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

Tokyo rubber hits 28-year high, ends under 340 yen

Reuters: [2008-05-26 11:28:00]

TOKYO, May 26 (Reuters) - Tokyo rubber futures extended gains to hit a fresh 28-year high on Monday, lifted by a combination of strong fundamentals and speculative buying, before drifting lower to end the day a little under 340 yen.

* The key Tokyo Commodity Exchange rubber contract for October delivery <0#JRU:> climbed 11.8 yen or 3.6 percent to an intra-day high of 341.8 yen per kg, the highest since April 1980, before closing the day at 339.4 yen, up 9.4 yen.

The trough was 328.1 yen.

* The contract rose to an intraday high of 330.3 yen on Friday, the highest for any benchmark since May 1980, on tight rubber supplies in Thailand, the world's top producer, and dwindling inventories in China, the largest consumer.

* Spot May TOCOM rubber expired at 323 yen on Monday.

* The key contract has risen about 7 percent over the past two business days alone, and some market participants expressed concern at the rapid rate at which the market has climbed. However, the market's upward momentum appears intact for now, they said.

* "It opened lower today, but it reversed course to climb even higher, and it looks like the bull trend will continue," said a Tokyo-based broker.

* "Funds have a major role in shaping the current market, and they appear to be bullish for now," he said.

* Strong crude oil prices, which often benefit rubber prices because investors believe expensive oil will encourage a shift to natural rubber from synthetic rubber, a petroleum product, provided additional strong upward impetus.

* U.S. crude futures were off last week's all-time high of $135.09 per barrel, but the price remained strong as it continued to trade around $133.

* NYMEX crude for July delivery <CLc1> rose 80 cents to $132.99 in Asian trade on Monday.

* The dollar traded at around 103.44/47 yen <JPY=>, compared to 103.30/35 yen in late trade in New York.

PRICES OF ASIAN PHYSICAL RUBBER COMPARED WITH FRIDAY

Grade Price Change

Thai RSS3 (July) $3.15/kg +$0.08

Thai RSS3 (August) $3.15/kg +$0.10

Thai STR20 (July) $3.05/kg unchanged

Thai STR20 (August) $3.05/kg +$0.03

Malaysia SMR20 (July) $3.05/kg +$0.05

Malaysia SMR20 (August) $3.05/kg +$0.05

Indonesia SIR20 (July) $1.37/lb unchanged

Indonesia SIR20 (August) $1.37/lb +$0.01

Thai USS3 95 baht/kg +3 bahts

Thai 60-percent latex (drums, July) $2,100/tonne -$20

Thai 60-percent latex (bulk, July) $2,000/tonne unchanged

(Reporting by Miho Yoshikawa) ((miho.yoshikawa@reuters.com; +81-3 6441 1854; Reuters Messaging: miho.yoshikawa.reuters.com@reuters.net))

** NOTE - The prices quoted above are offer prices collected from traders in Thailand, Indonesia and Malaysia. They are not official prices quoted by state-run rubber agencies in those countries.

For morning and afternoon prices at Thailand's state-run central rubber market, click on <RUB-BKK3>. For other physical rubber prices in Thailand, click on <RUB-BKK1> <RUB-BKK2>. For more details on Indonesian and Malaysian prices click on <RURKJK> and <RUQG>. * Reuters Terminal users can see cash and futures rubber prices by double clicking on the codes in the brackets: - Tokyo rubber futures -- <0#JRU:> - Osaka rubber futures -- <0#JRI:><0#JOS:> - Shanghai rubber futures -- <0#SNR:> - Singapore rubber futures -- <0#SRS:><0#SRU:>

<0#SRI:><0#STF:> - Thai rubber futures <0#ARU:><0#ASR20:> - Physical rubber -- <RUBBER/CASH1> - All rubber news [RUB] - Tokyo rubber report [RUB/T] - Shanghai rubber report [RUB-CN] - Thailand rubber report [RUB/TH] - Asian rubber report [RUB/AS] - Indonesian rubber report [RUB/ID] For Related News and other topics, double click on one of these codes: SPEED GUIDES <RUBBER1> <RUBBER/FUT1> <SOFT/SUM> <SOFTS/NEWS1> Keywords: MARKETS ASIA RUBBER

UPDATE 1-Indonesia to offer $19 billion projects - president

Reuters: [2008-05-26 11:13:00]

(Adds quotes, details)

By Muhamad Al Azhari and Adriana Nina Kusuma

JAKARTA, May 26 (Reuters) - Indonesia will offer projects worth about $19 billion, mostly in the infrastructure sector, to investors soon, President Susilo Bambang Yudhoyono said on Monday.

Southeast Asia's biggest economy badly needs investment, especially in infrastructure, to help boost growth and reduce unemployment, but has been struggling to do so amid a weak regulatory environment.

Yudhoyono told a regional investment forum his administration is taking measures to boost investor confidence such as fighting graft and reducing regulatory uncertainty resulting from the country's decentralisation drive.

"Legal certainty is vital to investors, that is why we are actively synchronising local and national policy to ensure that local regulations do not contradict national regulations," Yudhoyono told around 300 investors at the two-day meeting that began on Monday.

During the meeting, the government plans to offer 200 projects in sectors such as infrastructure, mining and tourism in the vast archipelago with a population of about 226 million.

The projects include an $81,000 cattle breeding project in Central Sulawesi province, a $4 billion oil refinery project in Banten province, a $27 million artificial lake in Riau province and a $204 million geothermal power plant in Central Java.

Actual foreign direct investment (FDI) and domestic investments rose significantly last year on the back of political stability and an improving economic outlook.

Actual FDI rose 73 percent to $10.3 billion last year while domestic investment climbed almost 70 percent to 34.9 trillion rupiah.

Indonesia's total foreign and domestic investment rose by around 80 percent in the first quarter from the year-ago period because of strong investment in the telecoms and pulp and paper sectors, the state investment agency (BKPM) said.

Foreign direct investment in January-April stood at $9.94 billion.

Yudhoyono said his administration would continue its fight against graft, one of his key election promises.

"I remind every single local official out there that any corruption on your part will ultimately cost you dearly. Investors have lots of choices in today's global economy. If they feel they are being mistreated, they will take their money elsewhere," Yudhoyono said.

Indonesia has been consistently rated as one of the most corrupt countries in the world by independent corruption watchdogs.

The government has projected Indonesia's economy will grow by close to 7 percent in 2009 compared to this year's 6.4 percent growth forecast in the state budget. (Additional reporting by Telly Nathalia and Tyagita Silka, writing by Andreas Ismar, editing by Sugita Katyal) ((ga.arka@reuters.com; Reuters Messaging: ga.arka.reuters.com@reuters.net; +62 21 384 6364))

Keywords: INDONESIA ECONOMY/INFRASTRUCTURE