Barefoot Investor: September 2011

Japanese stocks gained, with the Nikkei 225 (NKY) Stock Average rebounding from its lowest level since April 2009, on expectation European leaders will act to prevent the region’s sovereign-debt crisis from getting worse.

Sumitomo Mitsui Financial Group Inc. (8316) advanced 2.8 percent after European and U.S. lenders surged yesterday following a report that the European Central Bank may resume buying some loan-backed bonds. Canon Inc. (7751), a camera maker that depends on Europe for about a third of its sales, climbed 2.4 percent. Sumitomo Metal Mining Co., Japan’s second-largest copper smelter, jumped 3.3 percent after prices for the metal rose.

“Market psychology got a little boost on speculation the ECB will take some action,” said Yoshihiro Ito, chief strategist at Okasan Online Securities Co. in Tokyo. “Still, it’s too early to say the market has hit bottom.”

The Nikkei 225 rose 1.9 percent to 8,535.97 as of 12:31 p.m. in Tokyo. The broader Topix gained 1.8 percent to 741.64, with almost 10 times as many shares rising as falling. The gauge fell 19 percent this year through yesterday amid concern U.S. growth is sputtering and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest markets.

The Standard & Poor’s 500 Index climbed 2.3 percent yesterday after a euro-region central bank official said the ECB may discuss buying some loan-backed securities from banks at a policy meeting on Oct. 6. Bank of America Corp. and JPMorgan Chase & Co. rose at least 4.6 percent. Futures on the S&P were little changed today.
Lenders Advance

Sumitomo Mitsui Financial Group, Japan’s second-largest publically traded lender, climbed 2.8 percent to 2,135 yen. Mitsubishi UFJ Financial Group Inc. gained 3 percent to 339 yen. Japan’s biggest bank by market capitalization also got a boost after Daiwa Securities Group Inc. raised the lender’s investment rating to “outperform” from “neutral.”

The European Central Bank may also discuss offering 12- month loans to banks again at the Oct. 6 policy meeting, according to the official. Interest-rate cuts are likely to be discussed, though they are not on the agenda, the official said. A spokesman for the Frankfurt-based ECB declined to comment.

Japanese exporters to Europe advanced as the yen weakened against the shared currency. Canon gained 2.4 percent to 3,440 yen. Olympus Corp., an optical-equipment maker that generates more than 20 percent of its sales in Europe, jumped 5.5 percent to 2,396 yen. Shares also rose after Cosmo Securities Co. initiated coverage of the endoscope maker with a rating of “neutral plus” and a price target of 2,800 yen.
Sumitomo Metal

The euro gained to as much as 103.57 yen today in Tokyo, compared with 102.18 at the close of stock trading yesterday. A stronger euro boosts the value of some income for Japanese exporters.

Resource companies gained after copper futures for December delivery advanced for the first time in three trading days. Sumitomo Metal Mining jumped 3.3 percent to 1,059 yen. Mitsui Mining & Smelting Co. also climbed 3.1 percent to 201 yen.

Toshiba Corp. and Tokyo Electron Ltd., two Japanese companies among many that go ex-dividend tomorrow, both advanced at least 3.1 percent. Today is the last day to buy shares in the companies and still get a first-half dividend. (Bloomberg)


RAM Rating Services Bhd has reaffirmed the enhanced AAA(s) rating of Syarikat Mengurus Air Banjir & Terowong Sdn Bhd’s (SMART) medium-term notes of up to RM2.055 billion.

The ratings agency said on Tuesday, Sept 27 the long-term rating has a stable outlook.

To recap, SMART is a special-purpose company set up with the sole aim of undertaking the Storm-water Management and Road Tunnel Project in Kuala Lumpur.

Under the structure, all MTN issues are backed by facility payment certificates (FPCs) that represent payment undertakings by the Government.

RAM Ratings highlights that the FPCs represent the Government’s unconditional and irrevocable obligations regardless of whether the CONSTRUCTION and concession agreement is in existence.

“Given that the transaction has been structured such that the MTNs are independent from the overall risks of the company, the MTN holders only assume the credit risk of the Government. Therefore, the rating reflects the strength of the MTNs’ structure and the credit risk of the government,” it said.

Thus far, the first four series of the five MTNs, with a nominal value of RM411 million each, have been promptly and fully redeemed through the payments from the Government under the corresponding FPCs.

The payment date for the final series falls on Aug 30, 2012, after which the entire debt facility will be retired and cancelled.(


PROTON HOLDINGS BHD shares dipped at mid-morning on Tuesday, Sept 27 on concerns its sports carmaker-unit Lotus would remain loss-making in the next four years.

At 10.55am, Proton shed 5 sen to RM2.58 with 9,300 shares traded.

Last Friday, Proton had told analysts that Lotus was on track to turn around as the actual result on volume sold has exceeded the management’s target.

However, Affin Investment Bank Research said it expects Lotus to be a drag on the near-term domestic earnings trajectory, adding that implicit in its "depressed" earnings was a RM250 million earnings before interest and tax (EBIT) loss for Lotus.

On the fact that Lotus will be loss-making for few more years, Affin Research said it was not upbeat about Proton’s earnings prospects at least in the next one or two years.

According to the research house, Lotus CEO Danny Bahar confirmed that Lotus’ restructuring plan “is well within the guided timeframe”.

“Lotus is expected to be loss-making over the next four years as the management is in the midst of restructuring and developing new products before turning in profit in 2015,” it said.(


Japanese stocks fell amid signs of growing instability in the global financial system after the Federal Reserve said there are “significant downside risks” to the U.S. growth outlook and Europe’s risk watchdog said threats to the region’s banks have increased “considerably.”

Mitsubishi UFJ Financial Group Inc. (8306) led declines among Japan’s biggest lenders on growing international turmoil and after BNP Paribas SA said the country’s banking industry is “deteriorating.” Honda Motor Co., Japan’s second-largest carmaker, slid 4.6 percent. Softbank Corp. (9984) plunged 11 percent after a report the carrier will lose its position as the exclusive provider of Apple Inc.’s iPhone in Japan.

The Nikkei 225 (NKY) Stock Average lost 2.2 percent to 8,552.02 at 12:38 p.m. in Tokyo after investors were disappointed by a Fed plan to support growth in the world’s biggest economy by buying $400 billion of longer-term debt. The broader Topix index dropped 2 percent to 741.77, heading for the biggest drop since Aug. 19. Japan’s stock market will be closed tomorrow for a public holiday.

“The market had priced in the Fed’s plan,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “It won’t boost the economy much, while it may have a negative impact on earnings of financial institutions.”

‘No Surprises’

The Standard & Poor’s 500 Index slid 2.9 percent yesterday in New York, the biggest drop since Aug. 18, after the Fed announced a widely anticipated policy that investors dubbed “Operation Twist” because it’s designed to flatten the yield- curve to stimulate borrowing and investment. Financial shares plunged after Moody’s Investors Service cut its credit ratings for three major U.S. banks. Futures on the S&P 500 slipped 0.7 percent today.

“The Fed delivered no surprises, leaving markets facing sovereign-debt issues in Europe to which there is still no clear solution,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney. “Under the surface, we are moving quickly into a secondary credit crisis.”

The Topix has lost about 18 percent this year amid concern U.S. growth is sputtering and Europe’s debt crisis will damage the banking system, damping demand in two of Japan’s biggest export markets. The decline has cut the price of shares on the index to 0.89 times estimated book value, near the lowest since March 2009.
Risks Increase

The European Systemic Risk Board urged swift action from policy makers to tackle threats to the financial system that have increased “considerably” as the region’s sovereign debt crisis pressures banks.

“Key risks stem from potential further adverse feedback effects between sovereign risks, funding vulnerabilities within the European Union banking sector, and a weakening of growth outlooks both at global and EU levels,” the ESRB, Europe’s risk watchdog, said in a statement late yesterday. “Decisive and swift action is required from all authorities.”

Japanese lenders tumbled today after BNP Paribas initiated coverage on seven of the country’s largest banks, saying they have little chance of improving profitability.

Mitsubishi UFJ, the country’s biggest listed bank, declined 2.4 percent to 329 yen. Mizuho Financial Group Inc. (8411) slipped 1.8 percent to 112 yen, while Sumitomo Mitsui Financial Group Inc. (8316) dropped 2.4 percent to 2,076 yen.
‘Allowed to Fail’

Banking shares also fell in Tokyo today after Moody’s cut credit ratings for Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. The ratings service said “there is an increased possibility that the government might allow a large financial institution to fail, taking the view that contagion could be limited.”

Indexes tracking makers of cars and electronics contributed the most to declines on the Topix. Honda dropped 4.6 percent to 2,259 yen. Toyota Motor Corp. (7203), the world’s biggest automaker, fell 2.1 percent. Sony Corp. (6758), Japan’s biggest exporter of consumer electronics, slid 2.3 percent to 1,477 yen.

Softbank, Japan’s sole carrier of the iPhone, slumped 11 percent to 2,323 yen, falling the most on the Nikkei, after the Nikkei Business magazine reported that KDDI Corp. (9433) will begin selling the newest model of the smartphone in the domestic market. KDDI gained 1.3 percent to 637,000 yen. (Bloomberg)


China’s stocks fell after a measure of manufacturing weakened, the government said it will levy a new resources tax and Credit Suisse Group AG said funding may be tightened for developers.

China Shenhua Energy Co. sank the most in two weeks and China Petroleum & Chemical Corp. (600028) lost 1.9 percent after a preliminary manufacturing index released by HSBC Holdings Plc and Markit Economics dropped to 49.4. Poly Real Estate Group Co. plunged 4 percent, pacing losses by property companies, after Credit Suisse said the risk of default by developers is rising on possible credit tightening and weak sales.

“Companies’ earnings will slide in the third quarter as the tight monetary policy curbs economic growth and increases lending costs,” said Yang Delong, a fund manager at China Southern Fund Management Co., which oversees $21 billion.

The Shanghai Composite Index lost 1.7 percent to 2,469.36 as of the 11:30 a.m. local-time break. The measure has slumped 12 percent in 2011, extending last year’s 14 percent plunge, as the government increased measures to cool inflation that’s at the highest in almost three years. The CSI 300 Index (SHSZ300) dropped 2 percent to 2,715.71 today.

Stocks on the Shanghai gauge trade at 11.4 times estimated profit, after dropping to the lowest level on record this week, according to data compiled by Bloomberg.

The preliminary reading of 49.4 for the manufacturing index in September released today compares with the final reading of 49.9 for August and 49.3 for July. A reading below 50 indicates a contraction.
Slowing Growth

The pace of the nation’s economic growth will see a “noticeable” decline in 2011 to 2015 compared with the previous 10 years, Li Daokui, an adviser to the People’s Bank of China, said in an interview with Internet portal (NTES) It would be unrealistic to expect growth of above 9 percent in the next three years although expansion may be above 8 percent, he said.

A gauge tracking energy producers in the CSI 300 Index slid 2.2 percent. China Shenhua retreated 2.5 percent to 25.92 yuan, set for the biggest decline since Sept. 5. China Petroleum & Chemical, or known as Sinopec, dropped 1.9 percent to 7.08 yuan. PetroChina Co., the nation’s largest oil producer, fell 0.9 percent to 9.68 yuan.

China will levy a tax on resources based on their value and volume, according to a statement on the government’s website, citing a decision from a State Council meeting presided over by Premier Wen Jiabao. The country currently imposes resource taxes on producers of oil and gas as well as coal mining companies based on volume.
Profits Cut

China will set a benchmark rate of 5 percent that will vary across commodities, Du Ying, vice chairman of the National Development and Reform Commission, the top economic planner, said July 2010. The tax increase will cut profits of oil explorers including PetroChina, Sinopec and coal miners including China Shenhua and China Coal Energy Co.

The Shanghai Stock Exchange Property Index sank 2.5 percent, set for the lowest close since July 2010. Poly Real Estate retreated 4 percent to 9.96 yuan. China Vanke Co., the nation’s largest developer, slid 3.4 percent to 7.60 yuan.

A Reuters report that the China Banking Regulatory Commission ordered trust companies to inform the regulator of business dealings with Greentown China Holdings Ltd. may be a sign that China is trying to restrict financing sources for developers, Credit Suisse analyst Jinsong Du wrote in a report today. Greentown’s shares are traded in Hong Kong.
Financing Concerns

“If the Greentown news was true, investors are worried that the regulator will further tighten developers’ financing through trust funds,” said Johnson Hu, a Hong Kong-based property analyst of CIMB-GK Securities Research. “Financing through trusts accounts for quite a big pie of developers’ total financing, especially for those non-listed small and mid-sized developers.”

Tiffany Cheung, a Hong Kong-based head of investor relations at Greentown, didn’t respond to three messages left on her office voicemail from Bloomberg News seeking comment.

China’s stocks may drop in the fourth quarter as economic and corporate earnings growth slow and liquidity remains tight, according to UBS AG.

The property market will start “de-stocking” and that may cause weaker-than-expected recovery in industries dependent on the economy, Chen Li, head of China equity strategy at UBS, wrote in a report dated yesterday. The brokerage recommends stocks of food, beverage, clothing, telecommunication equipment and banks, according to the report.
’Operation Twist’

The MSCI Asia Pacific Index sank 3.5 percent on concern the Federal Reserve’s plan to buy $400 billion of bonds with maturities of six to 30 years through June, replacing shorter dated debt, will curb profit margins for global banks. The plan, dubbed “Operation Twist” after a similar program in 1961, will probably fail to lower the 9.1 percent unemployment rate, according to 61 percent of economists surveyed by Bloomberg before the announcement.

Jiangxi Copper Co., China’s biggest producer of the metal, fell 4.3 percent to 29.38 yuan. Yunnan Copper Industry Co. (000878) lost 3.5 percent to 18.58 yuan.

The three-month copper contract on the London Metal Exchange fell as much as 3.1 percent to $8,039.75 per metric ton to the lowest price since Nov. 17. (Bloomberg)


KUALA LUMPUR: Hong Leong Asset Management expects its total assets under management (AUM)) to grow to some RM4 billion by end of this year.

Its CEO Geoffrey Ng said the company, already with some RM3 billion under its banner, planned to launch at least two more funds to grow its AUM.

“We have a few funds in the pipeline.” Ng said at the launch of the Hong Leong Hong Kong Equity Optimiser Fund here on Thursday, Sept 22.

Hong Leong Asset Management had 33 unit trusts funds under its management as at June 30 this year. (


HSBC's China Flash PMI showed the Chinese factory sector contracted for a third consecutive month in September as both new orders and new export orders fell on slack global demand.

The flash Purchasing Managers' Index (PMI), designed to preview China's factory output before official data, was 49.4 in September, down from August's final reading of 49.9 and hovering below the 50-point mark for the third straight month.

Still, HSBC believes a PMI reading of as low as 48 in China still points to annual growth of 12-13 percent in industrial output and 9 percent expansion in gross domestic product, even if it indicates a contraction in factory activity on the month.

"Fears of a hard landing are unwarranted. External demand weakened a little, but official trade data still show solid export growth," said Qu Hongbin, China economist at HSBC.

"Resilient domestic demand is sufficient to support around 8.5-9 percent growth in the coming quarters," he said.

Both new orders and new export orders sub-indices fell further below the 50-point mark in September, reflecting weaker global demand. Other sub-indices that missed the 50-point mark include those for output, stocks of purchases and employment.

Factory price pressures, on the other hand, picked up in September, indicating Chinese policymakers still face difficult challenges to bring inflation under control.

Annual consumer inflation eased to 6.2 percent in August from a three-year high, while economic activity slowed, underlining expectations that the central bank may hold off on further policy tightening amid fears of a global slowdown.

The input price sub-index rose to 58.8 in September -- the highest in four months.

The flash PMI, compiled by British research firm Markit, is based on up to 90 percent of total responses to a monthly survey and is designed to be a snapshot of HSBC's final PMI.

This is the eighth month that HSBC has published a flash PMI for China. In August, the flash reading was 49.8, compared with the final reading of 49.9. (Reuters)


Shares of Southeast Asia’s largest lender DBS Group (DBSM.SI) fell as much as 2% on Monday, weighed by growing concerns the city-state may slip into a technical recession.

At 11:32 a.m., DBS was 1.9% lower at $12.39, while its smaller rival United Overseas Bank (UOBH.SI) was down 1.9% at $17.44 with 794,000 shares changing hands.

Oversea-Chinese Banking Corp (OCBC.SI) dropped 1.5% to $8.35.

“More people seem to be expecting Singapore to slip into a technical recession in the next few quarters,” a local trader said.

“Moreover with concerns about the global economy slowing down as well, all these factors are weighing on banking shares, which are a barometer for the economy.”

Nomura said in a report Singapore’s GDP growth fell to -6.5% seasonally adjusted quarter-on-quarter in the second quarter, and “recent events have raised the specter of another quarter of negative growth in Q3”. (The Edge Singapore)


Asian stocks fell after European policy makers failed to introduce a plan to stem the region’s debt crisis, dimming the earnings outlook for banks, exporters and raw-material producers. BHP Billiton Ltd. (BHP), the world’s biggest mining company, dropped 2 percent in Sydney as crude and metal prices sank. Esprit Holdings Ltd. (330), a clothing retailer with 83 percent of its sales in Europe, tumbled 16 percent in Hong Kong. Asian financial shares slumped, paced by Westpac Banking Corp. in Sydney. Industrial & Commercial Bank of China Ltd. slid 3.4 percent on speculation China won’t loosen measures to control inflation.

Investors were hoping for “a firm, positive response to Europe’s debt crisis,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “Instead, what they got was just greater uncertainty, and nothing was resolved.”

The MSCI Asia Pacific excluding Japan Index fell 2 percent to 406.26 at 12:03 p.m. in Seoul, extending two straight weeks of losses. More than five stocks retreated for each that rose. Markets in Japan are closed today for a public holiday.

South Korea’s Kospi Index slid 0.6 percent and Hong Kong’s Hang Seng Index dropped 2.4 percent. Australia’s S&P/ASX 200 Index lost 1.8 percent, while New Zealand’s NZX 50 Index declined 0.3 percent in Wellington. A report today from Westpac Banking Corp. (WBC) and McDermott Miller Ltd. showed New Zealand consumer confidence was unchanged in the third quarter.
Consumer Confidence

Futures on U.S. Standard & Poor’s 500 Index dropped 1.6 percent today. The gauge advanced for a fifth straight day on Sept. 16, capping a 5.4 percent weekly gain, after a report showed U.S. consumer confidence climbed.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 57.8 this month from 55.7 in August, the report showed. The median estimate of economists surveyed by Bloomberg News called for a reading of 57. The group’s measure of consumer expectations six months from now dropped to the lowest level since May 1980.

Asian stocks fell today after finance chiefs from the euro region said last week that the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation. Economic reports on Germany this week are forecast to show a decline in investor confidence and a slowdown in manufacturing in Europe’s largest economy.

Greece’s ability to avoid default hangs in the balance as international monitors assess whether Prime Minister George Papandreou can meet the conditions of rescue loans.
Aid Payment

European Union and International Monetary Fund inspectors will speak with Finance Minister Evangelos Venizelos today to judge whether the government is eligible for its next aid payment, due next month, and on track for a second rescue package approved by EU leaders on July 21.

“The fragility of the Greek position has the potential to threaten the solvency of euro banks, in turn creating added risk for the other highly leveraged European governments,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney.

BHP fell 2 percent to A$37.46 in Sydney. Rio Tinto Group, the world’s second-largest mining company by sales, lost 1.6 percent to A$70.15. Jiangxi Copper Co., China’s No. 1 producer of the metal, lost 4.4 percent to HK$17.84 in Hong Kong and Aluminum Corp. of China Ltd., the listed unit of nation’s biggest maker of the lightweight metal, slumped 1.6 percent to HK$4.39.
Oil, Metals

A measure of primary metals traded in London fell 0.4 percent on Sept. 16, while copper futures for December delivery declined 0.6 percent on the Comex in New York. Today, New York- traded copper sank as much as 2.2 percent. Crude oil for October delivery dropped 1.6 percent on the New York Mercantile Exchange on Sept. 16, and as much as 1.4 percent today.

Asian exporters also fell. Esprit tumbled 16 percent to HK$10.26. Li & Fung Ltd., a supplier of toys and clothes to Wal- Mart Stores Inc., retreated 4.6 percent to HK$13.56. Billabong International Ltd. (BBG), a surfwear maker that gets a fifth of its sales from Europe, fell 4.1 percent to A$3.02 in Sydney.

Westpac dropped 2.7 percent to A$19.39, while in Hong Kong, HSBC Holdings Plc, Europe’s largest bank by market value, lost 2.2 percent to HK$63.20.

The MSCI Asia Pacific ex Japan Index lost 13 percent this year through Sept. 16, compared with a 3.3 percent drop for the S&P 500 and a decline of 17 percent for the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 11.2 times estimated earnings on average, compared with 12.2 times for the S&P 500 and 9.6 times for the Stoxx 600.

China Inflation

Industrial & Commercial Bank slipped 3.4 percent to HK$4.61 in Hong Kong and Belle International Holdings Ltd., a Chinese retailer of women’s shoes, lost 2.4 percent to HK$13.98 after a report showed new-home prices rose in August in all 70 cities monitored by the government for the first time this year.

Prices in Beijing gained 1.9 percent from a year earlier, while those in Shanghai, the nation’s financial center, increased 2.8 percent, the statistics bureau said on its website yesterday.

China Coal Energy Co., a unit of the country’s second- biggest producer of the commodity, plunged 17 percent to HK$8.26 before trading in the stock was suspended in Hong Kong. Its parent, China National Coal Group Corp., was ordered to cease operations in China’s Shanxi province after flooding at a pit killed 10 people, Xinhua News Agency reported Sept. 17, citing provincial Vice Governor Li Xiaopeng.(Bloomberg)


Shares of SIME DARBY BHD fell to their lowest in 13-months in late morning on Monday, Sept 19, weighed down by the weak market sentiment despite the much improved earnings visibility.

At 11.42am, it was down 21 sen to RM7.79 with 7.06 million shares done.

The FBM KLCI fell 10.04 points to 1,420.89, partly weighed down by Sime’s losses. Turnover was 258.64 million shares done valued at RM423.37 million. There were 162 gainers, 280 losers and 269 stocks unchanged.

News reports said Sime Darby PLANTATION Sdn Bhd and Thai petrochemical company PTT Chemical International Pte Ltd, Emery Oleochemicals (M) Sdn Bhd will see its first significant investment involving Islamic bonds issuance worth RM480 million expected to be issued early next year.

Of the figure, RM416.2 million will be pumped into three expansion projects in Malaysia while the remaining will go into research and development and other smaller projects.

Another news report said that under the new stewardship of Sime Darby Bhd, the exclusive distributor for Caterpillar Inc is expected to benefit from Caterpillar's US$8.8 billion (RM27.28 billion) purchase of Bucyrus International Inc, from better sales of equipment and parts, lower production cost and improved service. (


Asian stocks climbed, with the regional benchmark index rebounding from its lowest level in more than a year, after French President Nicolas Sarkozy and German Chancellor Angela Merkel said Greece will stay in the euro zone.

Commonwealth Bank of Australia (CBA), the nation’s largest lender by market value, gained 1.3 percent in Sydney. Samsung Electronics Co., which receives 20 percent of its revenue from Europe, rose 3.1 percent in Seoul. S-Oil Corp. (010950), which refines and sells petroleum, surged 10 percent. Chipmaker Elpida Memory Inc. (6665) jumped 7.1 percent in Tokyo after saying it may shift some domestic production overseas to counter a strong yen. Taiwan Semiconductor Manufacturing Co. advanced 3.4 percent on higher dynamic random-access memory chip prices.

“Germany and France’s commitment to continue supporting Greece’s European Union membership diminishes the likelihood that it will be allowed to default,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne. “If Greece avoids default, it lessens any flow-on impact through the global banking system, which in turn is positive for Asian stocks.”

The MSCI Asia Pacific Index gained 1.3 percent to 117.78 as of 12:44 p.m. in Tokyo. All 10 industry groups on the measure rose, with about seven stocks gaining for every two that declined. The index yesterday fell to its lowest level since Aug. 25 last year. Concern the global economy was slipping back into a recession amid a worsening European-debt crisis triggered a 17 percent plunge in the MSCI Asia Pacific Index between this year’s high on May 2 and yesterday.
Greece and Europe

Japan’s Nikkei 225 Stock Average climbed 1.6 percent. South Korea’s Kospi Index rose 1.8 percent and Australia’s S&P/ASX 200 Index advanced 1.3 percent in Sydney. Hong Kong’s Hang Seng Index added 0.5 percent, while China’s Shanghai Composite Index was little changed.

Futures on the Standard & Poor’s 500 Index lost 0.2 percent today. In New York, the index advanced for a third day, rising 1.4 percent yesterday. Sarkozy and Merkel are “convinced” Greece will remain in the euro area, according to a statement issued by Sarkozy after they spoke to Greek Prime Minister George Papandreou by telephone.

Stocks also rose after U.S. Treasury Secretary Timothy F. Geithner said “there is no chance that the major countries of Europe will let their institutions be at risk in the eyes of the market.” At a meetings with European Union finance ministers on Sept. 16, Geithner will likely urge European governments to step up their crisis-fighting efforts.
Banks Gain

Commonwealth Bank of Australia gained 1.3 percent to A$44.55. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest publicly traded lender, rose 1.5 percent to 330 yen in Tokyo.

Financial shares provided the biggest support to the MSCI Asia Pacific Index as a group. Consumer discretionary stocks posted the second-biggest gain on the measure, rising 1.6 percent.

Samsung Electronics rallied 3.1 percent to 776,000 won in Seoul, the biggest boost to the MSCI Asia Pacific Index. Toyota Motor Corp. (7203), the world’s largest carmaker, gained 2 percent to 2,687 yen, while Honda Motor Co., which receives about 80 percent of its revenue from outside Japan, jumped 3.5 percent to 2,376 yen.

“We’re seeing some risk-on trading on hopes that the European issue will be pushed further down the road,” said Belinda Allen, senior analyst of investment markets research at Colonial First State Global Asset Management in Sydney, which oversees about $150 billion. “Despite the comments from the French and German leaders, Europe still has a lot of issues to work through that will impact markets over coming months.”
S-Oil, Elpida

S-Oil surged 10 percent to 120,000 won in Seoul as prices of paraxylene, used in synthetic fibers, gained ahead of winter season, according to Cho Seung Yeon, an analyst at HMC Investment Securities Co. The stock posted the biggest gain on the MSCI Asia Pacific Index.

Elpida jumped 7.1 percent to 575 yen. The company said it plans to shift some production from Japan to Taiwan as part of a plan to deal with a strong yen and an industry slump. Goldman Sachs Group Inc. said in a report today that the shift overseas by Elpida may help cut an surplus in dynamic random-access memory chips, which would be positive for DRAM prices.

Chipmakers boosted information technology stocks to the biggest gain among the 10 industry groups on the MSCI Asia Pacific Index after DRAM prices jumped. Taiwan Semiconductor Manufacturing advanced 3.4 percent to NT$69.5 in Taipei, and Hynix Semiconductor Inc. rose 5.5 percent to 20,950 won in Seoul.

The price of DDR3 2-gigabit dynamic random-access memory jumped 8.9 percent at yesterday’s close, the most since Jan. 28, according to data by TrendForce Corp.’s DRAMExchange.

The MSCI Asia Pacific Index declined 16 percent this year through yesterday, compared with a 5.5 percent drop by the S&P 500 and a 19 percent loss by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 11.6 times estimated earnings on average, compared with 11.9 for the S&P 500 and 9.4 times for the Stoxx 600. (Bloomberg)


Shares of BRITISH AMERICAN TOBACCO (M) Bhd and JT INTERNATIONAL BHD fell at midday on Thursday, Sept 15 on concerns of a hike in the tobacco duty in the Budget 2012 proposals which will be unveiled on Oct 7.

At 11.56am, BAT was down 56 sen to RM43.70 but in thin volume of 1,600 shares done while JTI lost 15 sen to RM6.45 with 13,000 units transacted.

The FBM KLCI was a marginal 0.55 of a popint up at 1,438.16 after closing at a 53-week low on Wednesday. There were 232.03 million shares done valued at RM370.32 million. There were 224 gainers, 241 losers and 272 stocks unchanged.(


Japanese stocks fell for a second day, with the Nikkei 225 (NKY) Stock Average headed for its lowest close in almost two and a half years, as exporters and banks tumbled amid speculation Greece may be nearing default.

Sony Corp. (6758), an exporter of consumer electronics that gets 21 percent of its sales in Europe, fell 2.6 percent as the yen’s advance to a 10-year high against the euro dimmed the earnings outlook. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender by market value, declined 2.4 percent on concern Europe’s debt crisis will hurt the global financial system. Sharp Corp. plunged 4.7 percent after Mizuho Securities Co. cut its target price on the maker of flat-screen panels.

The Nikkei 225 fell 1.9 percent to 8,569.66 as of 12:36 p.m. in Tokyo, headed for its lowest close since April 2009. The broader Topix slid 1.8 percent to 741.88 as speculation Germany is preparing for a Greek default spurred turmoil in financial markets worldwide.

“Rising default risks in Greece are stoking concerns about the financial system, which makes you think about the Lehman shock,” said Mitsuo Shimizu, an analyst at Cosmo Securities Co. in Tokyo.

Futures on the Standard & Poor’s 500 Index dropped 0.8 percent today. The index fell 2.7 percent on Sept. 9 in New York after three German officials said Chancellor Angela Merkel’s government is making plans to shore up banks if Greece defaults. The European Central Bank said Juergen Stark resigned from the executive board, suggesting policy makers are divided over how to fight the debt crisis. (Bloomberg)


Shares of Hong Leong Bank and Hong Leong Financial Group slipped in mid-morning on Monday, Sept 12 in line with the weaker markets and expectations of lower economic growth.

At 10.31am, HL Bank was down 40 sen to RM11.80 with 43,100 shares done while HLFG slipped 30 sen to RM11.22. The slide in the shares also was due to expectations of lower earnings ahead.

The FBM KLCI tumbled 19.12 points to 1,450. Turnover was 156.81 million shares valued at RM160.19 million. The broader market was weak with 362 losers to 59 gainers while 121 stocks unchanged.(


The FBM KLCI fell on Monday, Sept 12 in line with the decline at most key regional markets on escalating worries of the European debt crisis situation and mounting concerns of the global economy.

The 30-stock index declined, weighed by losses at blue chip counters including Petronas-linked stocks, Genting and PLANTATION []-linked counters.

Asian stocks fell and the euro remained under pressure on Monday after the resignation of a top German European Central Bank board member cast further doubt on Europe's ability to tackle its worsening sovereign debt crisis, according to Reuters.

Juergen Stark's plan to resign from the ECB's board underscored the internal divisions over its bond-buying programme -- one of the central bank's main weapons in fighting the debt crisis by forcing down yields of country's under pressure from the bond markets, it said.

At 10am, the FBM KLCI fell 14.63 points to 1,454.49. Market breadth was negative with 312 losers, 57 gainers and 90 counters unchanged.

Volume was 122.46 million shares valued at RM103.98 million.

At the regional markets, Hong Kong’s Hang Seng lost 3.10% to 19,250.54, Japan’s Nikkei 225 fell 2.01% to 8,562.47, Australia’s S&P/ASX 200 Index was down 2.88% to 4,073.80 and Singapore’s Straits Times Index shed 2.08% to 2,766.26.

Meanwhile, the China, Taiwan and South Korean markets were closed for the mid-autumn public holiday.

BIMB Securities Research in a note Sept 12 said fears of the still unresolved financial crisis in Greece prompted a sell down on European stocks which inadvertently affected Wall Street as well.

As a result, there was selling of equities across the board, it said.

“For Asia, we fear that regional bourses might get sucked into this current selling trend as investors are now becoming more allergic to negativities.

“Domestically we can expect some selling to emerge but envisage a lesser magnitude of decline. 1,450 remains the immediate support level for the FBM KLCI,” it said.

On Bursa Malaysia, Petronas Dagangan fell 34 sen to RM17.30, Petronas Gas 30 sen to RM13.30, PPB 28 sen to RM16.66, Genting 21 sen to RM9.56, KLK 20 sen to RM21.40, Hong Leong Bank 18 sen to RM12.02, BAT and HLFG 16 sen each to RM43.52 and RM11.36, Nestle 14 sen to RM49.30 and IOI Corp 12 sen to RM4.66.

Systech was the most actively traded counter with 9.64 million shares done. The stock declined three sen to 38 sen.

Other actives included E&O, Tejari, Timecom, Malton, TMS, Ramunia, Hubline and LBS.

Meanwhile, gainers included Shell, Kumpulan Europlus, E&O, Ark and Parkson.(


The FBM KLCI started off September on a positive note as bargain hunting on select blue chips sent the 30-stock index up by 1.85% on Friday, Sept 2.

The FBM KLCI gained 26.82 points to close at 1,474.09, lifted by gains including at CIMB, DiGi, KLK and Telekom.

However, analysts said the FBM KLCI was playing catch up with the regional markets, having lost out on the rally over the last four trading days since Bursa Malaysia was closed since Monday afternoon.

Regional and European markets, however, slipped ahead of the US jobs data due to be released later Friday that could be a yardstick for the economic giant’s growth momentum.

Meanwhile, signs that Greece will miss its 2011 deficit target of 7.6 percent underscored concerns about the euro zone debt crisis, prompting investors to lighten their risky assets, according to Reuters.

At the regional markets, Hong Kong’s Hang Seng Index fell 1.81% to 20,212.91, Japan’s Nikkei 225 lost 1.21% to 8,950.74, the Shanghai Composite Index was down 1.09% to 2,528.28, South Korea’s Kospi down 0.69% to 1,867.75, Taiwan’s Taiex shed 0.01% to 7,757.06 and Singapore’s Straits Times Index down 0.84% to 2,843.09.

UOB KayHian in a note Sept 2 said the best rebound plays were downtrodden liquid large caps that were delivering good earnings.

It said such companies on its Buy list were CIMB, Gamuda, GENTING BHD [] and UEM Land.

Other notable downtrodden companies include IOI Corp (Hold) and MMHC (Buy) although MMHC would be a ‘second liner’ mover given its latest disappointing results, it said.

Notable downtrodden mid-small caps include MRCB (Buy), it said.

“While the global equity markets are taking a respite, we remain cautious and expect equity markets to resume their downtrend, potentially until mid-4Q11.

“Hence, upside to the rebound plays could be capped,” it said.

On Bursa Malaysia, DiGi was the top gainer and added RM1.04 to RM31.26; Lafarge Malayan Cement added 41 sen to RM7, Harrisons 40 sen to RM3.80, Petronas Dagangan and KLK 36 sen each to RM18 and RM21.68, CIMB 33 sen to RM7.40, Parkson 31 sen to RM5.73, Tasek and Quality Concrete 30 sen each to RM7.56 and RM1.54, Telekom 21 sen to RM4.36 while Petronas Chemicals gained eight sen to RM6.30.

Axiata was the most actively traded counter with 45.99 million shares done. The stock fell two sen to RM4.70.

Other actives included E&O, CIMB, Petronas Chemicals, DVM, Telekom, Maybank and AirAsia.

Decliners meanwhile included Metrod, Masterskill, Hong Leong Industries, Faber, Petrol One, SapuraCrest and Southern Acids. (


Gold gained for a second day in London as concern about slowing growth drove equities lower and boosted demand for the metal as an alternative investment.

European equities fell before a report that may show the U.S. economy, the world’s largest, added fewer jobs last month as the jobless rate held above 9 percent. Advanced economies will probably return to recession as governments toughen austerity measures, said Nouriel Roubini, who predicted a bubble in U.S. house prices before the market peaked in 2006.

“Bullion is still well supported, as investors are afraid to liquidate their longs amid ongoing policy uncertainty in both the U.S. and Europe,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote today in a report. “All eyes are on the jobs report in the U.S. today.”

Immediate-delivery gold gained $21.83, or 1.2 percent, to $1,847.97 an ounce by 9:37 a.m. in London. The metal reached a record $1,913.50 on Aug. 23 and is up 1.1 percent this week. Gold for December delivery was 1.2 percent higher at $1,850.30 on the Comex in New York.

Bullion is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal is up 30 percent this year, outperforming global stocks, commodities and Treasuries.
‘Double-Dip’ Risk

“I don’t see a global recession in the sense that emerging markets will still grow robustly,” Roubini, chairman of Roubini Global Economics LLC, told Bloomberg Television today in an interview from Cernobbio, Italy. “Certainly there’s a risk of a double-dip recession in most advanced economies. One of the differences compared to the past is that we’re running out of policy bullets.”

A report due at 8:30 a.m. in Washington will show U.S. payrolls rose by 68,000 in August, down from a 117,000 increase in July, according to economist estimates. The Labor Department release may also show the unemployment rate remained unchanged at 9.1 percent.

“Employment is going to be a key issue for the U.S. for some time,” Zhang Jingjing, an analyst at Nanhua Futures Co., said by phone from Beijing today. “And until there’s some improvement in the job market, QE3 remains a real possibility and continues to be supportive of gold,” she said, referring to so-called quantitative easing.
ETP Holdings

Exchange-traded-product holdings were at 2,144.1 metric tons yesterday, little changed since Aug. 29, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on Aug. 8.

Silver for immediate delivery rose 1.5 percent to $42.21 an ounce. Platinum was up 0.5 percent at $1,859 an ounce. Palladium was little changed at $784.50 an ounce.

HSBC Securities USA Inc. raised its 2012 and 2013 price forecasts for platinum and palladium as increased automotive and industrial demand is expected to outpace mine supply. Platinum will average $1,875 next year, up from a previous outlook of $1,750, and palladium will average $810, up from $750, New York- based analyst James Steel wrote in a report yesterday. He cut estimates for 2011 because of lower auto demand resulting from Japan’s earthquake and tsunami in March. (Bloomberg)


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