November 4, 2008 – Daily Highlights
Interest in key index stocks, especially financial stocks, helped push the Kuala Lumpur Composite Index (KLCI) to 899.35, up 35.74 points, or 4.14 per cent, after opening 3.43 points higher at 867.04 yesterday morning.Confidence was higher in the local market ahead of the government’s announcement today on more measures under the financial stabilisation plan to support economic growth.Deputy Prime Minister and Finance Minister Datuk Seri Najib Razak is scheduled to make an announcement during the Budget 2009 winding-up session in Parliament. Volume on the main board rose to 850.36 million shares valued at RM1.22 billion from 742.66 million shares worth RM1.30 billion last Friday.
Asian stocks rose, extending last week’s rally, as South Korea pledged to pump $10.8 billion into its economy and India cut interest rates to ease the fallout from the global credit crisis. All markets open in Asia advanced yesterday, except in China. Australia’s S&P/ASX 200 Index climbed 5.1 percent, South Korea’s Kospi Index added 1.4 percent, and Hong Kong’s Hang Seng Index gained 2.7 percent. Indonesia’s Jakarta Composite Index jumped 7.6 percent, the biggest gain since Jan. 23, ahead of figures today showing that inflation slowed in October.
Wall Street ended the calmest session in recent memory with a narrowly mixed performance Monday as investors largely looked past a weak reading on the manufacturing sector and focused on the election. Stocks showed little lasting impact from the Institute for Supply Management report that its measure of U.S. manufacturing dropped last month to the lowest level since September 1982 as credit conditions tightened and disruptions remained from Hurricane Ike. The trade group said its index of manufacturing activity fell to 38.9 from 43.5 in September, well below the 41.5 economists predicted, according to Thomson/IFR. The Dow Jones industrial average fell 5.18, or 0.06 percent, to 9,319.83, after rising as much as 86 and falling 70. The day’s trading range was its lowest since Sept. 3. Broader stock indicators were mixed. The Standard & Poor’s 500 index fell 2.45, or 0.25 percent, to 966.30, while the Nasdaq composite index rose 5.38, or 0.31 percent, to 1,726.33.
‘World recovery takes time’
THE global economic downturn is expected to last two years before it slowly recovers from 2010 onwards, investment bank UBS Ltd says.Countries best positioned to weather the slowdown are those which did not borrow much and are not exposed to exports, said its managing director for global economics, Paul Donovan.”Malaysia is in between the two. You will face weakness in exports, but won’t suffer as much as the likes of the US or the UK because the country hasn’t borrowed much in the last few years,” Donovan told a media briefing in Kuala Lumpur yesterday.Malaysia’s economic growth will probably be held back at zero per cent next year, he said, taking into account the government’s stimulus plan to spur growth and a low inflation next year. Inflation in Malaysia is forecast to dip below one per cent next year on weak global growth and falling energy and food prices, Donovan said.The world will see the slowest expansion in more than a quarter century next year, he said, but the recession will not be as bad as the Great Depression in the 1930s.”It is a bad growth picture, but not a disaster,” Donovan said, noting the policymakers’ early reaction in making swift and sharp interest rate cuts that helped avert a deeper crisis.Donovan predicted the US economy to shrink 0.6 per cent next year and the eurozone’s to contract by 0.9 per cent.
Firefly seeks nod for Penang-Singapore flights
FIREFLY’S bid to make Penang its secondary hub by next year is expected to see the budget airline offering flights between Penang and Singapore.FlyFirefly Sdn Bhd managing director Eddy Leong said the company is applying to the Transport Ministry to operate the route.It is also seeking permission to offer direct flights from Penang to Johor Baru, which it hopes to start by the second quarter of next year.International flights from Penang are likely to include those to Krabi and Hua Hin in Thailand, he added.
Attracting more investments to Malaysia growth corridors
MORE needs to be done to attract investments to Malaysia’s economic growth corridors, International Trade and Industry Minister Tan Sri Muhyiddin Mohd Yassin said.He said while the corridors have drawn investments, more work is required especially for the Northern and Eastern corridors and also those in Sabah and Sarawak.The five economic growth corridors are Iskandar Malaysia in southern Johor, the Northern Corridor Economic Region (NCER) and the East Coast Economic Region (ECER), the Sabah Development Corridor (SDC) and the Sarawak Corridor of Renewable Energy (Score). For the first eight months of this
year, Sarawak attracted RM13.3 billion worth of investments followed by Johor (RM11 billion), Penang (RM8 billion), Selangor (RM7.4 billion) and Malacca (RM3.5 billion).
Ringgit strengthens against greenback
THE ringgit closed higher against the US dollar yesterday in line with the gains in regional currencies, dealers said.At 5pm, the ringgit strengthened against the greenback at 3.5210/5260 from last Friday closing of 3.5460/5510.The dealers said that Asian currencies traded higher yesterday, boosted by the rally in regional stock markets.They said that expectation of the central banks of Australia, Britain and Europe cutting interest rates encouraged investors to snap up regional stocks.In late trade yesterday, the ringgit was mixed against other major currencies.The local unit was lower against the Singapore dollar at 2.3947/4004 from 2.3890/3945 last Friday but it appreciated against the Japanese yen at 3.5465/5526 from 3.6594/6665
U.S. Economy: Factory Index Declines to 26-Year Low
Manufacturing in the U.S. contracted in October at the fastest pace in 26 years as a record share of banks made it tougher to get loans and faltering economies abroad eroded prospects for American exports. The Institute for Supply Management’s factory index fell to 38.9 from 43.5 in September; 50 is the dividing line between expansion and contraction. The Commerce Department said separately that construction spending fell for the eighth time in 10 months in September.
Blue Mountain Freezes $3.1 Billion Credit Hedge Fund
Blue Mountain Capital Management LLC froze its largest hedge fund after clients asked to pull a “meaningful percentage” of their money even as it outperformed the industry average by almost 10-fold this year. The $3.1 billion Blue Mountain Credit Alternatives Fund declined 2.4 percent through October, compared with the 19.6 percent loss by the HFRX Global Index compiled by Chicago- based Hedge Fund Research Inc. Withdrawals were suspended so Blue Mountain wouldn’t be forced to sell assets in falling credit markets, the firm said today in a letter to clients.
Australia May Cut Benchmark Interest Rate to 5.5%
Australia’s central bank will probably cut its benchmark interest rate by half a percentage point, the third reduction in as many months, amid increasing evidence global financial turmoil is buffeting the economy. Governor Glenn Stevens will lower the overnight cash rate target to 5.5 percent from 6 percent at 2:30 p.m. in Sydney today, adding to last month’s 1 percentage point reduction, according to 15 of 16 economists surveyed by Bloomberg News. One forecast a quarter point cut.
SingTel Second-Quarter Profit Hurt by Currencies
Singapore Telecommunications Ltd, Southeast Asia’s largest telephone company, said currency movements hurt fiscal second-quarter earnings because of contributions from overseas operations. “A stronger Singapore dollar will reduce the earnings contributions from the overseas operations,” the company said in a
statement to the Singapore stock exchange today. Financial estimates weren’t provided. Profit at SingTel, which gets more than half its earnings from its overseas units, is being eroded as the Singapore dollar strengthens against regional currencies.
Fed Says Banks Tighten Loan Standards Most on Record
A record share of U.S. banks made it harder for companies to get loans in the past three months, concerned about mounting losses from the economic slump and financial crisis, a Federal Reserve report showed today. “Almost all domestic and foreign respondents pointed to a less favorable or more uncertain economic outlook as a reason for tightening their lending standards” on commercial and industrial loans in the past three months, the Fed said today in its quarterly Senior Loan Officer Survey. “Large fractions of domestic banks again reported tightening standards on both credit card and other consumer loans.”
Fed’s Fisher Says U.S. Economy May Slump Through 2009
Tight credit conditions may keep the U.S. economy in a slump through the end of next year, while inflation pressures have disappeared, Federal Reserve Bank of Dallas President Richard Fisher said. “ My forecast is I don’t see any economic growth through 2009,” Fisher said in a Bloomberg Television interview. “The credit
crisis reached up and grabbed the throat of the global economy and choked off economic growth.” Fisher supported the Fed’s decision last week to cut its benchmark interest rate to 1 percent in an effort to revive credit and keep a selfreinforcing decline in consumer spending and bank lending from triggering a global