Dr Doom says QE3 will barely help

Despite the fact that Dr. Doom hasn’t been the most accurate predictor of the equity market rallies, one still always has to look at the markets from both a bull and a bear perspective.

Consider, first, that the previous QE rounds came at times of much lower equity valuations and earnings

Moreover, fiscal support is absent this time: QE1 and QE2 helped to prevent a deeper recession and avoid a double dip, respectively, because each was associated with a significant fiscal stimulus.

In short, QE3 reduces the tail risk of an outright economic contraction, but is unlikely to lead to a sustained recovery in an economy that is still enduring a painful deleveraging process

Source: The Mint

Sector Update 22.10.12 to 26.10.12

Bank earnings are out and the sector had profit taking in the past week, same goes for telco’s post the 3G auction its been a sell on fact for most market participants. Combine all this with continued rubbish economic news out of Europe (its going to go on and on and on and on for donkey years) and the market had a rubbish week. Only bright light? Agri sector, finally!


 

 

 

 

 

Continue reading Sector Update 22.10.12 to 26.10.12

Two main reasons Thai banks keeping growing

Other than the simple reason that Thai banks corporate income tax rate is dropping from 30% last to 23% this year to 20% next year which has been a boon to their bottom line (remember the thai banking sector is really the only sector on the market paying full corporate income tax rates) the two main reasons for their outstanding growth in the past few years has been the growth of consumer banking and the growth of non-interest fees, especially with insurance as a main growth driver, see below for pretty charts.

  • Consumer loans have more than doubled over the past 7 years, how is this a good thing? They can charge consumers extremely high interest rates capped @ 28%
  • is it safe? Well the majority of consumer loans are secured i.e. mortgages (48%) and car leasing (26%)

  • Income from consumer banking is now 51% of non-interest income

Source: Kimeng

What happened this past week?

Positives:

  • Thai banks earnings continue to do well up on avg 20% thanks to more expansion in consumer banking
  • Fed sits quietly this time
  • US Q3 GDP grows 2% vs est of 1.8%, helped out by .6% contribution from defense spending. Consumption up by 2%.
  • German consumer confidence rises to highest level since Oct ’07.
  • Q3 UK GDP grows 1% q/o/q, above est of up .6% and officially out of recession thanks to the Olympics.
  • Both exports and imports in Hong Kong rise more than est in Sept.
  • Philippines follows South Korea and Thailand in cutting rates in part due to weakening their currencies as they fight the Fed’s debasement of the US$.

Negatives:

  • US Q3 GDP weighed down by inflation as price deflator up 2.8%, 2nd most since ’08.
  • Spanish Q3 unemployment rate rises to 25% from 24.6%.
  • German IFO falls to lowest since Feb ’10.
  • Euro zone mfr’g and services composite index drops to weakest since June ’09.
  • French consumer confidence down 1 pt to 8 month low.
  • UK mfr’g index falls to -23 from -8, lowest June ’10.
  • Japanese exports in Sept fall 10.3% y/o/y. Exports to China down by 14.1%, to Europe down by 21.1%.

Quality, Versatility and Efficiency sweeten appeal of khonburi sugar

Khonburi Sugar Plc (KBS) was established in 1965 by Tawil Tawintermsup under the name Nong Yai Industry Co Ltd in Chon Buri’s Nong Yai district, with a cane crushing capacity of 1,500 tonnes a day. Listed on the Stock Exchange of Thailand in May 2011, today KBS crushes more than 20,000 tonnes of cane daily and counts major companies including Coca-Cola among its customers. Executive director Issara Twiltermsup discusses the company’s strategy and outlook.What is KBS’s business model?

Issara: Helping cane farmers improve

KBS has one sugar mill with a crushing capacity of 23,000 tonnes of sugar cane per day located in Nakhon Ratchasima. We consider ourselves to be a high-quality manufacturer, especially in white and refined sugar, and we operate at very high production efficiency and flexibility in order to service our customers well.

Who are KBS’s customers?

The Thai government sets the domestic quota to ensure there is enough sugar to meet the country’s needs. Domestically we sell about 25% and it goes to customers in the beverage industry such as Coca-Cola. We also sell to the modern trade companies _ Tesco, Big C and MaxValu _ as an original-equipment manufacturer for them and to convenience stores _ Makro and 7-Eleven _ around our factory area. We export the remaining 75% to traders that usually lock up commitments a year in advance.

Continue reading Quality, Versatility and Efficiency sweeten appeal of khonburi sugar

AIS ranked one of the 5 best stocks in Asia ! O__o

Normally one would only read about negative news regarding Thailand on CNN, how far things have come, with AIS being ranked amongst the top five stocks in Asia.

Advanced Info Services: AIS is the largest telecom company in Thailand. Singapore Telecom, the region’s largest carrier, has a 23% stake in AIS. But I like AIS over SingTel because of its improving fundamentals. AIS has pushed net margins up from 14.8% in 2008 to 17.6% in 2011, while SingTel’s margins have contracted from 23.1% to 21.2% in the same time period.

AIS is a solid way to invest in the continued growth of Thailand’s economy, where a larger middle class is emerging. AIS is a more pure play on Asian telecom growth without the baggage of SingTel’s presence across multiple markets.

Source: CNN

Management Trades 15.10.12 to 19.10.12

Notable Transactions

Buy(s):

  • BLAND – K. Anant is still accumulating shares! This run up is nowhere near finished.

Sell(s):

  • ERW – Hmmm ERW is a stock/company I’ve liked for a while and to see one of the founding family members sell off a portion is a slightly disconcerting (especially after analysts began writing about it 2 months ago), could explain why the stock was weak over the past few weeks

Sector Update 15.10.12 to 19.10.12

The agriculture sector has made a good comeback this month, reason why? CPF mainly, it was oversold over the past 2 months b/c of commodity price issues (which have proven to be temp) and I’m hoping for it to continue :) As for the market as a whole, flattish month but still up 0.7%, earnings will dominate life for the next 4 weeks, lets see how the market has a whole performs.


 

 

 

 

 

 

Continue reading Sector Update 15.10.12 to 19.10.12