December 3, 2008 Daily Highlights

December 10, 2008 at 3:30 am Leave a comment

MARKET REVIEW

KLCI Update
Equity markets in North Asia fared badly, with key indices in Hong Kong and Japan falling 5% and 6.4%, respectively. Markets in Southeast Asia fared relatively better, although still in the red. The local stock market was one of the most resilient, with minimal losses – albeit on thin volume. The relative strength of the local market is also partly due to the fact that we did not follow Wall Street’s rally last week, as investors reacted to corporate earnings and other local leads. The KLCI started the day 10 points lower, but ended with a small loss of just 2.7 points – closing at 845.8. Declining stocks beat advancing ones by a 1.8-to-1 ratio. Trading volume was, however, very thin at 388 million shares. Actively traded stocks include KNM, Resorts, Ramunia, Genting, Iris and
TM. Gainers include BAT, YTL and DiGi. Losers include Nestle, UMW, Public Bank local and foreign.

Regional Update
The S&P/ASX 200 Index rose 15.00 points, or 0.4 percent, to 3,543.20 at 12:50 p.m. in Sydney. The broader All Ordinaries Index gained 13.60 points, or 0.4 percent, to 3,487.00. Albidon Ltd. (ALB AU), an Australian company developing a nickel mine in Zambia, tumbled for a second day, after saying Managing Director Dale Rogers quit. The shares fell 4 cents, or 25 percent, to a record low 14 cents. Fusion Resources Ltd. (FSN AU), which explores for iron ore and gold in Australia, soared 11 cents, or 48 percent, to 34 cents, after receiving a takeover approach from Paladin Energy Ltd. Kagara Ltd. (KZL AU), an Australian zinc producer, rose 3 cents, or 5.5 percent, to 48 cents. The company announced “a further significant nickel intersection” at the Lounge Lizard project.

US Stocks
Brazilian stocks gained as weaker- than-expected industrial production prompted traders to increase bets the central bank will reduce interest rates. Banco Bradesco SA led a rally in banks on the prospect the slowing economy may lead to lower borrowing costs next year. Tam SA gained the most on the Bovespa after analysts said the recent decline in oil prices will boost earnings of the nation’s biggest airline. Net Servicos de Comunicacao SA and Companhia Energetica de Minas Gerais rose after UBS AG recommended that investors “remain defensive” and buy utilities, banks and cable shares.

MEDIA HIGHLIGHTS

Oil slumps 3% to 3½-year low on economy worry
Oil slid to a 3½-year low under US$48 (RM174.24) on Dec 2, extending the previous day’s sharp drop as signs grew the global economy is in worse shape than expected and after Opec opted to delay talks on further output cuts. Japan’s Nikkei average slid 5% on Tuesday, with exporters hit by a stronger yen after signs the US economy has been in a recession for a year heightened risk aversion. US light crude for January delivery fell US$1.43 to US$47.85 a barrel by 0342 GMT, the lowest since May 2005 and almost US$100 off the record US$147.27 peak reached in July. That followed an over 9% dive on Monday. London Brent crude dropped US$1.40 to US$46.57. Surging demand from emerging countries sent oil on a sixyear rally from 2002, but prices have tumbled since July’s all-time high above US$147 a barrel as economic turmoil erodes demand in top consumer the United States and other big developed nations.

Petrol down 10 sen from Wednesday
Pump prices for petrol will be down another 10 sen per litre from Dec 3, as global crude prices continued to ease. The new price of RON97 petrol will be RM1.90 per litre from midnight, down from RM2 per litre. This is below the RM1.92 pump prices were before the government’s move to raise prices by 41% or 78 sen to RM2.70 on June 4 this year, a decision that caused an uproar among consumers and sent inflation to record highs as food and transportation costs spiral. At the time global oil prices were trading above US$120 (RM435.60) per barrel. Today, oil prices are quoted at just under US$50 per barrel on the New York Mercantile Exchange. Pump prices for RON92 petrol will be reduced to RM1.80 per litre from RM1.90 per litre. Similarly, prices for diesel is also reduced by 10 sen to RM1.80 per litre.

HLB partners Amanah Raya on new trust deposit
Hong Leong Bank (HLB), the exclusive appointed agent of Amanah Raya Bhd, has launched the Hong Leong Invest Safe II. Hong Leong Safe II is a trust deposit for customers who make a placement that can potentially enjoy steady growth and enhance yield on their investments, the bank said in a statement ysterday. “The first product launched with Amanah Raya in 2006 generated positive response from the public. We exceeded RM500 million in sales and our customers have been happy with the returns. “On a gross basis, customers have been enjoying a steady return of 5% per annum. We’re confident the new product will equally excite our customers as we are targeting to deliver similar returns,” said Moey Tan, chief operating officer
for personal financial services. She said many customers favoured Invest Safe as it offers competitive dividends, compounding interest and the capital is protected.

Local entrepreneurs told to venture into aviation
The Entrepreneur and Cooperative Development Ministry is targeting to have more local entrepreneurs venture into the aviation industry through courses offered by the Malaysian Institute of Aviation Technology (MIAT) at Universiti Kuala Lumpur (UniKL). Its deputy secretary-general, Datuk Mohd Hashim Abdullah, said UniKL, established by MARA, not only provided training, but students were also exposed to business opportunities in aviation. “We do not want students to aim for jobs with the relevant companies after completing their course, but to think of how they can be entrepreneurs using the skills they possess,” he told a press conference after opening an international seminar on space industry and environmental issues here yesterday. Mohd Hashim said the world aviation industry was now worth US$5.6 billion (RM20.3 billion) a year and as such students should seize the opportunity to venture into the industry, not only as skilled workers but also as entrepreneurs.

Citigroup Said to Cut Most of Asia Real Estate Team After Slump
Citigroup Inc. fired most employees at its real estate investment banking team in Asia after slumping property prices stifled share sales and acquisitions in the industry, three people familiar with the matter said. The New York-based bank dismissed at least five people two weeks ago, the people said, declining to be identified because they aren’t authorized to discuss the matter publicly. Departures included Edmund Ho, a managing director who headed the team, and Director Edward Yeh, they said.

GM, Chrysler Seek ‘Emergency’ $15 Billion as Cash Drain Worsens
General Motors Corp. and Chrysler LLC told Congress they need $15 billion just to survive until next month, when President-elect Barack Obama takes office. Democrats pledged to keep them out of bankruptcy without saying how. U.S. lawmakers face a potential $34 billion bailout tab that is more than a third larger than the industry-aid request they set aside last month. A deepening auto slump also ratchets up the pressure on Congress to act by hastening GM’s rush to the brink of a default it says may come by Dec. 31. While Obama has said he favors an industry rescue, GM and Chrysler said yesterday they won’t be operating through January without the money stalled by a deadlock in Congress.

MEDIA HIGHLIGHTS

Tata Steel to Cut Costs as Slump Damps Sales, Prices (Update2)
Tata Steel Ltd., India’s biggest producer of the alloy, will pare staff and energy costs as it reduces output to combat a plunge in prices. The company plans to save at least 350 million pounds ($525 million) at its U.K.-based Corus Group unit and 3 billion rupees ($60 million) at its Indian operations by March 2009, Managing Director B. Muthuraman said in Mumbai yesterday. The credit crisis has stifled economic growth worldwide, damping demand for metals. Corus, which generates more than two- thirds of Tata’s output, said European steelmakers are facing a “tremendous challenge” after a collapse in global demand.

Hedge Funds Lower Fees, Lengthen Lockups on New Funds
Artradis Fund Management Pte, RAB Capital Plc’s Northwest unit and Cannizaro (Hong Kong) Ltd. are cutting fees and locking up investors’ money for longer in new hedge funds that will buy bonds after prices fell in Asia. Merrill Lynch & Co.’s prime brokerage unit has been approached by at least eight money managers about starting such funds in Asia to buy beaten-up fixed-income securities such as convertible bonds, said Eddie Guillemette, the firm’s regional co-head of global markets financing and services.

ECONOMY HIGHLIGHTS

India May Increase Spending, Lower Rates After Terror Attacks
India may boost public spending, increase export incentives and cut interest rates to support the economy after the country’s worst terrorist attack in 15 years last week undermined investor confidence, economists said. The government may establish a fund for investments in roads, power and ports, provide interest subsidies for housing and exports, and reduce the key repurchase rate by as much as 1.5 percentage points to 6 percent, The Economic Times reported today citing a government official it didn’t name.

China Property Slump Threatens Global Economy as Growth Slows
House prices in Shanghai, Shenzhen and Guangzhou are plunging, and the global economy may grind almost to a halt next year because of it. Construction of homes, offices and factories fell at least 16.6 percent in October after rising 32.5 percent a year earlier, according to Macquarie Securities Ltd. That’s squeezing an economy already slowed by recessions in the U.S., Japan and Europe that have cut demand for exports. Building is the biggest driver of China’s expansion, contributing a quarter of fixed- asset investment and employing 77 million people.

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3 December 2008 Newz Bits 5 December 2008 Newz Bits

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