22 December 2008 Newz Bits

December 23, 2008 at 1:38 am 1 comment

HIGHLIGHTS

On Malaysia
· Government gives go-ahead for construction of new low-cost carrier terminal in Labu
· Tenders for extension of LRT system to be called by 1Q09
· BNM to announce further liberalization in foreign ownership of local banks next year
· Aluminum smelter project in Sarawak under review
On The Global Front
· Ireland injects USD7.7bn into its 3 largest banks
· Bank of Japan cuts key policy rate to 0.1%
· Bush hands automakers immediate USD13.4bn lifeline
REPORTS
· Glomac – 2QFY09 Results (Hold; RM0.49; TP: RM0.62)

Telekom Malaysia Berhad (TM) (T MK, Hold, TP: RM3.40) has reported disruptions in its internet services due to circuit faults on the submarine cable network linking Malaysia and Europe, and said services would be completely restored by Dec 31. TM said in a statement yesterday that customers using its internet services may experience slow browsing while accessing websites hosted in Europe and that those using other IP (Internet Protocol) services and other critical business applications linked to Europe may also experience some service degradation. (StarBiz)
* * * * *
The government has given the go-ahead to the proposed construction of a low-cost carrier terminal (LCCT) in Labu, Negri Sembilan, sources say. This development marks a new chapter for both Sime Darby Bhd (SIME MK, Buy, TP: RM7.30) and AirAsia Bhd (AIRA MK, Buy, TP: RM1.90), which had jointly made the proposal to the cabinet recently. Sime, which will build the airport, is expected to take a majority stake in the joint venture with AirAsia. Sources say AirAsia is hoping to operate its own airport and create a hub bigger than Singapore. (The Edge)
* * * * *
Sime Darby Bhd’s (SIME MK, Buy, TP: RM7.30) deal to acquire a 51% equity stake in Institut Jantung Negara (IJN) has been postponed until an in-depth review has been undertaken by the relevant ministries, Deputy Prime Minister Datuk Seri Najib Tun Razak announced on Friday. On Thursday, Sime Darby said that the government had in principle given the nod for it to acquire the controlling stake in IJN Holdings, the company that operates IJN. (BT)
* * * * *
Syarikat Prasarana Negara Bhd (SPNB), a unit of the Ministry of Finance Inc, may call for tenders to extend the RapidKL Light Rail Transit (LRT) system by as early as 1Q09. The LRT covers two lines, namely the Ampang Line (previously, Star LRT) and Kelana Jaya Line (formerly Putra LRT). The assets are owned by SPNB. The tenders, worth over RM1bn, is for track and civil works, fare collection, and systems work involving power supply, signalling and communication, industry players said. Under the plan, the Ampang line will be extended from Bukit Jalil to Puchong, heading towards Subang Jaya, and linking up to the Kelana Jaya line. The extension will involve 32km of double track and around 24 new stations, a source said. “The extension will allow for a more complete integrated rail network. The project may be government-funded or implemented through private finance initiatives,” the source added. Key players like UEM Builders Bhd, IJM Corp Bhd, YTL Corp Bhd, Ho Hup Holdings Bhd, and Loh & Loh Construction Bhd are expected to bid. It is learned that low-profile railway engineering firm Global Rail Sdn Bhd will make submissions for the systems work, in collaboration with its foreign technology partners. It is eyeing a portion which is worth RM80m. The government is also expected to pump prime part of the RM500m allocation under the RM7bn economic stimulus package to kick-start the project. (BT)
* * * * *
The slump in building material prices will not only benefit contractors but also save the Government a significant amount of money. In the middle of the year, the Government agreed to include the variation of price (VOP) clause into designand- build projects on a 50:50 basis instead of limiting it to conventional contracts. Since then, prices have declined significantly. This then allows the Government to claim back certain amounts from contractors if the building material prices fall below the base price as at Jan 1, 2008. (Starbiz)
* * * * *
The government has decided not to set a floor price on petrol but instead will impose a tax if its market price falls below RM1.90 a litre, said Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad. “Under the mechanism, we determined that the ceiling price be set at RM2.70 a litre with 30 sen subsidy still given if the market price is above RM1.90 a litre. If the market price is below RM1.90 a litre, we (Cabinet) took the decision to impose a tax but the rate is still at the discussion stage and will be known next month,” he told reporters at his office. He added that fortnight or monthly average price of world crude oil would continue to be used in determining the pump price of petrol. As for diesel and liquefied petroleum gas (LPG), Shahrir said subsidies would continue to be given for them. (BT)
* * * * *
Bank Negara Malaysia will announce further liberalisation of the level of foreign ownership in local banks as early as the first quarter of next year. “We are going to announce our liberalisation measures early next year,” central bank governor Tan Sri Dr Zeti Akhtar Aziz said in Kuala Lumpur yesterday. In recent weeks, several top government officials indicated that Malaysia plans to further liberalise its economy, including the financial services sector. (BT)
* * * * *
The multi billion-ringgit aluminium smelter to be built by Rio Tinto Alcan and Cahya Mata Sarawak Bhd (CMS) is still on track but is under review by the former, given the current global economic turmoil. “Rio Tinto recently announced a thorough review of all our capital projects at all phases of development. We are currently undertaking a detailed stakeholder engagement programme and a project-by-project review will be given at the publication of the full-year results,” a Rio Tinto spokesman told The Edge. (The Edge)
* * * * *
The electronics industry continues to feel the pressure from the global economic squeeze, as firms struggle to keep profitability in the face of slumping demand and rising costs. Two giants in the industry with operations in Malaysia recently announced they would be cutting jobs globally in a bid to reduce costs after reporting poorer fortunes owing to the economic crisis. Hard disk manufacturer Western Digital (WD) and provider of semiconductor-related services STATS
ChipPAC announced last week they will slash their global workforce by 2,500 (5% of total workforce) and 1600 (12%) jobs respectively. US-based WD announced it would sell or shutter one of its two media substrate manufacturing facilities in Malaysia along with the job cuts as part of its cost restructuring plan. Stats ChipPAC’s job cuts are expected to be completed by 1Q09, although it is not clear whether Malaysian jobs will be a part of the cost-cutting exercise. ChipPAC’s facility in Kuala Lumpur provides lead frame packages and test services. (Financial Daily)
* * * * *
Stocks capped a rocky week on a mixed note Friday, as investors weighed the pros and cons of the Bush Administration’s plan to bail out the auto industry. Markets opened sharply higher, but the rally was short-lived as investors remain nervous about the economy. Friday’s session was particularly volatile due to an abundance of options expirations – a quarterly event called “quadruple witching.” Light trading volume is also contributing to volatility. The Dow Jones industrial average ended the day down 0.3% at 8579.11 points and is off about 0.6% for the week. The broader Standard & Poor’s 500 index added nearly 0.3% in the day to 887.88 points and is up 1% for the week. Meanwhile, the Nasdaq composite closed 0.75% higher at 1564.32 points. Tech stocks advanced 1.5% this week. (CNNMoney)
* * * * *
Ireland will pump 5.5bn euros (US$7.7bn) into its three largest banks and take control of Anglo Irish Bank Corp. to protect the nation’s financial-services industry from collapse after credit markets froze. The government will inject 1.5bn euros into Anglo Irish in return for preference shares with 75% of its voting rights, the government said yesterday. Allied Irish Banks Plc and Bank of Ireland Plc will each get 2bn euros. The preference shares issued by Anglo Irish will pay the state a fixed 10% annual dividend. The Bank of Ireland and Allied Irish shares will pay an 8% dividend and the government will have 25% of the voting rights on “key issues” such as change of control and capital structure. (Bloomberg)
* * * * *
Japan’s government expenditure will increase to a record next year as Prime Minister Taro Aso tries to spend his way out of a recession and lift his slumping popularity ahead of an election. Spending will rise 6.6% to 88.5trn yen (US$988bn) in the year starting April 1, a third year of expansion, according to a budget proposal released by the Finance Ministry in Tokyo Saturday. The government will sell 33.3trn yen of new debt, the most in four years, to help fund a revenue shortfall. In his first budget since taking the helm in September, Aso is expanding a debt burden that’s already the largest in the industrialized world as the economic slump cuts revenue and forces him to spend more to spur growth. The budget deficit will widen to the most in four years. The so-called primary deficit, the excess of spending over revenue excluding bond sales and interest payments, will balloon to 13.1trn yen from this year’s 5.2trn yen, the ministry said. (Bloomberg)
* * * * *
The Bank of Japan cut its key policy rate to 0.1% on Friday and moved to pump funds into the market to ease a corporate credit crunch as the yen’s sharp rise and crumbling demand batter the economy. Japan’s government forecast earlier on Friday that the economy would not grow in the fiscal year from April 1, although a slew of stimulus packages would keep it from contracting. The Bank of Japan also lowered its assessment of the economy, saying conditions would likely worsen in the near term. (Starbiz)
* * * * *
George W. Bush on Friday handed the fate of US carmakers to president-elect Barack Obama as he announced plans to lend General Motors and Chrysler $17.4bn to survive the next three months. The loan provides carmakers with $13.4bn from the Troubled Assets Relief Program, originally intended to stabilise the financial system, which will exhaust the $350bn first tranche of the fund. An additional $4bn would be available in February if the second tranche of the TARP is released by Congress. (FT)

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December 19, 2008 Daily Highlights Glomac 2QFY09 : Weighed down by bond losses

1 Comment Add your own

  • 1. tohca1  |  December 23, 2008 at 8:23 am

    Great update of what’s happening in Malaysia. Thanks.

    Cheers and Merry Christmas!

    The Malaysian Explorer

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