12 January 2009 Newz Bits

January 12, 2009 at 7:32 am 1 comment

HIGHLIGHTS


On Malaysia

· Shimizu Corp-led consortium to drop VO clause in order to secure tunneling contract of the Pahang – Selangor Water Transfer project
· Rupert Koh is IOI Corp’s new Group Finance Director
· Hong Leong Financial Group planning to sell a stake in Hong Leong Assurance
· Industrial output contracts sharply in November by 7.7%
On The Global Front
· U.S. unemployment rate climbs to 7.2%
· U.K. economy shrinks 1.5% in 4Q08, the fastest pace in three decades
· Bank of Korea cuts benchmark interest rate by 100 bps to 3%
· More output cut in the offing as OPEC and top producer Saudi Arabia seek to boost oil prices

The Shimizu Corp-led consortium are prepared to drop a conditional variation order (VO) clause in their tender proposal for the tunnelling portion of the RM5bn Pahang-Selangor Water Transfer project, for which it has submitted the lowest bid. Shimizu’s partners in the consortium are UEM Builder Bhd, IJM Corp Bhd (IJM MK, Buy, TP: RM6.10) and Nishimatsu Construction Co. It is learnt the consortium is waiting for the Malaysian government to call in the shortlisted companies to clarify their respective tender proposals. (Financial Daily)
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IOI Corp Bhd’s (IOI MK, Sell, TP: RM3.90) new group finance director Rupert Koh Hock Joo has reported for duty on January 2, the group’s executive chairman Tan Sri Lee Shin Cheng said. He replaced Datuk Yeo How, who has since joined an Indonesian oil palm planter based in  Singapore. Koh last held the position of head of central finance strategic functional units with RHB Capital Bhd. Koh is familiar with the oil palm industry as he served as Sime Darby’s finance director for Malaysia between 1989 and 1996. (BT)
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It’s business as usual for Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), a subsidiary of Puncak Niaga Holdings Bhd (PNH MK, Buy, TP: RM3.00), even as the company awaits a decision on its request for a water tariff review. Syabas CEO Datuk Ruslan Hassan said a proposal was submitted to the Selangor and federal governments on March 31 last year for a water tariff review. “A decision on the increase in water tariffs will depend on some key performance indicators such
as a reduction in non-revenue water and the service level agreement,” Ruslan said during the launch of Puspel, Syabas’ customer service centre’s new logo here yesterday. (Financial Daily)
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Hong Leong Financial Group Bhd is planning to sell a stake in its insurance arm, Hong Leong Assurance Bhd (HLA), industry sources said. Most observers believe the plan is to partner HLA with a well capitalised foreign company. This will help HLA grow further while giving it space to focus on its new greenfield takaful operations. A likely partner would be Tokio Marine & Nichido Fire Insurance Co Ltd. HLA already has a joint-venture takaful company called Hong Leong Tokio Marine Takaful Bhd since 2005. (BT)
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The Credit Guarantee Corporation Malaysia Bhd (CGC) has seen a fall in the number of loan guarantee applications from small-and medium-sized enterprises (SME), in line with expectations of SME growth slowing this year, CGC managing director Datuk Wan Azhar Wan Ahmad said. According to Wan Azhar, financial institutions have been more selective in granting loans. Many applications which did not meet the requirements were declined last year, hence a drop in loans approved. Loan applications from SMEs for capacity expansion or venturing into new businesses could also fall this year as SMEs were expected to consolidate their position. He added that financial institutions were expected to request for more CGC guarantees in order to minimise potential lending risks to SMEs, while more SMEs were expected to seek financial facilities to tide over the difficult time. (Financial Daily)
* * * * *
Long-haul budget airline AirAsia X said it hopes to launch flights to at least three destinations in Japan by year-end after Tokyo relaxed its tough visa requirements for Malaysians. Azran said since October, Japanese officials had dropped the requirement for Malaysian travellers to show a confirmed ticket and accommodation before a visa was issued. (BT)
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The recent contract cancellation of the WCT Bhd-Arabtec Construction LLC joint venture by Meydan LLC took another twist when the latter announced it could complete the project on time. A Bernama report Friday said the government-owned Meydan was confident that its new racecourse would be ready for the Dubai World Cup horse race in 2010 despite the cancellation of its contract with the two companies involved in the project. According to a Meydan statement,
the contract was cancelled for the joint venture’s failure to adhere to the agreed construction time schedule. (StarBiz)
* * * * *
The trading of APL Industries Bhd shares will be suspended from 9am on January 15, 2009, Bursa Malaysia said Friday. It said in a statement that in addition to the suspension, delisting procedures would start against the company. The company recently announced that its regularisation proposal had been aborted and it did not intend to undertake a new scheme to regularise its financial position, Bursa Malaysia said. (BT)
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Malaysia’s industrial output contracted sharply in November by 7.7%, raising concerns of slower economic activities in 4Q08. All the three indices under the Industrial Production Index (IPI) – manufacturing, mining and electricity – registered decreases that contributed to the decline in November from a revised 2.9% decline in October. The IPI came in worse than market expectations and a Business Times poll which expected a 6.57% drop. The Statistics Department said the IPI was also down by 3.1% m-o-m although cumulatively for the 11 months, it grew by 1.6% y-o-y. (BT)
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Hotels in Malaysia expect their rooms to be quite full in the first four months of 2009, despite a slower travel industry and higher room rates. “Forward bookings from January to April 2009 look very healthy. We do not anticipate any cancellation or rate wars. Things look very positive now,” said Malaysian Association of Hotels (MAH) vice-president Ivo Nekvapil. The occupancy rate for Klang Valley hotels in December was around 75%, contributing to a nationwide occupancy rate of 65% in 2008. (BT)
* * * * *
Stocks slumped Friday after a government report showed another big monthly drop in payrolls, resulting in the biggest annual job loss since just after World War II. The DJIAl lost 1.6% (-143.3 pts, close 8,599.2). The S&P 500 index shed 2.1% (- 19.4 pts, close 890.4) while the Nasdaq composite declined 2.8% (-45.4pts, close 1,571.6). The dollar tumbled versus the yen and gained versus the euro. US light crude oil for February delivery fell 87 cents to settle at US$40.83 a barrel on the New York Mercantile Exchange. (CNNMoney)
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U.S. lost 524,000 jobs in December, bringing the total drop for last year to 2.589m, just shy of the 2.75m decline at the end of World War II, the Labor Department reported Friday. The unemployment rate climbed to 7.2%, the highest level in almost 16 years. (Bloomberg)
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Sales at U.S. retailers probably fell in December for a sixth consecutive month as the recession headed into a second year, economists said before reports this week. Purchases fell 1.2% last month, capping the longest stretch of declines since records began in 1992, according to the median estimate in a Bloomberg News survey. Other reports may show prices slumped, led by plummeting commodity costs, and manufacturing output slid. Consumers are pulling back as unemployment surges and declining home and stock values squeeze household wealth, hurting retailers from Wal-Mart Stores Inc. to Macy’s Inc. The figures will serve as a reminder to lawmakers of the urgency to act on President-elect Barack Obama’s stimulus proposals to try to stem the decline in growth. (Bloomberg)
* * * * *
The U.K. economy shrank at the fastest pace in almost three decades during 4Q08 as the recession deepened, the National Institute for Economic and Social Research said on Friday. Gross domestic product fell 1.5% in 4Q08, compared with a drop of 0.6% in 3Q08. That would be the worst quarterly contraction since 1980, when Britain was in the grips of a steel workers’ strike. (Bloomberg)
* * * * *
Chinese business confidence plunged in 4Q08 as the mounting effects of the financial crisis weighed on exports and industrial output, an official survey showed. The business confidence index fell 29.2 points in 4Q08 to a record low of 94.6, the National Bureau of Statistics said. Hardest hit were manufacturers, hurt by shrivelling demand in the U.S. and Europe and a weakening domestic property sector. Their sub-index plummeted 32.1 points from 3Q08 to 87.2. Figures above 100 represent positive sentiment, while those below 100 signal a deteriorating outlook. The fall in confidence came despite a barrage of moves by authorities to prop up economic growth, including announcing a 4trn yuan (US$585bn) stimulus package and repeated cuts in interest rates. (StarBiz)
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The Bank of Korea cut its benchmark interest rate to a record low of 3% in an effort to prevent the global economic crisis from pushing the nation into its first recession since 1998. Governor Lee Seong Tae and his board reduced the 7-day repurchase rate by 100 basis points, more than estimated by all 16 economists surveyed by Bloomberg News, in Seoul Friday. The economy will cool rapidly as export growth slows, the bank said in a statement. The won, Asia’s worst performing currency this year, surged as much as 3.6% after the decision on optimism the central bank’s action may help cushion the economy. Policy makers worldwide are reducing borrowing costs to fight a recession that’s forcing Hynix Semiconductor Inc. and Hyundai Motor Co. to cut output and fire workers. (Bloomberg)
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Chile’s central bank signalled it’s likely to lower borrowing costs further after slashing its key interest rate by the most in a decade on Thursday in a bid to keep the economy from shrinking. Central Bank President Jose De Gregorio’s 1 percentage point cut, to 7.25%, suggests deepening concern about the prospects for growth in Latin America’s fifth-largest economy. The rate cut, which was larger than forecast by all but one of 20 economists in a Bloomberg survey, follows President Michelle Bachelet’s January 5 announcement of a US$4bn stimulus package worth the equivalent of 2.8% of gross domestic product. (Bloomberg)
* * * * *
Saudi Arabia plans to reduce its oil output to 7.7mn barrels a day next month, lower than its OPEC target, as the country seeks to bolster oil prices, Reuters reported, citing industry sources it didn’t identify. The kingdom will produce less than its Organization of Petroleum Exporting Countries quota of about 8mn barrels a day to prevent a build-up in stock and a further decline in prices, according to Reuters. In a separate news, the OPEC could decide to reduce oil output again at its meeting in March if crude oil prices fall further, said the Iranian OPEC representative. (Financial Daily & BT)
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Malaysia Economic Note – Call It a Recession Telecommunication Weekly Review: 5th – 11th January 2009

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