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Monday, April 27, 2009

Bursa Chat - News Highlights (27.04.2009)

Malaysia
Axiata Group Bhd (AXIATA MK, Hold, TP: RM1.77) has paid the remaining RM2bn of the RM4bn owed to Telekom Malaysia Bhd (T MK, Hold, TP: RM2.74) arising from the demerger exercise. The second payment, together with interest earned of RM68m, represents the full settlement from Axiata to TM. The initial RM2bn was paid a month ahead of schedule earlier this month. (Starbiz)
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Axiata Group Bhd’s (AXIATA MK, Hold, TP: RM1.77) Indonesian unit, PT Excelcomindo Pratama tbk (XL), may undertake either a rights issue or a convertible bond to fund its capex, which is reported to be 700bn rupiah (RM237.6 m), said Axiata president and group CEO Datuk Seri Jamaludin Ibrahim. He said the appropriate capital structure to fund XL’s growth will be decided next month. Earlier, Axiata had to scrap plans to sale 7,000 communication towers, which was supposed to have raised US$700mn for XL, due to regulatory changes in Indonesia, as well as the global financial crisis. (Malaysian Reserve)
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Several government-linked companies (GLCs) have emerged as interested parties to take up the reins at Ramunia Holdings Bhd, sources say. Heading the pack is Sime Darby Bhd (SIME MK, Buy, TP: RM6.40), which is said to be keen on wrapping up a deal with Ramunia. If all goes as planned, an announcement on the matter may be made within the next 2 weeks. Another GLC, UMW Holdings Bhd (UMWH MK, Hold, TP: RM5.70), which is one of the interested parties, is however believed to have dropped out of the talks and is now said to be looking to sub-contract O&G fabrication jobs to Ramunia. It is not certain whether Sime Darby' plan entails coming into Ramunia as a passive shareholder, or if it would involve a change in management of Ramunia. Sime Darby had expressed interest in coming to Ramunia as a shareholder back in 2006, but pulled out from negotiations following the commencement of the mega-merger of the Permodalan Nasional Bhd companies - Sime Darby, Golden Hope Plantations Bhd and Kumpulan Guthrie Bhd. (The Edge)
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YTL Power International Bhd (YTLP MK, Buy, TP: RM2.93) has resubmitted a proposal for the 450MW Bibiyana power plant project in Bangladesh, that is being re-tendered for the second time within a year. The utility submitted a bid for Bibiyana power plant project in 2007 but was disqualified at the final stage of the bidding process. Apart from YTL Power, Ranhill Bhd has also submitted a pre qualification bid. Bangladeshi news reports say the evaluation committee headed by the Power Cell will commence its review this Sunday and qualification will be announced within the next two or three weeks, with the final round of bidding in May. The winning bid is expected to be announced by June. Power Cell is a unit set up by the Bangladesh' Ministry of Power, Energy and Mineral Resources to carry forward the power sector reforms activities in Bangladesh. (BT)
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Glomac Bhd (GLMC MK, Hold, TP: RM0.62) may expand its ongoing 440ha Bandar Saujana Utama township project in Sg Buloh, Selangor, as demand soars. The RM1.3bn township, which is 80% developed, is focused on providing affordable homes priced from RM230,000 to RM400,000. Corporate communications director Fara Eliza Tan Sri FD Mansor said Glomac has offers from banks, landowners and receivers, to buy 40ha to 200ha of land, surrounding the township. "We are considering the offers. This is a matured township and there is soaring demand for properties. The township has attracted civil servants, who are not severely affected by the recent economic downturn," Fara said. She said the 400ha Universiti Teknologi Mara (UiTM) in Puncak Alam would be a catalyst for further growth at the township. (BT)
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Socotherm SpA, the Italian provider of pipe coatings for Eni SpA and Exxon Mobil Corp, has denied reports that its main stakeholder was preparing to give up part of its stake to Wah Seong Corp Bhd (WSC MK, Hold, TP: RM1.13). Last Wednesday, a piece of Italian news said Zeno Soave, Socotherm' largest shareholder, is ready to cut his 60% stake in the company as part of a possible partnership with Wah Seong. "The news was incorrect," Socotherm said, adding that Wah Seong had previously proposed taking up a stake in the company. Socotherm said it was proposed informally during an arbitration proceeding, started last December, over their Malaysian joint venture. (BT)
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Prime Minister Datuk Seri Najib Razak will announce the liberalisation measures for the financial sector today. This will be his second announcement on the country’s market liberalisation plan following the measures announced for 27 sub-sectors in the services industry on Wednesday last week. (Malaysian Reserve)
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The Government is to make a comprehensive decision on the issuance of approved permits (AP), Deputy Minister of International Trade and Industry Datuk Mukhriz Mahathir said yesterday. The approach would include doing away with the current policy of issuing APs or imposing levy or tax on AP holders. A final decision on the issue will be announced once cabinet approval is obtained. (Financial Daily)
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Bank Negara Malaysia is set to lift the cap on foreign equity participation in the insurance sector as it kick-starts the last phase of the 10-year Financial Sector Masterplan. Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz met with insurance and takaful officials last week to inform them of some of the upcoming liberalisation measures. She did not disclose details of the plan, but hinted that new licences, namely for takaful operation, may be on the cards, an industry source said. Currently, existing foreign shareholders can increase their stake in a local insurance company up to a maximum of 49% - the maximum allowable under Malaysia' foreign investment rules. New foreign insurance companies can also enter the industry but they can s
only buy up to 30% of a locally incorporated insurance company. The source said the lifting of the foreign equity barrier applies to both conventional and takaful operations. But there' a catch. The new player will have to help facilitate the Malaysian entity to expand overseas. (BT)
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The Nomad Group Bhd’s wholly owned subsidiary, The Nomad Residencies Sdn Bhd, is buying a 100% equity stake in City Centre Hotel Sdn Bhd (CCH) from Pulai Springs Bhd for RM47.3m. CCH is involved in the operation and management of hotels, and owns the Novotel Kuala Lumpur City Centre and the land on which the hotel is constructed. Novotel is a 28- storey building comprising of 274 rooms and 17 conference suites, restaurants, lounges, pool, and other amenities. Nomad Group said the proposed acquisition would provide synergy and expand its hospitality business. (Malaysian Reserve)
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Unisem says its equipment capacity utilisation has increased to 50% now from 40% in January, as demand has started picking up since last month. Unisem’s production utilisation averaged about 75% in the first three quarters ended Sept 30 before it saw a sharp contraction in the fourth quarter. According to the group, the March demand was higher than January and February combined. The factory in Chengdu, China, was at optimum utilisation (90-100%) now from 50% earlier this year. The Chengdu factory is key to Unisem’s performance where 60% or 70% of the output is for the Chinese domestic market. (Starbiz)
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Iskandar Malaysia will be receiving RM1.7bn worth of investments following the signing of a memorandum of understanding (MoU) between UK-based Lenstar Investments Ltd and Maestro Development Sdn Bhd. Under the MoU signed in Johor Bahru last Saturday, both parties will form a joint venture to acquire 142.13ha of land in Bandar Bistari Perdana, owned by Redez Properties Sdn Bhd, in Mukim Plentong. Lenstar’s managing director, Mohammad Munir Malik said among the developments to be carried would be the construction of a specialist medical centre. Other developments include constructing a higher education centre and business centre. Development of the area is expected to start in 3 months’ time. (Malaysian Reserve)
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Eastern Pacific Industrial Corp Bhd (EPIC) hopes to secure half of the RM200m worth of fabrication works it has submitted bids for via subsidiary EPIC Mushtari Engineering Sdn Bhd (Mushtari) this year. Managing director and chief executive officer Ramli Shahul Hameed said Mushtari is bidding for jobs from, among others, Shell in Brunei, ExxonMobil and Carigali Hess. He said this is the first time Mushtari will bid for jobs on its own, as previously it only participated as a sub- contractor for oil companies. (BT)
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INVESTMENT RESEARCH
Global

Stocks rallied Friday after Ford, Microsoft and American Express reported results that met or topped analysts' expectations. The Nasdaq ended higher for its 7th week in a row, while the Dow and S&P 500 ended the week slightly lower after six straight weeks of gains. The Dow Jones industrial average added 1.50% (+119.23 pts, close 8,076.29). The Standard & Poor' 500 index climbed 1.68% (+14.31 pts, close 866.23) and the Nasdaq composite gained 2.55% (42.08 pts, close 1,694.29). In currency trading, the dollar fell versus the euro and the yen. U.S. light crude oil for June delivery rose $1.94 to $51.56 a barrel on the New York Mercantile Exchange. (CNNmoney)
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The U.S. economy will continue to contract “for some time to come,” said Lawrence Summers, director of the White House National Economic Council. “I expect the economy will continue to decline,” with “sharp declines in employment for quite some time this year,” Summers said yesterday. Summers said the economy will pick up as manufacturers rebuild depleted inventories and consumers replace aging cars. “These imbalances can’t continue forever,” he said. “When they are repaired they will be a source of impetus for the economy.” Summers said the Obama administration is “on a path toward containment and toward building a path toward expansion,” he said, adding that “even sharp plans take time” to work, perhaps six months or
more. (Bloomberg)
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Financial regulators may force many of the largest U.S. banks to raise new capital or conserve extra cash after accounting for assets held off their balance sheets. The Federal Reserve yesterday released the methods used in stress tests on the 19 largest U.S. banks, which incorporated an accounting proposal that would bring about $900bn onto lenders’ books. The accounting change suggests most of the 19 will need to take some action to buttress their capital, analysts said. Stronger banks may keep dividend payments low or apply retained earnings, with others selling new shares to make up the amounts, they said. (Bloomberg)
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Treasury 10-year notes fell, pushing yields above 3% for the first time since the Federal Reserve announced a plan to buy U.S. debt, as investors focused on $101bn in note auctions next week. The benchmark 10-year security dropped for the fifth straight week as record U.S. debt sales overshadowed the buyback program the Fed unveiled on March 18 to drive down consumer borrowing rates. The 30-year bond yield rose to the highest since Nov. 20, while the gap between yields on two- and 10-year Treasuries approached the widest since November as investors demanded greater compensation to lend to government for longer periods. (Bloomberg)
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People’s Bank of China Governor Zhou Xiaochuan said China’s current-account surplus “‘will no longer be a serious problem” as the country’s economic-stimulus plan stokes domestic demand. China’s current-account surplus rose 15% to US$426bn last year, the State Administration of Foreign Exchange reported last week. Economists say China’s current- account surplus and the U.S. current-account deficit must shrink in order to put the global economy on a path to sustainable growth. The global economic slowdown is curbing demand for imports in the U.S. and causing Chinese exports to fall. The U.S. current-account deficit narrowed to US$132.8bn in 4Q08, reflecting a smaller gap in trade of goods. (Bloomberg)
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Taiwan and China signed agreements on financial cooperation on Sunday, expanding air links across the Taiwan Strait and jointly fighting crime, in a move to improve further trade and economic relations. Representatives of Taiwan' semiofficial Straits Exchange Foundation and its Chinese counterpart, the Association for Relations Across the Taiwan Straits, signed the agreements in the third round of formal negotiations between Taiwan and China since Taiwan' Ma Ying-jeou administration came to power in May 2008, on a pledge to improve Taiwan' flagging economy through better relations with China. (WSJ)
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The International Monetary Fund raised its estimate for how much fiscal stimulus governments are injecting in an effort to fight the worst global recession since World War II. The Washington-based lender said yesterday that the Group of 20 industrial and developing countries had committed to spending increases and tax cuts totalling 2% of their gross domestic product this year and 1.5% next year. That marks an increase from last month’s estimates of 1.8% for 2009 and 1.3% for 2010. IMF Managing Director Dominique Strauss-Kahn said Saturday that the current budget plans “may be enough” as long as policy makers can cleanse banks’ balance sheets. The new estimates come after countries including Japan, South Korea and Russia announced new rescue packages for their economies. The biggest effect from the measures may come toward the end of this year, an IMF official said on condition of anonymity. (Bloomberg)
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The International Monetary Fund is considering selling bonds to several developing countries to raise money to combat the global economic slump. China and Brazil are among a handful of nations that have expressed interest in purchasing the securities, which would give member states a different way to contribute to the Washington-based fund. The IMF has never before issued bonds. The IMF is seeking more cash to finance loans and aid to member countries during worst economic slump in the fund’s 64-year history. (Bloomberg)
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Governments and central banks need to boost demand through increased spending and interest-rate cuts to prevent deflation from becoming entrenched, the United Nations Conference on Trade and Development said. A “sharp contraction” in industrial output in developed nations and declines in the costs of commodities and other goods means an “absolute fall of the price level” is not likely to be avoided, Supachai Panitchpakdi, secretary general of the group, said. “The critical question is whether this marks only a temporary corrective drop or whether it is the beginning of a longer period of deflation,” he said. “The most important task is to break the spiral of falling asset prices and demand and to revive the financial sector’s ability to provide credit for productive investment to stimulate real economic growth.” Supachai said capacity utilization at “historic lows” and rising unemployment will prevent wage inflation for some time, he said. “Fears that too much money or rising government deficits could reignite inflation appear unjustified and could be misleading.” (Bloomberg)
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The OPEC and 13 Asian countries called for greater oversight of oil and other commodity markets to prevent a surge in prices after the global economy recovers from the recession. Ministers participating in an energy roundtable in Tokyo sought limits on positions in the OTC trades and said excessive oil price movements were undesirable. They also called for continuous investment to boost energy supplies. (Starbiz)
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