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Monday, March 30, 2009

Bursa Chat - News Highlights (30.03.2009)

AirAsia Bhd (AIRA MK, Buy, TP: RM1.90) has sealed a MobileOnAir Agreement with OnAir, which has its headquarters in Geneva Switzerland, for the provision of in-flight telephony services for use by its passengers. The move was part of the airline’s continuing efforts to increase the variety and improve the quality of its services to passengers in the course of business. OnAir is owned by SITA, the airline-owned provider of IT solutions and communications services to the air transport industry, and Airbus, one of the world’s leading aircraft manufacturers. (StarBiz)

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EON Capital Bhd is considering a rights issue, according to sources. It is learnt that Rin Kei Mei, a major shareholder of EON Capital with an 11.12% stake, is not agreeable to the proposed rights issue that is now being looked at by a European investment bank. Sources say the foreign investment bank has been mandated to study the need for it and to come up with recommendations if the bank needs the capital. According to EON Capital’s latest annual report, its risk-weighted capital ratio is 13.2%, which is above the industry average of 12.2%. (The Edge)

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Proton Holdings Bhd is believed to be close to finalising a technology collaboration pact with another foreign automaker. An announcement could be made as early as next month, sources say. It is believed that the foreign automaker is the Renaut-Nissan group, and the supposed collaboration should be for a Perdana replacement. The source says the new tie-up will not affect any of Proton’s existing partnerships, such as the product collaboration agreement with Mitsubishi to come up with a replacement for the Waja. (The Edge)
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DRB-Hicom Bhd is poised to take over as the importer of Volkswagen cars into the country from AutoStadt Asia Sdn Bhd, sources say. It is learnt that DRB’s wholly-owned unit DRB-Hicom Auto Solutions Sdn Bhd could commence importing the cars for Volkswagen Group Malaysia Sdn Bhd (VGM) as early as the middle of the year. It is not clear if DRB and VGM have included car assembly operations in their negotiations. (The Edge)
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Malaysia’s sales of 37,801 vehicles in January are the highest among the Asean countries, said the Malaysia Automotive Association (MAA) president Datuk Aishah Ahmad yesterday. She said Thailand had recorded the second highest sales with 32,085 units, followed by Indonesia (31,567), Philippines (8,791), Singapore (7,388), Vietnam (3,852) and Brunei (1,123).”This is the first time Malaysia has achieved the highest figure in Asean since the US financial crisis and global economic downturn plagued the region,” she told reporters after the MAA annual general meeting yesterday. (Bernama)

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Eastern & Oriental Bhd (E&O) is halting expansion work on its E&O Hotel in Penang due to the UNESCO ruling that buildings in heritage zones must not exceed 18m in height. E&O will wait for clarification from the relevant authorities, which is expected in June. The other 3 projects approved by the previous administration are the RM400m Pier Hub, the RM130m Royal Bintang, and the Low Yat Group’s proposed 23-storey hotel on Jalan Sultan Ahmad Shah. (StarBiz)
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Malaysia Airports Holdings Berhad (MAHB) has denied claims by Kazakhstan that it is ineffective in managing the International Airport Astana (IAA). MAHB said it started to manage the airport from May 2007. On 31 March 2007, Malaysia Airports Management & Technical Services (Labuan) Pte Ltd (MAMTS Labuan) signed a trust agreement with the Department of Finance of the Astana akimat (city mayor’s office), Kazakhstan. MAMTS Labuan is a subsidiary of MAHB. The IAA was managed by the Joint Stock Company International Airport Astana (JSC IAA), a wholly owned company of the Kazakhstan government. The government agreed to transfer its entire shareholding in the JSC IAA under trust management to MAMTS Labuan. The former has since reduced its active participation in the management of IAA. MAHB is presently in discussion with the government of Kazakhstan to resolve these issues. (Malaysian Reserve)
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INVESTMENT RESEARCH
Malaysia
The Government is likely to allocate RM200bn for the 2010 budget, says Deputy Prime Minister Datuk Seri Mohd Najib Razak, who is also Finance Minister, when winding up the motion on economy at the last day of the UMNO general assembly at the Putra World Trade Centre in Kuala Lumpur last Saturday. The government is expected to give out some RM28bn in subsidies this year. In addition, a special website will be launched in 2 weeks to monitor expenditure under the stimulus package to promote transparency in recovery efforts. (Malaysian Reserve)
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A total of 26,224 workers have been retrenched as of March 19, Malaysian Employers Federation (MEF) executive director Shamsuddin Bardan said. He told that out of this, 12,674 Malaysians and 6,651 foreigners lost their jobs outright while the rest were given voluntary separation schemes (VSS). Shamsuddin expected more workers to be retrenched in the weeks ahead if there was no immediate improvement in the economy. He said the recent mini budget did not have much an impact on the companies nor was there immediate incentive for companies to retain their workers. (Bernama)
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Property prices in Malaysia are expected to come down this year reflecting the softer market and oversupply as global economic and financial crises dampen demand, said president of International Real Estate Federation (FIABCI), Datuk Richard Fong. “The transactions have come down. The extent to which the prices will fall will also depend on the availability of financing now when the buyers are faced with financial difficulties due to job losses and uncertainties in the job market," he said at the 8th FIABCI Asia Pacific Regional Secretariat Summit 2009 here today. Fong said to support the property market, banks should be flexible in restructuring the duration of housing loans to meet the financial requirements of house buyers who were struggling with their commitments. “While the Malaysian economy is heading towards a pronounced slowdown, the banking sector remains relatively strong as compared to the 1997/98 Asian financial crisis,” he said. (Bernama)
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INVESTMENT RESEARCH
Global

Stocks tumbled on Friday at the end of an otherwise upbeat week, stretching the market rally to three straight weeks, for the best run in a year. The Dow Jones industrial average lost 1.91% (-148.38 pts, close 7,776.18). The Standard & Poor' 500 index lost 2.03% (-16.92 pts, close 815.94) and the Nasdaq composite lost 2.63% (-41.80 pts, close 1,545.20). In currency trading, the dollar weakened against the euro and the yen. U.S. light crude oil for May delivery fell by US$1.96 to settle at US$52.38 per barrel on the New York Mercantile Exchange. (CNNmoney)
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U.S. consumer spending rose for a second consecutive month in February and sentiment edged up in March, according to reports on Friday that backed views that the worst of the recession may be over. Spending increased 0.2% after rising by an upwardly revised 1.0% in January, the Commerce Department said. The hefty adjustment to January' figure, which was previously reported as a 0.6% gain, suggested that consumer spending rebounded in the first quarter after a big drop at the end of last year. (Reuters)
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The U.S. Treasury Department said it expects to have about $134.5bn left in its financial-rescue fund, giving the Obama administration a cushion as it implements a range of expensive programs aimed at unlocking the credit market and boosting ailing industries. The figure would mean that about 81% of the $700bn in the Troubled Asset Relief Program, or TARP, has been committed. But it also means that the Obama administration may not have to go to Congress to request additional funds, at least until well into the year. (WSJ)
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The European Central Bank could start buying corporate bonds in an unusual move to support the euro zone economy, ECB Vice President Lucas Papademos said on Thursday. His comments are the strongest signal yet about the ECB' plans to ramp up efforts to keep funds flowing through clogged euro-zone credit markets. The remarks indicate that s policy makers are prepared to take more-aggressive steps to stem the problem than they have thus far. (WSJ)
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The U.K. economy’s contraction in the fourth quarter was deeper than previously estimated, as consumer spending and construction slumped the most since 1980. Gross domestic product fell 1.6% from the third quarter, exceeding the prior measurement of 1.5%, which was also the median forecast of 27 economists in a Bloomberg News survey. Construction dropped 4.9% and consumer spending declined 1%. (Bloomberg)
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The Bank of England has rejected billions of pounds in aid to car firms, dealing a blow to the government’s promise to support the stricken industry. The refusal leaves struggling car manufacturers, which have slashed production, laid off thousands of workers and imposed wage cuts because of a collapse in demand, still waiting to receive any significant government response. (StarBiz)
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Spain mounted its first major bank rescue in 16 years as the state took over Caja Castilla-La Mancha after efforts to choreograph its purchase by a rival lender failed. The Bank of Spain said yesterday it appointed administrators to run the savings bank after removing its management. As part of the rescue, the government pledged to guarantee as much as 9bn euros (US$12bn) of the lender’s liabilities. Loan defaults in Spain have tripled since the global financial crisis began in 2007, ending the country’s real estate boom and boosting unemployment to a European-Union high of 14%. The economy is in the grip of its worst recession in half a century, with the government forecasting a contraction of 1.6% this year. (Bloomberg)
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INVESTMENT RESEARCH
Global
Japan' Parliament enacted a record 88.55trn yen ($897.16bn) budget for the next fiscal year, paving the way for the government to carry out its third stimulus package and accelerate work on its next steps to revive growth. The approval capped months of efforts by Prime Minister Taro Aso' Cabinet to put in action three stimulus plans crafted since last summer to fight the nation' recession. The national budget for the fiscal year starting April was needed to fund much of the last package, valued at 37trn yen. Introduced in December, this package includes steps to spur job growth, tax breaks to rejuvenate housing demand and help small companies as well as attempts to boost bank lending. (WSJ)
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Japan' core consumer price index was flat in February from the year-earlier month, but analysts say weakening private demand means it is a matter of time before deflation revisits the world' second largest economy. That was the second straight month of a flat reading in the core CPI, which excludes volatile fresh food prices, according to government data released Friday. Core CPI was flat in January after rising 0.2% in December. Still, many analysts say prices will very likely start falling from March because both overseas and domestic demand for Japanese goods is quickly decreasing due to the global economic downturn. (WSJ)
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Despite some recent signs of improvement in China' economy, profits at many Chinese companies continued to deteriorate in the first two months of the year, new data show. Profits of China' industrial companies in the January-February period fell 37% y-o-y to 219.1bn yuan (US$32.1bn), the National Bureau of Statistics said Friday. The drop contrasts with a y- o-y increase of 16.5% in the first two months of 2008 and was steeper than a 27% profit decline in the three months to November. While the performance in the coal and oil sector improved, profit in other industries including steel, power, chemicals, construction materials, equipment manufacturing, chemical fibre and non-ferrous metal all fell. The trend of declining profits follows a years-long string of 20% to 40% profit growth. At a time when Beijing is pouring four trillion yuan into a massive stimulus plan, falling profits mean companies have less money to buy new equipment or expand their businesses, increasing the burden on government stimulus to drive China' growth. (WSJ)
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The global economic crisis will hit jobs hard, with unemployment set to reach double digits in many developing and advanced countries, the Organisation for Economic Cooperation and Development (OECD) said yesterday. “By the end of 2010 the unemployment rate could be approaching double digit figures in all G8 countries with the sole exception of Japan, as well as in the OECD area as a whole,” the OECD forecast in a background paper to G8 labour and employment ministers gathering in Rome. In new projections to be issued on Tuesday the OECD will forecast growth in the 30-nation bloc will contract by 4.2% this year, the Paris-based body’s general secretary, Angel Gurria, told reporters on Friday. (BT)
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