November 26, 2008 Daily Highlights

December 2, 2008 at 7:18 am Leave a comment

MARKET REVIEW

KLCI Update
Malaysian shares ended mixed yesterday amid positive sentiment that the 25 basis points cut in interest rate will help ease the cost of doing business, dealers said.The benchmark Kuala Lumpur Composite Index (KLCI) rose 4.79 points to end yesterday’s session at 860.18 after opening 6.46 points higher at 861.85 in the morning.The central bank on Monday decided to cut the Overnight Policy Rate (OPR), which has been kept
unchanged for about two years, to 3.25 per cent from 3.5 per cent.However, the dealers said there was no solid follow-through buying activities as many investors were still worried about the slowing down of the global economy.Investors were taking a shortterm view and will sell on strength amid the volatile market conditions

Regional Update
Asian shares rose, led by financial companies and commodity producers, as the U.S. government’s rescue of Citigroup Inc. shored up confidence in banks and the world’s biggest economy. Japan’s Nikkei 225 Stock Average advanced 5.2 percent to 8,323.93. The country’s markets were closed yesterday for a holiday. Australia’s S&P/ASX 200 Index jumped 5.8 percent, its biggest gain since October 1997, led by BHP. All other
benchmark gauges in the region rose, except in China and India.

US Stocks
U.S. stocks climbed and the Standard & Poor’s 500 Index posted its first three-day advance since September after the Federal Reserve committed as much as $800 billion to help resuscitate lending. The S&P 500 added 0.7 percent to 857.39, extending its rebound from an 11-year low on Nov. 20 to 14 percent. The Dow Jones Industrial Average increased 36.08 points, or 0.4 percent, to 8,479.47. The Nasdaq Composite Index slipped 0.5 percent to 1,464.73. Almost two stocks rose for each that fell on the New York Stock Exchange. “The S&P 500 yesterday capped its biggest two-day gain since 1987 as confidence in the financial system was boosted by the government’s guarantee of troubled assets at Citigroup Inc. and President-elect Barack Obama announced his team of financial advisers. Obama’s picks included Fed Bank of New York chief Tim Geithner as Treasury secretary and former Harvard University President Lawrence Summers as White House economic director.

MEDIA HIGHLIGHTS

MISC aborts bid for Ramunia
MISC Bhd, via unit MSE Holdings Sdn Bhd, has aborted a proposed RM3.2bil reverse takeover (RTO) bid for Ramunia Holdings Bhd “due to unsatisfactory due diligence findings”.In a statement to Bursa Malaysia yesterday, MISC said MSE Holdings Sdn Bhd had elected to terminate the conditional sale and purchase
agreement (SPA) with Ramunia, with immediate effect.“MSE Holding has, in accordance with the terms of the SPA, elected to terminate the SPA due to unsatisfactory due diligence findings,” MISC said.However, MISC, the largest shipping company in the country, did not specify what the unsatisfactory findings were.The corporate exercise, if successful, would have seen MISC emerge as Ramunia’s largest shareholder with an effective 76% stake.The reverse takeover bid involved Ramunia acquiring MISC’s wholly-owned unit, Malaysia Marine and
Heavy Engineering Sdn Bhd (MMHE).In a separate statement yesterday, Ramunia said it had received a letter from MSE Holdings informing Ramunia that the latter would not proceed with the RTO bid.

Zeti: Full effects of global crisis could be felt next year
The full effects of the global economic crisis could be felt on emerging economies in the first half of next year, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said.“We are monitoring growth in the fourth quarter very closely and the first half of next year when probably, the full effects of the crisis taking place in the developed countries will have an effect on the emerging economies,” she said.“Right now even in the third quarter, we have already seen the effects on our export sector,” she told reporters after the launch of HSBC Amanah Malaysia Bhd yesterday.She said given Malaysia’s strong growth in the first half of this year, it was very likely that the growth for the full year would be between 5% and 5.5%.

Maybank and CIMB reduce lending rate
Malayan Banking Bhd and CIMB Group have reduced their base lending rates (BLR), effective from Dec 1, following the move by Bank Negara to lower the overnight policy rate (OPR).Maybank said yesterday it had reduced its BLR by 25 basis points from 6.75% to 6.5% effective Dec 1.Maybank Islamic Bhd’s base financing rate (BFR) would also be revised downward by 25 basis points from 6.75% to 6.5% effective Dec 1.CIMB Group said CIMB Bank Bhd and CIMB Islamic Bank Bhd would reduce both their BLR and BFR by 25 basis points to 6.5% with effect also from Dec 1.The two banking groups said their decision was made following Bank Negara’s move to lower the OPR by 25 basis points to 3.25%.“It is a decisive step to the advantage of our borrowers as well as a means to spur economic and business growth for the various sectors,” Maybank’s president and CEO Datuk Seri Abdul Wahid Omar said.He added that Maybank and Maybank Islamic would continue to review the market environment and provide customers more financial support in these difficult times.

Market expects more interest rate cuts
More rate cuts are expected following Monday’s move to reduce the overnight policy rate (OPR) by 25 basis points to 3.25%.Bank Negara has the flexibility to cut rates further in view of the wide interest rate differentials in the ringgit’s favour, said Lee Kok Kwan, group treasurer, CIMB group.‘‘I think it (the cut in OPR) is a good move as it will offset some of the effects of the global slowdown.“Also, central banks in the
western economies have reduced interest rates very significantly resulting in wider and wider interest rate differentials in the ringgit’s favour and this has given Bank Negara significant flexibility to reduce interest rates now,’’ he said.The ringgit has been firm compared to other regional currencies, having strengthened against most western currencies with the exception of the US dollar.

Fed Commits $800 Billion More to Unfreeze Lending
The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion. The central bank will purchase as much as $600 billion of debt issued or backed by government-chartered housing-finance companies. It will also set up a $200 billion program to support consumer and small-business loans, the Fed said in statements today in Washington. With today’s announcement, the central bank is starting to use some of the unorthodox policy tools that Chairman Ben S. Bernanke outlined as a Fed governor six years ago. Policy makers hope the initiatives will bring down the interest rates on mortgages and consumer loans, offsetting the withdrawal of private-sector financing.

Japan Manufacturers Probably Cut Production as Turmoil Deepened
Japanese manufacturers probably cut production in October as a worsening global financial crisis weakened exports of the country’s cars and electronics, economists predict a report will show this week. Factory output declined 2.5 percent from September, according to the median estimate of 33 economists surveyed by Bloomberg News. The Trade Ministry releases the figures on Nov. 28 at 8:50 a.m. in Tokyo.

South Korea’s Manufacturer Sentiment Declines to 10-Year Low
South Korean manufacturer confidence sank to the lowest level in more than 10 years on concern global financial turmoil will weaken demand, a report showed. An index measuring expectations for December fell to 52 from 65 the previous month, according to a survey of 1,409 companies released by the Bank of Korea in Seoul today. A score lower than 100 means pessimists outnumber optimists. December’s forecast matched that of the second quarter of 1998. The central bank started compiling monthly data in 2003.

Yen Rises on Speculation Stock Losses Will Curb Carry Trades
The yen rose against the euro and the dollar as declines in Asian stocks prompted investors to pare holdings of higher-yielding assets funded in Japan. The currency also gained versus the Australian dollar and the British pound on speculation the Federal Reserve’s $800 billion plan to unfreeze credit markets won’t prevent a protracted global slump. The U.S. economy, the world’s biggest, shrank in the third quarter as consumer spending plunged the most in three decades, according to figures released yesterday.

ECONOMY HIGHLIGHTS

Consumer Confidence in U.S. Increased in November
U.S. consumer confidence unexpectedly rose in November from a record low as falling gasoline prices helped alleviate concerns about rising unemployment and tumbling financial markets. The Conference Board’s index of consumer confidence climbed to 44.9, the second-lowest reading since 1974, from 38.8 the prior month. A separate report showed home prices continued to drop in September, further undermining consumer spending. Consumers are retrenching amid increasing job losses, falling stock and home prices and the worst credit crunch in seven decades.
Still, falling gasoline prices and the end of the political uncertainty that preceded the presidential election this month may have comforted consumers, economists said.

U.S. Economy Shrank 0.5% in 3rd Qtr, Most Since ’01
The U.S. economy shrank in the third quarter faster than previously estimated as consumer spending plunged by the most in almost three decades. Gross domestic product contracted at a 0.5 percent annual pace from July through September, the most since the 2001 recession, according to revised figures from the Commerce Department today in Washington. The government’s advance estimate issued last month showed a 0.3 percent decline.

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26 November 2008 Newz Bits Asian Stocks Fall as Manufacturing Declines; Woodside, JFE Drop

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