The Australian dollar climbed to its strongest level in more than three weeks as Asian stocks gained after Federal Reserve Chairman Ben S. Bernanke eased concerns the U.S. economy may stall.
The so-called Aussie appreciated against 15 of its 16 major peers before a report tomorrow that is forecast to show Australian building approvals increased in July by the most in four months and after traders trimmed bets that the Reserve Bank will reduce its benchmark interest rate this year. New Zealand’s dollar advanced before a U.S. report that economists said will show consumer spending rose last month.
“Expectations of rate cuts in Australia have been wound down and improved risk appetite following Bernanke’s comments last week is supporting the Aussie,” said Janu Chan, an economist in Sydney at St. George Bank Ltd.
Australia’s dollar strengthened to $1.0618 as of 1:54 p.m. in Sydney from $1.0573 in New York on Aug. 26 and earlier touched $1.0626, the most since Aug. 4. It gained 0.5 percent to 81.48 yen and earlier reached 81.52, the strongest since Aug. 8.
New Zealand’s dollar climbed to 84.41 U.S. cents from 84.07 cents last week and reached 84.49 cents, the most since Aug. 5. It gained 0.5 percent to 64.78 yen.
The MSCI Asia Pacific Index rose 1.7 percent. Standard & Poor’s 500 futures indicate U.S. stocks may extend last week’s gains after Bernanke on Aug. 26 signaled the economy isn’t weak enough to warrant additional stimulus. U.S. consumer spending is likely grew 0.5 percent in July according to economists surveyed by Bloomberg before today’s Commerce Department report. (Bloomberg)
KUALA LUMPUR: The recent decline in CIMB Group Holdings Bhd's share price was due to selling by foreign shareholders amid concerns of slower growth, says its chief executive Datuk Seri Nazir Razak.
"I had expressed some caution over the environment and CIMB's intention to move cautiously, and maybe some foreign investors interpreted that as slower growth.
"If they valued CIMB for high growth, then maybe, they would want to reduce their holdings in it," Nazir told reporters after distributing 5,000 special CIMB Touch 'n Go Cards to motorists at the Gombak Toll Plaza, here on Saturday.
CIMB has a foreign ownership of 38.4 per cent.
"The share price is determined by investors. What we do is to manage the company over the long term and also be as transparent as possible in terms of our strategy," he said.
CIMB's share price dropped a staggering 11.2 per cent over the week to close at RM7.04 last Friday and also marked a new one-year low.
Asked about a possible threat to growth in Asia due to the US position of instituting no new measures to boost the economy, Nazir said the probability of a double-dip recession is reasonably high.
He said a double-dip recession this time would affect the world and no economy would be able to offset the pressure as in the 2008 crisis.
"The bottom line is, in Malaysia, we are fortunate that the banking system is robust and the economy is well-balanced. So, I think that even a double-dip won't be so severe in the country," he added.
Nazir said that people have to handle such an environment sensibly in terms of balancing their own finances and reducing debt.(Bernama)
The OECD is prepared to cut growth expectations for much of the world, including Europe and Japan, the organization's head said on Friday.
"We're not talking about a contraction of the economies, but a slowdown of the growth," Angel Gurria, secretary-general, of the Organization for Economic Co-operation and Development club of industrialized nations, said in an interview with Reuters Insider in Jackson Hole, Wyoming, where central bankers are gathered for an annual meeting.
Only a few countries, like Turkey, are still experiencing strong growth. The rest are linked together in what has become a general slowdown: "In open economies, if they are not growing of course they don't buy from the others," Gurria said.(Reuters)
Eastern & Oriental Bhd (E&O) shares were actively traded on Monday, after SIME Bhd's announcement it was acquiring a 30% strategic stake in E&O at RM2.30 per share or RM766 million.
According to SIME Darby, the acquisition was to extend its presence in the property development and hospitality sectors, beyond the Greater KL region, specifically in Penang and Johor.
It is believed that Sime Darby was acquiring 273 million E&O Shares and 60 million irredeemable convertible secured loan stocks (ICSLS) in E&O -- which on a fully diluted basis -- was about a 30% equity interest in the niche property developer.
Sime Darby will acquire the stake from E&O managing director Datuk Tham Ka Hon and several other major shareholders of E&O.
Bothe companies also entered into a three-year collaboration agreement to formalise a framework for their property development businesses.
Sime Darby said at RM2.30 per E&O share, the deal was valued at about a 20% discount to E&O’s estimated realisable net asset value (RNAV) of RM3.2 billion.(theedgemalaysia.com)
Trading on Bursa Malaysia on Monday, 29 was subdued as most investors stayed on the sidelines in view of the shorter trading week with the Hari Raya and National Day holidays this week.
Investors also likely taking a breather after some heaving sell down last. Trading on Bursa Malaysia will end at 12.30pm today as the market is open only for the morning session.
At mid-morning, the FBM KLCI edged up 2.24 points to 1,447.05.
Gainers edged losers by 219 to 140, while 178 counters traded unchanged. Volume was 93.91 million shares valued at RM115.35 million.
Regional markets were mostly up on positive vibes from US Federal Reserve chairman Ben Bernanke’s address at Jackson Hole last Friday.
However, gains on Japan’s Nikkei 225 were limited ahead of the ruling party electing its next Prime Minister.
At the regional markets, Japan’s Nikkei 225 edged up 0.54% to 8,845.19, Hong Kong’s Hang Seng Index up 0.87% to 19,753.47, South Korea’s Kospi rose 1.97% to 1,814.02, Taiwan’s Taiex gained 1.64% to 7,567.34 and Singapore’s Straits Times Index up 1.01% to 2,775.85.
Meanwhile, the Shanghai Composite Index fell 1.3% to 2,578.30.
BIMB Securities Research in a note Aug 29 said many were wondering if Wall Street would be affected by Hurricane Irene battering New York.
It added that the Dow Jones rose 135 points but left investors wondering of Bernanke’s ultimate game plan.
Nonetheless many generally felt positive from his address. Regional bourses are expected to see some upward momentum following the gains on Wall Street, it said.
“We expect the local bourse to remain weak with selling on key component stocks to persist notwithstanding at a slower pace.
“Having broken the 1,460 support level last week, market undertone is jittery and may see a quiet half trading day on Bursa with dissipating selling pressure on the FBM KLCI,” it said.
On Bursa Malaysia, Nestle rose 40 sen to RM48.50, DiGi 22 sen to RM30.24, Carlsberg 17 sen to RM6.85, Allianz 14 sen to RM4.78, MISC 12 sen to RM6.90, Tradewinds and Rapid 11 sen each to RM9 and RM1.86, Bina Goodyear 10.5 sen to 83 sen, S P Setia 10 sen to RM3.80, Petronas Chemicals seven sen to RM6.10 and CIMB four sen to RM7.08.(theedgemalaysia.com)
Genting PLANTATION Bhd shares up after its net profit for the second quarter ended June 30, 2011 surged 96% to RM139.9 million from RM71.38 million a year earlier, due mainly to higher palm products prices and increased FFB production.
At 10.45am, Genting Plantations rose four sen to RM7.08.
Genting Plantations declared a gross interim dividend of 4.25 sen per share of 50 sen each to be paid on Oct 18.
Genting Plantations declared a gross interim dividend of 4.25 sen per share of 50 sen each to be paid on Oct 18.
It said on Wednesday, Aug 24 that revenue for the quarter rose 57.6% to RM364.38 million from RM231.17 million in 2010. Earnings per share rose to 18.44 sen from 9.41 sen, while net assets per share was RM4.03.(theedgemalaysia.com)
NEW YORK: US stocks rose on Wednesday following an upbeat report on durable goods orders and amid hopes that the US central bank chief might endorse new stimulus measures later this week.
The Dow Jones Industrial Average rallied 143.95 points (1.29 percent) to close at 11,320.71.
The broader S&P 500 rose 15.25 points (1.31 percent) to 1,177.60, while the tech-heavy Nasdaq Composite added 21.63 points (0.88 percent) to close at 2,467.69.
US stocks have risen for the past three days, regaining some of the ground they lost during a long slide in which the Dow slumped for four weeks amid fears of a slowing US economy and Europe's debt crisis.
Early on Wednesday, the US Commerce Department gave the market a boost when it said new orders for durable goods rebounded 4.0 percent in July from June, lifted by a surge in aircraft orders.
Separately, Federal Reserve chairman Ben Bernanke is set to give a speech on Friday which will be closely watched for signs of whether he endorses a further loosening of monetary policy to boost the sluggish US economy.
Last year, during a speech at the same annual central bankers' conference in Jackson Hole, Wyoming, Bernanke hinted that the Fed might launch a second round of quantitative easing - essentially, injecting fresh money into the economy in a bid to pump up growth. The Fed later carried through on the policy, fuelling a months-long stock market rally.
"Some of the optimism may be coming (out) of what may come out of Jackson Hole at the end of this week," said Lindsey Piegza, an economist with FTN Financial.
Banking stocks performed strongly on Wednesday, led by Bank of America, which surged 11.0 percent.
Its stock fell sharply earlier this week amid doubts about the strength of its capital base, leading some analysts to declare it undervalued.
JPMorgan Chase gained 3.0 percent for the day, while Goldman Sachs was up 3.2 percent and Citigroup was up 4.1 percent. (AFP)
Petroliam Nasional Bhd (Petronas) may start the proposed RM15 billion North Malay Basin project this year if it wants to make its first gas delivery by early 2013 as planned, an industry source said.
"As indicated, there will be nine fields with the first delivery of 100 mmscfd (million standard cubic feet of gas per day) by early 2013.
Last Tuesday, Petronas announced that the group and its partners planned to invest RM15 billion in a project to find new gas supplies to meet rising demand in Peninsular Malaysia.
Petronas and its production sharing contract (PSC) partners will undertake the project on an accelerated basis, with the first delivery of 100 mmscfd expected by early 2013, ramping up to 250 mmscfd by 2015.
The project comprises nine discovered gas fields located within Block PM301 and PM302 and in the Bergading contract area, about 300km off the coast of the peninsula.
It will also involve the development of a new 200km pipeline to transport gas from the fields to Kerteh, Terengganu.
"The 200km pipeline is surely a subsea pipeline to transport the gas extracted by the offshore platforms from the fields announced by Petronas.
"The gas will land at Petronas Gas Bhd's onshore gas terminal in Kerteh before being piped to its gas processing plants and then piped into the Peninsular Gas Utilisation (PGU) pipeline network for distribution to customers comprising the power and non-power."
Since 1984, Petronas has been processing natural gas produced by offshore Terengganu fields and supplying piped sales gas to end-users in the power, industrial and commercial sectors in Peninsular Malaysia and power plants in Singapore via the PGU system.
Comprising six gas processing plants with a combined capacity of two billion standard cu ft per day and more than 2,500km of main and lateral pipelines to transmit gas to the customers, the PGU pipeline is linked to the Trans Thailand-Malaysia gas pipeline system in the north.
On partners to develop the RM15 billion project, the source said they are likely to be the existing PSC contractors of the nine discovered gas fields. (Business Times)
Although the credit quality of the majority of Asia's utilities companies is likely to remain stable over the next 12 months, some potentially challenging issues are ahead, according to Standard & Poor's Ratings Services.
In an industry report card titled, "Outlook For Majority Of Asian Utilities Is Stable, But Some Challenges Are Ahead," released Thursday, Aug 25, S & P said electricity, gas, and water companies benefit from favorable industry factors and demographic trends that point to increasing demand for utility services in the region.
Its credit analyst Allan Redimerio said economic growth in the region was faster than the world average, and domestic populations were large with low electricity consumption and urbanisation was increasing.
Utilities companies in Japan, on the other hand, are facing tougher situations, due to the March 11 earthquake, tsunami, and the developments stemming from the Fukushima nuclear plant crisis, said Redmerio.
The potentially difficult issues ahead are the uncertain global economic growth, sustained increase in fuel costs, fuel sources and the competition for them, expansion opportunities, and the significant debt maturities and capital expenditures, he said.
"Asian utilities face significant debt maturities over the next two to three years.
"We estimate the amount averages about US$34 billion per year between 2012 and 2014 for the utilities that we rate in the region. We also think that refinancing risk is rising due to the global economic uncertainty,” he said.
Redimerio said an economic decline alone was unlikely to result in downgrades of utility companies.
Since electricity demand is not particularly elastic, declines in usage may not be as large as the overall economic contraction, he said.
“The more pressing issue is the ability of utilities to adapt to the changing economic and financial environment.
“Some countries in the region, such as Singapore, Thailand, and Philippines, rely heavily on export-driven income, and a global slowdown may affect their economic growth,” he said.(theedgemalaysia.com)
The early advance at most key regional markets was short-lived on Wednesday, Aug 24 as a one-notch cut of Japan’s credit rating grimly reminded investors that all is not well yet.
At 10am, the FBM KLCI was up 0.94 of a point to 1,483.31. Gainers edged losers by 203 to 177, while 196 counters traded unchanged. Volume was 183.47 million shares valued at RM253.34 million.
At the regional markets, Japan’s Nikkei 225 gave up its earlier gains and was down 0.19% to 8,716.76. Hong Kong’s Hang Seng Index fell 0.61% to 19,754.75, Taiwan’s Taiex down 0.42% to 7,518.42, South Korea’s Kospi fell 0.57% to 1,766.42, Singapore’s Straits Times Index lost 0.42% to 2,753.49 while the Shanghai Composite Index edged up 0.17% to 2,558.25.
Markets had started on a firmer note, as investors were encouraged by the overnight rally at Wall Street, which was spurred on by hopes of further economic stimulus in the US.
But the gains were short-lived after Moody's Investors Service cut its rating on Japan's government debt by one notch to Aa3 on Wednesday, blaming a build-up of debt since the 2009 global recession and the revolving-door leadership that has hampered effective economic strategies.
The downgrade, while not out of the blue, served as another reminder of the debt burdens that nearly all of the world's major advanced economies shoulder, according to Reuters.
The United States lost its top-tier AAA rating from Standard & Poor's earlier this month and Moody's warned in June that it may downgrade Italy.
At Bursa Malaysia, Panasonic was the top gainer at mid-morning and rose 40 sen to RM23.40; Pintaras was up 14 sen to RM2.34, Petronas Dagangan 12 sen to RM17.28, Apollo and Kossan 11 sen each to RM2.96 and RM2.89, Batu Kawan and Parkson 10 sen each to RM15.80 and RM5.70, Amway nine sen to RM9 and Kwantas eight sen to RM2.
AirAsia and MAS were actively traded and fell after both reported their results on Tuesday and said the fuel costs would impact their future earnings. Airasia fell 12 sen to RM3.50 with 6.3 million shares traded while MAS lost four sen with 4.05 million shares done.
Other actives included Tanco, Timecom, CIMB, Perdana and MUI.(theedgemalaysia.com)
Decliners g included Malayan Flour Mills, PPB, YTL Cement, KLK, GAB, MISC and JobStreet.
Oil and gas-related counters came in focus in early trade on Wednesday, Aug 24 on news that Petroliam Nasional Bhd and its production sharing partners were embarking on a RM15 billion project to extract gas from fields off Peninsular Malaysia which includes a new 200km pipeline.
At 9.07am, MMHE added 10 sen to RM6.65, SapuraCrest six sen to RM4.34, Wah Seong two sen to RM2.08 while Kencana and Alam Maritim added one sen each to RM2.78 and 79 sen.
(theedgemalaysia.com)
Gold may climb the most in more than three decades this year as investors and central banks boost their holdings on concern that global economic growth may stall amid a worsening sovereign-debt crisis in the U.S. and Europe.
Gold for immediate delivery may reach $2,000 an ounce by the yearend, extending this year’s gain to 41 percent, according to the median forecast in a Bloomberg survey of 13 traders and analysts at a conference in Kovalam in South India on Aug. 20. That would be the most since the 127 percent surge in 1979, according to Bloomberg data.
The metal is set for an 11th year of gains as holdings in exchange-traded products reached a record on Aug. 8 and central banks are adding to their reserves for the first time in a generation. George Soros, the billionaire investor, cut his holdings in the SPDR Gold Trust this year as prices rallied.
Gold for immediate delivery surged as much as 2.3 percent to a record $1,894.80 an ounce today and traded at $1,887.38 an ounce at 4:37 p.m. in Singapore. Prices gained 6 percent last week, the most since January 2009. Bullion for October delivery gained as much as 1 percent to an all-time high of 28,244 rupees ($616) per 10 grams on the Multi Commodity Exchange of India Ltd. and traded at 28,068 rupees at 2:24 p.m. in Mumbai.
Morgan Stanley
Morgan Stanley economists have cut forecasts for global growth this year and said the U.S. and Europe are “dangerously close to recession.” JPMorgan Chase & Co. said the U.S. economy may expand less than previously projected in the next two quarters as consumer sentiment drops and the housing market fails to gain momentum.
“Gold is the currency of the world at the moment, with the world convinced that the monetary and fiscal authorities are likely to do nothing right and everything wrong when it comes to resolving the world’s current fiscal problems,” Dennis Gartman, the economist who correctly forecast 2008’s commodities slump, said in his daily Gartman Letter on Aug. 19.
Bank of America Merrill Lynch raised its 12-month gold price target to $2,000 an ounce on the increased chance of a third round of so-called quantitative easing in the U.S., it said in a report dated Aug. 9.
Bernanke Speculation
Growing speculation that Federal Reserve Chairman Ben S. Bernanke will signal this week at a conference in Jackson Hole, Wyoming, that the Fed will increase monetary stimulus to boost the economy is prompting investors to buy gold, Edel Tully, an analyst at UBS AG in London, said in a report.
“Should Bernanke put a damper on QE3 expectations, the yellow metal could well experience the correction that potential investors have been impatiently awaiting,” she said.
About 60 percent of clients surveyed by UBS expect gold to be trading above $1,800 by the end of this year. The survey was conducted in the first two weeks of August, it said on Aug. 16.
“A developed world with slower growth, a large fiscal deficit and near zero rates over the next few years, inflationary pressures in emerging economies, and larger political and economic uncertainty bodes well for history’s oldest form of wealth,” Barclays Capital said on Aug. 18.
Soros, Mindich
Soros and Eric Mindich’s Eton Park Capital Management LP cut their holdings in the SPDR Gold Trust, the biggest ETP backed by gold, in the second quarter, while Paulson held on to his 31.5 million shares, a filing with the U.S. Securities and Exchange Commission showed Aug. 16.
Central banks added 155 tons valued at about $8.18 billion to reserves in the first five months of the year, according to the World Gold Council. Thailand, South Korea and Kazakhstan added gold valued at about $2.38 billion to their reserves. Thailand’s reserves rose to about 4.07 million ounces (126.6 tons) in June, from about 3.523 million ounces in May, according to the Bank of Thailand.
The Bank of Korea bought 25 tons over a one-month period from June to July, lifting reserves to 39.4 tons, the bank said. Kazakhstan’s holdings increased by 3.1 tons, according to data from the International Monetary Fund.
Central Banks
“Gold may rise to $2,000 or more by 2011-end if the global economy remains the same,” said Prithviraj Kothari, president of the Bombay Bullion Association. “Central banks are also buying gold, which is positive.”
Gold imports by India, the biggest consumer, may reach a record of as much as 1,000 tons this year as investors seek a haven against inflation and volatility in stock markets, Kothari said. Consumption rose to a record 963.1 tons last year, driving bullion imports to the highest ever at 958 tons, according to the gold council.
Purchases climbed to 267 tons in the three months ended June 30 from 167 tons a year earlier, as investment demand jumped 78 percent to 108.5 tons, the second-highest quarter on record, the council said on Aug. 18.
Gold may surge as high as $2,400 an ounce next year as the precious metal is still in the “middle of a bull run,” said Jeffrey Rhodes, chief executive officer at INTL Commodities LLC. Bullion may drop to as low as $1,725 an ounce as early as next month before rebounding, he said.
“It is definitely in a bubble territory and I don’t think the bubble will burst, but it will deflate a bit,” Rhodes told the gold conference. “Trees do not grow to heaven.”
GFMS is owned by Thomson Reuters Corp. and Bloomberg competes with Thomson Reuters in selling financial and legal information and trading systems. (Bloomberg)
European stocks rebounded from a two-year low amid speculation the Federal Reserve may this week signal additional measures to stimulate the economy. U.S. index futures rose while Asian shares fell.
Eni SpA (ENI) and Petrofac Ltd. (PFC) led a rally in oil companies, both rising more than 3 percent, amid speculation the civil war in Libya may be drawing to a close. Petropavlovsk Plc (POG) jumped 5.9 percent as Citigroup Inc. recommended the gold producer. Jyske Bank A/S dropped 1.3 percent after Denmark’s second-largest lender reported profit that missed estimates.
The benchmark Stoxx Europe 600 Index gained 1.2 percent to 225.88 at 9:56 a.m. in London, having earlier lost 0.8 percent. The gauge fell 6.1 percent last week, extending its decline from this year’s high to 23 percent, as Europe and U.S. economic data added to concern the global recovery is at risk.
Standard & Poor’s 500 Index futures climbed 1 percent today after the benchmark gauge tumbled 4.7 last week. The MSCI Asia Pacific Index retreated 1 percent today.
Jackson Hole
The Fed holds its annual symposium in Jackson Hole, Wyoming, this weekend. This time last year Chairman Ben S. Bernanke hinted that the U.S. central bank might embark on a second round of asset purchases, kicking off a 28 percent rally in the S&P 500 that ended in a three-year high on April 29.
Record-low yields on Treasuries show traders expect Fed Chairman Ben S. Bernanke to signal the central bank will begin a third round of asset purchases to boost the economy. Barclays Plc said 10-year yields indicate traders have priced in $500 billion to $600 billion of bond purchases by the Fed. Citigroup Inc. said current rates can only be justified by more bond buying or assuming the economy will shrink by 2 percent.
Gains in European shares were limited as German Chancellor Angela Merkel resisted calls for common euro-area borrowing amid mounting concern the economic recovery is at risk. Speaking in an interview with ZDF television from the chancellery in Berlin yesterday, she said bringing in euro bonds at this time would further undermine economic stability.
Eni Advances
Eni, the Italian oil company that was the biggest foreign producer in Libya, rallied 5.2 percent to 13.13 euros after rebel fighters reached the capital Tripoli. The overthrow of Muammar Qaddafi’s government may allow Eni and other oil producers to start fields closed by the civil war.
Petrofac, which said today it expects to bid for work in Libya after the end of the conflict, rallied 3.4 percent to 1,208 pence. The oilfield-services provider also reported first- half earnings rose 6.6 percent to $246.3 million.
Total SA (FP), France’s largest oil company, climbed 2.8 percent to 32.89 euros and BP Plc (BP/) gained 1.9 percent to 397.25 pence.
Petropavlovsk jumped 5.9 percent to 777 pence as Citigroup upgraded the producer of gold in Russia to “buy” from “hold” and the precious metal rallied for a sixth day to a record.
IG Group Gains
IG Group Holdings Plc (IGG) climbed 4.3 percent to 410.7 pence after the owner of the IG Index financial spread-betting brand said sales for the first quarter may increase by 19 percent as more people place bets because of recent market swings.
Revenue will rise to more than 94 million pounds ($155 million) for the quarter ending Aug. 31, from 79.1 million pounds a year earlier.
ICAP Plc (IAP), the world’s largest broker of trades between banks, gained 1.9 percent to 417.3 pence and Tullet Prebon Plc increased 1 percent to 333.2 pence.
Jyske Bank slid 1.3 percent to 155.70 kroner after Denmark’s second- largest lender reported second-quarter net income of 88 million kroner ($17 million) that missed the average analyst estimate of 260 million kroner, according to a Bloomberg survey.
Micro Focus International Plc (MCRO) slid4.51 percent to 251.5 pence after the company said it terminated talks with possible bidders. The U.K. software provider said it’s restarting a program to buy back as many as 12.3 million shares under its existing authority. (Bloomberg)
China’s stocks fell, extending the benchmark index’s losses to a fifth day, on concern the government will further tighten monetary policy even as the global economic slowdown threatens to curb Chinese exports.
Industrial & Commercial Bank of China (601398) Ltd. and China Vanke Co., the nation’s biggest lender and property developer respectively, led declines for financial companies after China’s money-market rate climbed to its highest level in almost three weeks and a Chinese state economist said it’s too early to loosen monetary policies. Yanzhou Coal Mining Co. jumped by the most in more than seven weeks after first-half profit increased.
“Investors have become sensitive to negative news and numb to good news,” said Tu Jun, a strategist at Shanghai Securities Co. “The market is still bearish amid tight liquidity and concern over the global economic slowdown has added to the bearish sentiment.”
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, lost 6.65 points, or 0.3 percent to 2,527.71 as of 11:19 a.m. local time. The gauge dropped 2.3 percent last week, capping the longest streak of weekly losses since December 2010. The CSI 300 Index (SHSZ300) dropped 0.5 percent to 2,794.98 today.
The Shanghai gauge has declined 10 percent this year as the central bank raised interest rates five times and ordered lenders to set aside more cash as deposit reserves 12 times since the start of 2010 to contain inflation that quickened to the fastest pace in three years last month. According to data compiled by Bloomberg, the measure is valued at 11.6 times estimated earnings, the lowest since Bloomberg began to track the data in 2006. (Bloomberg)
Key Asian markets were slightly higher in Monday's early morning trade as investors speculate that the United States Federal Reserve may come up with more stimulus policies to boost the world's largest economy, against the backdrop of the euro zone's debt crisis and recent data that indicated a global economic slowdown could hit soon.
At 10am today, Tokyo's Nikkei 225 was up 0.19% to 8,735.57, Hong Kong's Hang Seng Index rose 1.14% to 19,620.94 and Shanghai's A share index was 0.65% higher at 2,550.86.
Singapore's Straits Times Index was up 0.56% to 2,748.95. However, the local bourse's benchmark index was 0.47% lower at 1476.98.
At Bursa Malaysia, losers overwhelmed gainers by 269 to 121 while 184 other counters were traded unchanged.
There were 137.78 million shares done with a total turnover of RM267 million.
Among the gainers were Malayan Flour Mills Bhd which was up 16 sen to RM7.67 and Spritzer Bhd which rose 13.5 sen to 98 sen.
The losers included Ann Joo Resources Bhd which fell 12 sen to RM2.42 and Hong Leong Bank Bhd which fell 18 sen to RM12.82.
At 10am today, Nymex crude oil in electronic trade was US$0.91 higher at US$83.17 per barrel.
Meanwhile, jittery investors continued to seek safety in gold and at 10am, spot gold was quoted at US$1,870.10 per ounce while spot silver was quoted at US$43.40.
The ringgit was quoted at RM2.97 to the US dollar and RM4.28 to the euro.(The Star Online)
Petronas Dagangan Bhd, the best-performing stock in Malaysia’s benchmark index this year, plans to extend its reach in Southeast Asia after making its first overseas venture into Indonesia.
The retail arm of Malaysia’s state oil and gas group Petroliam Nasional Bhd is “always looking for acquisitions,” and is particularly interested in the oil and gas product markets in the Philippines and Thailand, Chief Executive Officer Amir Hamzah Azizan said August 19 in an interview in Kuala Lumpur.
Expanding abroad will generate growth beyond Petronas Dagangan’s home market where it has supplies 51 per cent of the nation’s liquefied petroleum gas according to its 2011 annual report. The company had cash of more than RM900 million (US$302 million) at the end of June.
“We need to start laying seeds,” Amir said. “At some point, we will top out. When you top out, then you sit on earning whatever the normal demand growth is in the country.”
Petronas Dagangan closed unchanged at RM17.40 in Kuala Lumpur on Aug. 19, bringing its total gain this year to 49 per cent. It is the best performer in the benchmark FTSE Bursa Malaysia KLCI Index, which has dropped 2.3 per cent. Over the past year, its shares have risen 66 per cent.
The company wouldn’t rule out the possibility of acquiring sister company PT Petronas Niaga Indonesia, which runs 19 petrol stations in the most-populated nation in Southeast Asia.
“If we believe that a combined entity is better than two stand-alone, I’m sure we will do it,” Amir said without giving a time frame.
Profit Growth
Petronas Dagangan posted net income of RM869.7 million for the year ended March 31, 16 per cent more than a year earlier. Over a five-year period, its earnings grew at a compounded annual growth rate of 6.3 per cent, according to Bloomberg calculations.
Petronas Dagangan, which also supplies 60 per cent of commercial demand for petroleum products in Malaysia and is second only to Royal Dutch Shell Plc in the lubricant market, has started selling its products in Indonesia to Petronas Niaga Indonesia, which is wholly owned by Petroliam Nasional, better known as Petronas.
“Indonesia is a big market,” said Amir. “We have just scratched the surface of it. I am hopeful that we can get a bit more growth on the volume.”
Dividend Policy
Petronas Dagangan, set up in 1982, now has more than 960 petrol stations in Malaysia, he said, adding that it will add 30 more by the end of this year. It aims to increase its market share to 40 per cent from 32 per cent in the retail segment, and to 28 per cent from 22 per cent in the lubricant segment, over the next five years, he said.
The company’s newly introduced dividend policy of paying about 55 per cent of its profits as bonus to shareholders on a quarterly basis is “sustainable” in view of its growth prospects, Amir said.
“Because the returns are sustainable and fairly predictable, that’s no reason why I would need to wait until the end of the year to declare dividends,” he said.(Bloomberg)
he FBM KLCI extended its losses at mid-morning on Monday, Aug 22 in line with the weaker closing at Wall Street last Friday and the still cautious sentiment at regional markets.
Most regional markets were slightly up on the prospect of currency market intervention in Japan offsetting growing worries of another U.S. recession.
The FBM KLCI was down 6.96 points to 1,477.02 at 10am, with weighed by losses at blue chips including CIMB, BAT, KLK, and Digi.
Losers edged gainers by 267 to 121, while 174 counters traded unchanged. Volume was 132.95 million shares valued at RM256.82 million.
At the regional markets, Japan’s Nikkei 225 added 0.19% to 8,735.57, Hong Kong’s Hang Seng Index gained 0.79% to 19,553.81, the Shanghai Composite Index was up 0.39% to 2,544.19, Taiwan’s Taiex rose 1.69% to 7,466.77 and Singapore’s Straits Times Index edged up 0.27% to 2,740.95.
Meanwhile, South Korea’s Kospi shed 0.04% to 1,744.20. (theedgemalaysia.com)
Singapore's SATS (SATS.SI) said on Friday its subsidiary has struck a joint venture agreement with OCS Ventures to provide catering services to
companies operating in remote areas worldwide.
SATS Investments, the subsidiary of SATS, will take a 51 percent stake in the joint venture company.
SATS provides ground-handling as well as food-related services, while OCS Ventures is an investment holding company which has interests in the food, energy and business services, as well as technology industries.
During the initial phase of operations, the venture will focus on clients in sectors such as oil and gas, mining, marine, defence, as well as industrial and infrastructure construction, SATS said in a statement.
These clients operate in ASEAN, China, Australia, New Zealand and Papua New Guinea, it said. (The Edge Singapore)
Gold rose to a record above $1,860 an ounce,longest run of weekly gains since April 2007. It is believed concern the global economy is slowing drove equities lower and spurred demand for a haven.
The metal is set for a seventh weekly advance as worse- than-expected U.S. economic data and Europe’s debt crisis boost speculation growth will falter. Asian stocks extended a global rout today after a Philadelphia-area manufacturing index sank to the lowest level since 2009, U.S. jobless claims rose and existing home sales fell.
Morgan Stanley and Deutsche Bank AG this week cut forecasts for China’s growth.
Rand, Euros, Pounds
Gold reached record highs today priced in Swiss francs, South African rand, New Zealand and Canadian dollars, euros and British pounds. June-delivery gold on the Tokyo Commodity Exchange also rallied to its highest ever.
The metal, up 31 percent this year, is in the 11th year of a bull market, the longest winning streak since at least 1920. Investors want to protect their wealth from declining equities, depreciating currencies and accelerating consumer prices. According to bloomberg news, gold may climb next week amid concern about debt crises and slowing growth. (Bloomberg)
KUALA LUMPUR: The superannuation fund, Lembaga Tabung Amanah Tentera (LTAT) is reported to be keen on buying the 65% stake in ESSO MALAYSIA BHD despite that ExxonMobil International had agreed to sell the stake to San Miguel.
Esso shares were down three sen to RM4 at 3.51pm on Friday, Aug 19, after the 18.6% share price tumble on Thursday after ExxonMobil announced the sale of the stake at RM3.50 per share. The shares had surged to RM4.95 on Wednesday.
A report by Berita Harian that the LTAT is keen to buy the stake seems to have provided some support for the shares when compared to the broader market and the fall on the 30-stock FBM KLCI.
The KLCI is down 23.64 points to 1,479.66. Turnover is 702.17 million shares valued at RM1.57 billion. Losers hammered gainers 695 to 83.
The Berita Harian said the LTAT was still keen on acquiring the Esso stake and it could offer as much as RM5.20 per share. Esso's net asset per share is RM3.28.
In April, The Edge FinancialDaily reported that BOUSTEAD HOLDINGS BHD and LTAT were believed to be eyeing the 65% stake. Esso’s 580 Esso and Mobile service stations across the country would have complemented Boustead’s own BH Petrol 300 service stations. (theedgemalaysia.com)
A New York-based fund H Partners Management LLC has ceased to be a substantial shareholder of Pelikan International Corporation Bhd after selling 32.74 million shares or 6.45% stake.
A filing with Bursa Malaysia showed that H Partners, an independent investment management firm, sold its entire stake on Aug 12 and is no longer a shareholder.
Another filing showed Persada Bina Sdn Bhd had emerged as a substantial shareholder in Pelikan, acquiring 20.01 million shares or 3.94% on that day.
The recent acquisition increased its stake to 6.7% or 33.99 million shares.
Persada Bina has its address at Jalan Pendidik U1/31, Hicom Glenmarie Industrial Park in Shah Alam.(theedgemalaysia.com)
Berjaya Land shares rose today after the company announced it was buying 57 acres of prime freehold land from Penang Turf Club for RM459 million for residential property projects with gross development value (GDV) of about RM1.52 billion.
Berjaya Land added three sen to RM1.10 with 618,000 shares done.
DIALOG GROUP BHD shares rose on Wednesday, Aug 17 after the company made its foray into the development and production of marginal hydrocarbon reserves in Malaysia following its joint venture (JV) securing a contract from Petroliam Nasional Bhd.
At 9.45am, Dialog rose four sen to RM2.71 with 3.98 million shares traded.
Dialog and its partners Roc Oil and Petronas Carigali clinched a 15-year Petronas contract worth up to US$950m to develop the Balai cluster fields.
CIMB Research in a note Aug 17 said it not surprised that Dialog landed its first-ever upstream venture but was positively surprised by Petronas Carigali’s involvement in this 2-phase project.
The research house left its forecasts unchanged as it had imputed CONSTRUCTION [] contributions during the pre-development phase.
CIMB Research said commercial production would start 24 months after commencement, i.e. beyond its forecast period.
“Our SOP-based target price rises from RM3.21 to RM3.48 as we apply a 40% premium to the businesses that we previously valued at 20% premium over our 14.5x target market P/E.
“This puts their valuations on par with those of larger O&G companies. Dialog remains an OUTPERFORM, with the potential share price triggers being this contract and the Rapid project,” it said. (theedgemalaysia.com)
Australia’s economy can “ride out” the turbulence in global markets because of its strong outlook and the continued growth of China, the country’s biggest trading partner, Treasurer Wayne Swan said.
“Australia has very low public debt, low unemployment, a massive pipeline of investment and we expect to bring the budget back to surplus next financial year,” Swan said in an e-mailed statement yesterday. While Australia isn’t immune to what happens in the rest of the world, “the prospects for our region remain much stronger” than for Europe and the U.S., he said.
The global economic outlook will remain uncertain for some time as the U.S. and Europe seek to reduce debt and make their fiscal budgets more sustainable, Swan said. There’s good reason to be “optimistic” about continued expansion in China as incomes improve, he added.
About $6.8 trillion was wiped off the value of global equity markets from July 26 through Aug. 11 as Europe’s debt crisis deepened and investors speculated the U.S. economy, the world’s biggest, may contract. U.S. stocks fell for a third straight week, including the biggest one-day drop since 2008, after Standard & Poor’s reduced the nation’s credit rating to AA+ from AAA on Aug. 5.
The Australian dollar dropped 0.8 percent to $1.0355 in the five days to Aug. 12, after reaching a record $1.1081 on July 27. The Australian 10-year bond yield fell to 4.43 percent, the lowest daily closing level since April 2009, sliding four basis points since Aug. 5 in a third week of declines.
The turmoil will make it more difficult for the government to achieve its target of returning its budget to surplus in the 2012/13 financial year, Swan said.
New Zealand
New Zealand’s budget is still expected to return to surplus by 2015 as economic growth is spurred by demand for commodities from China’s swelling middle class and rebuilding the city of Christchurch after the nation’s deadliest earthquake in 80 years, Prime Minister John Key said yesterday.
“Obviously if there’s a strong United States and a strong Europe, that helps New Zealand, and if there’s not, that can have some impact,” Key said in an interview broadcast on Television New Zealand. “But there are a number of different factors going on.”
New Zealand’s economy is recovering after growth of 1.1 percent last year amid a lull in consumer and business spending. A magnitude-7 quake near Christchurch, the nation’s second- largest city, on Sept. 4 disrupted spending before a temblor on Feb. 22 killed more than 180 people and shut the central business district.
The Treasury estimates the combined cost of the earthquakes will be about NZ$15 billion ($12.5 billion).
2008 Crisis
New Zealand’s gross domestic product shrank for five straight quarters from the start of 2008 amid the global credit freeze. Australia avoided recession in the wake of the collapse of Lehman Brothers Holdings Inc. in 2008, with just one quarter of contraction.
Australia will benefit as expansion in Asian economies spurs demand for commodities as well as tourism, education and luxury goods, Swan said.
“The tyranny of distance is really a thing of the past for Australia,” Swan said. “With the shift in global economic weight from West to East, we’re finally located in the right part of the world at the right time.”
Europe and the U.S. are both facing a “sustained period of sluggish growth,” he said.
China’s gross domestic product will increase 9.3 percent in 2011, according to the median forecast of 10 economists surveyed by Bloomberg. That compares to predictions of 1.8 percent growth in the U.S. and 2 percent in Europe. (Bloomberg)
Britain's finance minister called for some form of fiscal union to resolve the euro zone's debt crisis on Saturday, Aug 13 while his Italian counterpart renewed a call for the introduction of common euro zone bonds.
After more than a year of piecemeal responses to the euro zone's still-expanding debt crisis, some economists and policymakers are making the case for broader changes to how the currency bloc works.
The spread of market concerns in the crisis to France in the past week have raised the stakes further ahead of a meeting of the bloc's French and German leaders next week -- both of whom have opposed more radical moves to date.
UK Chancellor George Osborne said deeper integration had been the inevitable conclusion from the start of the single currency project.
Asked if the only answer for the health of the euro zone was some kind of fiscal union, he told BBC radio: "The short answer is yes."
"I was against Britain joining the single currency. One of the reasons ... was because I thought the remorseless logic of having a single currency is you end up having something akin to a single budget policy. You can't have one without the other," Osborne said on Saturday.
"An unstable euro is very bad news for us, we have to ensure that our influence on important decisions like financial services is not undermined. But we do yes have to allow greater fiscal union while protecting our own national interest."
Britain has held onto its pound currency and is only part of discussions over the European debt crisis as a member of the broader European Union.
Italian Economy Minister Giulio Tremonti, however, also renewed a call for common European bonds on Saturday, saying they would be the best solution for a debt crisis which he said still risked spreading to other countries.
Speaking a day after the government adopted a 45.5 billion euro package of spending cuts and tax hikes aimed at restoring confidence in Italy's public finances, Tremonti made a renewed plea for common debt issuance in the euro zone.
"A greater degree of integration and consolidation of public finances in Europe is necessary," Tremonti told a news conference to explain the austerity package.
"The best solution would have been the euro bond, with various possible models which could have been adopted," he said.
Tremonti noted that he and Luxembourg Prime Minister Jean-Claude Juncker had long argued in favor of joint euro bonds and he believed the trend was pointing toward closer coordination of fiscal policies.
"We expect developments which we think could and should take us in a direction toward fiscal consolidation and integration in Europe," he said.
The issue of common European debt would allow weaker and more indebted states to benefit from the higher rating of countries like Germany to issue debt more cheaply.
But Germany and France have so far opposed any common debt issuance, arguing that it would remove a key driver of fiscal discipline in individual member states and push up their own borrowing costs as AAA-rated sovereigns. (Reuters)
Asian investors will get a couple of key updates in the coming week on how Japan’s recovery from the devastating March 11 earthquake is going, with Tokyo set to release some important economic data.
Japanese gross domestic product numbers for the April-June quarter are due out Monday, and while almost all economists expect the data to show a contraction, they vary widely on how bad the hit will be.
A key consideration will be whether the economy shrank more than the revised 3.5% drop in January-March period.
A Dow Jones Newswires survey yielded forecasts ranging from a 1.4% contraction to a heavy 4.7% plunge, with the median projection for a fall of 2.7%.
In June, Japan swung to a surprise trade surplus of almost $900 million after posting deficits in April and May.
So while last week’s wild swings on the global stock markets may continue to be the biggest factor for Tokyo stocks, upside surprises for the GDP and trade data could go a long way toward pushing the Nikkei Average back up.
Other highlights for the coming week include minutes from the Reserve Bank of Australia’s last policy meeting.
And on Thursday, the market will be watching for earnings from two key Chinese blue chips: wireless provider China Mobile Ltd and computer maker Lenovo Group Ltd.
Meanwhile, Indian markets will be closed Monday for Independence Day, while South Korea will be on break that same day, in honor of National Liberation Day. (Market Watch)
Italy vows to cut down its huge bureaucratic and political costs as part of austerity moves
The Italian government is vowing that a new austerity package will slash Italy's huge bureaucratic and political costs, with thousands of jobs and elected posts being gradually eliminated and a myriad of the country's tiny towns losing their administrations.
Premier Silvio Berlusconi acknowledged the cuts were in some cases "excessive," but said they were approved because of widespread discontent among citizens over the perks enjoyed by the ruling class at a time of belt-tightening.
The government approved the euro45.5 billion ($64.84 billion) emergency package Friday seeking to balance the budget by 2013 in response to demands from the European Central Bank.
Cabinet minister Roberto Calderoli vowed Saturday to cut the number of national lawmakers and eliminate local governments for some small towns and villages. (AP-Associated Press)
Saudi Arabian shares rallied for a second day, after U.S. retail sales data eased concern the world’s biggest economy is headed for a recession.
Saudi Basic Industries Corp. (SABIC), the world’s biggest petrochemicals maker, and Al Rajhi Bank (RJHI), the kingdom’s largest publicly traded lender by assets, paced the gains.
The 147-company Tadawul All Share Index (SASEIDX) rose 1.8 percent, to 6,147.45 at 12:03 p.m. in Riyadh, the highest level since Aug. 6, extending its two-day gains to 2.3 percent. The gauge lost 6 percent in the past week, the steepest decline since the week ending March 2, after the U.S.’s credit rating was downgraded by Standard & Poor’s.
A U.S. report yesterday showed retail sales climbed 0.5 percent in July, matching the median forecast of 81 economists surveyed by Bloomberg News. The S&P 500 rallied 5.2 percent in the final two days of the week, its biggest back-to-back gain since March 2009. (Bloomberg)
Swiss stocks slid for a 12th day, extending the Swiss Market Index (SMI)’s longest losing streak on record, as banks retreated amid concern the global economy is faltering.
Credit Suisse Group AG (CSGN), Switzerland’s second-largest bank, plunged to its lowest price since 2003. Synthes Inc. (SYST), the maker of devices to treat spinal injuries, fell 2.4 percent after first-half earnings.
The SMI, a measure of the biggest and most actively traded companies, lost 1.6 percent to 4,888.92 at 3:09 p.m. in Zurich. The gauge entered a bear market on Aug. 4 after plummeting more than 20 percent from this year’s high on Feb. 18 as Europe’s debt crisis and the slowing global economy prompted investors to buy the Swiss franc, reducing the value of exporters’ revenue. The broader Swiss Performance Index also fell 1.6 percent today.
Swiss consumer confidence weakened more than economists forecast in July, slipping to minus 17 from minus 1 in April, adding to signs the economy is losing momentum. That’s the lowest since July 2009. Economists had forecast a drop to minus 5.
Household Pessimism
Swiss households are growing more pessimistic as a surging franc undermines exports and adds pressure on companies to eliminate jobs. The Swiss central bank on Aug. 3 unexpectedly lowered borrowing costs to zero, saying the outlook for the economy has “deteriorated substantially.”
Credit Suisse plunged 5.3 percent to 21.43 francs, its lowest price since March 2003.
Synthes declined 2.4 percent to 128.9 francs after reporting first-half net income of $454.4 million.
Transocean Ltd. (RIG), the world’s largest offshore driller, slipped 3.2 percent to 37.84 francs and Weatherford International Ltd. (WFT), a Geneva-based oil-rig owner, dropped 5.2 percent to 12.10 francs. Oil traded near a 10-month low in New York as the U.S. credit-rating cut boosted concern the economic slowdown will worsen. (Bloomberg)
Asian markets on Tuesday endured one of their most volatile days since the height of global financial crisis three years ago as margin calls forced traders to dump risky assets before bargain hunters and state investors swooped in to stem hefty losses.
Sparked by a 6.7 percent fall in the S&P 500 Index .SPX overnight and signs that global growth was sputtering, Asia stocks tanked at the open and quickly spiraled lower on indiscriminate selling.
South Korea's KOSPI .KS11 slumped close to 10 percent at one stage, its biggest slide in two years.
Some Asian mutual funds were also seen dumping shares on expectations that investors will pull out what's left of their money in an effort to preserve capital.
The rout spilled into foreign exchange, commodity and money markets, at one stage thumping the Australian dollar down as much as 3 cents versus the U.S. dollar and pushing it below parity for the first time in five months.
Japanese foreign exchange margin traders took a bath as stop loss orders hit cross rates include the Aussie/yen and South African rand/yen.
VOLATILITY RATTLES
Australia's S&P/ASX 200 index .AXJO, already down 11 percent over the past week, fell as much as 5.5 percent during the session before rebounding to close more than 1 percent higher.
In China, where the Shanghai Composite .SSEC ended flat after falling as much as 3.5 percent on top of a 3.8 percent fall on Monday.
Hong Kong stocks .HSI suffered their worst one-day loss, 5.7 percent, since the 2008 crisis. The moves in Hong Kong and South Korea came as stock futures saw record volume.
Not all market participants were fazed by the volatility. In Tokyo, which has endured a succession of natural and financial disasters, traders were more sanguine. (Reuters)
U.S. stock futures retained the bulk of Tuesday gains after the government reported U.S. productivity fell 0.3% in the second quarter.
Futures for the Dow Jones Industrial Average rose 152 points to 10,878. Those for the Standard & Poor's 500 Index added 20.7 points to 1,132. Futures for the Nasdaq 100 added 36.25 points to 2,074.25. (Market Watch)
Singapore shares were set to fall on Monday over fears of a global economic recession grew after Standard & Poor’s downgraded the United States’ top-tier credit rating.
Singapore’s benchmark Straits Times Index <.FTSTI> fell 3.61% on Friday to 2,994.78 points.
Here are some stocks and factors to watch:
Transport operators SMRT (SMRT.SI) and ComfortDelgro (CMDG.SI) may be in focus after Singapore’s Public Transport Council allowed a fare increase of 1% -- far less than the 2.8% sought by the two operators.
Singapore’s Keppel Corp (KPLM.SI), the world’s largest oil rig builder, said on Friday it has secured a repeat order from Transocean (RIG.N) (RIGN.VX) to build a jack-up rig worth US$195 million ($237 million).
Singapore’s Global Logistic Properties (GLPL.SI) said on Sunday it had started construction of new logistic facilities with a gross floor area of around 128,000 square metres at GLP Park Beijing Capital Airport in China.
Singapore abalone breeder Oceanus (OCGL.SI) said on Sunday it is expected to record a loss for its second quarter ended June 30, compared with a profit a year earlier, largely due to losses from a fair value change of biological assets and delayed sales.(The Edge Singapore)
The dollar dropped to a record low against the Swiss franc and fell for a second day versus the yen after Standard & Poor’s downgrade of the U.S. added to concern the fiscal health of the world’s biggest economy is slipping.
The greenback weakened against the euro before the Federal Reserve meets tomorrow on monetary policy after S&P cut the U.S. one level on Aug. 5. The euro also advanced after the European Central Bank signaled it’s ready to start buying Italian and Spanish bonds to curb the region’s debt crisis. The yen gained against most major peers as Asian shares slid for a fifth day, supporting demand for Japan’s currency as a refuge.
The dollar fell to as low as 74.85 Swiss centimes before trading at 75.85 centimes as of 1:20 p.m. in Tokyo from 76.74 in New York on Aug. 5. The U.S. currency weakened to 78.00 yen from 78.40 last week. Against the 17-nation euro, it declined to $1.4313 from $1.4282. The euro fetched 111.64 yen from 111.97.
S&P Outlook
S&P kept the outlook on the U.S. rating at “negative” as it became less confident Congress will end Bush-era tax cuts or tackle entitlements. The rating may be cut to AA from AA+ within two years if spending reductions are lower than agreed to, interest rates rise or “new fiscal pressures” result in higher general government debt, the New York-based company said on Aug. 5 after markets closed.
Moody’s Investors Service and Fitch Ratings affirmed their AAA credit ratings for the U.S. on Aug. 2, the day President Barack Obama signed a bill that ended a debt-ceiling impasse that had pushed the Treasury to the edge of default. Moody’s and Fitch also said downgrades were possible if lawmakers fail to enact debt-reduction measures and the economy weakens.
S&P’s move “highlights the much-less advanced pace of fiscal consolidation in the U.S., relative to Europe and the U.K.,” John Normand, the London-based global head of foreign- exchange strategy at JPMorgan Chase & Co., wrote in a report to clients.
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, fell for a second day, slipping 0.3 percent to 74.368.(Bloomberg)
Trading in the securities of MALAYSIAN AIRLINE SYSTEM BHD and AIRASIA BHD have been halted from 9am on Monday, Aug 8 to 5pm, Tuesday, Aug 9 at the request of the companies pending an announcement.
In separate announcements on Aug 8, CIMB Investment Bank Bhd on behalf of the two companies said they had requested for the suspension in the trading of their securities as the companies required time to prepare and release announcement relating to a material transaction.
The Edge Financial Daily reported this morning that a management committee comprising representation from all shareholders was expected to steer the direction of MAS following a proposed shareholding tie-up between the national carrier and AirAsia.(theedgemalaysia,com)
Gold climbed above $1,700 an ounce for the first time after Standard & Poor’s cut the top U.S. credit rating, fueling a slump in equities and the dollar amid concern that the global economy is slowing.
Gold futures for December delivery jumped 3.1 percent to a record $1,702.70 an ounce on the Comex in New York and traded at $1,701.90 at 2:07 p.m. in Melbourne. Silver futures climbed as much as 5.7 percent. Spot gold soared 2.2 percent to $1,700.22 an ounce, also a record.
Futures have surged 20 percent in 2011, gaining for an 11th year, as the sovereign debt crisis and a faltering economy boost haven demand. While George Soros sold most of his gold in the first quarter, John Paulson, who made $15 billion betting against subprime mortgages, is still the biggest investor in the largest exchange-traded fund backed by bullion. Goldman Sachs Group Inc. (GS) raised its price forecasts in a report released today.(Bloomberg)
The United States late Friday lost its triple-A debt rating from Standard & Poor’s for the first time in its history, with the credit-rating agency saying the political system of the world’s top economy has become less stable and that budget cutting announced earlier this week didn’t go far enough.
S&P lowered its rating on the U.S. by a notch to AA+ and, to compound the embarrassment, said the outlook is negative as well, as it threatened another reduction in two years. The rating agency said the deal reached by lawmakers to cut the federal deficit by an estimated $2.1 trillion over a decade didn’t go far enough, and “America’s governance and policy making becoming less stable, less effective, and less predictable than what we previously believed."
S&P, a unit of McGraw-Hill, had said in July that $4 trillion in cuts over a decade would be required if the U.S. were to keep its triple-A rating. The U.S. has over $14 trillion in debt, and, even after the deal reached this week, is anticipated to add another $7 trillion over the next decade.
By S&P’s analysis, the U.S. debt-to-GDP ratio will hit 85% by 2021.
The market impact of the S&P move is uncertain, but the wild 416-point swing in the Dow Jones Industrial Average on Friday was in part influenced by rumors of such a move. The political ramifications also were explosive, with both sides quickly taking to cable news stations to blame each other for the U.S. downgrade.
Fellow rating agencies Moody’s and Fitch Ratings have not been as critical as S&P about U.S. finances, as both have affirmed their triple-A ratings. (Market Watch)
Bursa Malaysia closed sharply yesterday (Friday, 5th August 2011) as investors fled stocks for safe haven assets. Investors now prefer keeping gold rather than held stocks. Confidence level drastically dropped due to Europe’s debt crisis and the increasingly gloomy global economic outlook.
The benchmark FBM KLCI plunged 22.46 points to 1,524.43, the lowest since May 10, 2011. The Finance Index lost 271.699 points to 14,489.15, Plantation Index fell 145.51 points to 7,592.94 and the Industrial Index eased 46.81 points to 2,758.24.
Among active stocks, Sanichi Technology slipped two sen to 8.5 sen, Air-Asia lost 15 sen to RM3.95 and Malaysia Building Society Bhd-warrant 11/16 dropped 4.5 sen to 75.5 sen.
Axiata Group, however, was unchanged at RM5.07.
In heavyweights, Maybank lost eight sen to RM8.77, CIMB fell 11 sen to RM8.29, Petronas Chemicals slipped 32 sen to RM6.59 and Petronas Gas fell 22 sen to RM13.12.
Catcha Media bucked the trend to rise 14 sen to 90 sen on news of a new substantial shareholder.
Volume on the Main Market increased to 1.349 billion shares worth RM3.596 billion from 702.706 million shares worth RM1.466 billion on Thursday.
Turnover on the ACE Market fell to 275.994 million units worth RM55.789 million from 370.385 million units valued at RM63.521 million on Thursday.
Warrants increased to 135.206 million shares worth RM16.378 million from 72.146 million shares worth RM11.083 million previously.
Consumer products accounted for 53.6 million shares traded on the Main Market, industrial products 229.5 million, construction 110 million, trade and services 450.2 million, technology 22.1 million, infrastructure 16.4 million, finance 201.4 million, hotels 1.5 million, properties 173 million, plantations 71 million, mining 181,900,REITs 5.8 million and closed/fund 227,900. (BERNAMA)
Yields on long-term Spanish and Italian government bonds increased Thursday as European Central Bank President Jean-Claude Trichet said the bank would hold more liquidity operations to give euro-area banks more cash.
However, short-term securities improved a bit, pushing yields lower. Bond yields move inversely to prices and rising yields indicate investors want more protection for the risk of holding the security.
Yields on 10-year Italian bonds rose to 6.12% during Trichet's press conference, from 6.06% before it began. Yields on Spanish 10-year bonds rose to 6.24% from 6.18% earlier. Italian 2-year bonds yielded 4.46% at last check, from 4.53% prior to the conference. Spanish 2-year yields slipped to 4.35% from 4.39%. The euro EURUSD -1.31% fell as low as $1.4151 as Trichet made the announcement then recovered to $1.4224, little changed from before his press conference and down from $1.4318 Wednesday. (Market Watch)
Energy stocks fell back on Thursday as the Dow Jones Industrial Average DJIA -1.48% dropped more than 100 points. The NYSE Arca Oil Index XX:XOI -2.98% dropped 2.7% to 1,202, wiping out its gain for the year. The NYSE Arca Natural Gas Index XX:XNG -2.26% fell 2.2% to 666. The Philadelphia Oil Service Index OSX -3.23% dropped 3.2% to 253. Crude oil futrues declined 1.1% to $90.95 a barrel. The Dow Jones Industrial Average dropped 143. points. (Market Watch)
U.S. stock futures fell Thursday after a report that the jobs market remains stagnant.
The government said that the number of people who applied for unemployment benefits for the first time last week rose to 400,000 from 398,000 the previous week. The increase was slightly less than Wall Street's estimate of 405,000 claims.
Stocks have been volatile this week because of concerns that the U.S. economy is weakening. Manufacturing, consumer spending and hiring by private companies are each below what typically signifies a healthy, growing economy.
Ahead of the opening bell, Dow Jones industrial average futures are down 127 points, or 1.1 percent, to 11,691. Standard and Poor's 500-index futures are down 17, or 1.3 percent, to 1,238. Nasdaq 100 futures are down 27, or 1.2 percent, to 2,275.
Stock futures do not always accurately predict the direction of the market once trading opens, however.
Kraft Foods rose more than 6 percent in premarket trading after the company said that it plans to split into two. One company will focus on snacks such as Oreo cookies and the other will target the North American grocery business. General Motors Co. fell 0.5 percent in pre-market trading despite beating analyst estimates. And CVS Caremark fell nearly 3 percent before the market opened after its revenue slipped last quarter.
Several national retailers are announcing July sales results throughout the day. Target gained 0.5 percent in premarket trading after its revenue at stores open at least a year beat Wall Street's estimates. Gap Inc. fell 1 percent in premarket trading after it said that its revenue was flat compared with the same time last year.
The Dow rose 30 points -- after being down 166 -- to break an eight-day losing streak Wednesday. Nine days would have been the longest since February 1978. The S&P 500 index rose 6 points and broke a seven-day streak.(AP)
Japanese stocks advanced for the first time in three days after the government sold yen, boosting prospects for exporters earnings.
The Nikkei 225 Stock Average gained 1 percent to 9,733.10 as of 12:42 p.m. in Tokyo, after falling as much as 0.2 percent. The broader Topix index climbed 0.9 percent to 833.88. The gains were maintained on optimism the yen may weaken further should the Bank of Japan follow its Swiss counterpart and take further measures.
The stock market is reacting to the yen’s depreciation, the yen may continue to weaken “if the Bank of Japan also takes some easing measures along with other countries.
Japan’s central bank may follow the unilateral action to sell the yen with monetary stimulus.
The yen dropped against all 16 of its major counterparts, falling to 79.15 against the dollar, the lowest level since July 20, compared with 77.15 at the close of stock trading in Tokyo yesterday. Against the euro, the yen slipped to 113.09 from 109.65. A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.
Exporters advanced on easing concerns the yen, which had approached a postwar high against the dollar, will hurt overseas earnings. Canon rallied 2.3 percent to 3,775 yen. Ricoh Co., an office-equipment maker which derives more than half of its revenue outside Japan, climbed 2.2 percent to 807 yen. Toyota Motor Corp. (7203), the world’s largest carmaker, advanced 2.2 percent to 3,190 yen.
Swiss Action
Switzerland, also contending with a stronger currency, unexpectedly cut interest rates and pledged to boost the supply of the franc yesterday.
In the U.S., the Standard & Poor’s 500 Index advanced 0.5 percent to 1,260.34 yesterday, snapping a seven-day decline, amid speculation the Federal Reserve may consider another economic stimulus program to prevent a recession.
The Wall Street Journal reported three former top officials at the Fed said the central bank should consider a new round of securities purchases to bolster economic growth. (Bloomberg)
Yen Plunges
The BOJ will likely expand an asset-purchase program that was first set up last year and aimed to counter Japan’s trenchant deflation.
Japan followed Switzerland in seeking to stem appreciating exchange rates that threatened to damage export competitiveness, selling the yen for the first time since the aftermath of the nation’s earthquake in March.
Japan acted alone in the market, while officials were in contact with other nations, Finance Minister Yoshihiko Noda told reporters today. The yen slid 2.6 percent to 79.09 at 12:34 p.m. in Tokyo, about its average of the past month. Noda suggested the Bank of Japan may follow with monetary stimulus, saying he hoped it would take appropriate action. The BOJ separately brought forward by a day the end of its scheduled policy meeting.
Today’s move reflects deepening concern of a U.S. return to recession that might force the Federal Reserve into another round of asset purchases and a widening in Europe’s debt crisis, with a sell-off in Spanish and Italian debt. The concerns have prompted investors to seek havens in the currencies of Japan and Switzerland, which both enjoy current-account surpluses, and those of emerging markets with faster growth rates.
“The yen’s level now is still a very tough level for exporters,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “The big companies have moved their yen expectations to 80 against the dollar but manufacturers overall still need the yen at 85. Intervention today doesn’t eliminate these problems.”
Japan’s stocks rallied after today’s move, with the benchmark Nikkei 225 Stock Average advancing 0.9 percent to 9,724.21 as of the midday break in trading.
Swiss Action
Switzerland yesterday unexpectedly cut interest rates and pledged to boost the supply of the franc in money markets. The nation’s exchange rate has soared 23 percent in the past six months against the dollar.
The decision by Japan followed gains in the yen that saw it approaching a postwar high against the dollar. The current level is still about 4 percent stronger than the 82.59 average exporters used in profit forecasts in a Bank of Japan survey released last month. Toyota Motor Corp. sees a yen stronger than 80 as a brake on growth.
Goldman Sachs Group Inc. analysts said the BOJ will likely today expand an asset-purchase program that was first set up last year and aimed to counter Japan’s trenchant deflation. The central bank widened the effort after the nation’s record March 11 earthquake shuttered factories and devastated the northeast. Goldman predicts a 10 trillion yen boost in purchases.
Latin America
The dollar’s tumble, along with Europe’s debt concerns, have spurred an influx of capital to emerging markets that threatens to destabilize their financial markets and economies. Brazil’s Finance Minister Guido Mantega has labeled the tensions “currency wars.” Latin American finance officials plan to gather this month to discuss ways to protect their currencies and economies from the turmoil in the U.S. and Europe.
Today’s step is the third time Japan intervened after six years of a hands-off approach ended in September 2010. The BOJ, at the behest of the Ministry of Finance, sold 692.5 billion yen ($8.8 billion) in March, when it led a coordinated effort with the Group of Seven to counter a jump in the yen on speculation insurers would repatriate foreign cash after the quake.
The dollar touched its weakest level since 1995 last week, according to the Fed’s Trade-Weighted Broad Dollar index, undermined by evidence of a deteriorating American economy.
U.S. Struggling
A government report tomorrow may show the rate held at 9.2 percent in July, according to the median forecast in a Bloomberg survey, up from 8.8 percent in March. U.S. gross domestic product expanded at an annual rate of 1.3 percent last quarter, from a near-stall of 0.4 percent in January to March.
The dollar’s status as the world’s reserve currency “appears to be slipping,” an advisory panel to the Treasury Department said yesterday. The Treasury Borrowing Advisory Committee, which includes representatives from firms ranging from Goldman Sachs Group Inc. to Pacific Investment Management Co., said the outperformance of haven currencies and those from emerging nations has aided in the debasement of the dollar’s reserve status, a release by the Treasury showed.
In Europe, policy makers have failed to contain a crisis that’s required a second bailout of Greece. Spanish and Italian 10-year government bond yields reached euro-area record levels this week on concern that increasing debt-servicing costs and stunted growth may wipe out the benefits of fiscal tightening.
Japan’s Contraction
Japan’s challenges have been compounded by the earthquake and tsunami that wreaked 16.9 trillion yen of damage, according to a government estimate, and left the economy shrinking for an estimated three straight quarters through June.
Prime Minister Naoto Kan has implemented two supplementary budgets totaling 6 trillion yen to contend with spending needs including emergency housing for the displaced. A third package may come in at 10 trillion yen, ruling party officials have said.
The appreciation in the yen is hurting Japanese pharmaceutical companies, and the currency on its own doesn’t warrant strengthening, Yasuchika Hasegawa, head of the Japan Association of Corporate Executives, told reporters in Singapore yesterday. “We, as an industry, are in a very tough situation,” said Hasegawa, who is president of Osaka-based Takeda Pharmaceutical Co., Asia’s largest drugmaker.
“Ongoing one-sided moves would hurt Japan’s economy at a time when everyone is working hard to rebuild the nation from the earthquake,” Noda said at a press conference in Tokyo today. Asked whether intervention can be effective, he said “we need to take bold action against disorderly and speculative movements.”
The finance chief declined to comment when asked if authorities would keep selling the yen. In the weeks following the September intervention, the currency returned to previous levels. After the coordinated March 17 move, it still appreciated 2.4 percent the following month.( Bloomberg)
Shares of GUINNESS ANCHOR BHD (GAB)advanced at midday on Thursday, Aug 4.
At 12.10pm, GAB was up 16 sen to RM10.86 with 49,900 shares done.
According to Amresearch, recent report that stabilising malting barley and hops in the second half of 2011 – key inputs for brewers – may also partially offset price surge effects seen in 1H.
Mah Sing has been given the first contract for the RM9 billion privatised urban regeneration project in Kuala Lumpur
Kuala Lumpur: Asie Sdn Bhd has dished out the first contract for the RM9 billion privatised urban regeneration project in Kuala Lumpur to Mah Sing Group Bhd, Malaysia's fifth largest property developer by revenue.
The contract given to Mah Sing entails it to undertake a niche development on 1.6ha.
Called M Sentral, it will feature serviced residences and retail lots worth a combined RM900 million.
The urban regeneration project, dubbed Tamansari Riverside Garden City and mooted more than 10 years ago, is one of key developments under the Entry Point Projects.
Asie, a private concessionaire, has full rights and approvals to build residential and commercial properties, leisure, recreation and infrastructure facilities on 15 parcels of development land with five air rights in Precinct 2-Pekeliling of the River Corridor Development under the Blue Corridor policy of Kuala Lumpur City Plan 2020.
Located on 23ha along Jalan Tun Razak-Jalan Pahang, the former site of the Tunku Abdul Rahman flats or Pekeliling flats, the 15-year project is envisaged to be bigger than Mid Valley City.
Yesterday, Mah Sing's wholly-owned unit, Grand Pavilion Development Sdn Bhd, signed a joint venture agreement (JVA) with Asie and its subsidiary Usaha Nusantara Sdn Bhd to develop M Sentral.
Under the JVA deal, Usaha Nusantara will grant Grand Pavillion the sole and absolute rights to develop the 1.6ha land for an entitlement of RM106.60 million. This will be settled via 60 per cent in cash (RM63.96 million) and 40 per cent stake in Grand Pavillion.
Mah Sing will continue to have 60 per cent shareholding in Grand Pavillion, it said in a statement issued yesterday.
Mah Sing group managing director and group chief executive officer Tan Sri Leong Hoy Kum said work on M Sentral will commence by the first half of next year, pending authorities' approval and fulfillment of conditions. It will take five years to develop.
Leong said there is a provision for a sky bridge's connection to the remaining 58 acres, in line with the understanding that Mah Sing may be the potential joint venture partner for other parcels within the land, subject to terms and conditions to be mutually agreed upon.(Business Times)
MELBOURNE: Plantation Industries and Commodities Minister Tan Sri Bernard Dompok and Malaysian timber and palm oil officials have met several Australian lawmakers in Canberra to lobby against a parliamentary move that could threaten Malaysia’s palm oil industry.
The Australian Senate last month passed “The Truth in Labelling Palm Oil” Bill which is now on its way to the House of Representatives.The Bill has been pushed by the independent senator Nick Xenophon with the support of the Greens, Zoos Victoria, the World Wildlife Fund and Greenpeace.
Xenophon, with votes from the Liberal-National Party Coalition, was successful in having the Bill passed while the ruling Labor party opposed it.
If the three pro-government independents vote with the Gillard government, then the Bill will be defeated in the House of Representatives preventing it from becoming law.
Xenophon had earlier said he wanted consumers to know if their food contained palm oil, now generally labelled as “vegetable oil”.
Dompok met Xenophon at the Parliament House on Monday and gave a detailed explanation as to how palm oil was safe and that orang-utans were protected in Sabah and Sarawak.
“I have invited Senator Xenophon and other concerned legislators to visit Malaysia to see first-hand that oil cultivation had not endangered the orang-utans,” Dompok told Bernama. “I told them the orang-utan is a far more protected species now than before because our government and the palm oil industry have done a great deal of work to protect their welfare and existence. “Wildlife and Green groups have fed the Australian public a lot of misconception and misinformation about oil palm and the orang-utan.” (BERNAMA)
Catcha Media Bhd shares surged in active trade on Wednesday, Aug 3, outperforming the broader weaker market on news that Datuk Justin Leong Ming Loong, grandson of late casino tycoon Tan Sri Lim Goh Tong emerged as a substantial shareholder.
At 11.19am, Catcha was up 24.5 sen to 81 sen. There were 8.24 million shares done.
The 30-stocks FBM KLCI fell 10.29 points to 1,544.56. Turnover was 370.46 million shares valued at RM464.45 million. Losers hammered gainers 528 to 88.
The Edge FinancialDaily reported Leong acquired a 5.01% stake in Catcha Media.
Leong acquired the 6.663 million shares on Monday from the open market. (theedgemalaysia.com)
Asian markets tanked on Wednesday, Aug 3, extending their losses as US stocks fell steeply overnight after the wrangling over the debt ceiling eased off and investors turned their attention to the stalling economy.
According to Reuters, on Tuesday, more weak US economic data fuelled concern about the economy even as Congress passed a debt-cutting measure in time to avoid a default.
US consumer spending fell in June for the first time in nearly two years and incomes barely rose, signs the economy lacked momentum as the second quarter drew to a close.
That followed Monday's weak manufacturing data from the United States, Europe and China and last week's disappointing second-quarter US GDP estimate, which reinforced fears that slowing economic growth could dampen oil demand, it said.
The FBM KLCI fell 13.33 points to 1,541.52 at mid-morning.
Market breadth was negative as losers thumped gainers by 457 to 51, while 155 counters traded unchanged. Volume was 203.91 million shares valued at RM234.54 million.
At the regional markets, Japans’ Nikkei 225 fell 2.21% to 9,627.11, Hong Kong’s Hang Seng Index lost 2.34% to 21,897.12, Taiwan’s Taiex down 2.51% to 8,369.23, South Korea’s Kospi tumbled 2.99% to 2,057.87, Singapore’s Straits Times Index lost 2.04% to 3,112.13 and the Shanghai Composite Index shed 0.76% to 2,658.88.
Among the losers, Nestle fell 60 sen to RM47, BAT down 44 sen to RM46.24, DiGi 22 sen to RM30, Petronas Gas and HLFG down 20 sen each to RM13.24 and RM13.02, Genting 18 sen to RM10.74, Tradewinds 17 sen to RM9.41, MISC 15 sen to RM7.40, Top Glove 13 sen to RM5.22 and Jaya Tiasa 11 sen to RM6.51.
U.S. stocks fell,for a sixth day, as slower- than-forecast growth in manufacturing.
Health-care stocks fell 2.5 percent, the most among 10 groups in the S&P 500, after Medicare announced an 11.1 percent rate cut for next year. The S&P 500 Financials Index (S5FINL) dropped 0.6 percent, reversing an early gain, which had been driven by optimism that lawmakers would race to push through a compromise to raise the U.S. debt limit by at least $2.1 trillion and slash government spending by $2.4 trillion or more.
The S&P 500 lost 1.2 percent to 1,277.38 at 11:55 a.m. in New York after climbing as much as 1.2 percent earlier.
Meanwhile, Dow Jones Industrial Average retreated 130.10 points, or 1.1 percent, to 12,013.14 today after rising 139 points.
Manufacturing
Equities erased their gains as data showed U.S. manufacturing expanded in July at the slowest pace in two years, indicating the industry that’s been driving the economic expansion is starting to weaken.
Manufacturing indexes from Asia to the U.S. to Europe fell in July as demand weakened and the global recovery from recession lost momentum. U.K., Russian and Australian manufacturing shrank last month, while the pace of factory growth slowed in Europe and China.
About 53 percent of companies in the Stoxx Europe 600 Index that have reported earnings since July 11 missed analysts’ projections.
The benchmark gauge lost 3.1 percent in the period, the largest decline to start an earnings season since April 2010.
Investors have been relying on manufacturers in Germany and Scandinavia to buoy stocks after Europe’s debt crisis forced Greece to accept a second bailout and cut projections for bank earnings.
Spreading Crisis
The Stoxx 600 fell 8.9 percent from its 2011 high on Feb. 17 through the end of last week as 10-year bond yields climbed as high as 6.29 percent in Italy and Spain on concern the region’s debt crisis is spreading from Greece, Portugal and Ireland. A struggle between U.S. lawmakers to lift the nation’s debt ceiling and avoid a default by the world’s largest economy also contributed to the decline.
The gauge plunged 1.2 percent to 262.02 at the 4:30 p.m. close in London today after a report showed U.S. manufacturing expanded in July at the slowest pace in two years.
A total of 88 companies out of 167 in the Stoxx 600 that reported earnings since July 11 trailed estimates, data compiled by Bloomberg show, while, in the U.S., 78 percent of Standard & Poor’s 500 Index members topped forecasts. Makers of industrial goods accounted for the biggest number of disappointments, with 18 of 33 companies lagging behind projections, the data show. Profits climbed an average of 7.4 percent from a year ago, trailing analyst forecasts by 11 percent.
Kinsteel was up three sen to 72.5 sen with 810,000 shares traded today morning.
According to OSK Research in a note Aug 1 said that aside from the progress towards the commissioning of Perwaja’s concentration and pelletisation plant in 1HFY12 which may potentially contribute to savings of US$50 per tonne of iron ore pellet, it was also excited over the Terengganu state government’s readiness to consent to Perwaja’s application to mine iron ore in Bukit Besi, Terengganu.
As iron ore fine currently costs over USD160 per tonne free-on-board (FOB) vs the local cost of less than USD50 a tonne, the concession would certainly be lucrative.
This year, and particularly over the last month, our sushi-loving neighbours from the east have been forking out big sums to take over or participate in Malaysian assets.
everage firm Asahi Group Holdings Ltd, for example, made big news here two weeks ago when it inked a deal to take over CI Holdings Bhd's Permanis Sdn Bhd, a soft drinks company that is also the bottler for PepsiCo Inc in Malaysia, for a handsome RM820 million.
Not long after, and with less media fanfare, Proto Corp bought the Malaysian publisher of Motor Trader and Autocar Asean magazines for some RM109.7 million.
And earlier in April, in one of the largest merger and acquisition transactions done so far this year, Mitsui & Co Ltd took a 30 per cent stake in Khazanah Nasional Bhd's Integrated Healthcare Holdings Bhd, a Malaysian healthcare firm with a regional presence, for a whopping RM3.3 billion.
It was, in fact, the most sizeable investment ever by a Japanese firm in Southeast Asia's healthcare sector.
Then, there was Oji Paper Co Ltd's RM258 million takeover launch for packaging firm HPI Resources Bhd in June.
Of course, not to forget the retail giant Uniclo opening its stores here last year to huge, enthusiastic crowds and two of Japan's top banks - Mizuho and Sumitomo Mitsui Financial Group setting up commercial banks here this year.
It's quite clear that Japan's interest here extends into pretty much every sector.
This is good news for Malaysia, which needs to beef up its foreign direct investments (FDIs). The interest also comes at a time when investment and trade from within Asia are being encouraged.
The fact is, Japan has long been one of the major sources of FDI for Malaysia. While it was a deliberate move by the government to woo Japanese investors in the '80s in line with its Look East policy, this time around, economists said the sudden pick-up in Japanese interest can be put down to pure commercial and business reasons.
Japanese investors have been looking for opportunities and better returns in faster-growing economies like Malaysia and Indonesia, particularly after the earthquake-and-tsunami disaster in March looked set to crimp growth at home. (Business Times)
Having such a stake in companies such as Eastern and Oriental Bhd (E&O), certainly will gives them direct access in more property projects in Penang.
Based on the annual report of E & O, E&O, ie one of Penang's top property developers and land owners, has some 200ha in Penang alone worth RM1.1 billion. It also has sizeable landbank in Gombak, Ampang, Damansara Heights and other areas of Kuala Lumpur. And based on the latest announcement from Bursa Malaysia, several shareholders of E&O had been building up their stakes in the company between July 19 and July 22 2011, this certainly indicate something is happening in E & O there.
Meanwhile, as for SP Setia's three biggest shareholders are Permodalan Nasional Bhd with a 32.9 per cent stake, the Employees Provident Fund with a 14.47 per cent interest, and SP Setia president and chief operating officer Tan Sri Liew Kee Sin with 11.96 per cent share.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/sp_en_6.gif)
