on strong performance in the property maintenance division, and Tower Australia Group's interim results benefited from faster sales growth. Meanwhile, Air New Zealand downgraded its earnings expectations for 2008, due to the rising prices of crude oil.
China/Hong Kong: Sun Hung Kai Properties' chairman Walter Kwok will be replaced by his mother, Kwong Siu-hing, to end the internal family feud. Shares of Wing Lung Bank and China Merchants Bank were suspended, as it appeared that the latter was close to acquiring the Wu family's 53% stake in the mid-sized Hong Kong bank.
India: HDFC Bank renewed its agreement with NCR Corporation and ordered 300 new ATMs; Infosys will provide IT solutions for BBVA Banco; and Tata Consultancy Services won a US$100m deal to support NXP Semiconductors' operations. Elsewhere, Taro Pharma terminated its merger agreement with Sun Pharmaceuticals. Meanwhile, ICICI Bank will start a private banking practice, while Bank of Baroda plans to open 10 new overseas branches this year.
Indonesia: First-quarter results were mixed: Ace Hardware's net sales grew sharply, after it opened six more stores during the period. Conversely, Indosat and Telkom's results were disappointing, as they suffered from increased competition and tariff cuts.
Japan: Toyota Motor will significantly expand production for hybrid batteries, in order to meet rising demand for its environmentally-friendly cars. In a surprise move, Rohm will acquire Oki Electric's semiconductor division for ¥90bn.
Malaysia: In corporate earnings news, Oriental Holdings, Aeon Co, Panasonic Manufacturing, Star Publications, Pos Malaysia and Alliance Financial Group all reported satisfactory results in line with expectations.
Philippines: Cebu Holdings will build a third residential condominium in the Cebu Business Park.
Singapore: OCBC Bank plans to raise up to S$1bn through a preference share issue. Bukit Sembawang posted lower fourth-quarter results on lower sales.
Sri Lanka: National Development Bank's first-quarter profits rose an annualised 16%.
Taiwan: Fubon Financial's application to purchase a 20% stake in China's Xiamen City Commercial Bank was approved.
Thailand: Earnings for the three months ended March were mixed: PTT Exploration and Production, Phatra Insurance and Phatra Securities performed well; but results were weak for Ratchaburi Thailand: Siam Makro will divest its Makro Office outlets to concentrate on its core cash-and-carry business.
We hold all the above companies highlighted.
Asian Fixed Income
Regional bond markets were weaker, as investors were gripped by inflation fears. Even though oil prices came off their record highs, governments were forced to raise prices of petrol to control their budgets. Asian currencies continued to weaken against the dollar. The Philippine peso was the worst-performing, while the South Korean won managed to pare some of its losses. Asian dollar credits were largely range-bound. High-yield sovereigns were weighed down by inflation concerns, thus impeding additional bond issuance. Investment-grade credit spreads generally held up well but total returns were affected by the sell-off in US Treasuries.
Aberdeen Asset Management Asia Limited