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Wednesday, June 10, 2009

Bursa Chat News Highlights (10.06.2009)

KNM Group Bhd (KNMG MK, Hold, TP: RM0.67) managing director Lee Swee Eng’s selling of a 1.6% stake recently has raised eyebrows and concerns about whether he would continue to pare his interest in the oil and gas player. He said the selling of the shares was a strategic placement and that the proceeds will be used to degear and clear up the margin taken up during the rights issue. He declined to comment on whether he would be selling more shares. (Financial Daily)

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DiGi Telecommunications Sdn Bhd, a unit of DiGi.Com Bhd (DIGI MK, Hold, TP: RM22.60) aims to solidify its leading position in the small and medium-sized enterprises (SME) market while growing its share of the large corporations market. DiGi yesterday launched corporate promotional packages for the BlackBerry Bold and Curve 8900 smartphones. DiGi’s head of enterprise business, Eric Chong said DiGi led the SME market with a 35% to 45% share but was still trailing behind the competition in the large corporations segment. DiGi is seeking to aggressively grow its presence in the large corporations market over the next few years and is looking very positive because of their focus in driving sales around enterprise businesses and through the SME, he added. (Financial Daily)

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Kuala Lumpur Kepong (KLK MK, Sell, TP: RM10.40) signed an accord with the Indonesian state planter PT Perkebunan Nusantara II to produce oil and rubber in North Sumatra. The companies signed a 30 year agreement, creating a venture called PT Langkat Nusantara Kepong, in which KLK will have a 60% stake. The venture will spend about RM283m to develop

20,221 hectares of oil palm and rubber plantations. It plans to raise yields to 27mt/ha from 10-11mt/ha currently. (Malaysian

Reserve)

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Malaysia Airlines (MAS MK, Sell, TP: RM2.44) is adopting the financial reporting standard 139 (FRS 139) to allow for transparency of its financial instruments, such as derivatives, given the tough operating environment. MAS executive director and chief financial officer Tengku Azmil Zahruddin said most airlines experienced derivative hedging losses, but the current Malaysian accounting standards did not provide for such transparency. (BT)

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Radian Starfish Sdn Bhd will develop Laguna Marina, a RM3bn integrated development in Mersing. The development, which has received the Department of Environment approval, involves land reclamation of 809.37ha which is scheduled to start this year. According to Johor Mentri Besar, the project is expected to take 10 years to complete. The waterfront development would consist of star-rated and boutique hotels, water front homes, a water theme park, convention center, cultural center, private medical centers as well as commercial and business areas. A new jetty complex was also in the plan to handle large capacity vessels and also a fishing jetty. (Starbiz)

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The four-star Hydro Hotel Penang in Batu Ferringhi is up for sale for an estimated RM100m, sources say. The property, previously known as Hydro Majestic Hotel and before that Ferringhi Beach Hotel, was bought by the Mah family of Penang in early 2006 from Asia Pacific Land Bhd. The 350-room property, now 28 years old, was bought for RM43m. It is understood that Hydro Hotel underwent a RM20m facelift after the acquisition. (BT)

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Malaysia's first Corporate Governance (CG) Index, launched yesterday, will filter through some 960 listed companies this year to determine its top 100, said the Minority Shareholder Watchdog Group (MSWG). The top 100 companies - rated based on their conformance to good CG, financial performance and engagement - will be announced at an award ceremony to recognise best performers in the first week of December. A list of the top 200 companies will also be published. (BT)

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Kuwait Finance House yesterday unveiled its sister company, Liquidity Management House for Investment KSCC which aims to penetrate further into the Malaysian market. Its main objective is to be a principal player in the international sukuk market and the Shariah-compliant structured finance area. Chairman and MD Emad Al Monayea said that it would issue sukuks of US$300m-400m in total and not limited to any country. (Malaysian Reserve)

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Tourists arrivals in April 2009 rose 7% to 1.88m, largely supported by visitors from Singapore, Brunei, Australia and Thailand, according to the Tourism Malaysia website. In April last year, a total of 1.76% tourists - or those who stay at least one night - made their way to our shores. Accordingly, arrivals in the first four months have increased by 2.64% to 7.29m compared with 7.1m recorded in the same period last year. (BT)

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The Nasdaq rallied Tuesday, while the broader market was little changed, after the government said 10 of the largest banks could pay back loans and after a positive Treasury auction cooled worries about rising borrowing costs. The Dow Jones industrial average lost 0.02% (-1.4 pts, close 8,763.1). The Standard & Poor's 500 gained 0.4% (+3.3 pts, close 942.4) and the Nasdaq composite gained 1.0% (+17.7 pts, close 1,852.1). In currency trading, the dollar fell versus the euro and the yen. U.S. light crude oil for July delivery rose US$1.92 to settle at US$70.01 a barrel on the New York Mercantile Exchange. (CNNmoney)

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JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley were among 10 banks that won U.S. Treasury approval to buy back US$68bn of government shares, freeing them from added oversight that curbed lending practices, hiring and pay. The government’s decision to allow the biggest repayments to the Troubled Asset Relief Program reflects surging financial stocks and rising pressure from banks to free themselves of political interference. U.S. firms unveiled plans to raise more than US$100bn since government stress tests of the 19 largest banks found that 10 needed US$74.6bn of additional capital to weather a more severe recession. The government didn’t name the banks. In addition, American Express Co., Bank of New York Mellon Corp., BB&T Corp., Capital One Financial Corp., Northern Trust Corp., State Street Corp. and U.S. Bancorp also said yesterday they are repaying the funds. (Bloomberg)

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Inventories at U.S. wholesalers fell in April for the eighth straight month as distributors tried to cut excess supply apace with decreasing sales. The 1.4% decline in stockpiles was larger than forecast and followed a revised 1.8% decrease in March that was larger than previously estimated, the Commerce Department said yesterday in Washington. Sales fell 0.4% to the lowest level since 2005. The economy shrank at a 5.7% annual pace in 1Q09, reflecting a record drawdown in inventories that may set the stage for a return to growth later this year. At the current sales pace, it would take 1.31 months for distributors to deplete the amount of goods on hand, compared with 1.32 months in March. The reading was as low as 1.1 months in June

2008. (Bloomberg)

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Bank of England Deputy Governor Paul Tucker said it will take until at least 3Q09 to gauge whether the financial system is producing enough credit to sustain economic growth. Tucker said that confidence “seems to have stabilized” and recent indicators and business surveys show a bit of an improvement in the economy and financial markets. The reopening of high-grade bond markets has been “encouraging,” Tucker said, while the “really good news” is that companies in the U.S. and Europe have been raising funds in equity and bond markets. Still, he cautioned that bank lending in most countries “remains subdued.” (Bloomberg)

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The U.K. housing market showed signs of “stabilizing” in May as the smallest balance of real-estate agents and surveyors in 18 months reported price declines, the Royal Institution of Chartered Surveyors said. The number of respondents in the monthly survey saying home values fell exceeded those reporting gains by 44.1 percentage points, the best reading since November 2007, RICS said in a report yesterday. Property sales per agent rose to 11.8 in the three months through May, the highest since August 2008. With Nationwide Building Society and Halifax saying that home values jumped in May, evidence is mounting that the property slump is past its worst. “On the face of it, the housing market does appear to be close to bottoming out with activity picking up in a material way and prices at last stabilizing,” RICS spokesman Ian Perry said. “However, it is important to remember that the lack of supply has been as important in underpinning prices as the rise in demand.” (Bloomberg)

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German exports fell more than economists forecast in April as the global crisis restrained demand, keeping Europe’s largest economy mired in a recession. Sales abroad, adjusted for working days and seasonal changes, fell 4.8% from March, when they rose a revised 0.3%, the Federal Statistics Office in Wiesbaden said yesterday. Economists expected a 0.1% decline in April, according to the median of 10 estimates in a Bloomberg survey. While Bundesbank President Axel Weber said June 5 that central bank policy has helped to slow the pace of the economic slump, the outlook “remains uncertain.” German imports dropped 5.8% in April from the previous month, when they increased a revised 0.2%, the statistics office said. The trade surplus narrowed to 9.4bn euros (US$13.1bn) from 11.3bn euros. The surplus in the current account, the measure of all trade including services, was 5.8bn euros, down from a revised 11.0bn euros. (Bloomberg)

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China’s top currency regulator relaxed controls on overseas lending, estimating the measures could encourage as much as US$30bn of new financing for businesses to expand abroad. Companies will be allowed to lend as much as 30% of the value of their total equity to units abroad, Sun Lujun, deputy director of the capital-account department at the State Administration of Foreign Exchange told a media briefing in Beijing yesterday. The nation will let more firms provide such funding, including those not owned by the state. “The aim of the rules is to provide follow-up funds for companies with overseas investments.” said Liu Guangxi, an inspector at SAFE’s capital-account department. China, with the world’s largest currency reserves at US$1.95trn, has been urging its companies to expand outside the nation as part of its “go-global” campaign. The government wants to diversify foreign-exchange investments to reduce the impact of any drop in the value of dollar- denominated debt. (Bloomberg)

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Japan’s deepest post-war recession is easing, according to the government’s broadest measure of economic health. The coincident index climbed to 85.8 in April, the first advance in 11 months, the Cabinet Office said yesterday in Tokyo. Economists surveyed by Bloomberg expected the gauge, a composite of 11 indicators including factory production and retail sales, to rise to 86. The Cabinet Office said the coincident index is showing signs of bottoming, raising its assessment of the measure. Reports since 1Q09, when the economy shrank a record 15.2%, suggest the nation is recovering from its worst recession since World War II. Industrial production and exports have improved two months running and bankruptcies fell in May for the first time in a year. (Bloomberg)

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The Bank of Japan’s 0.1% benchmark interest rate may be hampering the functionality of the money market, the central bank said. Having the key rate at the same level as the interest the central bank pays on reserves of commercial lenders has “reduced market functionality to an extent” by cutting trading volumes in the overnight-call market, the bank said in a report published in Tokyo yesterday. The onset of a global financial crisis last year prompted the BOJ to start paying interest on reserves in October, when it also began lowering borrowing costs. Funds eligible for the payments surged to 7.1trn yen (US$72bn) as of March, compared with 1trn yen in November, the bank estimates. “Should market participants continue to hold onto a high level of excess reserves, there is a risk that the liquidity of the market could deteriorate further,” the central bank said. Bank of Japan Governor Masaaki Shirakawa said in April that the key rate is at an appropriate level and cutting borrowing costs further would make money market trading unprofitable and stifle the flow of credit in the economy. (Bloomberg)

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