December 2, 2008 Daily Highlights

December 2, 2008 at 8:34 am Leave a comment

MARKET REVIEW

KLCI Update
The KL Composite Index (KLCI) slipped into the red led by sell-off in blue chips like Sime Darby, Genting and Resorts World. Shares for Sime Darby fell sharply after the company cut its profits forecast by more than half for the current financial year ending June 2009. This was based on expectations of sharply lower crude palm oil prices. Sime Darby is the world’s largest oil palm plantation company. Its other businesses, including property and motor, are also expected to suffer as the economic downturn gathers pace in 2009. The stock fell 75 sen to RM5.10 on heavy volume. There was also mounting selling pressure on shares for Genting and Resorts World. Losses from Genting’s UK gaming operations dragged the company into the red in 3Q08. Market breadth was in the red throughout the trading day. At the close, losing counters outpaced gaining ones by a ratio of roughly seven to three. The KLCI ended the day nearly 18 points lower at 848.4.

Regional Update
Japanese stocks tumbled to the lowest level in almost two weeks as a drop in global manufacturing added to evidence the global recession is deepening. Kobe Steel Ltd., Japan’s fourth-largest maker of the metal, sank 7.4 percent after tripling production cuts on dwindling demand from car and ship makers. Honda Motor Co., which gets more than half its profit from North America, slid 6.9 percent after the yen strengthened against the dollar. Oil explorer Inpex Corp. fell 10 percent after crude plunged to a three-year low. U.S. manufacturing shrank last month at the fastest pace since 1982, coinciding with record drops in Europe and China.

US Stocks
The MSCI Latin America Index fell 7.6 percent yesterday to 1,874.1. Brazil – Banco Sofisa SA (SFSA4 BS): The bank controlled by Brazil’s Burmain family may buy back up to 6 percent of outstanding shares during the next year, Sofisa said yesterday. The board approved the repurchase of as many as 2.25 million preferred shares. Sofisa fell 4 percent to 3.65 reais. Cosan SA Industria e Comercio (CSAN3 BS): The world’s biggest
sugar-cane processor said it will pay $715 million to acquire Exxon Mobil Corp.’s Brazilian service stations and other fuel-distribution assets. Cosan will also take over $175 million in debt held by Esso Brasileira de Petroleo Ltda as part of the previously announced deal, it said in a regulatory filing. Cosan fell 9.8 percent to 10.10 reais.

MEDIA HIGHLIGHTS

Petronas profit rises 46% in 1H
Despite falling oil prices, national oil company Petroliam Nasional Bhd (Petronas) continued to chalk up an impressive growth in net profit on the back of higher average prices of the commodity. Petronas posted a 46% year-on-year growth in net profit to RM42.68 billion for the first half (1H) of its financial year ending March 31, 2009 from RM29.27 billion, after paying tax expense of RM20.5 billion. Revenue was sharply higher at RM157.2 billion versus RM102.8 billion a year ago. Pre-tax profit soared nearly 49% to RM63.26 billion from RM42.57 billion previously. Higher earnings boosted Petronas’ cash pile to RM124.6 billion from RM113 billion as at March 31. The group’s other liabilities, however, shot up 47% to RM112.8 billion from RM76.9 billion in the previous corresponding period.

Bursa Trade Securities trading platform up and running
Bursa Malaysia’s new trading platform for the equities market was launched yesterday, providing greater accessibility for both local and international investors as well as enhancing trading efficiency and transparency in the market. “As the Malaysian marketplace progresses, we must leverage on new technologies to allow market users and investors access to more trading opportunities,” he said, noting
that greater speed, access and control in trading was a notable trend in global exchanges today. The first phase of Bursa Trade, powered by the NSC® trading system from NYSE Euronext, was implemented in 2006 for the derivatives market. NYSE Euronext co-global chief information officer Stanley Young said: “This
platform positions Bursa Malaysia on par with major international exchanges in terms of speed and functionality, but more importantly, it gives Bursa Malaysia the flexibility to bring new products and services to the market.”

Public Bank signs money market deal with Uzbekistan’s central bank
Public Bank Bhd has signed a money market deposits agreement with the Central Bank of the Republic of Uzbekistan. In a statement yesterday, Public Bank said the agreement would facilitate placements of money market deposits by Uzbekistan’s central bank with the Malaysian banking group. It said the signing of the agreement was also testimony of its growing reputation of strong capital position and superior asset quality that had enabled it to attract depositors from afar. “Notwithstanding the current global scenario where financial institutions are under severe liquidity duress, well managed Malaysian banks such as Public Bank continue to generate favourable interest from foreign depositors,” it said.

KNM aborts €20m purchase of Belgium’s Ellimetal
KNM Group Bhd has terminated plans to buy Belgium-based Ellimetal NV for €20 million (RM91.7 million) after the vendor was unable to fulfil one of the conditions in the master agreement signed in January this year. “The key objective for KNM in most acquisitions is to acquire the expertise of the target companies. In this case, the owner and the key management team are not staying in the company after KNM’s take over,” a company official told The Edge Financial Daily. He added that the owner wanted to retire because of old age and the rest of the key personnel were reluctant to continue under a different owner. Under the agreement signed earlier, Ellimetal managing director Lambert Geerkens was required to continue serving in the same capacity for two years. Similarly identified key personnel needed to sign a minimum of two years service contract with the company from the date of completion of the acquisition.

Boeing Engineers Approve 4-Year Labor Contract, Avert Strike
Boeing Co. engineers accepted a four- year contract offer, averting a possible second strike this year at the world’s No. 2 commercial-aircraft maker. The contract was approved by 79 percent of the engineers and 69 percent of technical workers in mailin ballots, the Society of Professional Engineering Employees in Aerospace said on its Web site last night. The union represents about 20,500 workers, mostly in Boeing’s
manufacturing home in Washington state.

Sales Rose 1.9% in 2 Days After Thanksgiving, ShopperTrak Says
Sales at U.S. retailers rose 1.9 percent in the two days following the Thanksgiving holiday, ShopperTrak RCT Corp. said, as a decline on Nov. 29 further damped the smallest Black Friday gain in three years. Retailers slashed prices up to 70 percent following the holiday to draw in shoppers who have cut spending because of rising joblessness and the worst housing slump since the Great Depression. Earlier and larger discounts may have prompted shoppers to complete more of their gift purchases sooner.

Shell, Anglo to Delay A$5 Billion Clean Fuels Project (Update2)
Royal Dutch Shell Plc and Anglo American Plc have delayed plans to develop a A$5 billion ($3.2 billion) project in Australia to convert coal into clean fuels, citing higher costs. The partners will extend studies into the proposed plant rather than move forward toward development, Roger Bounds, project director at the Monash Energy Holdings Ltd. venture, said in an e-mail. They still believe coal-to-liquids provides a
“long-term” opportunity for the brown coal resources in Australia’s Victoria state, he said.

Asian Money Costs Climb as Deepening Recession Curbs Lending
Asian money-market rates rose as the deepening global recession undermines banks’ willingness to lend, prompting central banks to extend interest rate cuts. The Tokyo three-month interbank offered rate, or Tibor, climbed to a 10-year high and Hong Kong’s Hibor jumped the most since Oct. 28. The Reserve Bank of Australia slashed borrowing costs today to the lowest level since 2002, adding to the biggest round of cuts since 1991. The Bank of Japan decided to adopt temporary measures to help companies obtain funds at an emergency board meeting in Tokyo.

ECONOMY HIGHLIGHTS

Swiss Central Bank Looks for Tools in Zero Interest-Rate World
The Swiss National Bank is becoming the first central bank in Europe to learn what it’s like to live in a zero interest-rate world. “They simply don’t have much room left on interest rates” following a 100 basis-point cut Nov. 20, said Reto Huenerwadel, senior economist at UBS AG in Zurich. “Still, they’re actively using monetary policy and are looking for creative solutions,” which may include buying bonds, intervening in
currency markets and expanding swaps with other central banks, he said. With Switzerland following the rest of Europe into recession, the central bank has cut the short-term rate it uses to steer borrowing costs in the broader economy to 0.1 percent.

Geithner to Stay at New York Fed for ‘Several Weeks’ (Update1)
Federal Reserve Bank of New York President Timothy Geithner, the nominee for U.S. Treasury secretary, will stay in his position for “several weeks” while leaving the Fed committee that sets the main U.S. interest rate. Christine Cumming, the New York Fed’s first vice president, will attend the Federal Open Market Committee’s Dec. 15- 16 meeting in Geithner’s place and vote on the panel’s decision, the Fed said today. The central bank created a search committee today and will also hire a national search firm “very soon,” the New York Fed said in a statement.

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TM International 3QFY08 : Dialog and Aktel deeper into the red 27 November 2008 Newz Bits

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