Despite challenges, cross-border issuance likely to revive as market improves in 2010
Moody's Investors Service says in a new report that issuance in the Asian structured finance market will rise moderately in 2010, as investor interest makes a comeback, and the price gap between investors and sponsors narrows.
"The performance outlook for Korean RMBS and auto loan ABS is stable.
Korean residential mortgage loans have a recovery rate of over 99%, while the performance of Korean auto loans has been stable, with no marked deterioration during the credit crisis," says Jerome Cheng, a Moody's Vice President and author of the report.
"The performance outlook for Korean credit card ABS and Singaporean CMBS is negative. The negative outlook on Korean credit card receivables is based on potential deterioration in cardholders' payment ability. Korean household debt is at an all-time high, and a rise in interest rates would
hurt cardholders' ability to pay down unsecured credit card receivables.
For commercial properties in Singapore, the oversupply of office and industrial space and a weak economy are adding pressure to both vacancy and rental rates," says Mr. Cheng.
However, Moody's sees no rating implications on the rated transactions due to asset performance. "Given the level of subordination and the structural mechanisms present, we do not expect any rating actions, even for the two asset classes on which we have a negative outlook," says Mr. Cheng.
In its outlook for activities in 2010, the rating agency says that Korea, the largest securitization market in this region, will issue some cross-border ABS, RMBS, and covered bond transactions. Investor interest is evident, given that Korean receivables did not deteriorate much during the crisis. Rather, they have all improved, as Korea's economy started to improve.
In its review of 2009, Moody's notes that the fallout from the credit crunch significantly impacted the issuance from the Asian structured finance market -- with the exceptions of the domestic markets in Korea and India.
Korea's domestic and cross-border issuance in 2009 was USD33.0 billion, 87.6% of the region's total USD37.7 billion issuance. Korea's domestic market was dominated by project finance securitizations and RMBS, while its cross-border market generated all the foreign currency-denominated issuance in the region, including Asia's first covered bond transaction.
Moody's rating actions in 2009 were mainly downgrades related to changes in counterparty ratings and the change in Korea's local currency bond ceiling. "The downgrades were not driven by pformance deterioration in the underlying receivables. If anything, the performance of these receivables is well within our expectations," explains Mr. Cheng.
Moody's also changed its assumptions for three transactions, as perceived levels of risk increased. Two of them are deferred payment transactions in Singapore where the underlying residential property buyers' default risk had increased and the property values had declined. The third one is a Real Estate Investment Trust (REIT) in Taiwan where the REIT had acquired a new property through increased leverage. The ratings of these three transactions were subsequently downgraded.
The report discusses Moody's expectations for the Asian structured inance market in 2010, examines the outlook for cross-border Korean RMBS and ABS and Singaporean CMBS, summarizes issuance activities in 2009, and discusses collateral performance and the rating downgrades in
2009.
The report, "Asian Structured Finance: 2009 Review and 2010 Outlook" can be accessed at www.moodys.com.
Sunday, February 7, 2010
Momentum likely to fade in second half of 2010, making stock picking increasingly important
Asian markets rallied strongly last year, spurred by government stimulus measures and liquidity-driven buying. While this trend is likely to carry through into the first half of 2010, Aberdeen Asset Management believes that the second half of 2010 will be altogether more challenging.
The key risks are in the timing of governments as they exit unorthodox stimulus strategies and what happens as monetary policy tightens across the region in response to rising inflation, according to Adam McCabe, Senior Portfolio Manager on the fixed income.
He believes that the consequences of any mis-step could be huge and predicts policy-makers would rather wait too long than do the opposite and risk a ‘double-dip’ recession. Easy money is leading to the risk of asset bubbles, for example in various property markets across Asia, and elsewhere across emerging markets as policy makers maintain loose monetary policy.
Although rising interest rates are outwardly negative for bonds, Aberdeen sees selective opportunities because not every development appears priced in.
“We are long Asian currencies generally, with any short term periods of USD strength providing an entry point for our preferred trades in the Korean won, Indonesian rupiah and Indian rupee. We also find relative value in Asian investment grade bonds versus US and European investment grade bonds. And Asian banks in particular look cheap versus European and US banks, leading us to take an overweight position on financials,”
Mr Adam summarised.
His theme of greater discrimination was echoed by Kwok Chern-Yeh, Investment Manager on the Asian equity team, who says stock-picking will gain in importance as buying momentum fades.
“We’re seeing investors start to pay more attention to company fundamentals. It’s really not yet clear how the recent pick-up in earnings may have been flattered by the inventory bounce and cost-cutting. Valuations suggest the markets are due for a pull-back. The trouble is the weight of money coming in, or waiting to do so, remains considerable and may lead to new highs in the near term.”
Mr Kwok Chern-Yeh affirmed Aberdeen style was to focus on defensive, cash rich names with strong franchises. BHP Billiton and Hindustan Lever, for example, were new additions to its model regional portfolio in 2009.
Mr.Chaikaseam Vadhanasiripong , Head of Funds Distribution, Aberdeen Asset Management Company Limited said “Overall Aberdeen anticipates more subdued asset market returns in 2010 versus 2009 because global recovery will be constrained by G3 delevering, ensuring that export levels won’t return to pre-crisis levels for a long time. It foresees growth in emerging market economies leading that of developed economies over the next three to five years, and Asia in turn leading emerging markets
The company aims to offer an outstanding pure asset management business that is well-diversified by territory, channel, and product. Our investment expertise is the management of client portfolios in equities and fix income from a fundamental perspective. This forms the basis of our core investment competence. Our business direction is to build long-term relationships with our clients and partners through strong performance and first-class client service”
For Thailand, Aberdeen will continue to reinforce our position as the leader in equity funds, especially FIF funds, by providing superior products, services, and direct accessibility to our fund managers from around the globe. Also, we've launched several services such as Monthly Investment Plan, Multi-redemption accounts, Internet Online Channel redesign to provide more convenient and to enhance clients' experience.
Mr. Chaikaseam added “For new business opportunities, we intent to develop our investment capability and distribution platforms in order to enter new markets and segments where we may have a competitive and sustainable edge. Last but not least, we will continue to educate investors on fundamental-driven long term investment approach via articles, interviews, mass media, and public seminars.”
About Aberdeen Asset Management Group
Aberdeen Asset Management manages over US$232.2 bn* of third party assets from its offices around the world. At Aberdeen, asset management is our sole business. We operate independently and only manage assets for third parties, allowing us to focus only on their needs, without conflicts of interest. Our clients access our investment expertise across the three asset classes: equities, fixed income and property. We package our skills in the form of segregated and pooled products across borders. We invest worldwide and follow a predominantly long-only approach, based on fundamentally sound investments – we do not chase market fads.
The key risks are in the timing of governments as they exit unorthodox stimulus strategies and what happens as monetary policy tightens across the region in response to rising inflation, according to Adam McCabe, Senior Portfolio Manager on the fixed income.
He believes that the consequences of any mis-step could be huge and predicts policy-makers would rather wait too long than do the opposite and risk a ‘double-dip’ recession. Easy money is leading to the risk of asset bubbles, for example in various property markets across Asia, and elsewhere across emerging markets as policy makers maintain loose monetary policy.
Although rising interest rates are outwardly negative for bonds, Aberdeen sees selective opportunities because not every development appears priced in.
“We are long Asian currencies generally, with any short term periods of USD strength providing an entry point for our preferred trades in the Korean won, Indonesian rupiah and Indian rupee. We also find relative value in Asian investment grade bonds versus US and European investment grade bonds. And Asian banks in particular look cheap versus European and US banks, leading us to take an overweight position on financials,”
Mr Adam summarised.
His theme of greater discrimination was echoed by Kwok Chern-Yeh, Investment Manager on the Asian equity team, who says stock-picking will gain in importance as buying momentum fades.
“We’re seeing investors start to pay more attention to company fundamentals. It’s really not yet clear how the recent pick-up in earnings may have been flattered by the inventory bounce and cost-cutting. Valuations suggest the markets are due for a pull-back. The trouble is the weight of money coming in, or waiting to do so, remains considerable and may lead to new highs in the near term.”
Mr Kwok Chern-Yeh affirmed Aberdeen style was to focus on defensive, cash rich names with strong franchises. BHP Billiton and Hindustan Lever, for example, were new additions to its model regional portfolio in 2009.
Mr.Chaikaseam Vadhanasiripong , Head of Funds Distribution, Aberdeen Asset Management Company Limited said “Overall Aberdeen anticipates more subdued asset market returns in 2010 versus 2009 because global recovery will be constrained by G3 delevering, ensuring that export levels won’t return to pre-crisis levels for a long time. It foresees growth in emerging market economies leading that of developed economies over the next three to five years, and Asia in turn leading emerging markets
The company aims to offer an outstanding pure asset management business that is well-diversified by territory, channel, and product. Our investment expertise is the management of client portfolios in equities and fix income from a fundamental perspective. This forms the basis of our core investment competence. Our business direction is to build long-term relationships with our clients and partners through strong performance and first-class client service”
For Thailand, Aberdeen will continue to reinforce our position as the leader in equity funds, especially FIF funds, by providing superior products, services, and direct accessibility to our fund managers from around the globe. Also, we've launched several services such as Monthly Investment Plan, Multi-redemption accounts, Internet Online Channel redesign to provide more convenient and to enhance clients' experience.
Mr. Chaikaseam added “For new business opportunities, we intent to develop our investment capability and distribution platforms in order to enter new markets and segments where we may have a competitive and sustainable edge. Last but not least, we will continue to educate investors on fundamental-driven long term investment approach via articles, interviews, mass media, and public seminars.”
About Aberdeen Asset Management Group
Aberdeen Asset Management manages over US$232.2 bn* of third party assets from its offices around the world. At Aberdeen, asset management is our sole business. We operate independently and only manage assets for third parties, allowing us to focus only on their needs, without conflicts of interest. Our clients access our investment expertise across the three asset classes: equities, fixed income and property. We package our skills in the form of segregated and pooled products across borders. We invest worldwide and follow a predominantly long-only approach, based on fundamentally sound investments – we do not chase market fads.
Friday, February 5, 2010
Global Corporate And Sovereign Rating Actions Hit 23-Year High Of 1,560 In 2009, Article Says
Standard & Poor's Ratings Services downgraded 1,298 global issuers and upgraded 262. The 1,560 total rating actions is the most taken in a single year since our series began in 1987, including the previous record high of 1,207 downgrades and 222 upgrades in 2001, said an article published today by Standard & Poor's Global Fixed Income Research, titled "Global Corporate And Sovereign Rating Actions: Fourth-Quarter 2009 (Premium)."
Of the rating actions in 2009, 62% were based in the U.S., 16% were based in Europe, 15% were based in the emerging markets, and 8% were based in the other developed region (Australia, Canada, Japan, and New Zealand).
"With the exception of the emerging markets, each region saw their downgrade ratios peak in the first quarter and then taper off before hitting lows for the year in the fourth quarter," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "The emerging markets' downgrade ratio peaked in the second quarter at 97%."
Of the industries that had more than five rating actions globally in 2009, finance companies, automotive, banks, sovereigns, forest products and building materials, capital goods, and media and entertainment all had downgrade ratios of 90% or higher for the year. Health care performed the best in 2009, with a downgrade ratio of only 33%--less than half the average across all sectors.
This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers to RatingsDirect on the Global Credit Portal at www.globalcreditportal.com and to RatingsDirect at www.ratingsdirect.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Of the rating actions in 2009, 62% were based in the U.S., 16% were based in Europe, 15% were based in the emerging markets, and 8% were based in the other developed region (Australia, Canada, Japan, and New Zealand).
"With the exception of the emerging markets, each region saw their downgrade ratios peak in the first quarter and then taper off before hitting lows for the year in the fourth quarter," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "The emerging markets' downgrade ratio peaked in the second quarter at 97%."
Of the industries that had more than five rating actions globally in 2009, finance companies, automotive, banks, sovereigns, forest products and building materials, capital goods, and media and entertainment all had downgrade ratios of 90% or higher for the year. Health care performed the best in 2009, with a downgrade ratio of only 33%--less than half the average across all sectors.
This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers to RatingsDirect on the Global Credit Portal at www.globalcreditportal.com and to RatingsDirect at www.ratingsdirect.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Fitch Affirms Holcim Capital (Thailand)’s Bonds; Revises Outlook to Stable
Fitch Ratings (Thailand) Limited has today affirmed the National Long-term ‘AA-(tha)’ ratings on two series of guaranteed debentures issued by Holcim Capital (Thailand) Limited (HCT) – Series II (due 2010) and Series III (due 2012), amounting to THB4.6bn. The Outlook on the ratings has been revised to Stable from Negative, due to a similar Outlook revision of its guarantor, Holcim Ltd. (Holcim) (For more information, please refer to the rating action commentary entitled “Fitch Revises Holcim’s Outlook to Stable; Affirms IDR at ‘BBB’”, dated 29 January 2010). The ratings of HCT’s debentures are based entirely on the irrevocable and unconditional guarantee provided by Holcim (‘BBB’/Stable).
Holcim’s Outlook revision reflects Fitch’s view that its credit metrics will improve gradually in the coming 24 months, which will place them more comfortably within the range of a ‘BBB’ rating. Trading conditions for the industry in mature markets will likely to remain challenged, especially in Western Europe, while growth is expected to persist in major emerging countries. Furthermore, Fitch expects positive impact on free cash flow generation from cost reduction measures, lowered capex due to the phasing out of major investment projects, and a conservative dividend policy. This will enable Holcim to progressively improve its financial metrics at a pace faster than previously anticipated by the agency.
Fitch notes that any changes in the International rating differential between Holcim and Thailand’s Sovereign rating may affect the debentures’ National ratings. In addition, a one notch change in the International rating could result in a change of more than one notch in a National Rating.
Applicable Criteria available on Fitch’s website at www.fitchratings.com: “Corporate Rating Methodology”, dated 24 November 2009.
Contacts: Obboon Thirachit, Pimrumpai Panyarachun, Vincent Milton, Bangkok, +662 655 4755; Elisabetta Zorzi, Milan, +39 02 8790 87213.
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable.
Holcim’s Outlook revision reflects Fitch’s view that its credit metrics will improve gradually in the coming 24 months, which will place them more comfortably within the range of a ‘BBB’ rating. Trading conditions for the industry in mature markets will likely to remain challenged, especially in Western Europe, while growth is expected to persist in major emerging countries. Furthermore, Fitch expects positive impact on free cash flow generation from cost reduction measures, lowered capex due to the phasing out of major investment projects, and a conservative dividend policy. This will enable Holcim to progressively improve its financial metrics at a pace faster than previously anticipated by the agency.
Fitch notes that any changes in the International rating differential between Holcim and Thailand’s Sovereign rating may affect the debentures’ National ratings. In addition, a one notch change in the International rating could result in a change of more than one notch in a National Rating.
Applicable Criteria available on Fitch’s website at www.fitchratings.com: “Corporate Rating Methodology”, dated 24 November 2009.
Contacts: Obboon Thirachit, Pimrumpai Panyarachun, Vincent Milton, Bangkok, +662 655 4755; Elisabetta Zorzi, Milan, +39 02 8790 87213.
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable.
Saturday, January 30, 2010
Thailand Investor Confidence Soars to a Record High in Q4 2009 with Biggest Quarter-on-Quarter Increase Among Pan-Asian Countries
ING Investor Dashboard Sentiment Index for Thailand moves from “neutral” to “optimistic” as investors reveal greater diversification and appetite for risk
Key Highlights of the Quarterly ING Investor Dashboard Survey
Thailand index jumps 154% to 150 for Q4 2009 from 59 in Q4 2008; rises significantly by 33% quarter-on-quarter from 113 in Q3 2009
Pan-Asia Index jumps 101% to 147 for Q4 2009 from the financial crisis low of 73 for Q4 2008; confidence level in 2009 back at levels before the crisis
Thai investors continue to diversify investments in terms of geography and asset classes and demonstrate greater willingness to take on more risk
Thai investors bullish on local property market; among Pan-Asian countries, show biggest increase in expectations that property prices will rise in Q1 2010
ING, the global financial services group, today released data from its quarterly ING Investor Dashboard Survey which shows Thai investor sentiment rising dramatically with the Thailand Index jumping 154% to 150 for Q4 2009 from 59 in Q4 2008, and also registering the sharpest quarter-on-quarter increase (33%) among Asian countries.
The overall pan-Asia (ex-Japan) ING Investor Dashboard Sentiment Index also shows a significant 101% jump in investor sentiment in Asia for 2009, with overall confidence recovering to pre-global financial crisis levels. The Index increases to 147 for Q4 2009 from 73 for Q4 2008.
Quarter-on-quarter, the pan-Asia Index registers a modest increase of 3.5% from 142 for Q3 2009 as investor sentiment continues to climb at pre-financial crisis levels following the run-up in the financial markets in Q2 and Q3 2009, reflecting that there is confidence in the stability of the global recovery. The survey results show the highest investor sentiment score since the Index was introduced in Q3 2007 and the Index moves further into “optimistic” territory.
Published for over two years, the ING Investor Dashboard is the first quarterly survey in the Asia Pacific region to provide a pan-Asia (ex-Japan) investor sentiment index. Conducted quarterly across 12 markets The survey was conducted across 12 markets in Asia Pacific: Hong Kong, China, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Japan, and Australia. The pan-Asia investor sentiment index includes all Asia markets and excludes Japan and Australia. in Asia Pacific, it provides market insights into investor attitude and outlook and allows each market to be benchmarked and tracked against the overall investor sentiment across Asia using the Index.
Investor sentiment buoyed in markets experiencing export and consumption rebounds
Investor sentiment in export-driven markets including Hong Kong, Taiwan and Singapore, ended 2009 by rising more than 100% from a year ago, as regional economies recovered and exports began to improve from Q2 to Q4 2009. In Thailand, the Q4 2009 export and consumption rebound was reflected in significant increases in national exports and consumption indicators for Value Added Tax. Meanwhile, investor sentiment in China and India continues to be the highest in the region, with a 53% year-on-year increase in 2009 for China and a 122% year-on-year increase for India.
Commenting on the results, Mr. Tor Indhavivadhana, Senior Vice President, Mutual Fund & Investment Consulting Department, ING Funds (Thailand) Limited said, “Given that the third quarter of 2009 was a banner quarter for the Stock Exchange of Thailand, with the index up more than 20%, a surge in investor sentiment in Q4 2009 was not unexpected. The survey results show that 62% of Thai respondents considered their return on investment had increased in Q4 2009 whilst 71% of respondents believe their return on investment will continue to increase in Q1 2010. This is a significant turnaround from the last quarter's survey and in line with our expectations given the overall improvement in investment performance. Sentiment always follows market performance.”
"ING continues to remain confident in the Thai market as the economy and corporate earnings improve, supporting currently cheap valuations. However, investors should not expect the kind of aggregate returns experienced in 2009. With exports expected to grow by 10-15% in 2010, investors may be prudent to consider export-related sectors including shipping and export-related manufacturers. On the downside, concerns about inflation, which the Bank of Thailand has reported may reach 5% in 2010, could derail much of the present optimism and compel investors to retreat to what are considered safe havens - cash deposits, income funds and gold."
Thai investors remain positive about the economic situation
Thai investors are positive about their local economy and many are optimistic that the economy will continue to improve in Q1 2010 as the situation in the U.S. continues to improve.
Economic situation improved Q4 09 Q3 09
Thailand 65% 45%
(% of investors)
Economic situation will improve in the next quarter (Q1 10) Q4 09
62%
Thailand
(% of investors)
U.S. economy will improve in the next quarter Q4 09 Q3 09
Thailand 66% 55%
(% of investors)
As sentiment about the economy improves, Thai investors are more confident about their own personal financial and household financial situations for the next quarter (up 27% and 23%, respectively, compared to Q3 2009) In addition, Thai investors appear willing to take on greater risk with their investments.
“Though Thai investors remain fundamentally conservative, they have demonstrated what may be a short-term phenomenon in terms of their risk appetite. Growing ranks of Thai investors accept that achieving higher returns is virtually impossible if they maintain 'cash is king' conservatism in a low interest rate environment. Still there are underlying contradictions, with the majority of investors (65% of those surveyed) expecting 10-15% per annum returns, while 55% of these same investors can only tolerate a maximum capital loss of 10%. In this low yield environment Thai investors will not generate these desired returns without taking higher investment risk. Cash yields are virtually zero and if investors want to generate returns of 10% or so per annum they clearly will have to diversify their allocations towards equities, including global equities and alternative assets. The survey confirmed that, at least in the last quarter, this risk tolerance has taken hold, with investors increasing allocations in stocks (up 20%) mutual funds and unit trusts (up 26%) and REITs/real estate property funds (up 31%)," added Mr. Indhavivadhana.
Thai investors bullish on stocks and property and continue to see upside for Q1 2010
Thai investors continue to be positive on the local stock markets and see further upside in Q1 2010.
View on the stock market for Q1 10 Remains at current level or rises* Expected increase in the stock market
Thailand 87% 10.1%
*(% of investors)
Currently, 34% of Thai investors are invested in local stocks, with many invested in the financial services, energy, resources and consumer goods sectors; 7% are invested in overseas stocks.
"In terms of geographic diversification among investors, our Greater China Fund has been remarkably popular among Thai investors who want exposure to the growth of the Thai economy. We will be following this success with a fund devoted entirely to U.S. equities, which we believe presents long-term upside on a price valuation and yield basis, added Mr. Indhavivadhana."
Thai investors are also positive on the property markets, with 33% of investors expecting increases in the next quarter of 5% to less than 7.5 %, reflecting overall confidence that the government will continue to provide incentives for home buyers and the Bank of Thailand will continue to adopt its relative accommodative monetary policies.
View on local property market (residential real estate) for Q1 10 Remains at current level or rises* Expected average increase
Thailand 91% 4.7%
*(% of investors)
Inflation and interest rate hikes seen as risks in 2010
Rising inflation and interest rate hikes are seen by Thai investors as key risks in 2010. 57% of Thai investors expect domestic interest rates to rise in Q1 2010 while 62% expect domestic interest rates to rise in 2010. 64% expect inflation to increase in Q1 2010, while 85% expect inflation to increase over the course of the year.
“Expectations of imminent and fairly significant increases in inflation might become self-fulfilling quite quickly. Given this scenario and the Bank of Thailand’s forecast for 5% inflation in 2010, it would not be unreasonable to expect the Bank of Thailand to increase interest rates in the short term. Any impetus in that direction would be compounded by further spikes in oil and other energy related prices,” concluded Mr. Indhavivadhana.
For an introduction of the ING Investor Dashboard Sentiment Index and latest detailed (high-resolution) data charts, please visit http://www.ing.asia/investor_dashboard.
Press enquiries Tor Indhavivadhana ING Funds (Thailand) Co., Ltd02-688-7777tor.indhavivadhana@ingfunds.co.th James BestAziam Burson Marsteller
02-252-9871james.best@abm.co.th
About the ING Investor Dashboard
The ING Investor Dashboard survey measures and tracks investor sentiment and behaviour of mass affluent investors each quarter from 12 Asia Pacific markets (including China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Japan and Australia), and is the first quarterly survey in Asia Pacific which provides a specific industry benchmark for pan-Asia (ex-Japan) investor sentiment.
The Q4 2009 survey was conducted in December 2009 and involved online interviews with a total of 3,730 mass affluent investors across the 12 Asia Pacific markets. The respondents are aged 30 years and above, and have disposable assets or investments of US$100,000 and above, with the exception of Indonesia (disposable assets or investments of US$60,000 and above) and the Philippines (disposable assets or investments of US$60,000 or monthly income of Php200,000 and above).
The survey is conducted by international and independent research firm The Nielsen Company and is tracked extensively by major financial and business media organisations across all 12 markets in Asia.
Profile of ING
ING is a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services. As of 30 September 2009, ING served more than 85 million private, corporate and institutional clients in more than 40 countries. With a diverse workforce of about 110,000 people, ING is dedicated to setting the standard in helping our clients manage their financial future.
About The Nielsen Company
The Nielsen Company is a global information and media company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and business publications. The privately held company is active in approximately 100 countries, with headquarters in New York, USA.
Key Highlights of the Quarterly ING Investor Dashboard Survey
Thailand index jumps 154% to 150 for Q4 2009 from 59 in Q4 2008; rises significantly by 33% quarter-on-quarter from 113 in Q3 2009
Pan-Asia Index jumps 101% to 147 for Q4 2009 from the financial crisis low of 73 for Q4 2008; confidence level in 2009 back at levels before the crisis
Thai investors continue to diversify investments in terms of geography and asset classes and demonstrate greater willingness to take on more risk
Thai investors bullish on local property market; among Pan-Asian countries, show biggest increase in expectations that property prices will rise in Q1 2010
ING, the global financial services group, today released data from its quarterly ING Investor Dashboard Survey which shows Thai investor sentiment rising dramatically with the Thailand Index jumping 154% to 150 for Q4 2009 from 59 in Q4 2008, and also registering the sharpest quarter-on-quarter increase (33%) among Asian countries.
The overall pan-Asia (ex-Japan) ING Investor Dashboard Sentiment Index also shows a significant 101% jump in investor sentiment in Asia for 2009, with overall confidence recovering to pre-global financial crisis levels. The Index increases to 147 for Q4 2009 from 73 for Q4 2008.
Quarter-on-quarter, the pan-Asia Index registers a modest increase of 3.5% from 142 for Q3 2009 as investor sentiment continues to climb at pre-financial crisis levels following the run-up in the financial markets in Q2 and Q3 2009, reflecting that there is confidence in the stability of the global recovery. The survey results show the highest investor sentiment score since the Index was introduced in Q3 2007 and the Index moves further into “optimistic” territory.
Published for over two years, the ING Investor Dashboard is the first quarterly survey in the Asia Pacific region to provide a pan-Asia (ex-Japan) investor sentiment index. Conducted quarterly across 12 markets The survey was conducted across 12 markets in Asia Pacific: Hong Kong, China, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Japan, and Australia. The pan-Asia investor sentiment index includes all Asia markets and excludes Japan and Australia. in Asia Pacific, it provides market insights into investor attitude and outlook and allows each market to be benchmarked and tracked against the overall investor sentiment across Asia using the Index.
Investor sentiment buoyed in markets experiencing export and consumption rebounds
Investor sentiment in export-driven markets including Hong Kong, Taiwan and Singapore, ended 2009 by rising more than 100% from a year ago, as regional economies recovered and exports began to improve from Q2 to Q4 2009. In Thailand, the Q4 2009 export and consumption rebound was reflected in significant increases in national exports and consumption indicators for Value Added Tax. Meanwhile, investor sentiment in China and India continues to be the highest in the region, with a 53% year-on-year increase in 2009 for China and a 122% year-on-year increase for India.
Commenting on the results, Mr. Tor Indhavivadhana, Senior Vice President, Mutual Fund & Investment Consulting Department, ING Funds (Thailand) Limited said, “Given that the third quarter of 2009 was a banner quarter for the Stock Exchange of Thailand, with the index up more than 20%, a surge in investor sentiment in Q4 2009 was not unexpected. The survey results show that 62% of Thai respondents considered their return on investment had increased in Q4 2009 whilst 71% of respondents believe their return on investment will continue to increase in Q1 2010. This is a significant turnaround from the last quarter's survey and in line with our expectations given the overall improvement in investment performance. Sentiment always follows market performance.”
"ING continues to remain confident in the Thai market as the economy and corporate earnings improve, supporting currently cheap valuations. However, investors should not expect the kind of aggregate returns experienced in 2009. With exports expected to grow by 10-15% in 2010, investors may be prudent to consider export-related sectors including shipping and export-related manufacturers. On the downside, concerns about inflation, which the Bank of Thailand has reported may reach 5% in 2010, could derail much of the present optimism and compel investors to retreat to what are considered safe havens - cash deposits, income funds and gold."
Thai investors remain positive about the economic situation
Thai investors are positive about their local economy and many are optimistic that the economy will continue to improve in Q1 2010 as the situation in the U.S. continues to improve.
Economic situation improved Q4 09 Q3 09
Thailand 65% 45%
(% of investors)
Economic situation will improve in the next quarter (Q1 10) Q4 09
62%
Thailand
(% of investors)
U.S. economy will improve in the next quarter Q4 09 Q3 09
Thailand 66% 55%
(% of investors)
As sentiment about the economy improves, Thai investors are more confident about their own personal financial and household financial situations for the next quarter (up 27% and 23%, respectively, compared to Q3 2009) In addition, Thai investors appear willing to take on greater risk with their investments.
“Though Thai investors remain fundamentally conservative, they have demonstrated what may be a short-term phenomenon in terms of their risk appetite. Growing ranks of Thai investors accept that achieving higher returns is virtually impossible if they maintain 'cash is king' conservatism in a low interest rate environment. Still there are underlying contradictions, with the majority of investors (65% of those surveyed) expecting 10-15% per annum returns, while 55% of these same investors can only tolerate a maximum capital loss of 10%. In this low yield environment Thai investors will not generate these desired returns without taking higher investment risk. Cash yields are virtually zero and if investors want to generate returns of 10% or so per annum they clearly will have to diversify their allocations towards equities, including global equities and alternative assets. The survey confirmed that, at least in the last quarter, this risk tolerance has taken hold, with investors increasing allocations in stocks (up 20%) mutual funds and unit trusts (up 26%) and REITs/real estate property funds (up 31%)," added Mr. Indhavivadhana.
Thai investors bullish on stocks and property and continue to see upside for Q1 2010
Thai investors continue to be positive on the local stock markets and see further upside in Q1 2010.
View on the stock market for Q1 10 Remains at current level or rises* Expected increase in the stock market
Thailand 87% 10.1%
*(% of investors)
Currently, 34% of Thai investors are invested in local stocks, with many invested in the financial services, energy, resources and consumer goods sectors; 7% are invested in overseas stocks.
"In terms of geographic diversification among investors, our Greater China Fund has been remarkably popular among Thai investors who want exposure to the growth of the Thai economy. We will be following this success with a fund devoted entirely to U.S. equities, which we believe presents long-term upside on a price valuation and yield basis, added Mr. Indhavivadhana."
Thai investors are also positive on the property markets, with 33% of investors expecting increases in the next quarter of 5% to less than 7.5 %, reflecting overall confidence that the government will continue to provide incentives for home buyers and the Bank of Thailand will continue to adopt its relative accommodative monetary policies.
View on local property market (residential real estate) for Q1 10 Remains at current level or rises* Expected average increase
Thailand 91% 4.7%
*(% of investors)
Inflation and interest rate hikes seen as risks in 2010
Rising inflation and interest rate hikes are seen by Thai investors as key risks in 2010. 57% of Thai investors expect domestic interest rates to rise in Q1 2010 while 62% expect domestic interest rates to rise in 2010. 64% expect inflation to increase in Q1 2010, while 85% expect inflation to increase over the course of the year.
“Expectations of imminent and fairly significant increases in inflation might become self-fulfilling quite quickly. Given this scenario and the Bank of Thailand’s forecast for 5% inflation in 2010, it would not be unreasonable to expect the Bank of Thailand to increase interest rates in the short term. Any impetus in that direction would be compounded by further spikes in oil and other energy related prices,” concluded Mr. Indhavivadhana.
For an introduction of the ING Investor Dashboard Sentiment Index and latest detailed (high-resolution) data charts, please visit http://www.ing.asia/investor_dashboard.
Press enquiries Tor Indhavivadhana ING Funds (Thailand) Co., Ltd02-688-7777tor.indhavivadhana@ingfunds.co.th James BestAziam Burson Marsteller
02-252-9871james.best@abm.co.th
About the ING Investor Dashboard
The ING Investor Dashboard survey measures and tracks investor sentiment and behaviour of mass affluent investors each quarter from 12 Asia Pacific markets (including China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, Japan and Australia), and is the first quarterly survey in Asia Pacific which provides a specific industry benchmark for pan-Asia (ex-Japan) investor sentiment.
The Q4 2009 survey was conducted in December 2009 and involved online interviews with a total of 3,730 mass affluent investors across the 12 Asia Pacific markets. The respondents are aged 30 years and above, and have disposable assets or investments of US$100,000 and above, with the exception of Indonesia (disposable assets or investments of US$60,000 and above) and the Philippines (disposable assets or investments of US$60,000 or monthly income of Php200,000 and above).
The survey is conducted by international and independent research firm The Nielsen Company and is tracked extensively by major financial and business media organisations across all 12 markets in Asia.
Profile of ING
ING is a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services. As of 30 September 2009, ING served more than 85 million private, corporate and institutional clients in more than 40 countries. With a diverse workforce of about 110,000 people, ING is dedicated to setting the standard in helping our clients manage their financial future.
About The Nielsen Company
The Nielsen Company is a global information and media company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and business publications. The privately held company is active in approximately 100 countries, with headquarters in New York, USA.
Friday, January 29, 2010
Moody's says Asia-Pacific sovereign ratings demonstrating resiliency
Moody's Investors Service says in its just-published "Asia-Pacific Regional Outlook - January 2010" that regional sovereign ratings will likely remain resilient to economic risks coming to the foreground as the global economy recovers from the crisis that emanated from the US and Europe.
Regional rating trends were generally positive in 2009 with no downgrades originating exclusively from the global crisis. Indeed, Indonesia and the Philippines were upgraded to Ba2 and Ba3, respectively, last year, while A1 China, Aa2 Hong Kong, and India (its Ba2 local currency government rating only) have positive outlooks.
The three countries with negative outlooks -- Baa1 Thailand, Ba3 Vietnam and B1 Fiji -- have long-standing underlying imbalances or political tensions which precede the onset of the global crisis.
Growth potential in the Asia-Pacific remains robust, benefiting from fiscal and monetary stimulus programs, liquid banking systems capable of extending credit, intra-regional trade, and foreign exchange reserve defenses built up after the Asian financial crisis of late 1990s.
"Moreover, recovery from the global crisis is appearing similar to previous recovery periods, in contrast to prospects for a sluggish rebound in the US and EU," says Tom Byrne, a Senior Vice President and Regional Credit Officer in Moody's Sovereign Risk Group.
"Despite the crucial role played by fiscal stimulus programs in supporting growth in 2009, most Asia-Pacific countries (ex-Japan) have begun or will likely start to wind down expansionary policies this year," says Byrne.
"Because of relatively less encumbered public finances in the region, with the exception of Japan, the build-up in debt over the past couple of years has been relatively moderate, a key factor in supporting the generally positive trend in ratings in Asia-Pacific," says Byrne. "Also, most countries' fiscal positions can absorb a moderate rise in interest rates in the year ahead," Byrne added.
Moody's notes that China is playing a lead role as a driver of growth in the region, while Japan sits on the sideline as it struggles to overcome stubborn deflation and lackluster domestic demand.
Despite the subdued outlook for Japan, the weakest in the region, Asia-Pacific GDP growth may reach 4.9 percent in 2010, up from 1.2 percent in 2009 and slightly stronger than previous recovery periods in
1999 and 2002.
Accordingly, the growth outlook for Asia-Pacific is more robust than that of Europe or Latin America. Excluding Japan, regional GDP growth is expected to be even stronger at 6.6 percent in 2010. This economic robustness has also underpinned the relatively positive rating trend in the region.
Risks to the economic outlook for the region include a relapse in the recovery in external trade and a rise in inflation. The latter could prove challenging to regional policymakers with the return of risk appetite and strong capital inflows, and could prompt more urgent exit strategies from counter-cyclical policies.
In addition, an endogenous risk to the regional outlook is an asset bubble which careens into a boom-bust cycle in China. Moody's central scenario, however, is that regional governments and monetary authorities will maintain a grip on policy, squeezing as tight as needed to prevent an inflationary destabilization.
The January 2010 edition of the "Asia-Pacific Sovereign Outlook" is the first of a regular publication explaining Moody's views and perspectives on sovereign ratings in the region. It is one of three regional outlooks being published by Moody's Sovereign Risk Group this month, the other two covering Latin America and Europe.
Two other regular reports further detail Moody's perspectives on sovereign ratings, the quarterly "Aaa Sovereign Monitor", which focuses on the highest-rated sovereigns, and the annual "Sovereign Risk Outlook", which provides a year-end review of global sovereign ratings activity and perspectives for the coming year. The latest editions of these reports were published in December 2009.
Regional rating trends were generally positive in 2009 with no downgrades originating exclusively from the global crisis. Indeed, Indonesia and the Philippines were upgraded to Ba2 and Ba3, respectively, last year, while A1 China, Aa2 Hong Kong, and India (its Ba2 local currency government rating only) have positive outlooks.
The three countries with negative outlooks -- Baa1 Thailand, Ba3 Vietnam and B1 Fiji -- have long-standing underlying imbalances or political tensions which precede the onset of the global crisis.
Growth potential in the Asia-Pacific remains robust, benefiting from fiscal and monetary stimulus programs, liquid banking systems capable of extending credit, intra-regional trade, and foreign exchange reserve defenses built up after the Asian financial crisis of late 1990s.
"Moreover, recovery from the global crisis is appearing similar to previous recovery periods, in contrast to prospects for a sluggish rebound in the US and EU," says Tom Byrne, a Senior Vice President and Regional Credit Officer in Moody's Sovereign Risk Group.
"Despite the crucial role played by fiscal stimulus programs in supporting growth in 2009, most Asia-Pacific countries (ex-Japan) have begun or will likely start to wind down expansionary policies this year," says Byrne.
"Because of relatively less encumbered public finances in the region, with the exception of Japan, the build-up in debt over the past couple of years has been relatively moderate, a key factor in supporting the generally positive trend in ratings in Asia-Pacific," says Byrne. "Also, most countries' fiscal positions can absorb a moderate rise in interest rates in the year ahead," Byrne added.
Moody's notes that China is playing a lead role as a driver of growth in the region, while Japan sits on the sideline as it struggles to overcome stubborn deflation and lackluster domestic demand.
Despite the subdued outlook for Japan, the weakest in the region, Asia-Pacific GDP growth may reach 4.9 percent in 2010, up from 1.2 percent in 2009 and slightly stronger than previous recovery periods in
1999 and 2002.
Accordingly, the growth outlook for Asia-Pacific is more robust than that of Europe or Latin America. Excluding Japan, regional GDP growth is expected to be even stronger at 6.6 percent in 2010. This economic robustness has also underpinned the relatively positive rating trend in the region.
Risks to the economic outlook for the region include a relapse in the recovery in external trade and a rise in inflation. The latter could prove challenging to regional policymakers with the return of risk appetite and strong capital inflows, and could prompt more urgent exit strategies from counter-cyclical policies.
In addition, an endogenous risk to the regional outlook is an asset bubble which careens into a boom-bust cycle in China. Moody's central scenario, however, is that regional governments and monetary authorities will maintain a grip on policy, squeezing as tight as needed to prevent an inflationary destabilization.
The January 2010 edition of the "Asia-Pacific Sovereign Outlook" is the first of a regular publication explaining Moody's views and perspectives on sovereign ratings in the region. It is one of three regional outlooks being published by Moody's Sovereign Risk Group this month, the other two covering Latin America and Europe.
Two other regular reports further detail Moody's perspectives on sovereign ratings, the quarterly "Aaa Sovereign Monitor", which focuses on the highest-rated sovereigns, and the annual "Sovereign Risk Outlook", which provides a year-end review of global sovereign ratings activity and perspectives for the coming year. The latest editions of these reports were published in December 2009.
Sunday, January 24, 2010
Moody's says Indonesia's Ba2 rating remains stable
Moody's Investors Service says -- in a new sovereign report on Indonesia -- that the outlook for the country's Ba2 rating remains stable.
"Indonesia's Ba2 rating was upgraded in September 2009, reflecting fundamental and ongoing improvements in its credit prospects," says Aninda Mitra, Moody's sovereign analyst for Indonesia.
"The country's underlying credit improvements reflect growth rates and a debt burden that are projected to be more favorable than other Ba-rated countries over coming years," says Mr. Mitra
"Such developments are likely to be supported in turn by ongoing flexibility in the country's economic policy framework and the resilience of its domestic economy, based on a low level of economic openness, a reasonably well diversified economy, low systemic leverage, and favorable demographics" adds Mitra.
"The momentum in reform will likely slow on account of the current parliamentary inquiry into the appropriateness of the Bank Century bailout, and which has implicated key ministers in the recently re-elected Yudhoyono administration," says Mitra.
"However, these risks will take time to play out and they are not expected to derail the macroeconomic policy framework, which had ably withstood the impact of recent elections, as well as several large external shocks," says Mitra.
"The recent moderation in headline consumer price inflation to below the central bank's targeted range of 4.5% +/- 1% and an appropriate stance in monetary policy support near-term price expectations," says Mitra, adding, "But, the postponement of power tariff adjustments poses risks to the medium-term inflation outlook."
According to Mitra, sovereign credit improvements are contingent on greater foreign currency reserve adequacy against unexpected shocks; and a stronger foreign currency reserve buffer could also crowd in greater and more stable inflows of foreign capital and anchor domestic monetary confidence.
"Structural reforms -- which could support medium-term price expectations, durably improve the financial fundamentals of state-owned-enterprises, and deepen domestic capital markets -- would also sustain the country's credit improvements," said Mitra.
"The stable outlook incorporates the recent increase in political uncertainty, and reflects the mix of relatively healthy growth prospects and the likelihood that the policy framework will maintain recent improvements in key credit metrics," says Mitra.
The last rating action on Indonesia was taken on 16 September 2009, when Moody's upgraded the sovereign bond rating to Ba2, from Ba3.
The principal methodology used in rating the government of the Republic of Indonesia is Moody's Sovereign Bond Methodology, published in September 2008 which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.
"Indonesia's Ba2 rating was upgraded in September 2009, reflecting fundamental and ongoing improvements in its credit prospects," says Aninda Mitra, Moody's sovereign analyst for Indonesia.
"The country's underlying credit improvements reflect growth rates and a debt burden that are projected to be more favorable than other Ba-rated countries over coming years," says Mr. Mitra
"Such developments are likely to be supported in turn by ongoing flexibility in the country's economic policy framework and the resilience of its domestic economy, based on a low level of economic openness, a reasonably well diversified economy, low systemic leverage, and favorable demographics" adds Mitra.
"The momentum in reform will likely slow on account of the current parliamentary inquiry into the appropriateness of the Bank Century bailout, and which has implicated key ministers in the recently re-elected Yudhoyono administration," says Mitra.
"However, these risks will take time to play out and they are not expected to derail the macroeconomic policy framework, which had ably withstood the impact of recent elections, as well as several large external shocks," says Mitra.
"The recent moderation in headline consumer price inflation to below the central bank's targeted range of 4.5% +/- 1% and an appropriate stance in monetary policy support near-term price expectations," says Mitra, adding, "But, the postponement of power tariff adjustments poses risks to the medium-term inflation outlook."
According to Mitra, sovereign credit improvements are contingent on greater foreign currency reserve adequacy against unexpected shocks; and a stronger foreign currency reserve buffer could also crowd in greater and more stable inflows of foreign capital and anchor domestic monetary confidence.
"Structural reforms -- which could support medium-term price expectations, durably improve the financial fundamentals of state-owned-enterprises, and deepen domestic capital markets -- would also sustain the country's credit improvements," said Mitra.
"The stable outlook incorporates the recent increase in political uncertainty, and reflects the mix of relatively healthy growth prospects and the likelihood that the policy framework will maintain recent improvements in key credit metrics," says Mitra.
The last rating action on Indonesia was taken on 16 September 2009, when Moody's upgraded the sovereign bond rating to Ba2, from Ba3.
The principal methodology used in rating the government of the Republic of Indonesia is Moody's Sovereign Bond Methodology, published in September 2008 which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.
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