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Tuesday, April 28, 2009

Bursa Chat - News Highlights (28.04.2009)

Malaysia
Axiata Group Bhd (AXIATA MK, Hold, TP: RM1.77) missed its headline key performance indicators (KPIs) for the financial year ended 31 December 2008, due to the economies of most countries, in which the group had operations, exhibiting primary and secondary downstream effects due to the global economic crisis. The company lowered its KPI targets for 2009, which include revenue growth of 6%-11%, EBITDA growth of 4%-6%, and ROE of 4%. (Financial Daily)
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Sime Darby Bhd (SIME MK, Buy, TP: RM6.40) and Ramunia Holdings Bhd yesterday said they are in preliminary discussions on a potential corporate transaction. This is part of Sime Darby’s continuous effort to seek opportunities to expand its energy and utilities division, while Ramunia said it was negotiating with Sime Darby Engineering Sdn Bhd as part of its search for a strategic partner. If all went as planned, an announcement on the matter may be made within the next 2
weeks. (Financial Daily)
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AirAsia Bhd (AIRA MK, Buy, TP: RM1.90) wants to have new associate units in the Philippines and Vietnam to strengthen its footprint in the Asean region. AirAsia now has a 49% stake each in affiliate airlines Indonesia AirAsia and Thai AirAsia. "It will be great to have operations in the Philippines and Vietnam - the two biggest countries in Asean that we have yet to establish a base in," group chief executive officer Datuk Seri Tony Fernandes said. By setting up affiliate airlines in the two countries, AirAsia will have access to a combined population of roughly 180m. However, he has not set a time frame for the expansion as AirAsia is still searching for the right partners and working on securing licences from the respective governments. Fernandes said the planned venture with Vietnam' shipbuilding giant Vinashin to form a Vietnamese low-cost carrier was frozen by the Vietnamese government. (BT)
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AirAsia Bhd (AIRA MK, Buy, TP: RM1.90) does not expect any slowdown in business despite a worldwide high alert on the deadly swine flu, as “it’s just another thing that happened,” said its group chief executive officer Datuk Seri Tony Fernandes. In addition, AirAsia, American Express, and Malayan Banking Berhad (MAY MK, Hold, TP: RM5.45) officially launched AirAsia’s acceptance of American Express cards for flight bookings, which would enable the airline to capture more high-spending guests, including business executives. (Financial Daily)
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Packet One Networks (MY) Sdn Bhd (P1) is on track to reach its target of 250,000 WiMAX users by year-end, its CEO Michael Lai said. Currently, P1 has 25% WiMax coverage of the population – about 6m users, concentrated in the Klang Valley, followed by Johor Bahru. P1 will continue to stick to spending RM1bn in capex over 5 years, of which RM440m has been spent to date. (Financial Daily)
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Malaysia's interest rate cuts will only have an impact on the economy nine months after they are made, Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz said. Zeti expects the economy to improve in the second half of the year. Asked if Bank Negara will be reducing the interest rate further at its policy meeting tomorrow, she said: "What we do now will only have an impact in nine months. Therefore, if we already see an improvement expected to take place in the second half, and certainly further improvement going into next year, we should have done most of what we need to do now." (BT)
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Malaysia’s exports of electrical and electronics parts and components have started to pick up following a positive impact from China’s stimulus package, Deputy Prime Minister Tan Sri Muhyiddin Yassin said yesterday. He said that this was an indication of a probable recovery within our export value, particularly in electrical and electronics parts and components. However, he warned that the country should not get over confident as the situation has not returned to normal. (Malaysian Reserve)
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Bank Pembangunan Malaysia Bhd’s president and group managing director, Datuk Tajuddin Atan, is expected to be appointed as the new head of RHB Capital Bhd (RHB Cap) in June, sources say. According to these sources, RHB Cap’s current group managing director, Michael J Barrett, who has been with the banking group since 2005, intends to retire once his term is up in June. While Tajuddin will only be appointed officially in June, sources said that the he may start familiarising himself with the banking group’s operations in May. (Malaysian Reserve)
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Global
Stocks slipped Monday as fears about the impact of swine flu and jitters about the next batch of quarterly results gave investors a reason to retreat after a big rally. Should the disease develop into an epidemic, world economies would be hurt at a time when a global recession is already exerting a crippling impact. Such fears were dragging on stocks. However, the market was also vulnerable to a pullback anyway, with the recent rally losing steam in a busy week for quarterly results and economic news, and ahead of the results of Treasury' "stress tests" for the largest U.S. banks. The Dow Jones industrial average lost 0.6% (-51.3 pts, close 8,025.0). The Standard & Poor' 500 index lost 1.0% (-8.7 pts, close 857.5) and the Nasdaq composite lost 0.9% (-14.9 pts, close 1,679.4). In currency trading, the dollar gained versus the euro and fell against the yen. U.S. light crude oil for June delivery fell US$1.41 to settle at US$50.14 a barrel on the New York Mercantile Exchange. (CNNmoney)
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European Central Bank President Jean-Claude Trichet said that confidence is improving in money markets as the ECB pumps money into the financial system. Since the start of the year “we have seen liquidity flows moving back from our balance sheet to the money market,” Trichet said yesterday. “This is a sign of improving confidence and more favourable conditions. We therefore see some indication that the functioning of the money market is improving.” The cost of borrowing euros for three months has dropped to the lowest in at least a decade as the ECB provides banks with unlimited funds. While some ECB policy makers have indicated the central bank may extend the maturities of these loans to 12 months from six at present, Trichet said he will wait until the next rate decision before announcing any new tools. (Bloomberg)
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European Central Bank Governing Council member Ewald Nowotny said the ECB is prepared to expand its range of policy tools if necessary to ease the flow of credit through the economy. Officials “stand ready to use unconventional measures of quantitative easing to assure European firms and consumers access to credit at appropriate conditions,” Nowotny said yesterday. The central bank will also keep rates low for “as long a time as is required.” ECB policy makers are debating whether to follow counterparts in the U.S. and the U.K. in buying assets to reverse the region’s economic slump. The 22-member council has split over how aggressive it should be at a time when its main interest rate is already at a record low of 1.25%. Nowotny has indicated that purchasing bonds may be an option for the central bank. (Bloomberg)
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German consumer confidence unexpectedly held steady for a third month as slower inflation boosted household purchasing power and the recession showed first signs of easing. GfK AG’s confidence index for May, based on a survey of about 2,000 people, was unchanged from April at 2.5%, the Nuremberg-based market-research company said yesterday. April’s result was revised up from 2.4. German business and investor confidence increased this month on hopes that interest- rate cuts and government stimulus packages will lift the economy out of its worst recession in over six decades. Germany’s leading economic institutes predict the economy, Europe’s largest, will shrink by 6% this year. GfK’s measure of economic expectations in Germany rose to minus 31.2 from minus 32.8 and a gauge of income expectations increased to minus 8 from minus 11.4. An index of consumers’ propensity to spend declined to 12.4 from 13.9. Gfk said factors supporting consumer confidence include tentative signs of an economic recovery later this year, low inflation rates and rising pensions. Only the other hand, concern about rising unemployment may damp sentiment in coming months, it said. (Bloomberg)
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Japan's economy is likely to shrink 3.3% this fiscal year, its worst contraction since World War II, the Cabinet announced yesterday as it submitted a massive supplementary budget to finance a new stimulus package. Finance Minister Yosano asked lawmakers to quickly pass the extra budget, which calls for a record 15trn yen (100 yen = RM3.73) in government spending to finance a new stimulus package. The package is equivalent to about 3% of Japan' gross domestic
product. (BT)
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South Korean consumer confidence in April climbed to the highest in at least nine months as shares gained and the government’s US$37bn stimulus coupled with record interest-rate cuts stoked the economy. The household sentiment index rose to 98 from 84 in March, the Bank of Korea said today. That’s the highest level since the bank’s monthly series began in July 2008. A reading less than 100 indicates pessimists outnumber optimists. Improved confidence adds to signs a slump across the region may be abating as government rescue packages underpin domestic demand and Asia’s exports start to recover. South Korea’s economy unexpectedly grew 0.1% in 1Q09, avoiding a technical recession following the previous quarter’s 5.1% slump. The consumer confidence index is based on a survey of 2,200 South Korean households in 56 major cities conducted by mail and telephone from April 14 to April 21. (Bloomberg)
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The worst may be over for Asia’s exporters as interest-rate cuts and a US$585bn stimulus package get China buying again. Singapore’s shipments to China jumped 29% in March from February, and those from Japan, South Korea and Taiwan also increased. AU Optronics Corp., Nissan Motor Co. and Hyundai Motor Co. this month all forecast higher sales to China. China’s spending on roads, bridges and low-cost housing should contribute “strongly” to growth in Asia, the World Bank said this month. Asian exports are also beginning to benefit after companies worldwide ate into inventories during the past two quarters instead of ordering new stock. Now when they need more goods, the orders translate faster into production and exports. Signs that the U.S. economy is recovering may provide further demand for Asia’s exporters. (Bloomberg)
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