December 12, 2008 Daily Highlights

December 12, 2008 at 6:48 am Leave a comment

MARKET REVIEW

KLCI Update
Share prices on Bursa Malaysia closed firmer yesterday on mild buying activities in selected heavyweights and lower liners, dealers said.They said this in turn helped push the Kuala Lumpur Composite Index (KLCI) to close at its highest level yesterday.The benchmark KLCI closed 6.02 points higher, or 0.704 per cent, at 860.68, boosted by gains mostly in Sime Darby, Bumiputra-Commerce, Maybank and Tenaga.The index, which moved between 851.1 and 860.68 during the whole session, was 0.7 point higher at 853.96 at the opening bell.

Regional Update
Most asian stocks rose yesterday, driving the region’s benchmark index to a fifth day of gains, as the U.S. moved closer to a $14 billion rescue of American car companies and South Korea cut interest rates to a record low. Japan’s Nikkei 225 Stock Average gained 0.7 percent to 8,720.55, paced by Honda. Australia’s S&P/ASX 200 Index fell 1.2 percent, led by Woolworths Ltd., after the jobless rate rose to the highest level in a year. Shanghai shares closed down 2.28 per cent after a key Beijing economic meeting failed to produce new measures to boost the economy. The benchmark Shanghai Composite Index closed down 47.44 points at 2,031.68. Korean shares closed 0.75 per cent higher on a bigger-than-expected rate cut, but concerns at the rapid worsening of the local and global economy capped further gains. The Kospi rose 8.56 points to 1,154.43. Thailand shares prices closed 0.19 per cent higher due to gains in big-cap banking and energy companies.The composite index edged up 0.82 points to close at 424.61 points while the
blue-chip SET-50 index gained 1.07 points to 299.32.

US Stocks
U.S. stocks declined the most in a week after lawmakers said a $14 billion plan to rescue the nation’s auto industry lacks the votes to pass the Senate and initial jobless claims jumped to a 26-year high. General Motors Corp. and Ford Motor Co. slid more than 10 percent. Bank of America Corp. slumped 11 percent and General Electric Co. tumbled 5.3 percent following government reports that 573,000 people applied for first-time unemployment benefits last week and the trade deficit grew 1.1 percent as exports decreased. The Standard & Poor’s 500 Index fell 2.9 percent to 873.59, with financial shares posting the biggest retreat among 10 industries. The Dow Jones Industrial Average decreased 196.33 points, or 2.2 percent, to 8,565.09.

MEDIA HIGHLIGHTS

Tanjong Q3 profit falls 45pc
TANJONG plc’s net profit for the third quarter ended October 31 2008 fell 45 per cent to RM97.1 million, due mainly to a RM55 million charge relating to the windfall levy on its Malaysian power plants.In a statement to Bursa Malaysia, the company said its gaming businesses also saw reduced contribution due to fewer draws and an increase in the prize payout ratio to 66 per cent from 62 per cent.However, the group’s revenue for the quarter increased by 42 per cent to RM987 million mainly due to additional contributions from the Globeleq power plants bought in November 2007.

Poll: Malaysia palm oil stocks to hit new peak
PALM oil stocks in Malaysia probably climbed 4.5 per cent in November to hit a record 2.18 million tonnes as slowing export growth outpaced production cuts, a Reuters poll showed yesterday.Output in the world’s second biggest producer of the vegetable oil, used in biofuel, food and cosmetics, slipped 3.2 per cent in November, the median forecast of five plantation houses showed.Poll respondents said production was trailing off after peaking in October at 1.65 million tonnes, due to a gradual slowdown in the production cycle and heavy rainfall that disrupted harvesting.Shipments of palm oil – mostly to China, India and the European Union –
inched up 4.8 per cent, continuing a trend of weak growth in the wake of a deepening global economic crisis.November’s palm reserves probably reached their highest in the 25 years since industry regulator the Malaysian Palm Oil Board (MPOB) started compiling data. MPOB will unveil data on November’s palm oil exports, production and exports today.

Dr M: Study, understand global financial crisis
THE Malaysian government must study and understand the complexities of the current global financial crisis when drawing up a plan as it would otherwise only reflect “cosmetic changes”, said former Prime Minister Tun Dr Mahathir Mohamad.Injecting a few billion ringgit into the economy was not the answer to counter the current global financial crisis which is of a more enormous size compared to the previous ones, he said.”It must be studied carefully. We must
understand how this crisis came about. The government will find difficulty in facing the crisis and must be seen to be serious and this includes unpopular measures,” he said, when he spoke about the future of Malaysia in light of global financial uncertainties in Putrajaya yesterday.He was speaking at the “Bridges – Dialogues Towards a Culture of Peace” programme organised by Perdana Leadership Foundation.”The government must play a bigger role but must be judicious. If its too tight, businesses can be strangled,” he said.Dr Mahathir was also sceptical of investments from the Middle East into the Iskandar Malaysia development corridor materialising.”Worldwide, there has not been much foreign direct investments (FDIs) seen lately,” he said.The 2003 Nobel Laureate in economics Professor Dr Robert F.Engle who spoke on why financial market volatility is so high said volatility was now dramatically above levels since 1990.

Fall in Malaysia industrial output sharper than expected
INDUSTRIAL output, which mainly measures factory production, fell sharper than expected in October, indicating that recession in major economies is hurting demand for Malaysia’s exports.The industrial production index (IPI) fell for the second straight month, down 3.1 per cent in October, after a 1.7 per cent contraction in September, the Statistics Department said.It was also much weaker than many predicted. A poll done by Business Times had expected IPI to fall 2.56 per cent.The IPI is expected to get much worse over the next few months with half the world economy in recession, commented ECM Libra Investment Bank economist Dr Lai Mun Chow.”Based on the latest IPI, it reinforces our forecast that the year-on-year real growth of the manufacturing sector for the fourth quarter would shrink by 6.4 per cent

Democrats, Republicans Meet on Compromise Auto Plan
Democrats and Republicans are negotiating a possible compromise $14 billion automaker bailout plan to beat a deadline and keep General Motors Corp. and Chrysler LLC from collapsing. “I’m hopeful that we can finish this matter tonight,” Senate Majority Leader Harry Reid said on that chamber’s floor. “We should know soon” whether an agreement can be reached, he said. Connecticut Democrat Christopher Dodd and Tennessee Republican Bob Corker are meeting in Washington to discuss Corker’s plan to add restrictions to legislation approved yesterday by the
House. “

Wall Street Bonuses to Fall 50%, Lowest Since 2002
New York City will lose 170,000 jobs between July 2008 and December 2010, and Wall Street bonuses will decline at least 50 percent this year to the lowest levels since 2002, the state and city comptrollers said today. Wall Street’s losses, the credit meltdown and the national recession will contribute to city tax revenue falling 4.3 percent in the fiscal year that began July 1, city Comptroller William Thompson said in a report to be released Dec. 15. “The impact of this crisis will have a lasting effect on the city’s fiscal condition for years to come,” said Thompson, a 2009 candidate for mayor. “The toll taken by the financial industry makes this one of the grimmest
economic periods for the city in many years.”

South Korea’s Lee Looks to Expand Currency Swaps
South Korean President Lee Myung Bak is turning to his richer neighbors for help stem this year’s 31 percent decline in the won, Asia’s worst-performing currency. Japan’s Prime Minister Taro Aso and China’s Premier Wen Jiabao will meet Lee in Fukuoka, Japan, tomorrow to discuss the global financial crisis. Lee is keen to expand currency swap agreements with the world’s biggest holders of foreign reserves to secure funds as the won’s plunge and a credit freeze make it harder for Korean companies to finance overseas debt.

New Zealand October Retail Sales Fall Amid Job Cuts
New Zealand’s retail sales dropped the most in more than four years in October as spending on cars fell amid a slowing economy, job cuts and weaker consumer confidence. Retail sales declined 1.3 percent from September when they rose a revised 0.3 percent, seasonally adjusted, Statistics New Zealand said in Wellington today. Vehicle sales fell 15 percent, while core retail sales, which exclude cars, fuel and workshops, increased 0.8 percent. “Consumers are becoming very cautious in light of the current uncertain environment, choosing to hold on to any spare cash,”
said Khoon Goh, senior economist at ANZ National Bank Ltd. in Wellington. “Despite having more money in their pockets, job insecurity is starting to make people more cautious.”

ECONOMY HIGHLIGHTS

U.S. Jobless Claims Soar 58,000 to a 26-Year High
The number of Americans filing first- time claims for unemployment benefits surged more than forecast last week to a 26-year high, a sign companies are stepping up firings as the recession deepens. Initial jobless claims increased 58,000 to 573,000 in the week ended Dec. 6, the highest level since November 1982, from a revised 515,000 the previous week, the Labor Department said today in Washington. The number of workers staying on benefit rolls reached 4.429 million, also the most since 1982. Employers are slashing payrolls as consumers retrench and credit stays frozen. Mounting job losses and falling home prices increase the likelihood that the U.S. recession will extend well into 2009, adding impetus to President-elect Barack Obama’s call for an economic stimulus package of unprecedented size. “The labor market is facing its worst crisis since 1982, and it is certainly not over yet,” Harm Bandholz, a U.S. economist at UniCredit Markets and Investment Banking in New York, said before the report. “One of the most important tasks of the newly elected government is, therefore, to help distressed homeowners and to stimulate the labor market.”

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