13 January 2009 Newz Bits

January 14, 2009 at 4:28 am Leave a comment

TALKING POINT

Crude palm oil inventory dips in December
Crude palm oil stock levels eased by 12.0% in December 2008 on the back of an 18.2% rise in exports and a 10.2% dip in production. Given the start of the rainy season in December, production numbers came off significantly, as expected, and this signifies the start of the seasonal production down-cycle which we believe will bring health back to the industry after a year of intense production that led to excess supply. On exports, we consider the export numbers in December to be a bit of an anomaly and continue to expect choppy export numbers throughout 1H09 given slowing growth in major importing countries. In fact, cargo surveyor Intertek has already reported a drop in exports for the first 10 days of January. We continue to remain Overweight on the plantation sector as we believe the longer term fundamentals are intact, despite some share prices of companies having over-run their short term fundamentals.

HIGHLIGHTS


On Malaysia
· MAS is prepared to embrace bio-fuel if it is commercially viable
· Berjaya Corp to develop RM2bn worth of serviced apartments with Ritz-Carlton
· Proton has no intention of asking interested carmakers to buy a stake in the company
On The Global Front
· IMF may need another US$150bn to help counter worsening global economic downturn on developing and poor nations
REPORTS
· Plantations – December MPOB Data – “Phew!” (Overweight)

Malaysia Airlines System Bhd (MAS MK, under review) is prepared to embrace biofuel if it is commercially available in the market, said the national carrier’s managing director and chief executive officer Datuk Seri Idris Jala. “Quite a lot of airlines are testing biofuel and Malaysia Airlines is prepared to do it too when these alternative fuels are commercially available. We are always looking for ways to reduce carbon emissions. When it becomes commercially available, we want to become the first company to embrace it,” he said. (Financial Daily)
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Eight companies are holding back investments of between RM5bn and RM8bn because they cannot secure supply of gas from Petrolium Nasional Bhd (Petronas), said International Trade and Industry Minister Tan Sri Muhyiddin Yassin. The companies from Japan, the US and Europe are in energy intensive industries such as steel and manufacture of glass. To overcome the problem, Muhyiddin said the cabinet had asked Petronas to come back with proposals on how best to resolve the issue. “At the moment, Petronas has committed all its gas production. The earliest the redistribution can happen is in 2014,” he said. Currently the bulk of Petronas’s gas goes into power plants. (Financial Daily)
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Berjaya Corporation Bhd (BCorp) has teamed up with The Ritz-Carlton Hotel Company to develop luxury serviced apartments with an estimated gross development value (GDV) of RM2bn. BCorp group chairman and chief executive officer Tan Sri Vincent Tan said the group expected to sell at least half the 300 units on offer and was prepared to offer the remaining portion for rental or for sale at a better time. Tan said the 48-storey twin towers would be owned and developed by BCorp’s wholly-owned subsidiary Wangsa Tegap Sdn Bhd but declined to elaborate on the  structure of the agreement with Ritz-Carlton which will be managing the property. (Financial Daily)
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Berjaya Corp Bhd (BCorp) may sell stakes in bread maker Silver Bird Group Bhd and stem cell companies StemLife Bhd and TMC Life Sciences Bhd. Even its 7-Eleven and Starbucks franchise rights are up for sale, if the price is right. “We’ve invested in many businesses with a view for long term plans. But these investments and businesses can be offered for sale if the price is right,” BCorp chairman and chief executive officer Tan Sri Vincent Tan said. On the group’s outlook for the current financial year ending April 2009, Tan commented that it was challenging on the whole but their consumer product business was doing well, especially Cosway. (BT)
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Proton Holdings Bhd said it has no intention of asking interested carmakers to buy a stake in the company. It is only open to “collaborative agreements” in relation to potential product developments between Proton and the collaboration partner. Referring to a Business Times report “US, Japan carmakers show interest: Proton” published yesterday, the company clarified
that there are no plans to offer shares for sale for the time being, and any decision lies on its  controlling shareholder, Khazanah Nasional Bhd. (BT)
* * * * *
The International Trade and Industry Ministry (Miti) will hold further discussions with Petrolium Nasional Bhd (Petronas), Tenaga Nasional Bhd (TNB) and the Ministry of Energy, Communications and Multimedia on the issue of gas supply and electricity prices, said its minister Tan Sri Muhyiddin Yassin. He also commented that the electricity tariffs should be
brought down, now that the fuel prices have been reduced. However, there has yet to be a discussion on that matter. (BT & StarBiz)
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The current practice of allocating open-Approved Permits (open-APs) to bumiputera motor traders will continue beyond 2010 while the government implements a five-year plan that charts the migration of the dealers into other areas of the industry. This means that the earliest the open-AP system can be discontinued is 2014. Under the National Automotive Policy (NAP) unveiled in 2006, the issuance of open-APs is to stop in 2010. (Financial Daily)
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Protasco Bhd has confirmed news reports that it is negotiating for two infrastructure projects in Syria worth more than RM2bn. In a statement to Bursa Malaysia filing yesterday, Protasco said it was interested in the implementation of the Damascus Ring Highway Project, which his expected to cost about €238.8m (RM1.36bn), on a build, operate and transfer basis for a proposed concession period of approximately 33 years. The group also said it was eyeing the construction of multistorey car parks and commercial buildings in Damascus at a cost of about €210m on a build, operate and transfer basis for a concession period of approximately 49 years. (Financial Daily)
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Giant Group Ltd (GGL), a Malaysian-owned company, is close to finalising a US$5bn (RM17.75bn) contract to construct a 210km electrified railway line in Laos that will connect it to Thailand in the west and Vietnam in the east. GGL, which is based in Malaysia and incorporated in the British Virgin Islands, signed a memorandum of understanding (MoU) with the Laotian government last November towards concluding the terms of the contract. Under the MoU, GGL is to completely finance and develop the project in exchange for a 25-year concession to operate the line, with the possibility of it being extended a further 12 years. The project will also involve the construction of stations and an immigration control office. Construction is expected to take five to eight years. (Financial Daily)
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Stocks tumbled Monday, dragged down by concerns about Citigroup’s potential deal with Morgan Stanley, and the start of the fourth-quarter earnings reporting period. The DJIA lost 125.2 points (-1.5%, close 8,473.9). The S&P 500 shed 2.3% (-20.1 pts, close 870.3) and the Nasdaq composite slid 2.1% (-32.8 pts, close 1,538.8). In currency trading, the dollar eased versus the euro and the yen. U.S. light crude oil for February delivery fell US$3.24 to settle at US$37.59 a barrel on the New York Mercantile Exchange. (CNNMoney)
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The International Monetary Fund may need another US$150bn to help counter the hit to emerging markets and poorer countries from a worsening global economic downturn, Managing Director Dominique Strauss-Kahn said. The fund will make a “significant” increase in its US$1.4trn projection of global financial losses and write-downs, he added. The remarks by Strauss- Kahn, a former French finance minister and presidential contender, may help build momentum for proposed stimulus packages in Germany and France. They also indicate that the fund may put pressure on nations with large foreign-exchange reserves, such as China and Saudi Arabia, to step up contributions. (Bloomberg)
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India’s industrial production unexpectedly rose in November, after declining in the previous month for the first time in 15 years amid a global recession. Output at factories, utilities and mines increased 2.4% y-o-y after a revised 0.3% fall in October, the Central Statistical Organization said yesterday. Economists expected a 0.8% contraction. The unexpected rebound is likely to be brief as external demand remains subdued, while domestic consumption is set to moderate in coming months as the overall economy loses momentum, creating an uncertain business environment and unemployment outlook. (Bloomberg)
* * * * *
Spain’s top AAA long-term sovereign ratings may be cut by Standard & Poor’s, putting Spain at risk of its first downgrade from the credit rating company as the country suffers its first recession in 15 years. S&P cited “significant challenges” facing the Spanish economy and said it would probably decide on the rating this month. Credit-default swaps linked to Spanish debt saw the biggest one-day gain in almost three months, a sign that investors attached a higher risk to Spanish assets. Spain’s economy, which outpaced the euro region for more than a decade, entered a recession in 2H08 as the global credit crunch deepened the collapse of a debt-fuelled domestic housing boom, sending the unemployment rate to the highest in Europe. The government has announced some 90bn euros (US$120bn) of stimulus measures, on top of steps to support banks, while tax revenue is falling. (Bloomberg)
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Turkey’s central bank will probably reduce the benchmark interest rate by three-quarters of a point this week, the third consecutive cut, as it seeks to avert a recession. The bank will lower the overnight borrowing rate to 14.25%, the lowest in 2 1/2 years, according to the median estimate of 20 economists surveyed by Bloomberg. Forecasts ranged from a half-point cut to a full percentage point. The Ankara-based bank will announce its decision on January 15. The bank will join monetary authorities worldwide in slashing the cost of borrowing as the global credit crisis prompts industrial output to tumble and inflation to slow. Growth in the European Union candidate state hit its slowest in six years in 3Q08 and gross national product probably contracted in 4Q08. (Bloomberg)
* * * * *
New Zealand businesses grew more pessimistic about the economic outlook and their own earnings as the world’s largest economies slumped into recession, curbing exports and consumer spending. A net 64% of companies surveyed last quarter expect the economy will worsen over the next six months, the New Zealand Institute of Economic Research said today. That is more than three times the 19% that forecast a deterioration in 3Q08. The government, which last month said the economy may not start expanding steadily until 2010, plans to cut income taxes and spend more on roads and schools to spark demand. (Bloomberg)
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