Bursa Chat - News Highlights (06.03.2009)

LOCAL

TM International Bhd’s (TI MK, Hold, TP: RM2.75) executive director and group CFO Datuk Yusof Annuar Yaacob said there is no need to tap shareholders’ fund twice, as the RM5.25bn rights issue will deleverage TMI’s balance sheet and bring down its debt to EBITDA ratio level below 3x. As part of its deleveraging, TMI had also managed to convert a bridging loan to a 3-year term loan, reducing the short term risk which was a concern among investors. TMI is even reviewing all its investments and may sell non-core assets and its minority stakes in an effort for greater focus and better synergies. Non-core assets it may hive off include stakes in telcos in Pakistan, Thailand and India. But there is no rush to do it at fire-sale prices. In the current economic scenario, he expects capex to be reduced to RM4bn for this year against RM6bn last year. (Bloomberg)

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FireFly, a wholly-owned unit of Malaysian Airline (MAS MK, Sell, TP: RM2.44), hopes to fly at least three times daily to Singapore once the route is approved by the respective governments, said managing director Eddy Leong. The airline would be receiving two additional planes in the next two months, bringing the total to seven, and would review if it should take on another three that were planned earlier. (StarBiz)

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The government is asking for at least RM10bn to implement the second stimulus package, a figure that comes in at the lower end of economists’ expectations. The supplementary supply bill comprising an allocation of RM5bn each for operational and development expenditures was tabled for first reading in parliament yesterday, said Deputy Finance Minister Datuk Kong Cho Ha. However, he told reporters in parliament that the final quantum of the package could be increased during the second reading next Tuesday. Deputy Prime Minister and Finance Minister Datuk Seri Najib Razak is scheduled to announce the details of the stimulus package, which has been dubbed a mini-budget, at 4pm on Tuesday. (Financial Daily)

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Proton Holdings Bhd is open to any international automobile company keen on a partnership, Deputy Finance Minister Datuk Kong Cho Ha said. But amidst the challenging economy currently, Proton has taken its own initiatives to restructure its internal management towards more effectiveness and efficiency in the long run. (Malaysian Reserve)

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The February CPO stockpile is likely to fall below January’s level of 1.83mt due to floods in some states said Datuk Peter Chin. Industry players polled by Reuters had forecasted that February’s palm oil stocks would probably fall to 1.67m mt, which would be its lowest in 16 months. Demand growth is still expected this year at 8.5% according to Ministry forecasts. To th note, MPOB statistics will be announced on March 11 . (Financial Daily)

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Discussions between the Ministry of Energy, Water and Communications, National Water Service Commission (SPAN) and the Johor state government on the restructuring of water assets are in the final stage. Minister Datuk Shaziman Abu Mansor said yesterday among the main topic of discussion was PAAB’s takeover of liabilities and water assets of the Johor state government and SAJ Holdings. He said that under the restructuring, SAJ’s water concession will be terminated prematurely and the management of water in Johor will come under jurisdiction of the Water Service Industry Act 2006. (Financial Daily)

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BNM is confident that the current floating rate regime will provide the flexibility for the ringgit to respond to any changes in economic conditions. Its governor said the local currency was now inline with other major currencies, and the central bank had not intervened in the forex market. She also said that Malaysia’s economic growth hinged on the external conditions, which for now had not shown any sign of stabilising. However, the domestic demand was still holding in positive
territory. BNM will also take steps to ensure that all credit lines were kept open for businesses and investments. (Financial Daily)

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Supermax Corp Bhd would be deferring its expansion plan and holding off all capital expenditure for 2009 as it seeks to increase efficiency and to conserve it cashflow. Executive chairman / group managing director Datuk Seri Stanley Thai said with uncertainties in the Malaysian economy, it would not make economic sense to expand. (Malaysian Reserve)

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GLOBAL

Stocks plunged to fresh 12-year lows Thursday as investors waded through more grim news: GM said its survival is in doubt, bank shares took a beating, and Citigroup fell below a buck. Adding to the global woes: China defied expectations by failing to boost its economic stimulus program. The Dow Jones industrial average lost 4.1% (-281.4 pts, close 6,594.4). The Standard & Poor' 500 index lost 4.2% (-30.3 pts, close 682.5) and the Nasdaq composite lost 4.0% (-54.2 pts, close 1,299.6). s In currency trading, the dollar gained against the euro and fell against the yen. U.S. light crude oil for April delivery fell US$1.77 to settle at US$43.61 a barrel on the New York Mercantile Exchange. (CNNmoney)

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U.S. Treasury Secretary Timothy Geithner told Congress the Obama administration will act to make sure the nation’s largest financial companies can get government help if needed to avoid collapse. Shares of Citigroup yesterday dropped below US$1 in New York trading for the first time, the latest sign that stock investors are losing confidence in a company that was once the world’s biggest bank by market value. The Obama administration is not yet seeking new money for bank rescue efforts, even though it included a US$250bn “placeholder” amount for that purpose in its budget forecast. About US$300bn remains unspent and uncommitted in the US$700bn Troubled Asset Relief Program, Geithner said. He said the Treasury wants to “reform the program completely” and ensure money is targeted at the neediest markets. (Bloomberg)

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More than 600,000 Americans filed claims for jobless benefits for a fifth straight week, the worst performance since 1982, pointing to a deteriorating job market that may deepen the spending slump. The Labour Department yesterday reported 639,000 first-time unemployment applications, the fifth straight week above 600,000. The agency also said worker productivity, a measure of employee output per hour, fell at a 0.4% annual rate in 4Q08. Economists forecast the Labour Department today will say U.S. payrolls fell by 650,000 in February, the most since 1949, according to a Bloomberg News survey. The unemployment rate probably surged to 7.9%. (Bloomberg)

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Americans fell behind on their mortgages and banks seized homes at a record pace in 4Q08 as unemployment rose to a 15-year high and real estate values tumbled. Mortgage delinquencies increased to a seasonally adjusted 7.88% of all loans, the highest in records going back to 1972, the Mortgage Bankers Association said yesterday. Loans in foreclosure rose to 3.30%, also an all-time high. The U.S. real estate market lost US$2.4trn in value last year, according to First American CoreLogic, and unemployment jumped to 6.9% in 4Q08, the highest since 1993. As the recession enters a second year, unemployment is becoming a major cause of delinquencies, said Jay Brinkmann, the trade group’s chief economist. (Bloomberg)

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European Central Bank President Jean-Claude Trichet indicated officials will cut the benchmark interest rate further after reducing it to a record low of 1.5% yesterday to combat a worsening recession. Policy makers still haven’t decided on using additional policy tools to stimulate growth, Trichet said. The economy of the 16 euro nations is shrinking faster than the ECB expected just three months ago as the global slowdown curbs export demand and companies lay off workers. Trichet also said the central bank has cut its economic forecasts again and expects inflation to stay “well below” its 2% ceiling this year and next. The euro-region economy will contract about 2.7% this year and stagnate in 2010, according to the ECB’s new forecasts. The central bank expects inflation to average about 0.4% in 2009 and 1% next year, the projections show. (Bloomberg)

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Bank of England Governor Mervyn King will take the unprecedented step of printing money to buy assets after reducing the benchmark interest rate by a half point to almost zero. The bank said it will pump cash into the economy by purchasing as much as 150bn pounds (US$211bn) in government and corporate bonds, sparking a rally across the debt market. It also cut its key rate to a record low of 0.5%. The Bank of England said it may take up to three months to carry out the asset purchases. (Bloomberg)

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Bank of Japan Deputy Governor Hirohide Yamaguchi said the central bank may need to expand its purchases of corporate debt to prevent a credit shortage from worsening the recession. Yamaguchi is the first member of the board to hint at further policy actions since it unveiled the plan to purchase corporate bonds from banks last month. Having cut interest rates close to zero, the central bank is buying assets to channel funds to businesses whose profits are falling the most in more than 30 years as demand dries up at home and abroad. An unprecedented drop in exports since last quarter has forced Japanese manufacturers to cut production at a record pace and fire thousands of workers. Governor Masaaki Shirakawa and his policy board forecast the economy will shrink 2% in the year starting April 1, the worst in 60 years. (Bloomberg)

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