Invest Malaysia

Billionaire Buffet urges US to stop 'printing' money and halt debt rise

2009-08-20T13:42:00.001+08:00

SOURCE: THE STAR ONLINE

WASHINGTON: Now that the worst of the economic crisis is past and recovery is slowly under way, Congress must halt the mounting increase in U.S. debt to avoid damage to long-term growth and destruction of the dollar, Warren Buffett is urging.

The plainspoken billionaire weighed in with his view in an Op-Ed piece published in The New York Times Wednesday, saying that once recovery is solidified, lawmakers need to exercise "extraordinary political will" and slow the printing of money to finance the spike in debt.

That huge spending for financial bailout and economic stimulus was sorely needed to rescue the economy in its greatest peril since the 1930s, Buffett said, but now "unchecked emissions" of dollars "will certainly cause the purchasing power of currency to melt" the way runaway carbon emissions will likely melt icebergs.

With government spending now nearly double what it is taking in, "truly major changes in both taxes and outlays will be required," Buffett wrote.

"A revived economy can't come close to bridging that sort of gap."

Buffett, one of the world's wealthiest men, enjoys opining on issues of the day.

And as the "Oracle of Omaha" and head of a successful investment firm, his views carry weight in the public arena.

He has gained a sharper political profile in recent years and has spoken out, for example, on the obligation of the privileged to help the poor.

Buffett was a top economic adviser to Republican Arnold Schwarzenegger's first campaign for California governor and advised Democrat John Kerry's presidential campaign in 2004.

Last September at the height of the financial turmoil, Buffett's firm, Berkshire Hathway Inc., rushed in with a $5 billion in investment in Wall Street powerhouse Goldman Sachs Group Inc., a move viewed as a vote of confidence for a survivor of a crisis that felled two of its investment banking peers.

The economy "is now out of the emergency room and appears to be on a slow path to recovery," Buffett wrote in the Op-Ed.

"But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself."

Because of the deficit, the amount of U.S. debt that is publicly held likely will rise to around 56 percent of Gross Domestic Product this fiscal year ending Oct. 1, from 41 percent last year, Buffett noted.

The three ways of financing the rising debt - borrowing from other countries, borrowing from Americans or printing money - all carry problems, he said.

"The United States is spewing a potentially damaging substance into our economy - greenback emissions," Buffett wrote. - AP

Malaysian SMEs See Business Recovery In 2010

2009-08-20T00:34:00.002+08:00

SOURCE: BERNAMA.COM

KUALA LUMPUR, Aug 19 (Bernama) -- Small and medium enterprises (SMEs) in Malaysia are optimistic that the current sluggish global economy will recover by this year or in 2010, according to the UPS Asia Business Monitor (UPS ABM) 2009.

In a statement on Wednesday, UPS said Malaysian SMEs, along with those surveyed in India, Taiwan, China and Singapore were the most optimistic toward recovery next year.

"Business prospects for 2009 have taken a sharp downturn. SME leaders in Malaysia are looking to offer more value added products and services, diversify their business and explore new revenue streams," said UPS Malaysia marketing manager Tee Wee Ping.

Tee said, of the 100 companies surveyed across Malaysia, 69 percent expected economic growth for the Asia Pacific to decline this year compared to only eight percent in 2008.

Furthermore, only 21 percent of SMEs in Malaysia predicted better business growth prospects for their companies this year, compared to 73 percent in 2008, he explained.

The ABM 2009 also revealed that despite the impact of the slowdown on their business, SMEs in Malaysia are still showing pockets of confidence by remaining stable with 40 percent of them expecting business prospects to remain the same.

"Most felt that tightening cash management via strict credit control and collection plans, exploring new revenue lines and reducing other cost such as rent, utilities and miscellaneous items is the way to sustain business and counter the effects of a global economic recession," he said.

Tee added SME leaders are not looking to downsize their staff count despite the current economic conditions as retaining talent and providing adequate training and support to employees is a key factor to growing a qualified workforce and staying competitive.

About 61 percent of Malaysian SMEs also intend to retain their current workforce with another 24 percent planning new recruitment.

He said the lack of a qualified workforce has been rated as one the biggest threats to the competitiveness and future growth of SMEs in Malaysia.

Overall in Asia, SMEs in the region saw major obstacles to competitiveness in the form of lack of government support, access to funding and working capital, innovation and the availability of a qualified workforce.

Second China company debuts on Malaysian bourse

2009-08-19T15:23:00.001+08:00

Source: THE STAR ONLINE

KUALA LUMPUR: China-based shoe sole maker Multi Sports Holdings Ltd. began trading Wednesday on Malaysia's stock exchange, becoming the second foreign company to list here.

It was a shot in the arm for the Malaysian bourse, which recently simplified and sped up procedures to attract more foreign listings and give its market more depth amid the global credit crunch.

Multi Sports hit a high of 0.89 ringgit (25 cents) shortly after debuting on the main board of Bursa Malaysia, up from its initial public offering price of 0.85 ringgit (24 cents).

However, it slid to 0.815 ringgit (23 cents) at noon in an overall sluggish market.

Chris Eng, analyst with OSK Securities, said investors are expected to be cautious with the two foreign stocks as the companies are fairly small and in the competitive area of shoe manufacturing.

Stock of China's sportswear company Xingquan International Sports Holdings Ltd, which began trading July 10, was at 1.43 ringgit (40.4 cents) at noon Wednesday, down 16 percent from its IPO price of 1.71 ringgit (48 cents).

"The appetite for good quality foreign IPO is huge but people tend to be cautious of generally small foreign companies," Eng said.

Authorities waived listing fees and gave fast-tracked approvals to Xingquan and Multi Sports under its efforts to get more foreign participation.

Multi Sports Chief Executive Lin Hou Zhi said the company chose to be listed in Malaysia because it was less affected by the global financial crisis compared to other nations.

The company has said it expected to raise 58 million ringgit ($16 million) from its share sale and would use part of the proceeds to build a second factory in China to triple its production capacity to 74.6 million pairs of soles a year.

Based in the southeastern city of Jinjiang in the Fujian province, Multi Sports posted a net profit of 46.8 million ringgit ($13 million) last year. - AP

Talk on Buffett’s investment principles

2009-08-18T13:54:00.001+08:00

Source: THE STAR ONLINE

KUALA LUMPUR: Warren Buffett may have reported some huge losses in the investments he made through Berkshire Hathaway Inc over the last couple of months, but the recent quarterly results only show that a longer-term view is necessary to evaluate his investment returns, says Robert P. Miles.

“As in most of the mistakes he made in the past, Buffett would probably say ‘a little more time please’,” Miles, an author, professional speaker and Warren Buffett expert, told StarBiz in an email.

Buffett, whose investment strategies and techniques are still regarded by most as the best and most successful ever, was not spared from the recent global financial crisis.

Weighed down by losses from investments and derivative bets, his investment arm Berkshire Hathaway posted a net loss of US$1.53bil (RM5.43bil) – its worst loss in at least two decades – for the quarter to March 31, compared with a profit of US$940mil in the same period a year ago.

But the company returned to the black with a second-quarter profit of US$3.29bil on improved stock markets and credit derivative gains.

“The global financial crisis presented Buffett some unbelievable opportunities to invest in preferred stocks such as Goldman Sachs, General Electric Company and Swiss Re,” Miles said, adding that railroads and banks were some of Buffett’s favourite plays currently.

For instance, Buffett in May increased his stakes in Wells Fargo & Co and US Bancorp by about 4.3% and 2.2%, respectively, when both counters were trading at their lowest prices in more than a decade.

“Buffett understands banks,” Miles said, “and he obviously believes in the long-term health of the banks, and he thinks their managers are rational, candid and doing the right thing for their shareholders.”

According to Miles, Buffett is an excellent example of corporate governance and should be studied around the world.

“He has greatly influenced many corporations – particularly those in which he holds stakes – such as in the way they expense their stock options, change their accounting procedures and make transparent their executive perks in their annual reports,” Miles said, adding that Buffett had resigned from some boards that had not followed his advice.

Miles will be in Kuala Lumpur to conduct a one-day seminar on Buffett’s principles of investment on Thursday at Istana Hotel.

Organised by the Malaysian Alliance of Corporate Directors, the seminar will feature Miles speaking on Warren Buffett Corporate Governance: Building a World Class Board of Directors and Astute Investing in Turbulent Times: Why Warren Buffett Prefers Declining Markets.

FBM KLCI down; investor cautious of region’s recovery

2009-08-18T13:51:00.002+08:00

Source: The Star Online

PETALING JAYA: The FTSE Bursa Malaysia KLCI (FBM KLCI) stayed in the red, along with its regional peers, as investors turned wary of the region’s recovery story led by China.

A Bloomberg report said Japan’s economic growth was below some economists’ expectations while foreign direct investment in China fell for the 10th month in July.
Last week, reports showed Chinese exports slowed in July, lending fell and investment growth weakened while Australia’s wage growth stalled due to high unemployment.

At 12.30pm, the Shanghai benchmark index fell almost 1.1%, Nikkei 225 was down 0.5%, Hang Seng Index lost 0.3%, Taiex dropped 2.3%, Kospi fell 0.09% while Singapore’s Straits Times Index was slightly up by 0.04%.
The FBM KLCI was 9.3 points lower at 1,159.7 before the midday break.
Losers led gainers 397 to 131 while 208 counters were unchanged.
Prices of crude palm oil (CPO) futures recovered marginally after yesterday’s losses.

CPO for November delivery rose RM36 per tonne to RM2,371. Oil in electronic trading in Singapore was higher at US$66.87 per barrel.
Plantation stocks, however, saw some selling pressure.
Sime Darby Bhd lost 8 sen to RM8.22, Kuala Lumpur Kepong Bhd dropped 46 sen to RM13.38, PPB Group Bhd fell 16 sen to RM14.92 and IOI Corp Bhd shed 14 sen to RM5.06.

On the gainers list, Adventa Bhd rose 8 sen to RM1.83 and Top Glove Corp Bhd added 9 sen to RM7.15.
OSK Investment Bank, in a report, said across east Asia, markets had rallied to the levels last seen in late 2006 and early 2007, indicating that markets were significantly overvalued and ripe for a retracement.
Corporate results wise, there were more outperformance this season, leading to upward revision in earnings estimates, the research house said.

“While poorer results tend to be held back up to the end, we still believe this results season will see more upgrades than downgrades,” OSK added.

Ideal Property to launch RM1.1bil project in Penang

2009-08-18T06:21:00.002+08:00

Souce: David Tan (The Star Online.COM)

GEORGE TOWN: The RM1.1bil Penang International City, located on a 100-acre site in Bayan Lepas, will be the most expensive and largest project unveiled on the island this year when it is launched in October, said Ideal Property Development Sdn Bhd managing director Datuk Alex Ooi.

Ideal Property is developing the project through a joint venture with Koperasi Tunas Muda.
It comprises some 1,800 landed residential and high-rise properties, which make up 80% of the project, with commercial properties taking up the rest, according to Ooi.
“Our strategy is to first launch the residential components, strengthen the infrastructure, and then move on to the commercial phase, comprising a four-star hotel, a 250,000 sq ft lifestyle shopping mall, and a 150,000 sq ft resort office building, equipped with recreational facilities, besides modern IT infrastructure,” he said.

The landed residential components, over 500 terraced and semi-detached units, will be launched in three phases between October 2009 and April 2010.”
Subsequently residential high-rise properties, comprising over 1,000 condominium units will be launched while “sometime in late 2010 or early 2011, the commercial components will be launched,” he added.

Ooi said the landed properties would be priced between RM550,000 and RM780,000, while the apartments between RM300,000 and RM500,000, adding that a 12-acre site would be allocated for the development of an education institution.
“We will also create a one-acre man-made lake as part of the project,” he said.
The project would be marketed in Hong Kong, Singapore, Indonesia, and other parts of Asia, Ooi said.

“We are confident as the property market in China has rebounded, which will have a positive impact on the regional market,” he said.

The recent brisk sales of the One World and One Sky high-rise projects in Bayan Baru showed very strong demand for residential properties on the island, Ooi said.
“The One World and One Sky high-rise properties by Ideal Property and Kuwait Finance House were respectively sold out after their launches in May and July.
“Both projects have over 500 condominium units, priced between RM235,000 and RM410,000,” he said.

Ooi said Ideal Property was also exploring to launch other projects with Koperasi Tunas Mudas, which owns other strategically located sites in the southwest district of the island.
“We are considering the development of modern office buildings next year,” he said.
Ideal Property is part of the Penang-based Ideal Group, comprising over 20 companies, involved in property development, property investment holding and business process outsourcing.

In property development, the group has since 2002 developed over 600 units of landed and residential high-rise properties in Penang and Kuala Lumpur.
The group currently owns and manages three properties on the island, including the landmark Northern Tower at Jalan Sultan Ahmad Shah (or the millionaires’ row) and a light industrial park in Kepong.

Besides Penang, the group also has property investment businesses in Cambodia, Shanghai and Beijing in China.

Bursa Shares End Broadly Lower

2009-08-17T19:02:00.002+08:00

Source: Bernama.Com

KUALA LUMPUR, Aug 17 (Bernama) -- Share prices on Bursa Malaysia ended lower Monday on continuous selling activities across the board, dealers said.The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) declined 19.52 points to close at 1,169.05, after opening 1.32 points lower at 1,187.25.An analyst said the market was in a correction mode after recent gains with the FBM KLCI reaching the 1,190-point level last week."The downtrend was due to heavy profit taking and there was no fresh catalyst to boost it."The market needs it but I don't think there will be any fresh catalyst in the near-term," said SJ Securities analyst Phua Kwee Hock.He said the decline was also in line with the softer regional markets after the announcement of poor US consumer confidence data recently."The data failed to lift up the market, erasing hopes among investors on the world economic recession," he added.

At the close, the Finance Index went down 194.88 points to 9,455.31, the Plantation Index dipped 127.58 points to 5,939.38 and the Industrial Index decreased 33.22 points to 2,575.83.The FBM Emas Index slipped 162.18 points to 7,899.08, the FBM Top 100 eased 141.40 points to 7,671.14 and the FBM ACE Index declined 89.83 points to 4,216.64.Losers led gainers by 701 to 93 while 111 counters were unchanged and 331 others untraded.Total turnover decreased to 1.023 billion shares worth RM1.435 billion from 1.051 billion shares valued at RM1.556 billion last Friday.Volume leader KNM Group went down 4.5 sen to 75 sen while TA dropped seven sen to RM1.16, MRCB dipped eight sen to RM1.33, Axiata lost 13 sen to RM3.00 and Telekom Malaysia rose a sen to RM3.08.UEM Land slipped seven sen to RM1.56 sen and AirAsia inched down half a sen to RM1.44.Among heavyweights, Sime Darby declined 12 sen to RM8.30, Maybank was 13 sen lower at RM6.47, Bumiputra-Commerce lost 24 sen to RM10.50, Tenaga Nasional dipped three sen to RM8.10 and IOI Corporation was lower by 15 sen at RM5.20.Volume on the Main Market stood at 904.397 million shares worth RM1.414 billion, lower from last Friday's 931,588 million shares worth RM1.536 billion.Tthe ACE Market volume dipped to 72.808 million shares valued at RM11.237 million from 80.976 million shares valued at RM10.643 million.

Warrants, however, rose to 41.008 million units worth RM8.121 million from 34.939 million units worth RM7.967 million.Consumer products accounted for 40.815 million shares traded on the Main Market, industrial products 255.488 million, construction 76.080 million, trade/services 305.317 million, technology 18.790 million, infrastructure 12.012 million, finance 70.503 million, hotels 2.053 million, properties 90.185 million, plantations 32.075 million, mining 53,000, REITs 952,900 and closed/fund 75,300.

IMF Commends Malaysia For Sound Macroeconomic Management

2009-08-17T00:57:00.002+08:00

Ramjit (Bernama.Com)

KUALA LUMPUR, Aug 15 (Bernama) -- The International Monetary Fund (IMF) has commended Malaysian authorities for sound macroeconomic management in difficult circumstances, and observed that Malaysia is well positioned to weather the severe impact of the global downturn.A strong external position, robust balance sheets of household and corporate sectors, and sound financial system should lessen the blow from adverse external shocks, it said in a public information notice issued after its executive board concluded the 2009 Article IV Consultation with Malaysia.

The consultation concluded on July 16.Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year.A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies.It prepares a report, which forms the basis for discussion by the executive board, and at the conclusion of the discussion, the managing director, as chairman of the board, summarises the views of executive directors, and this summary is transmitted to the country's authorities.IMF executive board's directors agreed that the counter-cyclical fiscal response has been appropriately large, and should mitigate the impact of output contraction on households and businesses.They saw some limited room for additional stimulus if the downturn proves longer or deeper than expected.

At the same time, noting the high prospective budget deficits and a rising debt to gross domestic product (GDP) ratio, they strongly encouraged the authorities to cast any future fiscal decisions in a medium-term framework.The directors highlighted that the necessary steps to reduce medium-term fiscal risks included broadening the non-oil tax base, moving ahead with subsidy reform, and putting fiscal policy on a credible consolidation path.They considered monetary policy settings to be broadly appropriate, and suggested that monetary policy should continue to provide the first line of defence against any deterioration of growth prospects, especially in light of the limited fiscal space.

Nevertheless, they felt that unless the outlook for growth or inflation deteriorates significantly, monetary policy should stay the course until a recovery is firmly underway.They also emphasised that although the financial sector appears sound and benefited from the growth of Islamic finance, volatile global markets put a premium on crisis preparedness and proactive supervision.They welcomed the authorities' focus on further preventive steps, including upgrading the stress-testing framework, ensuring effective risk management, and strengthening supervisory cooperation and oversight of institutions with cross-border activities.They underscored that a key medium-term challenge will be strengthening domestic demand as a source of growth.They encouraged the authorities to continue to focus on promoting private investment and deepening reforms in labour and product markets.They welcomed the recent decision to push ahead with further liberalisation in selected sectors, but stressed that more remains to be done to enhance the business climate and remove long-standing structural impediments to investment.Most directors generally considered that Malaysia's current exchange rate policy to be broadly appropriate.

They also noted the staff's assessment that the ringgit appears to be weaker than its equilibrium level in real effective terms.However, many directors were unconvinced by the exchange rate assessment, and underlined the uncertainty about fundamentals and transitory factors related to Malaysia's commodity exports and the global crisis.They concurred with the authorities' view that the exchange rate policy is consistent with a return to a gradual trend appreciation of the currency once the crisis subsides.Some directors supported the staff's position that, once the recovery is firmly established, a faster pace of real appreciation would facilitate a rebalancing of sources of growth toward domestic demand.As a background, IMF said Malaysia has been hit hard by the global downturn.The economy is set to contract for the first time in 10 years, while GDP growth and inflation have slowed sharply since mid-2008, it said.However, the reduction in employment has been relatively small so far, and as a result, consumer confidence has generally held up, it added.IMF said Malaysia's financial sector has faced the crisis from a position of strength and so far has coped well.Nevertheless, global turbulence has spilled into the domestic financial markets, it said.Equity prices fell sharply in late 2008 and early 2009, but rebounded more recently, reflecting renewed optimism about near-term prospects and an upturn in commodity prices, IMF said.Credit growth has decelerated, but remained at a reasonable 10.5 percent year-on-year in April 2009, well above nominal GDP growth, it said.

"Despite capital reversals and the unwinding of the commodity boom, Malaysia's external position remains strong," it added.The current account surplus reached 17 percent of GDP in 2008, as the collapse of exports in late 2008 was accompanied by an equally strong import compression, IMF said.The ringgit has appreciated slightly vis-a-vis the US dollar since April, fter experiencing depreciation pressures last fall and early this year as capital outflows intensified, it said.Budget consolidation was reversed in 2008.The central government deficit rose to almost five percent of GDP and is set to reach nearly eight percent of GDP in 2009, it said.Two stimulus packages have been announced in late 2008 and early 2009, totalling about 10 percent of GDP, to be implemented over two years.The packages include an array of expenditure and revenue measures, as well as loan guarantees, it added.Monetary policy has been loosened decisively, according to IMF.

Bank Negara Malaysia has slashed its policy rate by 150 basis points to two percent, and reserve requirements have also been cut to reduce the cost of financial inter mediation, it said.On the whole, dollar liquidity has remained adequate, and the monetary transmission mechanism has not been undermined by the global market turbulence.IMF said external developments will probably shape Malaysia's recovery path.The export-led recession is expected to last through end-2009, with quarterly growth returning in early 2010, it said.Risks to growth relate to the duration of the global recession, the evolution of commodity prices, and adverse macro-financial interactions, it added.

Worldwide rally lifts local stocks higher

2009-08-13T21:37:00.002+08:00

Source: The Star Online

KUALA LUMPUR: Shares on Bursa Malaysia advanced on Thursday, although the benchmark index rise was checked by investors' lacked of appetite for pricey local blue chip stocks.
At the close, the FBM KLCI Index rose 5.65 points, or 0.5% at 1,186.19 points. The broader FBM Emas Index jumped 0.7% to 8,052 points, while the FBM SmallCap Index sizzled 2% to 10,355 points.

Total turnover was 1.1 billion shares worth RM1.68bil. Market breadth was positive, with 568 rising counters leading 166 decliners and 194 counters traded unchanged.
Shares in Mudajaya surged 67 sen, or 24% to close at a record RM3.45 after CIMB raised the stock’s target price ro RM6.65 from RM3.68 previously. The stock was the biggest gainer among the 319-counters strong FBM Emas Index.

Another stock that benefited from upgrades by analysts today was IJM Land. The counter jumped 19 sen, or 10% to RM1.98 after AmResearch’s lifted its fair value call on the stock from RM2.40 to RM3.

Investors were in a buoyant mood yesterday, pushing major indices in Hong Kong, Taiwan, Australia and Indonesia up by at least 2%. Thailand’s leading stock indicator rose 1.8%, while shares were 1.7% higher in Singapore.

Shares in India were up by at least 3% ahead of the closing bell.
In Europe, shares rose by about 1% after latest government data showed that the German and French economies expanded in the second quarter, which confirmed the two countries exit from their worst recessions since World War II.

Euro zone economies contracted 0.1% during the quarter, which was better than what most economisthad expected.
Crude oil climbed above US$71 per barrel.

KLCI Closes Higher

2009-08-10T22:40:00.001+08:00

Source: THE STAR ONLINE

KUALA LUMPUR: Local stocks closed higher on Monday, with rubber glove makers posting handsome double digit gains as investors bet that companies like Supermax Corp, Adventa and Rubberex Corp would profit from increased demand and higher prices.

The FBM KLCI closed 3.12 points higher, or 0.28% at 1,188 points - a new high for the year. Total market turnover was 870 million shares worth an estimated RM1.286bil.
Rising stocks outnumbered decliners by a comfortable margin of 416 versus 262, while 218 counters were unchanged. The broader FBM Emas index rose 0.38% to 8,051 points and the FBM Small Cap index jumped 1.3% to 10,201 points.

Commodity related stocks hogged the limelight.
Shares in Supermax jumped 30 sen, or 11% to RM3.03, while Adventa rose 38 sen, or 22% to RM2.11 and Rubberex added 27 sen, or 16% to RM2.00.
Big plantations stocks, however, failed to ride on the bullish industry data that propelled crude palm oil futures contracts on Bursa Derivatives by as much as 3.4% to new two-month highs.
Sime Darby added 2 sen to RM8.28, IOI Corp advanced 1 sen to RM5.14 and KL-Kepong climbed 6 sen to RM12.70.

The Malaysian Palm Oil Board said on Monday that the edible oil stockpile in the country dropped 5.7% in July to 1.3 million tonnes from the previous month, as export surged faster than production.
Most Asian bourses ended higher on Monday, but European equities were down in early trade after four weeks of straight gains.

Bursa Shares Likely To Be Lower Next Week

2009-08-09T11:16:00.001+08:00

Source: Bernama.Com

KUALA LUMPUR, Aug 8 (Bernama) -- Share prices on Bursa Malaysia are expected to be lower next week as investors could go on profit taking after the rally the past few weeks, said an analyst.

"Local investors may re-enter once new market catalysts emerge," he said.

The analyst said one of the factors that could affect investors' decision next week would be the outcome of the US July employment report.

The report, to be released on Friday, would be the firmer evidence that the world's biggest economy has turned the corner.

On technical outlook, the analyst said, "a close above solid technical resistance of 1,200 is what would be needed by the bulls to reach an explosive target."

For the week just ended, the market saw the introduction of FTSE Bursa Malaysia ACE Index on Monday following changes to the MESDAQ Market as an alternative market for emerging companies of all sizes and sectors. It is now called the ACE Market.

The Main Board and Second Board were also merged into a unified board for established companies and is now known as the Main Market.

During the week, the local market sentiment was strong over optimism that the global economic slowdown led by the US has come to an end.

US President Barack Obama said that the US may be seeing the "very beginnings" of the end of the recession as the country was losing jobs at half the rate it was at the beginning of this year.

This sent the FBM Kuala Lumpur Composite Index (FBM KLCI) 9.98 points up to end the week at 1,184.88, although the market was slightly jittery ahead of the US employment report.

The Finance Index rose 133.80 to close the week at 9,689.03, the Plantation Index increased 141.88 points to 5,751.48 and the Industrial Index was 34.87 points higher at 2,610.85.

The FBM Emas Index added 101.20 points to 8,020.99, the FBM Top 100 Index rose 83.70 points to 7,789.75 and the newly introduced FBM ACE Index ended the week at 4,244.55.

Total turnover for the week fell to 4.801 billion shares worth RM7.702 billion from 5.457 billion shares worth RM8.236 billion a week before.

Volume on the Main Market stood at 4.197 billion units worth RM7.572 billion while the ACE Market volume was at 410.409 million units worth RM75.145 million.

The volume of call warrants declined to 167.581 million units worth RM42.159 million from 195.933 million units worth RM40.220 million the previous week.

Asia Currencies: Ringgit, Peso Lead Weekly Gains as Slump Eases

2009-08-08T09:49:00.003+08:00

Source: Lilian Karunungan (Bloomberg)

Aug. 8 (Bloomberg) -- Asian currencies rose this week, led by the Malaysian ringgit and the Philippine peso, as signs a global economic recovery is gathering pace bolstered demand for emerging-market assets.

The ringgit reached a two-month high against the dollar and the peso had its best week since May after reports showed manufacturing picked up last month in the U.S., Europe and China. Indonesia’s rupiah climbed to its strongest level in nine months before paring gains amid concern the central bank will combat appreciation to support exporters.

“Risk assets such as Asian currencies could rally further,” said Craig Chan, a Singapore-base strategist at Nomura Holdings Inc., Japan’s largest brokerage. “The momentum that has been built up in the market has been strong. There’s been very good numbers” from economic data.

The ringgit climbed 0.3 percent this week to 3.5065 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. It reached 3.4840 on Aug. 5, the highest since June 3. The peso advanced 0.7 percent to 47.755 and the rupiah was little changed at 9,965. The Indonesian currency reached 9,850 on Aug. 4, its strongest level since October.

The U.S. Institute for Supply Management’s factory gauge and a Markit Economics index of euro-area manufacturing activity both rose to 11-month highs in July, based on separate surveys of purchasing managers in the two economies. The indicators stayed below 50, signaling contractions. Surveys published this month in China, the world’s third-largest economy, showed factory output there expanded for at least a fourth month.

Maxis IPO

Malaysia’s government said on Aug. 6 there are “some signs of recovery” in electronics, the nation’s biggest export, after reporting that a slump in overseas shipments slowed in June.

The ringgit rose for a fourth week, the longest winning streak since early April. The Kuala Lumpur Composite Index of shares rallied to the highest level since June 2008 as mobile- phone operator Maxis Communications Bhd. prepares for what may be a record stock offering for Malaysia.

“The main driving factor for the ringgit is the stock inflows” given the improving economic outlook, said Azmi Shukri Rahman, a currency trader at CIMB Investment Bank Bhd. in Kuala Lumpur. “The new IPO should attract overseas funds in the medium term.”

Malaysian exports fell 22.6 percent from a year earlier, following a 30 percent drop in May, the trade ministry said on Aug. 5. Electronics manufacturers have seen “a slight pickup in orders so there’s a good sign,” Trade Minister Mustapa Mohamed told reporters in Singapore this week.

Global Recovery

The peso strengthened after JPMorgan Chase & Co. forecast remittances from overseas workers, which account for 10 percent of the economy, will increase 2 percent this year, revising a prior prediction for a 12 percent drop.

“The overall picture is a stronger peso because of the optimism on the global recovery,” said Alan Cayetano, a senior trader at Metropolitan Bank & Trust Co. in Manila. “There’s been a steady stream of positive data and good corporate earnings in the U.S. that has fueled momentum for investors to take on risk trades.”

Overseas investors bought more Indonesian stocks than they sold on all but one of the last 16 days, lured by the fastest economic expansion in Southeast Asia. Bank Indonesia said yesterday it wants “stability” in the rupiah, noting that asset appreciation this year has been spurred by inflows of $4 billion from abroad.

Intervention Risk

“Foreigners like Indonesia’s positive economic growth,” said Esther Chandra, a currency dealer at PT Bank Pan Indonesia in Jakarta. “But Bank Indonesia is also watching very closely and checking markets very frequently as they don’t want the rupiah to appreciate too fast.”

Concern about central bank intervention was also cited by traders as a factor limiting gains this week in the Korean won, the Taiwan dollar and the Thai baht.

The won rose 0.3 percent this week to 1,224.90 versus the greenback, the Taiwan dollar gained 0.1 percent to NT$32.792 and the Thai baht traded at 33.94 compared with 34.01 on July 31. The Singapore dollar rose 0.2 percent to S$1.4373.

Positive signs for US economy, jobless claims fall and fewer layoffs

2009-08-07T14:23:00.001+08:00

Source: The Star Online

WASHINGTON: In a positive sign for the U.S. economy, companies are laying off fewer workers as they prepare to ramp up production to replenish their depleted stockpiles of goods.

Many analysts pointed to Thursday's drop in jobless claims as evidence of a trend signaling fewer job losses in coming months, particularly compared with the flood of layoffs earlier this year.

Still, job openings remain scarce.

And most economists expect the unemployment rate to keep rising to 10 percent or higher by the end of this year.

On Friday, the government will report the July unemployment rate.

First-time claims for jobless benefits dropped to a seasonally adjusted 550,000 last week, down from 588,000 in the previous week, the Labor Department said Thursday.

The four-week average of claims, which smooths out fluctuations, dropped to 555,250, its lowest point since late January.

"The lower claims figures are an important economic development and confirmation that the economy is turning the corner," Joseph LaVorgna, chief U.S. economist at Deutsche Bank, wrote in a note to clients.

Fewer layoffs could help boost consumer sentiment.

That's because those who are spending less now for fear of losing their jobs could grow more confident.

If they start borrowing and spending more, it would help invigorate the economy.

Many economists say an improved job market could be evident in the unemployment report to be issued Friday.

LaVorgna, for example, has cut his projection of job losses for July to 150,000 from 325,000.

That would be the fewest since last July.

Overall, analysts expect the report will show the unemployment rate rose to a 26-year high of 9.6 percent last month, up from 9.5 percent in June, according to survey by Thomson Reuters.

Employers are forecast to have cut 320,000 jobs in July, the survey found, down from 467,000 in June and from an average of 645,000 in the six months from November to April.

But many economists think the July job losses will be smaller.

Dean Maki, chief U.S. economist at Barclays Capital, expects Friday's report to show a 275,000 drop in payrolls.

Analysts generally expect production to ramp up in the July-September period as manufacturers restock shelves and warehouses.

Layoffs in the construction industry should also decline, Maki said, because home building has recovered from record lows.

Spending on residential construction rose in June for the first time in more than three years, the Commerce Department said Monday.

"We think the trend is toward smaller and smaller job cuts" until the last three months of the year, Maki said, when employers may actually add jobs - which hasn't happened since December 2007.

Many companies have cut as many workers as they possibly can while still maintaining an adequate output of goods, said Rob Saam, senior vice president of Lee Hecht Harrison, a consulting firm that helps find jobs for laid-off professionals.

In many cases, these companies have managed to boost the productivity of their diminished staff.

"You can only maintain that level of productivity for so long before you wear out your work force," Saam said.

Other figures out Thursday indicated that jobs are still scarce.

The number of people who are continuing to claim unemployment benefits rose by 69,000 to 6.3 million, after having dropped for three straight weeks - evidence that the unemployed are having difficulty finding new work.

The figures for continuing jobless claims lag behind those for initial claims by a week.

When emergency extensions of unemployment are included, the total jobless benefit rolls climbed to a record 9.35 million for the week ending July 18, the most recent period for which figures are available.

Congress has added up to 53 extra weeks of benefits on top of the 26 typically provided by the states.

Despite the decline in new jobless claims, they remain far above the 300,000 to 350,000 that analysts say is consistent with a healthy economy.

New claims last fell below 300,000 in early 2007.

Separately, many retail chains reported sluggish July sales Thursday as consumers proved reluctant to spend.

Mall-based chains, such as Macy's Inc. and teen retailers Abercrombie & Fitch, were the hardest hit as shoppers focused on necessities.

Financial markets fell in afternoon trading.

The Dow Jones industrial average dropped 24 points, or 0.27 percent, while broader stock averages also declined.

The recession, which began in December 2007 and is the longest since World War II, has eliminated a net total of 6.5 million jobs.

More job cuts were announced this week.

The publisher of the Milwaukee Journal Sentinel said it would slash 92 jobs as the current advertising slump continues to ravage the newspaper business.

Elsewhere, about 6,000 General Motors Co. blue-collar workers have taken the latest round of early retirement and buyout offers.

But GM wants to cut about 13,500 workers, setting the stage for more layoffs. - AP

Economist: Malaysia's Investment environment must improve

2009-08-07T14:19:00.008+08:00

Source: The Star Online

KUALA LUMPUR: Despite talk of a relatively robust recovery among emerging markets, not all is sunny on the local economic front.

International investors are questioning Malaysia’s regional economic competitiveness as they begin to evaluate potential post-crisis investment opportunities in the Asian region.

Deutsche Bank Group global chief economist Dr Norbert Walter said Malaysia should make a concerted effort to improve its investment environment if it wanted to remain a competitive economic force among other emerging markets in the long run.

He cited political instability, uncertainty in the constitutional application of syariah law, and the lack of more concrete plans to develop local infrastructure as some of the key structural and institutional problems that might mar the country’s ability to attract and retain capital.

“Investment in Malaysia has been falling by almost 11% year-on-year for the past two quarters. Malaysia’s political volatility seems to be harming businesses and deterring future investment opportunities,” he told a media briefing on the worldwide recession yesterday.

When asked on the weakness of the ringgit against the greenback relative to other commodity-based currencies such as the Australian dollar, Walter speculated that this too might be due to investment capital outflows.

While the former International Monetary Fund economist lauded the Government’s prudence in diversifying its investment in sectors other than oil and gas such as the manufacturing sector, he urged the hasty embrace of renewable energy sources.

“Malaysia should capitalise on its geographical advantage as a tropical nation and explore its potential as a solar and biomass energy hub,” he said. On Malaysia’s economic recovery from the current crisis, Walter forecast an acceleration of growth well into 2010.

According to him, Malaysia’s recovery, however, would be slower than that of Singapore due to its greater reliance on foreign demand for commodities. The latter had already seen a recovery in the past month.

He alluded regional cooperation between Asean nations as a source of future growth and stability. “Deeper integration between Asean countries is definitely needed for economic reasons and for representation in the international forum,” he said, adding that Malaysia should promote Putrajaya as the official headquarters for Asean, even calling it the “Brussels of Asia”.

He went on to praise Bank Negara for promoting research of a potential integrated Asian monetary regime.

Malaysia and Brunei explore oil and gas project

2009-08-06T15:45:00.001+08:00

Source: STEPHEN THEN (The Star Online)

BANDAR SERI BEGAWAN: Malaysia and Brunei have taken a step forward to explore the possibility of oil and gas joint ventures in the maritime territories they both share, although details have yet to be worked out.

This followed a “highly successful meeting” between Malaysian Prime Minister Datuk Seri Najib Tun Razak and the Sultan of Brunei, Sultan Hassanal Bolkiah, who is also the Prime Minister.

A very happy-looking Najib told a press conference Thursday that his private meeting with the Sultan in conjunction with the two countries’ 13th annual consultation had ended on a “very satisfactory” note.

“This annual meeting has achieved very satisfactory results. The Sultan said he looks forward to greater levels of cooperation between us.

“The agreement between our two countries to settle the land and maritime boundary demarcation is one of the big milestones ... that will bring our bilateral relationship to new heights,” he said.

The boundary issue has been agreed to in principle, he said. There was still a large section of land at the Sarawak-Brunei that needed to demarcated and a topographical survey had to be conducted.

“The agreement (on the land and maritime boundary demarcation) will be final. The possibility of joint exploration (for oil and gas) will be worked out later,” Najib said.

Malaysia has proposed a role for its national oil and gas company Petronas in the joint venture, although that role had yet to be worked out, he told reporters before concluding his three-day official visit to this oil-rich sultanate.

He declined to give details on Petronas’ proposed role.

In March, Malaysia and Brunei had agreed in principle to resolve outstanding overlapping claims on the land and maritime boundary covering Limbang, a division in Sarawak sandwiched by the two borders of Brunei, following a meeting between the then Prime Minister Tun Abdullah Ahmad Badawi and the Sultan.

Analysts: Signs of quick rebound in property sector

2009-08-04T20:08:00.003+08:00

Source: EUGENE MAHALINGAM (The Star Online)

PETALING JAYA: The slew of property launches and speedy take-up rates lately are signs that the local (property) sector is on a quick rebound from the global economic downturn.

In its latest report, HwangDBS Vickers Research said the local high-end property sector had been on an uptrend, with developers raking in quick profits from project launches.

Among them were DNP Bhd’s Verticas condominiums in Bukit Ceylon, Kuala Lumpur, which saw 60% of the 50 units soft launched being taken up.

En bloc buyers also snapped up 93% of non-bumiputra units launched (last month) at IJM Land Bhd’s Light Linear project in Penang.

“We see demand for high-end units returning, which could re-rate the sector,” said HwangDBS.

It also highlighted Eastern & Oriental Bhd’s St Mary serviced apartments in Kuala Lumpur (launched in June, 80% take-up in five days) and SP Setia Bhd’s Sky Residences condominiums in KL (previewed in September 2008, with an average 70% take-up so far).

“Developers are more confident now to resume launches, which should lead to faster earnings recovery. Selling prices may soon be raised and incentives gradually pulled back, resulting in margin expansion for developers,” HwangDBS said.

An analyst from a local bank-backed brokerage said the take-up rates were not surprising, given the developers’ good reputation.

“These developers aren’t your fly-by-night type of developers. They have very good reputation and solid track record. The average investor or house-buyer is more likely to park his money with a well-known developer, knowing that his money would be safe,” he said.

Another analyst said the property sector was making a comeback in the region. In the last few months, Hong Kong, Singapore and China had seen strong surges in property demand, she said.

“There’s so much liquidity with nowhere to go. This is one of the safest ways to fight inflation. Putting your money in the bank basically means being eaten up alive by inflation.

“Malaysian property is generally still very affordable. If you don’t buy one now, it will be even more difficult to afford it next time. The 2% interest you get from banks is nothing,” she noted.

HwangDBS also highlighted the Malaysia Property Inc, a joint public-private sector initiative aimed to attract foreign investments worth RM20bil in the domestic real estate sector over the next 10 years.

“The recent liberalisation measures (abolishment of local equity ownership requirement for mergers and acquisitions and Foreign Investment Committee approvals) should help boost both foreign and local demand for Malaysian properties.

“Previous policy changes (waiver of real property gains tax and monthly EPF withdrawals) introduced just before the financial crisis have yet to be fully felt and could be strong catalysts during a recovery,” it said.

Global economy back on track next year

2009-08-04T20:04:00.001+08:00

Source: VANMALA SUBRAMANIAM (The Star Online)

Expert: Rates and unemployment will, however, remain high for some time

KUALA LUMPUR: The global economy is expected to be back on track by early next year, said former World Bank economist and bond market expert Ismail Dalla.

“The world economy is in a recovery mode,” he said, adding that his outlook analysis was based primarily on the World Bank’s latest forecast for a positive growth of 2.8% in the world economy by the last quarter of 2010.

But he cautioned that “despite some signs of recovery due largely to the amount of money being pumped into the US economy, interest rates will remain low and unemployment will remain high for some time to come.”

Dalla was speaking at public lecture organized by University Putra Malaysia titled Malaysian Fixed-Income Markets in the Context of Global Bond Markets here yesterday.

Commenting on the development of the domestic bond market, Dalla, now a visiting professor at the School of Business, George Washington University in the US, noted that Malaysia had the largest corporate bond market as a percentage of gross domestic product (GDP) in the world last year, surpassing that of the US and South Korea.

He also applauded Malaysia’s efforts in developing a healthy and robust local currency bond market and the recent proposal to create a private pension fund as an alternative to the Employees Provision Fund (EPF).

“This new private pension scheme is good news. The current EPF scheme reduces disposable income, limiting an individual’s ability to invest in the bond market,” said the author of The Korean Bond Market – Post-Asian Crisis and Beyond.

The Government recently announced that Malaysia would set up a private pension fund by the middle of 2010, aimed at those who remain outside any formal pension system.

According to Dalla, prospects for emerging market debt remain excellent as the asset class had performed much better than high yielding US bonds amid the global financial crisis.

With the increased availability of risk management tools, local currency bond markets had the potential and room to grow in depth and sophistication, he said.

The challenge was for market regulators to be proactive and avoid excessive counter-productive innovation and risk-taking, Dalla said.

Malaysia May Make Early Recovery From Crisis

2009-08-04T00:52:00.001+08:00

Source: Bernama.Com

KUALA LUMPUR, Aug 3 (Bernama) -- Malaysia is expected to be one of the first few countries in the region to recover from the economic crisis, said Ismail Dalla, a visiting professor at the School of Business, George Washington University, United States of America.

"Based on what's happening on the ground, it seems like we are already in the recovery mode," he said.

An international consultant on capital-market issues, Dalla said this when asked to comment on the country's economic outlook following a public lecture from him on "Malaysian fixed-income markets in the context of global bond markets".

Dalla, who has extensive experience in the financial markets including 25 years with the World Bank Group dealing with both the public and private sectors in the emerging markets, said recovery was on the way with indications of better gross domestic product growth.

His lecture programme here Monday was jointly organised by Graduate School of Management (GSM) University Putra Malaysia and RAM Holdings.

US recession appears on verge of ending, economy poised for growing again

2009-08-02T00:12:00.001+08:00

Source: The Star Online

WASHINGTON: At long last, the worst recession in America since World War II appears on the verge of ending.

The economy dipped only slightly in the second quarter of this year - falling at a 1 percent annual pace, better than expected.

And many analysts think the economy is starting to grow again in the current quarter, setting up a long-awaited recovery.

Still, any rebound is likely to be restrained by consumers' reluctance to spend. Stressed by rising unemployment, smaller paychecks and shrunken nest eggs, Americans spent less in the second quarter.

Without the full strength of consumer spending, which supplies more than two-thirds of U.S. economic activity, businesses would need to deliver more of the firepower for sustained growth.

Economists say they are hopeful that consumers, aided by the "cash for clunkers" program to boost car sales, eventually will nudge up spending.

Over time, that would help stem a still-heavy wave of job losses and stimulate hiring.

"We won't have a recovery as long as we keep losing jobs," President Barack Obama acknowledged Friday.

He added: "Eventually, businesses will start growing again and will start hiring again, and that's when it will truly feel like a recovery to the American people."

The small drop in gross domestic product for the April-to-June period, reported Friday by the Commerce Department, followed a dizzying free fall in the first three months of this year.

The economy plunged at an annual rate of 6.4 percent in the first quarter, the worst in nearly three decades.

Including the April-to-June period, the economy has now contracted for a record four straight quarters, for the first time on record dating to 1947.

Over that period, companies and ordinary Americans have suffered a painful toll, with job losses still exceeding a net total of 400,000 each month.

Many economists had predicted a slightly worse 1.5 percent annualized contraction in second-quarter GDP, which is considered the best gauge of U.S. economic health.

GDP measures the value of all goods and services - everything from cars, clothes and computers to makeup, manicures and machinery - produced in the United States.

"The recession seems to be largely over with at this point," said economist Joel Naroff, president of Naroff Economic Advisors.

"We still have a long way to go to get back to full health."

Behind the better second-quarter performance were other signs of a fading recession: less drastic spending cuts by businesses, a resumption of federal and local government spending and an improved trade picture.

Businesses did end up cutting their stockpiles of goods at a record pace in the second quarter, but that carries a silver lining.

With their inventories at rock-bottom, businesses will likely need to ramp up production to meet customer demand.

That would stimulate the economy starting in the current quarter.

Some economists think growth in the July-to-September quarter could be more vigorous than previously forecast - possibly 3 percent annual growth or higher.

Obama's stimulus package of tax cuts and increased government spending provided some support to the economy in the second quarter.

But it will have more impact in the second half of this year as it extends its reach, economists said.

In the meantime, the damage caused by this recession runs deep.

The figures released Friday provide the most compelling evidence to date that the current recession has been the worst since the Great Depression.

It has taken a 3.9 percent bite out of economic activity so far, said Mark Zandi, chief economist at Moody's Economy.com.

Before this downturn, the most painful hit came in the 1957-58 recession, when GDP fell 3.8 percent, he said.

And in revisions to GDP figures that stretch back to the Great Depression, the Commerce Department now estimates the economy grew just 0.4 percent in 2008.

That's much weaker than the 1.1 percent growth the government had earlier estimated.

Even if the recession ends later this year, the job market will remain weak. Companies are expected to keep cutting payroll through the rest of this year.

The Fed says unemployment - now at a 26-year high of 9.5 percent _ will top 10 percent at the end of this year.

Businesses won't likely boost hiring until they're certain the recovery has staying power.

In the second quarter, businesses - including home builders - continued to cut spending, though not nearly as much as they had earlier.

That's one reason the economy didn't contract as much as feared.

Consumers retreated en masse.

They sliced spending at a rate of 1.2 percent in the second quarter, after having nudged up purchases at a 0.6 percent pace in the first quarter.

In large part, that's because wages and salaries have fallen for the past three quarters.

With people spending less, Americans' savings rate rose sharply - to 5.2 percent in the second quarter, the highest since 1998.

As important as savings is, many economists wish that consumers would save less and spend more right now to help propel the recovery.

"I'm praying, 'God, please don't encourage American households to save a lot more just yet,"' said Nariman Behravesh, chief economist at IHS Global Insight. - AP

US stocks extend big July rally

2009-07-31T13:58:00.002+08:00

Source: The Star Online

NEW YORK: Stocks added to an already impressive run Thursday as another round of earnings reports gave investors new reasons to be optimistic about the U.S. economy.
The Dow Jones industrial average rose its highest level in nearly nine months with a gain of 84 points and the Nasdaq composite index traded above 2,000 for the first time since October.
The latest reports struck on a theme that has played out for weeks: Times are tough but companies aren't doing as badly as had been feared. Many have chopped costs to produce profits well beyond the market's modest expectations.
Motorola Inc. said it used deep cost cuts to wring a profit from its latest quarter.
Analysts had expected a loss.
Goodyear Tire & Rubber's shortfall was half what had been expected and Dow Chemical Co.'s CEO said he believes the U.S. economy "has found bottom."
A surprise drop in the number of people continuing to seek unemployment benefits gave investors even more reason to put money into stocks.
With one day to go, the Dow is up 8.4 percent this month, its strongest July since 1989, when it gained 9 percent.
A much-anticipated report on the overall output of the economy is sure to drive the market's direction on Friday.
Stocks are up 13 percent since July 13 when investors bet correctly that Goldman Sachs Group Inc. would report enormous earnings.
Since then, other profit reports have brought hope that the longest recession since World War II might end this year.
AT&T Inc., chip maker Intel Corp. and heavy equipment maker Caterpillar Inc. all posted results that outran expectations.
Three out of four companies in the S&P 500 index that reported second-quarter results so far have topped analysts' expectations, according to Thomson Reuters. About 300 of the 500 companies have reported.
Analysts said the end of the month is pressuring money managers and traders to show they have kept up with July's steep rally. Often, the summer months are quieter than the rest of the year on Wall Street as traders take vacations.
Some of the buying is likely tied to short-covering, where investors have to buy stock after having earlier sold borrowed shares in a bet they would fall.
"People kind of got caught a little flat-footed here. The summer is supposed to be slow," said Jon Merriman, chief executive of Merriman Curhan Ford in San Francisco.
The Dow rose 83.74, or 0.9 percent, to 9,154.46 after being up as much as 176 points.
The Standard & Poor's 500 index rose 11.60, or 1.2 percent, to 986.75.
It rose to nearly 997 during the day.
It hasn't traded above 1,000 since November.
It was the highest close for the Dow and the S&P 500 index since Nov. 4.
The Nasdaq advanced 16.54, or 0.9 percent, to 1,984.30. It rose to nearly 2,010 in morning trading, its first move above 2,000 since Oct. 3.
The index is up 56 percent from its low of 1,269 in March.
It was the highest finish for the index since Oct. 1.
The Russell 2000 index of smaller companies rose 9.42, or 1.7 percent, to 557.80.
About for stocks rose for every one that fell on the New York Stock Exchange.
Volume came to 1.4 billion shares compared with 1.3 billion Wednesday.
Stocks made little progress in the four days prior to Thursday but some break in the buying had been expected after the steep gains.
Investors rewarded the latest companies to beat expectations. Motorola rose 62 cents, or 9.4 percent, to $7.19.
Goodyear rose $1.97, or 14.2 percent, to $15.86. Dow Chemical rose $1.26, or 6.2 percent, to $21.53.
General Electric Co. led the Dow Jones industrial average higher after a Goldman Sachs analyst raised his rating on the stock and predicted the industrial conglomerate won't have to split off its lending arm under financial industry reform proposals circulating in Congress.
The stock rose 85 cents, or 6.9 percent, to $13.11.
Bond prices were mixed after a successful auction of $28 billion of seven-year notes.
Weak demand at auctions earlier in the week raised concerns that the government might have to offer higher returns on bonds to lure in investors, which would have the negative effect of raising borrowing costs on loans such as mortgages.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.62 percent from 3.67 percent late Wednesday.
Light, sweet crude rose $3.57 to settle at $66.92 a barrel on the New York Mercantile Exchange after tumbling 6 percent Wednesday on fears economic growth in China would slow and curb demand for resources. - AP

Amanah Saham 1Malaysia open for subscription from Aug 5

2009-07-31T13:56:00.002+08:00

Source: The Star Online

KUALA LUMPUR: Permodalan Nasional Bhd (PNB) will offer for subscription the RM10 billion Amanah Saham 1Malaysia, from August 5 at a fixed price of RM1 per unit.
This would be the largest fund offering to date by PNB.
Prime Minister Datuk Seri Najib Razak said at the launch of the fund Friday that the fresh injection of liquidity would boost the equities market as well as other investment instruments

Share Prices End On Mixed Note

2009-07-30T21:52:00.001+08:00

Source: Bernama.Com

KUALA LUMPUR, July 30 (Bernama) -- Share prices on Bursa Malaysia were mixed at close as investors shifted interest from bluechips to the lower liners, dealers said.The bluechips were weaker due to follow through profit taking from yesterday while the lower liners saw some buying interest."I think the CI now is under technical correction and it could hit a bottom of 1,134 before we see a rebound," said SJ Securities's technical analyst Phua Kwee Hock.He said investors will also be looking at US economic data namely the unemployment data and the second quarter gross domestic product growth, which is due for release later Thursday.

"Overall, the market expects the US data to be neutral but we never know," he said, adding that the market was anticipating a contraction in the US GDP but not more than 1.5 percent.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index closed lower by 3.82 points lower today at 1,160.66, after opening 0.73 point lower at 1,163.75.The Finance Index went up 1.899 points to 9,477.6, the Plantation Index fell 24.85 points to 5,598.83 while the Industrial Index eased 25.03 points at 2,537.0.The FBMEmas Index dropped 7.71 points to 7,836.66, the FBM Top 100 decreased 14.08 points to 7,621.58, the FBMMesdaq Index jumped 34.71 points to 4,144.87 and the FBM2BRD Index rose 63.33 points to 5,234.29.Advancers beat decliners by 353 to 240 while 254 counters were unchanged, 385 untraded and 32 others suspended.Leading the actives, KNM Group inched up one sen to 87.5 sen while SAAG Consolidated and Tebrau Teguh added half a sen each to 28.5 sen and 83.0 sen respectively.Newly-listed oil and gas crane services provider and manufacturer, Handal Resources surged 44 sen to RM1.16 at close after making a debut on the second board with a 18-sen premium at 90 sen today.Among heavyweights, Sime Darby slipped 10 sen to RM8.00, Maybank eased five sen to RM6.50, Bumiputra-Commerce rose 10 sen to RM10.30 and Tenaga increased five sen to RM8.15.

The Main Board volume decreased to 615.100 million shares worth RM1.396 billion compared with 1.131 billion shares valued at RM1.913 billion on Wednesday.Turnover on the Second Board increased to 84.188 million shares worth RM62.509 million versus 79.820 million shares worth RM30.525 million previously.The Mesdaq volume however rose to 53.314 million shares worth RM9.964 million from 38.150 million shares valued at RM5.899 million.Warrants went down to 30.089 milion units worth RM4.659 million from 47.188 million units worth RM9.545 million previously.On a sectoral basis, consumer products accounted for 27.581 million shares traded on the Main Board, industrial products 127.243 million, construction 47.422 million, trade/services 203.009 million, technology 14.418 million, infrastructure 22.561 million, finance 57.353 million, hotels 1.026 million, properties 81.365 million, plantations 28.658 million, mining 406,000, REITs 4.002 million and closed/fund 52,100.

Unit trust industry expected to grow 25% to 30%

2009-07-30T16:13:00.005+08:00

Source: DALJIT DHESI (THE STAR ONLINE)

PETALING JAYA: The net asset value (NAV) of the unit trust industry is expected to chart 25% to 30% growth this year underpinned by growing investor confidence from improving global capital markets, according to Federation of Investment Managers Malaysia (FIMM) president Tunku Ya’acob Tunku Abdullah.
He said the 25% to 30% improvement in NAV for the year was a reasonable expectation, given the country’s strong economic fundamentals.
As at end-June, the NAV of the industry was RM164bil, an increase of about 22% against RM134bil at end-2008. NAV refers to the value of the underlying assets held by a fund, minus liabilities.

Tunku Ya’acob said the recent stabilisation and gradual improvement in the world capital markets would bring about better investor sentiment.
Once confidence was restored, investors would be more comfortable taking on higher risk levels, he added. He said to date, there had been no major redemptions or panic selling of unit trust funds by investors in Malaysia compared with other markets worldwide.

“According to Bank Negara’s statistics as at April, there was more than RM300bil in savings and fixed deposit accounts. In view of the current low interest rate environment, some of these funds will eventually find their way into unit trust funds which offer better growth potential,” he said in an email reply.

MAAKL Mutual Bhd CEO Wong Boon Choy said the company expected to see continued improvement in investor confidence in the second half of this year.
The Government’s stimulus packages and their related multiplier effects would help cushion the impact of the sharp external downturn and set the stage for economic recovery in the second half year, he added.

Public Mutual Bhd CEO Yeoh Kim Hong said with risk aversion receding, investors were now selectively repositioning their portfolios to participate in the market uptrend.
This had helped the industry pick up in terms of NAV and sales of equity funds, she said, adding that the company expected the industry to remain resilient in the second half year.
However, HwangDBS Investment Management Bhd head of equities Gan Eng Peng felt that the investment appetite of investors had been affected in the last few months as only a small number was focused on making money, opting instead to preserve wealth and “bullet proof” their finances and businesses.

On fund performance, Tunku Ya’acob said judging from the six-month data, local conventional and Islamic equity funds had been doing relatively well.

“Over the six-month period, the conventional or non-Islamic equity fund sector gave an average return of about 17%. Over the same period, the local Islamic equity fund sector recorded an average return of about 16%,” he noted.
Yeoh said on a year-to-date basis, funds invested in regional markets had outperformed those invested solely in the local market as regional markets had broadly outperformed the domestic market.

Selected sector funds such as real estate funds had outperformed other funds as the regional property markets had stabilised, she added.
Gan said the new stock exchange barometer, the FTSE Bursa Malaysia KL Composite Index (FBM KLCI), was expected to further lift the industry in terms of institutional investor participation.

Institutional investors would not confine their investment portfolio to the 30 counters but also tap the larger opportunities available in the market, he said, referring to the 30 index-linked stocks that make up the FBM KLCI.
According to Wong, the soon-to-be-launched online electronic system, known as E-Pilihan Pelaburan Ahli (E-PPA) for the withdrawal of EPF savings for members to invest in unit trusts, will also help improve the industry’s growth.

The new system is expected to cut the current withdrawal process time from one to two weeks currently to three to five days.

Tunku Ya’acob said investor education was essential to push the industry to a higher level as it was vital for investors to understand the merits of investing early and for the long term.
To better communicate the risk profile of each fund to investors, FIMM has introduced the Fund Volatility Factor (FVF) disclosure for unit trust funds of at least three years.
The FVF is a measure of the rise and fall of a fund’s returns over a period of time relative to its average returns.

Citibank to expand branches

2009-07-30T16:13:00.002+08:00

Source: The Star Online

KUALA LUMPUR: Citibank Bhd, the locally incorporated subsidiary of Citigroup Inc, will set up another four branches in the country early next year from the current seven.
Citigroup chief executive officer Vikram Pandit, on a tour of the US-based financial services group’s Asian operations, told reporters Thursday this was part of the strategy to expand the footprint here.
Pandit, according to Bloomberg, was visiting employees in Malaysia, Singapore and Hong Kong to boost confidence following the departure of the group’s regional head Ajay Banga.
Citigroup made a US$28 billion loss last year as a result of the financial crisis.
Meanwhile, Citibank chief executive officer Sanjeev Nanavati said the bank would submit an official application soon to set up an Islamic subsidiary.

DiGi named most innovative firm

2009-07-29T17:32:00.002+08:00

Source: The Star Online

SHAH ALAM: DiGi Telecommunications Sdn Bhd has been named Malaysia’s most admired company for innovation by Wall Street Journal Asia for the third year running .
In a statement, the company said the Asia 200 Most Admired Companies survey also graded DiGi number three in the overall ranking of Malaysia’s Top 10 companies, up a notch from last year

DiGi was listed third for the Long-term Vision category and fifth for Quality.
The survey covered Asian companies that traded on stock exchanges as well as multinational companies that did extensive business in the region.
DiGi chief executive officer Johan Dennelind said the company was passionate about exceeding its customers’ expectations.
“For us, innovation is about bringing meaningful differences to our customers by making our mobile and internet services relevant, easy and affordable,” he said.
He said the company was thrilled with this recognition and would continue to push the boundaries in ensuring excellent customer experience

Government approves more lottery games

2009-07-29T11:49:00.002+08:00

Source: Rachael Kam (The Star Online)

Move will curb rise in illegal gaming operators

PETALING JAYA: All three number forecast operators (NFOs) in the country will benefit in the longer term as the government tries to curb a rise in illegal gaming by increasing the number of legal lottery games, although Berjaya Sports Toto Bhd (BToto) may face some initial pressure from new games awarded to its rivals, analysts said.

Multi-Purpose Holdings Bhd’s 51% subsidiary, Magnum Corp Sdn Bhd, has received approval for a new 4-digit (4D) game which will incorporate a jackpot element, slated to be launched at end-2009, Multi-Purpose told Bursa last Friday.

The move will certainly reduce the market share of illegal operators, and hence benefit all the NFOs in the long run, said OSK Research.

The illegal numbers market is estimated at 1-to-1.5 times that of the legal NFO market, which was valued at about RM8bil as at end-2008, according to OSK Research.

“Given that Magnum has the single largest market share in the 4D game and that the game is known to be the most popular in the illegal NFO market, we expect this move to give a significant boost to Magnum’s revenue growth,” the brokerage told clients in a research note.

The research house said the government had always resisted the move to increase gaming taxes as it would only give leeway for illegal operators to gain market share at the expense of the legal operators.

“The latest move to offer a jackpot element in the 4D game is a signal that the government remains serious in reducing the leakages to illegal operators,” OSK said, noting that illegal operators were unable to offer jackpots where the roll-over sum was typically too high for an illegal operator to match.

Gaming and corporate taxes are estimated to amount to more than RM1.5bil per annum.

OSK said although the approval of the new 4D game for Magnum might result in BToto facing a marginal slip in its market share, especially for its 4D games, it was unlikely to cause a drastic drop in BToto’s revenue growth.

“BToto’s non-4D games have a significantly higher matrix and hence the tendency for a higher jackpot roll-over element, which is the main contributor of the group’s super-normal growth rates,” the brokerage noted.

Currently, BToto’s 4D games contribute about 70% to 75% of its total NFO revenue.

OSK reckons that Tanjong Plc, which runs its gaming operations via Pan Malaysian Pools Sdn Bhd, may get a share of the action.

“We believe that the government may also offer a jackpot element in Tanjong’s 3D and potentially, 4D games, so as to be seen as providing a more level playing field for NFO operators,” it said.

OSK has maintained its “overweight” rating on the sector, and recommended a “buy” call on Tanjong with a target price of RM18.60.

It pegged BToto at a target price of RM5.60 and expected the company to remain a defensive, high-dividend yield play.

HwangDBS Vickers Research agrees that the policy makers’ initiatives to introduce more measures in the NFO industry is crucial to help players regain lost ground due to the rise in illegal gaming activities.

“As such, it is likely that Tanjong (rated ‘buy’) may also receive approval for a new game for its gaming operation,” the research house said in a note.

“We believe that the potential impact on the new games would be minimal on Tanjong’s bottom line, especially in the first one to two years of the operation,” HwangDBS said.

The brokerage believes investors should continue to focus on Tanjong’s strong fundamentals with resilient earnings from both its NFO and power generation businesses, and an attractive net yield of 5%.

It has maintained a “buy” call on Tanjong with a target price of RM19.25.

Malaysia's benchmark interest rate likely to stay

2009-07-29T11:47:00.001+08:00

Source: Yeow Pooi Linf (The Star Online)

Economists say Bank Negara may take a wait-and-see stance

PETALING JAYA: Bank Negara is expected to keep the benchmark interest rate unchanged at 2% at its monetary policy meeting today, say economists contacted by StarBiz.

David Cohen, an economist with Action Economics in Singapore, said the central bank could afford to “wait-and-see” since inflationary pressures had eased while economic indicators of regional economies were showing improvement.

“Things have bottomed out regionally and I suspect that Malaysia will follow in the same trend,” he said in a telephone interview.

Cohen, nonetheless, cautioned that there were still a lot of uncertainties within the world economies and if Malaysia’s economic data continued to weaken, Bank Negara might have to reduce rates further.

RAM Holdings Bhd economist Dr Yeah Kim Leng concurred, adding that the central bank would “keep its fingers on the trigger but not pull it yet as the bullet will come in handy” if there were signs that the global or domestic economy were heading towards a “double-dip” recovery.

So far, the strong monetary, financial and fiscal policy responses rolled out simultaneously across the world have helped avert a global depression in the first-half year. China, for example, saw a gross domestic product growth of 7.9% in the second quarter, he said.

Malaysia’s contraction in output and export, like its regional export-oriented peers, had slowed down while consumer and investor confidence was on the upturn, as reflected by the recent stock market performance, he added.

Business investment in the real economy, meanwhile, might still be held back by lingering concerns over the possibility of a slip-up in the recovery process of the United States and European economies, Yeah said.

Forecast Pte Ltd economist Joanna Tan also believed that Bank Negara was likely to keep rates unchanged but added that the downtrend in inflation had increased the scope for monetary easing.

“Given previous rhetoric on frontloading of rates and the impact of fiscal stimulus in the second half of the year, Bank Negara is likely to keep rates unchanged while monitoring closely the growth-inflation situation,” she said.

Yeah said Bank Negara had much room to cut rates further if domestic demand were to deteriorate more than expected, given that inflation rate had slipped into negative territory in June (minus 1.4%) mainly due to higher base-effect.

Maybank Investment Bank economist Suhaimi Ilias, however, considered the present level of record low overnight policy rate sufficient since global and local economies were showing signs of bottoming and turning around.

The policy focus would be on availability rather than cost of credit, hence the measures like government guaranteed scheme for loans for working capital and industrial restructuring, as well as bonds like Danajamin and microcredit initiatives, he said.

Tips for retail investors to stop losing money in stock market

2009-07-29T11:43:00.003+08:00

Source: Ooi Kok Hwa (Star Online)

IN the stock market, there are two main types of investors – smart investors and retail investors. While smart investors have been able to make money from the stock market, the majority of retail investors suffer losses most of the time.

As the market saying goes, only one out of 10 investors can make money from the stock market. The rest always incur losses in the stock market.

Some retail investors believe they can make quick money from the stock market. They believe that investing in the stock market is one of the best ways to accumulate wealth in a short period of time.

However, due to lack of proper financial training, investing knowledge and intelligence, they always find themselves at the losing end. When they are excited about investing, the stock market may be nearing to the peak.

On the other hand, when they are suffering losses, losing patience about investing and intending to cut their losses in the stock market, the market may be touching the bottom, and that, in fact, is supposed to be the best time to invest.

A majority of retail investors seldom pay attention to the stock market. They will only start doing so when newspapers or TV news headlines show that the market is touching a new high.

Driven by greed and the thought of making fast money, they will follow their friends or tips from their brokers to invest without paying much attention to the fundamentals of the stocks.

Due to lack of discipline to cut losses, more often than not, they find themselves holding on to a lot of poor quality stocks when the market collapses to a very low level.

We believe that the majority of retail investors do buy a mixture of good and poor quality stocks. However, they tend to hold on to poor quality stocks and sell the good ones when the stock market collapses.

This is because when the stock market crashes, poor quality stocks will drop much faster than good fundamental stocks.

Most retail investors find it difficult to sell poor quality stocks as the stocks may drop far lower their buying prices within a short period of time.

As retail investors refuse to admit their mistakes, they will hold on to these stocks, hoping to break even again in the future.

Unfortunately, they overlook one important market saying, which is: What goes up may come down, what goes down may never go up.

We may have emotional feelings about stocks but we should not refer to our purchase prices to determine whether we can cut our losses.

Our purchase prices are only important to us; they mean nothing to the overall market.

As our purchase prices may be much higher than those of other investors, even though we may not be able to sell the stocks, other investors, especially the company owners, can still liquidate their stocks.

We need to be careful when trading in speculative stocks especially those with prices that are much higher than the book values of the companies. The book value of a company reflects the owners’ costs in the company.

Hence, even though the stock prices tumble to a very low level, as long as the prices are still higher than the book values, a lot of company owners can still liquidate the stocks as their market prices are still higher than the cost invested.

For example, assuming the stock of a company is at the book value of only 30 sen and the stock price before the rally is 50 sen.

Due to the bullish sentiment and speculative play, the stock price may be pushed up to RM3. If our purchase price in the company is RM2, selling lower than RM2 means cutting a loss.

However, unfortunately, a lot of retail investors, instead of cutting losses continue to average down their purchase prices.

They may start averaging down their purchase prices at RM1.50, RM1, 80 sen and 50 sen.

If the company has poor fundamentals and has been incurring huge losses over a long period of time, averaging down our purchase prices this way means we will be incurring more losses.

While we are doing this, the owner of company can still sell the stock at 50 sen as his investment cost is only 30 sen!

Malaysia market set to test 1,200-point level

2009-07-29T11:39:00.003+08:00

Source: YVONNE TAN (The Star Online)

FBM KLCI rises for fifth day to finish at one-year high

PETALING JAYA: The current liquidity run may push the benchmark index beyond the 1,200-point level “soon” but concerns are mounting that the market may have become too expensive.

“It (the index testing 1,200) could be as early as August.

“There’s a lot of money out there in search of returns in the current low-interest rate environment,” said Pong Teng Siew, head of research at Jupiter Securities.

The FTSE Bursa Malaysia KL Composite Index (FBM KLCI) raced on for the fifth day yesterday to finish at a fresh one-year high, up 15.95 points to 1,172.38.

Nineteen stocks in the 30-stock index ended higher. Around 1.1 billion shares changed hands in trades valued at RM1.63bil.

At current levels, the market was priced at 17 times price-earnings to 2009 earnings, which was the level reached during the bull run in 2007. “Valuations are looking a bit too rich,” Pong said.

Since the start of July, the index has risen some 9%, extending the rally which started in April. Year-to-date, it has surged more than 30%.

Chris Eng, head of research at OSK Research, has advised traders to “sell into strength”.

“It (the index reaching 1,200) could be sooner than we earlier expected,” said AmResearch managing director and regional head of equity research Benny Chew.

He said the current rally could also be fuelled by high hopes that corporate earnings would be positive in August.

AmResearch has said the FBM KLCI would achieve 1,190 points by the first quarter of next year. Corporate earnings were expected to post a 17% growth next year from a contraction of 8% this year, the house said.

“I think the liquidity run will carry into the next month or so; (and) any correction should be ‘gentle’,” Pong said.

At Bursa Malaysia, major gainers yesterday were mainly blue chips which make up the index. Among the gainers were Sime Darby Bhd which added 25 sen to RM8.15, British American Tobacco Bhd which ended up 25 sen to RM45.25 and IOI Corp Bhd which finished 22 sen higher at RM5.

Major losers included PPB Group Bhd and Petronas Gas Bhd, which lost 20 sen and 10 sen to RM14.30 and RM10.20 respectively.

Among the more actively traded stocks were KNM Group Bhd, TA Enterprise Bhd and Lion Corp Bhd.

Stock markets across the globe have rallied in recent weeks bolstered by strong gains on Wall Street which were fuelled by better-than-expected corporate earnings.

Regionally, markets were mainly up yesterday. Singapore’s Straits Times Index and Hong Kong’s Hang Seng Index finished up 1.84% each.

Separately, at a function yesterday, Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff said the merger of the main and second boards was on track for the launch on Aug 3.

“We’ve tested it, all systems are ready,” he said.

He said he hoped the new structure would be more facilitative of new listings.

“We would like to see some of the small and medium companies merge. Based on feedback, we believe foreign investors would like to see much bigger companies in the market,” he said.

BURSA MALAYSIA: KL Shares Up, Hit New High At Close

2009-07-29T00:21:00.002+08:00

Source: Bernama.Com

KUALA LUMPUR, July 28 (Bernama) -- Share prices on Bursa Malaysia ended higher with the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI), hitting a new high Tuesday with interest centred on key heavyweights, especially finance and plantation stocks, dealers said.

At 5.00pm, the FBM KLCI rose 15.95 points to a year high of 1,172.38, after opening 1.4 points higher at 1,157.83. It saw an intra-day high of 1,174.01.

Jupiter Securities head of research, Pong Teng Siew, attributed the gains mainly to the new flush of liquidity in the market.

"The participation in our market came mainly from local investors and some foreign participants," he said, adding that the local stocks still had more room to grow.

Pong expects the resistance level to be between 1,200 and 1,220 in the near term.

"We still have between 30-50 points to go," he said.

The Finance Index soared 105.14 points to 9,512.77, the Plantation Index surged 141.78 points to 5,687.94 and the Industrial Index was 19.63 points higher at 2,565.82.

The FBMEmas Index advanced 103.69 points to 7,905.20, the FBM Top 100 increased 100.83 points to 7,689.37, the FBMMesdaq Index jumped 29.66 points to 4,150.32 and the FBM2BRD Index advance 32.09 points to 5,236.25.

Advancers beat decliners by 492 to 192 while 249 counters were unchanged, 299 untraded and 32 others suspended.

Total volume went up to 1.123 billion shares worth RM1.633 billion from yesterday's 987.228 million shares valued at RM1.215 billion.

Topping the actives, KNM eased one sen to 89.5 sen, Lion Corporation increased 2.5 sen to 52 sen, SAAG Consolidated eased half a sen to 29.5 sen and Genting jumped 12 sen to RM3.

Among heavyweights, Sime Darby increased 25 sen, Maybank and Bumiputra-Commerce jumped 10 sen each to RM6.55 and RM10.20 respectively while Tenaga advanced five sen to RM8.10.

The Main Board volume declined to 933.135 million shares valued at RM1.571 billion from yesterday's 987.228 million shares worth RM1.215 billion.

Turnover on the Second Board eased to 94.278 million shares valued at RM41.503 million from 220.272 million shares worth RM80.632 million yesterday.

The Mesdaq volume decreased to 28.707 million shares valued at RM5.171 million from 33.515 million shares worth RM55.464 million.

Warrants increased to 60.233 million units worth RM12.716 million from 30.311 million worth RM66.130 million previously.

On a sectoral basis, consumer products accounted for 54.241 million shares traded on the Main Board, industrial products 226.592 million, construction 65.542 million, trade/services 324.814 million, technology 14.346 million, infrastructure 26.424 million, finance 80.917 million, hotels 7.108 million, properties 98.397 million, plantations 30.204 million, mining 197,000, REITs 4.093 million and closed/fund 256,600.

Magnum’s new 4D game long-term gain for industry

2009-07-29T00:14:00.001+08:00

Source: The Star Online

PETALING JAYA: Magnum Corp Sdn Bhd’s recently obtained approval for a new 4-digit (4D) game containing a jackpot element would benefit the numbers forecast operations (NFO) industry as it will reduce the market share of illegal operators.

Multi-Purpose Holdings Bhd (MPHB), which has a 51%-stake in the company, said in a filing to Bursa Malaysia last Friday that the game was scheduled for an end-2009 launch.

OSK Research Sdn Bhd analyst Keith Wee said in a report Tuesday that the Government’s approval of the new game was seen as a move to reduce the market share of illegal 4D game operators, which was estimated to be one to one-and-a-half times larger than the legal NFO market.

He said given the popularity of 4D games in the illegal NFO market, this latest move was a signal that the Government remained serious in reducing the market share of illegal number operators since increasing taxes would only provide opportunities for such operators to gain market share.

“Gaming and corporate taxes are estimated to amount to more than RM1.5 billion per annum,” Wee added.

He said over the longer term, the move would enhance the legal NFO market and provide a level playing field for the three listed NFO firms - Berjaya Sports Toto, MPHB and Tanjong plc.

Bursa Malaysia To Introduce Commodity Murabahah House Next Month

2009-07-28T13:34:00.002+08:00

Source: Bernama.Com

KUALA LUMPUR, July 28 (Bernama) -- Bursa Malaysia Bhd plans to introduce a fully electronic web-based Syariah commodity trading platform next month.

Its chief executive officer Datuk Yusli Mohamed Yusoff said the Commodity Murabahah House (CMH) is the world's first fully Syariah compliant commodity trading platform.

Initially, the commodity to be traded on CMH is crude palm oil, he told a press conference here Tueaday.

"We will start with domestic players. We expect participation from the Gulf Cooperation Council (GCC) countries early next year," he said.

Yusli said Bursa Malaysia spent a few million ringgit to develop CMH.

CMH is a Malaysian Islamic International Finance Centre initiative operated by Bursa Malaysia's fully Syariah compliant wholly-owned subsidiary, Bursa Malaysia Islamic Services Sdn Bhd.

It is an international spot commodity platform that facilitates commodity-based Islamic financing and investment transactions under the Syariah principles of Murabahah, Tawarruq and Musawwammah.

Trades will be ringgit-denominated but efforts are being undertaken to make it multi currency capable, providing more choice, access and flexibility for international financial institutions to participate.

Bursa Malaysia expects daily transactions of up to RM1 billion for CMH.

Bursa Malaysia and 26 palm oil suppliers, financials institutions and trading participants have signed a memorandum to participate in CMH.

RON 95 petrol launched, Shell targets 1m users

2009-07-28T11:24:00.002+08:00

Source: The Star Online

PETALING JAYA: Shell Malaysia aims for one million motorists to use its new Shell Unleaded 95 (RON 95) fuel by Sept 1, says Shell Malaysia Trading Sdn Bhd and Shell Timur Sdn Bhd managing director Datuk Mohzani Abdul Wahab.

“We are targeting also by Sept 1, all our Shell petrol stations (over 900) in the country will be ready to offer this new fuel,” he said yesterday at the official launch of Shell Unleaded 95.

Mohzani said the new fuel was now available at Shell Alisha station in Batu 3, Federal Highway Klang-bound and by the first week of August, another Shell station in the Klang Valley would be ready to offer the RON 95 fuel.

“The introduction of the new Shell Unleaded 95 is to show our commitment to support the Government initiative to introduce RON 95 nationwide on Sept 1,” he said.

He added that staff had been stationed at the Shell Alisha station to assist customers seeking information and helping to address their concerns on RON 95 apart from educating Malaysian motorists on what Shell Unleaded 95 was all about.

“This is very much part of Shell’s commitment to ensure that our customers are aware of the differences in fuel, because not all fuels are the same and it is important that they can make an informed choice of the fuel that meets their need,” he said.

He also said by Sept 1, Shell would also introduce the new UERO 2M diesel fuel at the same diesel price.

Interested motorists can visit the Shell Malaysia website to read up on RON 95 or call Shell’s customer service centre.

Shell is also working with various motoring media, both print and online to help educate motorists on RON 95

Malaysia’s palm oil exports rise 10%

2009-07-27T17:47:00.002+08:00

Source: The Star Online

PETALING JAYA: Malaysia’s palm oil exports rose 10% from July 1 to July 25 compared to the same period in June, according to checks carried out by cargo surveyors.

According to cargo surveyor Societe Generale de Surveillance, a total of 1.08 million tonnes of palm oil were tracked in the period compared to the same period in June, where 983,345 tonnes were tracked.

In an earlier report, Intertek said palm oil exports rose 9.9% from July 1 to July 25 compared to the same period in June.

It said 1.11 million tonnes of palm oil were tracked compared to 1.01 million tonnes from June 1 to June 25.

Equity investment: What is tick size and how do investors benefit

2009-07-27T12:01:00.004+08:00

Source: The Star Online

EQUITY investment strategies take account of many factors, including tick sizes which are set by a stock exchange.

Here is a primer on tick sizes and how investors benefit from a smaller value.

This educative article is in conjunction with the introduction of a smaller tick size which will be made available by Bursa Malaysia and is planned for implementation on Aug 3.

Equity investors rely a lot on research and information to forecast the potential price appreciation of a stock. This ranges from fundamental analysis of the company to a technical analysis of its historical price movements. There is also a little known indicator known as a spread that can be used by investors to gauge the near-term movement of a particular stock. A stock’s spread is closely influenced by a “tick size”.

Understanding Spreads. Every share that trades on the stock market has a best buy and a best sell price. The best buy price is the highest price in the order book placed by interested buyers for a specific share while the best sell price is the lowest price in the order book placed by interested sellers.

These two prices are determined by demand and supply, which can be seen as a negotiation process between two parties.

The spread is the difference between a share’s best buy and best sell price. The general belief is that a consistently large spread signals low volume for that respective stock.

On the other hand, a narrow spread can indicate that a transaction will occur soon. For example, a stock with a buy/sell price of RM10 and RM10.02 suggests that buyers and sellers are very close to making a trade. If the narrow spread continues, volume for the respective share is expected to be high. A wider spread means that greater changes in the share’s buy or sell price is needed before a transaction can conclude.

Tick Sizes in a Spread. The magnitude of a stock spread is influenced by the tick size or the minimum tick size structure.

This refers to the smallest allowable price variation between the buy and sell price of a stock. The spread of a share can narrow if the tick size is reduced.

In the past few years, many global stock exchanges reduced their permitted tick size as this initiative was found to boost liquidity and efficiency to the capital market as a whole.

To stay competitive and relevant, Bursa Malaysia is also implementing a smaller minimum tick size for all shares and exchange traded funds (ETFs) trading on the local market (see table 1 and 2). Under the new structure, a share with a buy price under RM5 will have a new tick size of 1 sen instead 5 sen. This means, interested buyers or sellers of this respective stock can now enter a buy or sell price of 1 sen instead of 5 sen.

The equity ETFs on the main board also benefit from a smaller tick size. Smaller tick sizes encourage active trading as there are many benefits for retail investors (see box story).

The reduction of tick size is expected to attract more trading volume due to improved opportunities as investors now will have more choice of entering or exiting the market just by smaller trading ticks. In short, this reduction of tick sizes will enable price discovery, leading to a positive impact on market liquidity.

In respect to the bidding price for buying-in, the exchange will retain the 10 ticks. Arising from this, the buying-in price will be based on the current tick sizes instead of the new tick sizes to ensure that the buying-in price is attractive to potential sellers.

FBM KLCI may see more upside ahead

2009-07-27T11:59:00.001+08:00

Source: Fintan Ng (The Star Online)

KUALA LUMPUR: The local bourse’s benchmark FBM KLCI index may see more upside ahead following higher crude oil and commodity prices boosting investors’ confidence.

Nymex crude oil and the local crude palm oil futures settled at higher prices last Friday.

OSK Research Sdn Bhd analyst Shin Kao Jack said in a report that the market could be establishing a new uptrend after rallying for eight out of the last 10 sessions and adding 95 points in the process.

HwangDBS Vickers Research Sdn Bhd said in another report that the index would be eyeing to test the 1,160 resistance level again anytime soon.

“A convincing breakout will then lift the benchmark index towards the next resistance mark of 1,190,” it said.

At 9.30am, the index was down 2.32 points to 1,153.56 while in Bursa Malaysia, 161 counters were up, 103 were down and 121 others were traded unchanged.

There were 110.44 million shares done with a total value of RM79.89 million.

Among plantation counters, IOI fell 8 sen to RM4.78, Kulim dropped 10 sen to RM7.10 while PPB gained 40 sen to RM14.

IJM dropped 10 sen to RM6.20, Genting was up 10 sen to RM6.45, Public Bank’s foreign tranche lost 10 sen to RM10.10 and TNB shed 10 sen to RM8.05.

Nymex crude oil in electronic trade was up 9 cents to US$68.14 per barrel.

Spot gold gained 17 cents to US$951.52 per ounce

MPI to attract RM20bil foreign investments

2009-07-26T20:28:00.001+08:00

Source: The Star Online

PETALING JAYA: Malaysia Property Inc (MPI), a joint public-private sector initiative, is aiming to attract foreign investments worth RM20bil in the domestic real estate sector over the next 10 years.

The key players in MPI are the Economic Planning Unit, International Real Estate Federation (FIABCI) Malaysian Chapter, Real Estate Housing Developers’ Association (Rehda) and the Malaysian Institute of Estate Agents (MIEA).

MPI chairman Datuk Richard Fong said a budget of RM25mil would be set aside by property players in the private sector over the next five years to promote Malaysia as the preferred property investment destination.

“The Government has in principle agreed to match this amount contributed by players in the private sector, making the total pool of funds RM50mil,” he told reporters after the official launch of MPI here yesterday.

Fong said the funds would be used for promotional activities, including property exhibitions overseas in places like Britain, Hong Kong, Singapore and the Middle East.

“We want foreign investors to know more about the competitiveness of Malaysian properties in terms of price, against countries like Singapore and Hong Kong,” he said, adding that Malaysia was likely the only country in this region that allowed foreigners to buy freehold property, besides providing them with exemption from real estate property gains tax.

“If you take a residential property in Kuala Lumpur City Centre (KLCC), the price per square foot would be around US$600, against US$2,000 in a comparable residential location in Singapore or Hong Kong,” he noted.

Fong said MPI would not only act as a platform to create greater awareness of the attractiveness of Malaysian properties as an investment destination for foreigners but also support and assist the various players in the real estate sector, including providing feedback to the Government.

In his speech at MPI’s launching, which was read by Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop, Prime Minister Datuk Seri Najib Tun Razak said the Government would continue to facilitate investments in the Malaysian real estate sector given its key role in the country’s economy.

Najib noted that last year alone, the industry contributed close to RM11bil to the economy, representing a growth of nearly 10%, compared to 2007.

MPI would give specific focus on promoting the Malaysia My Second Home programme, in addition to marketing Malaysia as the preferred destination for multinational companies to have their offices here, the premier said.

Najib, who is also Finance Minister, said the current investment environment was especially inviting, with no restrictions on domestic funding for foreign investment in local properties, in addition to further deregulation in Foreign Investment Committee guidelines.

The Government spending provided for the two stimulus package worth RM67bil would further boost investors’ confidence, he said.

China economy growing again while US limps

2009-07-26T20:08:00.001+08:00

Source: The Star Online

WASHINGTON (AP): It's a tale of two economies, China and the United States. The United States, the world's largest economy, remains mired in recession as do most of its fellow top industrial powers.

China, poised to pass Japan as the world's second-largest economy perhaps by late this year, recently announced its Gross Domestic Product grew by more than 7.1 percent in the first half of this year.

That puts it alone among the top 10 world powers whose economy has expanded in recent months, making it the first major country to emerge from the worst global slump since the 1930s. Many analysts suggest that China could help to lead the rest of the world out of the doldrums.

For China's part, it hopes the U.S. and other Western countries will also recover and revive their now-depressed demand for Chinese goods, further buoying the Chinese economy. U.S. officials, however, suggest that, with recession-shocked American consumers spending less and saving more, those glory days for Chinese exporters will not return anytime soon.

Economic and strategic cooperation among the two world economic superpowers tops the agenda as top officials from both countries hold a two-day meeting in Washington, beginning Monday.

"China is increasingly becoming a responsible citizen in the global community," said economist Allen Sinai of Decision Economics. "No longer lawless, no longer difficult to deal with, much more responsible. It is now a powerhouse among economies and finance. And it's a rich country."

China stands out as a case study in how government economic-stimulus can work. In the United States, there are fierce debates over whether President Barack Obama's $787 billion stimulus, passed by Congress in February, is having much impact. Designed to help create jobs, U.S. unemployment continues to rise at a steep pace and the economy is still shrinking.

By contrast, Beijing's $586 billion stimulus effort, put in place last November, has been hugely successful by nearly all accounts.

It freed up massive public-works spending and made bank loans more available, spurring a huge increase in Chinese construction and purchases of cars, homes and other goods.

If anything, some economists suggest the Chinese stimulus may actually be working too well, threatening to overheat the Chinese economy. That raises concerns that the flood of easy money will cause inflation and set the stage for the same kind of housing-credit "bubble" that triggered the U.S. financial meltdown.

Why did China's stimulus work when the U.S. version was slow to kick in?

For one thing, China had many of the programs, including public works projects, in the planning stages for two or three years so they got a head start once hit last year by the global downturn. China also didn't have to go through the tortuous gyrations that the Federal Reserve and Treasury did to inject money into U.S. banks in hopes of getting them to resume lending.

"Credit was flowing not because Chinese bankers were inherently confident about their economy. Credit was flowing because the Communist Party was telling the banks to lend," said Charles Freeman, former assistant U.S. trade representative for China affairs and now with the Center for Strategic and International Studies.

While exports may not be as much a driver of the Chinese economy as in the past, China is well situated to benefit in any upturn, particularly because of its reputation for manufacturing inexpensive products, said Freeman. "Cheap goods are relatively in demand in times of economic trouble, and so China is the first and last resort for cheap goods," he said.

In addition to better economic cooperation, Beijing is also Washington's most important partner in efforts to discourage or contain North Korea's nuclear ambitions. Still, the U.S.- Chinese relationship isn't all rosy.

There remain security concerns as China bulks up as a military superpower as well as an economic one.

And there is still much trade friction between the two countries. Many in Congress and in organized labor still view China warily as a fierce competitor for U.S. manufacturing jobs.

"New opportunities in President Obama's new green economy will go to big players like GM and to businesses in China, where the government understands global commerce is played by rules of prison football," said Peter Morici, a business economist at the University of Maryland and former chief economist at the U.S. International Trade Commission.

"China has more than 100 million rural underemployed workers who, if moved into factories, could replace every manufacturing job in the United States, Western Europe and Japan," Morici said.

China and the United States are each other's second-largest trading partner. But the trade is way out of whack. The U.S. trade deficit with China remains its largest, even though trade overall has been down because of the global recession.

The Economic Policy Institute, a union-funded think tank, says that China represents a staggering 83 percent of the entire U.S. trade deficit in non-oil goods, up from 26 percent in 2000.

There is also a long-simmering dispute between the U.S. and China over exchange rates. U.S. officials claim China's currency policies end up overpricing U.S. goods there and making Chinese-made goods less expensive in the U.S.

And, as the largest holder of U.S. debt - mostly in the form of Treasury bonds - Beijing holds vast economic leverage over the United States. Suddenly selling those Treasurys or significantly reducing its debt holdings could send shock waves through the global financial system and make it harder for the U.S. to finance its mushrooming debt.

Most economists believe China is unlikely to make any such moves, because it would reduce the value of its own vast holdings in Treasurys. But Beijing might slow down its purchases of Treasurys and other dollar-denominated investments, complicating efforts for the United States to finance a budget deficit expected to surpass $1.8 trillion this year and a cumulative national debt approaching $12 trillion.

Also, there's one area in which China has now surpassed the U.S. and remains the world leader, even if it's hardly an honor. It is now the world's largest carbon emitter.

U.S. policymakers recognize that costly steps taken by Western nations to reduce pollution to help control global warming will mean little if China, with its population of 1.3 billion people, does not join in the effort.

But so far, the U.S. has been unable to persuade China to work to lower its emissions. China argues with conviction that it has a right to develop rapidly in hopes of attaining Western living standards and that its per capita pollution remains a fraction of that in the U.S. It also claims to have made great recent strides in energy efficiency and cleaning up coal plants.

Maxis to consider PM’s suggestion on relisting

2009-07-25T22:10:00.001+08:00

Source: The Star OnlineKUALA LUMPUR: Maxis Communications Berhad will consider relisting soon following the suggestion by the Prime Minister for the company to relist on Bursa Malaysia.

A company spokesperson said in a statement released Saturday that a further announcement will be made at the appropriate time.

She said Datuk Seri Najib Tun Razak had asked the stakeholders of Maxis to consider the possibility of seeking a re-listing of Maxis on Bursa Malaysia to assist in the Government’s overall efforts to enlarge the market capitalisation of the exchange and range of large companies that attract institutional investor interest.

“When Maxis was privatised and de-listed in 2007, the stakeholders articulated the possibility of a re-listing of the company after internal re-structuring, some time in the future,” she said.

It is learnt that the initial public offer (IPO) may be launched as early as October and the company may be listed by the end of the year.

CIMB Investment Bank may be appointed to manage the IPO.

Sources said the listing is likely to be only for its Malaysian operations.

Maybank Investment Bank senior analyst Khair Mirza welcomed the move saying it was positive for the markets.

“Maxis needs a legitimate reason to return to the stock market and the call by the Prime Minister is timely.

“When it would be listed remains to be seen,” Khair said.

Last Thursday, Najib urged Maxis, the mobile-phone company bought out by T. Ananda Krishnan in 2007, to re-list in Kuala Lumpur to attract investors to the exchange.

Maxis, 25%-owned by Saudi Telecom Co, was assessing the proposal, Najib had said after returning from the Middle East.

“It has been conveyed to the management and they are considering it very seriously. Hopefully, it will happen fairly soon,’’ said Najib.

Maxis first sold shares in Malaysia in 2002. Before the company was taken private in June 2007, it was valued at about RM40bil on the stock exchange.

In its listing in 2002, Maxis shares were sold to institutional investors at RM4.85 each and retail investors at RM4.36. On its last day of trading in July 2007, the shares were traded at RM15.20 each

Burgernomics and the ringgit

2009-07-25T13:39:00.001+08:00

What Are We To Do
By TAN SRI LIN SEE-YAN (THE STAR ONLINE)

Based on purchasing power parity, the ringgit is undervalued by 47%.

I am often asked: What is per capita PPP income. What does US$5,000 income @ PPP prices mean? Off-and-on, the term PPP intrudes into our lives: via TV news, newspapers and economic reports. PPP stands for purchasing power parity – a theory in economics first developed by Swedish economist Gustav Cassel after World War I. Simply put, this doctrine states that the exchange rate is determined by the relative purchasing power of any two currencies.

The common sense of this is that the same amount of money should purchase the same product in any two countries (whence, the term purchasing power parity). That is, the purchasing power of money, expressed in one currency, should change pari passu in different countries. If US$5 buys a cup of Starbucks coffee in New York and the actual cost of the same Starbucks coffee in KL is RM12, then the exchange rate should be US$1=RM2.40 according to PPP. But the actual exchange rate is close to RM3.60, or 33% cheaper.

PPP in today’s world

Is PPP relevant? To answer, we need to backtrack. During World War I, trade was disrupted between the allies and halted with enemies. When trade resumed after the war, a choice of new exchange rates was required. Any return to pre-war rates would not have made practical sense since countries had experienced significantly differing rates of inflation because of the disruption of war.

Let’s say before the war, US$1=30Ff (French franc). Since then, the price level in France had risen, say, 20 times and in the United States, doubled. Prices in France has thus risen 10 times more than in the United States; so the new exchange rate should be US$1=300Ff based on PPP (i.e. exchange rate determined by relative purchasing power of the two currencies).

Thus, PPP served as a useful guide at a time of major international turbulence. It was also practical to use and easy to understand. But it’s also too simplistic and even unrealistic. The world is not perfect. It’s also complicated. Many non-trading factors and too many other considerations do come into play in determining an exchange rate.

Today, the world has become even more imperfect and much more complex. Adjustment to stability (if ever) is far from instantaneous. Often, it involves a complicated web of geopolitical considerations which work to derail the timing of an often long process. Recent developments have led to widespread structural disruptions not seen since the 1930s. As a result, the market price discovery mechanisms we have taken so much for granted no longer function as a reliable guide for decision-making.

Exchange rates, interest rates, retail prices and the range of other price indices have become too “manipulated” to make good economic sense, in the face of an eco-system that has now become neither capitalist nor communist. It is in times like these that we look for simple, practical benchmarks that can offer sensible guides to help us manage the myriad of risks that just won’t go away.

The Big Mac index

In today’s globalised world, we encounter difficulties in assessing the value of currencies. Readers also ask: Is it true that the ringgit is undervalued? Why is the US dollar still so strong? How much basis-in-fact is there? The Economist magazine publishes annually its Big Mac index. The latest appeared in this week’s issue. It calls this index a “light-hearted guide to valuing currencies, provides some clues”.

Interestingly enough, it is based on the PPP theory and uses the Big Mac hamburger as the benchmark product since it is standardised and sold in more or less the same form worldwide. Comparison of the purchase price of this “common” burger in domestic currencies against the US dollar price would yield a PPP exchange rate between any currency and the US dollar. In this way, the rate of exchange that leaves the Big Mac costing the same in US dollars anywhere in the world provides a “fair value”, or PPP benchmark.

For example, you actually pay US$3.57 for a Big Mac in the United States; in the United Kingdom, it costs £2.29 or equivalent to US$3.69 converted at the current market exchange rate. The implied PPP exchange rate is therefore £1=US$1.56 compared with the actual market rate of £1=1.61. That’s close enough to fair value. But this is not always the case.

Value of the ringgit

Take Malaysia. According to this index, the Big Mac costs RM6.77 or only US$1.88 (converted at current market exchange rate) which is about half its price in the United States. This means that the ringgit has a much higher purchasing power in Malaysia than in the United States! Look at this another way: the implied PPP exchange rate is US$1=RM1.90. But the actual market exchange rate is closer to RM3.60. Nearly double!! Based on PPP, the ringgit is undervalued by 47%.

By the same token, the index showed that the Chinese renminbi is similarly undervalued, by 49%; Thai baht by 47%; Indonesia’s rupiah by 43%; Hong Kong dollar by 52%; Taiwan dollar by 37%; the Philippine peso by 25%; and the Singapore dollar by 19%. It would appear that the currencies of China and Hong Kong and those of most emerging Asean economies are significantly undervalued by 40%–50% against the US dollar.

At the other spectrum, most major European currencies appear substantially overvalued vis-a-vis the US dollar: the euro by 29%, Swiss franc by 68% and Scandinavian currencies by 40%–70%. However, like the pound sterling, the Japanese yen and Australian dollar are close enough to the fair value on this basis. These are interesting comparative numbers.

Malaysia’s 2008 per capita income (at current market prices) was placed at US$7,738. On a PPP basis, the international Monetary Fund (IMF) estimated this income’s purchasing power to be in the region of US$14,000. A word of caution, however. The PPP is subject to many flaws. Indeed, many economists regard it as quite irrelevant these days. Why is this so?

PPP as a guide

For one thing, costing of the burger includes many local inputs (e.g. wages, rent, advertising, etc.) which tend to be lowest in the poorest countries. Perhaps, that is why the Big Mac is so overpriced in Europe. Worse, the outcome will be different for different single standardised products used.

To be really helpful, we will need a representative basket of goods and services (not just the Big Mac alone). Price indices, however, include many goods and services that do not enter into international trade. Moreover, the jury is still out on whether the exchange rate moves in response to price changes or the other way around. The causal relationship is very unclear.

The PPP works from a base rate, the legitimacy of which can be in doubt. Most important, it overlooks the often volatile supply and demand of foreign exchange arising from non-trade sources: long and short-term foreign investment, loan flows, transfers and other speculative movements of capital. Finally, in our imperfect world, government interventions (e.g. exchange control, trade restrictions and taxes) do affect the purchasing power of currencies.

Nevertheless, PPP remains in use simply because it is readily understood, has an unusually simple construct, and is very transparent. It appears to be more useful during periods of marked changes (especially in rates of inflation). Also, it acts as better guides to exchange rate misalignments among nations with similar levels of income.

Be that as it may, the latest Big Mac index points to interesting trends: major European currencies appear grossly overvalued vis-a-vis the US dollar, and many Asian currencies, overly undervalued. Or is it that the base currency – the US dollar - is way overvalued?

You can’t tell from the PPP exchange rates. Nevertheless, the theory can serve as a crude approximation. But, it cannot offer a satisfactory explanation of today’s exchange rates. Prof Gottfried von Haberler, my mentor at Harvard and a guru on exchange rates, used to say: After all, in the final analysis, people value currencies for what they will buy.

The Japanese lesson

In Asia, the Chinese renminbi is often singled out to be grossly undervalued (the PPP also shows this). Strong pressures to re-value have come from the United States and the IMF. However, these have eased with the recent global meltdown. The Japanese experience over three decades ago offers a valuable lesson in history.

From the 1980s into the mid-1990s, Japan bashing was in vogue in the United States, much as China bashing was in the Bush years. Back then, Japan’s large bilateral trade surplus led to the United States continually threatening it with trade sanctions. Consequently, “voluntary” export restrains were put into place and the yen was allowed to appreciate. It did so all the way from US$1=360 yen in 1971 to touch 80 yen in April 1985.

This unhinged the Japanese financial system and induced the bubble in stock and land prices in the late 1980s which eventually collapsed in 1991. This resulted in Japan’s unrelenting deflationary slump of the 1990s – known now as the “lost” decade. Japan has yet to fully recover and remains today in a zero interest liquidity trap.

The Bank of Japan has failed to re-ignite economic growth. The recent financial meltdown and global recession have not made matters any better. Yet, Japan’s trade surplus as a share of gross national product (GNP) has not been reduced in any significant way.

Of course, the world has since changed dramatically. Nonetheless, in my view, any renewed pressures to force a revaluation of the renminbi at this time will run the risk of: (i) possibly sending China into a similar deflationary slump that hit Japan during the 1990s; and (ii) destabilising its currency to the detriment of global growth recovery.

The state of the world economy remains delicate. It calls for prudence. In the final analysis, I don’t see how the US trade deficit can be bridged by simply revaluing China’s exchange rate. The key must lie in increased US national savings. This won’t be easy given the current weak US economy.

Stock picks in key sectors

2009-07-25T13:33:00.001+08:00

Source: The Star Online

IN good or bad times, there is always value to be found. StarBizWeek polled several analysts’ views on their stock picks and have compiled a list of eight stocks from several key sectors.On the back of a 23% passenger growth and 77% load factor, analysts are expecting AirAsia Bhd’s quarterly results next month to surprise on the upside.

“Ancillary income will offset fuel price increase. It acts as the best defence against fuel price increase as every RM1 per pax increase will offset US$1 per barrel increase in fuel price,” says an analyst from ECM Libra.

He adds that ancillary income has doubled to RM29 per pax within the last two years and management targets to double it again to RM60 per pax by introducing more value-added services.

Meanwhile, AirAsia plans to defer the delivery of 15 A320 aircraft as it expects the construction of the new LCCT to be further delayed. Hence, capital requirement will be reduced by RM2.3bil while gearing will also be lowered.

“We reiterate our buy call on AirAsia with a target price of RM1.90. AirAsia is poised to outperform on consensus earnings upgrade in anticipation of strong second quarter results, sustained low fuel price and potential dual listing (or merger),” he says.

The analyst forecasts an 8.89% increase in revenue to RM2.87bil while net profit is expected to jump 211.13% to RM598.3mil for its year ending Dec 31, 2009. SP Setia Bhd

The recent abolishment of bumiputra equity requirement for mergers and acquisitions and Foreign Investment Committee approvals to improve the investability of Malaysian properties is likely to benefit the property sector.

The best proxy to a sector re-rating would be sector leader,

SP Setia Bhd. It is the largest developer by market cap and sales and is also a clear favourite among institutional investors.
n the first eight months of its financial year ending October 2009, the company hit a record RM1bil in sales. Unbilled sales rose to RM1.9bil, which is among the highest in the sector.

It is also expected to bring forward its RM5bil mixed development project near Midvalley in KL to 2010 (from 2013), which could mean upside to earnings.

“It has no plans for new launches in the next few months to concentrate on delivery. It will also not extend its 5/95 financing scheme beyond July, which could lead to margin expansion,” says HwangDBS Vickers analyst Yee Mee Hui.

Yee has raised her target price to RM5 from RM4.50 based on narrower 10% discount to its revised net asset value of RM5.54. For FY09, she is forecasting net profit of RM189mil on the back of RM1.2bil in revenue.

UEM Land Holdings Bhd

UEM Land is the largest land owner in Nusajaya, a key development area in Iskandar Malaysia, Johor. Its township development is set to benefit from closer ties between the Malaysian and Singapore governments.

CLSA Asia-Pacific Markets analyst Chee Wei Loong says that price differential remains wide with land in Singapore at least 40 times more expensive than in Johor.

“There have been talks to improve the economic linkages between Singapore and Malaysia, which will be a catalyst to improve property values in Johor,” he says.

The proposals include potential investments by the Singapore government in two iconic projects: building of a third link between the two countries and expansion of Singapore’s Mass Rapid Transit system to Johor Baru.

Khazanah Nasional has planned investments of about RM7bil, including the building of a RM1.1bil coastal highway linking Johor Baru to Nusajaya.

It is spearheading the development of a new financial district, education hub, international resorts and theme parks on 4,500 acres of land acquired from UEM Land in 2007.

“UEM’s share price is trading at a steep discount to an estimated RNAV/share of RM4. We believe newsflow of potential investors in Nusajaya, rather than immediate-term earnings prospects, will be a re-rating catalyst says Chee.

MISC Bhd

The outlook for the container sector is bleak but management initiatives to reshape the value-destroying division are positive, and losses could diminish.

“We like the stock for its defensive energy-shipping business, bright oil & gas sector outlook and good execution of strategies,” says Nik Hadi from CLSA Asia Pacific.
MISC is withdrawing from Grand Alliance, effective Jan 1, 2010. This will effectively end its participation in the Mediterranean or Asia-Europe trade lanes.

The focus will then be on the intra-Asia routes, the subcontinent India/Middle East to Asia trade.

CLSA is projecting losses at the division to decline from RM877mil in FY09 to RM525mil in FY10.

MISC’s parent, Petronas has said recently that it will continue to spend on upstream exploration and production activities.

In FY09, Petronas increased upstream capital expenditure to RM22.3bil, up 3.6%. The uptrend is likely to extend further and this bodes well for MISC’s offshore and heavy-engineering divisions.

At MISC’s price to book of 1.5 times (x), Nik Hadi does not expect the stock to retest its all-time low of 1x given a more resilient business model.

“At current levels, investors are getting the heavy-engineering division for free. Our sum-of-parts-derived target price of RM9.60 implies a total return of 12% and hence our ‘buy’ rating,” he says.

Downside risks are sharper than expected decline in shipping rates and cutbacks in Petronas’ capital expenditure.

QSR Brands Bhd

QSR Brands Bhd, the parent company of KFC Holdings Bhd and the owner of Pizza Hut, is aggressively expanding its quick service restaurant business in Malaysia and Cambodia. India is the group’s latest target market, with new outlets planned in Mumbai and Pune.

CIMB Research views QSR’s current share price as undervalued. Based on the latest closing prices, QSR’s 50.3% stake in KFCH is worth RM728mil, while the group’s current market value is just shy of RM800mil.

This indicates that the market assigned a small value to the growing Pizza Hut operation. Meanwhile, the management had been buying back shares in QSR, but not in KFCH over the past months.

QSR is 60% owned by Kulim (M) Bhd. Lembaga Tabung Haji has a 9.9% stake, while the Employees Provident Fund holds 5.8% share in the company.

CIMB Research, in a report dated July 10, has reduced QSR’s earnings forecast to account for higher start-up cost on its overseas operations, but sees QSR’s growth story as “attractive,” supported by compounded annual growth rate (CAGR) of 11.9% over the next three years.

It also noted that QSR’s share price valuation is cheaper compared to KFCH, while dividend yield is higher at 4.5%.

Fajarbaru Builder Group Bhd

Fajarbaru Builder Group’s order book stood at RM500mil as at end-March, which is a respectable size for a small second board-listed contractor with a market value of just RM140mil.

With no debts, cash in hand of RM87.5mil and a good execution track record in recent years, analysts say Fajarbaru will be a strong contender for upcoming public infrastructure works to be rolled out in the coming months.

Analysts predict that the firm would be able to meet market expectation of adding RM400mil worth of new jobs for this year. It had already secured a RM138mil job to build a hospital in Tampin, Negri Sembilan earlier this year. Five brokerages gave their profit forecast for the builder, with the mean prediction of 12.2 sen per share expected for year ended June 30, 2009.

Kencana Petroleum Bhd

Kencana Petroleum Bhd has proposed to sell new shares to raise as much as RM160mil. This will add to its existing cash pile of RM84mil.

Analysts say Kencana is looking to expand into the offshore support vessel business, and the fund raising exercise would help pay for the capital expenditure needed for the new venture.

Such vessels are the missing link in Kencana’s offshore operations.

The group’s current orderbook stands at RM1.9bil, made up mostly of oil and gas related fabrication works.

Chief executive officer Datuk Mokhzani Mahathir said last month that the group’s order book would remain healthy at least over the next three years with expected contract wins at home and abroad.

From October onwards, Kencana will start seeing recurring income from a 25% stake in a drilling rig contracted to Petronas.

Consensus estimates showed Kencana’s earnings would reach 13.6 sen for the year ending July 31. A steady crude oil price at above US$60 per barrel would keep sentiment on the oil and gas player intact.

Malayan Banking Bhd

An overwhelming 87% of analysts tracked by Bloomberg rated Malayan Banking Bhd (Maybank) as a “hold” at best.

Of the total 24 analysts, only three see the bank as a buy, saying that the country’s biggest bank is worth more than what the majority is willing to pay for it.

The market’s appetite for Maybank’s shares may have slowed after its share price surged 80% from a low in March. At RM6.40 on Thursday, the stock was well below where it was in early 2008 – before Maybank made what now looked like an ill-timed expansion into Indonesia and Pakistan.

Maybank’s current price-to-book value of around 1.6 times is at a discount to the industry’s average, but overrriding concerns about potential damaging impairment charges on overseas investment and loan loss provision are major turn-offs for investors.

Post a RM6bil rights issue announced earlier this year, Maybank’s key capital ratios will at “very healthy” levels.

Analysts expects the group’s solid local operations to keep the bank in the black for the current year ended June 30. The bank’s last quarter results are expected to be out by end of next month.

Malaysian shares seen down next week: Analyst

2009-07-25T01:33:00.001+08:00

Source: 24 Jul 2009, 1624 hrs IST, AGENCIES

KUALA LUMPUR: Malaysian share prices are expected to drop next week following recent rallies, an analyst said Friday.

"There have been rallies for the past eight or nine days -- the market is becoming more and more overbought so we are looking at a healthy correction," Stephen Soo, technical analyst with local brokerage TA Securities, told AFP.

"We also expect the blue-chips to consolidate," he added.

Soo said he expected the bourse to trade between 1,165 and 1,188 points next week.

For the week to July 24, the Kuala Lumpur Composite Index gained 34.98 points, or 3.12 percent, to close at 1,155.88.

Bursa reduces tick size to boost market liquidity

2009-07-24T15:28:00.003+08:00

Source: The Star Online

KUALA LUMPUR: Bursa Malaysia has reduced the structure of tick size or the minimum price variation between the buy and sell price for a stock, effective Aug 3.

In a statement yesterday, it said the tick size was reduced in line with the current practice by global developed markets and more importantly, to create market depth, enable price discovery and boost liquidity in the local equities market.

“Investors rely on information such as tick sizes to estimate future movement of a counter’s share price as well as form a gauge of market sentiment,” Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusoff said.

He said the exchange anticipated this reduction of tick size would broaden participation from investors who were poised to provide more liquidity to the local market as investors could enter and exit the market more easily.

In addition, the smaller tick size would enable investors and traders to take advantage of more trading opportunities with each price movement, however small.

“This is more evident with the advent of electronic access or Direct Market Access infrastructure which operates efficiently with smaller tick sizes,” Yusli said.

To investors, this revised tick size structure means that the minimum price change of listed securities is now smaller.

For example, currently, a RM5.10 stock is quoted in multiples of five sen which means that the next tick up is RM5.15 and the next tick down is RM5.05.

With the new tick sizes, investors can now quote in multiples of one sen, which will now see a RM5.10 stock go up to the next tick which is RM5.11 or next tick down, which is RM5.09.

Bursa said the equity exchange-traded funds (ETFs) would also benefit from the change. Currently, these ETFs have a tick size of one sen regardless of any price. In future, any ETFs below RM1 will have a tick size of 0.1 sen and ETFs that are priced between RM1 and RM2.995 will have a tick size of 0.5 sen.

For ETFs priced at RM3 and above, the new tick size will be one sen. Meanwhile, the bond ETF maintains its tick size of 0.1 sen. As to the bidding price for buying-in, Bursa said it would retain the 10 ticks.

Arising from this, the buying-in price would be based on the current tick sizes instead of the new tick sizes to ensure that the buying-in price was attractive to potential sellers, it added. — Bernama

Canada's central banks says recession over

2009-07-24T15:26:00.001+08:00

Source: The Star Online

OTTAWA: Canada's central bank is declaring the recession essentially over, saying the Canadian economy will begin growing this summer after nine months of stagnation and lead most of the industrialized world next year.

Bank of Canada Governor Mark Carney said Thursday the economy will grow this quarter.

The bank has dropped its April call for 1 percent contraction this quarter and now says the economy will instead expand by 1.3 percent annualized.

That will be followed by a 3 percent advance in the last three months of this year, and 3 percent growth next year.

But Carney says the economy remains dependent on government stimulus and his own conditional pledge to keep the interest rates at an historic low of 0.25 percent until mid-2010. - AP

Will Asia’s recovery lead the way?

2009-07-24T15:21:00.002+08:00

Comment by Jong-Wha Lee (The Star Online)

Will Asia’s recovery lead the way?
Comment by Jong-Wha Lee

Economic indicators from developed economies remain mixed but Asia is showing much more favourable signs

WHILE the rest of the world struggles, developing Asia is shifting from recession to recovery.

Latest economic indicators from the world’s advanced economies remain mixed.

There are some signs of stabilisation – industrial output and consumer spending are, for example, falling much more slowly than they were. But stabilisation does not mean imminent recovery.

The pace of deterioration may be slowing, but a decline is still a decline. Unemployment is still on the rise. Consumer and business confidence has not recovered. It is clear that the recession has yet to bottom out in the United States and Europe.

In contrast, signs are much more favourable in Asia. Markets, which are typically the first indicators of recovery, are rebounding much more sharply here.

While the Dow Jones Industrial Average rose 11% in the second quarter, Japan’s Nikkei 225 jumped 23%. Equity markets in China rose 25%, India 53% and Vietnam 60%.

Asia’s real economy is doing much better too. Industrial production in South Korea, Singapore, and Thailand has been rising in recent months.

And while most economies in Asia have suffered their worst performance since the 1997/98 Asian financial crisis, we believe they have hit bottom.

The Asian Development Bank forecasts that growth in gross domestic product (GDP) for emerging East Asia will still be 3% this year.

While that’s a significant reduction from the 6.1% growth in 2008, it is growth nonetheless – and much better than other regions of the world. Will Asia lead the global recovery? Quite possibly.

We expect a V-shaped recovery – growth in the region is likely to rise to around 6% next year. However, this is still two percentage points below the 8% average growth between 2003 and 2007.

The reason is that while we expect government stimulus to boost domestic demand, we doubt the external demand that drove exports during the years prior to the latest crisis will return any time soon.

We now see the US economy contracting 3% this year while the economies in Europe and Japan will likely shrink 4.3% and 5.8% respectively.

China is leading the recovery in Asia. Aggressive government spending there – more than 7% of GDP this year, and 8% in 2010 – will fuel domestic growth. And that, in turn, should help other Asian economies recover as they fill Chinese demand for their goods.

China is the biggest offshore buyer of Korean products and the second largest for Japan, snapping up about a quarter of Korean exports and one sixth of Japan’s.

About 12% of total exports from the five largest South-East Asian economies – Indonesia, Malaysia, Philippines, Thailand, and Vietnam – go to China.

But that won’t be enough to restore developing Asia to the growth levels seen in recent years.

For that to happen, consumers in the world’s major economies also need to start buying Asia’s goods again. The United States, Japan and Europe remain major markets for Asian exporters.

Intra-Asian trade has grown rapidly in recent years, but remains largely based on parts and components rather than final goods. Asians still don’t buy finished products made in their own backyard.

In fact, economic growth in the US, Japan and Europe influences East Asia’s regional output at least as much as China’s does. Plus, China’s ability to sustain economic growth over 8% is also reliant on a global recovery to provide external demand for its exports.

Economic growth that relies on stimulus is not sustainable. Clearly, China or Asia alone cannot be the region’s sole engine of growth. Developing Asia needs two engines – China and, just as important, the major advanced economies.

The implications are clear. First, a rebalancing of the sources of growth is needed. Even if demand in advanced economies recovers to pre-crisis levels, that won’t be enough to meet Asia’s expanding exports.

The key for sustaining long-term economic growth in Asia is how to strengthen Asia’s own domestic and regional demand.

Governments can no longer rely on export-oriented development strategies. Strengthening social safety nets, broadening and deepening financial markets, supporting small and medium enterprises (especially in services), and increasing exchange rate flexibility will all help strengthen domestic demand.

But effective rebalancing requires both demand-side and supply-side polices. Developing more competitive and efficient domestic industries to serve domestic markets will take time.

Second, to avoid any repeat of the global financial crisis, the region’s policymakers should improve and streamline their regulatory and supervisory regimes, while reinforcing regional and global cooperation.

By and large, emerging East Asia’s financial systems and institutions were shielded from the direct impact of the global financial crisis.

The resilience of Asia’s banking systems has been attributed to reforms taken following the 1997/98 Asian financial crisis.

Nevertheless, current risk-management and prudential oversight are clearly insufficient.

Both banks and regulators must upgrade their systems to prepare for future risks and challenges.

The underlying causes of the current global turmoil – emanating from financial innovation and globalisation – stress the need to better supervise financial institutions and protect financial stability.

While Asia may already be on the path to recovery, a return to sustained and rapid long-term economic growth will require a rebalancing of the sources of that growth and the safeguarding of financial market stability

U.S. Stocks Rally, Dow Tops 9,000 for First Time Since January

2009-07-24T00:37:00.002+08:00

By Matt Townsend (Bloomberg)

July 23 (Bloomberg) -- U.S. stocks rose, sending the Dow Jones Industrial Average above 9,000 for the first time since January, as EBay Inc., Ford Motor Co. and AT&T Inc. posted better-than-estimated results and home resales increased more than forecast.

EBay rallied 9.7 percent as its earnings signaled consumers’ appetite for online commerce is starting to recover. Ford jumped 9.9 percent after topping analyst estimates by paring expenses and adding market share. AT&T added 3.2 percent as new customers of Apple Inc.’s iPhone bolstered profit. D.R. Horton Inc. led homebuilders higher after sales of existing homes increased for a third straight month.

The S&P 500 advanced 2.3 percent to 975.64 at 11:41 a.m. in New York, the highest intraday level since Nov. 5. The Dow Jones Industrial Average gained 181.98 points, or 2.1 percent, to 9,063.24. The Nasdaq Composite Index surged 2.3 percent for a 12th straight gain, its longest streak since 1992. Benchmark indexes for Asia and Europe also rose.

“It’s been a good earnings season, given the backdrop that was there,” said Sarah Hunt, a money manager who helps oversee about $6 billion for Purchase New York-based Alpine Mutual Funds. “When you look at some of the estimates, they are expecting a better second half.”

The S&P 500 has rallied 10 percent since July 10 as earnings topped analysts’ estimates at 75 percent of the 158 companies in the index that reported results, including Caterpillar Inc., Intel Corp. and JPMorgan Chase & Co. Profits have fallen 25 percent on average from a year ago, according to data compiled by Bloomberg, less than the 33 percent drop forecast by analysts as of July 17.

‘Doing Well’

“Relative to the estimates, it looks like they are doing well,” said Stephen Wood, who helps manage $136 billion as chief market strategist for North America at Russell Investments in New York. “Part of that is an expectations game. Analyst estimates tend to lag, so some of that is a catch-up.”

EBay climbed 9.7 percent to $21.34 as the company forecast revenue in the next three months will be $2.05 billion to $2.15 billion. Analysts had estimated $2 billion.

Ford increased 9.9 percent to $7.01. The only major automaker to shun a U.S. rescue reported a second-quarter loss, excluding some items, of 21 cents a share. The average estimate of analysts surveyed by Bloomberg was for a loss of 50 cents.

“Ford looks like it’s improving its balance sheet, and its cash position looks pretty good,” said Hayes Miller, who helps manage $38 billion at Baring Asset Management Inc. in Boston. “Not only do we not have a potential for bankruptcy, but it looks like it’s improving itself at a quicker pace than Chrysler and GM.”

AT&T Climbs

AT&T added 3.2 percent to $25.64 after reporting second- quarter earnings, excluding some items of 54 cents a share, beating the average analyst estimate by 5.3 percent.

All 13 companies in a gauge of homebuilders advanced after sales of existing U.S. homes rose 3.6 percent in June to an annual rate of 4.89 million, the National Association of Realtors said in Washington. Economists in a survey had forecast an increase of 1.5 percent.

3M Co. gained 6.1 percent to $68.62, the biggest advance in the Dow, after the maker of Post-it Notes and Scotch Tape reported second-quarter profit excluding some items of $1.20 a share, beating the average analyst estimate by 28 percent. The company also raised its 2009 earnings forecast.

Fifth Third Bancorp, Ohio’s largest lender, gained 15 percent to $8.07 after reporting second-quarter earnings of $1.15 a share, compared with a loss of 37 cents a share a year earlier.

McDonald’s, Qualcomm Slump

McDonald’s Corp., the world’s largest restaurant company, sank 4.3 percent to $56.33, the biggest drop in four months. Second-quarter revenue declined more than analysts projected on slowing consumer demand and a stronger U.S. dollar.

Qualcomm Inc. declined 4.2 percent to $46.41 after the company forecast fourth-quarter sales that fell short of some analysts’ estimates, raising concern that handset demand is still slowing. Separately, South Korea’s antitrust regulator said it plans to fine the world’s biggest maker of mobile-phone chips a record 260 billion won ($208 million) for anti- competitive practices.

CIT Group Inc. slid 17 percent to 72 cents. Advisers to bondholders that rescued CIT with a $3 billion loan said creditors should push the company into Chapter 11 bankruptcy after a debt swap next month, according to a person familiar with the matter.

Bank Rakyat pre-tax profit and zakat rose 27% in Q2

2009-07-23T14:13:00.001+08:00

Source: The Star Online

KUALA LUMPUR: Bank Rakyat posted a pre-tax profit and zakat (PBTZ) of RM337.5mil for the second quarter ended June 30, a 27.2% or RM72.2mil increased compared to RM265.3mil in the same corresponding period last year.

Its PBTZ for the first half this year increased 29.6% or RM152.7mil to RM668.5mil from the RM515.7mil in same period last year.

Managing director Datuk Kamaruzaman Che Mat said the increased in profit performance was mainly contributed by the increased in its net income and fee based income.

“Gross income rose by 22.8% to RM1.889bil compared to the previous corresponding period, resulted to the rose of 35.4% of net income to RM1.382bil,” he told a press conference after the financial result briefing today.

Tenaga Q3 profit soars on forex gains

2009-07-23T12:21:00.002+08:00

By IZWAN IDRIS (The Star Online)

KUALA LUMPUR: Tenaga Nasional Bhd’s net profit more than tripled in the third quarter versus a year earlier, boosted by foreign exchange (forex) gains and a recovery in domestic electricity demand.

For the quarter ended May 31, TNB made a net profit of RM1.023bil, or 23.6 sen per share, against RM298.8mil, or 6.9 sen per share, in the year-earlier period.

Turnover improved to RM7bil from RM6bil before.

Stripping out the forex gains of RM603mil, TNB’s net profit stood at RM419.9mil.

President and chief executive officer Datuk Seri Che Khalib Mohamad Noh expects the utility firm would probably incur forex translation losses in the final quarter, due to the weaker ringgit trend since June.

A large chunk of TNB’s foreign debt is denominated in US dollar and Japanese yen. The ringgit was stronger against the two currencies in the three months ended May 31, but has since weakened.

Electricity demand in the country had been rising since March. TNB’s press handouts showed a new peak demand level was achieved on June 17 at 14,029 megawatts.

The company’s weekly generation data also showed energy consumption pattern in June and July “to have exceeded the levels achieved last year.’’

“We expect electricity demand to continue to improve in the last quarter,’’ Che Khalib told reporters at the group’s results briefing yesterday.

However, full-year demand was expected to show a slight drop at less than 2% compared with the previous year, dragged down by the steep plunge in usage registered in the January/February period.

Domestic electricity charges were lowered effective March 1 this year.

TNB shares closed unchanged at RM8.40 yesterday, ahead of the results announcement and a Cabinet decision on electricity tariffs. The rates were kept at current levels.

The market had been anticipating a tariff hike, although none had expected an adjustment to happen within TNB’s current financial year ending Aug 31.

“We take it as it is,’’ Che Khalib said when asked to comment on the power tariff adjustment, reiterating the stand that TNB would adjust the rates charged on consumers only if there was a review of the price of gas used to generate electricity.

TNB used 2.9 million tonnes of coal to generate electricity in the third quarter, higher than two million tonnes used in the second quarter. The increased usage of the more expensive coal was due to what TNB termed “gas curtailment,” or disruption in gas supply to its power plants.

This contributed to the decline in TNB’s operating margins in the third quarter.

Che Khalib said TNB would probably miss its target to keep the average coal price at US$85 a tonne this year, as prices had risen in the last quarter. TNB paid an average US$79.90 a tonne for coal in the third quarter, down from US$85 in the second quarter and US$113 a tonne in the first.

Inflation contracts now, but set to rise in near future

2009-07-23T12:14:00.001+08:00

By Jagdev Singh Sidhu (THE STAR ONLINE)

JUST as inflation contracts for the first time in decades, it is set to rise in the near future for a number of reasons.

Higher public transport charges will add to inflationary pressure and although a hike in electricity tariffs appears to have been put off for now, inflation will pick-up should that be raised. And on both counts, the impact will have far reaching consequences on the public.

The majority of people will be hit by higher bus and taxi fares as thousands each day throughout the country use that mode of transportation.

The rise in public transport charges stems from taxi drivers and bus operators clamouring for higher charges as the previous rise in taxi fares was in 2005 and school buses in 2006.

People won’t like it but I suppose they can emphatise with the plight of private taxi and bus operators who like many Malaysians would have incurred higher costs without a corresponding rise in income.

Another reason given in the granting of higher public transport charges is the prospect of better service but I am not hanging on to hope that public transportation improves just because fares are higher.

The public transport system is inefficient in the major cities in the country, especially Kuala Lumpur and Penang, and have remained so for decades.

Higher fares is not a substitute for more buses and a more extensive rail network.

Talk is rife that electricity tariffs are set to increase but the Government has indicated that any move to burden the public is off at the moment.

However, the motion to justify a tariff increase has been set in motion and among the many reasons given is the cheap price of power.

Well, should tariffs be raised by the reported quantum of about 4%, the new rates on a global scale are still cheap but as the rates are now more exposed to fluctuations of natural gas prices, people should be prepared to pay a lot more for their electricity in the coming years.

That is because most of the country’s power is from natural gas and even though the gap between the domestic price of gas and the international price is now narrower, it was much wider when oil and gas prices were at record levels.

Any improvement to the global economy will only see those prices rise and electricity prices go up.

Nevertheless, the argument for a tariff hike also extends to the need to remove the subsidy mentality and by allowing electricity tariffs to gravitate towards world market prices, companies can be more efficient and competitive.

There are a multitude of reasons that affect the efficiency and competitiveness of a company.

I doubt paying more for electricity will make a company more competitive or efficient but if a company learns to use less energy to generate RM1 of revenue, it becomes efficient.

Higher charges might nudge companies to use less energy but not necessarily make them more competitive or efficient.

The World Competitiveness Report sets down various parameters in which a country’s competitiveness is ranked.

Quality, not price of electricity is one of 122 factors that determine a country’s competitiveness.

And the same would extend to companies where productivity, wages and product quality might play a bigger role in efficiency than the price of electricity.

And I have my doubts whether the previous hike in tariffs had any substantial influence on any improvement in corporate Malaysia’s competitiveness.

There are other reasons that have more to do with improving the country’s competitiveness and efficiency of companies and those too need to be tackled in earnest.

People point out that too big a government will lead to inefficiencies and we all know the civil service in the country is bloated. Maybe that has to be looked at in improving the country’s competitiveness and efficiency.

Then there is the tax rate. The effective tax rate paid by Malaysians is too high.

Then there is the overall issue of government policies that need to be repealed or changed to improve the underlying competitiveness of a country.

Those changes will have a far bigger impact on efficiency than raising power charges.

Penang group secures RM2bil in building material contracts

2009-07-22T12:19:00.001+08:00

Source: The Star Online (David Tan)

GEORGE TOWN: Over RM2bil worth of contracts to supply building materials have been secured by about half of the Penang Master Builders and Building Materials Dealers Association’s (PMBBMDA) 117 members so far this year.

President Finn Choong said the materials included essential building blocks such as steel, cement and other aggregates for residential projects in Penang.

“These contracts do not include materials for interior decoration. They only involve PMBBMDA members,” Choong told StarBiz.

Works on the second Penang bridge did not require raw materials from its members at the moment, he said.

He added that the bridge will require supplies from our members when the piling and concrete works begin.

“The contracts to supply materials such as steel, cement, crusher run and premixed bitumen (for the bridge) should be worth a further RM1bil.”

Meanwhile, PMBBMDA secretary Ong Soo Yong said the forthcoming commercial and residential projects, such as the First Avenue Shopping Mall, Cititel Express and IJM’s The Light Linear, should generate demand for interior finishing products from local building material suppliers.

“The Kuala Lumpur-based developers in Penang tend to source essential building blocks from suppliers in Kuala Lumpur and not from our members.

“For such projects, our members can look forward to supplying interior finishings,” he said.

CPI may drop between 1.2% and 1.6% in June

2009-07-22T12:17:00.002+08:00

Source: The Star Online (LAALITHA HUNT)

However, impending rise in power, transport costs can dampen recovery

PETALING JAYA: A spike in electricity as well as transportation costs is likely to put the brakes on Malaysia’s economic recovery.

According to RAM Holdings Bhd chief economist Dr Yeah Kim Leng, a rise in these costs ahead of an economic recovery, which is expected by year-end, could have a dampening effect on the already weak domestic demand.

“It also depends on the quantum of increase allowed by the Government. If it’s a small rise, it could be absorbed by consumers without derailing the recovery process.

“However, sharp price hikes are worrisome as they could exert undue upward pressure on prices of consumer goods as observed last year when fuel prices spiked,” he told StarBiz.

An electricity tariff review scheduled for July 1 was postponed in light of the current economic situation.

Meanwhile, a 30% hike in bus and taxi fares due in August will likely offset deflationary pressures on Malaysia’s consumer price index (CPI).

Economists polled by StarBiz forecast the country’s CPI for June, which is scheduled for release today, to contract 1.2% to 1.6% year-on-year.

According to the Statistics Department, the CPI was up 2.4% in May from the same month last year. It was 0.2% higher than April.

The index for food and non-alcoholic beverages in May showed a 5.2% increase, while that for non-food registered 1% rise compared with a year ago.

Yeah said the CPI was expected to contract as inflationary pressures had come off significantly in recent months.

“Besides the weakness in both global and domestic demand, prices have been on the downtrend due to the decline in commodity prices,” he added.

Meanwhile, TA Research economist Patricia Oh said the CPI contraction was expected as prices had been falling from January to May this year, albeit at a moderate pace.

“However, prices are seen to be stabilising, so there is no concern for deflation,” she said, adding that the CPI should turn positive by the fourth quarter.

Banks expected to post better Q2 results

2009-07-22T12:13:00.003+08:00

Source: The Star Online (Leong Hung Yee)

KUALA LUMPUR: Public Bank Bhd’s better-than-expected second quarter results mark the beginning of a slew of positive financial figures from other banks for the current reporting season, say analysts.

Most of the analysts contacted believe the April-to-June quarter would provide a clear indication that the earnings momentum for banks remains intact. As such, they do not expect to see major disappointments.

Public Bank on Monday posted a 2.9% increase in net profit to RM610.7mil on revenue of RM2.35bil for the quarter ended June 30.

Its net non-performing loans (NPL) were below 1% while the bank’s loans growth also remained strong.

Kenanga Research said Public Bank’s net profit of RM1.2bil for the first half year was “commendable” given the current economic environment.

An analyst said if Public Bank were an indicator, he expected banks to report “slightly better results” in the quarter to end-June.

AmResearch expects all banking groups under its coverage to report an improvement in pre-provision profits and core earnings in their quarterly results.

“After a mixed bag in the first quarter this year, we expect banking institutions to post sequential improvement in core net profit for the second quarter.

“In the first quarter, aggregate core net profit of eight listed banks declined by 11% quarter-on-quarter as well as year-on-year,” the research house said.

“We foresee two potential surprise factors – better-than-expected loans growth and a strong rebound in capital market related income.”

AmResearch said while industry loans growth of less than 1% quarter-on-quarter was expected, more aggressive lenders such as Public Bank, CIMB Bank and Malayan Banking Bhd were likely to register above-average increase.

“Improvement in second quarter earnings, benign increase in loan loss provisions and improving business and consumer sentiments would provide room for upward revisions to our sector earnings projections of a 9% fall in 2009 but a healthy 15.5% rebound in 2010,” it said.

Commenting on Public Bank’s latest results, OSK Research said the bank, despite having outperformed the broader market, was still trading at a relatively undemanding 13.6 times for financial year ending Dec 31, 2010 (FY10) earnings.

“The group’s superior asset quality will help minimise any spikes in NPL, thereby allowing the bank to channel its resources to capture further market share at the expense of its peers.

“The stock could continue to re-rate as earnings and dividend may surprise on the upside,” OSK said.

The research house said it was “tweaking upwards” its FY09 and FY10 earnings forecasts for Public Bank by 4.2% and 2.5% after raising loans growth estimates to 13.5% and 15% respectively from 12% and 14% previously.

AmResearch has also raised its net profit forecast for the bank by 4% to RM2.4bil for FY09 and 5% to RM2.74bil in FY10.

“We like Public Bank as it has continued to surprise with its aggressive loans growth targets while benefiting from a recovery in the equities market,” it said.

Oil prices near US$65 per barrel on better earnings

2009-07-22T12:10:00.001+08:00

Source: The Star Online

COLUMBUS, Ohio: Oil traded near $65 a barrel Tuesday as a raft of better-than-expected profit reports boosted optimism that demand for crude would rebound.

Energy prices, except for retail gasoline, have been rising for a week. Yet it was the second day that prices crisscrossed $64, with lingering doubts about the ability of businesses or consumers to step up consumption.

Benchmark crude for August delivery rose 74 cents to settle at $64.72 a barrel on the New York Mercantile Exchange.

That's more than $5 above last Tuesday's closing price.

It was the last day of trading for the August futures contract and part of the price increase over the past week may be the result of traders covering strategic bets on the direction of oil.

Tuesday's closing price is still several dollars below the closing of the July contact.

Heavy equipment marker Caterpillar Inc. was among companies that issued an improved 2009 profit forecast on Tuesday, even as it said its second-quarter profit fell 66 percent on weak sales. Coca-Cola Co.'s second-quarter profit rose 43 percent.

Chemical maker DuPont Co. and drug company Merck & Co. said their profits fell, but the results weren't as bad as Wall Street had expected.

Still, Jim Ritterbusch of Ritterbusch and Associates said demand for gasoline, diesel fuel, heating oil and natural gas is remains weak and drivers still are not hitting the road, even with gasoline prices well below year-ago levels.

Pump prices have fallen for a month now, and headed lower overnight once again.

Retail gasoline prices fell 0.7 cents to $2.458 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

That's almost a quarter less than last month at this time and far below last year's price, when $4 gasoline gave motorists sticker shock in the U.S.

On Wednesday, the Energy Department's Energy Information Administration releases its weekly report on how much crude and gasoline is in storage.

Gasoline supplies, as well as diesel fuel, are expected to rise again as the busiest part of the driving season winds down.

In other Nymex trading, gasoline for August delivery rose 2.26 cents to settle at $1.812 a gallon and heating oil gained almost a penny to settle at $1.6984.

Natural gas for August delivery also rose just short a cent to settle at $3.846 per 1,000 cubic feet.

In London, Brent prices rose 43 cents to settle at $66.87 a barrel on the ICE Futures exchange. - AP

Bursa Malaysia Aims for 40 Listings a Year, CEO Yusli Says

2009-07-22T03:16:00.001+08:00

By Chan Tien Hin

July 21 (Bloomberg) -- Bursa Malaysia Bhd., operator of the nation’s exchange, said it aims to attract as many as 40 new listings a year as the easing of investment rules in the country helps draw foreign investors.

Bursa attracted 23 listings last year and 26 in 2007, down from 40 three years ago, according to its Web site. Only one sold shares for the first time in the first half, it added.

“Over the next six months, if we get the same number as last year, that will be good,” Yusli Yusoff, Bursa’s chief executive officer, said in an interview in Kuala Lumpur. “I don’t see why we can’t continue the momentum, I’ve always said that in any year, we should be looking at 30 to 40 companies.”

Malaysian Prime Minister Najib Razak last month eased investment rules governing initial public offerings and takeovers, scrapping the need for overseas companies and publicly traded Malaysian businesses to set aside 30 percent of their equity to local ethnic Malay investors.

Najib, who took office in April, is overhauling the Southeast Asian nation’s financial markets to attract investors and revive an economy that’s facing its first contraction in a decade. The benchmark FTSE Bursa Malaysia KLCI has risen 30 percent this year, lagging behind regional markets.

The measure’s gap with Southeast Asian indexes may widen. Macquarie Group Ltd. said in a report today that investors should “take profit” in Malaysian stocks as “liquidity and earnings upgrades are showing signs of fatigue.”

‘Big Ones’

Bursa said more than 20 companies are already in the “pipeline” for initial share sales, including a handful of businesses from China, with more expected following the easing of investment rules.

“We expect companies who previously may not have wanted to come to the market because of this condition to now come forward,” Yusli said today. “I want some big ones this year.”

The bourse said discussions with Southeast Asia’s stock exchanges to develop an electronic trading link connecting five markets in the next two to three years are at a “fairly advanced stage.”

Southeast Asia’s stock exchanges signed a preliminary agreement on Feb. 23 to develop a trading link to boost competitiveness and lure more overseas funds into the region.

Cash Rich and Profitable Companies

2009-07-21T23:41:00.001+08:00

Source: Fortune Sense

Below table shows some net cash rich and profitable companies in Bursa Malaysia main board. Net Cash = Total Cash and Equivalents - Total Liabilities.

Company RM mil
Resorts World 4600
Petronas Gas 1500
Oriental 910
Bursa Malaysia 280
Carlsberg 220
Uchitec 136
Dialog 112
Amway 108

By having net cash and the company is in profit, the company is in the position that is able to make acquisition when opportunity comes or providing consistent dividend to the shareholder.

Do share if you you the information of company that is net cash rich and is a profitable company.

Malaysia Employee Provident Fund (EPF) Dividend Rate Since Year 1983

2009-07-21T23:33:00.005+08:00

Source: Fortune Sense

Do you know the EPF dividend rate since year 1983 ? The information is as below :

Year - Dividend

2008 4.5
2007 5.8
2006 5.15
2005 5
2004 4.75
2003 4.5
2002 4.25
2001 5
2000 6
1999 6.84
1998 6.7
1997 6.7
1996 7.7
1995 7.5
1988 - 1994 8
1983 - 1987 8.5

The return rate is higher than the fixed deposit rate but it seems lower than the Amanah Saham Wawasan (ASW 2020) and Amanah Saham Malaysia (ASM). You are able to invest in these two schemes by using your EPF account. Do think of it if you do not know about it, based on the statistic, these two schemes, ASW 2020 and ASM provide higher return rate.

FBM KLCI ends lower on profit-taking

2009-07-21T23:11:00.001+08:00

Source: The Star Online

KUALA LUMPUR: Shares on Bursa Malaysia ended the day lower after a gain in morning trade due to profit-taking activities.

The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) closed 4.55 points, or 0.40% lower to 1,134.70 at 5pm while most markets in the region were in positive territory.

The Asian stocks rose, lifting the MSCI Asia Pacific Index to a nine-month high, after Australia’s treasurer said the global economy may have bottomed and Goldman Sachs Group Inc raised its Standard.

Tokyo’s Nikkei 225 gained 2.73% to 9,652.02 and Hong Kong’s Hang Seng Index unchanged at 19,501.73.

Shanghai’s A share index fell 1.64% to 3,213.21, Seoul’s Kospi Index advanced 0.71% to 1,488.99 while Singapore’s Straits Times Index was 0.7% lower at 2,454.33.

At Bursa Malaysia, 209 counters were up, 427 counters were down and 239 others were trade unchanged. There were 912.65 million shares changed hands with a total value of RM1.49 billion.

Among top gainers, PPB Group gained 40 sen to RM13.00, BAT surged 25 sen to RM45.25, KFC added 15 sen to RM7.15 and Panasonic Manufacturing Msia rose 10 sen to RM12.00.

Losers included DIGI plunged 30 sen to RM22.00, Top Glove fell 20 sen to RM7.05, DFZ Capital and MAS lost 12 sen to RM4.78 and RM3.04 respectively.

The most actively traded stocks included KNM down 1 sen to RM83 sen, Axiata fell 9 sen to RM2.87, Jaks Resources lost 1.5 sen to RM92 sen, IOI Corp up 4 sen to RM4.84, AMDB shed 3.5 sen to 16.5 sen, Kinsteel was 3 sen lower at 94.5 sen, Astro down 14 sen to RM3.28 and UEM Land remained unchaged at RM1.65.

Among bank stocks, Maybank rose 20 sen to RM6.40, BCHB fell 15 sen to RM9.950, Public Bank down 20 sen to RM10.10 and Hong Leong Bank was 5 sen lower at RM5.85.

Plantation stocks, United Plantations lost 30 sen to RM12.10, KL Kepong gained 20 sen to RM12.30, United Malacca up 5 sen to RM7.90 and Sime was unchanged at RM7.55.

Crude palm oil shed RM15 to RM2,145 per tonne.

Nymex crude oil added 1 cent to US$63.99 per barrel.

The ringgit was quoted at 3.542 to the US dollar.

Recession in U.S. May Have Ended, Leading Index Shows

2009-07-21T13:14:00.002+08:00

Source: By Carlos Torres (Bloomberg)

July 20 (Bloomberg) -- Components of the index of leading economic indicators are signaling the worst U.S. recession in five decades may be over now, not three to six months from now.

Less-known elements of the Conference Board’s report, including ratios and diffusion indexes, bolster the view the contraction has ended. The leading index, a gauge of the economic outlook over the next two quarters, rose 0.7 percent in June, a third consecutive gain, the New York-based research group said today.

“The process of coming out of the recession, although still fragile, may be starting,” Ataman Ozyildirim, a Conference Board economist that tracks the business cycle, said in an interview. “If it continues in this way, the NBER committee will look back and tell us the recession ended.”

A committee of the National Bureau of Economic Research, a private group in Cambridge, Massachusetts, is the accepted arbiter of when recessions begin and end. The group announced in July 2003 that the last recession had ended in November 2001, indicating their deliberations take time.

Several requirements within the Conference Board’s report that economists say need to be fulfilled before a contraction is officially considered over were checked off the list in June.

Those were: three straight gains in the ratio of coincident-to-lagging indicators, three months of 50-plus readings in the diffusion index, three consecutive gains in the leading index and an annualized reading over that period in excess of 10 percent.

Annual Rate

The leading index was up 12.8 percent at an annual rate over the last three months, today’s report showed. It was the best performance since January 2002, two months after the last recession ended.

“This is the third straight month of a gain in leaders and suggests that, along with other economic evidence, the U.S. recession might have ended” in the second quarter, Kenneth Kim, an economist at Stone & McCarthy Research Associates in Princeton, New Jersey, wrote in a note to clients.

The Conference Board’s index of coincident indicators, a gauge of current economic activity, dropped 0.2 percent after decreasing 0.3 percent the prior month. The NBER cycle-dating committee follows this index to help time downturns. The gauge tracks payrolls, incomes, sales and production.

Increases in the coincident index would provide confirmation that the recession has ended, said Ozyildirim.

The diffusion index shows the breadth of gains in the leading index, with figures over 50 showing the majority of components rising. The index registered a reading of 70 in June for a third consecutive month, today’s report showed.

Financial Gauges

Earlier this year, only the financial components of the leading index -- including money supply and the difference in interest rates between the benchmark 10-year Treasury note and the overnight rate banks charge to borrow from each other --were rising. The increase in the diffusion index shows other measures are also now increasing.

“We now have positive moves in the indicators of the real side of the economy,” such as decreasing jobless claims and increasing building permits, the Conference Board’s Ozyildirim said.

While the timeframe can vary between three and nine months, on average the leading index reaches a bottom about five to seven months before the end of a recession, Ozyildirim said.

“The ‘all clear’ is not quite there, but you are beginning to see the kind of sequence unfolding that will get us there,” he said, referring to the end of the recession.

Sony bids US$50mil for Michael Jackson rehearsal film

2009-07-21T12:13:00.002+08:00

LOS ANGELES: Sony Corp.'s movie studio has bid $50 million to acquire the worldwide distribution rights to a film based on rehearsal footage for Michael Jackson's "This Is It" comeback concert series, according to a person familiar with the bid.

The person said Monday that the bid came after several studios, including Paramount, Universal and 20th Century Fox, were shown footage starting early last week.

The person spoke on condition of anonymity because the bidding had not been completed. None of the studios would comment on the record.

The winning studio would produce the film with Jackson's concert promoter, AEG Live, and his estate.

It would go a long way to helping AEG Live recoup some of the $30 million to $32 million it spent producing the concert before Jackson died June 25.

The bidding was reported earlier by the Los Angeles Times and industry blogger Nikki Finke.

Sony Pictures has a leg up on other bidders because Sony Music distributes Jackson's music and is in a 50-50 partnership with his estate in Sony/ATV Music Publishing.

Sony's bid is on par with the cost of making a mid-range budget movie, and is offset by the fact that the Sony group of companies would benefit from the music licensing rights attached to the film.

There is also massive interest in Jackson material worldwide.

An estimated 31 million viewers in the U.S. alone watched the Jackson memorial service live earlier this month, according to Nielsen Media Research.

That's just shy of the 33 million U.S. viewers who watched Princess Diana's funeral.

"This type of a story, if put together right, could be very compelling and draw a very, very wide audience," said Mark Fleischer, an entertainment attorney with Venable LLP and former executive at MGM Studios.

The estate and AEG Live are also negotiating with several television networks and pay-per-view outlets on a TV special that would be a stage show featuring Jackson's music and dancing.

It would be directed by "This Is It" director Kenny Ortega.

The selling price being discussed for the rights to show the TV special is also in the tens of millions of dollars.

General Electric Co.'s NBC has been in talks on the TV show, but the concept, air date and cost for the rights has not been finalized, said NBC spokeswoman Rebecca Marks.

"We have no deal for the rights to the Michael Jackson special," Marks said.

The special administrators of Jackson's estate, attorney John Branca and former music executive John McClain, have been moving quickly to secure Jackson's assets and cut deals to capitalize on the surge in interest in the pop star since he died.

Last week, Branca and McClain received signed court papers authorizing them to act on his estate's behalf until another hearing Aug. 3. McClain has been sorting through unreleased Jackson recordings, while Sony Music is interested in releasing a commemorative album.

Music sales have soared.

Jackson's 2002 will named Branca and McClain as executors and directs all of his assets to be placed in a trust that will benefit his mother Katherine Jackson, his three children, and unnamed children's charities.

The estate is estimated to be worth more than $500 million.

But Katherine Jackson's lawyers on Friday sought a judge's ruling on whether she can challenge the authority of the men without triggering a "no contest" clause in the trust that would cause her to be disinherited

FBM KLCI touches year new high in morning

2009-07-21T12:11:00.002+08:00

Source: The Star Online

KUALA LUMPUR: The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) touches year new high of 1,143.26 at the opening Tuesday on active trading on bluechips.

HwangDBS Vickers Research Sdn Bhd said the positive vibes generated overnight are expected to spread on across the region today.

Local investors may be on the lookout for laggard plays following a cumulative gain of 75.6 points or 7.1% over five straigh days as measured by its bellwether FBM KLCI, according to the brokerage.

“FBM KLCI, which back to where it was in early August last year, has probably signaled a fresh wave of upward bias after breaking past the 1,125 resistance mark yesterday,” it said.

OSK Research analyst Shin Kao Jack said local bourse has gone up by at least 10 points daily for five consecutive trading days.

He expects there is still a great possibility that the market will take a breather this week.

“From the current level, an immediate resistance lies at the 1,165-point level followed by the 1,187-point level,” he said, noting that immediate support is seen at the 1,135-point level, followed by the 1,120 points and 1,108 points.

On regional, Asian stocks advanced in the morning trade following news on CIT Group Inc obtained a loan to allow the company to avoid bankruptcy and Goldman Sachs Group Inc raised its estimates for the US Standard & Poor’s 500 Index on improving earnings.

At 9.45am, the FBM KLCI down 0.14% to 1,137.66 while Singapore’s Straits Times Index dropped 0.01% to 2,455.96.

Tokyo’s Nikkei 225 gained 1.45% to 9,531.75. Shanghai’s A share index rose 0.19% to 3,273.23.

Hong Kong’s Hang Seng Index climbed 3.70% to 19,502.37 and Seoul’s Kospi Index added 0.84 to 1,490.95.

At Bursa Malaysia, 122 counters rose, 167 counters fell while 205 others were traded unchanged. There were 202.76 million shares done with a total value of RM230.14 million.

Among gainers, Tanjong up 20 sen to RM14.40, MPI and Superlon added 10 sen each to RM5.55 and 50 sen respectively.

Property counters, Landmarks was up 7 sen to RM1.38, Berjaya Land advanced 6 sen to RM3.80 and UEM Land rose 1 sen to RM1.66.

Plantation stocks, Kulim added 10 sen to RM7.15, Sime gained 10 sen to RM7.65, Astral Asia rose 7 sen to RM1.03 and TSH Resources was 6 sen higher at RM1.70.

Among losers, Nestle fell 25 sen to RM31.50, BCHB dropped 15 sen to RM9.95, Astro was 12 sen lower at RM3.30, DIGI down 10 sen to RM22.20 and Public Bank lost 10 sen to RM10.20.

Nymex crude oil rose 32 cents to US$64.30 per barrel.

Spot gold climbed 84 cents to US$947.85 per ounce.

The ringgit was quoted at 3.544 to the US dollar.

Oil wavers near US$64 on upbeat corporate earnings

2009-07-21T12:10:00.002+08:00

Source: The Star Online

Oil wavers near US$64 on upbeat corporate earnings

SIOUX FALLS, South Dakota: Oil prices wavered near US$64 a barrel Monday as encouraging quarterly reports from major corporations were offset by what could be an extended period of weak demand for energy.

Benchmark crude for August delivery rose 39 cents to $63.95 a barrel on the New York Mercantile Exchange. Prices neared $65 early on.

The Energy Information Administration this week is likely to report that supplies of gasoline, crude and natural gas in storage rose, said Alaron Trading Corp. analyst Phil Flynn.

If Flynn is right, it could suggest that a run-up in prices this year has been premature.

While crude levels overall have been drained off in recent weeks, there has been a build up at a crucial facility in Cushing, Oklahoma, which not only feeds a number of major refineries but is also where oil traded on Nymex is stored.

After rising again early to start the week, prices essentially flattened by midday. "I think the market is coming back down to earth a little bit," Flynn said.

Still, oil prices continue to be buoyed by the weak dollar and perhaps the political turmoil in Iran. On Friday, the contract jumped $1.54 to settle at $63.56.

Flynn said there is finally some interest in the unfolding events in a major oil-producing country, which could disrupt supplies in the future and possibly force crude prices higher.

Violence in Nigeria, Ecuador and Iran have failed to have the same effect that they would have last year.

Still, negative comments from the CEO of Halliburton helped push natural gas prices lower still.

"Due to continued weakness in natural gas demand ... we believe it is unlikely that there will be a meaningful recovery in natural gas prices and, consequently, drilling activity for the remainder of the year," said Dave Lesar, who is also chairman at the oilfield service giant.

Profits for oil service companies like Halliburton Co. and Weatherford International Ltd., which both reported second-quarter earnings Monday, have plummeted all year long.

Natural gas, which had been trading up all morning, fell about a dime to $3.71 per 1,000 cubic feet.

Big users of natural gas, like manufacturers, have been slashing production.

The American Iron & Steel Institute reported a 5.9 percent increase in steel shipments from April to May, and, according to the EIA, U.S. steel mills in 2002 consumed the equivalent of 8.9 percent of the average open interest of the Nymex natural gas contract.

That's encouraging, analyst and trader Stephen Schork said in his morning report, but steel production remains a little more than half of where it was during the 2002 recession, "a stark reminder of how far we had fallen and how far we still have to go."

In other Nymex trading, gasoline for August delivery rose less than a penny to $1.7740 a gallon and heating oil gained 3.24 cents to $1.6734.

In London, Brent prices rose 39 cents to $65.77 a barrel on the ICE Futures exchange. - AP

Gold prices may rise 20% to 30% by year-end

2009-07-21T12:07:00.001+08:00

Source: The Star Online

KUALA LUMPUR: Gold prices are expected to rise 20% to 30% with its spot price hitting US$1,100 per ounce by year-end, on expectations of a rebound in the global consumption of commodities and on rising demand for gold amid declining new supplies, according to OSK-UOB Unit Trust Management Bhd.

The current spot price for gold ranges from US$910 to US$920 per ounce.

OSK-UOB Unit Trust chief executive officer Ho Seng Yee noted that the annual production of new gold had been falling since 2001.

“However, gold demand has been increasing through traditional demand for jewellery and new investment demands,” he said during the launch of the OSK-UOB Gold and General Fund yesterday.

Ho reckoned that the increase in demand for commodities, including gold, by emerging economies such as China and India was setting the base for a prolonged commodity bull cycle.

“Although commodity demand has fallen in line with the recent economic weakness, we feel that the low per capita consumption levels in the developing world would provide support for a rebound in global commodity demand,” Ho said.

Singapore-based UOB Asset Management Ltd director of equities Robert John Adair noted that historically, gold had performed well despite different economic scenarios such as inflation or deflation.

“It is also a good hedge against paper currency, which has historically been seen to weaken during times of financial crisis,” he said, adding that the US dollar would likely weaken if unemployment rates in the US continued to rise.

“The value of (US-based) assets is likely to fall if consumers lose their jobs and are not able to service their loans.

"This would weaken the US dollar, which has not lost its value since the start of the financial crisis,” Adair said.

The OSK-UOB Gold and General Fund is a feeder fund that invests at least 95% of its net asset value in United Gold and General Fund, the target fund, which is managed by UOB Asset Management.

“The fund aims to achieve returns on investment mainly in securities of corporations whose business is, or is substantially in, the mining or extraction of gold, silver as well as precious metals besides oil, gas and coal,” Ho said.

In the past, the target fund has provided returns of 14% to 15% per annum on an annualised basis, according to Ho.

The OSK-UOB Gold and General Fund, which has an approved size of 800 million units, is being offered at an initial price of 50 sen per unit.

The offer period is from July 21 to Aug 10 and the initial minimum investment amount is RM1,000.

Public Bank’s Q2 profit rises to RM610mil

2009-07-21T12:06:00.004+08:00

Source: The Star Online

Group declares an interim dividend of 30 sen a share

KUALA LUMPUR: Public Bank Bhd posted a modest rise in net profit to RM610.7mil, or 17.7 sen a share, in its second quarter ended June 30 as a still vibrant business in Malaysia was dragged down by a weaker performance from its overseas operations.

It recorded a net profit of RM593.5mil, or 17.69 sen a share, in the previous corresponding period.

The group, however, sees its loans growth and non-performing loans (NPLs) to be at industry leading levels as it forecast yet another year of record profit on a recurring basis.

“The Public Bank group will continue to pursue its strategy of strong organic business growth, as well as maintain a high quality loan portfolio and improved productivity,” chairman Tan Sri Teh Hong Piow said in a statement.

The group declared an interim dividend of 30 sen a share less tax, which amounts to around RM777mil.

The payout remained constant from the previous corresponding period.

Revenue for the latest quarter was RM2.35bil compared with RM2.52bil previously while pre-tax profit was RM819.8mil compared with RM791.6mil.

Net NPLs were below 1%.

In a media briefing yesterday, managing director Tan Sri Tay Ah Lek said the bank was still on track to achieve a loans growth of 14% to 15% by year-end supported by the bank’s staple lending activity to small businesses and house and car buyers. Loans grew by 7.2% in the first half.

“Our loans are competitively priced and our people work a lot harder,” said chief operating officer Leong Kwok Nyem as to why Public Bank’s loans grew much faster than the industry average of 1.2% in the first five months of this year.

“We have been expanding our loans marketing resources despite the weakening economy.”

The record low overnight policy rate will put pressure on Public Bank’s net interest margins but the repricing of deposit rates, in which Public Bank has a market share of 15.2%, should help to partly mitigate the pressure on lower margins from its loans. A higher volume of business has also offset the pressure margins have come under.

Whereas net interest margins will remain under some pressure, Public Bank is looking to non-interest income as a boost. The group sees non-interest income, such as fees, to account for 26% of total income.

Tay said its non-interest margin was expected to rise in the second half mainly due to an increase in sales on unit trusts by unit Public Mutual Bhd.

Public Mutual is the leader in the private unit trust industry as it now claims to have 44% of that business in Malaysia as at end-June.

Bancassurance and wealth management are two segments of businesses that Public Bank is now focusing on growing and has now expanded a sales workforce for those businesses to 529.

Public Bank chief operating officer Wong Jee Seng said it expected meaningful numbers for its bancassurance business from 2011 when that segment is forecast to account for 3% to 4% of revenue.

Leong said Public Bank’s customer base, which has doubled in under eight years, would offer good channels for its sales executives to access.

Public Bank is expanding its overseas network, in particular in Hong Kong and Cambodia, by opening more branches but profit from abroad, especially Hong Kong, has come off.

It, however, expects the performance of its Hong Kong operations to be relatively stable as bankruptcies and asset quality have improved.

Public Bank will also look to enhance its capital ratios in the second half of this year.

US cconomic indicators up more than expected in June

2009-07-21T12:04:00.001+08:00

Source: The Star Online

NEW YORK: More plans to build homes, higher stock prices and fewer people filing first-time claims for jobless aid sent a private-sector forecast of U.S. economic activity higher than expected in June.

It was the third straight monthly increase for the New York-based Conference Board's index of leading economic indicators, and another sign pointing toward the recession ending later this year.

The index rose 0.7 percent last month. Wall Street analysts polled by Thomson Reuters expected a gain of 0.4 percent.

May's reading was revised up to a gain of 1.3 percent from 1.2 percent, while April was scaled back to 1 percent growth from 1.1 percent.

The group also said activity in the six-month period through June rose 2 percent, with an annual growth rate of 4.1 percent.

That's the strongest rate since the first quarter of 2006.

The index is meant to project economic activity in the next three to six months.

If these conditions continue, "expect a slow recovery this autumn," said Conference Board economist Ken Goldstein.

The Conference Board's leading indicators index bottomed in March after peaking in July 2007.

The decline accelerated last fall after investment bank Lehman Brothers collapsed and credit markets froze.

"We're now getting data which points to stabilization," said Josh Shapiro, chief U.S. economist at research firm MFR Inc.

"The overall signal they're sending is the slide in economic activity is poised to end. The jury is still very much out in terms of what happens after that."

Many analysts expect modest economic growth in the fourth quarter after the gross domestic product posted the worst six-month performance in about 50 years at the end of 2008 and beginning of this year.

Stocks rose on Wall Street after the better-than-expected index reading and on reports that commercial lender CIT Group had reached a deal with bondholders to avoid bankruptcy.

The Dow Jones industrial average added about 50 points in afternoon trading, and broader indices also gained.

Seven of the Conference Board index's 10 indicators rose in June, including building permits, stock prices, manufacturers' new orders for consumer goods and positive readings on jobs.

Consumer expectations, manufacturers' orders for capital goods and the real money supply weighed down the forecast.

The biggest gainer was the "interest rate spread."

That's the difference between yields on 10-year Treasurys and the federal funds rate, at which banks lend to one another, which is at a record low near zero.

A big difference between the two is viewed as positive because investors are willing to lend for longer periods.

A government report last week showed construction of new U.S. homes in June rose to the highest level in seven months.

That was the "most positive housing report in ages," said IHS Global Insight economist Patrick Newport.

The slump in housing led the country into the longest recession since World War II.

The downturn has pushed the unemployment rate to a 26-year high of 9.5 percent.

The Federal Reserve expects joblessness to surpass 10 percent this year and to stay above healthy levels for years.

A survey released Monday showed the number of firms planning layoffs later this year has dipped.

Twenty-eight percent of the companies polled by the National Association for Business Economics said they were still considering cutting jobs through attrition or layoffs in the next six months.

That's down from one-third in April and 39 percent in January.

Only 18 percent of employers polled said they expected to start hiring, but that's the highest level in a year.

The NABE's survey of 102 forecasters at companies and trade associations was taken June 19 through July 1.

Mass layoffs continue across many sectors, but the pace and depth of job cuts have slowed.

Harley-Davidson Inc. said last week it's cutting 1,000 more employees as motorcycle sales slid. Publisher McGraw-Hill Cos. said it eliminated 550 jobs in the second quarter.

Cisco Systems Inc. laid off between 600 and 700 employees last week at its San Jose, California, headquarters. - AP

Malaysia Central Bank to sell 500 Millions Ringgit Sukuk

2009-07-21T01:33:00.002+08:00

Source: Thomson Reuters
KUALA LUMPUR, July 20 (Reuters) - Malaysia's central bank said on Monday it will issue 500 million ringgit ($141 million) of three-month murabaha bills on July 28.

Under a murabaha deal, an Islamic bank buys an asset from a third party and sells it to its customer at cost plus profit. This allows the bank to extend financing without charging interest, which is forbidden by Islamic law.

Yahoo! BuzzFor further details of the sale, please go to the central bank's website at https://fast.bnm.gov.my/fastweb/public/MainPage.do?mode=MAIN

($1=3.547 Malaysian Ringgit)

(Click on for more Islamic finance stories and for a speed guide) (Reporting by Liau Y-Sing; Editing) ((y-sing.liau@thomsonreuters.com; Reuters Messaging: y-sing.liau.reuters.com@reuters.net; +603 2333 8083)) Keywords: MALAYSIA SUKUK/

U.K. Property Asking Prices Rebounded in July, Rightmove Says

2009-07-21T01:30:00.001+08:00

Source: Bloomberg (Jennifer Ryan)

July 20 (Bloomberg) -- British home sellers raised asking prices this month to meet increased demand from buyers, Rightmove Plc said.

The average cost of a home rose 0.6 percent to 227,864 pounds ($372,000) after falling 0.4 percent in June, the operator of the U.K.’s biggest residential property Web site said today in a statement. Prices in London had the first annual gain of the year so far.

The housing market is showing signs of recovery from the worst economic contraction in a generation after officials rescued banks and started printing money. Ernst & Young LLC’s Item Club today raised its forecast for British gross domestic product in 2010 to show expansion.

“With growing confidence that we’ve passed the bottom, buyers are more active, although they may discover that many of the best buys have gone,” Miles Shipside, commercial director of Rightmove, said in the statement.

Seven of 10 regions tracked by Rightmove rose this month, led by East Anglia, where asking prices increased 6.1 percent. Across England and Wales, values declined 3.1 percent from a year ago.

The average number of properties available for sale at each real-estate agent fell to 70 from 71 in June. At the same time the number of people looking at property listings on the Web site is “much higher than we would expect” for this time of year, Rightmove said.

London Prices

In the capital prices rose 1.4 percent on the month and 0.6 percent from a year earlier. Westminster led gains from June, with a 5.2 percent increase, followed by Croydon and Camden.

U.K. mortgage approvals rose to 43,414 in May, up from 27,000 in November, the least since Bank of England data began a decade ago. The reading is still about a third less than at the start of 2008.

The Bank of England has cut the benchmark interest rate to a record low of 0.5 percent and is buying 125 billion pounds of bonds with newly created money to ease lending strains. Prime Minister Gordon Brown has spent billions of pounds rescuing banks including Royal Bank of Scotland Group Plc.

“With only seven volume lenders remaining in the lending game, including three government-backed institutions that are prioritizing their balance sheets over new lending, we are set to bump along the bottom for some time yet,” Shipside said.

The economy will grow 0.5 percent next year, up from a previous forecast for a 0.1 percent contraction, the Item Club, which uses the same forecasting model as the U.K. Treasury, said today. It predicts gross domestic product will drop 4.4 percent this year, more than an earlier estimate for 3.5 percent.

Repossessions may total 17,494 in the third quarter, up from 17,049 in the three months through June as higher unemployment leaves more Britons unable to afford their mortgages, according to a separate report today by Property Portfolio Rescue, a London-based company that buys homes from distressed sellers.

Why China Will Keep Investing Abroad

2009-07-21T01:23:00.001+08:00

Source: New York Time ( ALAN WHEATLEY
Published: July 20, 2009 )

BEIJING — Overshadowed by a sparkling economic report card for the second quarter, the leap in China’s official currency reserves last week is yet one more reason to bank on a transformative surge in the country’s investments abroad.

But the diplomatic storm whipped up by charges leveled by Beijing against four employees of Rio Tinto shows just how bumpy the journey overseas may be if it triggers a backlash against Chinese interests.

China has long been scouring the globe for energy and commodities to feed its thrumming economy. What is new is the leadership’s determination to increase outbound foreign direct investment, or O.F.D.I., as it weans the economy off low-value, export-oriented manufacturing. The deal by Sinopec, the largest Chinese oil refiner, to buy the Swiss oil explorer Addax for $7.24 billion last month was China’s largest overseas acquisition yet.

The government is not throwing caution to the wind. Beijing blocked Bank of China’s purchase of a stake in La Compagnie Financière Edmond de Rothschild, the French merchant bank, and has responded tepidly to a bid by Sichuan Tengzhong, a little-known machinery maker, for General Motors’ Hummer unit.

But the first half of 2009 may prove to be an inflection point for Chinese outbound foreign direct investment, said Daniel Rosen, a visiting fellow at the Peterson Institute for International Economics in Washington.

“Despite short-term anxieties, Chinese O.F.D.I. is poised to grow markedly in the medium and long term, and the importance of these investments to Chinese firms is changing fundamentally as the nation confronts the need to rebalance its growth model,” Mr. Rosen wrote in a paper whose co-author was Thilo Hanemann.

With domestic economies of scale largely exhausted, companies will have a powerful incentive to move abroad to upgrade their manufacturing and compete in more profitable areas like distribution, design and branding. “Made in China” will increasingly give way to “Made by China — abroad,” Mr. Rosen and Mr. Hanemann argued.

On top of the commercial motives, greater capital outflows would make monetary policy easier to conduct by reducing China’s balance of payments surplus. Because the central bank buys most of the foreign currency entering China to cap the yuan’s exchange rate, every dollar that can be recycled as outbound investment is one dollar less that must be bought and added to reserves.

Those reserves jumped $177.9 billion in the second quarter to $2.13 trillion, helping to generate record credit and money supply growth that economists fear may be creating asset bubbles.

“We don’t know what the right amount of domestic monetary creation is, but it’s pretty safe to say it’s much, much lower than the increase in central bank reserves,” said Michael Pettis, an economics professor at Peking University.

Hence the significance of new government rules issued last week that will make it easier for companies to finance outbound foreign direct investment.

“On top of China needing to invest — they need to secure energy supplies, they need to acquire technology — there’s also the element of recycling dollar revenues,” said Qu Hongbin, chief China economist at HSBC in Hong Kong.

China’s outbound foreign direct investment has increased steadily this decade, and the outflow of $52 billion last year was a record. Still, the historical stock of the outbound direct investment of $170 billion is puny next to China’s foreign exchange reserves and its inward foreign investment stock of $876 billion.

Mr. Qu, however, said that outflows could reach $100 billion to $150 billion a year as soon as 2012. And Mr. Rosen said in an e-mail message that sum would be “entirely conceivable” if there were no political interference from Beijing.

Mr. Rosen and Mr. Hanemann identify four areas where progress, now blocked by the state’s reluctance to take its hands off the economy, is needed to promote outbound investment.

Bursa Malaysia Q2 net profit up 22.3 pct

2009-07-20T17:24:00.001+08:00

Source: Reuters (Reporting by David Chance, editing by Niluksi Koswanage)

KUALA LUMPUR, July 20 (Reuters) - Malaysia's stock market owner, Bursa Malaysia (BMYS.KL) saw its second quarter net profit rise 22.3 percent to 35.02 million ringgit ($9.83 million) from 28.64 million ringgit a year ago.

The company said in a statement on Monday that revenues rose to 94.58 million ringgit from 85.67 million.

For the first half of the year, net profit was 50.52 million ringgit, down from 70.71 million.

It is to pay a dividend of 10.1 sen per share for the second quarter, down from 16.50 sen a year ago.

Malaysia Public Bank eyes 14-15 pct FY09' loan growth

2009-07-20T17:22:00.002+08:00

Source: Reuters (Soo Ai Peng)

Q2 net profit up 2.9 percent yr/yr

*Sees slight drop in net interest margin in H2

*Expects government guarantees to support FY2009 loan growth

*Shares up 1 percent after earnings

(Adds news conference, details)

By Soo Ai Peng

KUALA LUMPUR, July 20 (Reuters) - Malaysia's third-largest lender Public Bank (PUBM.KL) can grow its loan book by 14-15 percent this year but its net interest margin will likely be squeezed, said a top executive on Monday.

Public bank on Monday said net profits grew by 2.9 percent to 610.74 million ringgit ($172.2 million) in the second quarter from a year ago.

First-half net profit dropped 8 percent to 1.2 billion ringgit due to a one-off goodwill payment, it said.

The bank recorded 7.2 percent loan growth in the first half.

Loans for the financing of residential properties and passenger vehicles and lending to mid-market commercial enterprises accounted for 77 percent of total loans of 129.4 billion ringgit at the end of June.

The banking industry's loan book will continue to grow even as the Southeast Asian economy is expected to shrink 4-5 percent this year after the government said it will provide, as part of a stimulus package for the economy, guarantees on bank loans to small and medium enterprises.

Public Bank expects its full year loan growth to be double the industry's 7-8 percent growth but the faster growth may come at the expense of falling interest margin.

"Depending on how intense the margin is in the SME segment, we will probably expect a stable margin or a very slight drop in net interest margin," Public Bank Chief Operating Officer Leong Kwok Nyem told a news conference after the earnings release.

Malaysia announced a two-year economic boost comprising extra spending and loan guarantees worth 67 billion ringgit that will bring its fiscal deficit to 7.6 percent this year.

Public Bank is the first Malaysian bank to report its April-June earnings. Top bank Maybank (MBBM.KL) and second-ranked CIMB Bank (BUCM.KL) are expected to announce results in August

US stocks - The Week Ahead

2009-07-20T12:28:00.001+08:00

Source: The Star Online

Wall Street looks to earnings to extend rally

NEW YORK: Investors are hoping companies' streak of good earnings news continues this week.

The Dow Jones industrial average is coming off its best week since March after reports from big companies like banker Goldman Sachs Group Inc., chip maker Intel Corp. and International Business Machines Corp. injected fresh hope in the market that the economy could be recovering.

The better-than-expected profits and forecasts pumped up the stodk market after a monthlong slide when investors detected few new signals that the economy was improving.

But analysts remain cautious and are hoping the good news won't fade.

"It probably gets tougher as we move further through the earnings season mainly because we get some sectors where the wind might not have been as much at their back," said Jeffrey Kleintop, chief market strategist at LPL Financial in Boston.

He said retailers and smaller banks aren't likely to have fared as well as the companies that reported last week.

Corporate heavyweights reporting this week should sharpen investors' view of the economy.

Reports on the April-June quarter are expected from American Express Co., aerospace manufacturer Boeing Co., industrial equipment maker Caterpillar Inc. and drug maker Merck & Co. Key consumer companies Amazon.com Inc., Apple Inc., Coca-Cola Co., eBay Inc., PepsiCo Inc. and Starbucks Corp. are also due to report.

Investors also will look to Capitol Hill for direction on the economy.

Federal Reserve Chairman Ben Bernanke makes his semiannual report to Congress Tuesday and Wednesday.

Investors want his take on the economy now, and also clues on how the central bank will eventually wean the economy from the emergency supports put in place last fall when the financial crisis intensified.

The Fed has slashed interest rates, offered cheap loans to banks and purchased government debt to ratchet down borrowing costs.

Disappointment over what companies or Bernanke have to say could make the stock market stall again.

The Standard & Poor's 500 index surged 40 percent from early March until mid-June when investors started asking whether an economic rebound was further off than they had projected.

Last week's gains allowed the S&P 500 index to recover the 7 percent it had lost since the market's advance began to lose steam.

The rally got going again last week because company profits and forecasts are some of the most powerful forces in the market.

The second-quarter reports have had particular pull over stocks because investors had such low expectations.

But analysts warn that the halo of better-than-expected numbers is likely to fade.

"The problem for the market here is that from a fundamental perspective things are not getting worse but they're not getting materially better. And the market needs to see signs that things are getting better to leg up," said Nick Kalivas, vice president of financial research at MF Global in Chicago.

There are major obstacles for the economy to overcome before it can emerge from the recession that began in December 2007, the longest since World War II.

Home prices are still down sharply in many parts of the country and, most important, unemployment sits at a 26-year high of 9.5 percent.

The Fed predicts unemployment will top 10 percent by the end of the year.

The Labor Department said Friday that unemployment already rose above 10 percent in 15 states and the District of Columbia in June.

Investors know unemployment often keeps rising even when an economy is improving.

But the worry is that joblessness will be so severe it will choke off a recovery by pushing businesses and even consumers with jobs to curb spending.

In downturns over the past 60 years, the S&P 500 index has hit bottom an average of four months before a recession ended and about nine months before unemployment hit its peak.

Beyond earnings reports and Bernanke's testimony, few economic indicators are expected.

The Conference Board releases its June index of leading indicators.

It's one of the few economic snapshots designed to look ahead, predicting economic activity for three to six months.

The National Association of Realtors is expected to issue a report on sales of existing homes.

Investors also will be watching for fallout from the financial troubles at small-business lender CIT Group Inc., which is burdened by a heavy debt load.

Its failure could dent investor sentiment and disrupt industries like retail, which has some suppliers tied to the company.

The stock jumped Friday as the company held talks with several large banks about securing emergency financing in hopes of avoiding a bankruptcy filing, a person familiar with the talks told The Associated Press.

The person spoke on condition of anonymity because the talks are confidential. - AP

Property transactions expected to increase

2009-07-20T12:22:00.001+08:00

Source: The Star Online (YEOW POOI LING)

This is due to the relaxation of the FIC rules, says foreign brokerage

PETALING JAYA: Bank earnings and loans growth are likely to improve towards the end of the year, bolstered by the recent deregulation of the Foreign Investment Committee (FIC) guidelines on properties as well as easing conditions for new listings and fund-raising activities.

According to a foreign brokerage, property transactions, both residential and commercial, are expected to increase following the relaxation of the FIC rules, which should spur demand for property financing.

Higher property financing would lead to a turnaround in loans growth by year’s end or early next year, it said, noting that property financing comprised 36.4% of total loans in the banking system.

“The policy changes will create more revenue streams for Malaysia’s financial sector and reduce dependency on pure interest income,” the foreign research house said, adding that loans growth in May was underpinned by the relatively stable household loans segment, which grew 8.4% year-on-year.

In addition, the liberalisation would also encourage more mergers and acquisitions (M&As), as well as more capital and equity market activities, which would benefit investment banks, it said. With greater foreign ownership allowed in stockbrokers, product innovation – such as the roll-out of more varied derivative products – is likely to improve.

The foreign research house added that Malaysia’s capital market was expected to gain better access to capital and investments with the removal of the 30% bumiputra equity requirement, making it more attractive for foreign listings while supporting existing listed companies seeking to raise funds.

A local bank-backed brokerage said residential mortgages showed “no signs of weakening” as they sustained 10% growth from December 2008 to May 2009 despite the gloomy economic landscape.

This was due to progressive release of housing loans approved in the past one to two years, high savings rate of Malaysians, sustainable property transactions thanks to limited speculation, low interest rates and attractive schemes by developers, it said.

Moreover, there could be more corporate deals in the pipeline, including new listings and M&A transactions on the back of improved average daily trading value on Bursa Malaysia, it said.

This would augur well for investment banking income, including brokerage and corporate advisory fees, the research house added.

HwangDBS Vickers Research, meanwhile, said the liberalisation was “very bold measures” to improve the competitiveness of Malaysia’s properties internationally.

“The biggest winners will be developers with large exposure to the more ‘open’ districts like the Federal Territory and Penang, where the authorities would likely be supportive,” it said.

Govt confident of positive economic growth by 4Q

2009-07-20T12:16:00.002+08:00

Source: The Star Online (YAP LENG KUEN)

PUTRAJAYA: Project implementation under the stimulus packages is on track and the Government is confident that by the fourth quarter, the economy may see some positive growth and some recovery by early next year.

“The impact of the first stimulus package can already be seen. In the first quarter of 2009, the construction sector was the only sector that registered a small positive growth while the rest of the sectors contracted,’’ Finance Ministry secretary-general Tan Sri Dr Wan Abdul Aziz Wan Abdullah told StarBiz.

The Government has allocated RM67bil to fund two stimulus packages that are aimed at stimulating the economy and building long-term capacity.

The first package amounted to RM7bil while the second totalled RM60bil.

The significantly larger second stimulus package accounts for 9% of gross domestic product (GDP). With the additional expenditure, the fiscal deficit is expected to increase to 7.6% this year compared with 4.8% in 2008 and 3.2% in 2007.

The Government had budget surpluses for five years (1993-1997) before the Asian financial crisis in 1997/98, when the economy was expanding rapidly with the private sector driving growth.

“We are committed to fiscal consolidation when the economy recovers and is on a firmer footing,’’ Aziz said. “We are taking measures to strengthen Government finances, reduce debt and broaden our revenue base so as to reduce dependence on resource-based commodities.”

Among some of the measures being considered are:

● improvement in efficiency and quality of spending through competitive bidding to obtain value-for-money;

● cutting back on discretionary expenditure;

● restructuring subsidies to ensure that they remain well targeted;

● further improvement in tax collection through productivity gains in tax administration; and

● new ways to monetise Government assets which include land, buildings and facilities.

On the implementation of the stimulus packages, Aziz said improvements were already seen through various measures and mechanisms put in place to expedite and track the progress of the projects.

“Several rules and regulations have been relaxed, largely relating to the award of contracts and procurement of services,’’ he said. Among these are:

● the limit for procurement of goods and services through quotation is now increased from RM200,000 to RM500,000;

● class F contractors awarded projects under the stimulus package are now eligible to apply for payment to commence work amounting up to 10% of the contract value or a maximum of RM20,000, whichever is lower;

● the authority to appoint consultants and approve consultancy fees has been delegated to procurement boards and quotation committees at the respective ministries and agencies. This is related to development projects, studies pertaining to physical and non-physical projects as well as environment and land surveys works; and

● the tender advertisement period has been shortened to 14 from 21 days previously.

A Project Management Unit (PMU) was set up at the finance ministry to manage the day-to-day operational issues of project implementation, while a technical committee chaired by Aziz himself meets weekly to ensure the smooth implementation of the stimulus packages.

The PMU reports fortnightly to the Economic Council which is chaired by the Prime Minister to track the progress of the implementation of programmes and projects. “The impact of both stimulus packages is expected to be felt in the third and fourth quarters of the year,” Aziz added.

“Data from the PMU indicate that the current pace of project implementation is on track and according to our expectations. The second package only commenced on March 10 and only RM1.6bil has been spent. Once we have gone through the project preparation stage, the award of contracts can begin.

“It takes three to four months to complete this stage. Once we have cleared the preliminary stages and projects are on the ground, we are confident that by the fourth quarter, we may see more positive growth and some recovery by early next year,’’ Aziz said.

Under the second package, the fiscal injection of RM15bil is divided into operating and development expenditure of RM5bil each for this year and a further RM5bil for development expenditure next year.

On the current economic situation, Aziz said: “Notwithstanding the continued decline in world trade, we have seen in recent months some signs of improvement especially in the slower pace of decline in global industrial output and firmer commodity prices.’’

Despite some of these encouraging signs, global trade is expected to remain fragile and being a globally integrated economy, Malaysia’s exports will remain sluggish.

Amid the increased uncertainties in the external environment, the domestic economy is likely to improve in the last quarter and register a mild recovery next year, supported by the two stimulus packages and monetary easing.

Good response to new investment guidelines

2009-07-20T12:09:00.004+08:00

Sources: The Star Online (YAP LENG KUEN)

PUTRAJAYA: The Government has received good response to the recently relaxed investment guidelines from potential investors in the Middle East, China and India.

“We have received enquiries related to Islamic finance, banking, construction, education, information technology, outsourcing, infrastructure and tourism,’’ Finance Ministry secretary-general Tan Sri Dr Wan Abdul Aziz Wan Abdullah told StarBiz.

Foreign investments this year are expected to be only half of last year’s figure, and the Government has stepped up efforts to facilitate the private sector to play a more active role in contributing to economic growth.

Private investment growth has slowed to an average of less than 5.1% a year since the Asian financial crisis of 1997/98 against 19.2% a year during 1990-1997. Some of the factors include:

rising costs of production leading to lower returns on capital;

● low levels of efficiency with inadequate investment in skills training, technology upgrading, and research and development; and

● skills and technical knowledge gap.

“Additionally, the continued dependence on cheap and low-skilled labour is a hindrance to moving up the value chain and attracting more capital-intensive investment,’’ Aziz said.

The Government recently liberalised the services sector, bumiputra equity guidelines as well as the fund management and stockbroking industries, and set up Danajamin Nasional Bhd to help viable companies tap the bond market.

Meanwhile, Government-linked companies will now focus on core activities and divest their non-core activities. This will enable greater private sector participation in the economy, while ensuring fair competition.

“All the measures announced are initial steps to boost private investment, both domestic as well as foreign, and contribute significantly to economic growth. The Government will introduce a new economic model which would transform Malaysia into a high-income economy,’’ Aziz said.

He said the Budget 2010, to be announced on Oct 23, would adopt a slightly different approach in view of the recent global financial crisis. “We are working with limited resources. There will be adjustments and sacrifices as we cannot meet all requests,’’ he said, adding that the approach would be outcome-based.

“It will be based on the outcome of a certain initiative rather than measuring of output,’’ he said.

For instance, in education, it would not be so much in terms of the number of higher learning institutions built but the quality of graduates who are employable.

Following the annual budget consultation on June 11, a series of focus group discussions will be held to look into issues, which include private investment, public transport, crime prevention and public safety, education, rural infrastructure, social safety net, human capital, fiscal consolidation and niche growth areas.

“This inclusive budgeting process helps ensure that the measures and resources allocated in the budget are well targeted and consistent with broad socio-economic objectives of the Government,’’ Aziz said.

Electricity tariff will go up only if gas price rises

2009-07-20T12:07:00.003+08:00

Sources: The Star Online

KUALA LUMPUR: The electricity tariff increase will only be implemented if the gas price is raised by the Government, Tenaga Nasional Bhd (TNB) president and chief executive officer Datuk Seri Che Khalib Mohamad Noh said on Saturday.

He said the tariff increase was intended to cover higher operating costs as a result of the rise in fuel prices.

“For TNB, when the gas price goes up, we need to make adjustments to the tariffs,” he told reporters at the TNB Family Day gathering at headquarters level here.

Khalib said that when fuel prices came down, the electricity tariffs were also adjusted accordingly.

“The gas price is determined by the Government and if it is raised, then we need to adjust our tariffs to take that into account,” he said when asked about the possiblity of a tariff increase if the gas price is raised.

Energy, Green Technology and Water Minister Datuk Peter Chin Fah Kui said recently that the National Economic Advisory Council has made a decision on the revision of electricity tariffs in line with the fuel price movements.

He said that any electricity tariff increase would not affect the lower income group as the Government had reduced the rates by an average 3.7% to 31.31 sen per kilowatt hour from 32.5 sen, effective March 1, 2009.

Khalib said the current fuel prices were higher when compared to that at the beginning of this year. — Bernama

“The decision to look into the gas price, whether to increase or not, is up to the Government. The gas price in Malaysia is not the market price,” he said, adding that with the various subsidies given, the gas price was much lower than the market price.

“If we are to pay the market price, then the gas price and electricity tariffs will be much higher than what we are enjoying now,” he added.

On the Bakun hydroelectric power project, Che Khalib said companies interested to participate in undersea cable portion could submit their tenders early next year.

“Those who qualify or are capable can tender for it early next year under the open tender process,” he said, adding that the process to evaluate the tenders usually requires about six months.

The transmission cable and undersea cable project is reported to be worth between RM8bil and RM10bil, involving a 730km high-voltage direct transmission line and 670km undersea cable for the Bakun dam.

KL-S'pore high-speed rail will generate economic benefits

2009-07-20T12:03:00.001+08:00

Sources: The Star Online (Choong Khuat Hock)

A KL-Singapore high-speed rail would generate more economic benefits than the double-tracking railway from Ipoh to Thailand

WITH negative export growth and private consumption, fiscal stimulus is playing a more important role. In Japan, building bridges to nowhere has not generated long-term economic benefits but has instead burdened future generations.

In Malaysia, building a double-tracking railway from Ipoh to the Thai border for RM12bil can never generate as much economic benefits as a high-speed rail (HSR) from Kuala Lumpur to Singapore for around the same price tag. (Please vote or express your views on the blog
http://klsingaporehsr.blogspot.com/)

Malaysia appears to be far behind in HSR development. China has completed six high-speed rail projects with design speeds of up to 250km/h and in July 2008, it completed the 108km Beijing to Tianjin HSR with a design speed of 350km/h.

This would be equivalent to travelling from KL to the Malacca border in 30 minutes. The 1,302km Beijing to Shanghai HSR will be ready next year.

China’s HSR network of 6,000km by 2013 will exceed Japan’s current HSR network of 2,459km. France, with an HSR network of 1,700km, has the most extensive HSR network among European countries followed by Britain (1,400km), Germany (1,290km) and Spain (1,272km).

Even the United States is jumping on the HSR bandwagon with Obama unveiling plans for 10 potential high-speed intercity corridors.

Other Asian countries that have successfully built HSR include South Korea and Taiwan. Interestingly, the 335.5km Taiwan HSR from Taipei to Kaohsiung (taking 90 minutes) is approximately similar in distance from KL to Singapore. I was able to buy tickets and board the train 10 mins before departure.

The train ride was very smooth and the speedometer on the train showed train speeds of close to 300km/h. As in Taiwan, the HSR in Malaysia could have direct services from KL to Singapore and also services that cover KL International Airport (KLIA), Malacca and Johor. Malacca’s tourist potential will be enhanced while Iskandar Malaysia’s viability will be improved.

The positive economic impact from the HSR from KL to Singapore would be tremendous. It would anchor KLIA-LCCT-Changi as the top airline hub in South-East Asia where foreign and domestic passengers will have a choice of full service or budget airlines.

The HSR may attract additional visitors to the KL-Singapore hub due to the clustering effect. Furthermore, it would boost the number of Singaporean and foreign visitors (from Singapore) visiting Johor, Malacca and Kuala Lumpur.

Airline frequency between KL and Singapore may decline but airlines could generate additional traffic from the cementing of KL-Singapore as the premier transportation hub of the region. Property prices in Kuala Lumpur should also benefit from greater demand from Singaporeans and foreigners who are attracted by the improved accessibility of KL.

With better accessibility, foreign companies may be attracted to place their operations in KL or Iskandar where operating costs are lower. The better accessibility would also make it easier to attract talent to work in KL or Iskandar.

The high-speed Eurostar train link from London to Paris in just 2.5 hours has helped narrow the discount of Parisian property prices to London property prices.

The differential between KL and Singapore property prices remains large with high-end condos in Malaysia going for around RM1,000 per sq ft while high-end Singapore condos are at least five times more expensive at over S$2,000 per sq ft.

Based on an estimated built-up area of 1.8 billion sq ft in the Klang Valley, property values could be boosted by a massive RM180bil if property values rise by RM100 per sq ft and the gain could rise to RM360bil if property prices appreciate by RM200 per sq ft. The positive wealth effect is an important ingredient for better consumer confidence.

Asian giants like China and India are increasingly dominating the economic field, hence, there is a greater urgency for Malaysia and Singapore to work together to carve out a niche (while it still exists) as the indisputable destination for investments, tourism, services and selected manufacturing in the Asean region.

Since the energy consumption per person using a train is less than those for cars and planes, the HSR will lead to lower carbon dioxide production, which contributes towards global warming. The KL-Singapore HSR will reduce the number of cars and planes plying between KL and Singapore and reduce road accidents.

Should the Malaysia and Singapore governments decide to carry on with the HSR, it is important for the project to be implemented by a group that can build the HSR within the stipulated cost and as quickly as possible.

We cannot afford another Port Klang Free Zone where massive cost overruns and accusations of misdemeanors in a privatised project have burdened taxpayers without any tangible economic benefits.

The Taiwan HSL was plagued with delays and severe cost overruns. The final cost at a staggering US$15bil (RM55bil) equates to a cost of US$45mil per km compared to US$27mil per km in South Korea and only US$12mil for the express rail link to KLIA which was built by a YTL-led consortium.

As a Malaysian consumer, I am very keen on being given the choice to travel on HSR to Singapore even if it costs more than the bus fare. As a taxpayer, I am keen on taxpayers’ money being spent on infrastructure projects that generate economic returns.

Economically-viable private sector-funded investments should be encouraged at a time when government finances are tight. As a property owner in KL, I am keen to see better property prices and KL becoming a vibrant international city with excellent connectivity. What do you think?

BURSA MALAYSIA: Bursa Shares Close Firmer

2009-07-17T19:24:00.001+08:00

Sources: Bernama Online (17th July 2009)

KUALA LUMPUR, July 17 (Bernama) -- Share prices on Bursa Malaysia closed firmer today as strong buying in key bluechips parried off mild selling pressure.

At the end of trade, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) was 12.02 points or 1.08 percent higher at 1,120.90 after hitting an intra-day low of 1,103.85.

It had opened higher at 1,112.51 following the encouraging overnight close in Wall Street and positive economic numbers abroad, dealers said.

They said the benchmark index slipped into the red briefly in the morning due to profit taking activities, and recovered and stayed in the positive territory until the closing bell, lifted by Maybank, Bumiputra-Commerce, Tenaga Nasional and Gamuda.

The Finance Index climbed 124.17 points to 9,136.79, the Plantation Index advanced 24.52 points to 5,404.40 and the Industrial Index was 2.69 points higher at 2,426.00.

The FBMEmas Index gained 67.09 points to 7,550.78, the FBM Top 100 went up 72.94 points to 7,353.23 and the FBMMesdaq Index increased 47.56 points to 4,077.68.

However, the FBM2BRD Index went down 12.77 points to 4,842.37.

Advancers led decliners by 295 to 277 while 276 counters were unchanged, 385 untraded and 35 others suspended.

Total volume decreased to 939.341 million shares worth RM1.453 billion from 1.666 billion shares valued at RM2.139 billion Thursday.

"The local bourse is still heading up despite the bombing news in Indonesia," a dealer said.

There was strong buying support from local funds in the bluechips which helped lift the key index, he added.

Another dealer said that it was possible for the FBM KLCI that had successfully crossed above the 1,100-point level, to continue its upward trend next week.

However, he said, the market that had advanced nearly 60 points over the past four trading days, would probably need to consolidate before scaling for greater heights.

Topping the actives, KNM Group edged up 2.5 sen to 82.5 sen while SAAG Consolidated eased three sen to 25 sen and

Jaks Resources shed half a sen to 90 sen.

Axiata Group advanced one sen to RM2.86 and UEM Land was up two sen to RM1.64.

Gamuda and Kumpulan Perangsang registered steady gains earlier after their associate company, Syarikat Pengeluar Air Selangor Sdn Bhd, received a third offer from the Selangor government under the proposed takeover of the state's water-related assets.

At the close, Gamuda was nine sen higher at RM3.06 but Kumpulan Perangsang edged down one sen to RM2.06 on profit taking.

Among heavyweights, Maybank rose 15 sen to RM6.10, Bumiputra-Commerce added 25 sen to RM9.95 and Tenaga Nasional gained 20 sen to RM8.20.

The Main Board volume fell to 838.871 million shares worth RM1.425 billion compared with Thursday's closing of 1.398 billion shares worth RM2.076 billion.

Turnover on the Second Board also declined to 27.660 million shares worth RM13.039 million from 95.502 million shares worth RM35.648 million yesterday.

The Mesdaq volume dropped to 40.427 million shares worth RM7.021 million from 96.420 million shares worth RM13.654 million.

Warrants went down to 35.221 million shares worth RM7.334 million from 72.538 million shares worth RM11.887 million.

On sectoral basis, consumer products accounted for 22.041 million shares traded on the Main Board, industrial products 187.053 million, construction 90.516 million, trade/services 335.519 million, technology 7.202 million, infrastructure 14.391 million, finance 51.286 million, hotels 1.968 million, properties 107.736 million, plantations 13.356 million, mining 249,500, REITs 2.528 million and closed/fund 27,000.

Public Bank Earns First-Place Honors in Malaysia

2009-07-17T19:18:00.002+08:00

By JAMES HOOKWAY (WSJ ONLINE)
Sometimes the old way of doing things is the best way of doing things. A few years ago, many investors overlooked Malaysia's Public Bank Bhd. It didn't get involved in the kind of exotic financial derivatives and credit swaps that recently have gotten so many other, higher-profile lenders into trouble. It was dull, reliable Public Bank, the place where ordinary Malaysians went to deposit their loans and apply for mortgages or loans to buy a new car.

Fast forward to today, and Public Bank's slow-but-sure way of doing things is back in favor as it continues to expand its business in Malaysia's consumer sector. It ranked as Malaysia's overall most-admired company in the Asia 200 survey of subscribers of The Wall Street Journal Asia and other businesspeople.

The company moved up from third place in the prior survey, with survey respondents moving it ahead of Nestlé (Malaysia) Bhd., the overall most-admired company in the prior survey. Nestlé (Malaysia) took second place this time, while DiGi Telecommunications Sdn. Bhd. took third.

In the survey, the readers and business people ranked Public Bank No. 1 in two of the five categories they are polled on, and they ranked it second in two others, and third in the fifth. Its top scores came in the categories of "financial reputation" and "management's long-term vision."

Nestlé (Malaysia) took first in "good company reputation" and "high-quality services and products," while mobile-phone company DiGi took the top spot in the category of "innovation in responding to customers needs."

Stock analysts in Malaysia said Public Bank's 79-year-old founder and chairman, Teh Hong Piow, gets the basics of the business right. Instead of setting his sights on new ways of making -- and losing -- money, he continues to build Public Bank's business by taking deposits and handing out loans.

People familiar with how the bank operates said the publicity-shy Mr. Teh still oversees dozens of loan applications a week, exhibiting the same attention to detail that enabled this former bank clerk to climb the corporate hierarchy in Malaysia to become one the country's most-respected business leaders. Public Bank now has 242 Public Bank branches in its home market, and the group has an additional 97 overseas branches in Hong Kong, China, Cambodia, Vietnam, Laos and Sri Lanka.

Equity analysts said Public Bank's success is built on its strength among ordinary consumers, particularly in extending personal loans and loans for mortgages, and Mr. Teh has introduced minimum service standards to keep people flowing through its doors. Standards include a maximum waiting time of two minutes and a promise of a quick turnaround on loan applications.

It seems dull, but, according to analysts, it works. Since 2000, Public Bank's share of the consumer-banking market in Malaysia has expanded to 15% from 6%.

One of the few Malaysian banks not to post a loss during the 1990s Asian financial crisis, Public Bank also conscientiously avoided borrowing from other banks in order to expand its lending base -- a mistake that has led to the collapse of several banks elsewhere, especially in Britain. "Public Bank does the basics right and its entire brand is built on that," said a banking analyst at a rival bank who prefers not to be identified.

After growing up in Singapore and learning to make ends meet by, among other things, selling cigarettes to Japanese troops during World War II, Mr. Teh joined Overseas Chinese Banking Corp. as a clerk when he was 20 years old. He worked hard, needless to say, and rose to head up Malayan Bank's Kuala Lumpur office in 1960. After a few years of that, and buying and selling real estate on the side, Mr. Teh used his savings to found Public Bank in 1966.

Since then, Public Bank has made significant headway in Malaysia's large ethnic Chinese population, many of whom have appreciated the bank's straightforward approach to doing business. At the same time, Public Bank also began moving into other areas, namely Islamic banking, a field in which Malaysia is becoming a global hub. It also has maintained its strength in other niche markets, such as providing loans for cars by using automated approval processes.

In 2008, the bank expanded its net profit 22% to reach 2.58 billion ringgit ($723.9 million) despite the onset of the global financial crisis and a dramatic export slump in Malaysia, a major supplier of electronics components and raw materials such as palm oil. Total loans expanded by 19% during the same period, with consumer deposits climbing 17% from 2007.

Surprisingly, perhaps, its nonperforming loan ratio fell to 0.86% of total loans at the end of 2008 from 1.23% the year before.

To be sure, it hasn't been all easy sailing for Public Bank, not least because Malaysia's economy is facing a severe contraction and consumers are tightening their belts and delaying purchases of big-ticket items such as cars. Prime Minister Najib Razak recently released a new government forecast that projected the economy to contract by between 4% and 5% this year -- worse than the government's earlier forecast of a contraction of as much as 1%.

That pessimism is reflected in the Asia 200 survey, in which 17% of Malaysian respondents stated they would spend significantly less this year. Forty-seven percent said they would spend somewhat less, while 28% said there would be no change in their spending. Only 3.4% said they would spend somewhat more and 4.4% said they would spend significantly more.

The deteriorating Malaysian economy has led some analysts to suggest that Public Bank may choose to strengthen its capital base. CLSA Asia-Pacific Markets said in a report released in March that Public Bank's relatively "weak" capital in relation to other banks in the region could undermine its standing. "Compared with regional peers, it will be perceived as more vulnerable to economic shocks," CLSA said.

Other research houses, such as Kuala Lumpur-based OSK Research, have suggested that investors use concerns about the bank's ability to maintain dividend payments amid the difficult economic environment to load up on Public Bank stock. Public Bank officials have said they will continue making dividend payouts and expect loan growth of 15% in 2009.

More recently, the global environment has improved and the rate of decline in Malaysia has slowed.

The bigger long-term question, perhaps, is what will happen at the bank when Mr. Teh eventually decides to step down.

Mr. Teh has been at the helm of Public Bank for 45 years now. His deputy, managing director Tay Ah Lek, is 65 years old, and may not be willing to put in years more of additional service at his age. Some analysts have suggested that when that transition eventually comes, Public Bank could be ripe for a takeover or merger, especially as Mr. Teh's children have chosen to work elsewhere.

Analysts who follow Public Bank say Mr. Teh's succession plans remain under tight lock and key.

BURSA MALAYSIA: KL Shares End Firmer On Positive Sentiment

2009-07-17T00:19:00.001+08:00

Sources: Bernama.com.my 16th July 2009KUALA LUMPUR, July 16 (Bernama) -- Share prices on Bursa Malaysia ended firmer Thursday with the key index up 1.06 percent, spurred on by the strong performance of major regional bourses and a better-than-expected Chinese economy.

The benchmark FTSE Bursa Malaysia KLCI went up 11.64 points to close at 1,108.88 after trading at an intra-day high of 1,120.41. It had opened unchanged at 1,097.24.

The market saw heavy trading interest in lower liners and penny stocks which pushed the day's volume above 1.0 billion units.However, overall gains were limited as investors were seen locking in some profits.

The Finance Index climbed 69.87 points to 9,012.62, the Industrial Index went up 26.29 points to 2,423.31 and the Plantation Index advanced 23.14 points to 5,379.88.

The FBMEmas Index gained 75.58 points to 7,483.69, the FBM Top 100 firmed up 80.98 points to 7,280.29 and the FBM2BRD Index increased 40.72 points to 4,855.14.

The FBMMesdaq Index, was however, down 46.25 points at 4,030.12.

Advancers led decliners by 398 to 304 while 229 counters were unchanged, 326 untraded and 57 others suspended.

Overall trading volume stood at 1.666 billion shares worth RM2.139 billion, up from the 1.365 billion shares worth RM2.139 billion yesterday.

"The better than expected China's second quarter gross domestic product which expanded 7.9 percent, has helped to shore up investor sentiment,"a dealer said.

He added that the market action marks the end of correction and is ready to embark on a new turnaround.

Topping the actives, KNM Group edged up 1.5 sen to 85 sen while SAAG Consolidated eased half sen to 29 sen and Axiata Group advanced 15 sen to RM2.85.

Jaks Resources rose four sen to 90.5 sen and Talam was unchanged at 9.5 sen.

Among the heavyweights, PPB Group gained 50 sen to RM12.50, Malaysian Pacific Industries rose 20 sen to RM5.35 and AMMB Holdings rose 14 sen to RM3.80.

The Main Board volume went up to 1.398 billion shares worth RM2.076 billion compared with Wednesday's closing of 1.141 billion shares worth RM1.729 billion.

Turnover on the Second Board also increased to 95.502 million shares worth RM35.648 million from the 83.383 million shares worth RM35.725 million previously.

The Mesdaq volume rose slightly to 96.420 million shares worth RM13.654 million from 93.927 million shares worth RM14.511 million yesterday.

Warrants went up to 72.538 million shares worth RM11.887 million from 42.151 million shares worth RM6.507 million.

On a sectoral basis, consumer products accounted for 50.635 million shares traded on the Main Board, industrial products 303.357 million, construction 145.296 million, trade/services 472.862 million, technology 14.219 million, infrastructure 24.103 million, finance 92.461 million, hotels 8.129 million, properties 251.448 million, plantations 32.093 million, mining 87,000, REITs 3.054 million and closed/fund 88,000.

Malaysia’s Economy May Shrink 4.2%

2009-07-17T00:17:00.003+08:00

Sources: Bloomberg (Soraya Permatasari) 16th July 2009

July 16 (Bloomberg) -- Malaysia’s economy may shrink more than previously forecast this year as the global recession reduces exports and household spending, the Malaysian Institute of Economic Research said.

Southeast Asia’s third-largest economy will probably contract 4.2 percent in 2009, the institute said in a report released in Kuala Lumpur today, cutting its forecast from an April prediction for a 2.2 percent decline in gross domestic product. It lowered the 2010 growth forecast to 2.8 percent from 3.3 percent.

The country “takes the hit from the knock-on effects of a flagging global economy,” the institute said. “Malaysia may not regain more strength until the global economy is back on track, which is going to be at a disappointingly slow pace.”

Prime Minister Najib Razak has unveiled 67 billion ringgit ($19 billion) of stimulus measures and eased foreign investment rules to shore up growth as plunging exports push the nation closer to its first recession in a decade. The government cut its 2009 GDP forecast in May, predicting a contraction of 4 percent to 5 percent.

Exports of goods and services may plunge 21.8 percent this year before growing 7.3 percent in 2010, the partially government-funded research institute predicts. Inflation may average 1.6 percent in 2009 and unemployment may reach 4.8 percent, it said.

Recession Looms

“If exports and foreign direct investment shrink severely, the downturn could be more damaging,” the institute said. “The healing from the current crisis will be difficult compared to previous ones, because of the synchronized nature of the downturn.”

The institute expects Malaysia will fall into a recession after contracting for a second quarter in the three months to June. GDP may contract 6 percent in the second quarter, shrink 4 percent in the third and expand 2 percent in the last three months of 2009, Ariff said.

The $187 billion economy shrank 6.2 percent in the first quarter of 2009, and second-quarter GDP data is due in August.

The ringgit, the worst performer among the 10 most-traded Asian currencies excluding the yen this year, fell 0.1 percent to 3.5663 as at 10:17 a.m. local time today.

The currency has been hurt by declining exports and will remain “volatile” until the global economy recovers, Mohamed Ariff Kareem, the institute’s executive director, told reporters in Kuala Lumpur today. The ringgit may strengthen to 3.4 to 3.5 against the dollar by the end of 2009 and 3 a dollar by 2012, he said, adding that the U.S. currency is “overvalued.”

Interest Rates

Malaysia’s central bank has kept its benchmark interest rate unchanged for two straight meetings after reducing borrowing costs 1.5 percentage points to 2 percent from November to February, saying the economy may improve in the coming months as the government implements stimulus measures.

There’s no urgent need for Bank Negara Malaysia to further reduce interest rates, though there is space to cut, Ariff said. Deflation, while possible, isn’t yet a threat for the country, he said.

An improvement in exports and the government’s measures to boost the economy will help the economy grow in the fourth quarter, he said. The budget deficit may exceed 8 percent of GDP this year and reach as much as 9 percent in 2010, he estimated.

The 2010 shortfall “will probably be bigger because this crisis isn’t going away anytime soon,” Ariff said. “2010 will still be a difficult year” and the government may need to boost spending to support growth.

Confidence Improves

The institute’s consumer sentiment index rose 26.9 points to 105.8 in the second quarter from the previous three months, helped by the government’s stimulus measures. The business confidence index climbed 44.1 points to 105.2.

Private consumption is expected to “moderate” in 2009 “owing to the reduction in income, a dismal labor market, a volatile stock market and lower commodity prices,” the institute said. “There will be some lag before the effects of the fiscal spending are felt, making the speed and efficiency of implementation critical.”

When will the markets and economies recover?

2009-07-16T11:57:00.002+08:00

Sources: The Star Online Thursday 16th July 2009 (Christopher Boyd)

Predictions on exactly when recovery will set in seem to depend on which channel you watch

IN Albert Camus’ celebrated book, The Plague, we read of an insidious outbreak of disease accompanied by a rat infestation in the French town of Oran. At least, that’s what we appear to be reading, but the story is actually an allegorical reference to the inexorable Nazi occupation of France.

It seems to me that the potential A(H1N1) threat could be read as an allegory for the impending danger of the global financial crisis.

Here, we have a life-threatening sickness sneaking unseen into the country to wreak havoc and destruction.

We can see minor signs popping up at random but the real tsunami has not hit us yet and already, we are reading of early signs of recovery.

It’s like sitting in a dark ride at the amusement park, waiting to be smacked in the face by a wet fish.

Just how the region is doing in terms of economic growth is shown on the “weather” map.

Predictions on exactly when recovery will set in seem to depend on which channel you watch.

Certainly the Malaysian market has seen some bright points recently.

The relaxation of local equity requirements for foreign investors has already generated renewed interest in the commercial property market.

There is a strong possibility of new foreign capital inflows and some of the many investment property sales that collapsed in the second half of last year could well be achieved this year.

Malaysian commercial property remains attractive in terms of yield, price and growth potential and having seen a recent minor value adjustment of around 15%, it is looking better value than ever. Be prepared for a number of major sales to be announced in the next 12 months, to both foreign and local investors.

The top-end residential market, while falling some 25% in value from its peak, has shown remarkable resilience and even renewed confidence. For example, the recent launch by Eastern & Oriental Bhd of their St Mary’s serviced apartments in the Golden Triangle has met with strong sales at around RM1,000 per sq ft. Sunrise Bhd has seen similar success with a new release in Mont’ Kiara, and Mah Sing Bhd has reportedly done equally well with its super-sized three-storey link houses in Batu Maung, Penang.

Globally, the office leasing market has felt some of the greatest impact of the financial crisis, with many multinationals resorting to deep cuts in operating costs, large-scale retrenchment and a freeze on new investment. Regionally this has dragged rental values down.

In Malaysia, the office leasing market has been a victim of circumstances since the beginning of the year and we hope we will not see a reenactment of the stagnant period from 1999 to 2006, with companies reluctant to expand.

Personally, I remain optimistic because the growth of the services sector is likely to pick up and will be boosted by a climate of liberalisation. Nevertheless, what we might see in the investment market is a greater differentiation in value between fully let buildings and those sold vacant or off the plan with no rental guarantee.

The appreciation of yield and the quality of that yield is a science that finally emerged in 2005 when the Securities Commission announced its new guidelines for the formation of real estate investment trusts and caused a scramble for investment properties. We are still waiting for banks to embrace this movement and provide more longer-term finance for commercial properties.

There is some cause for optimism with the recent growth of regional equity markets and successful elections in Indonesia and India. Maybe, that wet fish won’t come after all.

US stocks sharply higher on strong results from Intel

2009-07-16T11:55:00.001+08:00

Sources : The Star Online Thursday July 16, 2009 MYT 7:59:00 AM

US stocks sharply higher on strong results from Intel

NEW YORK: Stocks surged Wednesday for the second time in three days as investors pounced on more evidence that the U.S. economy might not be as sickly as some had feared.

Major stock indicators jumped about 3 percent, including the Dow Jones industrial average, which rose 257 points, its biggest one-day gain since March 23.

Strong earnings and an upbeat forecast from Intel Corp. and a more favorable take on the economy from the Federal Reserve pulled investors into the stock market.

Stocks also surged overseas following Intel's report.

Britain's FTSE 100 jumped 2.6 percent.

Germany's DAX index rose 3.1 percent.

France's CAC-40 gained 2.9 percent.

Hong Kong's Hang Seng index gained 2.1 percent.

US stocks also rallied Monday after an influential banking analyst raised her target on Goldman Sachs Group Inc.

The stock market had drifted lower over the past month as hopes faded that the economy would stage a quick recovery.

Stocks soared in March and April as glimmers of hope from banks and economic indicators stoked hopes for a turnaround this year.

But with little new evidence of improvement since then, investors began to worry last month that they had been too hasty in concluding that the economy was bottoming out.

The handful of reports this week from big companies are injecting the stalled rally with new energy because corporate profits are the ultimate driver of stock prices.

The latest encouragement came from Intel, the giant computer chip maker whose much better results suggested that computer sales - and perhaps capital investment in general - is picking up faster than had been expected.

Investors also latched onto a report showing that industrial companies cut production far less in June than they had in previous months.

The Federal Reserve said output at the nation's factories, mines and utilities slipped 0.4 percent last month after sliding 1.2 percent in May.

Traders found more good news when the Fed released minutes from its June meeting later Wednesday saying it now expects the economy to contract at a slower pace than previously thought.

"What we're seeing is some confirmation that stabilization is in fact upon us," said Matthew Kaufler, portfolio manager at Federated Clover Investment Advisors in Rochester, N.Y.

"At least right now investors are willing to say it's not going to be as bad as feared."

The Dow jumped 256.72, or 3.1 percent, to 8,616.21, its third straight gain.

The Standard & Poor's 500 index rose 26.84, or 3 percent, to 932.68, while the technology-heavy Nasdaq composite index gained 63.17, or 3.5 percent, to 1,862.90.

Nine stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.4 billion shares, compared with 978.8 million traded Tuesday.

The Russell 2000 index of smaller companies rose 18.22, or 3.7 percent, to 514.74.

Investors are showing again this week that economic data are important but corporate earnings and forecasts are even more important in galvanizing buyers.

Wednesday's gain in the Dow was the best percentage climb since April 9, when the blue chips jumped 3.1 percent as Wells Fargo & Co.'s early profit report topped expectations.

For the S&P 500 index, the day's jump was the biggest since a 3 percent rally on May 18 when a better-than-expected profit report from Lowe's Cos., the home-improvement chain, helped boost sentiment.

A report showing higher than expected consumer price inflation in June did little to affect stock prices but it did send bond prices lower for a third straight day.

The Labor Department's Consumer Price Index rose 0.7 percent last month as gasoline prices surged.

It was the fastest increase in 11 months and slightly worse than economists' projections of 0.6 percent.

The bond market is highly sensitive to signs of inflation, which erodes the value of a bond's fixed returns over time.

The renewed surge in stock prices also robbed Treasurys of some of their safe-haven appeal as investors became more willing to take on risk.

Bonds also fell on Tuesday after a report showing sharper-than-expected wholesale price inflation in June.

The 10-year Treasury note, a widely used benchmark for mortgages and other loans, tumbled more than a point, pushing its yield up to 3.61 percent from 3.47 percent late Tuesday.

Intel's upbeat report followed strong earnings earlier Tuesday from Goldman Sachs Group Inc.

Goldman kicked off earnings in the banking industry by easily topping analysts' earnings predictions.

The Wall Street banking giant said it earned $2.72 billion, after paying preferred dividends, only two quarters after posting a steep loss during the peak of the credit crisis.

The stock rose $1.22, or 7.3 percent, to $18.05.

Investors will be watching three other big banks - JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. - reporting second-quarter results this week to see whether the industry is recovering. - AP

Public Bank partners Bank of China

2009-07-16T11:53:00.001+08:00

Sources: The Star Online Thursday July 16, 2009

Public Bank partners BoC

KUALA LUMPUR: Public Bank Bhd has teamed up with Bank of China (M) Bhd (BoC) to launch yuan trade settlement service to facilitate Malaysia’s yuan trade settlement with China.

This follows the recent announcement of the commencement of the cross-border trade transactions in yuan by China on July 6 in Shanghai.

In a joint statement yesterday, the banks said initially the service would cover Shanghai, Guangzhou, Dongguan, Zhuhai and Shenzhen.

“Only designated and eligible enterprises in China are allowed to settle their cross-border trade transactions for both imports and exports in yuan,” they said.

The banks said the advantages of cross-border yuan transactions included minimised foreign exchange risk, locked-in financial costs and simplified estimation of corporate profit, workflow and processes.

“Companies which do not have income denominated in foreign currencies can benefit from the service as it can assist in minimising foreign exchange losses.”

They said the yuan trade business could also be conducted in Hong Kong and Macau as well as Indonesia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Myanmar, Laos and Cambodia.

Public Bank managing director Tan Sri Tay Ah Lek said the initiative, which covered open account transactions, documentary collections, letters of credit and bank guarantees, would enable the bank to reach a wider spectrum of the business communities that did businesses with China. — Bernama

Asia Stocks-Rise on recovery hopes, Malaysia hits 11-mth high

2009-07-16T00:30:00.001+08:00

Sources: Reuters (Kazunori Takada) Wed Jul 15, 2009 6:17am EDT

* Positive outlook, upbeat U.S. earnings boost markets * Malaysia at 11-month highs, S'pore a near 5-wk high * Cenbank comment pushes Thai market to 2-week high By Arada Therdthammakun BANGKOK, July 15 (Reuters) - Southeast Asian stock markets
edged higher on Wednesday as solid earnings from U.S. firms and
an improving Asian economic outlook boosted confidence in a
global recovery, sending Singapore and Malaysian shares to
fresh highs. Singapore's benchmark index .FTSTI rose 3.4 percent, with
a blue chip shares rally taking it to a near five-week high and
on buying in the last minutes of trading after a Reuters poll
showed the country will see a sharp turnaround next year as the
continent rebounds. [nSP519874] Malaysian stocks .KLSE edged 1.63 percent higher, having
hit their highest level unseen since Aug. 15, 2008 earlier in
the day, Philippine stocks .PSI closed up 0.95 percent at its
highest since June 15, with Philippine Long Distance Telephone
(TEL.PS) leading the way with a 0.42 percent rise. Thai shares .SETI closed up 1.75 percent at a two-week
high, extending a 0.53 percent rise in morning trade, after the
Bank of Thailand said it could still cut rates again if economy
slows. [nBKT001040] "As the BOT has decided to hold rates unchanged for the
second consecutive MPC meeting, this development should support
our views that Thai policy rates have reached the bottom
although the MPC's latest statement remains accommodative."
Usara Wilaipich, economist at Standard Chartered Bank said. The central bank said it was ready to cut rates if economic
growth slows and saw no immediate rate rise prospect. "The committee would continue to closely monitor
developments in domestic and external economic conditions and
would stand ready to implement appropriate monetary policy to
ensure an orderly economic recovery," it said in a statement. Elsewhere in the region, late buyings helped push
Indonesian shares .JKSE up 3.24 percent to their highest
since September 2008, while Vietnam stock index .VNI
rebounded 2.03 percent after falling to a six-week low a day
earlier. However analysts saw the sharp rise to be temporary, with
investors now looking for sings of a pick up in U.S. demand,
which is key to a solid global recovery, and quarterly results
from companies in the region. "The market gain might not last long, we are still cautious
on second-quarter earnings from firms whether they will have
any surprise to the markets," said Pichai Lertsupongkij, head
of sales at Thanachart Securities in Bangkok. The MSCI index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 2.8 percent by 0922, while U.S. stock
futures DJc1 edged up 0.79 percent. Financial stocks .FTFSTAS8000 were among the top
percentage gainers in Singapore's blue chip index for the
second day in a row, rising 4.24 percent to a four-week high,
after Goldman Sachs' quarterly earnings trounced forecasts and
raised investor confidence in financials. DBS, Southeast Asia's largest lender, edged up 3.6 percent.
Oversea-Chinese Banking Corp (OCBC.SI) climbed 2.5 percent and
United Overseas Bank (UOBH.SI) surged nearly 6.0 percent. In Bangkok, index heavyweight energy firm PTT Exploration
and Production PTTE.BK rose 0.8 percent, top conglomerate
Siam Cement SCC.BK gained 3.5 percent, while shipper Thoresen
Thai TTA.BK increased 5.24 percent. Gains in heavyweight pushed up shares in Kuala Lumpur, with
energy services firm KNM Group (KNMP.KL) jumping 11 percent,
the nation's top lender Maybank (MBBM.KL) climbing 4.4 percent
and top listed company Sime Darby (SIME.KL) up 2.08 percent.
($1=34.10 Baht)

KLCI rises to new high

2009-07-15T18:34:00.000+08:00

Sources: The Star Online

KUALA LUMPUR: The FTSE Bursa Malaysia Kuala Lumpur Composite Index (KLCI) reached an intra-day high of 1104.87 points buoyed by buying interest in banking and blue chips stocks.

Analysts said the benchmark index continued to thread higher as both market sentiments and economic outlook stay bearish.

“The rising stock prices across Asia lifted sentiment on the local bourse,” an analyst said. He added that positive news flow from overseas provided fresh impetus for the market.

At 5pm, the benchmark index closed 17.61 points higher to 1097.24.

On Bursa Malaysia, gainers outnumbered losers, with 574 stocks going down, 120 gainers and 151 counters remained unchanged. Some 1.36 billion shares valued at RM1.78bil exchanged hands on the local bourse.

Malayan Banking Bhd, which topped the gainers’ list, jumped 25 sen to RM5.90. Bursa Malaysia Bhd and Public Bank Bhd rose 25 sen each to RM7.25 and RM9.95 respectively.

Among other counters, PPB Oil Palms Bhd and Bumiputra-Commerce Holdings Bhd put on 20 sen RM12 and RM9.70 respectively.

Regional markets also gave a favourable performance. The Hang Seng Index was up 2.09% at18,258.66, the Straits Times Index rose 71.56 points to 2,382.11 points, the Nikkei 225 increased 7.44 points to 9,26925 points and the Jakarta Composite Index advanced 66.70 points to 2,123.28 points.

Meanwhile, crude oil advanced 82 cents to US$60.34 while crude palm oil futures rose RM71 to RM2,107

KLCI continues its uptrend

2009-07-15T15:13:00.000+08:00

Sources: Star Online Business

KUALA LUMPUR: Share prices on Bursa Malaysia closed higher at the midday break on continued buying interest in blue chips counters and lower liners.

At 12.30pm the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) rose 10.52 points to 1,090.15.

Turnover was 619 million shares valued at RM648.2mil. There were 398 gainers, 137 losers and 156 stocks unchanged.

Analysts said investors’ continued bargain-hunting activities especially on index-linked counters helped pushed the benchmark index above the 1,090 level.

A stronger regional performance and overnight gains on Wall Street and Dow Jones have also boosted market sentiments. Banking counters Bumiputra-Commerce Holdings Bhd (BCHB) and Public Bank Bhd led the gainers. Shares in BCHB rose 20 sen to RM9.70 while Public Bank closed 15 sen higher at RM9.85.

PPB Oil Palms Bhd was 20 sen higher at RM12, Sime Darby Bhd rose 10 sen to RM7.30 while IOI Corp Bhd was 4 sen higher at RM4.66.

Among the bigger losers were Ewein Bhd, LPI Capital Bhd and the warrant of Tanjong Offshore Bhd, while the most actively traded counter was KNM Group Bhd.

Elsewhere in the region, the Singapore Straits Times Index added 37.40 points to 2,347.95 while Hong Kong’s Hang Seng Index gained 285.25 to 18,170.98 points.

The Jakarta Composite Index advanced 32.06 points to 2,088.64 and Shanghai’s Composite Index 0.94% up at 3,174.70 points.

However, Japan’s Nikkei 225 fell 5.81 points to 9256 points.

On the commodity markets, crude oil advanced 71 cents to US$60.23 while crude palm oil futures rose RM60 to RM2,096.

Economists: Jump in Singapore’s GDP one-off

2009-07-15T12:00:00.000+08:00

Sources: The Star Online (FINTAN NG)

PETALING JAYA: Singapore may have seen some stabilisation in economic numbers following a big jump in its second-quarter gross domestic product (GDP) by 20.4% on an annualised basis, but it will not be sustainable as the country’s economy is still reliant on exports.

Economists believe the country’s economic recovery, as with the rest of Asia would hinge on demand for the region’s exports from the G3 nations comprising the United States, Japan and the European Union.

Standard Chartered Bank economist Alvin Liew said given the way Singapore’s economy was structured; with a reliance on exports, there would still be a decline for the year although it had stabilised compared with the last quarter of 2008 and the first quarter this year.

He said Singapore’s second quarter GDP growth was the exception rather than the rule compared with the rest of South-East Asia because a substantial portion of the manufacturing sector comprised pharmaceuticals.

Singapore’s trade and industry ministry released the country’s GDP data yesterday that showed pharmaceuticals helped to boost growth in the second quarter with manufacturing falling only 1.5% year-on-year against a contraction of 24% in the previous quarter.

Besides the positive picture in manufacturing, construction rose 18% while services dropped 5.1%.

“Pharmaceuticals make up more than 20% of Singapore’s manufacturing sector, with the exception of Japan, that’s not the case for most of Asia,” Liew told StarBiz.

Both United Overseas Bank Ltd economist Ho Woei Chen and Oversea-Chinese Banking Corp Ltd treasury research and strategy head Selena Ling said the performance of the pharmaceuticals segment was not representative of the economy.

“It’s very difficult to see as the figures are very volatile and swing from month to month.

“If we take the segment out, the electrical and electronic segment is still contracting as there’s no demand,” Ho said.

She has revised the GDP figures for the year upwards to a contraction of 5% compared with a drop of 7.5% earlier.

“We’re still seeing a fall in the services sector due to a lack of domestic demand. Only the financial services segment is supporting the sector but the rest of the sector is still down,” Ho said.

Ling said there could be any number of reasons for the jump in pharmaceutical output. “It could be due to the A (H1N1) flu pandemic,” she said.

She added that given the low base in the second-half of last year, it was likely that there would be a recovery at the end of this year.

Meanwhile, Morgan Stanley Research analysts led by Tan Deyi said in a report that with the second-quarter GDP advance estimate, the first half was now tracking at a contraction of 6.7% year-on-year.

“We’re marking to market our 2009 GDP forecast from minus 10% year-on-year to minus 5% year-on-year to take this into account,” she said.

Tan said that the forecast for the year incorporated a gradual turnaround in the non-pharmaceuticals segments but also assumed a certain normalisation of pharmaceuticals output in the second half.

“With the bottom now behind us, the focus has shifted from how deep and how long to what kind of recovery,” she said.

Consumer confidence in Malaysia increases

2009-07-15T11:58:00.000+08:00

Sources: By YVONNE TAN (The Star Online) 15th July 2009

PETALING JAYA: Consumer confidence in Malaysia improved in the second quarter of the year compared with the first quarter as individuals began to feel “less negative” about the current state of the economy and more optimistic about its future, according to a recent study.

The local Consumer Confidence Index was up from 83 to 94 alongside increases in the indexes of other Asian countries, namely Singapore, China, Thailand and Indonesia, according to independent market research agency InsightAsia Research group’s latest survey.

“Consumers are substantially more positive in the second quarter than they were in the first,” it said in its latest report on Asian Consumer Confidence.

Even though economic growth was expected to remain negative this year, emergency economic policy measures and recovering equity markets had lent support to confidence, it noted.

The survey covered 2,300 people from urban areas that were asked their assessment of the current economic situation and expectations for the next 12 months. The level 100 is the neutral point in the index, where an index higher than 100 indicates a high confidence level (optimistic) and an index below 100 indicated a low level of confidence (pessimistic).

Of the five countries, Singapore registered the strongest growth, adding 26 points to 88 while Indonesia and Malaysia increased more than 10 points each and were now just below the neutral point, at 97 and 94 respectively, the survey revealed.

Singapore yesterday said its economy rebounded strongly by 20.4% quarter-on-quarter in the second quarter versus the market’s expectation of 13.4%, helped by recovery in its construction and manufacturing sectors.

The Singapore government has raised its 2009 forecast to between -4% and -6% year-on-year, up from a previous forecast of -6% and -9%.

In Malaysia, improvements in the local economy were expected in the second half and should extend into 2010 as the effects of the implementation of the various stimulus packages were felt.

Professor of economics and head of department at the London School of Economics Danny Quah does not think that the renewed confidence is unfounded.

“The severe fall-off in the first place was, in my view, an unwarranted over-reaction in any case,” he told StarBiz via e-mail yesterday.

Quah said the 1997 Asian financial crisis had previously already “cleaned out” a lot of financial weaknesses in the region and while exports to the rest of the world remained important for the region generally, the fundamentals on the supply side had been strong and domestic demand had continued to be supported by both high productivity and healthy balance sheets.

“However, caution and vigilance on the part of policy-makers will always be needed,” he added.

Asian economies needed to be more “profoundly aware” that the world’s centre of gravity had shifted eastwards sharply, and that whatever anaemic growth the West might offer in the next few months, strong performance from China would provide significant growth opportunity for the rest of Asia, he said.

Is your EPF money enough for retirement?

2009-07-15T11:53:00.000+08:00

Sources: Wednesday July 15, 2009
Is your EPF money enough for retirement?
by Ooi Kok Hwa

A look at whether a retiree can survive after losing monthly income and with only EPF savings to rely on

SOME studies conducted in Malaysia have shown that most retirees spend all their EPF money within three years of their retirement. Given that the average lifespan for a Malaysian is 75 years, if we retire at 55 and spend all our EPF money within three years, a lot of us will be wondering how to survive from 58 to 75.

The most worrying question that most of us will be asking is how to survive retirement when we lose our steady stream of monthly income to cover our daily expenses.

However, if we have been building an investment portfolio apart from EPF money, we would not be able to generate a source of returns from our own investment portfolio.

In reality, a lot of us have been spending most of our savings, including part of our EPF savings on our children’s education and clearing debts on house and car purchases, which leave us with not much savings for our retirement.

With this general concern in mind, let’s look into how much of our EPF money we can afford to spend to have enough for our retirement based on the our local conditions and some assumptions.

Generally, an average Malaysian starts working at 25 and reaches retirement at 55 (after 30 years of working), thereafter living the remaining 20 years (until 75) relying on the EPF savings.

We will assume a starting pay of RM1,500, growing at the rate of 8% per annum; an average bonus of two months per annum, average EPF returns of 5%, total EPF contribution of 23% (employer: 12%, employee: 11%) and inflation rate of 3%.

Our main objective is to test how much EPF money we can spend until we use it all up.

Our analysis shows that if we are able to live with just one-third (or 33%) of our last drawn salary, the EPF money should be able to support us for 20 years until we pass away at 75.

From the example below, if a person’s last drawn salary is RM13,976 at 55, he can only afford to spend one-third or RM4,612 per month after retirement (1/3 x RM13,976).

However, if his spending exceeds the one-third level, such as 50% or the full amount of his last drawn salary, his EPF money can only last 12 or five years respectively.

Even though our computations are based on a lot of assumptions and hypothetical scenarios, our objective is to bring to your attention that we need to be careful in spending our EPF money and control our expenses once we retire.

We will need to adjust our lifestyle after our retirement, especially for those of us that are used to spending most of our take-home pay when we are still working.

Once we lose the regular income source and are relying just on the savings, we will need to plan carefully in order not to out-live our savings. In this example, we can only afford to spend 33% of our last salary after retirement!

Everyone has different financial situations. However, we need to plan for our retirement. If possible, we need to build our own investment portfolio apart from the EPF savings. We may need to seek some part-time jobs after retirement if our financial resources do not permit us to stop working. Besides, we need to clear all our outstanding debts before retirement.

We also need to buy enough life and medical insurance for ourselves as well as set up education funds for our children.

Last but not least, one important point to note is that our computation is based on the assumption that we are still able to generate 5% returns after retirement.

Unless we have the skills and knowledge to generate the returns, putting the money back in EPF and letting EPF generate returns may be a good option. For the average person, we feel that it is not easy to generate 5% returns annually over a long period of time.

● Ooi Kok Hwa is an investment adviser and managing partner of MRR Consulting.

Affordable homes making a comeback

2009-07-15T11:51:00.000+08:00

Sources: The Star Online (David Tan) Wednesday July 15, 2009

Developers in Penang are targeting buyers on a lower budget

GEORGE TOWN: Double-storey terrace houses and properties priced around RM200,000 are making a comeback in Seberang Prai.

Henry Butcher Malaysia (Seberang Prai) senior manager Fook Tone Huat said in early 2003 and 2004, 2½- to three-storey houses were popular as purchasers sought bigger space for their families.

Fook Tone Huat ... ‘we are also seeing a new range of affordably priced high-rise properties being planned for the mainland.’
“The built-up areas of such properties start from 2,200 sq ft and when first launched, they were priced from RM280,000. Today, these properties are priced between RM350,000 and RM380,000.

“Last year, when the global economic crisis set in, developers started developing double-storey houses, as buyers now have a lower budget,” he told StarBiz.

With a built-up area of 1,500 sq ft, the double-storey properties were priced from over RM200,000, depending on location, Fook said.

“Such properties on the mainland generally appreciate by about 10% annually. We are also seeing a new range of affordably priced high-rise properties with theme park facilities being planned for the mainland, that are normally found only on the island. These condominiums are priced between RM170,000 and RM190,000,” he said.

Fook said developers should look into introducing the 5:95 easy payment plan, which allowed buyers to pay just 5% for the property and the remaining 95% upon completion of the project.

This easy payment scheme, although popular on Penang island, had yet to be widely implemented for projects in Seberang Prai, he said.

The Seberang Prai property market in the second quarter showed no improvement over the preceding quarter and was expected to remain sluggish into the third and fourth quarters, he said, adding that sales were anticipated to pick up early next year.

Fook added that for the past two years, the development of new property projects had shifted from Raja Uda and Bagan Lallang in north Seberang Prai and Bukit Mertajam in central Seberang Prai to Bukit Tambun and Simpang Ampat in south Seberang Prai.

One Asia Property Consultants (Penang) Sdn Bhd managing director Najihah Md Noor said the soft property climate offered buyers a wide range of choices.

Terrace houses developed by DNP Land in Bukit Mertajam

“It is the buyer’s market. They can pick from the new launches which normally offer freebies for the properties such as kitchen cabinets and air-conditioners.

“Buyers can also get value for their money from auctioned properties which are sold below market value,” she said.

The banks’ offer of ultra low financing loans last month had also brought some improvement in the market, she said.

Developers launching new double-storey terrace and higher-end condominium projects on the mainland include Asas Dunia, Tambun Indah, DNP Land Sdn Bhd and new player Landmark Strategy Sdn Bhd.

After a hiatus about six months, Asas Dunia is now launching some 1,177 landed properties in central Seberang Prai.

Asas Dunia managing director Datuk Jerry Chan said about 50% of the new launches were terraced properties priced between RM130,000 and RM250,000.

“The other 50% are semi-detached houses and bungalows, priced at RM280,000 to RM350,000 for the former and RM350,000 to RM450,000 for the latter,” he said.

Chan said the group was resuming its property launches because sales had picked up in May and June.

“We are also confident that there is commitment to complete the second bridge on schedule by 2012, after seeing substantial progress made on construction work,” he said.

DNP Land general manager K.C. Tan said the company would, in the fourth quarter, launch 338 properties, comprising 200 double-storey terrace houses and 138 semi-detached houses and bungalows, for the BM Utama project in Bukit Minyak and Taman Sri Impian in Bukit Mertajam.

The double-storey terrace houses are priced from RM250,000 while the semi-detached units and bungalows start from RM400,000.

“We will develop a five- and four-acre park respectively for the BM Utama and Taman Seri Impian schemes, which will be properly landscaped and equipped with the appropriate amenities.

“We will also construct a 90,000 sq ft commercial centre in Bukit Minyak, located between the two projects,” he said.

Meanwhile, Tambun Indah and Mutiara Goodyear Bhd are offering 600 terraced, semi-detached and bungalow units at its Pearl Garden scheme with an estimated gross sales value of over RM200mil in Simpang Ampat, south Seberang Prai.

Landmark Strategy Sdn Bhd is developing the 952-unit Pinang Laguna Theme Park Condominium with a gross sales value of RM160mil on seven acres in Seberang Jaya.

The units are priced between RM170,000 and RM220,000 for built-up areas of 950 to 1,100 sq ft.

Business development manager Michael Cheng said the project would be equipped with theme park facilities. “There will also be a clubhouse with spa, gymnasium, sauna and outdoor jacuzzi,” he said.

KL, Penang property markets looking good

2009-07-15T03:55:00.000+08:00

Sources: The Malaysia Insider (15th July 2009)

KUALA LUMPUR, July 9 — Always a favourite, landed real estate is receiving more interest in the current property lull. According to property agents, there has been a slight pick-up in the past two months, mainly in primary sales and landed properties located in popular suburbs.

Zerin Properties' chief executive Previn Singhe described April and May as “surprising months with very strong interest in landed properties”, centred mainly in the Klang Valley as prospective purchasers act on the premise that prices are unlikely to slip because of the limited supply.

In some places, demand continues to outstrip supply, he said, citing Bangsar, Bukit Damansara, Damansara Heights, Taman Tun Dr Ismail, Seputeh, Taman Desa and Jalan Ipoh where prices — which had held steady — have started to inch up as investors turn to property as a hedge against inflation.

“If you want to buy for owner occupation, any time is a good time. If it's for investment, you need to be looking now,” advised CH Williams Talhar & Wong managing director Goh Tian Sui.

Singhe lists those on the property hunt: the first timers attracted by low interest rates; investors in the 30-55 age group who are acquiring for their children; professional investors looking at Kuala Lumpur landed real estate for capital appreciation or condominiums for rental yields; and non-resident Malaysians.

There are also foreigners who have started to look at condos in the Kuala Lumpur City Centre and Mont Kiara areas since the price of some units have dropped by 20 per cent. Location-wise, Penang is another hot-spot, popular with Penangites and other northerners, as well as KL-ites looking to retire there.

“There are more opportunities in the secondary market because the primary market development costs have gone up.”

Across the South China Sea, Kota Kinabalu real estate has received a boost from the oil and gas boom, as well as tourism which has led to numerous Koreans and Europeans succumbing to its charms, Singhe said.

In the south of the peninsula, Johor's Iskandar Malaysia remains a major point of interest. Central to Iskandar is the Nusajaya area with its strategic location across the Straits of Johor. Nusajaya's jewel is the 687-acre Puteri Harbour with its planned integrated waterfront and marina development.

The precinct is to be gradually developed and because of its geography, has attracted the attention of a number of foreign builders which are keen to be involved. One of them is Limitless Holdings, a unit of Dubai World, which plans to jointly develop luxury residences with Nusajaya's master developer, UEM Land.

Another planned joint venture between UEM Land and the Middle East's Damac Properties was scrapped recently after Damac — which was to buy 43.5 acres in the enclave for nearly RM400 million — did not fulfil conditions for the sale to proceed.

Still, most believe Puteri Harbour's location, quality of build, management, and security will prove a big attraction to investors — especially foreign ones — just as they have in places slightly further afield such as Leisure Farm, Horizon Hills and Ledang East in Nusajaya.

Singhe is of the view that the better quality products in Iskandar have allowed Johoreans to “upgrade”. Indeed, many property consultants believe branded developments or designer buildings are what discerning investors increasingly desire and could make a difference in a project's “sell-ability”.

KGV-Lambert (M) executive director Samuel Tan agrees that the higher-end developments in Iskandar have drawn the most interest in Johor. The rest of the market has been softer.

“People think that Nusajaya is Iskandar Malaysia,” he observed wryly, pointing out that it is only a fraction of the special economic zone which is three times the size of Singapore. He highlighted new developments in brownfield areas as well as mature ones in the Tebrau Corridor, Skudai and Pasir Gudang which have been under-promoted but which might be worth a second look. “There are more opportunities in the secondary market because the primary market development costs have gone up.”

For those considering the lower- to mid-range of the market, bad debts have created a “sub-market” of auctioned properties in Johor, he revealed, with auctions held weekly. Each auction offers 20-50 properties and they go for about 30 per cent less than their market value.

Despite the global financial crisis, Iskandar investors remain committed, the biggest to date being Middle Eastern firms which plan to develop the area called Medini, located near the Second Link.

Still, property developers caution that the pace of construction could be slowed. On the bright side, the state government has already moved into the new administrative buildings in Kota Iskandar, and overall infrastructure works are continuing.

Singhe believes the 2003-04 pattern of funds sniffing for deals which resulted in a property boom in 2006-07 is being repeated now based on the number of funds that are making inquiries. Accordingly, he expects a property upswing to materialise in 2011-12.

The Quill Group of Companies, which designs and constructs purpose-built offices, confirms growing interest in Malaysia. Its property director, Ng Chee Kheong, said that multinationals were showing keen interest in the area of shared services, particularly in the Klang Valley and Penang.

Of late, Malaysia has started to speed up its liberalisation of many sectors of the economy to attract more investments. Should it succeed, the expatriate market ought to increase which would in turn stimulate demand for rented properties and help arrest some of the decline in yields.

Because of the downturn, a number of developments had been put on hold, including one by Singapore's Kwek Leng Beng who was to have launched a 42-storey luxury condominium last year in the Kuala Lumpur golden triangle.

A prospective buyer expressed disappointment at the delay as he had been looking forward to purchasing a unit in the Carlos Ott-designed building which is to be constructed next to the tycoon's Millennium Hotel.

Kuala Lumpur high-end condo prices have dipped to an average of RM1,000 per sq ft although the more prestigious ones still command a premium. Because of the weak ringgit, prices remain very affordable, especially for foreigners.

Ferrari team's ex-boss Jean Todt, who is engaged to well-known actress Michelle Yeoh, recently revealed he had acquired a unit in OneKL, which sits opposite the iconic Petronas Twin Towers. — Business Times Singapore

EPF equities value surges

2009-07-15T03:52:00.000+08:00

Sources: IZWAN IDRIS ( TheStar Online)

PETALING JAYA: The value of equities held by the Employees Provident Fund (EPF) rose faster than the market over the past six months as the fund increased its stakes in battered stocks and rode on the rally that lifted share prices from their lows in March.

The latest publicly available data showed that the market value of EPF’s top 15 holdings had risen 23% since the start of the year, compared with the 21% gain in the FBM KLCI as of last week.

As a pension fund, the EPF follows a strict conservative strategy in managing its funds that had swelled to RM356bil as of the end of March.

About a quarter of this money is invested in equities, but only a fraction is allowed for overseas investment.

“Contrary to popular belief, the EPF is quite aggressive in managing its stock portfolio,’’ said a senior fund manager with a local asset firm.

EPF’s most valuable shareholding is its 930 million shares, or 15.5% stake in Sime Darby Bhd, which is also the most expensive stock in terms of market value on Bursa Malaysia.

Its current stake in Sime Darby is less than the 15.7% reported as at end of last year.

Despite the slight decrease, the value of EPF’s stake in Sime Darby had increased to RM6.67bil as at the end of June compared with RM4.97bil at the start of the year after the stock climbed 38% over the same period.

Filings with Bursa Malaysia in the past months showed that the EPF’s stake in Sime Darby fluctuated by as many as three million shares a day.

Conservative estimates of the fund’s transactions put it at about 20% of the stock’s daily volumes.

The fund is also active in buying and selling shares in other big companies where it owns substantial stakes in Tenaga Nasional Bhd, Malayan Banking Bhd and IOI Corp Bhd.

Bloomberg data showed that the EPF has stakes exceeding 10% in 47 companies as at last week.

However, there were little change in terms of the fund’s equity stakes in the country’s biggest firms over the past six months, except for Axiata Group Bhd, formerly known as TM International Bhd.

EPF’s current top 15 shareholdings have a market value of about RM55bil against RM43.7bil six months ago.

Analysts said a rising market provided the opportunity for funds like the EPF to make trading profit on stocks.

This may help boost returns from investments at a time when companies are expected to pay lower dividends as their profits shrink.

EPF had warned that this year’s dividend payout to contributors may be less than the 4.5% paid for 2008.

It has to guarantee a minimum payout of at least 2.5% every year as its fund size grows at about 7% and 10% rate annually.

Currently, the EPF is invested in more than 100 companies on Bursa Malaysia, with its 67% in Malaysian Building Society Bhd and 57% in RHB Capital Bhd comprising its biggest stakes.

The total market capitalisation of just over 950 companies on Bursa Malaysia stood at RM817bil as at end-June.

While the fund’s stakes in the country’s biggest firms remain relatively stable, it has been increasing its shares in a number of mid-size companies.

Among stocks that saw a significant jump in EPF investment so far this year was WCT Bhd.

The pension fund started the year with a 20% stake in the construction group but took advantage of a steep price plunge in January to buy more shares, raising its equity stake to 26% by end-June.

Latest filings showed that the EPF owned 25.16% of the company as at July 6.

Shares in WCT closed at RM2.23 yesterday, up 47% year-to-date.

The stock, however, was down 61% from a peak of RM4.98 achieved on Jan 11 last year.

EPF’s stake in WCT is currently worth about RM430mil compared with RM220mil at the start of the year.

The fund did not disclose the amount paid for the additional stakes in its filings with Bursa.

Other mid-sized firms that saw increased EPF interest are oil and gas counters like Dialog Group Bhd and KNM Group Bhd.

The two stocks had posted strong double digit gains this year from their recent lows in March.

Tesco To Continue Investing In Asia

2009-07-15T03:49:00.000+08:00

Sources: Bernama.Com, thestar-online

KUALA LUMPUR, July 13 (Bernama) -- Tesco plc, the international grocery and general merchandising retail chain, will continue to invest in Asia despite the global economic slowdown, its chief executive officer of retailing services, Andrew Higginson, said Monday.

"We had terrific success and we are the biggest retailer in Asia. It is important for us to expand as there are still huge opportunities in Asia, including China and Japan," he said.

In Asia, South Korea is Tesco's biggest market outside the United Kingdom where the company is based, followed by Thailand and Malaysia.

Higginson said Tesco planned to spend 3.6 billion pound this year on capital expenditure to support growth around the world, of which slightly more than half will go to the Asian markets.

Malaysia, he said, is an important market for Tesco as the country is the third major anchor for Tesco in Asia, after South Korea and Thailand.

"It is important for Tesco to establish its third anchor before pushing into China," he told reporters on the sidelines of the Chartered Institute of Management Accountants (CIMA) World Conference 2009 held here.

Besides Asia, Tesco will also continue to invest to expand its business in Europe, including Poland, the Czech Republic and Hungary, Higginson said.

He said the company will continue to invest in developing its retailing and financial services and telecoms, adding that it is important to invest to be in a commanding position to reap benefits when the economy recovers.

Originally specialising in food and drinks, Tesco has over the years diversified into areas such as clothing, consumer electronics, financial services, telecoms, home, health and car insurance, and dental plans as well as Internet services and software.

The conference, themed "The Global Village -- No Boundaries, No Limits", focuses on managing global profitability in the downturn, outsourcing as a competitive strategy, managing costs, shaping the future and the impact of the current economic crisis on globalisation.

At the event, finance directors were told that businesses must not only continue to deliver against short-term demands but still invest for the long term if they are to be in the best position to benefit when the global economy starts to recover.

"Now, more than ever, we must really listen to our customers and strive to be first for them. But to be able to deliver for customers, you need to get the basics right -- manage cash and costs carefully," Higginson said.