US stocks extend big July rally

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

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

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%

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

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

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

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.