16 January 2009 Newz Bits

January 16, 2009 at 4:28 am Leave a comment

On Malaysia
· Maybank plans to raise RM3bn to boost its working capital
· Time dotcom sells 2.9% of its stake in DiGi Com Bhd
· EPU warns 3.5% GDP growth target may be missed if the RM7bn stimulus package is not implemented on schedule
· Power tariff reduction will likely take place by mid-February
On The Global Front
· U.S. House Democrats unveil a $825bn stimulus plan
· ECB cuts benchmark interest rate by 50bps to 2%
· Kuala Lumpur Kepong – U-turn land sale (Hold; RM9.55; TP: RM9.90)

Malayan Banking Bhd (MAY MK, Hold, TP: RM7.00) plans to raise an additional RM3bn to boost its working capital this year and is looking at various options for the fund-raising exercise, said CEO Datuk Seri Abdul Wahid Omar. He said Maybank’s capital requirements would be some RM12bn, of which RM9.1bn has been raised. He also said most banks were looking to boost their capital ratios, especially the Tier 1 capital ratio. (Financial Daily)
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Time dotCom Bhd (TdC) yesterday sold 2.9% of its stake in DiGi Com Bhd (DIGI MK, Hold, TP: RM25.50) for RM463.5m. The sale reduced its holding to 7.1% and the proceeds will be utilised to pare debts, according to an announcement on Bursa. TdC’s wholly owned subsidiary Hakikat Pasti Sdn Bhd disposed of the 22.5m DiGi shares via a book-building process. The disposal works out to be RM20.60 per share, 20 sen lower than the closing price of DiGi shares yesterday. “Given the current challenging market conditions and in line with its prudent debt management practices, the company has decided to reduce the borrowings of the TdC group, which were taken to finance its investments in securities,” said TdC of its rationale for disposing of the shares. (Financial Daily)
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BankThai PCL, majority owned by Bumiputra-Commerce Holdings Bhd (BCHB MK, Buy, TP: RM8.60), said yesterday it would issue bonds worth up to 2.5bn baht (100 baht = RM10.30) as part of a plan to boost its capital. It also said in a statement it would cut the price on shares offered in a one-for-one rights issue to 0.38 baht each from 0.66 baht. The bond sale and rights issue are revisions to the bank’s capital-raising plan announced last year. CIMB has said it would inject 5 bn – 6 bn baht in new funds into BankThai by around April of this year. The debt could be raised in an issue of hybrid securities to boost its Tier 1 capital, or an instrument that could boost Tier 2 capital, or a combination of these, the bank said. As of September 2008, its capital adequacy ratio was 6.93%, lower than the required level of 8.5%. (BT)
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Asiatic Development Bhd (ASP MK, Buy, TP: RM5.00) has set aside RM200m for new plantings on 20,000ha in Indonesia this year. The allocation will be shared proportionately with its joint-venture partners in that country. “We are focusing on organic growth. We have no acquisition plans. We will embark on new plantings aggressively this year,” its chief executive officer Tan Sri Lim Kok Thay said yesterday. “Planting cost has increased lately. We estimate investments of
RM14,000 per hectare in the first three years before the trees start to bear fruits,” chief operating officer Yong Chee Kong said. Asiatic has oil palm landbank of 65,664ha in Malaysia, while in Indonesia it is developing 159,100ha through joint ventures. As at December last year, about 6,500ha had been planted. (BT)
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Malaysia Airline System Bhd (MAS MK, under review) is offering the lowest prices this weekend for its domestic oneway destinations within West and East Malaysia with fares starting from RM39 nett. “We are offering our best deals with up to 250,000 seats on sale. These promotional fares are only possible as we have removed the domestic fuel surcharge from January 14”, said its senior general manager,network revenue and management, Dr Amin Khan. Customers will also pay an all-time low fare starting from RM69 nett for flights from and to Kuala Lumpur to all destinations in Sabah and Sarawak. The special fare is also available for travel from Johor Bahru to Kuching. (BT)
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Malaysia Airline System Bhd (MAS MK, under review) said yesterday it had won a court claim of US$1.51m (RM5.44m) against Shahjalal Aviation System Ltd in Dacca, Bangladesh. It also said the court judgment on Tuesday included a dismissal of Shahjalal’s claim of US$46.06m against the national carrier for alleged unlawful termination of a general sales agency agreement between them. (Financial Daily)
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The Economic Planning Unit has warned that Malaysia may miss its gross domestic product (GDP) growth target for 2009 if the RM7bn stimulus package is not implemented on schedule. “It’s important that we push that stimulus package. If the effect is slow, I think the highest we can achieve is 2.5%,” Economic Planning Unit (EPU) director-general Tan Sri Dr Sulaiman Mahbob said. The government has projected 3.5% GDP growth for the year. Second Finance Minister Tan Sri Nor Mohamed Yakcop said the RM7bn has already been given to the various ministries, which are expected to fully disburse the funds by year-end. Asked if the government was planning another stimulus package, he said: “If there is a need, we will have another one. The Treasury is always looking at various projects that could be implemented if there are extra funds, so in that sense, the work is going on.” (BT)
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Malaysian Institute of Economic Research (MIER) expects the government to launch a second stimulus package of RM7bn to RM10bn by the middle of the year to help boost the economy. MIER executive director Professor Datuk Dr Mohamed Ariff Abdul Kareem said that a second package could see the economy growing an additional 1-2%. Even if the two packages leave the fiscal deficit for 2009 at 5.5% of gross domestic product (GDP), it is “not unmanageable”, he added. MIER has revised downwards its GDP forecast for last year to 5.1%, from 5.5% previously, and for this year, to 1.3% from 3.4%, below the official growth forecast of 3.5%. (BT)
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The government is confident the country’s real GDP will grow at its projected 3.5% this year even as economists cut their growth projections on the back of deteriorating economic conditions worldwide. The government is holding onto its growth target given the RM7bn stimulus package and any additional fiscal measures it could undertake if and when the need arises. Even though the KLCI fell below the psychological 900-point level yesterday, Second Finance Minister Tan Sri Nor Mohammed Yakcop expressed confidence that the country would experience growth, albeit at a declining pace, this year. (Financial Daily)
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The much-expected reduction in power tariffs will likely take place by mid-February following a reduction in the price for natural gas supplied by Petroliam Nasional Bhd (Petronas) to the power sector. The Economic Planning Unit (EPU) is expected to come up with a recommended revised gas price “in a matter of days”, according to a source. Electricity tariff rates depend largely on the subsidised gas cost that is pegged at RM14.30 per mmbtu (million British thermal units) against a market rate of RM20-RM25/mmbtu. Gas is the biggest fuel component and accounts for some 60% of the country’s power generation fuel mix. It is believed that Energy, Water and Communications Minister Datuk Shaziman Abu Mansor met with Tan Sri Amirsham Aziz, Minister in the Prime Minister’s Department in charge of EPU, late Wednesday and the latter was agreeable to that the price of gas sold to the power sector would need to be cut. However, the extent is unknown. (StarBiz)
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Temasek Holdings (Private) Ltd has ceased to be a substantial shareholder of WCT Bhd after the Singapore government’s investment arm disposed of 253,400 shares in the latter, thereby reducing its stake to below the 5% threshold. According to a filing to Bursa Malaysia Securities, Temasek’s stake in WCT was reduced to 4.99% comprising 38.52m shares after the disposal on Jan 9. (Financial Daily)
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Kencana Petroleum Bhd has launched the construction of its second tender assisted drilling rig just 11 months after starting fabrication of its first rig, the KM-1. The project is expected to be completed by May 2010. (Financial Daily)
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The Securities Commission (SC) will formally announce the implementation plans for a unified board on Bursa Malaysia Securities Bhd in 1Q09, its chairman Datuk Seri Zarinah Anwar said. “Efforts are well on track. We will be posting highlights of the scheme for public consultation by end-January or early next month,” she said yesterday. (Financial Daily)
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US stocks rose Thursday, erasing earlier losses, as investors breathed a sigh of relief that the government will make more funding available to Bank of America, which is struggling in the aftermath of its purchase of Merrill Lynch. The Dow Jones industrial average added 0.1% (+12.35pts, close 8,212.49), after ending lower for six consecutive sessions. The Dow had fallen
as much as 205 points earlier, dropping below 8,000 for the first time since Nov. 21, when it hit a 5 1/2 year low. The Standard & Poor’s 500 index rose 0.1% (+1.12pts, close 843.74) and the Nasdaq composite rose 1.5% (+22.20pts, close 1,511.84). In currency trading, the dollar was mixed against rival currencies as concerns about the nation’s banking sector vied with optimism surrounding the government’s proposed economic stimulus program. The euro slipped to $1.3138 from $1.3159 late Wednesday, while Britain’s pound rose to $1.4647 from $1.4569. Oil fell towards $36 a barrel on Thursday after gloom about the health of the world economy put a cap on earlier modest gains. (CNNMoney)
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House Democrats unveiled a $825 billion stimulus plan aimed at helping lift the economy out of recession through a combination of tax cuts for families and businesses and a half-trillion dollars in new federal spending. The plan would provide tax cuts totaling $275 billion, including a $500 payroll tax cut for individuals and $1,000 for families. The plan would spend $550 billion more on infrastructure projects, an expansion of jobless benefits, renewable energy initiatives, aid to the poor, school repairs, college tuition assistance and scores of other initiatives. House Appropriations Committee Chairman David Obey, a Wisconsin Democrat, called the bill “the largest effort by any legislative body on the planet to try to take government action to prevent economic catastrophe.” (Bloomberg)
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Interest rates on U.S. 30-year fixed-rate mortgages dropped for the 11th straight week to a record low, according to a survey released on Thursday by home funding company Freddie Mac. Interest rates on the 30-year fixed-rate mortgage averaged 4.96%, with an average 0.7 point, for the week ending Jan. 15, down from the previous week’s 5.0%, according to Freddie Mac. (CNNMoney)
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World oil demand will contract more than expected this year and the weakening economy may further erode consumption, OPEC said on Thursday, building a case for additional supply cuts. In a monthly report, OPEC said it expected demand to fall by 180,000 barrels per day (bpd) in 2009, 30,000 bpd more than its previous forecast. Oil use is declining this year and in 2008, the first drop in more than 20 years. (CNNMoney)
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The European Central Bank cut its benchmark interest rate by half of a percentage point to 2% on Thursday, matching its lowest-ever rate as inflation plummets and recession spreads. The cut, in line with consensus forecasts, marks the fourth cut in just over three months amidst signs the financial crisis is biting hard into the real economy and inflation threatens to fall further below the ECB’s 2% ceiling. The ECB also set new rates for its overnight facilities, after announcing in December it would increase the gap between these rates and the benchmark rate to back to 100 basis points. From Jan. 21, funds borrowed from its marginal lending facility will attract an interest rate of 3% and overnight deposits will pay 1%. (CNNMoney)
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15 January 2009 Newz Bits Kuala Lumpur Kepong : U-turn Land Sale

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