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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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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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Saturday, April 25, 2009

Psychology of Trading

by Jason Alan Jankovsky

As we have discussed before, this discussion forum is to explore the psychology behind the success or failure to trade successfully. As most traders with any experience know, the ability to “call “ the market is relatively easy in comparison to getting properly positioned within the market, and taking the most amount of money from your observation; that is where the real work of lasting trading success really lies. All of us have found the actual bottom or top of a significant move but failed to capitalize on that opportunity for one reason or another.

This month, I would like to address one of the more common trading errors. Everyone has made the error of overtrading at some point and many continue to make this error despite knowing they have this problem. Just knowing you have a propensity for a trading problem is half the battle but more importantly, you need skills and tools to correct your trading error. One of the more critical skills to develop in my view is to stop and confront the problem of overtrading.

Overtrading is a symptom of a deeper psychological problem which I like to call attachment to results. All traders have a certain degree of results they are pursuing in the markets; that is not the problem. The markets exist to exploit inequalities (real or imagined) in the supply and demand of something or financial instruments. It is a good thing to see an opportunity and assume the risk for the potential that is there. Once that action has been taken the only question is whether or not that inequality you perceived is an actual event that is unfolding over time. Between the time you execute for an entry and the time you liquidate for an exit; the markets will be moving. That movement is where the issue of attachment to results translates into your personal results.

Attachment to results can actually be expressed two ways depending on your personal psychology and trade method. The first way is holding losers and the other way is overtrading. We will discuss the issue of holding losses at a later time but the net effect on your equity is the same whether your problem is holding losses too long or you overtrade. Attachment to you results is the bedrock problem behind either overtrading or holding losses. In the case of overtrading, it represents the psychological need for immediate results (or positive results) without the corresponding willingness to allow time to pass. I think it is safe to say that a certain amount of time is required for any trading style to generate a gain and the unwillingness to let the required amount of time to pass comes out in the markets as constant execution over some timeframe.

If you use an hourly timeframe to pick your points of entry it is safe to assume that more than one hour must pass in order to determine if your executed trade has potential as you see it. Should the market move against your position that is to be expected, it is unreasonable to assume you will “buy the low” or “sell the high” every time you trade. As the market moves, if you are attached to your results, that movement means something to you. It is personally helping or hurting your equity. As your account balance changes from open trade equity, your focus narrows down to how this is affecting you personally. Most traders with this problem now seem to forget the high degree of study, preparation and thought they invested into picking that spot to execute. For some reason, the long-term fundamentals are forgotten, the technical studies are re-evaluated in real time, the protective stop order might be moved and the limit order to take the gain is moved closer to the market. Or any number of things. Then this trader executes to exit the market. Prices remain near their entry or advance. Attachment to results now says “You are missing it! You were right!” and this trader now executes again for an entry. As prices return to the first entry price, this trader again has a small open-trade loss; again the trader’s attachment says the trade is not going to work. This process may repeat itself several times over a short period of time, especially if the market is advancing in the intended direction. The problem is not the market price action; the problem is the attachment to results imposed by the trader creating an urge to action that is not consistent with normal ebb and flow of most market action. The trader has failed to allow time to pass and let the market do what it is going to do. During a major price advance or decline that was properly observed, this trader has small gains or even net losses when his just sitting tight for a period of time would have resulted in a nice gain.

Solving this problem is a factor of learning patience as well as adapting your thinking to better fit with the market you trade. I have observed from working with many developing traders that if they have the problem of overtrading, the simplest solution is to impose a new set of rules on their execution that allows time to pass. I have a very common sense based method that I would encourage you to try for yourself. Simply turn your screen off; the assumption here is that the market will do what it will do whether you watch it or not. The problem is not the market price action, the problem is attaching meaning to that action and executing. If you can’t see the price action, you can’t execute. So the first thing we do is impose the rule: After you execute you have to turn the screen off for at least one bar of your time frame as a minimum.

In most cases, several bars are needed to either confirm or deny a trade potential is developing so often the trader must sit in front of a dark screen for several hours. The market is still moving, but in this case, the stop is also still where it was originally placed, the limit is still where it was placed and the trader cannot reevaluate the trade nor do anything except wait. During this time I also require the trader to write out in as much detail as possible exactly his hypothesis for the trade. This keeps the trader focused on the critical thought required to do the trade as opposed to how the tic-by-tic price action is affecting his equity. After enough time, this self-imposed isolation develops into patience to let the trade work. At some point, the trader will no longer need to be “in the dark” and he has the skill to simply sit still and let the trade work.

Next month we will talk more about attachment to results as it comes out when you hold losing positions. In the meantime, if you have a tendency to overtrade; try this method. I think you will be surprised at how fast you learn to let your trades work
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Friday, April 24, 2009

Bursa Chat - News Highlights (24.04.2009)

Malaysia
AirAsia (AIRA MK, Buy, TP: RM1.90) is flying another oriental route – Kuala Lumpur-Taipei, starting July 1 via its low- cost long-haul carrier affiliate AirAsiaX. In a statement yesterday, AirAsia said the route would start with five direct flights weekly. Booking periods start from today to May 3 for travel between July 1 2009 and January 2010. (Financial Daily)
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Sime Darby Bhd (SIME MK, Buy, TP: RM6.40) says Super Deals Travel & Tours Sdn Bhd has received unconditional approval from the Foreign Investment Committee to buy the former’s subsidiary Sime Darby Travel Sdn Bhd. Completion of the disposal is pending the nod from the Tourism Ministry, Sime Darby told Bursa Malaysia yesterday. (BT)
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IOI Properties Bhd will be delisted from the Bursa Securities list on Tuesday. To recap, IOI Corp now holds 91.33% of IOIP. PNB and Valuecap were among the shareholders that did not take up the offer. (Financial Daily)
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Lityan Holdings Bhd hopes to resolve its financial woes by the end of the year and start to be profitable in 2010, said group managing director and chief executive officer Nor Badli Mohd Alias. Lityan, a supplier of both IT software and hardware, has been classified under the financially troubled category of PN17 since 2004, after several overseas ventures turned sour.(StarBiz)
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Northport (Malaysia) Bhd will continue its expansion plans at Port Klang this year, despite a sluggish business environment. The NCB Holdings Bhd subsidiary, which operates the country' largest multipurpose port, has budgeted RM500m for the expansion. (BT)
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YTL e-Solutions Bhd will invest RM2.5bn over the next 5 years to roll-out a nationwide mobile Internet network to cater for 14m customers, said managing director Tan Sri Francis Yeoh. The first service trial will take 6-8 months, with a full nationwide rollout in 14 months. YTL e-Solution’s unit Y-Max Infra Sdn Bhd entered into a contract with Samsung to implement a nationwide mobile Internet network. Samsung will provide a comprehensive WiMAX network solution, including base stations, end-to-end information technology, multimedia technology and a range of mobile Internet devices. (Malaysian Reserve)
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The 16,000ha Tanjung Manis Halal Park in Sarawak, launched two months ago, has attracted RM9 billion worth of investments from 11 companies. Halal Industry Development Corp Sdn Bhd (HDC) chief executive officer Datuk Jamil Bidin said the investors comprise of six Taiwan companies (RM6bn) and the others are local firms (RM3bn). They plan to invest in, among others, aquaculture, biotechnology and modern farming. (BT)
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The Minority Shareholder Watchdog Group (MSWG) is working with Bursa Malaysia Bhd to come up with an organisation or a pool of independent directors for companies to choose from whenever they require independent directors. This is part of efforts to increase the level of corporate governance in Malaysia, MSWG said. It will also be launching a corporate governance ranking system for all companies on Bursa Malaysia by next month, said MSWG chief executive officer Rita Benoy Bushon. (StarBiz)
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Indonesia has offered Petronas a chance to participate in developing the country’s giant Natuna D-Alpha gas field, Prime Minister Mohd Najib Razak said yesterday. Indonesia’ government has appointed state oil firm Pertamina as the operator of Natuna, but it does not have the capacity to develop the gas field alone, with an estimated RM144.8bn investment required. Pertamina intends to keep a 40% stake in the Natuna D-Alpha gas project, with 60% to be shared among the partners. The Natuna-D-Alpha block has around 222 trn cubic ft (tcf) of gas reserves, of which 46 tcf are thought to be commercially viable. The block accounts for about 25% of Indonesia’s total commercially recoverable gas reserves of 182 tcf. The block is situated 1,100km north of Jakarta and 200km east of the West Natuna fields that feed gas to Singapore. (Malaysian Reserve)
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INVESTMENT RESEARCH
Global

Stocks staged a late-session rally Thursday, influenced by a weak housing market report, a mix of corporate results and the latest for the automakers. The Commerce Department will today release the March durable goods orders report and the Census Bureau releases the March new home sales report. Stocks are down for the week as investors have retreated after a six-week
advance that propelled the S&P 500 nearly 29%. The Dow Jones industrial average gained 0.9% (+70.5 pts, close 7,957.1). The Standard & Poor' 500 index gained 1.0% (+8.4 pts, close 851.9) and the Nasdaq composite gained 0.4% (+6.1 pts, close 1,652.2). In currency trading, the dollar fell versus the euro and the yen. U.S. light crude oil for June delivery gained 77 cents to settle at US$49.62 a barrel on the New York Mercantile Exchange. (CNNmoney)
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Sales of existing U.S. homes in March stayed near a four-month average, and prices rose from February, a sign the housing recession has stopped getting worse. From a year before, existing home sales were down 7.1% in March. Distressed properties accounted for about 50% of all home resales last month, the group said, up from about 45% in previous months. The median price slumped 12% from March 2008, to US$175,200, and climbed 4.2% from February. While prices normally increase during this time of year, the gain was more than twice as large as in prior years, NAR’s Yun said. While yesterday’s figures from the National Association of Realtors showed purchases fell more than forecast to an annual rate of 4.57m, economists noted that the sales level is hovering near the level it reached in November. Prices for home resales posted their biggest monthly gain since June 2005, and NAR chief economist Lawrence Yun said that some regions are seeing multiple bids on properties. (Bloomberg)
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The number of Americans filing first-time applications for unemployment insurance rose last week to 640,000 as forecast, while total benefit rolls reached a record, indicating the labour market continues to deteriorate. Initial jobless claims increased by 27,000 in the week that ended April 18, from a revised 613,000 the prior week, the Labour Department said yesterday. The number of people staying on jobless-benefit rolls rose by 93,000 to 6.14m, the 12th straight week the figure has set a record. Job losses may continue all year even as the longest recession in the post-war era shows signs of reaching a trough. The release indicates employment cuts may come close to topping 650,000 for a record fifth straight month in April because yesterday’s report covers the week of the monthly payroll survey. The jobless rate among people eligible for benefits rose 0.1 percentage point to 4.6 percent, the highest since January 1983, in the week ended April 11. (Bloomberg)
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The Federal Reserve released its most detailed breakdown to date on the types of assets it accepted from Bear Stearns a year ago and the cause of losses on the portfolio. The biggest losses in the US$25.7bn portfolio of Bear Stearns assets as of the end of last year came from commercial and residential mortgages, according to a report released by the Fed yesterday. The
central bank agreed in March 2008 to buy the assets so JPMorgan Chase & Co. would acquire Bear Stearns and avert the investment bank’s bankruptcy. Yesterday’s report follows pressure by lawmakers on the central bank to identify the collateral for its record extension of credit, along with a lawsuit by Bloomberg News in November. Fed Chairman Ben S. Bernanke has pledged to boost disclosure, assigning Vice Chairman Donald Kohn to lead the effort. The Fed wrote down the value of former Bear Stearns commercial-mortgage holdings by 28% to US$5.6bn and residential loans by 38% to US$937m as of Dec. 31, the central bank said yesterday. Properties in California and Florida accounted for 45% of outstanding principal of the residential mortgages. (Bloomberg)
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Europe’s manufacturing and service industries contracted at the slowest pace in six months in April, signalling the worst of the recession may be over. A composite index of activity in both industries posted its biggest gain on record, rising to 40.5 from 38.3 in March. The index is based on a survey of purchasing managers by Markit Economics and a reading below 50 indicates contraction. The manufacturing index rose to 36.7 from 33.9 in March, while the services index increased to 43.1 from 40.9, Markit said. A composite index measuring new orders showed the weakest contraction in six months. European industrial orders fell 34.3% y-o-y in February, the most in at least 13 years, the European Union’s statistics office said yesterday. The International Monetary Fund predicts the euro-region economy will contract 4.2% this year, the most since World War II. (Bloomberg)
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U.K. government support for the banking system has risen to 1.4trn pounds (US$2trn) and may climb higher as the financial crisis spreads to building societies and economists warn lenders may need more aid. Commitments include 526.5bn pounds of asset insurance, 250bn pounds to guarantee bank lending and 154bn pounds to take on the liabilities of nationalized banks Northern Rock and Bradford & Bingley Plc. The government also loaned the Bank of England 185bn pounds to finance a special liquidity program for banks. In addition, the central bank agreed to purchase as much as 150bn pounds of assets with new money to lower borrowing costs through so-called quantitative easing. Other state aid to the industry includes direct investment in U.K. lenders, assistance for customers of Icelandic banks and the bailout of Dunfermline Building Society. The 1.4trn figure doesn’t count government pledges to stimulate the economy. (Bloomberg)
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Thursday, April 23, 2009

Bursa Chat - News Highlights (23.04.2009)

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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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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Wednesday, April 22, 2009

Bursa Chat - News Highlights (22.04.2009)

Malaysia
AirAsia (AIRA MK, Buy, TP: 1.90) plans to venture into India in a big way but it has to first address some issues with MAS over flights to four major cities there, said CEO Datuk Seri Tony Fernandes. The four cities are Delhi, Mumbai, Hyderabad and Bangalore, currently serviced by MAS. The issues concern royalties and free and discounted tickets, which are arrangements MAS has with Air India over the four cities. As the agreement will lapse in December 31, 2009, AirAsia plans to wait till next year for its move. (Starbiz)
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Ambank (M) Bhd, a unit of AMMB Holdings (AMM MK, Buy, TP: RM3.40), is targeting a net growth of RM5.7bn for branches’ deposits for its financial year ending March 31 2010, general manager of branch banking, Mohamad Sabirin, said yesterday. He said the bank was focused on growing its current and savings accounts, especially as they were a safer set in view of the current economic conditions, and at least two more promotion campaigns will be held this year. “This financial year we are expecting the net growth to soften with the economic challenges. (BT)
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Sime Darby Bhd (SIME MK, Buy, TP: RM6.40) has put up Hotel Equatorial Melaka for sale at an estimated RM180m. The sale is said to be in line with Sime Darby' intention to sell non-core businesses. Hotel Equatorial Melaka is owned by Syarikat Malacca Straits Inn Sdn Bhd, in which Sime Darby holds 55% and the Malacca state government 30%. The rest is held by Hotel Equatorial (M) Sdn Bhd, which is also the operator. (BT)
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Tenaga Nasional Berhad (TNB MK, Hold, TP: RM7.00) has repurchased US$39.09m (RM142m) of its US$150m 7.5% debentures due in 2096. In a filing yesterday, Tenaga said it intended to cancel the repurchased loans from yesterday onwards. Following the exercise, the amount outstanding for the debentures will be US$100.92m as TNB had earlier purchased and cancelled US$10m of the debentures. This reduces TNB’s total debt by 0.8% to RM23.23bn and also reduces foreign currency exposure. (Malaysian Reserve)
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AEON will open three new Aeon shopping centres this year – one in Melaka Sentral, while the other two locations are still being identified. MD Nagahisa Oyama said the Malacca outlet, to be opened by end of the year, would be the company’s second shopping centre in the state. He said that Aeon would invest some RM30m for fittings and fixtures at the Melaka Sentral shopping center as it would be leasing the building from the developer. (Starbiz)
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The Malaysian unit of Danish brewer Carlsberg is looking for an acquisition target in Asia, said Soren Jensen, managing director of Carlsberg Brewery Malaysia. The brewer had interest bearing cash of RM227m as at end 2008, and is comfortable in gearing over that cash position to acquire a suitable target. The brewer is not ruling out Malaysian companies, or one outside the alcoholic beverage industry. (Financial Daily)
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The board of EON Capital Bhd (EON Cap) will meet in the next few days to discuss and probably decide on a proposed rights issue or other methods of raising capital for the bank, sources said. Apart from a rights issue, the other option for EON Cap is raising Tier-2 capital. To date, EON Cap has raised RM410m via the issuance of subordinated medium term note (MTN) under a subordinated MTN programme of up to RM2bn, and redeemed its existing US$225m sub- debt. (Financial Daily)
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Green Packet’s 27.42% owned associate GMO Ltd is seeking to be de-listed from the Alternative Investment Market (AIM) citing listing expenses and low liquidity and poor share price performance since listing in September 2006. To accommodate shareholders that do not want to hold unlisted shares, GMO is offering a share buyback at a price of 0.5pence per share. Three major shareholders (mTouche Technology, Gpacket and OSK Ventures International) with a combined 94.8% stake in GMO will not participate in the share buyback and will remain as shareholders. (Malaysian Reserve)
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Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) yesterday announced the freezing of a RM2.6bn project to replace old mains and communication pipes, in light of the restructuring of the water management sector in Selangor and the federal territories of Kuala Lumpur and Putrajaya. Syabas executive chairman Tan Sri Rozali Ismail said the freeze was imposed on the directive of the government. (Financial Daily)
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The Malaysian Automotive Association (MAA) expects vehicle sales volume for April to be better than March following the recent announcement of the government’s second stimulus package. MAA’s positive reaction comes on the back of 20.5% or 7,530 unit increase in sales volume m-o-m for March. New model introduction and higher sales of light commercial vehicles, as well as the longer working month were the main reason for the increase. (Financial Daily)
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Malaysia' property market is expected to worsen this year as the global economic uncertainties deepen. The Valuation and Property Services Department of the Finance Ministry director-general Datuk Abdullah Thalith Md Thani said the local property market will fall moderately further this year, with signs of pressure looming. This is based on data collected by the National Property Information Centre in the first quarter of this year. "It showed negotiated price and rental rates are heading downwards," he said at the launch of the Malaysian House Price Index and the Property Market Report 2008 by Deputy Finance Minister Datuk Chor Chee Heung in Kuala Lumpur yesterday. Abdullah Thalith said the number of new housing projects launched in 2009 will remain as last year. But property transactions and value are expected to drop by 5-10% in the current year, unless the government' RM67bn stimulus packages bear fruit soon. Abdullah Thalith said the industrial sub- sector will be the most pressured this year as the majority of the companies are service or export-oriented and affected by market turbulence. In line with the dismal outlook in industrial activities, the number of industrial overhangs, unsold under construction and unsold not constructed units grew by 30%. (BT)
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After forging a partnership with Cisco last year, YTL e-Solutions is set to ink yet another deal tomorrow with South Korea’s Samsung group to help it deploy WiMAX services in Peninsula Malaysia, sources say. To build the WiMAX based platform, YTLe will be investing about RM2.5bn for a nationwide rollout, which will be funded by internally generated funds. The arrangement with Samsung will cover infrastructure build-up, especially radio network systems and the provision of hand-held devices for the services. (Starbiz)
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INVESTMENT RESEARCH
Global

Stocks gained Tuesday, rebounding after the previous session' rally as worries about corporate results were countered by renewed hopes that the financial sector is closer to stabilizing. After the close, Yahoo reported lower quarterly sales and earnings that topped estimates. Financial firms Wells Fargo and Morgan Stanley also due to report quarterly results today. The Dow Jones industrial average gained 1.6% (+127.8 pts, close 7,969.6). The Standard & Poor' 500 index gained 2.1% (+17.7 pts, close 850.1) and the Nasdaq composite gained 2.1% (+35.6 pts, close 1,643.8). In currency trading, the dollar fell versus the euro and gained against the yen. U.S. light crude oil for May delivery gained 63 cents to settle at US$43.51 a barrel on the New York Mercantile Exchange. (CNNmoney)
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Treasury Secretary Timothy Geithner said banks found to need additional capital at the conclusion of regulators’ stress tests will have a range of options for shoring up their balance sheets. The Treasury chief, testifying before a congressional oversight panel yesterday, said lenders will be able to take taxpayer money, raise funds from private investors or convert previous government investments from preferred to common shares. Each bank can chose the “best mix” of alternatives and will likely make different choices, Geithner said. Geithner underscored that financial regulators are taking the lead in reviewing the 19 biggest banks. Those agencies - and not the Treasury - will also determine when the healthiest banks can pay the government back, he said. The Federal Reserve is leading the assessments, with results due for release on May 4. The tests are designed to ensure that firms have enough capital to weather a deeper economic downturn over the coming two years. (Bloomberg)
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Worldwide losses tied to distressed loans and securitized assets may reach US$4.1trn by the end of 2010, the International Monetary Fund said. Banks will shoulder about 61% of the write-downs, with insurers, pension funds and other non-banks assuming the rest, the lender said in a report released yesterday on the state of the global financial system. The fund forecast US$2.7trn in losses from U.S.-originated loans and assets, compared with its estimates of US$2.2trn in January and US$1.4trn in October. “Stabilizing the financial system remains a key priority and, although progress is being made, further policy efforts will be required,” the fund said in its report. “Without a thorough cleansing of banks’ balance sheets of impaired assets, accompanied by restructuring and, where needed, recapitalization, risks remain that banks’ problems will continue to exert downward pressure on economic activity.” (Bloomberg)
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German investor confidence rose to the highest level in almost two years in April after stock markets rallied on government and central bank efforts to revive economic growth. The ZEW Center for European Economic Research said its index of investor and analyst expectations rose to 13 from minus 3.5 in March. That’s the highest since June 2007 and the first positive reading since July 2007. Still, ZEW’s gauge of current conditions fell to minus 91.6, the lowest since September 2003, from minus 89.4 in March. Business confidence fell to the lowest level in more than 26 years in March and industrial production dropped for a sixth month in February. Adding to signs of a deepening economic slump, German producer prices declined .5% y-o-y in March, the Federal Statistics Office said yesterday. That’s the biggest drop since September 2002. The
International Monetary Fund has tried to temper optimism about the outlook, saying on April 16 that the global economy is in the grip of a “severe recession” and a recovery will probably be weak. The IMF publishes revised forecasts today. (Bloomberg)
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The U.K. inflation rate dropped to the lowest level in a year last month as the recession blunted price pressures across the economy. Consumer prices rose 2.9% y-o-y, compared with 3.2% in February, the Office for National Statistics said yesterday. The result matched the median forecast of 29 economists in a Bloomberg News survey. The retail price index annual gauge dropped for the first time since 1960. Inflation slowed as household gas bills fell and the cost of heating oil dropped, the statistics office said. Prices for food and non-alcoholic drinks also declined, led by vegetables, fruit, bread and cereals. The U.K. central bank forecasts that inflation will slow to 0.3% in 2011, below the 2% target. (Bloomberg)
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The Bank of Japan may cut its fiscal year outlook for the Japanese economy to a decline of 3% to 5% on weak production, Nikkei English News reported, without saying how it obtained the information. The Bank of Japan had cut its fiscal 2009 growth forecast to a decline of 2% in January, Nikkei reported. (Bloomberg)
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India’s central bank reduced interest rates for the sixth time in as many months to a record low after forecasting the economy will expand at the slowest pace since 2003. The Reserve Bank of India cut the reverse repurchase rate to 3.25% from 3.5%, according to a yesterday. Economic growth may ease to 6% in the year that started April 1 from 7.1% in the previous 12 months, the central bank said. Governor Duvvuri Subbarao’s efforts to stimulate growth in Asia’s third-largest economy are being hampered by the reluctance of commercial lenders to pass on rate cuts and the government’s inability to increase spending during an election. The Reserve Bank also cut the repurchase rate by a quarter-point to 4.75% and kept the cash reserve ratio unchanged at 5%. (Bloomberg)
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Sweden’s central bank cut the benchmark interest rate to a record 0.5% and said it’s ready to take further steps to revitalize the Nordic region’s largest economy, mired in the worst recession in more than half a century. The bank lowered the seven-day repo rate by half a percentage point, the bank said yesterday. The largest Nordic economy sank into its first recession since 1992 last year as a global decline in trade eroded demand for exports, which Sweden relies on for half its national output. Slumping production has forced up unemployment, sapping consumer demand and triggering deflation. Riksbank Governor Stefan Ingves has cut borrowing costs more than his counterparts in neighbouring Norway and at the European Central Bank, signalling in February the possibility of zero rates. (Bloomberg)
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Asia’s biggest oil users will meet the world’s largest producers this week in Tokyo to discuss ways to revive spending and ensure energy supplies after the global recession ends. International Energy Agency head Nobuo Tanaka and Saudi Arabian Oil Minister Ali al-Naimi will lead delegates from the Organization of Petroleum Exporting Countries, Japan, China, and India in the talks on oil and gas investments, said a Japanese trade ministry official with direct knowledge of the meeting who spoke on condition of anonymity. OPEC, supplier of about 40% of the world’s crude, faces a 51% plunge in net oil revenue this year, according to the U.S. Energy Department, which estimates the group will earn US$476bn. Spending on new energy production is likely to drop around 20% this year, according to the IEA. Global oil supplies will be “severely constrained by today’s lower prices and lower investment,” the IEA said in an April 10 report. (Bloomberg)
*****

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Monday, April 20, 2009

Bursa Chat - News Highlights (20.04.2009)

Malaysia

Axiata Group (AXIATA MK, Hold, TP: RM1.77) will consider listing its Bangladesh subsidiary, AKTEL, in 2010 or the year after if capital markets stabilise by then. Its president and Group CEO said Axiata’s previous plan to float AKTEL was put on hold due to deteriorating market conditions. Meanwhile he also said that Axiata will be open to divesting its sub-scale or non-core units which could include the company’s current operations in Iran where it owns 49% in Mobile Telecommunications Company of Esfahan. (Malaysian Reserve)
*****
Tenaga Nasional Berhad (TNB MK, Hold, TP: RM7.00) will retain the present electricity tariff as long as the price of oil, gas and coal remain unchanged. The president and CEO of the Group stressed that the current concern was effective use of electricity. (Malaysian Reserve)
*****
The decision by Malaysia and Singapore to further liberalise air travel between them is expected to benefit low-cost carriers – Firefly and AirAsia (AIRA MK, Buy, TP: RM1.90) – when the new traffic rights take effect in June, sources said. Under the new agreement, which was announced by the Singapore Transport Minister, carriers from both countries would operate between Singapore and six new destinations in Malaysia and vice versa. The destinations are Ipoh, Kuala
Terengganu, Kuantan, Malacca, Sandakan, and Tawau apart from allowing more flights to Penang, Langkawi, Kuching and Kota Kinabalu. (Malaysian Reserve)
*****
Local oil and gas (O&G) companies are keen on gaining a foothold in the rapidly growing energy sector in India, which is expected to attract between US$120bn and US$150bn in investments over the next 5 years. Local companies on the lookout for jobs in India are SapuraCrest (SCRES, Sell, TP: 0.64), Kencana, and Scomi Engineering. (Financial Daily)
*****
The EPU will present a comprehensive proposal to the government to resolve the toll issue within three months. A Minister from the Prime Minister’s department said the EPU will review all aspects, including the concerned agreements and its economic impact, in drawing up the proposal. When asked about the possibility of the government taking over Plus Expressway Bhd, he said the proposal would have to be studied in detail first. (Malaysian Reserve)
*****
Aeon Credit Services (M) Bhd (Aeon Credit) will continue its drive to improve efficiency with a plan to establish a collection agency as a new business that may be operational as early as 4QFY09, which is 20 February 2010. According to Aeon Credit’s managing director, Naruhito Kuroda, this centre will leverage on micro-credit collections of the company, as well as third parties, financial institutions, utilities, and other service companies. (Financial Daily)
*****
Bintulu Port Holdings Bhd is aiming to reduce its dependency on liquefied natural gas (LNG) cargo to 60% of its total operating revenue in the next 5 years, said its chairman Tun Mohd Eusoff Chin. Currently, LNG contributes 78% of the group’s revenue. The group will enhance existing facilities; develop new facilities such as refurbishment of the multipurpose terminal, and development of 19.1ha for operations buildings and yard. The company plans to expand its container terminal, develop an additional berth for the edible oil terminal, oil and gas terminal, and break bulk facilities. The estimated cost of these projects is about RM600m. (Financial Daily)
*****
Eastern & Oriental (E&O) Bhd is set to launch 2 premium projects in Kuala Lumpur (KL) and Penang, despite the economic slowdown. The 2 projects are the RM1bn serviced apartment project at the former St Mary’s School site in Jalan Tengah, KL, and the RM1.3bn Seri Tanjung Pinang (STP 1) luxury condominium project. The St Mary project in KL, which is a
50:50 JV with Lion Group, is being developed on a 4.13-acre parcel of land, with a DV of RM500m going to E&O. The project is scheduled to be launched in 3QCY09. STP 1 has a GDV of RM1.3bn, which E&O plans to launch at the end of 2009. (The Edge)
*****

Eastern Pacific Industrial Corporation (EPIC) is still on an expansion drive to enhance its operations in fabrications and port services, despite a slight slowdown in maintenance work on ships and rigs at the Kemaman Supply Base (KSB) in Terengganu. The company owns the sole petroleum supply base in Peninsular Malaysia, which hosts some 300 companies supporting the oil sector. The company is allocating RM100m in capex for FY2009, and intends to double its port tonnage from its current 3.9m tonnes in 5 years. (The Edge)
*****
Petroliam Nasional Bhd (Petronas) has signed an exploration and production sharing agreement with Oman to explore and sell natural gas there, strengthening its presence in Oman' oil and gas industry. It inked the deal last Wednesday to explore and sell natural gas from Block 63 in Al Dhahirah and Al Dakhiliyah regions, covering an area of 3,709 sq km. Industry sources told Business Times that the EPSA is for an acreage of Natih block, and Petronas is working with British oil company BP for the development of the natural gas in the designated area. (BT)
*****
Bursa Malaysia will adopt the FTSE global index standard, and thus be known as the FTSE Bursa Malaysia KLCI from July 6. The FTSE Bursa Malaysia KLCI will comprise the 30 largest main board companies based on investable market capitalization. It will be free-float-adjusted and liquidity-screened to give investors a highly investable and tradable index. The improved index will adopt a higher speed of calculation of every 15 seconds compared with 60 seconds now. (StarBiz)
*****

Global
Stocks inched higher Friday as better-than-expected earnings from Citigroup, General Electric and Google, helped stretch the recent advance to a sixth straight week. The Dow Jones industrial average added 0.07% (+5.90 pts, close 8,131.33). The Standard & Poor' 500 index gained 0.5% (+4.30 pts, close 869.60) and the Nasdaq composite gained 0.2% (+2.63 pts, close 1,673.07). In currency trading, the dollar gained versus the euro and fell against the yen. U.S. light crude oil for May delivery rose 35 cents to settle at $50.33 a barrel on the New York Mercantile Exchange. (CNNmoney)
*****
Orders for U.S. durable goods and home sales probably retreated in March after rebounding the previous month, showing any economic recovery will be slow to evelop, economists said before reports this week. Bookings for goods th meant to last several years fell 1.5%, the 5 drop in 6 months, according to the median forecast in a Bloomberg News survey. Combined sales of new and existing homes likely decreased to a 5.02m annual rate, down from a 5.06m pace in February. (Bloomberg)
*****
European Central Bank President Jean-Claude Trichet said he wouldn’t exclude another “very measured” rate cut, though a zero interest-rate policy wouldn’t be appropriate for the bank. The bank this month cut its benchmark rate less than economists had forecast, by a quarter point to 1.25%, and delayed a decision on new, so called non-standard policy tools such as purchases of debt securities until May 7. Policy makers on the ECB’s 22-member council are divided over the best way to stem the euro region’s worst recession since World War II. Trichet said ther was no split among the Governing Council. He declined to comment on any possible non-standard measures the bank may decide at its May 7 meeting. (Bloomberg)
*****
China’s 4 trn yuan (US$585 bn) stimulus plan has shown “better-than-expected” results in reviving growth of China’s economy and helped restore market confidence, Premier Wen Jiabao said. “China’s rapid reaction in rolling out the stimulus package has resolved some prominent problems in the economy, strengthened market confidence and stabilized people’s expectations,” Wen said on Saturday at the Boao Forum in southern China’s Hainan province. The Chinese economy grew 6.1% in the first quarter, urban fixed-asset investment expanded, and loans rose amidst record car sales in March, signalling a tentative recovery. (Bloomberg)
*****
The Bank of Japan will probably cut its forecasts for the economy and prices next week as the recession takes a toll on spending by companies and households. The world’s second-largest economy will probably contract 4.2% in the year to March 2010, more than twice the pace the central bank projected three months ago, according to the median estimate of 16 economists surveyed by Bloomberg News. Consumer prices excluding fresh food will tumble 1.3%, they said, also faster than the bank’s earlier estimate. Governor Masaaki Shirakawa said this month that the economy has “underperformed” since January and weakening spending by companies and consumers will impair growth even as declines in exports and production moderate. Economists say Prime Minister Taro Aso’s record 15.4trn yen (US$155bn) stimulus package is unlikely to sustain a recovery. With the benchmark interest rate already at 0.1%, the bank will probably be forced to buy more debt issued by the government and companies to inject money into an economy heading for the worst recession since 1945. (Bloomberg)
*****
Asian currencies mostly gained this week, led by the Indonesian rupiah, as signs a global recession is easing whetted investors’ risk appetite, helping draw funds to emerging markets. The rupiah surged 5.5%, its best performance this year, as early election results indicating President Susilo Bambang Yudhoyono may keep his post bolstered demand for Indonesian assets. The rupiah is the only gainer this year among Asia’s 10 most-traded currencies after President Yudhoyono, who plans to stand for re-election in July, won the support of more than half of respondents in a poll following parliamentary elections last week. He was favored by 53% of 4,200 people who cast their ballots in the April 9 contest, according to the Indonesian Survey
Institute’s exit-survey. (Bloomberg)
*****


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Friday, April 17, 2009

Bursa Chat - News Highlights (17.04.2009)

Air Asia (AIRA MK, Buy, TP: RM1.90) is still waiting for implementation of the 50% rebate on landing charges asannounced in the second economic stimulus package, said its CEO. Any cost reduction will ultimately benefit thecustomers and more people will be encouraged to travel he said. The rebate is supposed to be given for 2 years starting April2009. (Malaysian Reserve)
* * * * *
Nestle Malaysia will spend some RM320m this year to expand its business and meet rising demand for instantnoodles, non-dairy creamer and coffee products. This is 72% more than what it spent last year, said managing directorSullivan O'Carroll. It's investing some RM80m for its non-dairy creamer plant in Shah Alam, which will be used as an exportcentre to markets such as Indonesia, the Philippines, Turkey and Russia. About RM110m will be spent to double the capacityof its coffee plant in Shah Alam, to be fully operational by November. (BT)
* * * * *
The retail and commercial operations in Malaysia of the Royal Bank of Scotland (RBS) will be put up for sale,alongside its other Asian operations. RBS is currently in talks with HSBC Holdings plc, Standard Chartered plc andAustralia and New Zealand Banking Group Ltd (ANZ) for the sales. The bank will retain its corporate banking business here.RBS Malaysia has 5 branches in Malaysia, including one in Labuan. (Financial Daily)
* * * * *
Since October 2008, a total of 31,161 workers, including 7,952 foreign workers, have been retrenched as ofWednesday, according to Deputy Human Resources Minister Datuk Maznah Mazlan. In addition, 30,152 workers, including8,512 foreign workers, saw their salaries reduced while 9,511 workers, including 1,766 foreigners, were given a temporarylayoff. RM650mn has been allocated to the Ministry of Human Resources to implement various programs to assist inmaintaining the employability of the Malaysian workforce. (Financial Daily)
* * * * *
The internationalisation of the ringgit will not take place under the current uncertain economic conditions and in theabsence of a foreign exchange market, said Tan Sri Dr Zeti Akhtar Aziz said yesterday. As interest rates are still at ahistorical low, focus would be on sustaining domestic demand. (Financial Daily)* * * * *The manufacturing sector recorded a 26.1% decline in sales in February to RM32.9bn. Sales in February decreased by2% when compared to January’s RM33.7bn. The Statistics Department said the decline was seen in 77 industries (66%) outof 116 industries covered in the survey. The five major industries whose sales value decreased significantly were refinedpetroleum products (34.7%), computer and computer peripherals (46.6%), electronic valves and tubes and printed circuitboards (49.4%), basic iron and steel products (54.5%), and other basic industrial chemicals except fertilisers and nitrogencompounds (48.6%). The Statistics Department said the workforce in the manufacturing sector also decreased by 6.5% inFebruary to 960,652 compared to a year ago. The number of workers also decreased by 2.7% compared to January. (BT)* * * * *
Global
Street recharged the advance Thursday, with the major gauges touching multi-month highs on JPMorgan Chase'sbetter-than-expected results and anticipation about Google's profit report. After the close, Google posted quarterly earningsthat rose from a year ago and topped estimates on revenue that rose from a year ago but was shy of forecasts. Sharesslipped in after-hours trading after initially spiking. The Dow Jones industrial average gained 1.2% (+95.8 pts, close 8,125.4).The Standard & Poor's 500 index gained 1.5% (+13.2 pts, close 865.3) and the Nasdaq composite gained 2.7% (+43.7 pts,close 1,670.4). In currency trading, the dollar gained versus the euro and the yen. U.S. light crude oil for May delivery rose 73cents to settle at US$49.98 a barrel on the New York Mercantile Exchange. (CNNmoney)
* * * * *
Claims for U.S. unemployment insurance unexpectedly dropped last week and single-family housing starts stabilizedin March, providing more evidence the economic slump is easing. Initial jobless claims decreased by 53,000 to 610,000 in theweek ended April 11, the fewest since January, the Labour Department said yesterday. Builders broke ground on 358,000single-family homes at an annual rate, unchanged from the prior month. Still, the report from Labour showed the number ofpeople collecting benefits jumped to a record 6.02m a week earlier, indicating companies are not hiring even as firings slow.The unemployment rate among people eligible for benefits, which tends to track the jobless rate, climbed to 4.5% in the weekended April 4, the highest since January 1983. (Bloomberg)
* * * * *
The Federal Reserve and other regulators aim to release the results of stress tests on 19 of the biggest U.S. banks onMay 4, a central bank official said. Regulators also plan to publish a paper on their methods on April 24, according to theofficial. The May 4 results will include any plans for boosting capital to weather a deeper economic downturn, the person said.Procedures for releasing information on specific firms, including whether the banks themselves or the supervisors will releasethe results, are still under discussion. The Securities and Exchange Commission, which sets rules for what publicly tradedcompanies must disclose to investors about their financial condition, is involved in the talks, the person said. The goal ofpublishing the stress-test methods is to bolster credibility of the assessments, which will expose weaker banks and may boostconfidence in stronger ones. (Bloomberg)
* * * * *
Industrial production in Europe contracted by the most on record in February as the deepening global recessioncurtailed demand for manufactured goods around the world. Output in the euro region fell 18.4% from the year-earlier month,the biggest drop since the data series began in 1986, after a revised 16% decline in January, the European Union’s statisticssaid yesterday. Economists expected production to fall 18% in February, according to the median of 16 estimates in aBloomberg survey. Inflation slowed in March to 0.6%, a record low, the office said in a separate report. Factories across the16-nation euro zone are cutting output and firing workers as companies cope with the worst global slump in 60 years. TheEuropean economy may shrink as much as 4.1% this year, the OECD forecast on March 31. (Bloomberg)
* * * * *
China’s economy, battered by collapsing exports, grew at the slowest pace in almost 10 years, probably marking itslow point. Gross domestic product expanded 6.1% y-o-y in 1Q09, after a 6.8% gain in 4Q08, the statistics bureau said. A 30%surge in urban fixed-asset investment in March and a jump in industrial output, both reported yesterday, added to evidencethat the government’s 4trn yuan (US$585bn) stimulus plan is working. Premier Wen Jiabao cautioned that while the world’sthird-biggest economy is in better-than-expected shape, China is yet to establish a solid foundation for a recovery. Whilestimulus measures have started to produce results, China faces faltering export demand, industrial overcapacity,unemployment and weak private investment sentiment, Wen said. A rebound in industrial-output growth lacks momentum, thepremier said. (Bloomberg)
* * * * *
Confidence at Japanese companies is hovering near record low levels but firms expect business conditions toimprove in the next three months, a Reuters poll showed - a sign that Japan's worst recession in decades may bemoderating. Current sentiment among big manufacturers improved slightly from a record low hit in March but confidence atlarge non-manufacturers edged down to be barely above a record low hit in February. The Reuters Tankan survey foundmanufacturers'sentiment improved 2 points to minus 76 in April, and is seen jumping 24 points to minus 52 by July.Sentiment among non-manufacturers worsened 1 point to minus 38 but is seen climbing 10 points to minus 28. The surveyalso found Japan is expected to start recovering in 1H10 and that nearly one-third of respondents expect the U.S. economy tostart picking up in 4Q09. But many companies remain wary, saying a recovery in Japan will likely be gradual. The Reuterspoll, to which 219 firms responded, was conducted from March 26 to April 13 and is designed to be a leading indicator for theBank of Japan's closely watched Tankan corporate survey. (Reuters)
*****

Turkey’s central bank cut its benchmark interest rate by three-quarters of a percentage point, its sixth consecutivereduction, as industrial output slumped and the number of jobless rose by more than a million. The bank in Ankara lowered itsovernight borrowing rate to a record 9.75% yesterday. The bank had been forecast to cut the rate by half a point, according tothe median estimate of 18 economists surveyed by Bloomberg. The cut means the bank has shaved 7 percentage points fromthe benchmark rate in sixth months as it tries to minimize the impact of the global recession. Turkey’s economy contracted6.2% in 4Q08, the first decline in seven years. Future rate reductions will be “measured,” the bank said, reiterating that theeasing bias “may need to be maintained for some time.” (Bloomberg)
* * * * *
India’s inflation slowed to a 20-year low in the first week of April, giving the central bank room to cut interest rates furthernext week. Wholesale prices rose 0.18% in the week after gaining 0.26% previously. (Malaysian Reserve)
* * * * *
The global economy is in the grip of a “severe” recession with “worrisome parallels” to the Great Depression and arecovery will probably be weak, according to a report by the International Monetary Fund. “The current downturn is highlysynchronized and associated with a deep financial crisis, a rare combination in the post-war period.” the Washington-basedlender said. The warning comes ahead of semi-annual IMF and World Bank meetings next weekend in Washington, whichalso will include a gathering of finance ministers from the Group of Seven industrial economies. The full IMF report, withgrowth forecasts for individual countries and the world, is scheduled to be released April 22. IMF Managing DirectorDominique Strauss-Kahn has said he’s concerned that some of the wealthiest nations haven’t made enough use of fiscalstimulus measures to revive growth. The fund has said the global economy will shrink by as much as 1% this year.(Bloomberg)* * * * *
--------------------------------------------------------------------------------
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Thursday, April 16, 2009

Trading Stocks For A Living

Do you want to trade stocks for a living?
I do not trade for a living.

I get emails from traders wanting to start a trading business. They want me to tell them how to trade for a living. My standard answer is this:

"I don't trade for a living and I don't have any kind of a stock trading business. Sorry I can't help you."

And then comes the usual reply...

"Why don't you do this full time? Don't you want to quit your job?"

And then it hits me...

This person is sick and tired of his "job" and wants to do something that he loves to do - trading stocks! I currently own a small business (not related to the stock market) and believe me - one is plenty! I don't have the desire that this person has because I don't work for someone else. I work for myself.

I can understand the desire to want to trade stocks for a living. I used to have a "job" and to be quite honest - it sucked!

A Job Versus A Business
Having a "job" is the worst method of generating income and the most inefficient way to make money.

Why you ask?

Because your salary is based on time. You can see the problem right away. There is only so much time in a day! In order to make more money you have to invest more time. This makes you miserable, tired, and cranky!

Some other problems associated with having a job..

You can never get paid what your really worth.
You have to work long hours to make someone else wealthy.
You can't make more money unless you beg for a raise.
You have no freedom.
You have no leverage.
And the number one problem? You have to work in order to make money.

Yep. I can see why so many people want to trade stocks for a living!

Now let's look at owning a business. Time is no longer a factor. How much time you spend running your business is up to you. You get paid for the value that you provide to your customers. This is usually in the form of a product or service. If you trade stocks for living, then you are providing liquidity to the markets. This is very valuable. Without traders, the stock market wouldn't work!

Now let's look at the benefits of having a business:

You get paid what for what you are worth.
You get paid to make yourself wealthy.
You decide how much money you want to make.
You have freedom.
You have leverage.
And the number one benefit? You do not have to work in order to make money. You can put on a trade, type in your stop loss order, and go fishing. Assuming the trade goes in your direction, you will make money without working.

As I type this on my computer, I am making money with my current business, even though I'm not doing any work there.

Another thing to consider...

When you own a business, you can get paid over and over again for a one time effort. Let me explain: Let's say you decide to trade stocks for a living. You buy a stock on Monday. This will be a typical three or four day swing trade. When the stock moves in your favor, you will continue to make money over the course of several days, for just that one time effort you put into it on Monday!

This is the same way with any business.

So, when you go into work tomorrow to that dreadful day job, tell your boss that you would like to get paid over and over again for the effort you put in last Monday. He will laugh and think you are crazy! But, HE will get paid over and over again for YOUR efforts!

Doesn't seem fair does it?

Trading Stocks For A Living
Well, I hope I haven't upset you by the above comments. But hopefully it will inspire you to make a change.

Like I said at the beginning. I do not trade stocks for a living but I am observant. I own a business so I can see what other professional full time traders do to make a living.

There a several things that I know you MUST do before you begin a trading business:

You must eliminate all of your personal debt.
You must be well capitalized.
You must have a logical trading system.
You must follow extreme money management rules.
This is true for most any business. You have to have your ducks in a row before you even begin.

But there is one major problem that I can see if you decide to trade stocks for a living. This is no small problem either:

Drawdowns.

You WILL have drawdowns. Every professional trader goes through periods where they lose money. Anyone that tells you otherwise is a liar! How will you deal with this?

How do professional traders deal with this? The answer is right in front of you but I bet you never noticed it.

They teach others to trade, sell books, and create a myriad of other products and services related to the stock market. They create multiple streams of income to compensate for the harsh realities of draw downs.

Think about it. Look around the internet. Every one of them has a product or service to sell. There is nothing wrong with this if what you are selling is valuable and helpful to other stock traders. That's what a business does. It sells value. If it succeeds, then it becomes a total win-win situation for both the business owner and the customer.

Heck, you don't even need a product or have to sell a service to make money on the internet! I know of a couple people who make a living selling other people's products. Not only do they make a living but they make a very nice living.

Check out some of these success stories from the company that I use to build this website. Yes. They make a living from their website. You'll be shocked but inspired.

Anyway, back to my point. If you want to trade stocks for a living you would be wise to come up with other ways to make money to compensate for drawdowns. A LOT of professional traders do it. Very smart.

In Conclusion...
Like I said in the beginning. I do not trade stocks for a living.

The thought of staring at a computer screen watching candles form on a chart does not excite me! But, I wanted to write this page to give you some perspective on it from a business owners point of view - without the hype.

Do not start a trading business just because you want to quit your 9 to 5 job.

Do it because...

YOU LOVE TO TRADE STOCKS!

I certainly do.

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