Bursa Chat - News Highlights (17.04.2009)

Air Asia (AIRA MK, Buy, TP: RM1.90) is still waiting for implementation of the 50% rebate on landing charges asannounced in the second economic stimulus package, said its CEO. Any cost reduction will ultimately benefit thecustomers and more people will be encouraged to travel he said. The rebate is supposed to be given for 2 years starting April2009. (Malaysian Reserve)

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Nestle Malaysia will spend some RM320m this year to expand its business and meet rising demand for instantnoodles, non-dairy creamer and coffee products. This is 72% more than what it spent last year, said managing directorSullivan O'Carroll. It's investing some RM80m for its non-dairy creamer plant in Shah Alam, which will be used as an exportcentre to markets such as Indonesia, the Philippines, Turkey and Russia. About RM110m will be spent to double the capacityof its coffee plant in Shah Alam, to be fully operational by November. (BT)

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The retail and commercial operations in Malaysia of the Royal Bank of Scotland (RBS) will be put up for sale,alongside its other Asian operations. RBS is currently in talks with HSBC Holdings plc, Standard Chartered plc andAustralia and New Zealand Banking Group Ltd (ANZ) for the sales. The bank will retain its corporate banking business here.RBS Malaysia has 5 branches in Malaysia, including one in Labuan. (Financial Daily)

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Since October 2008, a total of 31,161 workers, including 7,952 foreign workers, have been retrenched as ofWednesday, according to Deputy Human Resources Minister Datuk Maznah Mazlan. In addition, 30,152 workers, including8,512 foreign workers, saw their salaries reduced while 9,511 workers, including 1,766 foreigners, were given a temporarylayoff. RM650mn has been allocated to the Ministry of Human Resources to implement various programs to assist inmaintaining the employability of the Malaysian workforce. (Financial Daily)

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The internationalisation of the ringgit will not take place under the current uncertain economic conditions and in theabsence of a foreign exchange market, said Tan Sri Dr Zeti Akhtar Aziz said yesterday. As interest rates are still at ahistorical low, focus would be on sustaining domestic demand. (Financial Daily)* * * * *The manufacturing sector recorded a 26.1% decline in sales in February to RM32.9bn. Sales in February decreased by2% when compared to January’s RM33.7bn. The Statistics Department said the decline was seen in 77 industries (66%) outof 116 industries covered in the survey. The five major industries whose sales value decreased significantly were refinedpetroleum products (34.7%), computer and computer peripherals (46.6%), electronic valves and tubes and printed circuitboards (49.4%), basic iron and steel products (54.5%), and other basic industrial chemicals except fertilisers and nitrogencompounds (48.6%). The Statistics Department said the workforce in the manufacturing sector also decreased by 6.5% inFebruary to 960,652 compared to a year ago. The number of workers also decreased by 2.7% compared to January. (BT)* * * * *

Global

Street recharged the advance Thursday, with the major gauges touching multi-month highs on JPMorgan Chase'sbetter-than-expected results and anticipation about Google's profit report. After the close, Google posted quarterly earningsthat rose from a year ago and topped estimates on revenue that rose from a year ago but was shy of forecasts. Sharesslipped in after-hours trading after initially spiking. The Dow Jones industrial average gained 1.2% (+95.8 pts, close 8,125.4).The Standard & Poor's 500 index gained 1.5% (+13.2 pts, close 865.3) and the Nasdaq composite gained 2.7% (+43.7 pts,close 1,670.4). In currency trading, the dollar gained versus the euro and the yen. U.S. light crude oil for May delivery rose 73cents to settle at US$49.98 a barrel on the New York Mercantile Exchange. (CNNmoney)

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Claims for U.S. unemployment insurance unexpectedly dropped last week and single-family housing starts stabilizedin March, providing more evidence the economic slump is easing. Initial jobless claims decreased by 53,000 to 610,000 in theweek ended April 11, the fewest since January, the Labour Department said yesterday. Builders broke ground on 358,000single-family homes at an annual rate, unchanged from the prior month. Still, the report from Labour showed the number ofpeople collecting benefits jumped to a record 6.02m a week earlier, indicating companies are not hiring even as firings slow.The unemployment rate among people eligible for benefits, which tends to track the jobless rate, climbed to 4.5% in the weekended April 4, the highest since January 1983. (Bloomberg)

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The Federal Reserve and other regulators aim to release the results of stress tests on 19 of the biggest U.S. banks onMay 4, a central bank official said. Regulators also plan to publish a paper on their methods on April 24, according to theofficial. The May 4 results will include any plans for boosting capital to weather a deeper economic downturn, the person said.Procedures for releasing information on specific firms, including whether the banks themselves or the supervisors will releasethe results, are still under discussion. The Securities and Exchange Commission, which sets rules for what publicly tradedcompanies must disclose to investors about their financial condition, is involved in the talks, the person said. The goal ofpublishing the stress-test methods is to bolster credibility of the assessments, which will expose weaker banks and may boostconfidence in stronger ones. (Bloomberg)

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Industrial production in Europe contracted by the most on record in February as the deepening global recessioncurtailed demand for manufactured goods around the world. Output in the euro region fell 18.4% from the year-earlier month,the biggest drop since the data series began in 1986, after a revised 16% decline in January, the European Union’s statisticssaid yesterday. Economists expected production to fall 18% in February, according to the median of 16 estimates in aBloomberg survey. Inflation slowed in March to 0.6%, a record low, the office said in a separate report. Factories across the16-nation euro zone are cutting output and firing workers as companies cope with the worst global slump in 60 years. TheEuropean economy may shrink as much as 4.1% this year, the OECD forecast on March 31. (Bloomberg)

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China’s economy, battered by collapsing exports, grew at the slowest pace in almost 10 years, probably marking itslow point. Gross domestic product expanded 6.1% y-o-y in 1Q09, after a 6.8% gain in 4Q08, the statistics bureau said. A 30%surge in urban fixed-asset investment in March and a jump in industrial output, both reported yesterday, added to evidencethat the government’s 4trn yuan (US$585bn) stimulus plan is working. Premier Wen Jiabao cautioned that while the world’sthird-biggest economy is in better-than-expected shape, China is yet to establish a solid foundation for a recovery. Whilestimulus measures have started to produce results, China faces faltering export demand, industrial overcapacity,unemployment and weak private investment sentiment, Wen said. A rebound in industrial-output growth lacks momentum, thepremier said. (Bloomberg)

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Confidence at Japanese companies is hovering near record low levels but firms expect business conditions toimprove in the next three months, a Reuters poll showed - a sign that Japan's worst recession in decades may bemoderating. Current sentiment among big manufacturers improved slightly from a record low hit in March but confidence atlarge non-manufacturers edged down to be barely above a record low hit in February. The Reuters Tankan survey foundmanufacturers'sentiment improved 2 points to minus 76 in April, and is seen jumping 24 points to minus 52 by July.Sentiment among non-manufacturers worsened 1 point to minus 38 but is seen climbing 10 points to minus 28. The surveyalso found Japan is expected to start recovering in 1H10 and that nearly one-third of respondents expect the U.S. economy tostart picking up in 4Q09. But many companies remain wary, saying a recovery in Japan will likely be gradual. The Reuterspoll, to which 219 firms responded, was conducted from March 26 to April 13 and is designed to be a leading indicator for theBank of Japan's closely watched Tankan corporate survey. (Reuters)

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Turkey’s central bank cut its benchmark interest rate by three-quarters of a percentage point, its sixth consecutivereduction, as industrial output slumped and the number of jobless rose by more than a million. The bank in Ankara lowered itsovernight borrowing rate to a record 9.75% yesterday. The bank had been forecast to cut the rate by half a point, according tothe median estimate of 18 economists surveyed by Bloomberg. The cut means the bank has shaved 7 percentage points fromthe benchmark rate in sixth months as it tries to minimize the impact of the global recession. Turkey’s economy contracted6.2% in 4Q08, the first decline in seven years. Future rate reductions will be “measured,” the bank said, reiterating that theeasing bias “may need to be maintained for some time.” (Bloomberg)

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India’s inflation slowed to a 20-year low in the first week of April, giving the central bank room to cut interest rates furthernext week. Wholesale prices rose 0.18% in the week after gaining 0.26% previously. (Malaysian Reserve)

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The global economy is in the grip of a “severe” recession with “worrisome parallels” to the Great Depression and arecovery will probably be weak, according to a report by the International Monetary Fund. “The current downturn is highlysynchronized and associated with a deep financial crisis, a rare combination in the post-war period.” the Washington-basedlender said. The warning comes ahead of semi-annual IMF and World Bank meetings next weekend in Washington, whichalso will include a gathering of finance ministers from the Group of Seven industrial economies. The full IMF report, withgrowth forecasts for individual countries and the world, is scheduled to be released April 22. IMF Managing DirectorDominique Strauss-Kahn has said he’s concerned that some of the wealthiest nations haven’t made enough use of fiscalstimulus measures to revive growth. The fund has said the global economy will shrink by as much as 1% this year.(Bloomberg)* * * * *
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