5 January 2009 Newz Bits

January 6, 2009 at 6:51 am Leave a comment

TALKING POINT

Expect recovery in global economic conditions in 2H09

There is every reason to believe that the concerted efforts by governments and central banks globally will bear fruit eventually. We probably have not seen the worse, but we can possibly say
we’re much closer to it today than we were a year ago. P/B valuations of markets are hovering around at “neutral” levels, pricing in extreme hope and expectations that a recovery is at hand
in the coming year. We have, since September last year, made our expectation known that we will see a recovery in global economic conditions in 2H09, albeit a weak one. With equity markets taking a lead, we do expect that some form of turnaround in sentiment and increase in risk appetite earliest 2Q09. We continue to maintain our expectation of the KLCI trading towards the 1180 point level at the 2009 year-end, though we must caution that a tight trading band of 910-970 points could be the highlight of the year should conditions and sentiment not recover.

HIGHLIGHTS

On Malaysia
· YTL Power wants to extend its power purchase agreement with Tenaga Nasional
· Leading index recorded its first fall since January 2005
On The Global Front
· US’s manufacturing activity falls to a 28-year low in December
· China’s manufacturing shrinks for a third month
· Singapore’s recession deepens in the fourth quarter
REPORTS
· Market Strategy – “Mirror Mirror on the wall….”

YTL Power International Bhd (YTLP MK, Buy, TP: RM2.93) wants to extend its power purchase agreement with Tenaga by another five years as well as a licence to build a new plant. YTL Power has submitted proposals to grow its business in a move that would test the government’s resolve over an important policy. The power generation arm of the YTL group has proposed to extend a deal to sell power to national utility firm Tenaga Nasional Bhd (TNB) and also build a new plant,
government sources said. The papers, submitted to the Economic Planning Unit sometime last year, are being circulated in the Energy, Water and Communications Ministry for feedback. (BT)
* * * * *
Kuala Lumpur Kepong Bhd (KLK MK, Hold, TP: RM8.04) has proposed to allocate about RM1.32bn to buy back up to 10% of its paid-up capital. In a circular issued to shareholders yesterday seeking their mandate for the buyback, the board of directors said the 10% stake would amount to 106.4m shares. “The funding for the proposed authority to buy back shares will be sourced wholly from internal funds,” the board said, adding that the RM1.32bn represented the audited retained earnings of the company as at Sept 30. (BT)
* * * * *
Star Publications (Malaysia) Bhd (STAR MK, Hold, TP: RM3.60) has announced several boardroom changes. Datuk Steven Tan is now a non-independent and non-executive director. He was previously deputy chairman. Datuk Oh Chong Peng has been redesignated from his previous position as non-executive director to his new position as an independent and nonexecutive
director. Datuk Seri Kamal Mohamed Hashim has been redesignated to non-independent and non-executive director. (Bernama)
* * * * *
Malaysian Rating Corp Bhd (MARC) has lowered its forecast of the country’s economic growth for this year to 2.5%, against 3.5% it projected two months ago, mainly due to uncertain global economic outlook. The rating agency expects private consumption to grow by 4% this year, against an estimated 8.2% last year. (BT)
* * * * *
The Johor state government is looking at a proposal by an international company to invest RM17bn to construct an oil refinery at Teluk Ramunia, Kota Tinggi. Menteri Besar Datuk Abdul Ghani Othman said the state government was assessing the effects of the project on the lives of fishermen and tourist centres in the area before giving approval. He was informed of the
investment proposal through a letter from the Malaysian Industrial Development Authority (MIDA) three days ago. (Bernama)
* * * * *
Ringgit speculation abroad should be monitored so that Malaysia does not become a victim of opportunistic groups seeking to gain from the fall of the currency, a former president of the local stock exchange said. “Our economy is not in recession and our currency should not be lower than those of countries already in recession,” Datuk Muhammad Salleh Majid said yesterday. “The ringgit reached as high as RM3.10 to the US dollar in April last year, but now, even with the US economy in recession, our currency has weakened to RM3.51,” he pointed out. (BT)
* * * * *
Tan Sri Quek Leng Chan took a 3% stake in InterContinental Hotels Group Plc, the Daily Telegraph reported, citing a company statement. Quek made the investment, worth £51m (US$74m), through his Hong Leong Group Malaysia, the Londonbased newspaper said. He owns the Guoman hotel chain in Britain, formerly known as Thistle Hotels, it said. (BT)
* * * * *
Malaysia’s leading index, a forward looking measure of economic activity, recorded its first fall since January 2005 and fell to its lowest level in 12 months in October, according to the Statistics Department. The leading index fell by 1.8% to 155.7 points in October while the six-month smoothed index, which strips out one-off statistical events, declined by 2.9%, the department said. (StarBiz)
* * * * *
US stocks rallied Friday, with investors starting off a new year on the right foot, after an abysmal 2008, and the Dow closing above 9,000 for the first time since November. The Dow Jones industrial average rose 258 points, or 2.9%. It was the secondbest start of the year on a point basis, according to Dow Jones. On a percentage basis, it was the sixth best start of the year.
The Standard & Poor’s 500 index gained 3.2% and the Nasdaq composite rose 3.5%. In currency trading, the dollar gained versus the euro and yen. U.S. crude for February delivery settled up $1.47, or 3.9%, to settle at $46.15 a barrel. (CNNMoney)
* * * * *
Singapore’s recession deepened in the fourth quarter as the global financial crisis took its toll on manufacturers and the services sector, and the government warned the economy may shrink by as much as 2% this year. The economy contracted at a seasonally adjusted, annualised pace of 12.5% during the October-December quarter, following a revised 5.4% decline in July-September, data showed yesterday. It was the third consecutive quarter of decline in gross domestic product
and was worse than the most pessimistic forecast of nine economists polled by Reuters which was for a decline of 8.6%. The government now expects Singapore’s GDP to come in between a decline of 2% and growth of 1% in 2009, lower than the previous forecast of 1% to 2% made in November. (Reuters)
* * * * *
A key index of the US’s manufacturing activity fell to a 28-year low in December, according to a report released Friday. The Institute for Supply Management, a purchasing management group based in Tempe, Ariz., said its manufacturing index was 32.4 for December. That’s the lowest reading since June 1980, when it stood at 30.3. An index of 35.4 was expected for December, according to a consensus of economist opinions provided by Briefing.com. That’s down from November, when the index was 36.2. (CNN Money)
* * * * *
The number of Americans filing for first-time unemployment benefits fell sharply last week, according to a government report released, as a year filled with layoffs and income cuts draws to a close. The Labor Department said initial filings for state jobless benefits fell to 492,000 for the week ended Dec. 27, a decline of 94,000 from the 26-year high of 586,000 claims a week earlier. Economists were expecting jobless claims to slip to 575,000, according to a consensus survey by Briefing.com (CNN Money)
* * * * *
Rates on mortgage loans in the US are the lowest in the 37-year history of the Freddie Mac Primary Mortgage Market Survey, according to a weekly report released Wednesday. The average 30-year, fixed-rate loan issued to borrowers declined to 5.1%, with 0.7 up-front points, for the week ending December 31, according to the survey. The rate dropped from an average
of 5.14% last week, which was the previous 37-year low. Freddie Mac (FRE, Fortune 500) began surveying lenders back in 1971. The 30-year fixed was at 6.06% a year ago (CNN Money)
* * * * *
China’s manufacturing shrank for a third month as exports fell and companies ran down inventory, worsening the slowdown in the world’s fourth-largest economy. The Purchasing Managers’ Index rose to a seasonally adjusted 41.2 in December from 38.8 in November, the China Federation of Logistics and Purchasing said today in an e-mailed statement. A reading below 50 indicates output contracted. China’s growth may have slipped to 5.5% last quarter, the weakest pace in at least 15 years, as recessions in the U.S., Europe and Japan cut demand for exports, according to Shanghai-based Industrial Bank Co. (Bloomberg)
* * * * *
Crude prices rose above US$46 a barrel Friday as the Middle East tension continued while OPEC would carry out its largest production cut. Concerns that the conflict between Israel and Hamas in Gaza could disrupt supplies in the Middle East continued boosting prices. The gains were also encouraged by a rally in U.S. stocks to a two-week high despite U.S. manufacturing activity fell more than expected in December. The Organization of Petroleum Exporting Countries (OPEC),
which accounts for about 40% of global supply, is to slash 2.2m barrels per day this month. It would be the cartel’s biggest-ever output cut (Chinaview)
* * * * *
Air freight market conditions will likely continue to deteriorate this year, with the International Air Transport Association’s (IATA) November 2008 data showing a sharp 13.5% fall in international cargo and 4.6% drop in international passenger traffic. The November slump in the international air cargo business was the largest drop since 2001, the aftermath of September 11,
said IATA Director General and CEO, Giovanni Bisignani. Asia Pacific carriers, representing 44.6% of global airfreight, saw freight traffic fall by 16.9% in November – the largest decline of any region. (StarBiz)
* * * * *

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Kim Loong Resources 3QFY09 : Bad news in the price Mirror Mirror On The Wall…. | Market Strategy

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