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Malaysia
SP Setia (SPSB MK, Sell, TP: RM2.38) has extended its home loan package on all its residential properties in the Klang Valley, Johor, and Penang until July 19, following favourable response from homebuyers. The property developer first launched the financing package Setia 5/95 Home Loan Package on 19 Jan 2009, which requires only a 5% down payment with no interest payable during construction period. The purchaser only begins servicing the 95% loan upon completion of construction. The home loan extension is applicable for existing projects and its new launches – Setia Vista, Solace Apartments at Setia Walk and luxury high-rise Setia Sky Residences on Jalan Tun Razak. (Financial Daily)
*****
UMW Holdings Bhd's (UMWH MK, Hold, TP: RM5.70) oil and gas (O&G) business, buoyed by the start of its big China pipe factory recently, should cushion a slowdown in the group's automotive division this year, the group's chief said. UMW is traditionally dependent on the trading and assembly of Perodua and Toyota vehicles, but the O&G activities it first ventured in 2002 continue to help boost the overall performance in the past few years. Managing director Datuk Abdul Halim Harun said the group's pipe factory in Qin Huang Dao in China particularly should provide some cushion to offset the slide of the automotive division business. He said demand is not a problem as the plant's output has been fully booked over the next three years to help build a 6,000km gas pipeline linking China and Kazakhstan. (BT)
*****
The government has removed – with immediate effect – the 30% Bumiputra equity requirement for 27 services sub- sectors under liberalization of the services sector. Prime Minister Datuk Seri Najib Tun Razak who said these sectors would now have no equity conditions imposed, said more liberalization measures were in the offing. Some of the sectors include; computer and related services, health and social services, tourism services, transport services, sporting and other recreational services, business services, rental/leasing services without operators, supporting and auxiliary transport services. (The Star)
*****
The consumer price index (CPI) rose 3.5% y-o-y in March 2009, lower than the 3.7% increase in the previous month. From January to March 2009, the CPI was up by 3.7% compared to the same period last year, the Statistics Department said in a statement today. This was brought by increases observed in the indices of all main groups except transport, clothing and footwear and communications, which decreased by 2.1%, 0.8% and 0.5% respectively. (Bernama)
*****
The international reserves of Bank Negara Malaysia fell 0.18% to RM320.1bn as at April 15 from RM320.7bn on March 31. The reserves position is enough to finance 8.1 months of retained imports and is four times the short-term external debt. (BT)
*****
IJM Plantation Bhd has proposed to buy a 75% stake in a planter based in South Sumatra, where a potential RM160m investment would be made to develop oil palm estates over the next 5 years. IJM Plantation’s unit Dynasive Enterprise Sdn Bhd has acquired the stake in Prima Alumga (PTPA) for RM250,000. PTPA is to buy a 10,252ha property in Lampung, South Sumatera, of which some 1,300ha has been established as oil palm plantation. The anticipated cost of the assets and the cost of developing the balance of land with oil palm, and to bring the plantings to full maturity will be about RM160m over the next 5 years. (Malaysian Reserve)
*****
Malaysia Airports Holdings Bhd (MAHB) has entered into agreements to sell its non-core assets in National Exhibition and Convention Centre Sdn Bhd (NECC) and Sepang International Circuit Sdn Bhd (SIC) to the government. The airport operator said yesterday it had inked the deals for the sale of 162.39m shares in NECC and 10m shares in SIC to the Minister of Finance (MoF) for RM159.63m and RM1 cash, respectively. The government will assume the liability of SIC amounting to RM120m. SIC has been the main promoter and organizer of the F1 Malaysian Grand Prix since 1999. The asset sales are part of MAHB’s restructuring plan, in which MAHB will pay the government RM1.01bn, comprising of RM508m cash and the balance will be set off against the sale of NECC, SIC and other capex projects. (Financial Daily)
*****
INVESTMENT RESEARCH
Malaysia
The freezing of the RM2.6bn project by Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) to replace the mains and communication pipes will not have an adverse affect on the restructuring of the water management sector in the state, said Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim. He said Syabas had already spent some RM1.8bn in capex to repair and replace the mains under the RM2.6bn project, but the state found that RM2.3bn had been put in to date. (Financial Daily)
*****
Malaysian Bulk Carriers Bhd (Maybulk) expects to remain profitable for the full-year ending December 31 2009, as it believes the dry bulk market has hit bottom. Executive chairman Teo Joo Kim said the company would be "barely okay", but still post a profit this year, assuming that the Baltic Dry Index (BDI), which tracks rates to ship dry commodities, remains at the 1,700-point level. "My personal view is that when the BDI hit 656 points in January this year, it was the lowest point. I don't think it will come to that level again. At that BDI level, all the shipowners were barely surviving because it was below their cash operative costs. Shipowners are now barely comfortable with the BDI at 1,700 points. We expect the BDI to range between low 1,000 points and 2,000 points (for rest of the year)", he said. (BT)
*****
MBM Resources Bhd is unlikely to match its 2008 financial performance this year given the weak economic environment, said its chairman Datuk Abdul Rahim Abdul Halim. The company also faced pressure from higher import costs as a result of the weak ringgit, he said. (Financial Daily)
*****
MK Land Bhd said it will not proceed with its plans to implement the proposed private placement involving up to 10% of its paid-up capital. The private placement was proposed late in 2007 when the company’s paid-up capital stood at RM1.21bn. The company told Bursa Malaysia yesterday the Securities Commission approval period for the private placement will expire today. In the SC’s approval letter dated Oct 31, 2008 approving the extension of time up to April 23, 2009, the SC stated that the said extension of time was the final extension for MK Land to complete the private placement. Hence, MK Land said it will not be proceeding to implement the private placement. (Malaysian Reserve)
*****
The Economic Planning Unit has approved MMC Corporation Bhd’s RM1.7bn acquisition of Senai Airport Terminal Services Sdn Bhd (SATS) and land. With the acquisition, MMC would own the only privatised airport in the country, and this is expected to help the group create value for its logistics and transportation business. (Financial Daily)
*****
INVESTMENT RESEARCH
Global
Stocks abandoned gains Wednesday, with the Dow ending a choppy session lower, as investors pled exhaustion after the recent six-week advance. After the close, Apple reported higher quarterly sales and earnings that topped estimates, while eBay reported lower quarterly sales and earnings that topped forecasts. Economic reports are due today on weekly jobless claims and existing home sales for March. Stocks seesawed through the early afternoon, moving in tune with the volatile financial sector. A late-session rally petered out in the last minutes of the session. The Dow Jones industrial average lost 1.0% (-82.9 pts, close 7,886.6). The Standard & Poor's 500 index lost 0.8% (-6.5 pts, close 843.5) and the Nasdaq composite gained 0.1% (+2.3 pts, close 1,646.1). In currency trading, the dollar fell versus the euro and the yen. U.S. light crude oil for June delivery gained 30 cents to settle at US$48.85 a barrel on the New York Mercantile Exchange. (CNNmoney)
*****
U.S. home prices rose 0.7% in February from January, the first consecutive monthly gain in two years, a sign that low interest rates may be moderating declines in real estate values. Prices fell 6.5% y-o-y in February, the second-smallest drop in six months, led by a 19% decrease in the region that includes California, the most populous U.S. state, the Federal Housing Finance Agency in Washington said yesterday. Mortgage rates have tumbled 1.6 percentage points in six months, making houses and condominiums more affordable. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan increased 5.3% last week as Americans took advantage of interest rates near record lows. The inventory of properties on the market fell to a 9.7 month supply in February at the current sales pace, down from April’s high of 11.3 months, and sales rose 5.1% from a month earlier, the National Association of Realtors said. (Bloomberg)
*****
The International Monetary Fund said the global recession will be deeper and the recovery slower than previously thought as financial markets take longer to stabilize. The fund said in a forecast released yesterday that the world economy will shrink 1.3% this year, compared with its January projection of 0.5% growth. The lender predicted expansion of 1.9% next year instead of its earlier 3% estimate. The fund’s latest outlook highlights the precarious state in which the world economy remains, even amid signs the worst slump since World War II may be easing. Recovery isn’t assured and will depend on policy efforts to cleanse banks’ balance sheets and craft measures that spur demand, the IMF said. The revised outlook comes a day after the fund calculated worldwide losses from distressed loans and securitized assets may reach US$4.1trn by the end of 2010 as the recession and credit crunch exact a higher toll on financial institutions. (Bloomberg)
*****
Chancellor of the Exchequer Alistair Darling raised taxes on British motorists, smokers and the rich to contain an unprecedented budget deficit as he forecast the worst recession since World War II. The Treasury will borrow 269bn pounds (US$392bn) more than estimated in November. It will raise taxes by 3.2bn pounds on people earning above 100,000 pounds a year and 6bn pounds through duties for alcohol, tobacco and gasoline, Darling said in his annual budget yesterday. The moves left the government little room to stimulate the economy before the next election, which must be held by the middle of 2010. Deficits will total 703bn pounds during five fiscal years through April 2014 compared with 434bn pounds forecast in November.
The Treasury expects the economy to shrink 3.5% this year and to rebound with 1.25% growth in 2010. (Bloomberg)
*****
Germany’s leading economic institutes predict the economy, Europe’s largest, will shrink by a post-war record of 6% this year, a government official said yesterday, speaking on the condition of anonymity. The institutes’ forecast, part of a biannual review of the economy for the government, will be presented today in Berlin. Combined with government estimates it forms part of the basis of tax-revenue projections and government spending plans. The Sueddeutsche Zeitung newspaper reported yesterday the institutes forecast the economy will shrink by some 0.5% in 2010. The government will run a budget deficit of 3.7% of gross domestic product this year and 5.5% of GDP next year as the recession cuts tax revenue, Sueddeutsche said. The institutes’ projection for contraction in the economy will add pressure on Chancellor Angela Merkel to reconsider new stimulus measures in the crisis. (Bloomberg)
*****
As many as 30m Chinese migrant workers may have returned to their farms because city jobs have become scarce amid the country’s economic slowdown, a researcher said, raising a government estimate by 50%. Cheng Guoqiang, deputy head of the Chinese State Council’s Development & Research Center, said yesterday “Earlier reports put the estimate at 20m people. According to our estimate, about 30m farmers have lost their jobs.” The higher estimate underscores the challenge facing Chinese Premier Wen Jiabao as he tries to keep China expanding at 8% a year to prevent unemployment from leading to social unrest. About 225m people, or 28% of China’s rural population, are migrant workers who’ve left their farms in search of work in cities and towns, the National Bureau of Statistics said in March. China’s official jobless rate was 4.2% at the end of 2008, the fifth lowest of 15 Asia-Pacific economies, according to Bloomberg data. (Bloomberg)
SP Setia (SPSB MK, Sell, TP: RM2.38) has extended its home loan package on all its residential properties in the Klang Valley, Johor, and Penang until July 19, following favourable response from homebuyers. The property developer first launched the financing package Setia 5/95 Home Loan Package on 19 Jan 2009, which requires only a 5% down payment with no interest payable during construction period. The purchaser only begins servicing the 95% loan upon completion of construction. The home loan extension is applicable for existing projects and its new launches – Setia Vista, Solace Apartments at Setia Walk and luxury high-rise Setia Sky Residences on Jalan Tun Razak. (Financial Daily)
*****
UMW Holdings Bhd's (UMWH MK, Hold, TP: RM5.70) oil and gas (O&G) business, buoyed by the start of its big China pipe factory recently, should cushion a slowdown in the group's automotive division this year, the group's chief said. UMW is traditionally dependent on the trading and assembly of Perodua and Toyota vehicles, but the O&G activities it first ventured in 2002 continue to help boost the overall performance in the past few years. Managing director Datuk Abdul Halim Harun said the group's pipe factory in Qin Huang Dao in China particularly should provide some cushion to offset the slide of the automotive division business. He said demand is not a problem as the plant's output has been fully booked over the next three years to help build a 6,000km gas pipeline linking China and Kazakhstan. (BT)
*****
The government has removed – with immediate effect – the 30% Bumiputra equity requirement for 27 services sub- sectors under liberalization of the services sector. Prime Minister Datuk Seri Najib Tun Razak who said these sectors would now have no equity conditions imposed, said more liberalization measures were in the offing. Some of the sectors include; computer and related services, health and social services, tourism services, transport services, sporting and other recreational services, business services, rental/leasing services without operators, supporting and auxiliary transport services. (The Star)
*****
The consumer price index (CPI) rose 3.5% y-o-y in March 2009, lower than the 3.7% increase in the previous month. From January to March 2009, the CPI was up by 3.7% compared to the same period last year, the Statistics Department said in a statement today. This was brought by increases observed in the indices of all main groups except transport, clothing and footwear and communications, which decreased by 2.1%, 0.8% and 0.5% respectively. (Bernama)
*****
The international reserves of Bank Negara Malaysia fell 0.18% to RM320.1bn as at April 15 from RM320.7bn on March 31. The reserves position is enough to finance 8.1 months of retained imports and is four times the short-term external debt. (BT)
*****
IJM Plantation Bhd has proposed to buy a 75% stake in a planter based in South Sumatra, where a potential RM160m investment would be made to develop oil palm estates over the next 5 years. IJM Plantation’s unit Dynasive Enterprise Sdn Bhd has acquired the stake in Prima Alumga (PTPA) for RM250,000. PTPA is to buy a 10,252ha property in Lampung, South Sumatera, of which some 1,300ha has been established as oil palm plantation. The anticipated cost of the assets and the cost of developing the balance of land with oil palm, and to bring the plantings to full maturity will be about RM160m over the next 5 years. (Malaysian Reserve)
*****
Malaysia Airports Holdings Bhd (MAHB) has entered into agreements to sell its non-core assets in National Exhibition and Convention Centre Sdn Bhd (NECC) and Sepang International Circuit Sdn Bhd (SIC) to the government. The airport operator said yesterday it had inked the deals for the sale of 162.39m shares in NECC and 10m shares in SIC to the Minister of Finance (MoF) for RM159.63m and RM1 cash, respectively. The government will assume the liability of SIC amounting to RM120m. SIC has been the main promoter and organizer of the F1 Malaysian Grand Prix since 1999. The asset sales are part of MAHB’s restructuring plan, in which MAHB will pay the government RM1.01bn, comprising of RM508m cash and the balance will be set off against the sale of NECC, SIC and other capex projects. (Financial Daily)
*****
INVESTMENT RESEARCH
Malaysia
The freezing of the RM2.6bn project by Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) to replace the mains and communication pipes will not have an adverse affect on the restructuring of the water management sector in the state, said Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim. He said Syabas had already spent some RM1.8bn in capex to repair and replace the mains under the RM2.6bn project, but the state found that RM2.3bn had been put in to date. (Financial Daily)
*****
Malaysian Bulk Carriers Bhd (Maybulk) expects to remain profitable for the full-year ending December 31 2009, as it believes the dry bulk market has hit bottom. Executive chairman Teo Joo Kim said the company would be "barely okay", but still post a profit this year, assuming that the Baltic Dry Index (BDI), which tracks rates to ship dry commodities, remains at the 1,700-point level. "My personal view is that when the BDI hit 656 points in January this year, it was the lowest point. I don't think it will come to that level again. At that BDI level, all the shipowners were barely surviving because it was below their cash operative costs. Shipowners are now barely comfortable with the BDI at 1,700 points. We expect the BDI to range between low 1,000 points and 2,000 points (for rest of the year)", he said. (BT)
*****
MBM Resources Bhd is unlikely to match its 2008 financial performance this year given the weak economic environment, said its chairman Datuk Abdul Rahim Abdul Halim. The company also faced pressure from higher import costs as a result of the weak ringgit, he said. (Financial Daily)
*****
MK Land Bhd said it will not proceed with its plans to implement the proposed private placement involving up to 10% of its paid-up capital. The private placement was proposed late in 2007 when the company’s paid-up capital stood at RM1.21bn. The company told Bursa Malaysia yesterday the Securities Commission approval period for the private placement will expire today. In the SC’s approval letter dated Oct 31, 2008 approving the extension of time up to April 23, 2009, the SC stated that the said extension of time was the final extension for MK Land to complete the private placement. Hence, MK Land said it will not be proceeding to implement the private placement. (Malaysian Reserve)
*****
The Economic Planning Unit has approved MMC Corporation Bhd’s RM1.7bn acquisition of Senai Airport Terminal Services Sdn Bhd (SATS) and land. With the acquisition, MMC would own the only privatised airport in the country, and this is expected to help the group create value for its logistics and transportation business. (Financial Daily)
*****
INVESTMENT RESEARCH
Global
Stocks abandoned gains Wednesday, with the Dow ending a choppy session lower, as investors pled exhaustion after the recent six-week advance. After the close, Apple reported higher quarterly sales and earnings that topped estimates, while eBay reported lower quarterly sales and earnings that topped forecasts. Economic reports are due today on weekly jobless claims and existing home sales for March. Stocks seesawed through the early afternoon, moving in tune with the volatile financial sector. A late-session rally petered out in the last minutes of the session. The Dow Jones industrial average lost 1.0% (-82.9 pts, close 7,886.6). The Standard & Poor's 500 index lost 0.8% (-6.5 pts, close 843.5) and the Nasdaq composite gained 0.1% (+2.3 pts, close 1,646.1). In currency trading, the dollar fell versus the euro and the yen. U.S. light crude oil for June delivery gained 30 cents to settle at US$48.85 a barrel on the New York Mercantile Exchange. (CNNmoney)
*****
U.S. home prices rose 0.7% in February from January, the first consecutive monthly gain in two years, a sign that low interest rates may be moderating declines in real estate values. Prices fell 6.5% y-o-y in February, the second-smallest drop in six months, led by a 19% decrease in the region that includes California, the most populous U.S. state, the Federal Housing Finance Agency in Washington said yesterday. Mortgage rates have tumbled 1.6 percentage points in six months, making houses and condominiums more affordable. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan increased 5.3% last week as Americans took advantage of interest rates near record lows. The inventory of properties on the market fell to a 9.7 month supply in February at the current sales pace, down from April’s high of 11.3 months, and sales rose 5.1% from a month earlier, the National Association of Realtors said. (Bloomberg)
*****
The International Monetary Fund said the global recession will be deeper and the recovery slower than previously thought as financial markets take longer to stabilize. The fund said in a forecast released yesterday that the world economy will shrink 1.3% this year, compared with its January projection of 0.5% growth. The lender predicted expansion of 1.9% next year instead of its earlier 3% estimate. The fund’s latest outlook highlights the precarious state in which the world economy remains, even amid signs the worst slump since World War II may be easing. Recovery isn’t assured and will depend on policy efforts to cleanse banks’ balance sheets and craft measures that spur demand, the IMF said. The revised outlook comes a day after the fund calculated worldwide losses from distressed loans and securitized assets may reach US$4.1trn by the end of 2010 as the recession and credit crunch exact a higher toll on financial institutions. (Bloomberg)
*****
Chancellor of the Exchequer Alistair Darling raised taxes on British motorists, smokers and the rich to contain an unprecedented budget deficit as he forecast the worst recession since World War II. The Treasury will borrow 269bn pounds (US$392bn) more than estimated in November. It will raise taxes by 3.2bn pounds on people earning above 100,000 pounds a year and 6bn pounds through duties for alcohol, tobacco and gasoline, Darling said in his annual budget yesterday. The moves left the government little room to stimulate the economy before the next election, which must be held by the middle of 2010. Deficits will total 703bn pounds during five fiscal years through April 2014 compared with 434bn pounds forecast in November.
The Treasury expects the economy to shrink 3.5% this year and to rebound with 1.25% growth in 2010. (Bloomberg)
*****
Germany’s leading economic institutes predict the economy, Europe’s largest, will shrink by a post-war record of 6% this year, a government official said yesterday, speaking on the condition of anonymity. The institutes’ forecast, part of a biannual review of the economy for the government, will be presented today in Berlin. Combined with government estimates it forms part of the basis of tax-revenue projections and government spending plans. The Sueddeutsche Zeitung newspaper reported yesterday the institutes forecast the economy will shrink by some 0.5% in 2010. The government will run a budget deficit of 3.7% of gross domestic product this year and 5.5% of GDP next year as the recession cuts tax revenue, Sueddeutsche said. The institutes’ projection for contraction in the economy will add pressure on Chancellor Angela Merkel to reconsider new stimulus measures in the crisis. (Bloomberg)
*****
As many as 30m Chinese migrant workers may have returned to their farms because city jobs have become scarce amid the country’s economic slowdown, a researcher said, raising a government estimate by 50%. Cheng Guoqiang, deputy head of the Chinese State Council’s Development & Research Center, said yesterday “Earlier reports put the estimate at 20m people. According to our estimate, about 30m farmers have lost their jobs.” The higher estimate underscores the challenge facing Chinese Premier Wen Jiabao as he tries to keep China expanding at 8% a year to prevent unemployment from leading to social unrest. About 225m people, or 28% of China’s rural population, are migrant workers who’ve left their farms in search of work in cities and towns, the National Bureau of Statistics said in March. China’s official jobless rate was 4.2% at the end of 2008, the fifth lowest of 15 Asia-Pacific economies, according to Bloomberg data. (Bloomberg)
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