December 10, 2008 Daily Highlights

December 10, 2008 at 6:19 am Leave a comment

MARKET REVIEW

KLCI Update
Malaysian shares were mixed at the end of trading yesterday after profit-taking pared earlier gains, particularly in banking and financial stocks, dealers said.The benchmark Kuala Lumpur Composite Index (KLCI) was down 3.11 points or 0.371 per cent to 835.17, dragged down by losses in Bumiputra-Commerce and Maybank.However, the losses were limited with Sime Darby lending support through gains, dealers said.The KLCI moved between 835.17 and 853.44 yesterday.ainers led losers by 268 to 213, while 185 counters closed unchanged, 584 were untraded and 33 counters suspended.Turnover was higher at 529.041 million shares worth RM791.057 million from last Friday’s closing of 316.971 million shares worth RM516.348 million.

Regional Update
Asian stock markets were mixed yesterday, with Tokyo rising despite grim economic data from Japan, as hope remained for fresh stimulus steps by the US government to fight recession.Japan’s Nikkei 225 Stock Average rose 0.8 percent to 8,395.87. Nomura Holdings Inc. led gains after people familiar with the situation said it will cut jobs in Asia. Sony Corp. climbed 3.9 percent before saying after the close it will reduce headcount by 8,000 and lower investment in electronics. Shanghai Shares closed down 2.54 per cent as concerns of weaker-than-expected November economic data due to be released this week weighed down sentiment, prompting profit-taking across the board. The benchmark Shanghai Composite Index closed down 53.03 points at 2,037.74. Thailand exchange closed 3.22 per cent higher as investors welcomed signs that Thailand was on its way to forming a new government after crippling protests. The composite index gained 13.21 points to close at 423.79 while the blue-chip SET-50 index rose 11.16 points to 298.25.

US Stocks
U.S. stocks slid, halting a two-day advance, after companies from FedEx Corp. to Danaher Corp. forecast earnings that disappointed investors as the deepening recession crimps sales. The S&P 500 ost 2.3 percent to 888.67, extending declines late in the day as a drop in oil snuffed out gains in energy shares. The Dow Jones Industrial Average declined 242.85 points, or 2.7 percent, to 8,691.33 and the Nasdaq Composite Index slipped 1.6 percent to 1,547.34. About three stocks fell for each that rose on the New York Stock Exchange.

MEDIA HIGHLIGHTS

Trading in Oilcorp shares resumes today
TRADING in shares of Oilcorp Bhd will resume trading today after the company submitted all of its delayed accounts. Oilcorp told Bursa Malaysia yesterday that it has submitted the re-audited accounts for the financial year ended December 31 2007, the annual report for 2007 as well as the first and second quarterly reports for the current financial year. Trading in the counter had been suspended since May 20 this year, pending a re-audit of the company’s accounts for 2008 after the discovery of discrepancies.

Sarawak planters hit rough patch
Many Sarawak-based plantation companies are facing tough sales and operational conditions following the drastic drop in crude palm oil (CPO) pricesThese planters, being late entrants to the oil palm sector, currently have a combined mature area of about 20% or 103,678ha, unlike their counterparts in Peninsular Malaysia and Sabah with about 86% and 59% mature areas respectively.A plantation analyst said that planters in the peninsula and Sabah had enough hectarage of profitable harvesting area to be financially ndependent but Sarawak planters, given their shortage of mature areas, mostly could not cover their CPO sales and high cost of production.The remaining 80% of young palm areas in Sarawak also need huge capital injections, resulting in some planters having huge bank borrowings.With the current CPO price at RM1,500 a tonne, Sarawak planters are finding it difficult to service their loans. They are also saddled with rising fertiliser and chemical prices and CPO taxes imposed by the Federal and state Governments.

Tanjong said to be potential takeover target
Shares in Tanjong Plc hit a five-month high yesterday as talk resurfaced about the company being a potential takeover target.Dealers said rumours had been rife since last week that Tanjong’s major shareholder Usaha Tegas Sdn Bhd (UTSB) may offer to buy Tanjong’s gaming operation or take it private.The stock rose 30 sen, or 2.2%, to close at RM14.10 with 1.85 milion shares traded. At this level, the company is valued at just below RM5.7bil.A Tanjong spokesman said: “The company never comments on market speculation.’’Shares in Tanjong have risen almost 20% over
the past two weeks, which contrasts with the KL Composite Index’s 2.3% drop over the same period.“If the major shareholder plans to buy out Tanjong, not many people would hear about it until it has actually happened,’’ a Kuala Lumpur-based stockbroker said.

Mycron sees 15% rise in overseas revenue
Mycron Steel Bhd is looking to expand the revenue contribution from its overseas market to about 15% over the next three years, boosted by growing requests for cold-rolled coils (CRC) from abroad.Chief executive officer Azlan Abdullah expressed hopes of diversifying the company’s customer base as the domestic market currently contributed about 97% to its revenue.“We are now exporting CRC in small volumes to Sri Lanka, Vietnam and Indonesia,” he told reporters after the company’s AGM yesterday.He said that following the global financial crisis, the regional market price for hot-rolled coils (HRC), the base raw material for the manufacture of CRC, had tumbled from US$1,100 per tonne to US$600 per tonne in September.“The regional price for CRC has followed suit, falling from US$1,250 to US$750 per tonne,” he said.

U.S. Automaker Bailout Stalled on Lawsuits, Viability
Congressional approval of a $15 billion U.S. automaker bailout is stalled over disputes including whether the companies should be required to drop lawsuits challenging environmental rules. The lawsuits are “one of the issues we’re talking about,” House Financial Services Chairman Barney Frank told reporters. The disagreements don’t appear to be “of a sufficient nature to blow this thing up,” said Frank, a Massachusetts Democrat. Senate Majority Leader Harry Reid said the Senate isn’t likely to act tonight and warned lawmakers may be in session this weekend if objections are raised to voting earlier. “Everyone should understand we’re going to work until we complete this,” said Reid, a Nevada Democrat, on the Senate floor. General Motors Corp. and
Chrysler LLC have said they need at least $14 billion in combined aid to keep from running out of cash by early next year.

Citigroup to Cut 1,000 Jobs at Japan’s Nikko Cordial
Citigroup Inc., the U.S. bank that’s eliminating 52,000 jobs worldwide, will shed about 1,000 workers at its retail brokerage unit in Japan, two company officials said. The workers at Nikko Cordial Securities Inc., which employs about 7,000 people, accepted Citigroup’s offer to take early retirement by a Dec. 8 deadline, the officials said, declining to be identified because a public announcement hasn’t been made.

Australian Consumer Confidence Increases on Rate Cuts
Australian consumer confidence rose in December for a second month, suggesting the nation’s most aggressive round of interest-rate cuts since 1991 may help stoke a recovery in household spending. The sentiment index jumped 7.5 percent to 92 points, according to a Westpac Banking Corp. and Melbourne Institute survey of 1,200 consumers conducted between Dec. 1 and Dec. 7 and released today in Sydney. The index has since February held below 100, which indicates pessimists outnumber optimists. Reserve Bank of Australia Governor Glenn Stevens cut borrowing costs by three percentage points since early September on concern waning consumer
spending will tip Australia into its first recession in 17 years.

Macquarie to Cut 600 More Jobs as Industry Shrinks, Union Says
Macquarie Bank Ltd. may slash an additional 600 jobs, adding to 200 it has already cut, as Australia’s finance industry shrinks for the first time in 13 years, according to the Finance Sector Union of Australia. The worsening global credit crisis has seen banks and brokerages fire 4,821 workers this year, union spokeswoman Leanne Shingles said. Australian commercial banks have made the deepest cuts, with Australia & New Zealand Banking Group Ltd. shedding 1,000 jobs, while Westpac Banking Corp. and its BT Investments unit fired 450 workers. Goldman Sachs Group Inc. has cut 10, Merrill Lynch & Co. 20, and UBS AG 50, the union said.

ECONOMY HIGHLIGHTS

Bank of Canada Cuts Lending Rate to Lowest Since 1958
The Bank of Canada lowered its benchmark interest rate by more than anticipated to a half- century low and signaled more action may be needed as economic growth sputters amid a “broader and deeper” global slump. Governor Mark Carney and his rate-setting panel slashed the target rate for overnight loans between commercial banks by three-quarters of a point to 1.5 percent, the lowest since 1958. Two of 23 economists surveyed by Bloomberg predicted the move, with 20 calling for a halfpoint cut and one calling for a quarter of a point. Canada’s economy “is now entering a recession,” the central bank said in a statement from Ottawa today, the first time it has made that assessment outright. “The Bank will continue to monitor carefully
economic and financial developments in judging to what extent further monetary stimulus will be required.” Since Carney said Nov. 19 that a recession was a possibility, reports have shown employment fell by 70,600 in November and housing starts on an annualized basis plunged 19 percent. Meanwhile, manufacturers such as General Motors Corp. are scaling back operations in Ontario, Canada’s industrial heartland, and lower commodity prices are paring investment in the western province of Alberta’s oil fields.

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9 December 2008 Newz Bits Sunrise 1QFY09 : A slow quarter

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