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ANALYSIS-Asian fuel price rises unlikely to spark unrest
Reuters: [2008-05-26 13:04:00]
(Refiles with additional codes)
By Jason Subler and Ahmad Pathoni
SINGAPORE/JAKARTA, May 26 (Reuters) - Leaders across Asia are starting to give in on the prickly issue of fuel subsidies, hiking prices in the face of $130 a barrel oil, but careful calibration of the steps may allow them to get away with it.
Indonesia jacked up fuel prices by an average of 28.7 percent from Saturday, Sri Lanka followed with its own increase on Sunday and Bangladesh said it planned an increase soon.
India is also considering such a move. The odd man out is China, which has strong finances and has said it does not plan to raise prices soon.
(For a graphic on world petrol prices, see: https://customers.reuters.com/d/graphics/Petrol_prices.gif)
While the increases will be difficult to swallow, especially for governments with approaching elections such as India and Indonesia, social disruptions such as those seen due to food shortages will probably be avoided, analysts said.
For one thing, fuel does not have the same impact with lower-income people as food.
"Food is so immediate and obvious," said Steve Wilford, India country manager for consulting firm Control Risks.
"In countries that have a recent memory of famine ... it's such an emotive subject that governments can't ignore the immediate impact of rapid food price hikes in the same way as they can with fuel price hikes."
In addition, accompanying the hikes with mollifying steps can cushion the blow.
Indonesia has twinned the fuel price hikes with some $1.5 billion in cash handouts for the poor.
India may try to limit increases in prices for fuels used by the poor, such as kerosene, while also not giving too big a hit to middle-class voters through dearer gasoline, said Wilford.
Some policymakers are also aided by an awareness among their populations of the reality of sky-high global prices.
LESSER OF TWO EVILS
That is generally the case in Taiwan, which has said it will end a freeze on prices of fuels and utilities on June 1, said Raymond Wu, managing director of Taipei-based political risk consulting firm e-Telligence.
"These utility price hikes are expected, from cement to food, so people psychologically are expecting an increase," Wu said.
Still, the potential impact on elections will prompt governments such as in India and Indonesia to tread very carefully, weaning their economies off subsidies only bit by bit.
"Once given, these kinds of subsidies are extraordinarily difficult to take away," Wilford said.
The issue of fuel subsidies has proved tricky for the Indonesian government ahead of next year's parliamentary and presidential elections, highlighted by the protests in the run-up to the policy move.
President Susilo Bambang Yudhoyono sought on Monday to ease people's concerns.
"The alternative would be a possible financial and economic crash similar to that of 1997, and the real loser here would be our own people," Yudhoyono told an investment forum.
While a threat by some legislators to impeach Yudhoyono on account of the decision was just "empty talk", it was dividing his ruling coalition, said Arbi Sanit, a political analyst at the University of Indonesia.
"If SBY failed to restore the unity of the coalition, it would jeopardise his chances for re-election," Sanit said.
Still, some analysts said that the fuel price increase was unlikely to trigger social unrest in Indonesia, even though it comes on top of rapid increases in food prices and other goods.
"Even though the people reject the fuel price increase, I don't see signs people want to make things worse," said political analyst Fachry Ali, noting that the latest increase was moderate in comparison to a rise of more than 100 percent in October 2005.
"Nothing happened then, so it will be all right now."
MOUNTING COSTS
To be sure, raising fuel prices will come at a cost.
Though Taiwanese citizens would generally accept the fuel price rises, they would probably put the administration of freshly-inaugurated President Ma Ying-jeou under more pressure to deliver on his election promises of better economic links with China, said Wu.
The pick-up in inflation that results from lowering subsidies will also probably force central banks to increase interest rates, analysts say, just at a time when weakening global demand already threatens to sap growth.
But inaction could have an even greater cost, as it would contribute to the growing current account and fiscal deficits in countries such as India, putting further downward pressure on their currencies.
The cost of sinking so much money into fuel subsidies could drag significantly on countries like India, where significant investments are needed to improve education and infrastructure, said Wilford.
"Those kind of issues are just not getting the money they should be getting, because it's all going to prop up the price of fuel," he said. (Additional reporting by Nidhi Verma in New Delhi, Ralph Jennings in Taipei and Telly Nathalia in Jakarta; Editing by David Fox) ((jason.subler@thomsonreuters.com; +65 6870 3818)) Keywords: ASIA SUBSIDIES/
SE Asian Stocks-Fall on worries over inflation, growth
Reuters: [2008-05-26 12:32:00]
By Tan Wei Xin
SINGAPORE, May 26 (Reuters) - Southeast Asian stock markets
fell on Monday, as fears over rising regional costs hit
financials and industrials such as Thailand's Siam Commercial
Bank <SCB.BK> and Singapore's Keppel Corp <KPLM.SI>.
Thai <.SETI> stocks slid 2.15 percent after the country's
first-quarter GDP growth was dragged down by inflation, while
Malaysia <.KLSE> slipped 0.11 percent and Philippine shares
<.PSI> closed 0.31 percent down.
Indonesia <.JKSE> was down 1.87 percent and Vietnamese <.VNI>
shares fell 1.76 percent, while Singapore's benchmark Straits
Times Index <.FTSTI> slipped 0.6 percent to its lowest level in
more than five weeks.
"Food and energy prices are soaring, which are pushing up CPI
inflation...this makes for a very challenging environment for
equity markets," Macquarie analysts said in a research report,
addiing that financial and consumer sectors would be hit hardest
by inflation.
"In terms of individual markets, we think the risks are more
than fully priced in the Philippines, broadly commensurate with
valuations in Thailand, but not yet fully priced in in
Indonesia."
In Singapore, conglomerates Keppel Corp <KPLM.SI> and
Sembcorp Industries <SCIL.SI> led losses after falling 2 and 2.1
percent respectively, as the country's manufacturing output fell
at its sharpest rate since records started in 1983.
The trade-dependent city-state's April output slumped 16.2
percent after seasonal adjustments from a month ago, as drugs and
tech output fell, providing fresh signs of slowing global demand
and raising fears over Singapore growth. [ID:nSIN181127]
Analysts said high prices would drag on activity in Thailand
in coming quarters. [ID:nBKK16020]
Thailand's third largest lender Siam Commercial Bank fell 4.1
percent and fourth-ranked <KBAN.BK> closed 1.7 percent lower.
State-controlled energy firm PTT <PTT.BK> fell 3.2 percent
and its unit PTT Exploration and Production (PTTEP) <PTTE.BK>
lost 3 percent, despite oil futures prices <CLc1> gaining around
a dollar to over $133 a barrel.
Oil refiner PTT Aromatics and Refining <PTTAR.BK> was down 5
percent while Thai Oil <TOP.BK> closed 7.4 percent lower after
the Thai Energy Ministry told refiners to cut margins in a bid to
ease the impact of rising diesel to consumers.
"Thai refiners could come under pressure from the combination
of higher oil prices and government policy," UBS said in a client
note. "We believe there is a risk that an overhang could develop
on the (PTT) stock if oil prices keep rising."
Indonesia's largest coal miner Bumi Resources <BUMI.JK> fell
6.3 percent after Merrill Lynch downgraded the firm to "sell"
from "buy", saying the firm's shares were trading 20 percent
above their fair value. [ID:nJAK265442]
Bumi raised its offer for Australian-listed Herald Resources
<HER.AX> to A$504 million ($483.7 million), trumping a rival bid
by a consortium formed by Indonesia's Aneka Tambang <ANTM.JK> and
China's ShenZhen Zhongjin Lingnan Nonfemet <000060.SZ>.
In Malaysia, planters Sime Darby <SIME.KL> fell 0.5 percent
while KL Kepong <KLKK.KL> ended 1.1 percent lower. Philippines'
top telecommunications firm PLDT <TEL.PS> led losses after
falling 1.1 percent and property firm Megaworld Corp <MEG.PS>
closed 2.9 percent lower.
Malaysia's largest lender Maybank <MBBM.KL> fell 1.3 percent
while third-largest lender Public Bank <PUBM.KL> lost 0.85
percent.
Vietnam's top dairy firm Vinamilk <VNM.HM> was down 1.8
percent and property developer Vincom <VIC.HM> ended 3.9 percent
down.
(Editing by Neil Chatterjee)
((weixin.tan@thomsonreuters.com; +65 6403 5667; Reuters
Messaging: weixin.tan.reuters.com@reuters.net))
For South East Asia Hot Stock reports, click;
[.SI] [.KL] [.BK]
FACTORS TO WATCH
*S'pore's April output in biggest slump since 1983 [nSIN181127]
*OCBC plans to sell S$1 bln in preference shares [nSGC002015]
*Malaysia palm up as rising oil supports vegoils [nKLR294814]
*Indonesia to offer $19 bln projects -president [nJKB000684]
*Indonesia's GDP growth seen at 6.5-6.9 pct in '09 [nJKB000682]
*Thai Q1 growth slows, inflation risks mount [nBKK16020]
*Philippine Q1 GDP to slow on weaker exports, consum[nMAN80918]
SOUTHEAST ASIAN STOCKS
Change on the day
Market Current Prev Close Pct Move
Singapore 3103.30 3122.15 -0.60
Bangkok 856.80 875.59 -2.15
Manila 2840.52 2849.28 -0.31
Jakarta 2419.73 2465.96 -1.87
Kuala Lumpur 1273.37 1274.78 -0.11
Ho Chi Minh 420.51 428.05 -1.76
Change on year
Market Current End prev yr Pct Move
Singapore 3103.30 3465.63 -10.45
Bangkok 856.80 858.10 -0.15
Manila 2840.52 3621.60 -21.57
Jakarta 2419.73 2745.83 -11.88
Kuala Lumpur 1273.37 1445.03 -11.88
Ho Chi Minh 420.51 927.02 -54.64
ASIA-PACIFIC STOCK MARKETS:
Pan-Asia........[STXNEWS/AS] Japan.......[.T] S.Korea...[.KS]
S.E. Asia.......[.SO] Hong Kong...[.HK] Taiwan....[.TW]
Australia/NZ....[.AX] India.......[.BO] China.....[.SS]
OTHER MARKETS:
Wall Street ....[.N] Gold .......[GOL/] Currency..[FRX/]
Eurostocks.....[.EU] Oil ........[O/R] JP bonds...[JP/]
ADR Report .....[ADR/] LME metals.[MET/L] US bonds.. [US/]
Stocks News US..[STXNEWS/US] Stocks News Europe [STXNEWS/EU]
DIARIES & DATA:
IPO diary & data <SG/IPOMENU> Asia earnings diary [ASIA/EQTY]
U.S. earnings diary [RESF/US] European diary [WEU/EQTY]
Singapore diary [SG/DIARY] Wall Street Week Ahead [.N/O]
Eurostocks Week Ahead [.EU/O]
TOP NEWS:
For top Asian company news, double click on: [nTOPEQA]
U.S. company news [TOP/EQU] European company news [TOP/EQE]
Forex news [TOP/FRX] Global Economy news [TOP/MACRO]
Banking news [TOP/FIN] Tech,Media,Telecoms [TOP/TMT]
Politics/General news [TOP/G] Asia Macro data <ASIATODAY>
A multimedia version of Reuters Top News is available at:
http://topnews.session.rservices.com
LIVE PRICES & DATA:
World Stocks <0#.INDEX> Currency rates <EFX=> <NFX=>
Dow Jones/NASDAQ <.DJI> <.IXIC> Nikkei <.N225>
FTSE 100 <.FTSE> Debt <0#USBMK=> <EURIBOR>
(Local currency) <SGD=> LME price overview <RING=>
Keywords: MARKETS SOUTHEASTASIA STOCKS/
DIARY - Asian holidays to December 2008
Reuters: [2008-05-26 12:01:00]
REUTERS DIARY OF ASIAN HOLIDAYS
Details below represent the latest information available and will be supplemented later, particularly with updated entries for Muslim holidays.
Market holiday - Markets and exchanges closed.
Public holiday - Government offices, banks and ordinary businesses closed.
Double-click in brackets for Americas holidays diary [HOL1/DIARY], European holidays [HOL3/DIARY], Middle East and African holidays [HOL4/DIARY].
Alternatively click on <HOLIDAY> to retrieve dates by country.
************************************************************
2008 MARKET HOLIDAYS
************************************************************
** MORE COUNTRIES WILL BE ADDED AS AND WHEN THE DATES ARE CONFRIMED
MAY
MONDAY, MAY 19
MALAYSIA - Wesak Day - Market Holiday
SINGAPORE - Vesak Day - Market Holiday
THAILAND - Wisakha Bucha Day - Market Holiday
TUESDAY, MAY 20
INDIA - Buddha Purnima - Delhi Exchange Closed.
INDONESIA - Birthday of Buddha - Market Holiday
JUNE
MONDAY, JUNE 2
NEW ZEALAND - Queen's Birthday - Market Holiday
FRIDAY, JUNE 6
SOUTH KOREA - Memorial Day - Market Holiday
SATURDAY, JUNE 7
MALAYSIA - King's Birthday - Market Holiday
SUNDAY, JUNE 8
TAIWAN - Dragon Boat Festival - Market Holiday (No addition day off for it's falling on weekend)
MONDAY, JUNE 9
CHINA - Dragon Boat Festival - Market Holiday
AUSTRALIA - Queen's Birthday - Market Holiday
HONG KONG - The day following Tuen Ng Festival - Market Holiday
PHILIPPINES - Independence Day Celebration - Market Holiday
JULY
TUESDAY, JULY 1
HONG KONG - Hong Kong Special Administration Region Establishment Day - Market Holiday
THAILAND - Mid Year Closing Day - Market Holiday
THURSDAY, JULY 17
THAILAND - Asarnha Bucha Day - Market Holiday
MONDAY, JULY 21
JAPAN - Ocean Day - Market Holiday
WEDNESDAY, JULY 30
INDONESIA - Isra Mi'raj - Market Holiday
DIARY - Asian holidays to December 2008
Reuters: [2008-05-26 12:01:00]
REUTERS DIARY OF ASIAN HOLIDAYS
Details below represent the latest information available and will be supplemented later, particularly with updated entries for Muslim holidays.
Market holiday - Markets and exchanges closed.
Public holiday - Government offices, banks and ordinary businesses closed.
Double-click in brackets for Americas holidays diary [HOL1/DIARY], European holidays [HOL3/DIARY], Middle East and African holidays [HOL4/DIARY].
Alternatively click on <HOLIDAY> to retrieve dates by country.
************************************************************
2008 MARKET HOLIDAYS
************************************************************
** MORE COUNTRIES WILL BE ADDED AS AND WHEN THE DATES ARE CONFRIMED
MAY
MONDAY, MAY 19
MALAYSIA - Wesak Day - Market Holiday
SINGAPORE - Vesak Day - Market Holiday
THAILAND - Wisakha Bucha Day - Market Holiday
TUESDAY, MAY 20
INDIA - Buddha Purnima - Delhi Exchange Closed.
INDONESIA - Birthday of Buddha - Market Holiday
JUNE
MONDAY, JUNE 2
NEW ZEALAND - Queen's Birthday - Market Holiday
FRIDAY, JUNE 6
SOUTH KOREA - Memorial Day - Market Holiday
SATURDAY, JUNE 7
MALAYSIA - King's Birthday - Market Holiday
SUNDAY, JUNE 8
TAIWAN - Dragon Boat Festival - Market Holiday (No addition day off for it's falling on weekend)
MONDAY, JUNE 9
CHINA - Dragon Boat Festival - Market Holiday
AUSTRALIA - Queen's Birthday - Market Holiday
HONG KONG - The day following Tuen Ng Festival - Market Holiday
PHILIPPINES - Independence Day Celebration - Market Holiday
JULY
TUESDAY, JULY 1
HONG KONG - Hong Kong Special Administration Region Establishment Day - Market Holiday
THAILAND - Mid Year Closing Day - Market Holiday
THURSDAY, JULY 17
THAILAND - Asarnha Bucha Day - Market Holiday
MONDAY, JULY 21
JAPAN - Ocean Day - Market Holiday
WEDNESDAY, JULY 30
INDONESIA - Isra Mi'raj - Market Holiday
DIARY - Asian holidays to December 2008
Reuters: [2008-05-26 12:01:00]
REUTERS DIARY OF ASIAN HOLIDAYS
Details below represent the latest information available and will be supplemented later, particularly with updated entries for Muslim holidays.
Market holiday - Markets and exchanges closed.
Public holiday - Government offices, banks and ordinary businesses closed.
Double-click in brackets for Americas holidays diary [HOL1/DIARY], European holidays [HOL3/DIARY], Middle East and African holidays [HOL4/DIARY].
Alternatively click on <HOLIDAY> to retrieve dates by country.
************************************************************
2008 MARKET HOLIDAYS
************************************************************
** MORE COUNTRIES WILL BE ADDED AS AND WHEN THE DATES ARE CONFRIMED
MAY
MONDAY, MAY 19
MALAYSIA - Wesak Day - Market Holiday
SINGAPORE - Vesak Day - Market Holiday
THAILAND - Wisakha Bucha Day - Market Holiday
TUESDAY, MAY 20
INDIA - Buddha Purnima - Delhi Exchange Closed.
INDONESIA - Birthday of Buddha - Market Holiday
JUNE
MONDAY, JUNE 2
NEW ZEALAND - Queen's Birthday - Market Holiday
FRIDAY, JUNE 6
SOUTH KOREA - Memorial Day - Market Holiday
SATURDAY, JUNE 7
MALAYSIA - King's Birthday - Market Holiday
SUNDAY, JUNE 8
TAIWAN - Dragon Boat Festival - Market Holiday (No addition day off for it's falling on weekend)
MONDAY, JUNE 9
CHINA - Dragon Boat Festival - Market Holiday
AUSTRALIA - Queen's Birthday - Market Holiday
HONG KONG - The day following Tuen Ng Festival - Market Holiday
PHILIPPINES - Independence Day Celebration - Market Holiday
JULY
TUESDAY, JULY 1
HONG KONG - Hong Kong Special Administration Region Establishment Day - Market Holiday
THAILAND - Mid Year Closing Day - Market Holiday
THURSDAY, JULY 17
THAILAND - Asarnha Bucha Day - Market Holiday
MONDAY, JULY 21
JAPAN - Ocean Day - Market Holiday
WEDNESDAY, JULY 30
INDONESIA - Isra Mi'raj - Market Holiday
Next: Reuters quote of the day, May 26