December 18, 2008 Daily Highlights

December 19, 2008 at 8:43 am Leave a comment

MARKET REVIEW

KLCI Update
Malaysian shares ended the day mixed amid sustained interest in select key index-linked counters, dealers said.The benchmark Kuala Lumpur Composite Index (KLCI) closed at
862.50, up 7.70 points after opening 5.52 points higher at 860.32 in the morning.However, the dealers said that some selling activities were seen in second boarders as well as small-cap technology stocks. Gainers led losers by 264 to 240 while 190 counters were unchanged, 557 untraded and 31 others suspended.Turnover increased to 338.103 million shares valued at RM544.749 million from Tuesday’s close of 301.663 million shares worth RM344.707 million.

Regional Update
Asian stocks rose to a five-week high yesterday, led by developers, after the Federal Reserve cut interest rates to a record low and said it will use “all available tools” to stimulate the economy. Hong Kong’s Hang Seng Index gained 2.1 percent, led by a 5.2 percent advance in China Unicom (Hong Kong) Ltd. after the nation’s second-biggest mobile-phone carrier agreed to buy telecommunication assets from its parent. Japan’s Nikkei 225 Index Share prices ended up 0.52 per cent , capping a rocky day after a drastic cut in US interest rates and a sharp spike in the yen. The benchmark Nikkei-225 index clawed back in late trade, ending up 44.50 points at 8,612.52.

US Stocks
Wall Street finished moderately lower Wednesday, as further signs of economic deterioration dampened investors’ earlier enthusiasm about the Federal Reserve’s record interest rate cut.Stocks declined in the early going after a larger-than-expected loss from Morgan Stanley offered fresh evidence of the sizable obstacles the battered financial industry still faces. The Dow Jones industrial average fell 99.80, or 1.12%, to 8,824.34, after falling as many as 146 points earlier in the session. The Standard & Poor’s 500 index slipped 8.76, or 0.96%, to 904.42, and the Nasdaq composite index fell 10.58, or 0.67%, to 1,579.31.The Fed’s action on Tuesday is expected to lower rates on everything from home equity loans to credit card loans. Meanwhile, mortgage rates are falling after the Fed renewed its pledge to buy up billions of dollars of mortgage debt.The national average rate on a 30-year fixed rate mortgage on Wednesday was 5.06 percent, according to financial publisher HSH Associates, the lowest average since the early
1960s and down from 5.3 percent on Tuesday.

MEDIA HIGHLIGHTS

Sime Darby seeks stake in IJN
Sime Darby Bhd wants to acquire a stake in IJN Holdings Sdn Bhd which operates the national heart institute, Institut Jantung Negara (IJN).Sime Darby had written to the Government about its intention and was now awaiting an official response, the company said in a statement to Bursa Malaysia.The company did not provide details on the size of the stake and the price involved. IJN is a leading heart medical centre in the region, offering comprehensive cardiac services under one roof and is 99.99% owned by the Ministry of Finance.“I expect the Government (to) include
strict conditions on medical charges in the negotiations,” said a healthcare analyst from OSK Research. “Probably Sime Darby has to divide its healthcare division into two segments, one for the public and another for the private sector. But the main question is, who will subsidise IJN’s expenses?”The analyst said he expected the discussions to take a long time due to political considerations, adding that it was important for Sime Darby to find a win-win situation for both its shareholders and the public.He added that although the acquisition would not have a significant impact on Sime Darby’s revenue, the move was logical as the group had planned to expand its
healthcare division.When Sime Darby Healthcare (SDH) was launched in October, the company had said it would focus on specialised treatment, expand its healthcare presence in Malaysia and also look for opportunities in emerging countries.

Natural rubber exports to be cut next year
Natural rubber exports will be reduced next year to restore the commodity’s price in the world market. The price has dropped by 60% since July.Rural and Regional Development Minister Tan Sri Muhammad Muhammad Taib said the International Rubber Consortium, in which Malaysia, Indonesia and Thailand are members, had agreed to cut rubber output by 915,000 tonnes next year.This year, the consortium only exported 5.5 million tonnes of natural rubber. ”We will trim down rubber exports from the first quarter of next year. For a start, we will only export 270,000 tonnes as a precautionary measure on the possibility of rubber prices continuing to fall,” he
told reporters after launching the Quality Day of the Rubber Industry Smallholders Development Authority yesterday.

Gamuda Q1 net profit down on weak property market
Gamuda Bhd attributes its weaker performance in the first quarter ended Oct 31 to lower contributions from its property and construction divisions.Its net profit in the quarter declined 37.5% to RM55.03mil from RM88.06mil in the previous corresponding quarter.Pre-tax profit plunged 32% to RM72mil from RM106.4mil while revenue jumped 27% to RM614mil from RM482.4mil previously.“Property sales have been weak as a result of the uncertain economic outlook,” it said in a statement.However, it added, infrastructure construction work on the Yenso project in Vietnam was progressing well.“The works on the public parks and lake clearing are in full swing. The works on the sewerage treatment plant have commenced with the award of the civil works and the mechanical and electrical works contracts,” it said.

AmBank to open 10 new branches next year
AmBank (M) Bhd will continue to invest in expanding its retail banking distribution network and improving services despite the current economic slowdown.Managing director for retail banking, Datuk Mohamed Azmi Mahmood, said the bank planned to open 10 new branches next year involving a cost of between RM500,000 and RM750,000 for each branch.

OPEC Agrees Larger-Than-Expected Cut to Revive Price
OPEC, supplier of more than 40 percent of the world’s oil, agreed to cut production quotas by a larger- than-expected 9 percent to revive prices as a global recession reduces demand for crude. The Organization of Petroleum Exporting Countries set a quota for 11 of its members of 24.845 million barrels a day, starting Jan. 1, compared with its current target of 27.308 million barrels a day, OPEC President Chakib Khelil said. The record 2.46 million barrel-a-day cut is larger than a 2 million-barrel drop indicated yesterday by Saudi Arabian Oil Minister Ali al-Naimi.

Morgan Stanley Pay Expense Drops 26%; Some Bonuses Cut by Half
Morgan Stanley, which today reported its lowest full-year net income since 1995, cut annual compensation expense 26 percent to $12.3 billion as most employees had their year-end bonuses trimmed in half on average. Total compensation and benefits for the company’s 46,964 employees was an average $262,030, down from $339,556 a year ago. Excluding the 8,426 financial advisers in Morgan Stanley’s wealth management unit, the bonus pool for employees was reduced by 50 percent, the New York-based firm said in a statement today. The company cut 1,782 jobs during the year.

Philippines May Cut Interest Rate for First Time in 11 Months
The Philippine central bank may cut its benchmark interest rate for the first time since January to boost economic growth amid a global recession. Bangko Sentral ng Pilipinas will reduce the rate it pays banks for overnight deposits to 5.75 percent from 6 percent today, according to six of 13 economists in a Bloomberg News survey. Four predict the bank will cut the benchmark to 5.5 percent, one expects a reduction to 5.25 percent, and two expect the rate to be left unchanged.

National Australia’s Growth May Slow, Bad Debts Rise
National Australia Bank Ltd., the country’s biggest by assets, expects sales growth to slow and bad debts to increase as the global economy cools. “We would generally expect to see slowing volume growth and rising impairments as a natural consequence of a slowing economy,” Chief Executive Officer John Stewart said in notes for a speech to the company’s annual general meeting in Melbourne today. “When combined with the ongoing higher cost of funding, this is likely to result in tougher times for banks across the board.”

ECONOMY HIGHLIGHTS

Anglo Joins Rio Tinto in Mining Industry’s Biggest Contraction
The world’s biggest mining companies are cutting expansion plans by about $200 billion as prices of metals, demand from factories and funding for projects collapse. “It will be the biggest cutback in the history of the resources sector, an emergency stop,” Graham Birch, who helps manage $40 billion in natural resources assets at BlackRock Investment Management in London, said yesterday. “Any project that is not under way is going to be stopped.” Anglo American Plc, which controls the largest platinum producer, reduced planned investment by more than half yesterday, scuttling a $45 billion expansion program. Rio Tinto Group, the third-largest mining
company, will curb spending by $5 billion. Credit Suisse Group said Dec. 3 the industry may cut $193 billion of scheduled spending. Mine operators can’t stop production fast enough as demand for copper, aluminum and iron ore used in cars, buildings and steelmaking wanes along with global economic growth. Two-thirds of seaborne iron ore, a quarter of global copper and nickel, and 12 percent of aluminum output may be deferred for at least two years, Credit Suisse said.

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Gamuda 1QFY09 : Earnings and dividend shocker 19 December 2008 Newz Bits

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