apanese stocks rose, with the Nikkei 225 Stock Average paring its biggest monthly loss since August, as shipping companies and steelmakers rebounded.
Kawasaki Kisen Kaisha Ltd. (9107) and other shipping lines advanced, rising for a third day after the sector plunged by as much as 25 percent this month. JFE Holdings Inc. (5411) and Kobe Steel Ltd. (5406) both rebounded for a third day. Nikon Corp., a camera maker that depends on Europe for about a quarter of its sales, gained 1.5 percent on optimism the leaders in the region will boost efforts to end the debt crisis.
“Investors are likely to buy shares even on small news because stocks (TPX) have been sold too much globally on lingering debt issues in European countries,” said Seiichiro Iwamoto, who helps oversee about $35 billion in Tokyo at Mizuho Asset Management Co. “People in the market are swinging between joy and sorrow on even the smallest news from the region.”
The Nikkei 225 (NKY) gained 1.1 percent to 8,377.74 as of 12:36 a.m. in Tokyo. For the month, the gauge has lost 6.8 percent amid signs Europe’s crisis is spreading to the region’s major economies. The broader Topix gained 0.8 percent to 721.72 today.
The Standard & Poor’s 500 Index (SPXL1) gained 2.9 percent yesterday in New York after Thanksgiving retail sales climbed to a record amid speculation European leaders will do more to tame the debt crisis. U.S. retail sales during the holiday weekend increased 16 percent to $52.4 billion, the National Retail Federation said on Nov. 27, citing a BIGresearch survey.
Shippers, Steelmakers
Shipping lines and steelmakers gained the most among the 33 Topix industries groups today, rebounding after the sectors plunged by at least 35 percent this year.
Kawasaki Kisen, which sank by more than 60 percent this year, gained 4.6 percent to 136 yen. Shares gained even after the Nikkei newspaper reported the shipping line will likely post a net loss of 32 billion yen ($409 million) this fiscal year on sluggish demand from the U.S. and Europe.
Mitsui O.S.K. Lines Ltd., the nation’s No. 2 shipping line by revenue, rose 2.9 percent to 247 yen. The shares have fallen by about half this year.
JFE Holdings advanced 4.2 percent to 1,381 yen. Kobe Steel climbed 1.8 percent to 116 yen. The companies have dropped more than 40 percent this year.
Japanese stocks gained even after the jobless rate rose for the first time in three months, adding to evidence that the nation’s post-earthquake rebound is fading. The unemployment rate increased to 4.5 percent in October.
Exporters to Europe
Japanese exporters to Europe advanced today. Nikon gained 1.5 percent to 1,770 yen. Ricoh Co., a maker of cameras and office-equipment that depends on the region for more than 20 percent of its sales, rose 2 percent to 680 yen.
In Europe, German newspaper Welt am Sonntag reported German Chancellor Angela Merkel and French President Nicolas Sarkozy are discussing an agreement under which member states will commit to tighter budget discipline without waiting for treaty changes. The newspaper did not say where it got the information.
“There are increasing expectations that some additional support for the European debt crisis will come out at the European summit meeting next month,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. “The expectations won’t last long and the markets will likely react nervously to European news.” (Bloomberg)
TIME (FV RM0.70- BUY) 9MFY11 Results Review: Almost on The Dot
Time dotCom’s (TDC) operating revenue was below expectations at 67% and 66% of
our and consensus full-year estimates, owing to the absence of global bandwidth sales.
However, higher private leased line and domestic bandwidth sales drove core EBITDA
margins to a record 34% in 3QFY11. With its minority shareholders recently approving
management’s corporate proposals, TDC is poised to become a regional wholesale
service provider in 1QFY12, which is a future catalyst for the stock. We are maintaining our BUY, at a revised FV of RM0.70 (excluding contributions from the entities to be acquired), which effectively provides an 8.5% upside from the current price level.
KFC (FV RM4.08-BUY) 9MFY11 Results Review: Not Much to Crow About
MEDIAC (FV RM1.47– BUY) 1HFY12 Results Review: Staying on Course
KIMLUN (FV RM2.15-BUY) 9MFY11 Results Review: Intact on All Fronts
PERWAJA (FV RM1.54-BUY) 9MFY11 Results Review: Awaiting Upstream Makeover
MRCB (FV RM2.50- TRADING BUY) 9MFY11 Results Review: Progressing a Tad
Slower
IJMPLNT (FV RM3.42-BUY) 6MFY12 Results Review: Stage Set For Double-Digit
Growth
SIME (FV RM9.64-NEUTRAL) 1QFY12 Results Review: Upping Fair Value to RM9.64
IJM (FV RM5.74-NEUTRAL) 1HFY12 Results Review: A Rather Surprising Letdown
SOP (FV RM6.51-BUY) 9MFY11 Results Review: More Blowout Results
KULIM (FV RM4.80-BUY) 9MFY11 Results Review: Maintains Winning Streak
Market Review
Still skittish. The FBM KLCI closed over 16 points lower ahead of the long weekend asinvestors took profit on blue chips after the recent gains. The headlines over the weekend are: (i) Khazanah highlighted that non-Bumiputra firms can acquire non-core assets divested by GLCs and (ii) ROC Oil is keen on more oil projects in Malaysia with its local partner, Dialog Group. On the results front, Sime Darby reported a 64% y-o-y jump in net profit, Kulim posted a 40% fall in 3Q earnings, MRCB's 3Q numbers surged 191% while KFCH's earnings fell 12%. We expect sentiment to remain skittish albeit the stronger close across Asian markets yesterday coupled with gains overnight in the US and Europe over better Thanksgiving weekend sales and hopes of a recovery in the Eurozone respectively should pare down the earlier losses today.(OSK Wealth Management Trading)
KUALA LUMPUR (Nov 29): Shares of PROTON HOLDINGS BHD [] rose to an intra-morning high of RM3.23 on Tuesday as UOB Kay Hian Malaysia Research raised the target price to RM3.05 on a possible takeover.
At 11.32am, it was up 11 sen to RM3.19. There were 1.10 million shares done at prices ranging from RM3.16 to RM3.23.
UOB Kay Hian Research upgrade Proton to a Hold from Sell previously raised its target price to RM3.05, after imputing a 15% discount (vs 30% previously) to RNAV.
“Should Proton be able to dispose the loss-making Lotus Group, every RM100 million raised from this potential disposal could add 20 sen/share to Proton’s RNAV,” it said.
The research house said there was some truth to the constant speculation of Proton’s impending takeover, after seeing Proton’s somewhat bullish share price action (uptrend but with high volatility) over the past two weeks, recent consolidation in the auto industry (MBM Resources buying Hirotako), ongoing reforms by ailing GLCs (eg Malaysia International Shipping Corporation (MISC) has just announced its decision to cease its liner operations, once thought to be a “sacred cow”).(theedgemalaysia.com)
SAN FRANCISCO (Nov 28): Facebook, the world's largest Internet social network, is preparing for a initial public stock offering next year, according to a source familiar with the matter.
Facebook is exploring raising $10 billion, the Wall Street Journal said on Monday. It hopes the offering will value the company at more than $100 billion, according to WSJ, which first reported the story.
Facebook's Chief Financial Officer, David Ebersman, had discussed a public float with Silicon Valley bankers but founder and Chief Executive Officer Mark Zuckerberg had not decided on any terms and his plans could change, the Journal said.
The social network, which now claims more than 800 million members after seven years of explosive growth, has not selected bankers to manage what would be a very closely watched IPO. But it had drafted an internal prospectus and was ready at any moment to pull the IPO trigger, the Journal cited people familiar with the matter as saying.
At $100 billion valuation, the company started by Zuckerberg in a Harvard dorm room would have double the valuation of Hewlett-Packard, the Journal said.
A formal S-1 filing could come before the end of the year, though nothing was decided, the newspaper added.
A Facebook representative declined to comment.
Silicon Valley start-ups have this year begun to test investor appetite for a new wave of dotcoms. If it does debut in 2012, Facebook's IPO would dwarf that of any other dotcom waiting to go public.
"Farmville" creator Zynga has filed for an IPO of up to $1 billion. In November, daily deals service Groupon debuted with much fanfare, only to plunge below its IPO price within weeks.
LinkedIn and Pandora are now also trading significantly below the levels their stocks reached during their public debuts earlier this year.
Facebook has become one of the world's most popular Web destinations, challenging established companies such as Google Inc and Yahoo Inc for consumers' online time and for advertising dollars.
Facebook does not disclose its financial results, but a source familiar with the situation told Reuters earlier this year that the company's revenue in the first six months of 2011 doubled year-on-year to $1.6 billion.
Eric Feng, a former partner at venture capital firm Kleiner Perkins Caufield & Byers who now runs social-networking site Erly.com, said that the cash Facebook will get in an IPO would allow them to make more acquisitions and refine or work on new projects, such as a rumored-Facebook phone or a netbook.
Having tradeable stock will also allow Facebook to attract more engineering talent who might have been more attracted to the company in earlier days when it was growing faster but now perhaps might be attracted to other companies. "It'll be a powerful bullet for them," said Feng.
Investors have been increasingly eager to buy shares of Facebook and other fast-growing but privately-held Internet social networking companies on special, secondary-market exchanges.
Facebook said in January that it will exceed 500 shareholders this year, and that in accordance with SEC regulations, it will file public financial reports no later than April 30, 2012.(Reuters)
SapuraCrest Petroleum Bhd executive vice-chairman and president Datuk Seri Shahril Shamsuddin will be group president and chief executive officer (CEO) of the new merged entity between the company and Kencana Petroleum Bhd.
Datuk Mokhzani Mahathir, who is Kencana CEO, will be the enlarged group’s executive vice-chairman, according to letters sent by the former and Shahril to their respective staff.
The letters, obtained by Business Times yesterday, also noted that the Securities Commission (SC) had approved the merger proposal a few days ago.
Datuk Hamzah Bakar, currently chairman of SapuraCrest, will be nominated group chairman, Shahril said in his letter.
“It is critical that we put in place a strong and dynamic organisational structure that would ensure business continuity and realisation of the synergies we hope to derive as a merged entity.
“I would like to assure each and everyone of you that you will continue to be an important part of the new organisation.
“As founding members of this new organisation, it is incumbent upon all of us to ensure that the organisation continues to grow and chart new territories as a global oil and gas player,” he said.
Mokhzani said he and Shahril had come up with a “winning management” formula.
“We have decided that we both can lean on each other to strengthen the prospects of two already successful companies. Neither will take a back seat to the other. We will both helm the company and chart its way forward.
“With the approval from SC now obtained, the journey towards merging the two companies will really begin in earnest,” Mokhzani added.
The RM11.85 billion merger will create the largest oil and gas (O&G) service provider by asset in the country.
Once completed, the SapuraCrest-Kencana group will be the world’s fifth largest oil and gas service provider.
Under their cash and share swap deal, special purpose vehicle Integral Key Sdn Bhd will buy all the assets and liabilities of SapuraCrest for RM5.87 billion and Kencana for RM5.98 billion.
Following the SC approval, the next hurdle will be for both companies to secure 75 per cent of shareholders' approval each before the deal can go through.
Shahril said SapuraCrest will call for an extraordinary general meeting (EGM) to vote on the deal on December 14.
Kencana, meanwhile, has set December 15 for its EGM.
Shahril, via Sapura Technology Bhd, owns a 40.1 per cent stake in SapuraCrest, while Mokhzani's investment firm, Khasera Baru Sdn Bhd, owns a 32.4 per cent stake in Kencana.
Other key shareholders of Sapura is Norway-based Seadrill Ltd with a 23.6 per cent stake, while Kencana has Kumpulan Persaraan Wang with a 6.8 per cent stake in it.
Both Sapura and Kencana have a common shareholder in the Employees Provident Fund with a 10.1 per cent stake and 7.8 per cent stake respectively in the companies.
(Business Times)
NEW YORK: US equity markets tanked Wednesday as a poor German government debt auction fuelled fears over Europe's fiscal crisis and weak growth in the eurozone, a major US trading partner.
Markets spent the day stuck in negative territory after Germany was able to sell only part of an issue of German 10-year bonds, considered the gold standard of eurozone debt.
"The European debt crisis escalated after a failed German government-bond auction indicated that investors are now demanding higher risk compensation even at the heart of the currency bloc's debt market," said Robert Brusca, chief economist at FAO Economics.
The Dow Jones Industrial Average tumbled 236.17 points (2.05 percent) to finish at 11,257.55.
The broader S&P 500-stock index dropped 26.25 points (2.21 percent) to 1,161.79, while the tech-rich Nasdaq slid 61.20 points (2.43 percent) to 2,460.08.
US stocks were under solid pressure "as the ongoing eurozone debt crisis is conspiring with resurfacing global economic concerns, courtesy of disappointing manufacturing data out of China and Europe," Charles Schwab analysts said.
A batch of US economic data was mixed ahead of the Thanksgiving Day holiday Thursday, when US markets are closed.
US consumers spent less than expected in October despite seeing a rise in earnings, government data showed, as businesses also trimmed big-ticket durable goods orders this month amid the threat of a global slowdown.
New claims for US unemployment insurance rose only slightly last week from seven-month lows, suggesting stabilization in the weak job market where the unemployment rate is at 9.0 percent.
Financial stocks were under pressure after the Federal Reserve's post-market announcement Tuesday that it will stress-test 31 major US banks next year.
Bank of America dived 4.3 percent, Citigroup fell 3.9 percent and JPMorgan Chase shed 3.5 percent.
KKR fell 2.5 percent to US$11.50. The investment firm and three partners said they were buying most of privately held Samson Investment Company, a leading US energy producer, for US$7.2 billion.
Groupon shares plunged 15.5 percent to US$16.96, falling below their initial US$20 public offering price for the first time since the online daily deals site made its debut on the Nasdaq three weeks ago.
Among the rare gainers was farm machinery maker Deere, up 3.9 percent after earnings beat market expectations. (AFP)
MALAYSIAN BULK CARRIERS BHD (Maybulk) shares retreated on Thursday after its net profit fell 99% to RM371,000 for 3QFY11 ended Sept 30, from RM87.75 million a year earlier.
At 10.25am, Maybulk lost seven sen to RM1.59 with 309,600 shares done.
Maybulk’s revenue declined 60% to RM44.4 million compared with RM109 million a year earlier. Basic earnings per share for the quarter fell to 0.04 sen versus 8.77 sen a year earlier.
CIMB Research cut its target price for the stock to RM1.65 from RM1.81 previously, and maintained its Underperform call on the stock while cutting earnings numbers since the contribution from the expired Tenaga contract was more substantial than earlier thought.
“We continue to apply a 20% discount to our SOP-based target price, similar to other bulk shipping stocks.
“As forewarned, the expiry of the lucrative Tenaga contract in June sent bulk earnings tumbling this quarter. 9M core profit came in slightly below our estimates at 70% but was only 51% of consensus numbers. Brace for sizeable consensus downgrades,” the research house said on Thursday. (theedgemalaysia.com)
CONTINUITY: Firefly managing director Leong's departure will not affect airline's new business plan but is still a loss of talent, say analysts
ANALYSTS see the departure of Firefly managing director Datuk Eddy Leong as a minor scrape to already bleeding Malaysia Airlines (MAS).
"I don't see how it will affect the future business plan for MAS. It (the business plan) will be very much driven by the chief executive officer (CEO) and deputy CEO," one analyst said.
Leong, prior to the announcement of his departure, was part of the senior management team of MAS, designated as the chief operating officer of short-haul business and Firefly turboprop.
Another analyst who also declined to be named acknowledged, however, that it was a shame to see one of the more dynamic characters in MAS leave the company.
"There are a lot of gaps that need to be filled in MAS and internal promotions have not fared well before," he said.
The news comes just a day after analysts declared that a teleconference with the new management of MAS did nothing to allay investors' fears.
Analysts were told that an even bleaker fourth quarter was expected for the airline, with a potential for operational breakeven in 2012.
According to analyst reports, MAS is also banking on recovering Pre-Delivery Payment for aircraft amounting to RM3 billion to tide it over its operational losses.
Its cash reserve currently stands at RM1 billion.
Analysts have been told that a bleaker fourth quarter is expected for the national airline, with a potential for operational breakeven expected only in 2012. (Business Times)
O&G INTEREST Sarawakian Tiong Chiong Hiiung's purchase of 8.15pc stake comes amid talk that rival Dayang Enterprise is looking to do the same
A Sarawakian chicken breeder has emerged as a substantial shareholder in oil and gas firm Perdana Petroleum Bhd.
Tiong Chiong Hiiung has bought an 8.15 per cent stake by virtue of his direct shareholding in Achiever Development Sdn Bhd.
Achiever is believed to be a vehicle of the Tiong family in Sarawak.
Tiong is also the managing director of the publicly-traded CCK Consolidated Holdings Bhd, a company founded by his father Datuk Tiong Su Kuok.
The elder Tiong currently serves as the non-executive chairman of CCK.
The Tiong family owns slightly above 36 per cent of CCK Consolidated via two private companies, namely Central Coldstorage Sarawak Sdn Bhd and S.K. Tiong Enterprise Sdn Bhd.
The emergence of the Sarawakian business man in Perdana Petroleum comes at a time when there has been speculation that a rival Sarawakian party is looking into buying a significant stake in the company.
Dayang Enterprise Holdings Bhd said in October that it may buy a strategic stake in Perdana Petroleum, as part of a potential collaboration with the offshore marine support provider.
Perdana Petroleum now has a fleet of 22 offshore marine vessels comprises anchor-handling tug supply vessels, work barges, work boats and platform supply vessels.
Under the company's fleet expansion and renewal programme, 14 new vessels will be delivered over the next one to two years, Perdana Petroleum said on its website.
For the six months ended June 30 2011, Perdana Petroleum posted revenue of RM140.35 million versus RM108.28 million in the same period a year ago.
Group pre-tax profit for the financial year in review, meanwhile, stood at some RM803,000 versus a pre-tax loss of RM30.67 million a year ago.
As for CCK, it recorded group-level revenue of RM391.97 million for the financial year ended June 30 2011, versus RM351.21 million a year ago.
Group pre-tax profit stood at RM25.53 million versus RM24.35 million before. The company has slightly more than RM25 million in the bank, its unaudited accounts revealed. (Business Times)
YTL Corp Bhd saw its first quarter net profit decline by 9.7 per cent to RM251.8 million, mainly due to losses incurred in its mobile broadband business.
The company - which has investments in the power, cement, property development and others - registered a 3.1 per cent increase in revenue at RM4.54 billion for the first quarter ended September 30.
"The 2012 financial year has shown a promising start, with revenue increasing marginally over the same period last year, owing predominantly to the group's multi-utility businesses," Yeoh said in a statement yesterday.
Group net profit for the first quarter was slightly down on the back of a loss incurred in the "Yes" mobile broadband division operated by a subsidiary of YTL Power, which started commercial operations about a year ago.
This was not unexpected given the nature of the business and the front-end loaded ca-pital outlay required to build their nationwide network, he added.
YTL Corp expects its 4G operations to continue to pick up steam and begin recording a profit once the necessary scale has been reached.
Its unit YTL Power Bhd, which is also where its mobile broadband business is parked in, registered a 4.4 per cent increase in revenue to RM3.63 billion.
Net profit, however, was 9.8 per cent compared to the first quarter of last year.
YTL Cement Bhd saw revenue improve 17.6 per cent to RM544.7 million during the quarter. Net profit increased 4.4 per cent to RM75.8 million, despite higher production costs and increase in electricity tariffs that impacted the division's profit.
Its property development arm YTL Land & Development Bhd saw a slight decline in its net profit at RM2.9 million, versus RM3.2 million a year ago.
The decline was due to timing differences of project launches by its units and increase in operating expenses.
YTL Corp said it had early this week completed part of the final stage of the ongoing rationalisation of its retail and hospitality REITs with the acquisition of eight hotels by Starhill REIT. They included The Ritz-Carlton KL, the Vistana chain of hotels, and the Pangkor Laut, Tanjong Jara and Cameron Highlands luxury resorts.
This will enable Starhill REIT to focus fully on a single class of hotel and hospitality-related assets.
"Internationally, the trust is in the process of completing its acquisition of the Hilton Niseko in Japan. In addition, the group completed the restructuring of its property development business on November 4," he said. YTL Corp shares declined 1 sen to RM1.43 yesterday. (Business Times)
Asian stocks fell, heading for a third week of losses, while metals dropped and the South Korean won weakened as Europe’s debt crisis spread and concern mounted that bad loans in China increased.
The MSCI Asia Pacific Index fell 1.5 percent as of 12:17 p.m. in Tokyo, reaching the lowest level in almost six weeks. Standard & Poor’s 500 Index futures were little changed after the U.S. equity benchmark sank 1.7 percent yesterday. Copper lost 0.5 percent and nickel and zinc fell more than 1 percent. The won declined 0.6 percent to 1,136.70 per dollar. Oil, which slid below $100 a barrel yesterday, sank 0.1 percent to $98.71.
“The fear is that Europe is deep in recession,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “That will make the debt situation worse.”
Investors drove up the funding costs of France and Spain as the countries sold 11.6 billion euros ($15.6 billion) of debt yesterday. The China Banking Regulatory Commission told lenders last week that loans to property developers are likely to sour as sales slow, said a person with knowledge of the matter who declined to be identified because the instructions were private.
Growth in Southeast Asian economies may have peaked last quarter as the European debt crisis and Thai floods hurt the outlook for exports. Malaysia’s gross domestic product increased 4.8 percent in the three months through September from a year earlier, after a 4 percent expansion the previous quarter, based on the median of 25 estimates from a Bloomberg News survey taken before a central bank’s report today.
Nikkei, Kospi
S&P 500 futures rose less than 0.1 percent to 1,215.20. The U.S. stock gauge has lost 3.8 percent in the past four days and closed yesterday at the lowest level in a month.
About five stocks fell for each that rose on the MSCI Asia Pacific Index. Japan’s Nikkei 225 Stock Average lost 1.3 percent, South Korea’s Kospi tumbled 2.1 percent and Hong Kong’s Hang Seng Index retreated 1.8 percent.
China Vanke Co., the nation’s biggest listed property developer, sank 4.5 percent in Shenzhen, southern China. Evergrande Real Estate Group Ltd. (3333) and Agile Property Holdings Ltd. fell more than 2 percent in Hong Kong. China’s banking regulator said banks should cut “high-risk” loans to developers, the person with knowledge of the instructions said.
China’s home prices fell in 33 of 70 cities monitored by the government in October, the statistics bureau reported today. That’s the worst performance since the government expanded property curbs and scrapped the reporting of its national average housing data this year.
Greek Bailout
Debt in the property industry is “certainly something Chinese authorities need to focus on, but the information I have tells me that it’s an issue that government will be able to control and they have enough ability to withstand the size of defaults,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion.
The euro was within 0.2 percent of a five-week low versus the yen as discussions progressed between Greece’s government and banks on terms of a voluntary debt swap that is part of the country’s international bailout. The 17-nation currency traded at $1.3465 from $1.3458 yesterday in New York and has declined 2.1 percent this week.
German Chancellor Angela Merkel rejected yesterday French calls to deploy the European Central Bank as a crisis backstop, defying global leaders and investors calling for more urgent action to halt the turmoil. Merkel listed using the ECB as lender of last resort alongside joint euro-area bonds and a “snappy debt cut” as proposals that won’t work.
Most Bearish
Copper dropped 0.5 percent to $7,492.50 a metric ton, having fallen as much as 2.1 percent today. The metal is set for a 1.8 percent decline this week, the third weekly drop. Zinc weakened 1.2 percent to $1,903.25 a ton and nickel slipped 1.9 percent to $17,801.
Copper traders and analysts are the most bearish in almost two months because of mounting concern that Europe’s debt crisis will curb demand in the region that accounts for about 19 percent of global consumption. Eleven of 23 surveyed by Bloomberg expect the metal to decline, the second consecutive week that their outlook worsened and the highest proportion since Sept. 23.
The cost of protecting corporate and sovereign bonds from default in the Asia-Pacific region rose, according to traders of credit-default swaps. The Markit iTraxx Japan index increased 6 basis points to 192, Deutsche Bank AG prices show. That would be its highest close since Oct. 26, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. (Bloomberg)
Japan’s economy expanded for the first time in four quarters as exports recovered from a record earthquake, an expansion that is already slowing because of weakening overseas demand.
Gross domestic product grew at an annualized 6 percent in the three months ending Sept. 30, the fastest pace in 1 1/2- years, the Cabinet Office said today in Tokyo. At 543 trillion yen ($7 trillion), economic output was back to levels seen before the March 11 earthquake, the report showed.
Japan’s return to growth after three quarters of contraction was driven by companies including Toyota Motor Corp. making up for lost output from the disaster. A sustained rebound will depend on how much reconstruction demand can offset a slowdown in global growth as Europe’s debt crisis damps global confidence and an appreciating yen erodes profits.
“GDP will slow very sharply in the current quarter,” said Kiichi Murashima, chief economist at Citigroup Global Markets Japan Inc. in Tokyo. A yen trading near World War-II highs and Europe’s fiscal woes are “very strong headwinds” for the nation’s manufacturers, he said.
Expansions in Asian nations from China to South Korea to the Philippines are already showing signs of cooling. International Monetary Fund Managing Director Christine Lagarde said on Nov. 12 that Japan needed to swiftly implement reconstruction spending.
Europe’s Woes
The GDP figure was inline with the 5.9 percent median forecast of 26 economists surveyed by Bloomberg News. The yen traded at 77.16 per dollar as of 12:37 p.m. in Tokyo, from 77.18 before the report. The Nikkei 225 Stock Average rose 1.2 percent amid optimism new governments in Greece and Italy will help contain European fiscal woes.
Personal consumption rose 1 percent from the previous three months in the third quarter, led by an increase in durable goods purchases and exceeding forecasts, and overseas shipments advanced 6.2 percent, today’s report showed.
“Market interest has already shifted to a slowing down in the fourth quarter, and the first quarter of next year,” Junko Nishioka, chief economist at RBS Securities in Tokyo said in a Bloomberg Television interview. Nishioka predicted the pace of growth will dip below 2 percent in the first half of 2012.
Japan’s rebound is likely to slow to 2.1 percent this quarter, according to the average forecast of 42 analysts surveyed by the Economic Planning Association, a government- affiliated body, released last week.
Reconstruction Work
“Japan’s economic growth will remain elevated, mainly on domestic demand,” said Masaaki Kanno, chief Japan economist at JPMorgan Chase & Co. (JPM) in Tokyo and a former Bank of Japan official. “Especially from the first quarter, we expect reconstruction work in the Tohoku region to support the economy,” he said, referring to the northeast region struck by the temblor.
Companies plan to cut machinery orders for the first time this year in the quarter ending Dec. 31, a government survey last week showed, a sign growth will slow even as government spending for reconstruction takes effect. Industrial production fell for the first time since the March disaster in September.
“We’re aware that the environment surrounding the Japanese economy is becoming more harsh,” Motohisa Furukawa, the economy minister, told reporters in Tokyo today. “A further slowdown of overseas economies as well as fluctuations of the yen and stock prices may pose downside risks to Japan’s economy, and we must pay close attention to these factors.”
Currency Losses
Publicly traded companies have lost 301 billion yen ($3.9 billion) in currency transactions because of the stronger yen, a report by Tokyo Shoko Research Ltd., a credit research company, showed last week. Nintendo Co., the world’s largest maker of video game consoles, forecast its first annual loss in at least 30 years.
Toyota’s second-quarter profit fell a bigger-than-expected 19 percent to 80.4 billion yen in the quarter ended Sept. 30. Even so, Asia’s biggest automaker has been hiring temporary workers to help make up for lost output after the March earthquake and tsunami that left about 19,000 dead or missing caused shortages of parts and electricity.
Japan’s currency last week advanced to its highest level since authorities intervened on Oct. 31, the day the yen reached a postwar record of 75.35 against the dollar. Prime Minister Yoshihiko Noda said in parliament on Nov. 11 that the government would sell yen as necessary.
‘Competitive Devaluation’
“The Ministry of Finance has been intervening more than they ever have,” Martin Schulz, a senior research fellow at Fujitsu Research Institute in Tokyo who has previously conducted research for the Bank of Japan (8301), said before the report. “This policy helps exporters and it produces liquidity, but it produces major disruptions in Asia in terms of competitive devaluation.”
The yen may remain at 77 per dollar until the end of March 2012, according the median analyst estimate compiled by Bloomberg. Former Japanese Finance Ministry official Eisuke Sakakibara said last month it may strengthen to the low 70s against its U.S. counterpart.
Japan’s central bank will hold a two-day policy meeting from tomorrow, after having expanded its asset-purchase program last month by 5 trillion yen to shield the economy from damage from the strong yen. In a Bloomberg News survey, 13 of 14 economists expected the BOJ to leave policy unchanged.
Japanese companies with factories in Thailand have also had to contend with record flooding in the Southeast Asian country. Unable to measure the extent of the damage, Toyota and Honda Motor Co. have scrapped their annual profit forecasts.
The lower house of parliament approved on Nov. 10 a third supplementary budget for the reconstruction of the quake- devastated northeast region of the nation. The 12.1 trillion yen budget comes on top of two packages worth a total of 6 trillion yen already pledged. (Bloomberg)
OCBC Investment Research has lowered its target price on Singapore property firm UOL Group (UTOS.SI) to $5.17 from $5.48 but maintained its buy rating.
OCBC said it cut its target price on UOL as it had applied a heavier 25% discount to revised net asset value to reflect the heightened macro-economic risks.
OCBC expected UOL to launch its 577-unit development at Bedok Reservoir in Singapore later this month at indicative price levels of $1,100-$1,200 per square foot.
But given that Singapore’s CapitaLand (CATL.SI), Southeast Asia’s largest property developer, would likely launch its 583-unit Bedok Residences in the same window at similar price levels, OCBC said it was cautious about UOL’s pace of sales going forward.
However, UOL has a solid track record of accretive land acquisitions and navigating the property cycle well, OCBC said, adding that the management would be actively seeking land as the company’s land bank was almost depleted.
At 11:08 a.m., UOL shares were up 2% at $4.53. The stock has fallen nearly 5% so far this year. (The Edge Singapore)
The FBM KLCI advanced at mid-morning on Monday, Nov 14 in line with the gains at key regional markets, and the higher close at Wall Street last Friday.
Asian stocks and the euro rose on Monday on hopes that new leaders in Italy and Greece will take decisive action to save their indebted nations from bankruptcy and fend off a wider financial meltdown in the euro zone, according to Reuters.
The FBM KLCI rose 11.53 points to 1,480.28.
Gainers led losers by 359 to 96, while 211 counters traded unchanged. Volume was 582.71 million shares valued at RM271.34 million.
At the regional markets, Japan’s Nikkei 225 rose 1.55% to 8,646.45, Hong Kong’s Hang Seng Index gained 2.21% to 19,560.18, the Shanghai Composite Index added 0.70% to 2,498.45, Taiwan’s Taiex rose 2.10% to 7,522.16, South Korea’s Kospi gained 1.99% to 1,900.55 and Singapore’s Straits Times index advanced 1.44% to 2,831.09.
BIMB Securities Research in a note Nov 14 said that although the clarity of both Greece and Italy had improved, the volatility of global equity markets remains high.
Investors’ sentiments was now running at high sensitivity to the Eurozone as outlook remains hazy with the slightest of uncertainty may well bring back the skepticism, it said.
Nonetheless at least for now, confidence was back with most major European bourses all charted positive gains on Friday, it said.
The research house said that as a consequence the Dow Jones Industrial Average also posted a strong comeback to breach the 12,000 mark again with a 259.89 point jump.
Regionally, it was a rather mixed Friday with the FBM KLCI ended 3.90 points lower to close at 1,468.75, just off the 1,470 immediate support level, it said.
“Looking ahead, we believe the current market consolidation to continue until we see more committed buying emerges.
“For now, we expect the benchmark index to retest the 1,490 resistance level over the immediate term,” it said.
Among the gainers on Bursa Malaysia, DiGi rose 62 sen to RM34.40, United PLANTATION []s 40 sen to RM18.30, Dutch Lady 30 sen to RM21.30, MAHB 28 sen to RM6.48, Harvest Court and TSH Resources up 24 sen each to RM1.89 and RM3.69, Genting Plantations and KLK 22 sen each to RM8.14 and RM21.12, while BAT was up 20 sen to RM45.90.
Ingenuity Solutions was the most actively traded counter with 66.95 million shares done. The stock gained 1.5 sen to 7 sen.
Other actives included Compugates, Hibiscus warrants, DPS, SYF and Flonic.
Decliners at mid-morning included HELP, IJM Plantations, LTKM, Sunchirin and CMMT.(theedgemalaysia.com)
The euro rose from a one-month low versus the dollar amid optimism European leaders are tackling their debt crisis after Italy’s Senate approved an austerity bill yesterday and Greece swore in a new prime minister.
The 17-nation currency pared a weekly loss versus the greenback to 0.3 percent as Italian bonds rose, pushing yields below the 7 percent level that led Greece, Ireland and Portugal to seek bailouts. The euro fell earlier on concern the debt crisis was worsening and before data next week that may show the region’s economic growth stagnated.
“We had one week of good progress, and now hopefully we’ll have technocrats in charge in Greece and Italy,” said Greg Anderson, a senior currency strategist at Citigroup Inc. in New York. “Markets at this point will demand implementation. There’s a lot that needs to be done before the deep underlying fears are resolved.”
The euro declined versus the dollar to $1.3750, from $1.3792 on Nov. 4, after rallying 1.5 percent in the past two days. It touched $1.3484 on Nov. 10, the weakest level since Oct. 10. Europe’s shared currency slid 1.7 percent against the yen to 106.10, its biggest weekly loss since the five days ended Sept. 23.
The Japanese currency gained 1.4 percent to 77.20 per dollar, the most in a week since Aug. 12. The yen rose against all of its 16 most-traded peers after tumbling 3.1 percent last week, the most since April, following the Bank of Japan’s sale of yen on Oct. 31 to weaken the currency. Investors bet this week the nation would refrain from further aggressive steps.
Three-Month Gain
The yen gained 1.9 percent versus nine developed-nation peers over the past three months, according to the Bloomberg Correlation-Weighted Currency Indexes. The dollar climbed 4.1 percent, and the euro rose 0.5 percent.
The euro dropped 2.1 percent on Nov. 9, the most on a closing basis since August 2010, as Italy’s 10-year government bonds fell, pushing up yields to as high as 7.48 percent. The securities slid as LCH Clearnet SA, a clearing house that guarantees investors’ trades are completed, boosted the deposit it demands from clients to trade Italian government bonds.
The shared currency rebounded after Italy drew double the bids for the amount on offer at a bill sale and political wrangling in Greece, where the two-year debt crisis began, produced a new government charged with the immediate task of securing funds to avert an economic collapse. Former European Central Bank Vice President Lucas Papademos was sworn in yesterday as prime minster.
Italian Austerity Bill
The austerity legislation in Italy stemmed from a 45.5 billion-euro ($63 billion) package initially passed by Parliament in September that helped convince the ECB to buy Italian bonds to try to contain surging borrowing costs.
In a bid to shore up international confidence, Prime Minister Silvio Berlusconi presented a timetable for implementing some of them to European Union leaders and is now converting that plan into law. EU leaders pushed the nation to implement it.
Group of 20 nations policy makers at a summit last week in Cannes, France, demanded details of a Greek rescue package and refused to commit new money to the region’s debt crisis, reflecting irritation with Europe’s failure to resolve it.
Italy’s Chamber of Deputies will give final approval to the austerity legislation today and Berlusconi will resign “a minute later,” Chamber Speaker Gianfranco Fini said. The new government may be led by former EU Competition Commissioner Mario Monti.
The euro region’s gross domestic product grew 0.2 percent in the third quarter, the same as in the second quarter and lowest level since the three months ended in June 2009, when it was contracting, according to analysts in a Bloomberg News survey before the EU reports the data Nov. 15.
Japan on Guard
The yen reached its strongest level versus the dollar yesterday since Japan intervened last month, touching 77.05. Finance Minister Jun Azumi said he’s on guard against speculative yen trades. He declined to comment on whether the nation has been selling the currency this month.
Japan took the action after the yen reached a post-World War II high of 75.35 per dollar on Oct. 31. Barclays Plc and Tokyo-based Totan Research Co. estimated the nation sold 8 trillion yen ($103 billion) that day, based on changes in the central bank’s balance sheet.
“There are indications the Bank of Japan stepped away from intervening after the G-20 summit,” Lee Hardman, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, said yesterday. “Now that risk of intervention is reduced, I would expect the yen to recuperate the losses it sustained.”
Dollar Index Falls
The Dollar Index was little changed for the week at 76.911 after better-than-forecast U.S. economic data help spur stocks and commodities to five-day gains. The number of Americans filing applications for unemployment benefits last week fell to the lowest level in seven months, Labor Department data showed, and consumer confidence rose more than projected this month, according to the Thomson Reuters/University of Michigan preliminary index of consumer sentiment.
The S&P 500 Index (SPX) 0.9 percent and the S&P GSCI Index of 24 raw materials jumped 1.9 percent.
The Canadian dollar climbed versus all of its most-traded counterparts except the yen. It gained 0.8 percent to C$1.0104 to the greenback.
South Africa’s rand dropped after Moody’s Investors Service lowered its outlook for the nation’s sovereign debt Nov. 10. The loss eased as investor risk appetite improved, and the currency ended the week down 0.4 percent to 7.9365 per dollar.(Bloomberg)
U.S. stocks rose this week, restoring the year-to-date gain for the Standard & Poor’s 500 Index, as improving economic data and leadership changes in Greece and Italy bolstered investor optimism.
Walt Disney Co. (DIS) and Cisco Systems Inc. (CSCO) advanced more than 5.4 percent, helping lead the Dow Jones Industrial Average (INDU) higher, after reporting better-than-estimated profits. Health- care stocks advanced the most in the S&P 500 as Merck & Co. gained 5.7 percent after increasing its dividend. E*Trade Financial Corp. slipped 14 percent after the board rejected putting the company up for sale.
The S&P 500 rose 0.9 percent to 1,263.85, overcoming a 3.7 percent decline on Nov. 9 that was the largest one-day loss since Aug. 18. The Dow advanced 170.44 points, or 1.4 percent, to 12,153.68 this week.
“With abated fears on Europe and abated fears on the U.S. economy, there is a general sense that the world is not going to come to an end,” Uri Landesman, who helps oversee $1 billion as managing general partner of New York-based hedge fund Platinum Partners LLP, said in a telephone interview. “Neither the bulls nor the bears are digging in their heels, so there is overreaction to the news.”
Stocks resumed the rally that drove the S&P 500 up as much as 20 percent since the first week of October. Equities gained after U.S. consumer confidence improved and Italy’s Senate approved debt-reduction measures, paving the way for a new government led by former European Union Competition Commissioner Mario Monti. Greece swore in Lucas Papademos to head a unity government.
Economic Surprises
The S&P 500 has rebounded 15 percent from a 13-month low on Oct. 3 as the Citigroup Economic Surprise Index for the U.S., which gauges whether reports are beating or trailing estimates, climbed to a seven-month high.
The benchmark measure of U.S. equities rose 2 percent yesterday, preventing a second weekly drop, after a gauge of consumer sentiment topped estimates in November and reached the highest level since June. The Labor Department said Nov. 10 that the number of Americans filing applications for unemployment benefits fell to the lowest level in seven months.
Stocks tumbled on Nov. 9 as yields on Italian government bonds surged, fueling concern European leaders will struggle to fund bailouts.
Focused on Europe
“It’s hard not to focus on the negative news from Europe, despite compelling corporate earnings reports and data at the micro level,” said David Sowerby, a fund manager with Bloomfield Hills, Michigan-based Loomis Sayles & Co., which manages more than $150 billion.
Walt Disney climbed 5.6 percent to $36.70 for the second- biggest advance in the Dow. Higher fees from pay-TV operators, advertising gains and improved results at resorts drove revenue and profit higher. Audience ratings for ESPN increased 13 percent in the quarter, according to Nielsen data provided by Barclays Plc. Disney resorts benefited from higher ticket prices and a new ship.
Viacom Inc. (VIA/B) rallied 9 percent to $44.90 for the biggest gain in the S&P 500. The owner of the MTV network and Paramount Pictures reported fourth-quarter profit and revenue that rose more than analysts estimated and boosted its stock-repurchase program by $6 billion.
Cisco, Merck
Cisco climbed 5.5 percent, third-most in the Dow, to $19.02. The world’s largest maker of networking equipment posted higher-than-estimated fiscal first-quarter profit. Chief Executive Officer John Chambers is eliminating jobs, scaling back operating expenses and revamping a management structure that slowed decision making.
Health-care companies in the S&P 500 increased 2.3 percent. Merck advanced 5.7 percent to $35.97 for the biggest increase in the Dow. The second-biggest U.S. drugmaker raised its dividend for the first time since 2004 and emphasized drug discovery in a meeting with analysts.
E*Trade lost 14 percent to $9.09. The online brokerage’s board rejected putting up for sale following a strategic review spurred by Citadel LLC, the company’s biggest shareholder. E*Trade hired Morgan Stanley in July to explore a sale and then replaced the bank with Goldman Sachs Group Inc. The broker initiated the review following Citadel’s request to address “catastrophic losses.”
Federal Budget
Computer Sciences Corp. (CSC) tumbled 18 percent to $26.48 for the biggest retreat in the S&P 500. The contractor for U.S. government agencies and companies reduced its fiscal 2012 profit forecast amid “federal budget uncertainty.”
Apple Inc. (AAPL) slumped 3.9 percent to $384.62 amid concern about a drop in supplier orders, indicating potentially weaker sales of the iPad and iPhone. Analysts at Cleveland Research Co. reduced their predictions for shipments of the iPad to 12 million from 14 million this quarter, citing information it gleaned from Apple’s suppliers. Ticonderoga Securities also said a survey of suppliers suggests slower sales of Apple gadgets.
Lowe’s Cos. advanced 7.3 percent to $23.11 for the second- biggest gain in the S&P 500. Pershing Square Capital Management LP’s Bill Ackman recommended at a conference that investors buy shares of the home-improvement retailer, according to a person who attended the presentation who declined to be identified.
“Demand for most stocks has improved, pushing prices higher,” James Stellakis, the founder and director of technical research at New York-based Technical Alpha, wrote in an e-mail. “But from a risk-reward standpoint, these gains have made stock selection much harder. Many stocks now trade midway between their recent buy and sell levels, and we can make a case for most names to rise and fall by the same amount.” (Bloomberg)
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) is likely to trend moderately higher towards 1,500 level next week, dealers said.
They said the leadership changes in Italy and Greece had raised hopes of a resolution to the eurozone debt crisis.
Affin Investment Bank head of retail research, Dr Nazri Khan, said the local market breadth was expected to be positive with important local sectoral indices such as financials, trading services, technology and small cap indices making a strong comeback after recent declines.
He said in spite of volatility in global markets due to the threat of economic slowdown, the local sentiment would remain resilient and traders should use temporary weakness in the local market to ride out potential year-end rally.
"As for the moment, we are pegging 1,500 and 1,530 as the major resistance while 1,460 and 1,430 as the major support for the local benchmark," he told said.
On downside risk, Nazri said, any new talks of radical overhaul and breakup of the European Union may unsettle investors and create a fresh wave of volatility in global financial markets.
Nazri recommended traders accumulate high-yield, defensive and small-cap stocks in the telco and utilities sectors (such as Yi Lai, Signature, NCB Holding and Century Logistic) which may rebound after undergoing a deep correction in the previous months.
He said Bank Negara Malaysia's decision to maintain the Overnight Policy Rate unchanged at three per cent amid a moderate global growth momentum should also be positive for the local market as it provided more certainty and stability in business funding cost.
On a Friday-to-Friday, the benchmark FBM KLCI declined 8.76 points to 1,468.75.
Bursa Malaysia's Finance Index dropped 132.08 points to 13,152.76, Plantation Index slipped 27.74 points to 7,519.15 and Industrial Index declined 16.81 points to 2,684.89.
The FBM Emas Index slipped 32.82 points to 10,039.33, FBM70 Index increased 10.86 points to 10,853.62, FBM ACE Index increased 68.87 points to 4,268.61 and FBM Top 100 Index decreased 44.12 points to 9,846.52.
Total volume increased to 9.203 billion shares valued at RM6.049 billion from 8.15 billion shares valued at RM7.22 billion last week.
The main market turnover rose to 6.784 billion shares worth RM5.72 billion from 5.76 billion shares worth RM6.91 billion previously.
Warrants slipped to 384.614 million units valued at RM34.419 million from 442 million units valued at RM36.75 million last Friday.
Volume on the ACE market went up to 2.009 billion shares worth RM289.039 million from two billion shares worth RM257.73 million last week.(Bernama)
The ringgit is expected to see range-bound trading next week as investors are likely to stay on the sidelines amid a wobbly global economic outlook, dealers said.
They said with the lack of progress in the eurozone debt crisis, investors were unlikely to take heavy positions.
The ringgit is expected to trade between 3.14 and 3.17 next week.
Meanwhile, Bank Negara Malaysia (BNM) has decided to maintain the Overnight Policy Rate at three per cent at its Monetary Policy meeting yesterday.
BNM said domestic demand would continue to be the anchor of growth, supported by private consumption and investment and reinforced by public sector spending and investment activities.
It said global growth momentum has moderated in recent months.
For the week just-ended, the ringgit fell against the US dollar at 3.1410/1450 compared with 3.1105/1150 previously.
It was quoted higher at 2.4362/4400 against the Singapore dollar from 2.4513/4564 last week but weakened against the yen to 4.0571/0649 from 3.9841/9921 last Friday.
The ringgit fell against the British pound to 4.992/9062 from 4.9754/9849 previously.
It appreciated against the euro to 4.2865/2936 from 4.2912/2990 last week.(Bernama)
Asian stocks and South Korea’s won rose for the first time in three days, and copper headed for the largest increase in a week after Chinese inflation eased and a pledge to resign by Italy’s prime minister eased concern Europe’s debt crisis will worsen.
The MSCI Asia Pacific Index rallied 1.4 percent as of 11:40 a.m. in Tokyo. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong jumped 2.6 percent. Standard & Poor’s 500 Index futures slipped less than 0.1 percent. The won strengthened 0.4 percent after South Korea’s unemployment rate unexpectedly fell. The euro was little changed at $1.3835. Copper rose 1.7 percent, while oil advanced for a sixth day. The cost of insuring Asia-Pacific debt from default decreased.
China’s consumer price inflation cooled to 5.5 percent in October from 6.1 percent the previous month, while producer prices fell by more than economists had forecast, signaling the government may be able to reduce measures to cool its economy. Italy’s Silvio Berlusconi agreed to step down after the approval of an austerity plan in a vote next week, following a surge in the nation’s bond yields to a euro-era record.
“Now that we see inflation easing, it suggests that Asian central banks can switch to a more pro-growth strategy,” said John Woods, Hong Kong-based chief Asian strategist at Citigroup Inc.’s private bank. “The markets will take the near-term resolution of political uncertainties in Europe positively,”
About seven shares advanced for every two that fell on MSCI’s Asian index, helping the gauge rebound from a two-day 0.9 percent loss. Japan’s Nikkei 225 Stock Average added 0.9 percent, Australia’s S&P/ASX 200 Index climbed 1.4 percent and South Korea’s Kospi Index gained 0.3 percent.
Nomura, Olympus
Nomura Holdings Inc. rose 7.4 percent in Tokyo, rebounding from yesterday’s 15 percent plunge, after Japan’s biggest securities firm said it is unaware of any involvement in Olympus Corp.’s concealment of losses. Olympus sank 20 percent, extending yesterday’s 29 percent plunge.
Industrial & Commercial Bank of China (1398) Ltd., the world’s largest lender by market value, gained 3 percent in Hong Kong, pacing an advance among Chinese companies. The decline in consumer prices matched analysts’ forecasts and was the slowest since May. The producer price index was expected to decline to 5.8 percent, according to economists surveyed by Bloomberg News.
“The trend is in favor of China taking measures to improve economic development,” Peter So, co-head of research at CCB International Securities Ltd., said in a Bloomberg Television interview in Hong Kong.
Copper, Oil
Copper for three-month delivery rose as much as 2.1 percent to $7,959.75 a metric ton on the London Metals Exchange, rebounding from a three-day, 1.3 percent decrease. Nickel added 2 percent and tin climbed 0.8 percent.
December-delivery oil rose 0.3 percent to $97.06 a barrel on the New York Mercantile Exchange. Prices climbed 1.3 percent yesterday to the highest settlement since July 28. U.S. gasoline supplies dropped 1.49 million barrels last week, the American Petroleum Institute said. An Energy Department report today may show they rose 1 million barrels, according to a Bloomberg News survey.
South Korea’s won strengthened as much as 0.9 percent to 1,111.38 per dollar. The unemployment rate fell to a three-year low of 3.1 percent in October from 3.2 percent the previous month, Statistics Korea said today. The median estimate in a Bloomberg News survey of 11 economists was for an increase to 3.3 percent. Taiwan’s dollar rose 0.2 percent to NT$30.055, and Malaysia’s ringgit gained 0.5 percent to 3.1120.
Berlusconi’s Pledge
The 17-nation euro traded at 107.40 yen from 107.52 yesterday and held onto a 0.4 percent gain versus the dollar. Berlusconi’s pledge to resign came after he failed to muster an absolute majority on a routine parliamentary ballot after key lawmakers defected from his party this week.
The yield on Italy’s benchmark 10-year bond jumped 11 basis points yesterday to 6.77 percent before Berlusconi’s announcement, the most since the euro’s introduction in 1999 and near the 7 percent level that drove Greece, Ireland and Portugal to seek international bailouts. The extra premium investors demand to hold the debt instead of German bunds closed at a euro-era record 497 basis points.
The cost of protecting Asia-Pacific corporate and sovereign bonds from default decreased, with the Markit iTraxx Japan index falling three basis points to 175 basis points, Citigroup Inc. prices show. The gauge is set for its biggest one-day drop since Nov. 4, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Treasury 10-year yields were little changed at 2.07 percent, following a four-basis-point increase yesterday. The U.S. is scheduled to sell $24 billion of 10-year securities today and $16 billion of 30-year bonds tomorrow, after an auction of three-year notes yesterday attracted the highest demand on record. (Bloomberg)
The stock rose 30.5 sen to RM1.18, while the warrants rose by 30 sen a piece to close at RM1.05.
Nazifuddin, who was recently appointed as a director of the company, bought 2.04 million shares at 84.5 sen.
This is believed to be his first purchase of Harvest Court shares, bringing his shareholding in the company to 1.19 per cent.
Filings to the stock exchange also show that Harvest Court's second largest shareholder, Datuk Raymond Chan Boon Siew, who controls Sagajuta (Sabah) Sdn Bhd, had also bought more shares in the company.
Chan bought 5.1 million shares at 84.9 sen a piece on the open market last Friday, Bursa Malaysia's record shows.
Nazifuddin is also a director in the privately held Sagajuta.
However, some of the other directors in Harvest Court have been selling their shares.
A check by Business Times showed that managing director Ng Swee Kiat sold 600,000 shares and almost six million warrants, while non-executive director and chairman of the company's audit committee, Chua Eng Chin, sold 329,400 shares.
Jupiter Securities head of research, Pong Teng Siew, told Business Times that the directors might sell their stakes to make way for new shareholders and new businesses.
He said the timber industry was getting tougher as timber resources were depleting, especially in Sabah and Sarawak.
"They have to find new business income streams. Therefore, new shareholders may emerge," Pong said.
The rapid rise in Harvest Court's share price has given a steroid-like boost to other retail stocks over the past couple of weeks.
Harvest Court's rise in recent weeks has been dramatic, and this has been matched almost blow for blow by rises in the value of its warrants.
The one-for-one warrants, which expires on November 19, 2019, has a conversion rate set at 25 sen.
This means that an investor who buys the warrant will have to add an extra 25 sen to convert the warrants to the mother share.
The long life of the warrant may have prompted investors to take a risk, but analysts pointed out that Harvest Court has already received as many as two unusual market queries from the stock exchange.
The last time the market had been set abuzz by a penny stock was early this year, when Ho Wah Genting rose to RM1 a share from 36.5 sen in a span of two months. (Business Times)
Singapore stocks are expected to rise after Italian Prime Minister Silvio Berlusconi offered to resign once the government approves austerity measures, easing concern Europes’s debt crisis will damp the earnings outlook for Asian exporters.
Singapore’s Straits Times Index gained 0.6% to 2,866.52 at the close. Four stocks rose for every three fell in the index of 30 companies. Here are some stocks to watch:
Wilmar International, the agribusiness group, posted a 24% increase in net profit to US$321 ($406.5 million) for the quarter ended September 30, 2011 (3Q2011). Revenue was up 69% to US$13.1 billion for the quarter driven by higher sales volume and prices of agricultural commodities as well as contribution from the sugar segment.
Mainboard-listed integrated property developer Overseas Union Enterprise has reported a 84.4% fall in net profit of $19.9 million for the third quarter (3Q2011) ended 30 September 2011 compared to the year ago period.
Del Monte Pacific announced today that third quarter (3Q2011) net profit more than doubled to US$7.8 million ($9.9 million) from US$3.3 million a year ago while revenue increased 19% to US$105.3 million from US$88.4 million.
Kencana Agri says net profit for 3Q2011 fell 79% to US$460,000 ($584,407) from $2.2 million a year ago due to the exchange loss of US$1.4 million which came mainly from the translation of US$ borrowings.
Tiong Woon Corporation Holding has posted a 23% fall in net profit after tax of $1 million in the first quarter ended 30 September 2011 compared to $1.3 million in the previous corresponding quarter.
Kreuz Holdings, the subsea service provider for the oil and gas industry, reported its profits more than quadrupled to US$5.9 million ($7.5 million) for the three months ended September 30, 2011 (3QFY2011) from US$1.3 million in the year-ago period (3QFY2010). Revenue more that doubled to US$34.1 million from US$13.6 million. Meanwhile, Kreuz also announced it has won contracts from Swiber worth US$57.5 million.
China Sunsine Chemical Holdings says it posted a 17% fall in net profit to RMB28.2 million ($5.7 million) in 3Q2011 from RMB33.8 million in 3Q2010 mainly due to a 28% increase in administrative expenses as well as higher income tax expense.
Cosco Corporation (Singapore) says unit, Cosco (Dalian) Shipyard Co., has delivered a new build 30,000 dwt multipurpose heavy lift carrier, the Kraszewski, to its buyer.
UE E&C has reported a 216% jump in net profit of $17.5 million for the 3Q ending Sept (3Q2011) from $5.5 million a year ago (3Q2010) due to changes in the financial reporting standards of property developers.
Catalist-listed Tung Lok Restaurants (2000) reported a net loss of $0.6 million for the six months ended 30 September (1HFY12) compared to a profit of $0.3 million a year earlier (1HFY11) hit by lower sales as well by operating expenses which to rose $16.5 million from $0.5 million.
Mainboard-listed Sunpower Group, the China-based heat transfer technology specialist, says wholly-owned subsidiary, Jiangsu Sunpower Technology Co. has secured a US$8.6 million ($10.91 million) contract with Ma’aden Bauxite and Alumina Company to supply 72 heat exchangers. Ma’aden Bauxite and Alumina Co. is a joint venture between the Saudi Arabian Mining Company, Ma’aden and US aluminium giant, Alcoa Inc.
China Fishery Group has agreed to buy two Peruvian fishing companies for US$26.2 million ($33.2 million).
Hiap Seng has reported a 2Q net income jumps 70% to $3.6 million.
Wheelock Properties has reported a 3Q net income rose 8.5% from a year earlier to $80.8 million. (The Edge Singapore)
Bursa Malaysia Securities has queried Hibiscus Petroleum Bhd over the unusual market activity (UMA) of its shares recently.
“We draw your attention to the sharp increase in price and high volume of your company’s securities recently,” it said.
At 11.33am, Hibiscus was up two sen to 78.5 sen. There were 49.43 million shares done at prices ranging from 78 sen to 84 sen.
Bursa Securities advised investors to take note of the company’s reply to the above UMA query which will be posted at Bursa Malaysia’s website under the company announcements, when making their investment decision.(theedgemalaysia.com)
Asian stocks fell, South Korea’s won weakened and the cost of insuring bonds against default rose as data added to evidence that regional economies are slowing as Europe’s debt crisis curbs exports. The Australian dollar slid after the central bank cut rates for the first time in 31 months.
The MSCI Asia Pacific Index slipped 1.2 percent at 12:33 p.m. in Tokyo. Standard & Poor’s 500 Index futures lost 0.7 percent. The euro weakened 0.1 percent to $1.3839 and the yen was little changed, after a 3.1 percent slump yesterday. The won fell 0.4 percent and Australia’s dollar dropped 0.5 percent. The Markit iTraxx Australia index of debt-default risk was set for the biggest gain in four weeks. Oil retreated for a third day.
China’s manufacturing, South Korean exports and Taiwan’s economy are all expanding at the slowest pace since 2009, based on data released since late yesterday. Greek Prime Minister George Papandreou pledged to hold a referendum on the European Union’s latest bailout plan for the nation, days before Group of 20 leaders gather Nov. 3-4 for a summit in Cannes, France, to discuss the debt crisis.
“Markets are taking a second look and they see a lot of gaps” in Europe’s debt accord, Hans Goetti, chief investment officer for Asia at Finaport Investment Intelligence, said in a Bloomberg Television interview from Singapore. “The fundamentals point in the direction of a recession in the U.S. and Europe and in recessionary times, you do have earnings downgrades. The market has some downside going into 2012.”
Two shares declined for every one that gained on MSCI’s Asia Pacific Index. Japan’s Nikkei 225 Stock Average decreased 1 percent, Australia’s S&P/ASX 200 Index declined 1.1 percent and Hong Kong’s Hang Seng Index lost 1.6 percent.
Panasonic, Harvey Norman
Among the 379 companies that have released quarterly results on the MSCI regional index, 201 have missed analysts’ profit estimates, compared with 118 that beat forecasts, data compiled by Bloomberg show.
Panasonic Corp. sank 4.3 percent after the maker of Viera televisions forecast its biggest annual loss in 10 years. Harvey Norman Holdings Ltd. (HVN) dropped 5.1 percent in Sydney after Australia’s largest electronics retailer estimated pretax profit before slumped 19 percent in the last quarter.
Futures signal the S&P 500 may extend yesterday’s 2.5 percent retreat. The gauge still rallied 11 percent in October, the biggest monthly increase since December 1991. Data today may show the Institute for Supply Management’s factory index rose to 52 this month from 51.6 in September, according to the median forecast of 85 economists surveyed by Bloomberg News.
Treasury 10-year yields climbed three basis points to 2.14 percent, after sliding 28 basis points in the previous two days.
Europe’s Economy
The euro extended yesterday’s 2.1 percent loss against the dollar amid speculation a report tomorrow will confirm the region’s manufacturing shrank for a third month. That may add pressure on the European Central Bank to consider cutting interest rates as early as its next policy meeting on Nov. 3.
Greece’s Papandreou also told lawmakers he’ll seek a vote of confidence in parliament. The referendum on the EU accord, which called for a 50 percent writedown on Greek debt as well as an expansion of the region’s bailout fund, will likely be held after details are wound up, Papandreou said.
“Investors are looking at the details of the European deal and they’re not satisfied,” Russ Koesterich, the San Francisco- based global chief investment strategist for the IShares unit of BlackRock Inc., said in a Bloomberg Television interview. “The problem is the same one we’ve been facing since April 2010: The deal tends to piecemeal, it tends to be complex and it doesn’t provide the finality that investors have been looking for.”
Won, Taiwan Dollar
The won and the Taiwan dollar retreated from six-week highs. South Korea said its exports increased 9.3 percent in October from a year earlier following an 18.8 percent gain in September. The Taiwan dollar depreciated 0.4 percent to NT$30.035 after the statistics bureau said yesterday gross domestic product grew 3.37 percent in the three months through September, the smallest increase in two years.
The China Federation of Logistics and Purchasing said its Purchasing Managers’ Index fell to 50.4 in October from 51.2 the previous month. China is Asia’s biggest economy and the No. 1 export destination for South Korea and Taiwan.
The yen declined as much as 1.1 percent to 78.99 per dollar before trading at 78.15. Japanese Finance Minister Jun Azumi said in Tokyo he will “continue to intervene until I am satisfied,” after yen sales yesterday that Credit Suisse Group AG analysts estimated may have exceeded $50 billion.
The Australian dollar weakened to $1.0502. The central bank lowered interest rates by a quarter of a percentage point to 4.5 percent and said inflation is now likely to be close to target.
Bond Risk, Oil
The cost of protecting Asia-Pacific corporate and sovereign bonds from default rose, with the Markit iTraxx Australia index increasing 13 basis points to 173 basis points, according to Westpac Banking Corp. The gauge is set for its biggest increase since Oct. 4, according to data provider CMA, after rising 10 basis points yesterday by New York close of trading.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan jumped 10 basis points to 189.5 basis points, BNP Paribas SA prices show, while the Markit iTraxx Japan index rose eight basis points to 169.5, according to Deutsche Securities Inc.
Crude for December delivery slid 0.7 percent to $92.53 a barrel on the New York Mercantile Exchange. The contract extended its decline after the PMI report from China, the world’s second-biggest oil user. Futures rose 18 percent in October, the biggest increase since May 2009.
Copper in London dropped as much as 1.4 percent to $7,880 a metric ton, falling for the second day, as base metals declined on concern the deepening European debt crisis will damp demand for raw materials. Zinc slumped 2.4 percent to $1,951.25 a ton.
Copper futures on the London Metal Exchange had open interest, or contracts outstanding, of 502,214 as of Oct. 24, the highest level since Dec. 16, 2008, exchange data on Bloomberg showed. The contract gained almost 14 percent last month, the most since December last year. (Bloomberg)
Shares of Jerneh Asia Berhad advanced today after it received a takeover offer from its major shareholder Kuok Brothers Sdn Bhd.
At 11.53am, Jerneh Asia was up six sen to RM1.42.
The FBM KLCI fell 7.5 points to 1,484.39. Turnover was 517.93 million shares valued at RM432.07 million. Declining stocks beat advancers 380 to 181 while 226 stocks were unchanged.
Kuok Brothers offered to buy the remaining 58.19% stake, which it does not own, for RM1.45 a share. At RM1.45, this is nine sen above Monday’s close of RM1.36 while the warrants ended at 40 sen.
Kuok Brothers and the parties acting in concert directly hold 102.02 million shares or 41.81% of Jerneh Asia.(theedgemalaysia.com)
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