November 17, 2008 Daily Highlights

November 25, 2008 at 1:21 am Leave a comment


KLCI Update
HEAVY falls in key telco stocks TM and TM International, sparked by fears that the group’s high dividend payout policy won’t be repeated in future years, and in Maybank due to weaker earnings outlook for the banking industry next year contributed to almost all of the benchmark Kuala Lumpur Composite Index’s (KLCI) losses last week. The KLCI lost 12.3 points, or 1.4 per cent, week-on-week to close at 881.65, as daily average trading volume dwindled to 819.7 million shares from 891.5 million shares in the previous week. Apart from the above factors, the local stock market also succumbed to external pressures as last week’s trading pattern portrayed the return of risk aversion appetite among global investors after the release of some hard economic data in the US, Europe and China that retriggered anxiety about the health of the world economy. Looking ahead, KLCI are expected to have more downward pressure with regional ecomic data
pointing downward. Despite this, the market are volatile, there could be numerous major market swing coming ahead. This could provide active tradings opportunities.

Regional Update
Asian stocks rose, paring a weekly decline, as commodity producers climbed after oil and metal prices rallied and investors snapped up shares trading near the cheapest valuations on record. Japan’s Nikkei 225 Stock Average gained 2.7 percent to 8,462.39. Nintendo Co. led the advance after sales of its Wii console jumped in the U.S. China’s CSI 300 Index rose 3.7 percent, led by China Vanke Co., on speculation banks relaxed
mortgage lending approvals. The gauge jumped 16 percent this week, the most since April, after the government announced a 4 trillion yuan ($586 billion) plan to boost the slowing economy.

US Stocks
For the whole week, U.S. stocks fell as profit outlooks worsened for companies from Goldman Sachs Group Inc. to Best Buy Co., the Treasury shifted its rescue away from banks and General Motors Corp. faced bankruptcy speculation. The S&P 500 slid 6.2 percent to 873.29, while the Dow Jones Industrial Average fell 446.50 points, or 5 percent, to 8,497.31. The Russell 2000 Index of small U.S. companies lost 9.7 percent to
456.52. The MSCI World Index of 23 developed markets lost 6.4 percent to 879.42.


Builders: Don’t make us wait
Late payments in construction jobs may be a thing of the past as contractors are pushing for Parliament to pass a law to ensure faster payments and quick resolution of disputes.Currently, although payments should be made within 30 to 60 days, which is the industry practice, it is often not the case.Contractors are now worried that as the economy is expected to slow further, they may have to wait longer for their money.They are now banking on the Construction Industry Payment and Adjudication (CIPA) Bill. Unfortunately, the draft, which was given to the Attorney General’s Chambers in early 2007, has not made its way to Parliament.

Pressure mounts on palm oil producers
THE battle lines remain drawn for oil palm growers from Malaysia and Indonesia, as pressure groups continue to question the credibility of the Roundtable on Sustainable Palm Oil (RSPO) certification process that was put in place earlier this year.A three-day conference, themed “RSPO Certified Sustainable Palm Oil – The Gathering Momentum” which opens in Bali tomorrow may seek additional criteria for the certification process which covers the production and development of the palm oil.RSPO secretary-general Dr Vengeta Rao said four resolutions have been received for the conference, including from Wetlands International and Pan Eco.Wetlands International wants to call for a moratorium on palm oil from tropical peatlands until a greenhouse gases (GHG) committee has been established and carried out its work. To strong activists and non-RSPO members like Greenpeace, the RSPO has yet to prove its credibility. Greenpeace is campaigning strongly for palm oil buyers to cancel contracts with suppliers who continue deforestation and peat clearance.The sixth RSPO meeting which will be in Bali from November 18 till 20, has attracted 540 participants from 30 countries, mostly from Malaysia and Indonesia.

MediLink to expand network overseas
INSURANCE electronic healthcard provider MediLink Global (Asia) Pte Ltd, en route to a listing on the London Stock Exchange’s Alternative Investment Market (AIM), wants to develop its healthcard network regionally.The group hopes that overseas contribution will grow to 80 per cent in the next two years, from about five per cent, mainly derived from China. Currently, more than 95 per cent of its revenue is contributed locally.Group chief executive officer Shia Kok Fat said that healthcare schemes are becoming globalised in nature as more people travel for work and leisure and businesses expand internationally.”The design of healthcare benefit is very sophisticated today. Due to increasing demand for healthcare services, MediLink is at the right time to expand our services overseas,” he told Business Times in an interview.Next year, MediLink plans to expand its network of services to Thailand, Vietnam, Singapore and Cambodia.MediLink, established in 2002, provides electronic healthcard network for insurance, companies and third-party
administrators to facilitate medical claims and healthcare data management.

Tiger starts flying to Kuching Thursday
TIGER Airways Pte Ltd, a budget carrier 49 per cent-owned by Singapore Airlines Ltd, will start daily flights between Singapore and Kuching on Thursday.This will be followed by daily flights between Singapore and Kota Kinabalu starting March 1 2009.With the new services, Tiger Airways will be operating 14 flights a week
between Singapore and Sabah and Sarawak.To celebrate the new routes, it is offering 15,000 seats for S$0.01 (RM0.024), excluding taxes and charges, each way for travel between Singapore and Kuching from November 20 to October 5 2009.It is also offering 8,000 seats from S$86.99 (RM207), including taxes and charges, for
one-way travel between Singapore and Kota Kinabalu from March 20 to October 29, 2009.

Japan’s Economy Shrinks 0.4%, Confirming Recession
Japan’s economy, the world’s second largest, unexpectedly shrank in the third quarter, confirming it entered the first recession since 2001 as companies cut spending. Gross domestic product fell an annualized 0.4 percent in the three months ended Sept. 30, the Cabinet Office said today in Tokyo. Economists predicted the economy would grow 0.1 percent after contracting a revised 3.7 percent in the previous period. The slowdown that last month forced Prime Minister Taro Aso to propose a stimulus package is likely to worsen as export demand weakens and companies respond with investment cuts and layoffs.

G-20 Calls for Action on Growth, Overhaul of Financial Rules
Leaders from the biggest developed and emerging nations agreed to further steps to shore up a global economy sliding into recession, and laid out regulatory proposals to prevent a recurrence of the financial crisis. The Group of 20 yesterday urged a “broader policy response,” citing the potential for additional interest-rate cuts and fiscal stimulus, in a statement after meeting in Washington. The group set a March
deadline for recommendations on strengthening accounting standards, derivatives markets and oversight of hedge funds and debt-rating companies.

Indonesian Economy Probably Expanded at Slowest Pace in 2 Years
Indonesia’s economy probably grew at the slowest pace in two years in the third quarter as declining commodity prices reduced the value of exports. Southeast Asia’s largest economy expanded 5.9 percent from a year earlier, after growing 6.4 percent in the preceding three months, according to the median estimate of 22 economists in a Bloomberg News survey. The Central Statistics Bureau will release the data in
Jakarta today. Exporters in Indonesia, the world’s biggest producer of palm oil and the second-largest maker of rubber, are reeling from a slump in commodity prices as a slowdown in the U.S. and Europe reduces demand. Frozen credit markets are also making it difficult for companies to obtain the letters of credit needed to secure payment for their shipments.

Pakistan IMF Bailout May Prompt Higher Credit Rating, ADB Says
Pakistan’s $7.6 billion rescue from the International Monetary Fund may help the nation overcome a “crisis of confidence” and improve its debt rating, according to the Asian Development Bank. “There is no reason why it should not” lead to an upgrade in Pakistan’s credit rating, ADB Managing Director Rajat Nag said in an interview in New Delhi yesterday. “The IMF program will bolster confidence and I am optimistic Pakistan will be able to undertake the reforms required for the bailout package.”


Prices May Have Tumbled as Economy Sank: U.S. Economy Preview The cost of living in the U.S. probably fell in October by the most in almost sixty years, while manufacturing and homebuilding sank deeper into a recession, economists said before reports this week. Consumer prices probably dropped 0.8 percent last month, the most since 1949, according to the median estimate in a Bloomberg News survey. Builders broke ground on the fewest houses in at least a half century and factory output weakened further, other reports may show. Commodity costs plunged in October when the economy, which descended last quarter, went into freefall as credit and financial markets collapsed. Slumping sales are forcing retailers to lower prices, giving the Federal Reserve scope to keep cutting interest rates to limit the damage. “Tumbling energy and commodity prices have altered the inflation landscape,” said Ryan Sweet, a senior economist at Moody’s in West Chester, Pennsylvania. “More rate cuts are needed as the economy is sinking deeper into recession.”


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Construction Weekly Review: 10th – 16th November 2008 Commodity Update : November 17, 2008

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