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

Wall Street made a sharp turnaround about an hour into trading, on rumors that Spain may be close to asking for a sovereign bailout, which traders say may have increased buying.

The S&P 500 was still down nearly 2 percent for the month on lingering concerns about the “fiscal cliff” in the United States, and the debt crisis in the euro zone.

The fiscal cliff is a series of budget cuts and tax hikes that begin to take effect in the new year. Market participants worry that if no deal is reached to avoid going over the cliff, the economy could fall back into recession.

Concerns over this possibility contributed to the S&P 500′s worst week since early June last week, with no sign of a bottom despite a drop of almost 3 percent over the past two weeks.

“The attention in the equity markets has shifted more noticeably to the possibility that the U.S. fails to properly handle the so-called fiscal cliff,” said Ari Wald, an analyst at PrinceRidge Group, in New York.

Wald said equities in developed countries have been outperforming U.S. stocks despite worries about the euro zone’s financial health.

hina’s sovereign wealth fund will focus more of its $482 billion firepower on Asia in twin bids to beat a rise in protectionism in the West and boost exposure to rapid regional growth, Chairman and Chief Executive Lou Jiwei said.

The man charged with stewardship of a slice of the world’s largest store of foreign wealth lauded the British approach to overseas investment in public sector projects as one for the world to follow and said the policy response to Europe’s debt crisis was a reason to stay underweight in bonds and stocks there.

“As compared with other financial investors we feel that the scrutiny on us is a little more strict because of issues such as national security,” Lou said, adding that while not a major issue yet, he detected rising concern among foreign regulators when CIC partnered with Chinese firms to make acquisitions.

Tensions between Beijing and Washington have recently ratcheted higher because of a series of trade actions against China by President Barack Obama, including his blocking of a privately-owned Chinese company from building wind turbines close to a United States military site and his challenge of Chinese auto and auto-parts subsidies in a World Trade Organization case.

The US House of Representatives’ Intelligence Committee warned last month that Beijing could use equipment made by Huawei, the world’s second-largest maker of routers and other telecoms gear, as well as rival Chinese manufacturer ZTE, the fifth largest, for spying.

Canada has twice delayed a decision over whether to allow a $15.1 billion bid by CNOOC Ltd, China’s top offshore oil and gas producer, for Nexen Inc, despite shareholders giving it their backing.

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Singapore

Mohan Mulani, the founder and executive chairman of Harry’s and his wife Rita Mulani, have agreed to sell their combined holding of 45.91% of Harry’s to Everstone.

Everstone Capital along with Verlinvest has offered to buyout Singapore exchange listed Harry’s Holdings Ltd for up to S$21.85 million (Rs 98 crore or $17.85 million). The Harry’s Group owns and operates a chain of premium lifestyle bars under the brand name Harry’s and also owns and operates various themed restaurants cum bars under the names Mirchi – Taste of India, Marrakesh Moroccan Lounge & Bar and The Rupee Room.

The Harry’s Group is also licensed as franchisee to operate one O’Brien’s sandwich bar in Singapore, operates a boutique hotel The Club by Harry’s Hospitality in Singapore and also provides catering services for corporate functions, social events and large-scale external events. It also owns and operates centres providing interactive play and music programmes to children in Singapore and Malaysia, as a franchisee of the Gymboree Play Programs Inc.

Everstone Capital has bid through a special purpose vehicle F&B Asia Ventures Ltd, a subsidiary of Everstone Capital Partners II LLC. The firm has made a voluntary conditional cash offer for all the issued and paid-up ordinary shares of Harry’s Holdings at S$0.23 per share to take the firm private.

Everstone will be co-investing in the SPV with Verlinvest S.A., a Belgian family holding company dedicated to private equity investments in the consumer sector, which is also a limited partner of Everstone.

The offer price of S$0.23 per share is at a premium over Harry’s IPO price of S$0.22 per share when it went public in January 2011 as well as its peak historical traded price of S$0.22 per share since listing.

The offer price also represents a premium of 53 per cent over the last traded price of $0.150 prior to the announcement of the offer last Friday and a premium of 80 per cent over the average closing price for the six-month period preceding the date of the offer.

Mohan Mulani, the founder and executive chairman of Harry’s and his wife Rita Mulani, have given irrevocable undertakings to accept the offer for their combined holding of 45.91 per cent of Harry’s.

JM Financial Singapore Pte Ltd advised Everstone on the transaction.

For Everstone, this deal would extend its exposure to the F&B space. It had previously picked large stakes in firms like JS Hospitality (Pind Balluchi among other brands) and Pan India Food Solutions (Copper Chimney, Spaghetti Kitchen, The Coffee Bean etc) in the restaurant business.

The fund which has assets under management of approximately $1.8 billion is now looking to expand its network of food and beverage businesses outside India and in particular in South East Asia.

Everstone’s managing partner, Sameer Sain said in a disclosure statement: “We believe that Harry’s, with its well established brand and strong network of premium lifestyle bars and themed restaurants, as well as its catering services business, is a suitable platform for Everstone in the region.”

The offer is subject to receiving valid acceptances so that the PE firm picks at least 50 per cent stake in the firm (including the stake to be acquired from the key shareholders).

Harry’s is listed on Singapore Stock Exchange’s sponsor-supervised listing platform Catalist. Catalist’s regulatory regime offers a faster and simpler way to raise capital.

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Thailand

Thailand and South Korea have agreed to more than double their annual trade to US$30bil over the next five years, the kingdom’s Prime Minister said.

After a meeting with South Korean President Lee Myung-bak, Thai leader Yingluck Shinawatra said the pair had vowed to strengthen economic bonds between their countries.

Thailand would boost exports of rice, fruit and frozen chicken, Yingluck said, adding South Korea had expressed support for the multi-billion-dollar Dawei deep-sea port project being led by a Thai company in Myanmar.

“This project (Dawei) will turn Thailand into Asia-Pacific hub for trade and logistics,” Yingluck said, without detailing South Korea’s offer of help.

The Dawei development on Myanmar’s southern Andaman coast is a key part of the impoverished country’s plans to transform its economy, giving neighbours such as Thailand an outlet to the Indian Ocean and markets to the West.

But the project led by Thai industrial giant Ital-Thai has faced resistance from local villagers and there have been signs of funding troubles.

Malaysia

The FBM KLCI index lost 3.49 points or 0.21% on Monday. The Finance Index fell 0.13% to 15048.76 points, the Properties Index dropped 0.44% to 1063.69 points and the Plantation Index down 0.62% to 8022.8 points. The market traded within a range of 4.13 points between an intra-day high of 1640.78 and a low of 1636.65 during the session.

Actively traded stocks include PATIMAS, TIGER, MTRONIC, FASTRAK-OR, LUSTER, KBUNAI, ASTRO, TM, YTL and NEXTNAT-WA. Trading volume increased to 780.00 mil shares worth RM1027.28 mil as compared to Friday’s 777.11 mil shares worth RM1320.38 mil.

Leading Movers were GENTING (+9 sen to RM9.49), AMMB (+5 sen to RM6.40), MMHE (+6 sen to RM4.90), HLFG (+6 sen to RM12.72) and HLBANK (+2 sen to RM14.72). Lagging Movers were CIMB (-5 sen to RM7.67), IOICORP (-3 sen to RM5.00), PBBANK (-4 sen to RM15.48), KLK (-26 sen to RM20.72) and GENM (-4 sen to RM3.46). Market breadth was negative with 225 gainers as compared to 390 losers.

Indonesia

Indonesian energy company Benakat Petroleum Energy is on course to complete its acquisition of Astrindo Mahakarya Indonesia before the end of the year.

Benakat put the value of the acquisition at $600 million.

The company set September as the deadline but did not meet it because the acquisition was plagued by a series of administrative and legal problems.

“There are so many owners at Astrindo, and that posed legal problems for us,” said Firlie Hanggodi, a Benakat director. “Now we are in the final stage and hope to close the deal at the end of the year.”

Benakat agreed in December 2011 to buy control of Astrindo.

Astrindo provides coal-mining infrastructure and mining services, including transportation and port management, at its sites on Kalimantan and Sumatra, two islands that contain the bulk of the country’s 5 billion-plus tons of coal reserves.

Firlie said that once the acquisition is complete, Astrindo will be included in the company’s consolidated financial earnings.

Benakat bought the company from Indokreasi Nuansa Sejahtera. It hired Danatama Makmur to help with the deal.

Firlie said that Benakat will use internal funds coupled with bank loans for the purchase. The company is seeking loans from local and international banks but did not disclose the names of the lenders.

Steffen Fang, director of Danatama, said that Astrindo has good quality assets, making the acquisition a sensible move.

Benakat posted a net income of Rp 20.1 billion ($2.1 million) in the first nine months of this year from Rp 4.1 billion in the same period last year.

Revenue rose to Rp 273 billion in the first three quarters from Rp 253 billion in the same period last year.

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Philippines

Philippine exports rose at their fastest pace in almost two years in September as the troubled electronics sector recovered and shipments to Japan soared, the government said Tuesday.

September exports rose 22.8 percent from a year earlier to $4.784 billion, the National Statistics Office said in a statement.

This marked the biggest rebound since December 2010, when exports rose 26.5 percent, records showed.

“Improved overall demand for the country’s manufactured exports was mainly due to the generally favorable developments in global industrial production,” the National Economic and Development Authority said in a statement.

Economist Luz Lorenzo of ATR-Kim Eng Securities said exports to Japan, the top market for the month, rose 115 percent to $1.473 billion due to increased demand as the country recovered from a 2011 earthquake and tsunami.

This helped bring double- or even triple-digit growth in Philippine exports of tuna, metal components, bananas, woodcraft and furniture, she said.

“Those are things we export a lot of, to Japan,” Lorenzo said.

The head of the Philippine Exporters Confederation, Sergio Ortiz-Luis, said the September figures were a sign that developed countries were starting to buy electronic products again.

However he expressed doubt that exports would hit the 10-percent growth target earlier set by the government for this year.

“It’s kind of difficult now. We just have three months to go,” Ortiz-Luis said.

Philippine exports had plunged 6.9 percent in 2011 amid a sharp drop in demand for its electronics products.

Total Philippine exports in the first nine months of 2012 year rose 7.2 percent year-on-year to $40.07 billion.

Electronics exports rose 1.1 percent in September. The sector accounted for 38.3 percent of all Philippine shipments for the month.

Electronics exports had plunged 14.9-percent fall in August when overseas demand slumped amid the slowdown in the economies of developed countries.

After Japan, the United States was the second largest export market, buying $602.89 million in September, the government said.

This was a 16.2-percent increase from the same period last year.