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Thursday, March 26, 2009

Bursa Chat News Highlights (26.03.2009)

Telekom Malaysia Bhd (T MK, Hold, TP: RM2.74) has signed a deal with PT Telekomunikasi Indonesia Tbk (PT Telkom) to enhance the value of their products and services in Malaysia and Indonesia. The two companies yesterday signed a memorandum of understanding (MOU) to collaborate towards international infrastructure development, which covers expansion of international voice and data services coverage, diversification of the Dumai-Malacca Cable System and provisioning of multiprotocol label switching services. The MOU also covers the co-location of data centre in Singapore and other cities in the region, which will enable TM and PT Telkom to have wider service reach within the region and beyond, as well as joint marketing and promotion activities. (BT)

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Boustead Holdings’s (BOUS MK, Buy, TP: RM4.00) 95% owned unit, Boustead Building Materials Sdn Bhd yesterday was awarded a RM18.87m contract from Boustead Hotels and Resorts Sdn Bhd which is 65% owned by Boustead Holdings. The contract is for the construction of a 12-storey four-star 301 room hotel and two levels of basement parking in utiara Damansara. The hotel is expected to be completed by 2Q2010. (Malaysian Reserve)

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The Malaysian economy is expected to contract significantly in the first half of 2009 before the stimulus packages kick in to provide support, Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz said. The economy' prospect for recovery in the second half will nevertheless be dependent on the global economic outlook and success of restoration moves in crisis- affected countries. "For the first quarter of 2008, we had an exceptional growth of 7.4%, and it is very likely the first quarter of this year will see a much slower growth because we already had more than 25% drop in exports in January," she said. Taking into account the full implementation of the measures to support domestic demand, gross domestic product (GDP) performance in 2009 in real terms is projected to be between -1% and 1% from 4.6% in 2008. (BT)

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Malaysia’s headline inflation is expected to slow significantly to average between 1.5% and 2% in 2009, reflecting the sharp reversal of global commodity prices from their peaks in 2008 and slowing global economy, said Bank Negara Malaysia in its 2008 Annual Report. As a small and highly open economy, the decline in global commodity prices and recessionary influences would have a material impact on price developments in Malaysia, it said. (Financial Daily)

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The local labour market is expected to further weaken in tandem with the slowdown in economic activities, with the unemployment rate projected to increase from 3.7% in 2008 to 4.5% in 2009, said Bank Negara Malaysia. The unemployment rate in the country stood at 3.3% and 3.2% in 2006 and 2007, respectively, it said in its Annual Report 208. The report said average private sector salary increase was expected to moderate to 2.7% in 2009 from 5.9% last year. Per capita income was projected to decline to RM24,541 compared with RM25,796 last year, it said. (Financial Daily)
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Bank Negara Malaysia (BNM) has proposed the setting up of a corporate debt restructuring committee (CDRC), similar to the one established during the 1997-98 Asian financial crisis, but with an extended scope to tackle private debt securities (PDS) instead of just corporate borrowings. The enhanced CDRC proposal would be forwarded to the finance ministry soon, and expected the enhanced CDRC to be operational by mid April. (Financial Daily)

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Bank Negara Malaysia (BNM) is receptive to the idea of a new international reserve currency, to replace the US dollar as the world’s main reserve currency, as it has the potential to provide greater stability to the global financial market, according to governor Tan Sri Dr Zeti Akhtar Aziz. Zeti acknowledged that the Special Drawing Rights, an international reserve asset created by the International Monetary Fund in 1979, had the potential to provide greater stability due to its representation of a composite of currencies. (Financial Daily)

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INVESTMENT RESEARCH
Malaysia
Khairy Jamaluddin yesterday won the contest for the Umno Youth chief post in a closely fought battle while Datuk Seri Sharizat and Datuk Rosnah Rashid Shirlin secured the coveted Wanita Head and Puteri Umno chief respectively. Today, delegates will decide on the outcome for the other much anticipated close fights for the posts of deputy Umno president and supreme council members. (Malaysian Reserve)

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Perodua will introduce the car scrapping programme from March 27 instead of April 1 as earlier scheduled. Perodua MD said the company had completed all its processes ahead of plan. There are an estimated 4.8m cars of 10 years and above on the road now. Of this number, about 300,000 are Perodua Vehicles comprising the Kancil, Rusa and Kembara registered between 1994 to 1999. He also said Perodua wished to clear the misconception that it would be giving customers the RM5000 voucher plus the market value of their old car stressing that it was a scrapping exercise and not a trade-in programme. (Malaysian Reserve)
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INVESTMENT RESEARCH
Global
Stocks gained Wednesday, mustering up a late-session rally after a choppy session that helped push the S&P 500' two- week gains to 20%. Stocks spiked in the morning on better-than-expected readings on new home sales and durable goods orders, but the advance sputtered out through most of the afternoon. A late-session jump in financial stocks and tech shares helped markets finish higher. The Dow Jones industrial average gained 1.2% (+89.8 pts, close 7,749.8). The Standard & Poor' 500 index gained 0.9% (+7.6 pts, close 813.9) and the Nasdaq composite gained 0.8% (+12.4 pts, close 1,528.9). In currency trading, the dollar fell against the euro and the yen. U.S. light crude oil for May delivery fell US$1.21 to settle at US$52.77 a barrel on the New York Mercantile Exchange. (CNNmoney)

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Orders for durable goods and sales of new homes unexpectedly rose in February, reports yesterday showed, a sign of improvement in two of the biggest drags on the U.S. economy. Last month’s 3.4% increase in bookings for long- lasting goods such as machinery and computers was the biggest gain in more than a year and the first in seven months, Commerce Department figures showed. Another Commerce report indicated new-home sales jumped 4.7% from a record low pace in January. Home sales picked up as plummeting prices and cheaper mortgage rates lured some buyers. The median sales price fell 18% y-o-y, the biggest drop since records began in 1964, and the glut of properties on the market dwindled. (Bloomberg)

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Treasury Secretary Timothy Geithner sent the dollar tumbling with comments about China’s ideas for overhauling the global monetary system, only to drive it back up by affirming that it should remain the world’s reserve currency. Geithner was asked at a Council on Foreign Relations event in New York about People’s Bank of China Governor Zhou Xiaochuan’s call for new international reserve currency. He said while he had not read Zhou’s proposal, he understood it as a plan “designed to increase the use of the IMF’s special drawing rights. And we’re actually quite open to that.” The dollar slid as much as 1.3% against the euro within 10 minutes of news accounts of Geithner’s remarks. It recouped much of the loss about 15 minutes
later, when Geithner then predicted no change in the U.S. currency’s role. (Bloomberg)

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The collapse in U.S. inventories indicates the economy is laying the foundation for a return to growth this year. Stockpiles of long-lasting factory goods declined 0.9% in February after falling 1.1% in January, the biggest two-month slide since 2003, the Commerce Department reported yesterday. The decrease brought the ratio of inventories to sales down for the first time in seven months. The report bolstered forecasts that the world’s largest economy will begin to expand in 2H09 after a likely contraction in 1H09. Retail sales, residential construction and home sales last month have all been stronger than most economists projected. (Bloomberg)

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The U.K. failed to find enough buyers for 1.75bn pounds (US$2.55bn) of bonds for the first time in almost seven years as debt investors repudiated Prime Minister Gordon Brown’s plan to stem the worst economic crisis in three decades. Gilts slumped after the London-based Debt Management Office, which manages bond auctions on behalf of the Treasury, said investors bid for 1.63bn pounds of the 40-year securities. The last time the U.K. government was unable to attract enough investors was in 2002 when it tried to sell 30-year inflation-protected bonds. Brown’s government aims to sell a record 146.4bn pounds of debt this fiscal year and as much as 147.9bn pounds in 2010 as he tries to pull Europe’s second-largest economy out of its worst recession since 1980. The prime minister’s plan drew criticism on Tuesday when Bank of England Governor Mervyn King said the government should be “cautious” about spending and deficits. (Bloomberg)

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German business confidence fell to the lowest level in more than 26 years in March, adding to signs that the recession is deepening. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 82.1 from 82.6 in February. That’s the worst reading since November 1982. A global slump in demand has forced German companies to scale back production and cut jobs, pushing the economy into its worst recession since World War II. Commerzbank AG expects gross domestic product to decline as much as 7% this year. (Bloomberg)
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INVESTMENT RESEARCH
Global
Japan’s exports plunged a record 49.4% in February as deepening recessions in the U.S. and Europe sapped demand for the country’s cars and electronics. Shipments to the U.S., the country’s biggest market, tumbled an unprecedented 58.4% y- o-y, the Finance Ministry said yesterday. Automobile exports slid 70.9%. The collapse signals gross domestic product may shrink this quarter at a similar pace to the annualized 12.1% contraction posted in the previous three months, the sharpest since 1974. Prime Minister Taro Aso is compiling his third stimulus package as companies from Toyota Motor Corp. to Panasonic Corp. fire thousands of workers. (Bloomberg)
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The Bank of Japan won’t rule out additional reductions to the benchmark 0.1% interest rate, Deputy Governor Hirohide Yamaguchi said. His remarks contrast with Bank of Japan Governor Masaaki Shirakawa, who yesterday told lawmakers that the key rate is now at the most appropriate level. The central bank last lowered the rate in December and has since focused on easing credit for companies by purchasing corporate debt and stocks from banks. Yamaguchi said the policy board would need to assess the impact of further rate reductions on money-market trading. Shirakawa has repeatedly said lowering the overnight lending rate to zero percent should be avoided because it would make trading in short-term markets unprofitable.
(Bloomberg)
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