November 19, 2008 Daily Highlights

November 25, 2008 at 8:00 am Leave a comment

November 19, 2008 Daily Highlights

MARKET REVIEW

KLCI Update
Share prices on Bursa Malaysia closed lower yesterday with the key index declining 0.11 per cent, led by selling in property and plantation-related stocks as sentiment was weighed down by a sharp fall in Wall Street overnight.Dealers said investors remained cautious over the global economic outlook after Europe and Japan slid into recession.The benchmark Kuala Lumpur Composite Index (KLCI) fell 0.97 point to close at 883.09. It had opened 4.39 points lower at 879.67 yesterday morning. Losers led gainers by 390 to 161 while 171 counters were unchanged, 604 untraded and 31 suspended.A total of 509.263 million shares worth RM666.736 million were transacted yesterday, down from Monday’s 571.273 million shares worth RM595.515 million. Main board-debutante, UEM Land Bhd closed 2.5 sen higher at 57.5 sen. The property arm of
Khazanah Nasional was the most active counter with 48.805 million shares traded.

Regional Update
Asian stocks fell for a second day, led by financial and technology companies, on heightening concern that the global recession is worsening. Mitsubishi UFJ Financial Group Inc. slumped 6.7 percent, leading the region’s financial stocks to a five-year low, as Citigroup Inc. said it will eliminate about 15 percent of its workforce. Japan’s Nikkei 225 Stock Average slumped 2.3 percent to 8,328.41. Mitsubishi Estate Co. led property developers lower after the Nikkei newspaper said the nation’s condominium market will be weak in 2009. Woolworths Ltd. led declines in Australia before tomorrow’s lifting of a ban on short selling of non-financial securities. China’s CSI 300 Index posted the region’s steepest slide, losing 7.4 percent, as Jiangxi Copper Co. led commodity producers lower.

US Stocks
U.S. stocks gained in the last hour of trading as a rally in energy and technology shares overpowered earlier declines spurred by a drop in homebuilder confidence to the lowest level on record. The S&P 500 added 1 percent to 859.12, the first advance in three days. The Dow Jones Industrial Average increased 151.17 points, or 1.8 percent, to 8,424.75. The Nasdaq Composite Index rose less than 0.1 percent to 1,483.27. About six stocks retreated for every five that advanced on the New York Stock Exchange.

MEDIA HIGHLIGHTS

‘MMC will make profits despite Q3 charges’
CONGLOMERATE MMC Corp Bhd will not report a loss in its fiscal third quarter, a source said, denying a research report that it may be in the red due to provisions for windfall tax charges.”There will be provisions but it is not finalised yet. In any case, we should have enough of a buffer to make a profit,” the source said.OSK Research Sdn Bhd said in a report yesterday that MMC, which operates ports and power plants, may report losses in its third quarter as it makes a full provision for windfall tax charges.The group could provide RM212 million, which is the full year payment, in that single quarter instead of spreading it over a longer period.OSK acting head of research Chris Eng said he had expected MMC to make a net profit of about RM190
million in the quarter to September 30 2008.”Reporting a loss during the current volatile market conditions will not be favourably viewed by investors,” Eng said. MMC is due to report its third quarter results on November 27.

Citigroup to trim staff in Malaysia
US BANKING giant Citigroup Inc’s recent announcement that it plans to cut another 50,000 jobs worldwide is expected to hit its staff in Malaysia.The group, through Citibank Bhd, employs more than 4,000 people across seven branches in Kuala Lumpur, Selangor, Penang and Johor. Citibank Bhd chief executive officer Sanjeev Nanavati said staff numbers will be cut slightly as it seeks to be more efficient and productive. He did not give details.Meanwhile, HSBC Bank Malaysia Bhd, OCBC Bank (Malaysia) Bhd and Standard Chartered Bank Malaysia Bhd (StanChart Malaysia) said they had no plans for retrenchment but had frozen recruitment.HSBC, which employs over 5,000 people locally, is well-known for its recruitment drive particularly for its call centre in Cyberjaya, Selangor.

Malaysian govt to review need for new power plants
THE government will review the need for new power plants by the end of 2009 as electricity consumption has weakened in the last one year, Energy Minister Datuk Shaziman Abu Mansor says.The decision was made yesterday by a committee, the Jawatankuasa Perancangan Pelaksanaan Pembekalan Elektrik dan Tariff (JPPET),
which the minister chairs.Shaziman noted that demand for electricity has fallen by 4.8 per cent this year.Malaysia has a total installed generation capacity of 19,743 megawatts (MW), while in contrast, the maximum demand was 14,007MW.He said power consumption is expected to increase by 3.0 to 3.5 per cent in five to six years.Shaziman reiterated that the country has enough supply given its high electricity reserve margin.He said the current 42 per cent reserve is expected to rise to 47 per cent next year with the commissioning of a new independent power producer (IPP) in Jimah, Negri Sembilan.Malaysia’s reserve margin is expected to come down to only 25 per cent as a result of the decommissioning of five IPPs in
2016.

Malaysia: Numbers for entrepreneurs still not there
THE level of entrepreneurship in Malaysia remains low, Deputy Entrepreneur and Cooperative Development Minister Datuk Saifuddin Abdullah says. He said although various government agencies, non-governmental bodies and business organisation have been promoting entrepreneurship especially to young Malaysians, only a handful have ventured into business. “Out of the thousands of university students we have, only 2.4 per cent of them goes into entrepreneurship upon graduation,” he told participants of the Global Entrepreneurship Week (GEW) in Kuala Lumpur on Monday. Also present at the opening were British High Commissioner Boyd McClearly, Kauffman Foundation senior fellow Paul Kedrosky and Warisan Global Sdn Bhd chief executive officer B. Dhakshinamoorthy. GEW is being held for the first time simultaneously in 75 countries including Malaysia from November 17 to November 23 to catalyze entrepreneurship, especially among youth.

Paulson, Democrats Clash on Bailout for Homeowners
Treasury Secretary Henry Paulson rejected using the government’s financial-rescue program as a “panacea” for economic difficulties, clashing with lawmakers who want the funds to help beleaguered homeowners. “The rescue package was not intended to be an economic stimulus or an economic recovery package,” Paulson said in testimony to the House Financial Services Committee in Washington. The Troubled Asset Relief Program was designed to stabilize financial markets and the flow of credit and “is not a panacea for all our economic difficulties.”

GE Capital to Pare Jobs, Assets to Save $2 Billion
GE Capital, the lending arm of General Electric Co., will cut $2 billion in costs next year as it pares jobs, forms regional units and marks assets such as overseas home mortgages for possible sale amid a global financial crisis. The changes include a newly created chief operating officer post and take effect Jan. 1, the Fairfield, Connecticut-based company said today on its Web site. GE Capital will shed an unspecified number of its 75,000 jobs as the unit consolidates back offices and curbs lending in areas such as residential mortgages, Vice Chairman Michael Neal said in an interview.

Australian Economic Index Falls as Recession Looms
Australia’s leading economic index fell in September, signaling the nation may slip into a recession, ending 17 straight years of economic expansion. The leading index, a gauge of future economic growth, fell 1 percent to 258.4 points, Westpac Banking Corp. and the Melbourne Institute said in Sydney today. The annualized growth rate of the index slowed to 1.1 percent from 2.5 percent in August. “This is a disturbing fall in the growth rate,” said Bill Evans, Sydney-based chief economist at Westpac. “Growth in the first half of 2009 will be barely positive, with a decent risk the first two quarters of growth in 2009 could be negative.”

Nissan Says Second-Half Profit Will Fall to `Zero’
Nissan Motor Co., Japan’s third- largest automaker, said profit in the second-half will go to “zero” because of lower sales in the U.S. and a stronger yen. Chief Executive Officer Carlos Ghosn made the comments in an interview with the Wall Street Journal, which were confirmed by Nissan spokesman Simon Sproule. Last month, the company forecast second-half net income of 33.7 billion yen ($348 million) and operating profit of 78.4 billion yen. The yen has gained 16 percent against the dollar and 34 percent against the euro this year, eroding Tokyo-based Nissan’s overseas earnings. Lower demand for Sentra small cars and Pathfinder sport-utility vehicles drove the carmaker’s U.S. sales down 34 percent in October as the industry heads to
the lowest annual tally in 15 years.

ECONOMY HIGHLIGHTS

U.S. Economy: Producer Prices Drop Most on Record
Prices paid to U.S. producers plunged in October by the most on record as the faltering global economy caused demand for commodities to dry up. The 2.8 percent drop was larger than forecast and followed a 0.4 percent decline in September. The figures from the Labor Department came after the U.K. reported the biggest decrease in its inflation rate in at least 11 years, signs that deflation may be added to the list of
economic challenges facing President-elect Barack Obama in January. A collapse in demand is forcing companies including Dow Chemical Co., the largest U.S. chemical maker, to charge lower prices and has brought automaker General Motors Corp. to the brink of bankruptcy. Central banks are likely to keep cutting interest rates, with some benchmarks approaching zero percent, as a global recession increases the
threat of deflation.

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TM International | Higher risks and debt weigh on valuations CLSA: It has been bad, now looking ugly

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