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For the week, although key global markets have been negative, we have yet to call for the bear to arrive in our local market. As of today, the bears have still yet to arrive in the FTSE Bursa Malaysia KLCI.
Dow Jones stable for now
The highly correlated Dow Jones, after suffering significant sell-downs from Friday to the beginning of this week, also seems to be stabilizing at this point. The support line that is keeping the Dow afloat is the mid term 90-day Moving Average trend line at the 8,000 level.
Our market’s buoyancy might provide trading opportunities
The Dow’s stabilization might also keep our local market afloat in the next few days. As of now, the FTSE Bursa Malaysia is supported by its short term 30-day Moving Average line. Our market's buoyancy might permit short term trading in second liner property counters like E&O and DNP which we have been highlighting in our previous reports.
Bursa Chat- News Higlights
Malaysia
Sunway City Bhd (SCITY MK, Buy, TP: RM3.60) plans to construct new buildings over the next few years, that will later be injected into its RM4bn real estate investment trust (REIT). "We are working on pipeline investment assets to include into the REIT later when they mature in earnings and have the right tenant mix," SunCity executive director Datuk Jeffrey Ng Tiong Lip told Business Times in an interview. SunCity is still weighing its option of whether to list on Bursa Malaysia or via reverse takeovers in Singapore or Australia. (BT)
* * * * *
Sime Darby Plantation Sdn Bhd, a unit of Sime Darby Bhd (SIME MK, Buy, TP: RM7.70), is set to invest an initial RM100m to develop oil palm plantations on Native Customary Rights (NCR) lands in Julau. Its Plantation Agency and Consultation head Mohd Helmy Othman Basha said the project would cover an area of about 20,000ha and that it will be a joint ventureship with landowners from 109 longhouses in three areas namely KJD/Lower Julau, Sungai Julau/Sungai Pitoh and Merurun/Meluan/Entabai. In the joint venture, Sime Darby will hold 60% equity while the landowners will hold 30% and the Land Custody and Development Authority (LCDA) 10%. Helmy said the target was for Sime Darby to develop around 50,000ha in Sarawak and another 50,000ha in Sabah. (The Malaysian Reserve)
* * * * *
AirAsia Bhd (AIRA MK, Buy, TP: RM1.90) expects its newly launched low cost courier, Redbox, to contribute RM25m to RM30m revenue to the group each year. Group CEO Datuk Seri Tony Fernandes said the courier service, which offers an average 50% lower shipment rates than the market’s, was targeted at small and medium sized enterprises and individual customers. (Financial Daily)
* * * * *
The Transport Ministry is ready to consider proposals from airlines like AirAsia (AIRA MK, Buy, TP: RM1.90) to serve the Kuala Lumpur-Stockholm-New York route, which Malaysian Airlines (MAS) (MAS MK, Sell, TP: RM2.00) will cease to operate from October. Currently, AirAsia X, partly owned by AirAsia Bhd, offers long-haul flights to London, Melbourne, Perth and Taipei. (BT)
* * * * *
Steelmaker Ann Joo Resources Bhd’s export sales surged in 2Q after a price slump late last year led to a global supply shortage. Its managing director Datuk Lim Hong Thye said that the group sold a record 150k tonnes of steel products in April-June to overseas customers as steel mills globally scrambled to meet rising demand. He also stated that the group’s main plant has been running full on 3 shifts since April and that the industry’s inventory level is way below the normal level to sustain demand. (Financial Daily)
* * * * *
Malaysia Airports Holdings Bhd (MAHB) recorded a 1.1% y-o-y growth in passenger movements to 4.05m passengers in May 2009. According to an announcement to Bursa Malaysia, MAHB said out of the 4.05m, 2.32m passengers passed through the Kuala Lumpur International Airport (KLIA), with the rest of the passenger numbers contributed by other airports operated by the company. (Financial Daily)
* * * * *
Perusahaan Otomobil Kedua Sdn Bhd (Perodua) expects sales of its cars to reach 158k units this year and approach its historic high of 167k units next year. The group expected demand for new cars to pick up ahead of year-end festivities and the upcoming launch of its multi-purpose vehicle (MPV) this November to boost sales. Its director of sales, Ahmad Suhaimi Mohd Anuar said that the group expected the automotive industry to recover slightly with total industry volume to reach 490k units and Perodua to once again reach 165k units in 2010. (Financial Daily)
* * * * *
Prime Minister Datuk Seri Mohd Najib Razak said yesterday that all projects under the Northern Corridor Economic the Region (NCER) are proceeding according to schedule. Under the 9 Malaysia Plan, the government has allocated RM750m to the Northern Corridor Implementation Authority (NCIA) to develop the area. The projects in the NCER master plan covered the major economic sectors of agriculture, manufacturing and tourism, supported by the infrastructure, education, human capital and social development sectors. The prime minister also stated that some of the projects were pilot in nature in the sense that the government wanted to try out the project before implementing it on a large scale (The Malaysian Reserve)
* * * * *
Malaysia’s industrial output contracted 11.1% y-o-y in May, registering the smallest decline in six months, following an 11.7% (revised) y-o-y decline in April. M-o-M, the industrial production index (IPI) increased by 1.6% while the cumulative index for the first five months declined 13.2% against the same period in 2008. In a statement yesterday, the Statistics Department said the drop in May was due to decreases in three indices - manufacturing by 15.2%, mining by 3% and electricity by 2.1%. (Starbiz)
* * * * *
Global
Stocks managed gains Thursday, but the trend has remained downward since mid-June as investors have stepped back after a 40% rally off the March 9 lows. Bank, tech and commodity shares rose, but the broad market wavered as Alcoa©s narrower-than-expected quarterly loss failed to dispel concerns about the start of the quarterly reporting period. The Dow Jones industrial average gained 0.1% (+4.8 pts, close 8,183.2). The Nasdaq gained 0.3% (+5.4 pts, close 1,752.5) and the S&P 500 index gained 0.3% (+3.1 pts, close 882.7). In currency trading, the dollar fell versus the euro and gained versus the yen. U.S. light crude oil for August delivery rose 27 cents to settle at US$60.41 a barrel on the New York Mercantile Exchange. (CNNmoney)
* * * * *
The number of Americans filing claims for unemployment benefits fell last week to the lowest since January, as early automotive plant closures altered the timing of layoffs that typically happen at this time of year. Initial jobless claims fell by 52,000 to 565,000, a lower level than forecast, in the week ended July 4, from a revised 617,000 the prior week, the Labour Department said yesterday in Washington. Meanwhile, the number of people collecting unemployment insurance jumped to a record in the prior week. General Motors Corp and Chrysler LLC closed some plants in May and June, earlier than the normal summer shutdown period for retooling factories, as they entered bankruptcy, according to an economist. As a result, auto workers filed applications for jobless benefits earlier than usual, pushing down claims for July. (Bloomberg)
* * * * *
German exports rose in May, the third report this week to suggest Europe’s largest economy may be shaking off its worst recession since World War II. Sales abroad, adjusted for working days and seasonal changes, increased 0.3% from April, when they dropped 5%, the Federal Statistics Office in Wiesbaden said yesterday. Economists expected a gain of 1.5% in May, according to the median of 10 forecasts in a Bloomberg News survey. While the increase in exports was weaker than economists predicted, it follows reports this week showing factory orders and industrial output jumped in May. Imports declined 2.1% from April, when they dropped 6%, the statistics office said. The trade surplus widened to 9.6bn euros (US$13.4bn) from 9.4bn euros in the previous month. The surplus in the current account, the measure of all trade including services, was 3.7bn euros, down from 5.5bn euros in April. (Bloomberg)
* * * * *
The U.K. trade deficit narrowed in May to the smallest in three years as imports dropped, a sign the recession and the weakness of the pound is hurting demand for foreign products. The goods-trade gap was £6.3bn (US$10.2bn), the least since June 2006, compared with £7.1bn in April, the Office for National Statistics said yesterday in London. Imports fell 4% and exports declined 0.8%. The pound’s 18% slide against the dollar in the past year is making British exports more competitive and encouraging companies to shun imports. Manufacturers have nevertheless struggled to raise overseas sales as global trade slumps, hindering a recovery from the U.K. economy’s worst contraction in five decades. The trade gap was smaller than the £6.8bn median estimate in a Bloomberg News survey of 14 economists. (Bloomberg)
* * * * *
China’s passenger-vehicle sales rose 48% in June, the biggest jump since February 2006, as government stimulus spending spurred a revival in the world’s third-largest economy. Chinese motorists bought 872,900 cars, sport-utility vehicles and other passenger vehicles last month, the China Association of Automobile Manufacturers said in a statement yesterday. Overall auto sales, including buses and trucks, rose 36% y-o-y to 1.14m. A 4trn yuan (US$585bn) economic package has helped China surpass the U.S. as the world’s largest auto market this year and boosted sales for companies from General Motors Corp. to Alcoa Inc. The trade group raised its full-year vehicle sales forecast to more than 11m from 10.2m previously. 1H09 sales jumped 18% to 6.1m after the government cut some retail taxes and handed out vehicle subsidies in rural areas to spur demand. (Bloomberg)
* * * * *
Chile’s central bank cut its benchmark interest rate for a seventh straight month to a record in a bid to pull South America’s fifth-biggest economy out of its deepest slump in a decade. Policy makers yesterday reduced the rate to 0.5% from 0.75%, after central bank President De Gregorio on June 30 said that further stimulus may be needed. All 20 economists surveyed by Bloomberg correctly forecast the quarter-point cut. The bank’s five-member rate-setting committee slowed the pace of easing after reducing the benchmark by at least a half point at each of its six previous meetings this year. Chile’s policy makers have cut borrowing costs by 7.75 percentage points in 2009, more than any other central bank tracked by Bloomberg as the economy shrinks and the threat of inflation evaporates. (Bloomberg)
* * * * *
Leaders of the world’s biggest developed and emerging nations avoided a debate over the dollar’s role in the global economy as they agreed not to devalue their currencies to promote their exports. With officials from Brazil, India, China and Russia pushing consideration of alternative reserve currencies, their joint statement’s language on foreign exchange echoed an agreement at an April summit of the Group of 20. The leaders agreed to “refrain from competitive devaluations of our currencies,” according to the statement released after their meeting yesterday at the G-8 summit in L’Aquila, Italy. They also agreed to “promote a stable and well-functioning international monetary system.” (Bloomberg)
* * * * *
Dow Jones stable for now
The highly correlated Dow Jones, after suffering significant sell-downs from Friday to the beginning of this week, also seems to be stabilizing at this point. The support line that is keeping the Dow afloat is the mid term 90-day Moving Average trend line at the 8,000 level.
Our market’s buoyancy might provide trading opportunities
The Dow’s stabilization might also keep our local market afloat in the next few days. As of now, the FTSE Bursa Malaysia is supported by its short term 30-day Moving Average line. Our market's buoyancy might permit short term trading in second liner property counters like E&O and DNP which we have been highlighting in our previous reports.
Bursa Chat- News Higlights
Malaysia
Sunway City Bhd (SCITY MK, Buy, TP: RM3.60) plans to construct new buildings over the next few years, that will later be injected into its RM4bn real estate investment trust (REIT). "We are working on pipeline investment assets to include into the REIT later when they mature in earnings and have the right tenant mix," SunCity executive director Datuk Jeffrey Ng Tiong Lip told Business Times in an interview. SunCity is still weighing its option of whether to list on Bursa Malaysia or via reverse takeovers in Singapore or Australia. (BT)
* * * * *
Sime Darby Plantation Sdn Bhd, a unit of Sime Darby Bhd (SIME MK, Buy, TP: RM7.70), is set to invest an initial RM100m to develop oil palm plantations on Native Customary Rights (NCR) lands in Julau. Its Plantation Agency and Consultation head Mohd Helmy Othman Basha said the project would cover an area of about 20,000ha and that it will be a joint ventureship with landowners from 109 longhouses in three areas namely KJD/Lower Julau, Sungai Julau/Sungai Pitoh and Merurun/Meluan/Entabai. In the joint venture, Sime Darby will hold 60% equity while the landowners will hold 30% and the Land Custody and Development Authority (LCDA) 10%. Helmy said the target was for Sime Darby to develop around 50,000ha in Sarawak and another 50,000ha in Sabah. (The Malaysian Reserve)
* * * * *
AirAsia Bhd (AIRA MK, Buy, TP: RM1.90) expects its newly launched low cost courier, Redbox, to contribute RM25m to RM30m revenue to the group each year. Group CEO Datuk Seri Tony Fernandes said the courier service, which offers an average 50% lower shipment rates than the market’s, was targeted at small and medium sized enterprises and individual customers. (Financial Daily)
* * * * *
The Transport Ministry is ready to consider proposals from airlines like AirAsia (AIRA MK, Buy, TP: RM1.90) to serve the Kuala Lumpur-Stockholm-New York route, which Malaysian Airlines (MAS) (MAS MK, Sell, TP: RM2.00) will cease to operate from October. Currently, AirAsia X, partly owned by AirAsia Bhd, offers long-haul flights to London, Melbourne, Perth and Taipei. (BT)
* * * * *
Steelmaker Ann Joo Resources Bhd’s export sales surged in 2Q after a price slump late last year led to a global supply shortage. Its managing director Datuk Lim Hong Thye said that the group sold a record 150k tonnes of steel products in April-June to overseas customers as steel mills globally scrambled to meet rising demand. He also stated that the group’s main plant has been running full on 3 shifts since April and that the industry’s inventory level is way below the normal level to sustain demand. (Financial Daily)
* * * * *
Malaysia Airports Holdings Bhd (MAHB) recorded a 1.1% y-o-y growth in passenger movements to 4.05m passengers in May 2009. According to an announcement to Bursa Malaysia, MAHB said out of the 4.05m, 2.32m passengers passed through the Kuala Lumpur International Airport (KLIA), with the rest of the passenger numbers contributed by other airports operated by the company. (Financial Daily)
* * * * *
Perusahaan Otomobil Kedua Sdn Bhd (Perodua) expects sales of its cars to reach 158k units this year and approach its historic high of 167k units next year. The group expected demand for new cars to pick up ahead of year-end festivities and the upcoming launch of its multi-purpose vehicle (MPV) this November to boost sales. Its director of sales, Ahmad Suhaimi Mohd Anuar said that the group expected the automotive industry to recover slightly with total industry volume to reach 490k units and Perodua to once again reach 165k units in 2010. (Financial Daily)
* * * * *
Prime Minister Datuk Seri Mohd Najib Razak said yesterday that all projects under the Northern Corridor Economic the Region (NCER) are proceeding according to schedule. Under the 9 Malaysia Plan, the government has allocated RM750m to the Northern Corridor Implementation Authority (NCIA) to develop the area. The projects in the NCER master plan covered the major economic sectors of agriculture, manufacturing and tourism, supported by the infrastructure, education, human capital and social development sectors. The prime minister also stated that some of the projects were pilot in nature in the sense that the government wanted to try out the project before implementing it on a large scale (The Malaysian Reserve)
* * * * *
Malaysia’s industrial output contracted 11.1% y-o-y in May, registering the smallest decline in six months, following an 11.7% (revised) y-o-y decline in April. M-o-M, the industrial production index (IPI) increased by 1.6% while the cumulative index for the first five months declined 13.2% against the same period in 2008. In a statement yesterday, the Statistics Department said the drop in May was due to decreases in three indices - manufacturing by 15.2%, mining by 3% and electricity by 2.1%. (Starbiz)
* * * * *
Global
Stocks managed gains Thursday, but the trend has remained downward since mid-June as investors have stepped back after a 40% rally off the March 9 lows. Bank, tech and commodity shares rose, but the broad market wavered as Alcoa©s narrower-than-expected quarterly loss failed to dispel concerns about the start of the quarterly reporting period. The Dow Jones industrial average gained 0.1% (+4.8 pts, close 8,183.2). The Nasdaq gained 0.3% (+5.4 pts, close 1,752.5) and the S&P 500 index gained 0.3% (+3.1 pts, close 882.7). In currency trading, the dollar fell versus the euro and gained versus the yen. U.S. light crude oil for August delivery rose 27 cents to settle at US$60.41 a barrel on the New York Mercantile Exchange. (CNNmoney)
* * * * *
The number of Americans filing claims for unemployment benefits fell last week to the lowest since January, as early automotive plant closures altered the timing of layoffs that typically happen at this time of year. Initial jobless claims fell by 52,000 to 565,000, a lower level than forecast, in the week ended July 4, from a revised 617,000 the prior week, the Labour Department said yesterday in Washington. Meanwhile, the number of people collecting unemployment insurance jumped to a record in the prior week. General Motors Corp and Chrysler LLC closed some plants in May and June, earlier than the normal summer shutdown period for retooling factories, as they entered bankruptcy, according to an economist. As a result, auto workers filed applications for jobless benefits earlier than usual, pushing down claims for July. (Bloomberg)
* * * * *
German exports rose in May, the third report this week to suggest Europe’s largest economy may be shaking off its worst recession since World War II. Sales abroad, adjusted for working days and seasonal changes, increased 0.3% from April, when they dropped 5%, the Federal Statistics Office in Wiesbaden said yesterday. Economists expected a gain of 1.5% in May, according to the median of 10 forecasts in a Bloomberg News survey. While the increase in exports was weaker than economists predicted, it follows reports this week showing factory orders and industrial output jumped in May. Imports declined 2.1% from April, when they dropped 6%, the statistics office said. The trade surplus widened to 9.6bn euros (US$13.4bn) from 9.4bn euros in the previous month. The surplus in the current account, the measure of all trade including services, was 3.7bn euros, down from 5.5bn euros in April. (Bloomberg)
* * * * *
The U.K. trade deficit narrowed in May to the smallest in three years as imports dropped, a sign the recession and the weakness of the pound is hurting demand for foreign products. The goods-trade gap was £6.3bn (US$10.2bn), the least since June 2006, compared with £7.1bn in April, the Office for National Statistics said yesterday in London. Imports fell 4% and exports declined 0.8%. The pound’s 18% slide against the dollar in the past year is making British exports more competitive and encouraging companies to shun imports. Manufacturers have nevertheless struggled to raise overseas sales as global trade slumps, hindering a recovery from the U.K. economy’s worst contraction in five decades. The trade gap was smaller than the £6.8bn median estimate in a Bloomberg News survey of 14 economists. (Bloomberg)
* * * * *
China’s passenger-vehicle sales rose 48% in June, the biggest jump since February 2006, as government stimulus spending spurred a revival in the world’s third-largest economy. Chinese motorists bought 872,900 cars, sport-utility vehicles and other passenger vehicles last month, the China Association of Automobile Manufacturers said in a statement yesterday. Overall auto sales, including buses and trucks, rose 36% y-o-y to 1.14m. A 4trn yuan (US$585bn) economic package has helped China surpass the U.S. as the world’s largest auto market this year and boosted sales for companies from General Motors Corp. to Alcoa Inc. The trade group raised its full-year vehicle sales forecast to more than 11m from 10.2m previously. 1H09 sales jumped 18% to 6.1m after the government cut some retail taxes and handed out vehicle subsidies in rural areas to spur demand. (Bloomberg)
* * * * *
Chile’s central bank cut its benchmark interest rate for a seventh straight month to a record in a bid to pull South America’s fifth-biggest economy out of its deepest slump in a decade. Policy makers yesterday reduced the rate to 0.5% from 0.75%, after central bank President De Gregorio on June 30 said that further stimulus may be needed. All 20 economists surveyed by Bloomberg correctly forecast the quarter-point cut. The bank’s five-member rate-setting committee slowed the pace of easing after reducing the benchmark by at least a half point at each of its six previous meetings this year. Chile’s policy makers have cut borrowing costs by 7.75 percentage points in 2009, more than any other central bank tracked by Bloomberg as the economy shrinks and the threat of inflation evaporates. (Bloomberg)
* * * * *
Leaders of the world’s biggest developed and emerging nations avoided a debate over the dollar’s role in the global economy as they agreed not to devalue their currencies to promote their exports. With officials from Brazil, India, China and Russia pushing consideration of alternative reserve currencies, their joint statement’s language on foreign exchange echoed an agreement at an April summit of the Group of 20. The leaders agreed to “refrain from competitive devaluations of our currencies,” according to the statement released after their meeting yesterday at the G-8 summit in L’Aquila, Italy. They also agreed to “promote a stable and well-functioning international monetary system.” (Bloomberg)
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