Economist and Hedge Fund Manager Shayne Heffernan of www.livetradingnews.com takes a look at Bukit Asam, PLDT, Singapore, CIMB Niaga, PTTEP

Tuesday’s shutdown was the first time weather had resulted in a two-day market shutdown since the Great Blizzard of 1888. Exchanges expect to reopen on Wednesday.

Investors expect heightened volatility when markets do reopen as the two-day closure creates pent-up demand.

Certain sectors are seen as especially tied to the fallout from the storm, which caused major flooding from storm surge during high tides, along with extensive damage from high winds and lashing rain. Disaster-modeling company Eqecat estimates Sandy caused between $10 billion and $20 billion in total economic damages, with $5 billion to $10 billion in insured losses.

Construction sectors as well as retailers such as Home Depot (HD.N) may see a boost from the eventual rebuilding effort, though airlines, which were forced to cancel thousands of flights, could see sharp falls. Insurance companies will also be in focus.

China’s top four banks are on course for their weakest annual profit growth since going public as the central bank’s interest rate cuts in the middle of the year kick in, slicing lending margins.

After posting profit gains of more than 20 percent for years, the so-called “Big Four”, led by Industrial and Commercial Bank of China Ltd (ICBC) , are expected to report growth of as little as 5 percent in 2012, according to Thomson Reuters Starmine.

That would be the slimmest growth since China Construction Bank Corp (CCB) became the first of the four to list in 2005, following the central bank’s interest rate cuts in June and July.

Thailand

PTTEP for this quarter, the total revenue of PTTEP and its subsidiaries was USD 1,422 million (equivalent to 42,837 million baht), a decrease of USD 65 million or 4% compared to the revenue of USD 1,487 million (equivalent to 45,012 million baht) posted in the previous quarter. The sales volume decreased to 264,961 barrels of oil equivalent per day (BOED) compared to the previous quarter’s total sales volume 273,310 BOED. This decrease was the result of lower sales volume of natural gas and condensate from Arthit, Arthit North and Bongkot projects. However, a sales volume of natural gas and condensate from the MTJDA-B17 Project and a sales volume of diluted bitumen from Canada Oil Sands KKD Project increased. In addition, the higher average petroleum sales price this quarter went down to USD 55.37 per barrel of oil equivalent (BOE) compared to the previous quarter’s price of USD 56.28 per BOE.

One of the key progresses in the third quarter was the Bongkot South Field in the Gulf of Thailand. The central processing platform and living quarter platform have been installed successfully while the hook-up and commissioning offshore activities are currently ongoing. The production start up of natural gas at 320 million standard cubic feet per day is expected by the first half of 2012. Another was the development of Montara Field progressing as planned. The expected initial production is still maintained in 2012 as well.

Vietnam 16-1 Project which commenced crude oil production in August this year has increased the average production rate to 31,000 BPD. The production is expected to reach approximately 40,000 BPD by the end of 2011.

Malaysia

CIMB Group Holdings Bhd’s 97.9% indirect subsidiary in Indonesia, CIMB Niaga, has recorded a 30% increase in net profit to 3.10 trillion rupiah (RM986.6mil) for the nine-month ended Sept 30, from the previous corresponding period driven by an increase in total operating income.

This translates to earnings per share (EPS) of 123.42 rupiah, from 95.10 rupiah a year earlier.

Total operating income increased by 25% to 9.59 trillion rupiah as at Sept 30 from a year ago with corporate, commercial, and treasury operations being the largest contributors.

CIMB Niaga president director Arwin Rasyid said that Indonesia’s relatively stable economy had a positive impact on the bank’s performance, particularly in the disbursement of loans.

For the period under review, loans grew by 14% to 138.91 trillion rupiah from a year ago.

“The loans growth was contributed by commercial banking (including syariah), consumer banking, and corporate banking, which grew by 28%, 7%, and 5%, respectively on a year on year basis. They contributed 59.12 trillion rupiah, 38.95 trillion rupiah and 40.84 trillion rupiah to CIMB Niaga’s total loan, respectively” said Arwin in statement yesterday.

A number of CIMB Niaga’s businesses, Arwin said, showed impressive lending and financing growth.

These included personal loans, a product the bank introduced in May last year with such loans reaching 851 billion rupiah by end-September, up significantly by 325% from last year.

Another unit listing strong growth was the syariah financing business, which grew 117% to 6.13 trillion rupiah for the period under review.

“The catalyst to our syariah growth was the loan-to-value policy imposed on conventional banks,” Arwin said.

In addition, another product, rahn, has seen a significant growth of 174% to 85.68 billion rupiah through 77 outlets operated as at Sept 30.

While making the aggressive move to pursue profitable but safer asset classes, CIMB Niaga has successfully improved its asset quality, as reflected in the gross non-performing loan ratio of 2.41% as at Sept 30, down from 2.63% previously.

The bank also saw an increase in total deposits during this period.

The bank’s deposits reached 146.18 trillion rupiah, a 16% increase from previously with the current account savings account increasing by 19% to 62.49 trillion rupiah.

The bank’s financial ratios also showed improvements where CIMB Niaga’s fee income ratio increased from 24.76% to 25.28%, while the cost to income ratio decreased from 49.17% to 47%.

Return on asset was at 3.19%, 30 basis points higher than 2.89% previously, while return on equity shareholder’s fund rose to 20.98% from 19.58%.

With this achievement, CIMB Niaga continues to maintain its position as Indonesia’s fifth largest bank by asset size.

The bank’s total assets as at Sept 30 reached 190.62 trillion rupiah, up 20% from a year ago.

Singapore

Singapore’s Gross Domestic Product growth is likely to come in below potential for the second consecutive year in 2013, says the Monetary Authority of Singapore (MAS).

In its half-yearly Macroeconomic Review, October 2012 released today, the central bank said over the last two years, the global economy has been subjected to frequent swings in sentiment, alternating between bouts of cautious optimism and alarming risk aversion.

In the second quarter and third quarter this year, for instance, MAS said there was a discernible loss in growth momentum, following a temporary rebound in the earlier part of 2012.

The moderation in growth was due to renewed concerns over the recovery in the advanced economies which in turn weighed on consumer and business sentiment around the world.

Mirroring the developments on the external front, MAS said the Singapore economy slowed significantly in Q2 and contracted in Q3, after a strong expansion at the beginning of the year.

While the economy escaped a technical recession, the weakening in the third quarter has broadened beyond the trade-related sectors.

Reflecting the recent slowdown in regional demand, led by China and the newly industrialised countries, the sluggishness in Singapore’s trade-related industries extended to the services sectors which had previously been resilient.

Nonetheless, pockets of strength in the domestic-oriented activities offered some support. On balance, MAS said Singapore’s GDP growth is expected to come in at 1.5-2.5 per cent this year.

According to the review, while the global economy should be relatively less volatile next year, its growth momentum is unlikely to pick up significantly as the deleveraging process in the advanced economies will be protracted.

As such, Singapore could see its second consecutive year of below-potential growth in 2013.

Nonetheless, the level of domestic output should continue to be above its underlying potential, aided by the resilience of the domestic-oriented sectors.

This will provide support to the labour market, which should remain at close to full employment next year.

Philippines

Moody’s Investors Service upgraded the credit ratings of several large private and government firms in the country, saying factors that led to the improved credit standing of the Philippine government have the same positive impact on the financial performance of the companies.

In separate statements issued late Monday and early Tuesday, the international credit watchdog said it raised the credit ratings of the state-owned National Power Corp. (Napocor), Power Sector Assets and Liabilities Management Corp. (PSALM) and Land Bank of the Philippines.

It also said it raised the credit scores of private firms Philippine Long Distance Telephone Co. (PLDT), Banco de Oro Universal Bank, Bank of the Philippine Islands and Metropolitan Bank & Trust Co.

The credit ratings of all the companies mentioned—except PLDT—were raised from Ba2 to Ba1, or from two notches to just one notch below investment grade.

PLDT’s credit rating was raised from Baa3 to Baa2, or from the minimum investment grade to one notch above the minimum.

Moody’s said the upgrades for the companies were all in line with the increase in the credit rating of the Philippine government.

Last Monday, Moody’s raised the Philippine government’s credit rating from Ba2 to Ba1, citing favorable growth of the domestic economy among others factors, which would directly or indirectly affect creditworthiness.

An economy that is growing robustly should help improve tax collection of the government, thereby increasing its ability to service its obligations.

For companies, a favorable performance of the economy means rise in incomes of households that in turn leads to increased consumption of goods and services and, therefore, higher profits.

In the first semester, the Philippine economy grew by 6.1 percent from a year ago, thus registering one of the fastest growth rates during the period. This came while advanced economies are confronted with problems, with the euro zone suffering a recession.

Moody’s also cited favorable macroeconomic factors, such as low inflation and rising remittances from overseas-based Filipinos.

Low inflation is seen to allow individuals to consume more, and to encourage firms to purchase capital and invest more to boost earnings.

The higher credit ratings of the government and the companies in the Philippines are expected to allow them to borrow funds, such as via sale of bonds in the international capital market, at lower costs.

The Philippine government expects to get an investment grade by 2013.

Indonesia

Tambang Batubara Bukit Asam had a decline of almost 8 percent in profit for the third quarter, as falling coal prices amid concern of a global economic slowdown affect the company’s revenue.

Net income at Bukit Asam fell 7.6 percent to Rp 640 billion ($66 million) in the July-September period from the same three months last year. Still, revenue rose 12 percent to Rp 2.93 trillion.

The Jakarta Globe calculated third-quarter figures by subtracting nine-month data from the first half. The company did not confirm this calculation.

In the first nine months, net income at Bukit Asam fell 5 percent to Rp 2.2 trillion, the company said in a statement released on Monday.

Bukit Asam’s revenue rose 12 percent to Rp 8.72 trillion in the same period.

Joko Pramono, corporate secretary at Bukit Asam, said a 15 percent increase in sales by volume to 11.36 million metric tons contributed to its revenue growth. However, the average selling price of coal at Bukit Asam fell 2 percent to Rp 765,934 per ton.

The average selling price continued its decline from where it was in the first half of this year at Rp 785,043 per ton.

Frederick Daniel Tanggela, an analyst with Trimegah Securities, said in a note to client on Monday that Bukit Asam’s net income was lower than expected.

“With these lower-than-expected set of results, we may downgrade our 2012 [earnings] estimates,” he said, noting that Trimegah’s current estimates for Bukit Asam was already 31 percent lower than the consensus expectation.

For the full year, Frederick forecast Bukit Asam’s revenue to be at Rp 11.7 trillion and net income at Rp 2.77 trillion.

Despite the possible earnings downgrade, he said Trimegah would maintain its Rp 18,000 target price for Bukit Asam’s shares, a 15 percent premium on its latest trading price.

“Bukit Asam remains our top pick in the sector given its mine-mouth plants projects,” Frederick said.

Bukit Asam said on Monday that it had set up a joint-venture company in September called Huadian Bukit Asam Power to build two 620 megawatt coal-fired power plants in Tanjung Enim, South Sumatra.

Bukit Asam controls 45 percent of this joint venture and will be the sole supplier for the power plant with 5.4 million to 6 million tons per year for 25 years.

Shares in Bukit Asam fell 2.8 percent to Rp 15,650 in Monday trading on the Indonesia Stock Exchange.

Economist and Hedge Fund Manager Shayne Heffernan of www.livetradingnews.com takes a look at Greece

All indications are that unemployment in Greece will continue to rise. The economy has shrunk by around a fifth since the recession started in 2008 and youth unemployment has pushed far above 50 percent. The economy is expected to enter a sixth year of recession next year. “This is a very dramatic result of the recession,” said Angelos Tsakanikas, head of research at Greece’s IOBE economic research foundation.

Excerpts from the International Monetary Fund (IMF) report were presented to the Eurogroup Working Group (EWG) — junior finance ministers and treasury officials who prepare meetings of euro zone finance ministers.

“It is clear that Greece is off track and there is no chance they will cut the debt to 120% of GDP in 2020 as envisaged. It will be rather 136%, and this would be under a positive scenario of a primary budget surplus, a return to economic growth, and privatization,” a eurozone official, who insisted on anonymity, said.

The Greek banking sub index plummeted 13.59 percent over unresolved recapitalization, tied to last-minute efforts to complete conditions for new debt funding to avert bankruptcy for Greece.

And the main market index was showing a fall of 5.88 percent in afternoon trading after the finance ministry said that Greek banks would not be able to swap their holdings of national debt.

The ministry also said that results for the banks for the second quarter of this year would be delayed by a month until November 30 because of delays in recapitalization.

The ministry made its announcement shortly after a meeting between Finance Minister Yannis Stournaras and the Greek banking federation on Monday to discuss the urgent plight of the banks.

The ministry said that at the meeting, the possibility that Greek banks could swap their greatly devalued Greek bonds for bonds issued by the new European Stability Mechanism “was ruled out”.
Stock market dealers said that this caused banks share to plunge, dragging down the entire Athens stock index.

Greece hopes to help recapitalize its banks, hard hit by the national debt, deep recession and flight of capital, with money from the next installment of rescue funds from the IMF and EU, which still hangs on completion of new reforms.

The critical matter of recapitalizing the Greek banks, being kept going with various forms of funding on especially easy terms from the European Central Bank, is far behind schedule.

Recapitalization hangs on completion of the latest audit and agreement on extra budget action and reforms between Greece and the
International Monetary Fund, European Union and ECB. Without payment of the next installment, Greece faces bankruptcy next month.

The banks took a body blow when Greek debt was restructured under the latest rescue arrangements which forced private holders of Greek debt to take a big loss on the money owed.

Stournaras and Georges Zanias, head of the Union of Greek Banks, met to work out details of how to help institutions hit by the write down of more than 100 billion euros ($130 billion) in privately held government debt in March.

The European Union’s temporary rescue fund has earmarked around 50 billion euros for the task, and much of an EU-IMF lifeline worth another 31.5 billion is also expected to help banks restore solid balance sheets so they can provide more support to the wider Greek economy.

Greece, which has been in recession for five years, must set its financial sector back on its feet to underpin economic growth as the government enacts austerity measures worth 13.5 billion euros that have been demanded by creditors in exchange for their aid.

The German magazine Spiegel reported on Sunday that international auditors, including some from the European Central Bank, would demand that Greece carry out another 150 reforms to its economy, and suggest that holders of Greek debt, often the banks, accept further losses.

Citing an interim version of the findings of the so-called troika of creditors, Spiegel said that Athens would be allowed two more years to carry out the reforms in its programme but that this delay would cost billions of euros.

Greece has completed 60 percent of the reforms already demanded of it, the report says, according to Spiegel. Another 20 percent are being debated by the Greek government, while the rest are outstanding.

Talks between the Greek government and creditors have reportedly stalled on demands for more flexibility in its labor market, a position that is opposed by the left-of-center Dimar party, one of three parties that comprise a Greek coalition led by Prime Minister Antonis Samaras.