4 November 2008 – Newz Bits

November 4, 2008 at 4:13 am Leave a comment

TPG makes investment into Bumiputra Commerce

The Group announced yesterday the issuance of up to USD150m senior unsecured guaranteed bonds, together with 5-year warrants which will be subscribed by TPG Malaysia Finance L.P. While the dilutive impact of the warrants is insignificant, what is more important to note is the confidence of TPG in the Group in making an investment at a 56% premium to current market price. We believe negative expectations have been factored into current prices, and present an opportunity for accumulation at P/B levels last seen in the recent recession. Our buy call is reiterated while target price of RM9.60 is unchanged. (Please refer to report for details)

Malaysia Highlights

AirAsia X Sdn Bhd is confident in meeting the financial obligations for the purchase of 25 new Airbus A330 airplanes.
“Since April 2008, we have well in excess of RM300m cash in hand, including cash from our foreign equity partners. We have been operating on positive cash flows and are confident that we could continue to raise funds in Europe as banks have to continue lending”, AirAsia X chief executive officer Azran Osman-Rani said. (Financial Daily)

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Bursa Malaysia will launch a new system for equities trading on Dec 1 to replace the existing system that ran into problems in July and caused trading to be suspended an entire day. (Financial Daily)

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Malaysia’s September export growth is expected to slow further and lag import growth because of lower commodity prices and falling demand for electronic goods as a result of the global economic downturn. Malaysia’s annual export growth is expected to slow to 8.2% in September from 10.6% in August for its lowest rate since March, according to the median of a Reuters poll of 11 economists. (Financial Daily)

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Perwaja Holdings Bhd has awarded a €5.9m (RM26.6m) contract to Switzerland’s Concast AG for the supply of a new electric arc furnace. The purchase would be payable in cash to be funded via internally generated funds. Upon delivery of the additional furnace by October next year, its production capacity would be increased by another 750,000 tonnes to the existing 1.3m tonnes. (Financial Daily)

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Global Highlights

Stocks seesawed Monday, the Dow Jones industrial average lost 5 points, or 0.06% as investors awaited the presidential election and mulled weaker oil prices, a stronger dollar and more signs that the economy is in a recession. Lending rates continued to improve, amid the efforts of U.S. and world governments to get money flowing again. Treasury prices rose, lowering the corresponding yields. Oil prices slipped and the dollar gained versus other major currencies. Slumping manufacturing and construction activity, and plunging auto sales, added to bets that a recession is underway. Additionally, the government said it will borrow a record $550bn in the fourth quarter and another $368bn in the first quarter of next year as it looks to fund the massive financial rescue plans recently put in place (CNN Money)

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The Institute for Supply Management’s manufacturing index fell to a 26-year low of 38.9 in October from 43.5 in September. Economists thought it would fall to 42. The decline suggests a recession and echoes the weakness in recent regional manufacturing reports. Another report showed that construction spending fell 0.3% in September, short of forecasts for a drop of 0.8%. Spending rose 0.3% in August. (CNN Money)

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The US Treasury Department said Monday it plans to borrow a record $550bn in the current October-December quarter and another $368bn in the first three months of next year. Major Wall Street bond traders estimate the government’s borrowing needs for the whole year will total an unprecedented $1.4trn. The bond traders predict that borrowing will be needed to cover a budget deficit that will approach $1trn for a single year. The major Wall Street firms are projecting a deficit of $988bn
in the current budget year, far above the $482bn estimate that the Bush administration made in July. (CNN Money)

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Inflation is slowing across Asia, giving policy makers in the region scope to reduce borrowing costs to protect their economies from a global slump. Asian central banks are switching their focus from fighting inflation to bolstering growth as the global financial crisis that has pummeled the U.S. and Europe threatens to engulf the region’s export-dependent economies. The Reserve Bank of Australia and the Bank of Korea are both expected to cut interest rates further this week, according to Bloomberg (Bloomberg)

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The euro zone is already in a technical recession and economic growth will come to a virtual standstill next year, the European Commission said yesterday, calling for coordinated action to support growth. Economic growth in the 15 countries using the euro would slow to 0.1% next year from 1.2% expected this year, the commission said. It forecast 0.9% growth for 2010. The commission said it expected gross domestic product to decline in 3Q08 in both the EU as a whole and the euro area. (StarBiz)

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China’s manufacturing activity slowed sharply in October amid weaker export demand despite a flurry of official measures to boost flagging growth in the world’s fourth-largest economy, an industry group reported. The China Federation of Logistics and Purchasing said its purchasing managers’ index, a broad measure of new orders, exports and other factors, fell to 44.6 in October. It was the lowest level since the survey began in 2005 and a drop from September’s 51.2. A number above 50 indicates activity is growing, while a number below 50 shows it is contracting. October’s slowdown was driven by a downturn in export orders and demand for goods such as steel and machinery, the federation said. (CNN Money)

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South Korea announced yesterday an US$11bn (RM38.7bn) in new spending and tax cuts to rev up its economy, while central banks in Europe and Australia looked set to cut rates again to prevent the world from entering into its worst slump in decades. Australia, long sheltered from economic headwinds blowing from America thanks to windfall profits from the global commodities boom, reported yesterday retails sales fell in twice as much as expected in September and housing prices fell sharply in 3Q08. (Financial Daily)

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Global INVESTMENT RESEARCH

China’s manufacturing contracted by the most on record last month as the global financial crisis cut demand for exports, a second survey showed. The CLSA China Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 45.2 in October from 47.7 in September. A government backed survey released on November 1 also showed a record contraction, adding to concern that the Chinese economy may slump. (Financial Daily)

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VADS – 3QFY08 : Mixed set of results November 4, 2008 – Daily Highlights

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