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Wednesday, April 22, 2009

Bursa Chat - News Highlights (22.04.2009)

Malaysia
AirAsia (AIRA MK, Buy, TP: 1.90) plans to venture into India in a big way but it has to first address some issues with MAS over flights to four major cities there, said CEO Datuk Seri Tony Fernandes. The four cities are Delhi, Mumbai, Hyderabad and Bangalore, currently serviced by MAS. The issues concern royalties and free and discounted tickets, which are arrangements MAS has with Air India over the four cities. As the agreement will lapse in December 31, 2009, AirAsia plans to wait till next year for its move. (Starbiz)
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Ambank (M) Bhd, a unit of AMMB Holdings (AMM MK, Buy, TP: RM3.40), is targeting a net growth of RM5.7bn for branches’ deposits for its financial year ending March 31 2010, general manager of branch banking, Mohamad Sabirin, said yesterday. He said the bank was focused on growing its current and savings accounts, especially as they were a safer set in view of the current economic conditions, and at least two more promotion campaigns will be held this year. “This financial year we are expecting the net growth to soften with the economic challenges. (BT)
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Sime Darby Bhd (SIME MK, Buy, TP: RM6.40) has put up Hotel Equatorial Melaka for sale at an estimated RM180m. The sale is said to be in line with Sime Darby' intention to sell non-core businesses. Hotel Equatorial Melaka is owned by Syarikat Malacca Straits Inn Sdn Bhd, in which Sime Darby holds 55% and the Malacca state government 30%. The rest is held by Hotel Equatorial (M) Sdn Bhd, which is also the operator. (BT)
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Tenaga Nasional Berhad (TNB MK, Hold, TP: RM7.00) has repurchased US$39.09m (RM142m) of its US$150m 7.5% debentures due in 2096. In a filing yesterday, Tenaga said it intended to cancel the repurchased loans from yesterday onwards. Following the exercise, the amount outstanding for the debentures will be US$100.92m as TNB had earlier purchased and cancelled US$10m of the debentures. This reduces TNB’s total debt by 0.8% to RM23.23bn and also reduces foreign currency exposure. (Malaysian Reserve)
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AEON will open three new Aeon shopping centres this year – one in Melaka Sentral, while the other two locations are still being identified. MD Nagahisa Oyama said the Malacca outlet, to be opened by end of the year, would be the company’s second shopping centre in the state. He said that Aeon would invest some RM30m for fittings and fixtures at the Melaka Sentral shopping center as it would be leasing the building from the developer. (Starbiz)
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The Malaysian unit of Danish brewer Carlsberg is looking for an acquisition target in Asia, said Soren Jensen, managing director of Carlsberg Brewery Malaysia. The brewer had interest bearing cash of RM227m as at end 2008, and is comfortable in gearing over that cash position to acquire a suitable target. The brewer is not ruling out Malaysian companies, or one outside the alcoholic beverage industry. (Financial Daily)
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The board of EON Capital Bhd (EON Cap) will meet in the next few days to discuss and probably decide on a proposed rights issue or other methods of raising capital for the bank, sources said. Apart from a rights issue, the other option for EON Cap is raising Tier-2 capital. To date, EON Cap has raised RM410m via the issuance of subordinated medium term note (MTN) under a subordinated MTN programme of up to RM2bn, and redeemed its existing US$225m sub- debt. (Financial Daily)
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Green Packet’s 27.42% owned associate GMO Ltd is seeking to be de-listed from the Alternative Investment Market (AIM) citing listing expenses and low liquidity and poor share price performance since listing in September 2006. To accommodate shareholders that do not want to hold unlisted shares, GMO is offering a share buyback at a price of 0.5pence per share. Three major shareholders (mTouche Technology, Gpacket and OSK Ventures International) with a combined 94.8% stake in GMO will not participate in the share buyback and will remain as shareholders. (Malaysian Reserve)
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Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) yesterday announced the freezing of a RM2.6bn project to replace old mains and communication pipes, in light of the restructuring of the water management sector in Selangor and the federal territories of Kuala Lumpur and Putrajaya. Syabas executive chairman Tan Sri Rozali Ismail said the freeze was imposed on the directive of the government. (Financial Daily)
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The Malaysian Automotive Association (MAA) expects vehicle sales volume for April to be better than March following the recent announcement of the government’s second stimulus package. MAA’s positive reaction comes on the back of 20.5% or 7,530 unit increase in sales volume m-o-m for March. New model introduction and higher sales of light commercial vehicles, as well as the longer working month were the main reason for the increase. (Financial Daily)
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Malaysia' property market is expected to worsen this year as the global economic uncertainties deepen. The Valuation and Property Services Department of the Finance Ministry director-general Datuk Abdullah Thalith Md Thani said the local property market will fall moderately further this year, with signs of pressure looming. This is based on data collected by the National Property Information Centre in the first quarter of this year. "It showed negotiated price and rental rates are heading downwards," he said at the launch of the Malaysian House Price Index and the Property Market Report 2008 by Deputy Finance Minister Datuk Chor Chee Heung in Kuala Lumpur yesterday. Abdullah Thalith said the number of new housing projects launched in 2009 will remain as last year. But property transactions and value are expected to drop by 5-10% in the current year, unless the government' RM67bn stimulus packages bear fruit soon. Abdullah Thalith said the industrial sub- sector will be the most pressured this year as the majority of the companies are service or export-oriented and affected by market turbulence. In line with the dismal outlook in industrial activities, the number of industrial overhangs, unsold under construction and unsold not constructed units grew by 30%. (BT)
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After forging a partnership with Cisco last year, YTL e-Solutions is set to ink yet another deal tomorrow with South Korea’s Samsung group to help it deploy WiMAX services in Peninsula Malaysia, sources say. To build the WiMAX based platform, YTLe will be investing about RM2.5bn for a nationwide rollout, which will be funded by internally generated funds. The arrangement with Samsung will cover infrastructure build-up, especially radio network systems and the provision of hand-held devices for the services. (Starbiz)
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INVESTMENT RESEARCH
Global

Stocks gained Tuesday, rebounding after the previous session' rally as worries about corporate results were countered by renewed hopes that the financial sector is closer to stabilizing. After the close, Yahoo reported lower quarterly sales and earnings that topped estimates. Financial firms Wells Fargo and Morgan Stanley also due to report quarterly results today. The Dow Jones industrial average gained 1.6% (+127.8 pts, close 7,969.6). The Standard & Poor' 500 index gained 2.1% (+17.7 pts, close 850.1) and the Nasdaq composite gained 2.1% (+35.6 pts, close 1,643.8). In currency trading, the dollar fell versus the euro and gained against the yen. U.S. light crude oil for May delivery gained 63 cents to settle at US$43.51 a barrel on the New York Mercantile Exchange. (CNNmoney)
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Treasury Secretary Timothy Geithner said banks found to need additional capital at the conclusion of regulators’ stress tests will have a range of options for shoring up their balance sheets. The Treasury chief, testifying before a congressional oversight panel yesterday, said lenders will be able to take taxpayer money, raise funds from private investors or convert previous government investments from preferred to common shares. Each bank can chose the “best mix” of alternatives and will likely make different choices, Geithner said. Geithner underscored that financial regulators are taking the lead in reviewing the 19 biggest banks. Those agencies - and not the Treasury - will also determine when the healthiest banks can pay the government back, he said. The Federal Reserve is leading the assessments, with results due for release on May 4. The tests are designed to ensure that firms have enough capital to weather a deeper economic downturn over the coming two years. (Bloomberg)
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Worldwide losses tied to distressed loans and securitized assets may reach US$4.1trn by the end of 2010, the International Monetary Fund said. Banks will shoulder about 61% of the write-downs, with insurers, pension funds and other non-banks assuming the rest, the lender said in a report released yesterday on the state of the global financial system. The fund forecast US$2.7trn in losses from U.S.-originated loans and assets, compared with its estimates of US$2.2trn in January and US$1.4trn in October. “Stabilizing the financial system remains a key priority and, although progress is being made, further policy efforts will be required,” the fund said in its report. “Without a thorough cleansing of banks’ balance sheets of impaired assets, accompanied by restructuring and, where needed, recapitalization, risks remain that banks’ problems will continue to exert downward pressure on economic activity.” (Bloomberg)
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German investor confidence rose to the highest level in almost two years in April after stock markets rallied on government and central bank efforts to revive economic growth. The ZEW Center for European Economic Research said its index of investor and analyst expectations rose to 13 from minus 3.5 in March. That’s the highest since June 2007 and the first positive reading since July 2007. Still, ZEW’s gauge of current conditions fell to minus 91.6, the lowest since September 2003, from minus 89.4 in March. Business confidence fell to the lowest level in more than 26 years in March and industrial production dropped for a sixth month in February. Adding to signs of a deepening economic slump, German producer prices declined .5% y-o-y in March, the Federal Statistics Office said yesterday. That’s the biggest drop since September 2002. The
International Monetary Fund has tried to temper optimism about the outlook, saying on April 16 that the global economy is in the grip of a “severe recession” and a recovery will probably be weak. The IMF publishes revised forecasts today. (Bloomberg)
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The U.K. inflation rate dropped to the lowest level in a year last month as the recession blunted price pressures across the economy. Consumer prices rose 2.9% y-o-y, compared with 3.2% in February, the Office for National Statistics said yesterday. The result matched the median forecast of 29 economists in a Bloomberg News survey. The retail price index annual gauge dropped for the first time since 1960. Inflation slowed as household gas bills fell and the cost of heating oil dropped, the statistics office said. Prices for food and non-alcoholic drinks also declined, led by vegetables, fruit, bread and cereals. The U.K. central bank forecasts that inflation will slow to 0.3% in 2011, below the 2% target. (Bloomberg)
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The Bank of Japan may cut its fiscal year outlook for the Japanese economy to a decline of 3% to 5% on weak production, Nikkei English News reported, without saying how it obtained the information. The Bank of Japan had cut its fiscal 2009 growth forecast to a decline of 2% in January, Nikkei reported. (Bloomberg)
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India’s central bank reduced interest rates for the sixth time in as many months to a record low after forecasting the economy will expand at the slowest pace since 2003. The Reserve Bank of India cut the reverse repurchase rate to 3.25% from 3.5%, according to a yesterday. Economic growth may ease to 6% in the year that started April 1 from 7.1% in the previous 12 months, the central bank said. Governor Duvvuri Subbarao’s efforts to stimulate growth in Asia’s third-largest economy are being hampered by the reluctance of commercial lenders to pass on rate cuts and the government’s inability to increase spending during an election. The Reserve Bank also cut the repurchase rate by a quarter-point to 4.75% and kept the cash reserve ratio unchanged at 5%. (Bloomberg)
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Sweden’s central bank cut the benchmark interest rate to a record 0.5% and said it’s ready to take further steps to revitalize the Nordic region’s largest economy, mired in the worst recession in more than half a century. The bank lowered the seven-day repo rate by half a percentage point, the bank said yesterday. The largest Nordic economy sank into its first recession since 1992 last year as a global decline in trade eroded demand for exports, which Sweden relies on for half its national output. Slumping production has forced up unemployment, sapping consumer demand and triggering deflation. Riksbank Governor Stefan Ingves has cut borrowing costs more than his counterparts in neighbouring Norway and at the European Central Bank, signalling in February the possibility of zero rates. (Bloomberg)
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Asia’s biggest oil users will meet the world’s largest producers this week in Tokyo to discuss ways to revive spending and ensure energy supplies after the global recession ends. International Energy Agency head Nobuo Tanaka and Saudi Arabian Oil Minister Ali al-Naimi will lead delegates from the Organization of Petroleum Exporting Countries, Japan, China, and India in the talks on oil and gas investments, said a Japanese trade ministry official with direct knowledge of the meeting who spoke on condition of anonymity. OPEC, supplier of about 40% of the world’s crude, faces a 51% plunge in net oil revenue this year, according to the U.S. Energy Department, which estimates the group will earn US$476bn. Spending on new energy production is likely to drop around 20% this year, according to the IEA. Global oil supplies will be “severely constrained by today’s lower prices and lower investment,” the IEA said in an April 10 report. (Bloomberg)
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