December 9, 2008 Daily Highlights
Closed for Public Holiday on December 8.
Asian stocks and U.S. futures rose yesterday as U.S. President-elect Barack Obama pledged the biggest public works program in about 50 years and India cut interest rates. Japan’s Nikkei 225 Stock Average advanced 5.2 percent to 8,329.05. China’s CSI 300 Index advanced 4.1 percent, a sixth- straight gain and its longest winning streak this year, amid optimism an annual government economic conference that starts today will spur measures to stimulate growth. Hong Kong’s Hang Seng Index surged 8.7 percent, while South Korea’s Kospi Index climbed 7.5 percent. Australia’s S&P/ASX 200 Index jumped 4.1 percent, led by Santos Ltd., the country’s third-biggest oil and gas producer, on takeover speculation. Most markets in the region advanced, with Singapore,
Indonesia and Malaysia closed for public holidays. Governments worldwide have introduced measures this year to buttress their economies from the worst financial crisis since the Great Depression.
Stocks rose around the world, sending the Dow Jones Industrial Average to a one-month high, as President-elect Barack Obama pledged to boost the economy with the biggest public-works spending package since the 1950s. The Standard & Poor’s 500 Index extended its gain from an 11-year low last month to 21 percent. U.S. Steel Corp. and Alcoa Inc. climbed at least 17 percent, while Chevron Corp. added 4.9 percent, as Obama’s plan to improve infrastructure triggered gains in commodities. General Motors Corp. jumped 21 percent as lawmakers agreed in principle with the White House to provide funds to shore up the car industry. “Hopefully it helps get the economy turned around, jumpstarting private spending with public spending,” said Bill Stone, who helps oversee about $56 billion as chief investment strategist at PNC Wealth Management in
Philadelphia. “That’s the whole point of this is to try to get that jumpstart going.” The S&P 500 surged 3.8 percent to 909.7, with all 10 industry groups advancing. The Dow added 298.76 points, or 3.5 percent, to 8,934.18 and earlier rose above 9,000 for the first time in a month. The Nasdaq Composite Index increased 4.1 percent to 1,571.74. Five stocks gained for each that fell on the New York Stock Exchange.
Bumpy ride ahead for Proton
The automotive market is expected to be sluggish next year due to a slower economic expansion, but Proton Holdings Bhd appears to be operationally weak in entering into this slowdown.It reported a small operating loss of RM670,000 in its second quarter ended Sept 30, a deterioration from the small operating profit of RM13.5mil in the preceding quarter.This is in contrast with the other large automotive companies’ results which peaked in their third quarter (Q3) in September. This was true, for instance, for UMW Holdings Bhd’s automotive division which reported an operating profit of RM265mil, its highest quarterly profit this year.Likewise, Tan Chong Motor Holdings Bhd announced an operating profit of RM118mil in its third quarter, also its best quarterly result this year.It’s therefore surprising that Proton’s operating results deteriorated – its operating expenses exceeded operating revenue by RM670,000 in its September quarter. It is believed the loss from its manufacture and sale of cars was partly due to its exports – its cars were sold at a lower price overseas.
NatBio’s restaurant venture boosts brand
Natural Bio Resources Bhd (NatBio) expects its latest venture into restaurants and introduction of vending dispensers to further strengthen its brand.Executive director See Thuan Po said the company recently started its own restaurant and was also leasing out vending dispensers under the AliCafe brand in public places such as restaurants and convenience stores.“We plan to launch our second AliCafe restaurant in Kelana Mall (in Petaling Jaya) on Dec 16 and probably another outlet in USJ (Subang Jaya) by the first quarter of next year, depending on how well our second outlet fares,” he told Starbiz.NatBio, through its subsidiaries, is engaged in the manufacturing, marketing and distribution of the group’s ready-to-drink coffee, tea and energy beverages. Despite the economic downturn, NatBio is not holding back its marketing and branding plans as it sees them as essential to increasing awareness of its brand name.See said returns from its restaurant line would not be high but would enhance the company’s branding in a big way.“We believe that customers who have tried our coffee in our restaurants would want to buy our coffee
when they go to supermarkets or anywhere else. It will slowly become part of their lifestyle,” he said.
Ireka laying groundwork for projects in Vietnam
IREKA Corp Bhd, which has over RM500 million worth of construction jobs in hand in Sabah and the Klang Valley, is preparing to work on new projects next year including in Vietnam.Its associate firm, London-listed Aseana Properties Ltd, is finalising the master layout plan for approval for a 32ha seafront resort and residential development in Kota Kinabalu, Sabah, worth more than US$200 million (RM728 million).The project will be developed in two phases, which involve building villas, a hotel and resort homes, executive director Lai Voon Hon said.”We are
currently working on the submission of plans and will assess the market conditions before launching this project,” he told Business Times.
MAS needs to focus on recovery programme
Weaker economic conditions and a growing number of distressed airlines globally have prompted many to ask if Malaysia Airlines (MAS) plans to buy up airline assets that are now going cheap or consider entering into a merger.But, while the scenarios are interesting, the airline and the Government may not be ready for such a move.Recently, there was talk of MAS joining in the high profile British Airways (BA) and Qantas merger talks, but earlier there had even been suggestions that MAS could acquire AirAsia Bhd that is seeking to go private itself.An analyst
covering the airline sector said it might be better for MAS to focus on continuing its recovery before contemplating a merger so soon.
Congress, White House Near Agreement on Auto Aid Plan
Congressional Democrats sent President George W. Bush a draft proposal for a $15 billion, short-term rescue of U.S. automakers and said it will likely be voted on this week. The plan would require the president to appoint a person or board to oversee long-term restructuring of the auto industry as a condition for receiving federal aid. Final details are yet to be worked out and White House officials said they don’t agree with all parts of the legislation. The plan would make General Motors Corp., Ford Motor Co. and Chrysler LLC eligible for loans. GM and Chrysler have said they need the money to keep operating through the end of March. The House may vote Dec. 10 on the measure, House Democratic leaders said. Automakers must take major steps to make themselves financially viable in order to remain eligible for funds, House Speaker Nancy Pelosi said.
U.K. November Housing Sales Fall to 30-Year Low, RICS Says
U.K. home sales declined to the lowest level since at least 1978 as Britain plunged deeper into a recession, the Royal Institution of Chartered Surveyors said. Real-estate agents and surveyors sold an average of 10.6 homes in the quarter through November, the least since the series began three decades ago, RICS said today. A separate report showed retail sales fell in two consecutive months for the first time since at least 1995. The Bank of England last week reduced the benchmark interest rate to 2 percent, the lowest in a half-century, as policy makers sought to prevent deflation from taking hold in the economy.
Thailand Expects Unemployment to More Than Double Next Year
Thailand’s unemployment rate may morethan double next year as companies cut jobs amid weakeningdemand for exports and political turmoil.At least 900,000 people will be unemployed in 2009,according to the National Economic & Social Development Board,the government’s planning agency. That’s about 2.5 percent ofthe total workforce, Suwannee Khamman, deputy secretary-generalof the agency, said in Bangkok today.“This forecast doesn’t include the impact from the airport closure,” Suwannee said. “We will review our forecast becausethe airport closure has hurt tourism and related industries.”Anti-government protesters ended their eight-day blockageof the country’s main international airport on Dec. 3 followingthe removal of
Prime Minister Somchai Wongsawat. The siegeparalyzed Thailand’s tourism industry in its peak season,stranding as many as 400,000 travelers.
Japan’s Economy Shrank 1.8% Last Quarter, Revised Figures Show
Japan’s economy shrank in the third quarter faster than the government initially estimated, after businesses made deeper-than-expected spending cuts. Gross domestic product contracted at an annual 1.8 percent pace in the three months ended Sept. 30, the Cabinet Office said today in Tokyo, more than the 0.4 percent reported last month. Economists surveyed by Bloomberg predicted a 0.9 percent decline. Japan’s first recession since 2001 is deepening as companies cut production, jobs and spending in anticipation exports will keep falling. A Bank of Japan survey next week will probably show sentiment among Japan’s largest manufacturers falling the most in 34 years, economists predict.
Obama to Spur Economy With Infrastructure Investment
President-elect Barack Obama is focusing his economic recovery strategy on making the biggest investment in the nation’s infrastructure since President Dwight D. Eisenhower created the interstate highway system a half- century ago. Speaking yesterday at a Chicago news conference and on NBC’s “Meet the Press,” Obama said state governors have many such projects that are “shovel ready,” meaning they could be undertaken swiftly and have an immediate impact on jobs. He declined to specify a price tag for the stimulus, saying his advisers are “busy working, crunching the numbers, looking at the macroeconomic data to make a determination as to what
the size and the scope of the economic recovery plan needs to be. But it is going to be substantial.”
Entry filed under: Business, Finance, Stock Market. Tags: 2008, Alcoa Inc., Chevron Corp, Daily Highlights, December, Dow Jones Industrial Average, General Motors Corp, Hang Seng Index, KLCI Update, MARKET REVIEW, nikkei, U.S. Steel Corp.