November 20, 2008 Daily Highlights

December 1, 2008 at 1:59 am Leave a comment

MARKET REVIEW

KLCI Update
MALAYSIAN shares extended a seven-day low amid a bearish market as investors remained cautious over the gloomy economic outlook, dealers said. “The overnight rise on Wall Street somewhat helped the key index to rebound at the opening today,” a dealer said yesterday.”However, it was unable to sustain the gains from the afternoon session until closing, as profit-taking emerged over continued worries on the prospects of the global economy,” the dealer added.At close market barometer Kuala Lumpur Composite Index (KLCI) tumbled by 0.62 per cent or 5.44 points to 877.65, led by losses on index-linked counters. The key index had opened 0.88 of a point higher at 883.97.

Regional Update
Asian stocks fell for a third day, led by financial companies and commodity producers, as Sumitomo Mitsui Financial Group Inc. planned to raise cash and Oz Minerals Ltd. said earnings may decline. Sumitomo Mitsui, Japan’s third-largest bank, fell 7.9 percent on a plan to raise 400 billion yen ($4.1 billion) to replenish capital as Japan’s recession drives up bankruptcies and bad loans.Babcock & Brown Ltd., the worst performer on the MSCI Asia Pacific Index this year, lost 19 percent in Sydney after saying it will hasten jobs cuts to avoid debt default.

US Stocks
U.S. stocks sank and benchmark indexes slid to their lowest levels since 2003 on growing concern over the health of the financial system and survival of the nation’s car industry. Citigroup Inc. tumbled 23 percent to $6.40, a 13-year low, on a plan to buy $17.4 billion of troubled investment-fund assets. General Motors Corp. slid 9.7 percent to its lowest price since the 1940s, while Ford Motor Co. lost 25 percent. Fourteen
companies in the Standard & Poor’s 500 Index fell 20 percent or more as government data signaled the recession is deepening and expectations grew that insurers will post more investment losses. The S&P 500 plunged 6.1 percent to 806.58 and extended its 2008 retreat to 45 percent, poised for its worst year since 1931. The Dow Jones Industrial Average lost 427.47 points, or 5.1 percent, to 7,997.28.

MEDIA HIGHLIGHTS

Strong bookings to fuel AirAsia’s revenue
AirAsia Bhd is poised for a record fourth-quarter revenue, driven by a blistering pace of bookings for its flights. “I think bookings are at a record pace … it’s such a record pace that our computer systems crashed on the first day,” AirAsia chief executive officer Datuk Seri Tony Fernandes told Business Times in Kuala Lumpur yesterday.The airline industry is not in good shape as a slowing global economy has hurt demand for travel amid high fuel prices.Although this is changing, falling fuel prices present another problem as airlines had locked in prices with hedging contracts to deal with price volatility. This means that carriers could be stuck with hedging losses.AirAsia’s second-quarter net profit plunged almost 95 per cent due mainly to foreign exchange losses and its third-quarter numbers are not out yet.Fernandes, however, expects the airline to remain profitable this year, despite provisions and costs which will be incurred.AirAsia will make provision for losses from the collapse of Lehman Brothers investment bank.

Cut resources diligently, firms told
Deputy Prime Minister Datuk Seri Najib Tun Razak reminded companies to be careful when cutting costs, especially in manpower, because skilled resources are important for their long-term competitiveness. “Experience has shown that it is difficult to rebuild skilled resources when the economy rebounds,” he said in his speech at the CFO (chief financial officer) Conference 2008 in Kuala Lumpur yesterday.Najib’s speech was read by Second Finance Minister Tan Sri Nor Mohamed Yakcop.Najib, who is also Finance Minister, said the global financial crisis has created a pool of unemployed resources, which consists of highly skilled and
knowledge workers.”Companies must proactively look at employing such workers and continue building up their human capital capabilities,” he said.Later, Nor Mohamed said retrenchment is not expected to be as bad as it was during the Asian financial crisis.”Things happened so fast in such a short period of time, the stock
market collapsed, the ringgit collapsed, confidence was shaken, there was a turmoil for us,” he said.This time around, the government is more prepared and has set up RM300 million fund for workers to upgrade their skills. “The government feels that with the stimulus package and the training fund, we should be able to minimise the unemployment,” he said.

SC okays licence for India, Kuwait fund managers
TWO more foreign Islamic fund managers have obtained licences to operate in Malaysia as the country gears up to be a global centre for Islamic fund management activities, says Deputy Prime Minister Datuk Seri Najib Tun Razak.The Securities Commission has approved India’s Reliance Asset Management and Kuwait-based
Global Investment House, and is currently reviewing applications made by other foreign financial institutions.Najib said this was part of the ongoing liberalisation measures in the capital markets and to complement the broader Malaysia International Islamic Financial Centre initiatives.

Chinese tourist arrivals to Malaysia pushing 1m mark
Malaysia’s aggressive promotion in China is pushing tourist arrivals from the world’s fastest growing market closer to the one-million target. The number of Chinese nationals visiting Malaysia between January and October had already surpassed that for 2007, Deputy Tourism Minister Datuk Seri Sulaiman Abdul Rahman Abdul Taib said Wednesday. “As of October, we have received over 800,000 visitors. Basically, we are getting an average of 70,000 coming in every month,” he said today. Tourism Malaysia figures show that arrivals from China in the first 10 months grew 27.3 per cent to 802,956 with 74,780 visiting in October alone, nearly 25 per cent up from October last year. Last year, nearly 790,000 Chinese visited Malaysia on the back of Visit Malaysia Year 2007. The deputy minister is here to attend China’s biggest tourist show, the China International Travel Mart (CITM 2008), which begins tomorrow.

Buffett’s Berkshire Falls Most in at Least 23 Years
Warren Buffett’s Berkshire Hathaway Inc. fell the most in at least 23 years, dropping for the eighth straight day since reporting a 77 percent decline in third- quarter profit. The stock plunged $11,550, or 12 percent, to $84,000 in New York Stock Exchange composite trading and has slipped 41 percent this year, compared with the 45 percent drop in the Standard & Poor’s 500 Index. Berkshire, based in Omaha, Nebraska, rose
in 17 of the past 20 years.

Barclays Sues Ritchie Funds Over Petters Investment
Barclays Bank Plc sued hedge fund manager Ritchie Capital Management and its principal, Thane Ritchie, accusing them of concealing more than $150 million in investments made in the collapsed Petters Group Worldwide LLC and affiliates. Now bankrupt, Petters Group, based in Minnetonka, Minnesota, was raided in September by FBI agents acting on information that the company may have cheated at least 20 investors. Principal Tom Petters, accused of leading a $2 billion fraud, is being held without bail in a Minnesota jail.

South Korea Likely to Cut Interest Rate Further, Institute Says
South Korea’s central bank is likely to cut interest rates further to protect the economy from the global slowdown, according to the head of the Korea Development Institute. “I believe the Bank of Korea will cut rates; the central bank has already said it can,” Hyun Jung Taik, president of the state-run researcher, said in an interview from Seoul on Nov. 18. “The Bank of Korea should increase liquidity further. Even though it has
cut rates a lot, rates in economies like the U.S., England, Europe and Japan are much lower.”

Isuzu to Cut 1,400 Temporary Jobs, Truck Production
Isuzu Motors Ltd., Japan’s largest maker of light-duty trucks, will cut temporary and part-time workers and reduce output from next month as demand falls. Isuzu will terminate 1,400 temporary and part-time workers’ contracts by the end of the year and cut one shift at a truck plant in Fujisawa, Japan from next month, spokesman Naoki Ariizumi said today in a phone interview.

ECONOMY HIGHLIGHTS

U.S. Economy: Consumer Prices Fall as Deflation Looms
The cost of living in the U.S. fell by the most on record and construction began on the fewest homes ever last month, evidence the economy is in the worst recession in at least a quarter century. The consumer price index plunged 1 percent last month, the most since records began in 1947, the Labor Department said in Washington. Commerce Department figures showed housing starts tumbled to an annual rate of 791,000, indicating the industry’s contraction may extend into a fourth year. Today’s CPI report signals deflation, or a prolonged price slide, may become another hazard facing Federal Reserve Chairman Ben S. Bernanke and President-elect Barack Obama. Deflation could worsen the economic downturn by making debts harder to
pay off and countering the impact of Fed interest-rate cuts.

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