19 December 2008 Newz Bits

December 19, 2008 at 8:53 am Leave a comment

HIGHLIGHTS

On Malaysia
· Sime Darby plans massive development projects
· Proton denies being sued by Chinese JV partner
· Government may impose ceiling price on fertilizers
On The Global Front
· U.S. index of leading indicators dropped 0.4% m-o-m, 3.7% y-oy in October
· ECB cuts overnight deposit rates and lifts emergency lending rate
· IMF forecasts a U.S. recovery by early 2010
· Bank of Japan may trim interest rates today

Sime Darby Bhd (SIME MK, Buy, TP: RM7.30) will carry out a massive development project at the Negri Sembilan-Selangor border covering some 12,120ha. The development will be based on 5 themes – health, education. Sports, hi-tech and recreation – and will be located at its present Labu and Tanah Merah estates. Each theme will be developed as an integrated city and the cities will be interconnected. The first to be launched will be the Medical City, which is expected to take
of next year. (StarBiz)
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Sime Darby Bhd (SIME MK, Buy, TP: RM7.30), which was close to selling its healthcare division a few years ago, had decided to expand the business instead. This follows its proposal to acquire a 51% stake in the National Heart Institute (IJN), a move that has received the agreement in-principle from the government. The due diligence exercise is expected to be carried out at the start of the new year, and the whole exercise could be wrapped up in less than 5 months, with the purchase consideration being paid in cash. (Financial Daily)
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Proton Holdings Bhd has denied a report by a local daily that it was being sued for one billion yuan or RM520m by China’s Goldstar Heavy Industrial Co Ltd over the collapse of their joint-venture plan to build vehicles in China. In a statement to Bursa Malaysia yesterday, the national carmaker said it had not been served with any summons by its Chinese JV partner and was not aware of the basis or quantum of the purported claim. Proton said the parties had referred the dispute for arbitration, in accordance with the spirit of the JV agreement. (Financial Daily)
* * * * *
Scomi Group Bhd’s subsidiary has won a US$12m (RM41m) drilling waste management (DWM) job with BP Norway. This is the first time that Scomi Oiltools (Europe) Ltd has secured a DWM tender with BP in Norway, which covers complete DWM solutions both offshore and onshore. The project is for up to four years with the option of a two-year extension. (BT)
* * * * *
The government may make imported chemical fertiliser a controlled item, placing a ceiling on its price so as to ease oil palm planters’ burden. Generally, oil palm planters do not want to skim on fertiliser unless left with no other option. This is because the trees produce more fruits with fertiliser. But the severity of the situation was seen last month when some 200,000- odd oil palm planters, including the six biggest plantation companies, pledged to reduce fertiliser purchase in the next six months because of the high prices that were eating up their profits. The government is aware that fertiliser prices have yet to come down despite importers pledging to drop prices by 15%. (BT)
* * * * *
After flip-flopping most of the session, Wall Street falls sharply and the Dow plunges more than 200 points, one day before a slew of options expire. A selloff on Wall Street accelerated in the last hour of a volatile session as traders square up positions for a handful of options that expire Friday, known as “quadruple witching.” The Dow Jones industrial average lost 219 points, or 2.5%.The broader Standard & Poor’s 500 index shed 19 points, or 2.1%, and the Nasdaq composite fell 27 points, or 1.7%. Oil prices fell below $37 a barrel Thursday, reaching levels not seen since June 2004. Crude oil for January fell $3.84 to settle at $36.22 a barrel. (CNNMoney)
* * * * *
The Conference Board’s index of leading indicators dropped 0.4% from October, and 3.7% from a year before. Other reports showed first-time claims for unemployment benefits held close to a 26-year high and manufacturing in the Philadelphia region contracted for the 11th time this year. The drop in the leading index underscores economists’ projections that the recession will be the longest in the postwar era as banks restrict credit, home and stock values plunge and job losses mount. (Bloomberg)
* * * * *
The European Central Bank cut the interest rate it pays banks to deposit money with it overnight and lifted its emergency lending rate in an effort to jolt financial companies into lending more to each other. ECB President Jean-Claude Trichet and his governing council said after meeting in Frankfurt yesterday that from Jan. 21 the deposit rate will be reduced to 100 basis points below its benchmark rate and the marginal lending rate will be increased to 100 basis points above it. Both are now separated from the ECB’s key rate of 2.5% by 50 basis points. (Bloomberg)
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The Bank of Japan may trim interest rates today and introduce new ways of pumping funds into the banking system to bolster the ailing economy. Governor Masaaki Shirakawa and his colleagues may lower the overnight lending rate from 0.3%, the second reduction in two months, economists said. The bank may also offer to buy more government bonds from lenders, start purchasing commercial paper from them and broaden the range of collateral it accepts. (Bloomberg)
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India’s inflation rate fell to the lowest since early March as demand slowed amid the global economic meltdown and a drop in crude oil costs led the government to cut retail fuel prices. Wholesale prices increased 6.84% in the week to Dec. 6 from a year earlier after gaining 8% the previous week, the commerce ministry said in New Delhi today. Economists expected an increase of 7.49%. Bonds rose amid speculation that slowing inflation will give the central bank room to add to three interest-rate cuts in the past two months as growth falters. India’s monetary policy should have been “more aggressive” to counter the impact of the global financial crisis, Arvind Virmani, the finance ministry’s chief economic adviser said yesterday. India’s 10-year bonds extended gains after the inflation report, pushing yields to a 4 1/2-year low of 5.54% as of 12:02 p.m. in Mumbai. (Bloomberg)
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The IMF cautiously forecast a US recovery by early 2010 and a British central banker said yesterday UK interest rates could hit zero, a level Japan’s are forecast to drop closer to this week. “There is reasonable probability… of the US economy starting to recover at the end of 2009 or the start of 2010,” International Monetary Fund (IMF) managing director Dominique Strauss-Kahn told Spanish newspaper Expansion. He based his view on the likelihood of the housing market having touched a low point and demand reacting to a fiscal stimuli, but said it was “plagued with uncertainty”. (Financial Daily)
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The global economy is likely to worsen in 1H09 with rising unemployment adding to the woes of governments, World Bank president Robert Zoellick said yesterday. He said an upturn in 2009 would depend on how governments cooperated among themselves to implement monetary and fiscal policy and whether they refrained from protectionism. He also said China’s leaders had “been struck by the depth and fallout in exports.” But China, armed with its huge foreign exchange reserves and government surpluses, was well-positioned to cope with the crisis, he added. Zoellick said the financial and economic problems that emerged this year could turn into an employment crisis in 2009, and pledged that the World Bank would make funds available to help poorer countries cope with the economic downturn. (Financial Daily)
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December 18, 2008 Daily Highlights December 19, 2008 Daily Highlights

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