December 19, 2008 Daily Highlights

December 19, 2008 at 9:07 am Leave a comment

MARKET REVIEW

KLCI Update
SHARE prices on Bursa Malaysia closed mostly higher yesterday led by gains on plantation stocks amid improved sentiment on optimism over the United States economic recovery, said dealers.Gains on most key plantation stocks helped elevate the benchmark Kuala Lumpur Composite Index (KLCI) to 880.50, up 18.00 points, after opening 2.31 points lower at 860.19 yesterday morning.Dealers said interest was largely seen in plantation stocks as the weaker US dollar has spurred sales of crude palm oil, thus boosting earnings.

Regional Update
Asian stocks saw modest gains yesterday as investors watched out for interest rate cuts, with Japan looking poised to slash its rate near zero to tackle a sharp economic downturn, dealers said. Markets were unmoved by a record 2.2 million barrels per day cut in output by the Opec oil group on Wednesday that was announced as it tries to battle falling prices.The Bank of Japan yesterday opened a two-day meeting which could cut interest rates down from the already low 0.3 per cent.The US Federal Reserve on Tuesday slashed its benchmark rate to virtually zero, sending the dollar plunging against the yen. Tokyo’s share prices closed 0.64 per cent higher. The Tokyo Stock Exchange’s benchmark Nikkei-225 index rose 54.71 points to close at 8,667.23. The broader Topix index of all first-section shares gained 0.23 points or 0.03 per cent to finish at
838.69.Sydney’s share Prices closed up 0.3 per cent. The benchmark S&P/ASX200 rose 10.6 points to 3,581.2, while the broader All Ordinaries was up 6.7 points at 3,521.7.SHANGHAI’s Shares closed up 1.97 per cent. The benchmark Shanghai Composite Index rose 38.88 points to 2,015.69 on turnover of 64.9 billion yuan.

US Stocks
U.S. stocks fell for a second day as a deteriorating credit outlook for General Electric Co. spurred concern the financial crisis is worsening, while oil’s retreat below $36 a barrel dragged down energy shares. The S&P 500 declined 2.1 percent to 885.28. The Dow Jones Industrial Average slid 219.35 points, or 2.5 percent, to 8,604.99, while the Russell 2000 Index of small companies fell 1.5 percent. Benchmark indexes drifted between gains and losses before sliding to session lows late in the day as GE sank.

MEDIA HIGHLIGHTS

PM: Take over of IJN only allowed if poor taken care
The Government will only allow the private sector to take over the National Heart Institute (IJN) if they fulfilled their responsibilities to the poor, Datuk Seri Abdullah Ahmad Badawi said.The Prime Minister said there might be good in Sime Darby Bhd’s bid to buy a stake in IJN because with privatisation, more people would have access to treatment despite rising operation and medicine costs.“It should not matter if the party who wants to take over can give an assurance that the lowincome group will be able to seek treatment there and charged reasonable rates,”
he said.“There are criticisms on the move to allow the private sector to buy a stake in IJN, that this will result in a hike in fees.“At the same time, we have to adapt to changes in the field of medicine and equipment.“The best experts are also needed, who may need higher remunerations. More beds are also needed.“All this incur additional costs. The deal depends on many things in the negotiations.“The Government needs to look into this carefully,” he told reporters at his office in Parliament House on Thursday.

Malaysia Nov inflation to ease on lower fuel prices
MALAYSIA’S inflation level is expected to have come down significantly in November, with the cut in pump prices on the back of plunging global crude oil prices. A Business Times poll of economists expects to see the consumer price index (CPPI) fall to 6.61 per cent year-on-year from 7.5 per cent in October.The Statistics Department will release the data on Wednesday. DBS Bank economist Irvin Seah said with global commodity prices having fallen in such dramatic fashion in recent months, there is every reason to expect inflation to ease sharply going forward. The relief of cost inflated pressures, said Patricia Oh of TA Enterprise, is mainly attributable to the subsequent downtrend in the transportation index. This was due to the sequential adjustment in petrol pump prices to RM2.15 and RM2.00 on October 31 and November 18, respectively. “Also, inflation is likely to decrease as the component of food and non-alcoholic beverages probably reduce gradually in November in tandem with the enforcement to bring down prices of essential good items,” she said.

Ringgit rises most since dollar peg ended
THE ringgit had its biggest gain since a fixed exchange rate to the dollar was scrapped more than three years ago, as slides in global borrowing costs spurred demand for higher-yielding assets. The currency climbed to a two-month high after the US central bank this week cut its key interest rate to about zero and the London interbank offered rate, or Libor, for three-month dollar loans reached a four-year low. The MSCI Asia-Pacific Index of regional shares climbed to the highest a month. “Asia seems to be attracting an uptick in equity flows,” said Dwyfor Evans, a strategist with State Street Global Markets in Hong Kong. “There’s just a lot of cheap money out there at the moment.” The ringgit rose 1.9 per cent to 3.4625 per dollar as of 5:18 pm yesterday in Kuala Lumpur. It earlier touched 3.4527, the strongest level since October 14, according to data compiled by Bloomberg.

Petronas unit buys Marathon Oil Ireland
PETROLIAM Nasional Bhd’s (Petronas) subsidiary Star Energy Group has bought the Irish unit of Marathon Oil Corp, the fourth largest US oil company, for US$180 million (RM628 million).In a statement, Marathon Oil said it expects the deal for wholly-owned Marathon Oil Ireland Ltd to conclude by the first quarter of next year.However, the deal does not include Marathon Oil’s 18.5 per cent interest in the Corrib natural gas development.Marathon Oil executive vice president David E Roberts said the sale, along with the sale of non-core assets, is part of Marathon Oil’s global asset review.”With the sale of Marathon Oil Ireland, our global asset portfolio review and the resulting sale of non-core assets has generated nearly US$1.2 billion (RM4.2 billion) in cash.

GE, GE Capital Ratings Outlook Cut to Negative by S&P
General Electric Co., the biggest issuer of U.S. corporate bonds, has a one-in-three chance of losing its AAA credit rating in the next two years as earnings deteriorate, Standard & Poor’s said. S&P cut the outlook on the company and that of its GE Capital finance arm to negative from stable. While the AAA ratings were left intact, S&P said in a statement today that it was concerned about cash flow and funding for the finance unit as global conditions worsen. GE Capital’s stand-alone rating, without parent support, would be A+, four levels below, it said.

Genworth Slashes 1,000 Jobs, Take $45 Million Charge
Genworth Financial Inc., the insurer spun off by General Electric Co., is slashing 1,000 jobs, or about 14 percent of the staff, after two quarterly losses. The insurer will record a $45 million charge in the fourth quarter in connection with the cuts, the Richmond, Virginia-based company said today in a statement. The firings will help reduce operating costs by $100 million to $150 million annually by the end of next year, the company said.

Bank of Japan May Cut Key Rate, Pump More Funds Into Economy
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 percent, 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. The global economy is in the worst state since the Great Depression, intensifying the risk for a prolonged slump in Japan, Shirakawa told parliament on Dec. 16.

Zhou Stokes Speculation China Is Poised to Cut Rates
Chinese central bank Governor Zhou Xiaochuan stoked speculation that an interestrate cut is imminent, reiterating that falling inflation has added pressure for a reduction. The pressure “is based on the outlook for inflation,” Zhou said in Beijing today. “Inflation may slow further in the future.” China reduced borrowing costs by the most in 11 years last month to counter a deepening slump in the world’s fastestgrowing major economy. Zhou said on Dec. 16 that rates may fall further, after inflation cooled in November to 2.4 percent, the weakest pace in 22 months.

ECONOMY HIGHLIGHTS

ECB Cuts Deposit Rate, Lifts Marginal Lending Rate
The European Central Bankcut 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 percent by 50 basis points. By lowering
incentives to leave cash with it, the ECB is seeking to encourage banks to lend more as the euro region economy suffers the first recession in 15 years. Trichet and other officials have expressed concern that following the U.S. Federal Reserve in cutting the benchmark rate closer to zero won’t boost the economy as long as banks are hoarding cash.

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19 December 2008 Newz Bits 22 December 2008 Newz Bits

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