November 18, 2008 Daily Highlights

MARKET REVIEW

KLCI Update
At close yesterday, the benchmark KLCI increased 2.41 points to 884.06. It opened 6.45 points lower at 875.20.The Industrial Index jumped 4.26 points to 2,122.51, the Finance Index went up 38.65 points to 6,799.58 and the Plantation Index slid 23.52 points to 3,896.36.The FBMEmas added 10.65 points to 5,819.91, the FBM30 added 30.55 points to 5,732. 69, the FBM2BRD shed 37.92 points to 4,447.99 and the FBMMesdaq Index was 24.82 points lower at 3,471.00.Losers outnumbered gainers by 327 to 200 while 177
counters were unchanged, 622 still untraded and 32 others suspended.Turnover rose to 571.273 million shares worth RM595.515 million from last Friday’s closing of 718.742 million shares valued at RM854.674 billion.

Regional Update
Asian stocks retreated yesterday, led by financial companies and commodity producers, as recession in Japan and Hong Kong and declining oil prices heightened concern a global economic slowdown is deepening. Japan’s economy, the world’s second largest, slipped into recession for the first time since 2001 as companies cut back spending, the Cabinet Office said today. Hong Kong’s economy entered its first recession since the outbreak of a deadly epidemic in 2003 as the global financial crisis cut exports and
spending cooled, the government said on Nov. 14. Japan’s Nikkei 225 Stock Average gained 0.7 percent to 8,522.58, as Daiichi Sankyo Co. and other drugmakers attracted investors seeking companies whose earnings will be shielded from a slowdown.

US Stocks
U.S. stocks tumbled yesterday, extending a two- week drop, as a record contraction in New York manufacturing and Citigroup Inc.’s plan to cut 52,000 jobs spurred concern the recession will deepen. The S&P 500 declined 2.6 percent to 850.75 after swinging between gains and losses at least 18 times as energy shares climbed earlier in the day. The Dow Jones Industrial Average decreased 223.73, or 2.6 percent, to 8,273.58. The Nasdaq Composite slid 2.3 percent to 1,482.05, a five-year low. Three stocks fell for
each that rose on the New York Stock Exchange. The tumble in U.S. equities today followed declines in Asia and Europe after Japan unexpectedly slid into a recession and Britain’s biggest business lobby said the U.K. slump may be deeper than earlier predicted.

MEDIA HIGHLIGHTS

Hoteliers see challenging year ahead
Hoteliers foresee a challenging year ahead given the present gloomy economic outlook.Hotel Nikko Kuala Lumpur (KL) general manager Michael Borostyan said the first quarter was expected to be quiet due to the holiday season and the slowdown in the global economy.Hotel Nikko, however, might be little affected as it
was less reliant on long-haul markets, he said.Parkroyal Hotels & Resorts, Malaysia, vice-president and Parkroyal Kuala Lumpur general manager Ian McKie said business growth next year would likely be on a reduced scale.“Currently, our corporate business remains steady but we are seeing a slight softening in long-haul leisure business particularly from Britain,” he said.Parkroyal’s business in September was below expectations due to the fasting month. However, there was a strong pick-up from the second week in October especially from the corporate segment.

RAM: Local sukuk market may post double-digit growth
Despite the gloomy global economic outlook, the Malaysian sukuk market could see double-digit growth as Asian markets return to normal in the next six to nine months, according to RAM Ratings Services Bhd.The sukuk is an Islamic financial instrument that is equivalent to a bond in conventional banking.RAM Ratings
managing director Wong Fook Wah said Asian capital markets, including Malaysia, were clearly less exposed to the US banking and housing debt crisis and, therefore, would suffer less.

CIMB Aviva offers VSS
An industry source said that about 200 of the group’s conventional insurance and takaful unit employees had accepted the voluntary separation scheme (VSS), offered last month.It is learnt that CIMB Aviva has about 550 employees.News of the VSS scheme is a worrying sign amid the global financial crisis. Already, there
are rumours that a similar scheme may be offered at another local insurer as the slowing economy hurts business.CIMB Aviva told Business Times that the VSS was part of a restructuring exercise. This will lead to its focusing on the life and family takaful business, distributed through a bancassurance partnership with CIMB Bank.”This VSS is a a direct component of the business restructuring exercise, which will give CIMB Aviva much greater focus and efficiency in the future,” it said in an e-mail reply.

Moody’s downgrades shipping industry outlook
The agency cited continued vessel overcapacity, weaker demand for commodities, and volatile prices for bunker fuel.The negative outlook applies to all three sectors: dry bulk, tankers and liners.”The excess of supply in vessels has worsened as growth in commodities demand has slowed, in line with the global economic downturn, the freezing in credit, lower consumption in the US and Europe, and volatility in currency and other financial markets. An easing in demand for oil is another factor,” Moody’s said in its report entitled “Asia-Pacific Shipping Sector: Preparing for Volatile Times”.It said the excess supply is apparent in all three sectors and expected to take a long time to correct.Today, the order book for
capsized bulk carriers is similar in size to that of the current global fleet. For the tanker sector, the order book for Very Large Crude Carriers (VLCCs) and Suezmax tankers is about half the size of current fleet capacity, and these new- builds will be delivered over 2008-2012.As for the liner sector, it has an order book for 6.5 million TEUs (20-foot equivalent units), representing 55 per cent of current fleet capacity. Moody’s said rated issuers facing over-supply in vessels include PT Humpuss Intermoda Transportasi in dry bulk; MISC Bhd and BW Group Ltd in tankers; and Wan Hai Lines Ltd and MISC in liners.

Obama, McCain Vow Cooperation at Post-Election Talks
President-elect Barack Obama and former rival John McCain pledged to work together on the economic and national security challenges facing the country in their first face-to-face meeting since the election. At this defining moment in history, we believe that Americans of all parties want and need their leaders to come together and change the bad habits of Washington so that we can solve the common and urgent
challenges of our time,” the two men said in a joint statement issued after their hourlong meeting in Chicago.

Singapore May Favor Weaker Currency Amid Recession, UBS Says
Singapore, facing a slump in exports amid a recession, may change its foreignexchange policy to favor a weakening currency in April or sooner, according to UBS AG. The Monetary Authority of Singapore, after ending its policy of encouraging gains in the local dollar last month, may be open to depreciation to help revive the $161 billion economy, wrote Ashley Davies, a currency strategist at the world’s secondbiggest
foreign-exchange trader. The U.S. Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank have all reduced benchmark interest rates to combat recessions.

Bank of America to Double China Construction Stake
Bank of America Corp. will almost double its three-year-old stake in China Construction Bank Corp., three weeks after being awarded $15 billion from the U.S. government to thaw frozen credit markets. Bank of America, which is buying Merrill Lynch & Co., will boost the stake in China’s No. 2 bank to 19.13 percent from 10.8 percent, the Charlotte, North Carolina-based lender said today. It will buy shares from China SAFE Investments Ltd., a state investment arm that is the Beijing-based bank’s biggest stakeholder.

Australian, New Zealand Dollars Decline as Stocks Head Lower
The Australian and New Zealand dollars fell as equities slid on concern the global recession will deepen, prompting investors to sell higher yielding assets. The currencies fell against the yen and the greenback after U.S. stocks tumbled, extending a two-week drop, after a record contraction in New York manufacturing and Citigroup Inc.’s plan to cut 52,000 jobs. “Equities are going to retain a pretty important influence
over currencies,” said Joe Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia Ltd. Australia’s dollar fell 0.8 percent to 64.74 U.S. cents as of 9:53 a.m. in Sydney from 65.24 cents late in Asia yesterday.

ECONOMY HIGHLIGHTS

Paulson Says Markets Likely to Remain Stressed for `Months’
U.S. Treasury Secretary Henry Paulson said that while concern about failures of major financial companies has subsided, markets will remain strained for “months” to come. “There will be stress in the capital markets for a number of months here, because housing prices are still declining and now it has moved beyond housing,” Paulson said at a panel discussion in Washington. He was joined at the conference
by Clinton administration Treasury chiefs Robert Rubin and Lawrence Summers. Rubin, now a senior counselor to Citigroup Inc., predicted the crisis of confidence will abate “within a reasonable period.” Summers, now at Harvard University, called for a “speedy, substantial and sustained” fiscal stimulus that seeks to boost the economy for the next two to three years. Paulson and Federal Reserve Chairman Ben S.
Bernanke met earlier with House Speaker Nancy Pelosi and other Democratic leaders to discuss how the funds are being used and a proposal to rescue the auto industry. “We have some questions about the significant alterations that have been made in the implementation” of the bailout program, Pelosi said before the meeting.