International Market Daily
www.fnsyrus.com April 11, 2011
Equities Index Close %1 Day %MTD
SET 1,082.69 -0.60 3.36 Escalating concerns about spiraling oil prices
SET50 765.81 -0.67 4.05
Dow Jones 30 12,380.05 -0.24 0.49 MARKET DIRECTIONS
S&P 500 1,328.17 -0.40 0.18 Asian stocks look set to trade sideways today, as investors’ concerns about the
NASDAQ Comp 2,780.42 -0.56 -0.02
impact of spiraling oil prices on their economies have intensified and are likely
to outweigh positive support of energy-related shares. However, market losses
FTSE 100 6,055.75 0.81 2.49
should be limited as attention turns to the upcoming US earnings season this
Hang Seng 24,396.07 0.47 3.69 week with relative optimism. Although an international community has
Nikkei 225 9,768.08 1.85 -0.20 increasingly showed unease over Japan’s handling of the nuclear crisis, it has
Shanghai Comp 3,030.02 0.74 3.48 become a non-issue to stock markets outside Japan as it seems the situation
Weighted Taiwan 8,894.54 -0.08 1.99 should be under control pretty soon.
KOSPI 2,127.97 0.27 1.22
Straits Times 3,187.31 0.49 2.14 FACTORS TO WATCH
Kuala Lumpur 1,557.49 -0.28 0.94 Global issues:
Jakarta Comp 3,741.81 0.30 1.72 • Fighting in Libya intensified NATO has raised its air strikes after Gaddafi’s
Philippines Comp 4,241.01 0.51 4.58 forces increased its attacks on rebels’ bases.
• Japan expects to stop pumping radioactive water into the ocean today,
S&P ASX 200 4,940.60 0.14 2.26
days later than planned. China and South Korea have criticized Japan's
VIX Index 17.87 4.44 0.73 handling of the nuclear crisis, reflecting growing international unease over
MSCI Indices Close %1 Day %1 M the month-long atomic disaster and the spread of radiation.
MSCI AC World 348.72 0.44 3.56 • Clashes in Egypt Protestors clashed with the soldiers after they rejected
MSCI Asia Pac Ex Japan 501.91 0.52 8.98 Army’s order to disperse from Cairo’s main square on Sunday in the biggest
MSCI Asia Ex Japan 589.57 0.26 8.19 rally since Mubarak stepped down. They demanded the Army to move quickly
MSCI EM Asia 487.86 0.17 8.84 to civilian rule and purge deeper of corrupt officials. Meanwhile, unrests in
MSCI Thailand 445.48 -0.67 8.92 other Middle East nations have continued. In Syria, 22 protesters have been
Foreign Fund Flows shot dead by the government forces. Yemen Army killed 4 protestors.
(US Million) Last WTD YTD • Oil surged to a 32-month high on concerns about weak dollar and prolonged
India 86.68 1,515.70 858.29 Libya’s supply cuts. US crude surged US$2.49 (+2.21%) to US$112.79 a barrel.
Indonesia 1,692.52 1,753.91 1,520.91 Brent jumped US$3.98 (+3.24%) to US$126.65 a barrel, a 32-month high.
Philippines 19.45 281.40 262.30 • Weaker dollar The expectations of more interest rate hikes by ECB drove the
Korea 112.62 1,047.81 132.94 euro to a 15-month peak against the dollar as interest rate differentials
Taiwan 572.83 1,710.59 591.29
between that of the US and Europe will from now on continuously widen.
Thailand 27.71 359.45 624.47
• Focus this week will be the first batch of earnings reports for 1Q11,
Vietnam 2.11 19.32 78.55 including Alcoa, JP Morgan Chase and Google. Also, retail sales figures should
Total 2,513.92 6,688.18 4,068.75 show if rising oil prices have had an impact on consumer spending.
Currency Markets Current Previous %change • US stocks fell on Friday as a sharp rise in oil prices ignited worries that
Bt/ US$* 30.04 29.98 -0.20 inflation would derail the recovery. DJIA was down 29.44 points (-0.24%) at
US$/ Euro 1.44 1.45 -0.26 12,380.05. S&P500 dropped by 5.34 points (-0.40%) to 1,328.17. Nasdaq fell
Yen/ US$ 84.83 84.76 -0.08 15.72 points (-0.56%) to 2,780.42.
Yuan/ US$ 6.54 6.54 0.10 • The prospect of a US government shutdown due to the budget disputes is
Commodity Price Current Prev %change temporarily solved after the Congress resolved to allow the government to
Crude Oil 112.85 112.79 0.05 breach the debt ceiling through short-term borrowings under the
GOLD 1,476.50 1,474.10 0.16 Parliamentary approvals.
BDI 1,376.00 1,401.00 -1.78 Japan:
• The Nikkei average is likely to move sideways today on a surge in oil prices,
ZINC 2,534.00 2,452.00 3.34
but buying in reconstruction-related stocks for the rebuilding Japan should
CRB index 368.70 364.48 1.16
Source: Bloomberg *onshore rate • Core machinery orders rose 7.6% YoY but fell 2.3% MoM in February and
are expected to deteriorate sharply in coming months as the March 11
earthquake and tsunami and a subsequent nuclear crisis disrupted supply
chains and production.
This report has been prepared by Finansia Syrus Securities Public • The Japanese government is expected to outline details of its first extra
Company Limited (FSS). The information herein has been obtained budget for disaster relief today with ruling Democratic Party lawmakers
from sources believed to be reliable and accurate; however FSS suggesting the size for the first spending package should be around ¥4tn
makes no representation as to the accuracy and completeness of (US$47bn).
such information. Information and opinions expressed herein are • The BOJ last week kept monetary policy unchanged and would launch an
subject to change without notice. FSS has no intention to solicit ultra-cheap loan scheme for banks in the area devastated by the quake and
investors to buy or sell any security in this report. In addition, FSS tsunami, while cutting its view on the economy, saying it would remain under
does not guarantee returns nor price of the securities described in
"strong downward pressure" for some time.
the report nor accept any liability for any loss or damage of any
• Sharp Corp (6753.T) has suspended work at two domestic LCD panel
kind arising out of the use of such information or opinions in this
report. Investors should study this report carefully in making factories, citing an inability to secure a stable supply of industrial gas in the
investment decisions. All rights are reserved. This report may not aftermath of the March 11 earthquake in Japan.
be reproduced, distributed or published by any person in any • NTT DoCoMo (9437.T) will release late this month a mobile phone that can
manner for any purpose without permission of FSS. Investment in have its SIM lock removed, allowing the handset to be used with other
securities has risks. Investors are advised to consider carefully carriers' networks.
before making investment decisions • IHI Corp (7013.T) is seeking to commercialize as early as fiscal 2015 a marine
wind power station that costs half as much to install as existing models.
Contact person : Warut Siwasariyanon
International Market Dept.
April 11, 2011
• China posts trade deficit in sign of rebalancing China recorded a rare trade deficit in
1Q11 on the back of domestic economic strength and rising commodity prices. In 1Q11,
China imported US$1.02bn more than it exported. In March, China registered a trade
surplus of US$140mn, following a US$7.3bn deficit in February. China's exports were up
35.8% in March YoY, while imports rose 27.3%.
• The MAS is expected to tighten its monetary policy further during its policy meeting on
Thursday, resulting in further appreciation of the Singapore dollar.
• AusGroup, which provides services to resources companies, is exploring a secondary
listing on the Australian Securities Exchange.
• Mapletree Logistics Trust plans to sell its two properties in Singapore for a total of
• Jasper Investments’s subsidiary Jasper Drilling signed a letter of intent with AGR Peak
Well Management whereby Jasper will drill one well for AGR with an option for another
in West Africa. The firm portion of the contract is worth around US$15mn.
• Aztech Group, an electronics and marine logistics company, will record a loss for 1Q11
compared with a profit a year earlier, mainly due to the impairment of vessels owned by
INTERNATIONAL MARKET DAILY
Singapore (OCBC’s reports)
CapitaLand Limited (CAPL – BUY, TP S$4.10): Visits to Chinese showrooms by Eli Lee (65)
6531 9800 email@example.com
Last week, we visited two CapitaLand (CAPL) residential projects in China - the showrooms at
the Paragon (Shanghai) and the Beaufort (Beijing). We believe 116 units at the Paragon (T1-2)
would be launched in May 11 at RMB100–150k per sqm, in line with prices around the area. At
the Beaufort, 220 units (T2) were launched in Dec 10 and there are only 30-40 unsold units
left at RMB 40-43k per sqm. Our visits confirm the picture of slowing volume but stable prices
in these two cities. Given CAPL’s current share price, we reiterate our view that Chinese
residential worries on CAPL are likely overwrought. First, Chinese residential exposure only
takes up around 12% of CAPL’s total book assets (FYE10, ex. cash). In addition, we believe
major projects, such as the Paragon, are well thought-out and likely resilient in a weak
market. We update our assumptions and maintain BUY at a revised fair value of $4.10 (at
parity to RNAV).
Micro-Mechanics (MMH – BUY, TP S$0.67): Encouraging industry data but risks remain by
Wong Teck Ching Andy (65) 6531 9800 firstname.lastname@example.org
We believe that Micro-Mechanics’ (MMH) upcoming 3QFY11 results should be supported by the
still encouraging global semiconductor industry performance. This is because demand for its
products is strongly correlated with chip production. However, the massive 9.0-magnitude
earthquake and tsunami and subsequent aftershocks that struck Japan could potentially have
an adverse impact on MMH in the future as Japan made up ~4.8% of MMH’s revenue as at
1HFY11. For now, MMH updated us that it had not experienced any cancellation or slowdown
in orders. Word from its customers is that business is as usual although the actual fallout from
this catastrophe can only be ascertained at a later date. We continue to like MMH for its
experienced management team as well as its healthy balance sheet (zero gearing). We are
keeping our estimates for now but will be obtaining updates from management along the way
on any possible impact on MMH’s 4QFY11 results. Maintain BUY and fair value estimate of
S$0.67 (based on 12x blended FY11/FY12F EPS). Key risks include liquidity risk and worse-
than-expected developments coming out of this Japan calamity.