December 15, 2008 Daily Highlights

December 15, 2008 at 9:14 am Leave a comment

MARKET REVIEW

KLCI Update
A WINDOW-DRESSING attempt in the local stock market last week was overshadowed by extreme external volatility, as the unexpected rejection by the US Senate of the US$14 billion bailout plan for American carmakers late week increased fears that the global economic downturn will worsen.Nevertheless, the benchmark Kuala Lumpur Composite Index (KLCI) still gained 13.99 points, or 1.7 per cent week-on-week to close at 852.27, as daily average trading volume improved to 420.9 million shares from 360.5 million shares in the previous week.

Regional Update
Asian stocks fell last Friday, ending a five-day rally by the region’s benchmark index, after the U.S. Senate rejected a bailout for automakers, threatening to deepen the global recession. Japan’s Nikkei 225 Stock Average retreated 5.6 percent to 8,235.87. The CSI 300 Index sank 3.8 percent in China, after a government official said growth will slow more sharply next quarter. China Mobile Ltd. fell 4.7 percent in Hong Kong. South Korea’s Kospi Index lost 4.4 percent, led by KB Financial Group Inc., after the Bank of Korea said the economy will expand at the slowest pace in 11 years in 2009.

US Stocks
U.S. stocks advanced last Friday as speculation the government will boost spending on technology overshadowed concern a bailout of carmakers won’t bring the nation out of a recession, spurring a 3.3 percent rebound by the Standard & Poor’s 500 Index from the day’s low. Intel Corp.and Micron Technology Inc. rose more than 5.2 percent after Nancy Pelosi said the House is likely to act next month on an economic-stimulus measure that would boost computer expenditures. General Growth Properties Inc. surged 25 percent, leading a real-estate rally, after refinancing debt to stave off bankruptcy. General Motors Corp. and energy stocks fell. The S&P 500 increased 0.7 percent to 879.73 after falling as much as 2.6 percent. The index swung between gains and losses at least 30 times and jumped more than 1 percent in the final four minutes of trading. The Dow Jones Industrial Average climbed 64.59 points, or 0.8 percent, to 8,629.68. The VIX, a measure of how much investors are paying for protection from stock declines, slipped 2.7 percent to 54.28, the lowest since Nov. 4.

MEDIA HIGHLIGHTS

ASNB fixed-priced unit trust funds a hit with investors
AMANAH Saham Nasional Bhd’s (ASNB) fixed-priced unit trust funds launched in the past few years have proven to be big winners due to their commendable returns.These equity-based funds, namely Amanah Saham Wawasan 2020 (ASW 2020) and Amanah Saham Malaysia (ASM), have achieved compounded annual growth rates of 10.78% and 6.3% respectively since the time of its launch.ASW 2020 and ASM have been providing an annual average distribution income of 7.74 sen and 7.12 sen respectively.To paint a clearer picture, say if an investor had placed RM100,000 in ASW 2020 10 years ago, his investment value would amount to RM251,360 today.Similarly, by placing the same amount in the ASM fund 10 years ago, the investor would have RM173,340 today in his investment account.

Exports weakening Shipments likely to decline well into next year
Malaysia’s exports are expected to decline well into 2009 after a dismal performance in October which saw the effects of falling consumer demand kick in.“The sharp reversal in merchandise exports, from a 15.1% year-on-year increase in September to a 2.6% contraction in October, suggests exports in November will slump further,” an economist said.He said the gloomy outlook was also premised on the forecast that demand in recession-hit developed economies would take a “deeper-than-expected hit”.Malaysia’s exports in October fell 2.6% to RM53.5bil from a year earlier, the first decline in 15 months.The economist forecasts about a 5% drop year-on-year in Malaysia’s exports in November and sees further contraction going into 2009 as the full impact of the slower global growth takes its toll on the country’s exports.CIMB Research chief economist Lee Heng Guie concurred. “It will not be good,” he said.For next year, Lee said he expected exports to contract up to 3% year-on-year against the Government’s forecast of 1.5%.“We are likely to see a more pronounced price effect of the commodity fallout in the first half of next year, coupled with continued sluggish demand for electrical and electronics (E&E) products due to reduced consumer spending.” he said.

Work on RM750m theme park to start 2010
Work on the RM750mil Legoland theme park at Bandar Nusajaya in Iskandar Malaysia will start in 2010 and the opening slated for 2013.The park, to be built in the city centre of Nusajaya, will have a 5.5 million sq ft of gross floor area within the 58.679ha land dedicated for the lifestyle-theme development.Merlin Entertainment Group Ltd managing director for Legoland Parks, John Jakobsen said the theme park would create about 1,000 job opportunities in the park itself and it could reach up to 5,000 during construction period and indirectly upon the completion of the project.Sectors which would benefit from the opening of the park would include retail, hospitality, services and food and beverage to cater for tourists and visitors.

New firms in Cyberjaya to increase by 10%
Cyberview Sdn Bhd expects a 10% increase in the number of companies housed at Cyberjaya next year, its managing director Redza Rafiq said.Cyberview, a government-linked company, was formed to undertake the development of Cyberjaya as a global Information Communication Technology (ICT), multimedia and services hub.Redza said that despite the current uncertainty in the global economic market, he was confident of achieving this target based on the excellent
infrastructure and eco-system support offered by Cyberview.Cyberjaya, at the center of the Multimedia Super Corridor (MSC) Malaysia, has shown an improvement of 57% between 2006 and 2008 in the number of companies housed there. It now hosts 474 companies, of whom 30 are multinationals and 444 homegrown.“ Of the 444, 181 are small and medium entreprises at the SME Technopreneur Centre Cluster,” he told Bernama recently.

Bush Says He ‘Signaled’ Using TARP Funds Possible for Autos
President George W. Bush said he’s “not quite ready” to announce his decision on a rescue plan for U.S. automakers. The president, traveling on Air Force One from Iraq to an unannounced trip to Afghanistan, told reporter that “it won’t be a long process” because of the “fragility” of the industry. Asked if he is leaning toward using funding approved to rescue Wall Street firms, he said, “I signaled that’s a possibility.” After the Senate failed to pass that package of aid on Dec. 11, the White House said it would consider tapping the $700 billion Troubled Asset Relief Program, or TARP, to help the auto companies. General Motors Corp. and Chrysler LLC, Corker said. Those two automakers have said they need aid this month to avoid running out of cash for operations. Ford Motor Co. has asked for a credit line it said it may not have to use.

Nomura Has 27.5 Billion Yen at Risk Linked to Madoff
Nomura Holdings Inc., Japan’s largest brokerage, said it has 27.5 billion yen ($302 million) at risk linked to Bernard Madoff’s investment funds. Nomura joined firms including Spain’s Banco Santander SA in disclosing investments tied to Madoff, who was arrested Dec. 11 and charged with defrauding investors of as much as $50 billion through a Ponzi scheme at his New York-based firm’s business advising rich people, hedge funds and institutions.

Japan’s Tankan Confidence Plunges Most in 34 Years
Sentiment among Japan’s largest manufacturers fell the most in 34 years, signaling companies are likely to cancel spending plans and cut more jobs, pushing the economy further into recession. An index that measures confidence among large makers of cars and electronics dropped to minus 24 from minus 3, the Bank of Japan’s quarterly Tankan survey showed today, in line with economists’ estimates. A negative number means pessimists outnumber optimists. The yen’s surge to a 13- year high last week has compounded woes for Japanese manufacturers who are already reeling from a collapse in export markets. Job cuts by companies including
Sony Corp. and Toyota Motor Corp. have brought the recession home to households and increased the risk of a prolonged slump.

Australia, New Zealand Dollars Fall on U.S. Auto Rescue Concern
The Australian and New Zealand dollars fell amid concerns General Motors Corp. and Chrysler LLC will collapse into bankruptcy in the U.S., deepening a recession in the world’s largest economy. The currencies pared losses last week after President George W. Bush said he may tap funds set aside for banks to provide short-term aid to the auto industry after the Senate rejected a $14 billion bailout package. They were lower today as the Australian Bureau of Agricultural and Resource Economics said commodity exports may be 10 percent less than previously forecast for the year ending June 30. “The currency markets are waiting for confirmation” that Bush will
intervene, said Richard Grace, chief currency strategist at Commonwealth Bank of Australia in Sydney. “After the Senate rejected the $14 billion plan to prevent the bankruptcy of the automakers, it’s very possible Treasury could change its mind.”

ECONOMY HIGHLIGHTS

BOJ May Trim Rates, Former Deputy Governor Muto Says
The Bank of Japan may cut the benchmark interest rate further to show its commitment to countering a deepening recession and market turmoil, said Toshiro Muto, a former central bank deputy governor. “A central bank has a role of influencing financial market sentiment and a rate cut is an option to show their determination” to support the economy, Muto, 65, said in an interview on Dec. 11. Still, “with the interest rate already so low, a further reduction would have only a limited impact.”

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Telecommunications Weekly Review: 8th – 14th December 2008 16 December 2008 Newz Bits

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