Tuesday, March 2, 2010

20100302 1356 FKLI Mid Day Hourly Chart Study.

FKLI closed : 1286.5, changed : +3.5 points, volume : high.
Bollinger band reading : side way upside biased.
MACD Histrogram : getting weaker, buyer lock in profit.
Support : 1285, 1278, 1270 level.
Resistant : 1290, 1300, 1307 level.
Comment :
FKLI opened and traded higher but face strong resistant at 1290 level follow by profit taking pressed price to closed near the low of the first session. Looking at the hourly chart, the 2nd candle of today touched and tested above the upper Bollinger band triggered market to do a downward consolidate correction. On the 2nd half session, market could still continue to do have a downward correction testing support level before resume its upward movement. But overall still a uptrend market with temporary correction taking place.

20100302 1342 FCPO Mid Day Hourly Chart Study.

FCPO closed : 2600, changed : -28 points, volume : low.
Bollinger band reading : side way bearish biased.
MACD Histrogram : getting lower, seller fought back.
Support : 2590, 2570, 2521 level.
Resistant : 2620, 2650, 2670 level.
Comment :
FCPO ease lower after market opened slightly higher and followed by sell down pushed prise below 2620 support level. Hourly chart suggesting market to trade side way ranging with a little down side biased.

20100302 0938 Malaysia Corporate News.

The government is evaluating a proposal to build another highway linking the northern and southern parts of Peninsular Malaysia to complement the North-South Expressway (NSE). A highway would be built between Banting in Selangor and Taiping in Perak at a cost of between RM5bn-RM6bn.
  • Depending on the viability, the highway would later be extended to connect Banting and a town in Johor, believed to be Gelang Patah. The study was based on a proposal made in the 1990s but could not be realised due to the economic slowdown. 
  • Works Minister Datuk Shaziman Abu Mansor said a viability study on the proposed project was being carried out by the Public-Private Sector Partnership Unit (Ukas) and the Malaysian Highway Authority (MHA). (NST) 
This news is a positive surprise and would be a bonus for the construction sector if the project takes-off. The proposed alignment resembles that of the West Coast Expressway (WCE) costing c.RM3.1bn which was deferred a year ago due to funding issues. Funding could still be an issue for the estimated RM5-6bn cost, which is higher than the RM1-2bn South Klang Valley Expressway and KL-Kuala Selangor Highway which are currently under construction in Selangor. Approval of this project would roll-out the largest PFI job to date after the RM2bn New LCCT terminal. This news could be negative for PLUS Expressway's traffic volume given that it would be sharing PLUS' stretch at the northern region.

The Energy, Green Technology and Water Ministry will explore the possibility of Peninsular Malaysia using renewable natural gas from biogas plants installed at palm oil mills. According to the Malaysian Palm Oil Board, there are 417 palm oil mills in the country, of which 246 are in Peninsular Malaysia. Tenaga is receptive to the concept but stressed that it is important for the government to assess whether it is economically viable to generate the amount of gas needed by consumers. (BT)

Palm oil rose for a second day as soybean futures gained in Chicago and crude oil advanced, boosting the appeal of vegetable oils used to make biodiesel. Palm oil for May delivery added as much as 1.7% to RM2,638/MT, before closing at RM2,630/MT. On the physical market, Indonesia withdrew 10,000 MT of the tropical oil it auctioned after buyers demanded lower prices. (Bloomberg)

Wilmar International aims to expand its India business to about half the size of its Chinese operations in the next 10 years, CEO Kuok Khoon Hong said. The expansion in India will include crushing oilseeds, and refining and bottling cooking oil, Kuok said. "Our company grows very fast, so we have to look into new businesses to expand into," Kuok added.
  • Wilmar also plans to enter the sugar-milling and the cane-plantation businesses in Indonesia and expand its rice and flour milling and oilseed crushing businesses in China, Kuok said. The company aims to double its milling capacity in China to at least 2m tonnes of rice and flour, he said. (Bloomberg)

Allianz Malaysia says its gross written premium (GWP) rose 17% to a record RM2.1bn in 2009, driven by its life and general businesses. Backed by strong performance from its general insurance business, its CEO Alexander Ankel said that business recorded RM1.2bn in GWP last year, 12% growth from 2008. He said the combined ratio of Allianz General stood at 87% compared with 88% previously.
  • Allianz General also recorded a commendable underwriting profit of RM102.4m, representing a 29% jump from 2008 through its prudent underwriting and strong risk management. 
  • "This clearly makes Allianz General Insurance Co (Malaysia) Bhd (AGIC) the number one general insurance provider in Malaysia," Ankel said, noting that it command a market share of 10.4%.
  • AGIC chief executive Ng Hang Ming, meanwhile, said the core of its success is its diversified distribution channels. "The agency force of about 5,500, the corporate brokers and bankassurance through partnership with CIMB Bank similarly contribute to new business of its products which include motor, fire and personal assurance," he said.
  • Allianz Life Insurance Malaysia Bhd also created waves with strong profitable growth in 2009. It recorded RM868.7m in GWP, interpreting a 26% increase over RM692m in the previous year. Its total assets increased to RM2.53bn from RM1.97bn in 2008.
  • For 2010, Ankel said Allianz will continue to focus on profitable growth while further enhancing various productive distribution channels, especially its core agency force in life insurance business. "We will create a common sales and service platform for our life and general business through our One Allianz initiative," he said. (BT)
Hong Leong Bank (HLB) says it and partner Bank of Chengdu Co Ltd (BOCD) have got approval from the Chinese banking authority to start a consumer finance joint venture called Sichuan Jincheng Consumer Finance. HLB holds 49% of the joint venture, while BOCD, the remaining 51%. (BT)

Affin Islamic Bank is optimistic that it can increase its market share by 10% this year, from 3% to 4% currently, CEO Kamarul Ariffin says. "It's a good percentage to grow and it's something that we strive for, be it local or internationally," he said.
  • The lender also wants to open more branches. Presently, there are five Affin Islamic branches located in the Klang Valley, Penang and Johor. 
  • "We are looking at having one branch in each state in the next two to three years," he said, without revealing investment figures.
  • Affin Islamic also wants to expand to Indonesia, although Kamarul did not specify a time frame.
  • Affin Islamic is unlikely to drop the bai bithaman ajil financing structure, its chief said, reflecting the industry's struggle to achieve a common stand on the disputed contract. Bai bithaman ajil is a popular contract that is based on the controversial bai inah concept, which has drawn comparisons to a conventional loan. Some practitioners have argued that it will eventually be phased out as banks strive for wider markets. (BT)
AmBank Group expects a new structured product offering potentially higher returns than fixed deposits to pull in RM100m from risk-averse investors in the one-month offer period. The floating rate negotiable instrument of deposit (FRNID), known as AmStable Income FRNID, provides a capital guarantee and may return between 20%-40% at the end of the four-year investment period, according to test results of historical data. The returns are linked to the outperformance of a rule-based systematic commodity index over the Dow Jones UBS Commodity Index. (BT)

Export offers of Malaysian billet have gone up by US$15-30/tonne in the past two weeks in response to higher scrap costs. Malaysian mills were offering at US$500-535/tonne fob this week, up from US$500-520 fob in mid-February, said market participants in Malaysia, Singapore, Vietnam and Indonesia. Transaction prices have also risen to US$480- 520/tonne fob, from US$480-505/tonne two weeks ago.
  • "Of course we try to push prices up. Prices usually go up after the Chinese New Year. Scrap costs have gone up too. But how fast this billet price can go up depends on the market sentiment," said an official at a Malaysian mill. A buyer in Singapore bought at US$516/tonne fob last week, but so far, deals largely range between US$490-500/tonne fob, he said. 
  • Market demand was reported to be particularly strong in Vietnam, where there are many enquiries and some deals closed at US$500-520/tonne fob.
  • In Indonesia, offers from Malaysia are at US$535/tonne fob, or US$550-560/tonne cfr. But no deals have been concluded as most traders and buyers in Indonesia think prices are still high. (Metal Bulletin)
Corrugated carton prices will rise 20% this month, mainly due to the huge demand from China. On top of that, the industry has to deal with a shortage in the world supply of old corrugated cartons as well as raw and waste paper.
  • Malaysian Corrugated Carton Manufacturers Association president Soh Man Tong said raw paper prices have jumped 30% between US$450-US$480/tonne in Feb-10 from between US$330-US$350in Sep-09. 
  • Raw materials like imported paper are the main component of a corrugated carton box. "China is gobbling all the raw and waste paper to make corrugated cartons resulting in a world shortage of between 30-40%.
  • Paper prices and the costs of other sub-materials like starch and pallets used to make corrugated carton boxes and its related products have increased substantially in the last few months due to higher raw material prices. (BT)
MISC has completed the sale of its MT Bunga Semarak, a 15,999 DWT single-hull chemical tanker for US$2.5m to PT Waruna Nusa Sentana. The sale is in line with its asset management strategy to phase out single hulled vessels. It is also in tandem with the strategy to maintain a modern fleet of chemical tankers, the company added. (BT)

Malaysian Airline System (MAS) may introduce "premium economy" seats in its doubledecker Airbus SAS A380s as tighter corporate travel budgets damp demand for businessclass seating. "A premium-economy cabin in our A380s would provide another option for our passengers," Amin Khan, the carrier's senior general manager for network and revenue management said.
  • It would serve "those organisations that maintain economy-class travel policy for their employees, even after the recession." The carrier may include premium-economy class in its six on-order A380s to lure travellers seeking more comfort than is available in coach at prices lower than in business class. (Bloomberg)
DiGi Telecommunications ("DiGi") and Apple have reached an agreement to bring iPhone to Malaysia in the coming months. iPhone 3G and iPhone 3GS, the fastest, most powerful iPhone yet, will be available to DiGi customers to experience on Turbo 3G™. The entry of DiGi will end Maxis' monopoly in this segment. CEO John Dennelind said iPhone will help DiGi raise sales by more than 5% this year. (DiGi and Starbiz)

Celcom Axiata is considering selling iPhone's in Malaysia's telecommunication market. CEO Datuk Seri Shazalli Ramly said the company would study the viability of the plan carefully as it required a dedicated end-to-end system for the iPhone.
  • "Unlike normal GSM phone, the iPhone requires lots of after-sales service and a good support and customer service system," he said. Meanwhile, Shazalli said Celcom has set aside RM900m-RM1bn for capex this year, out of which 40% would be allocated to improve its 3G and data broadband services. (Bernama)
REDtone International has obtained a licence to offer content application services in Malaysia. The licence is valid for ten years, ending Feb 1 2020. (Starbiz)

Proton appointed an Indian national, Behara Venkata Rama Subbu, as a new member of its board with immediate effect. Subbu had served as president of Hyundai Motors India and after leaving Hyundai in 2006, he took on advisory roles in several automotive outfits based in India.
  • Proton's chairman Datuk Mohd Nadzmi Mohd Salled said the new board member's extensive experience in the Indian automotive market would be valuable to Proton in its plans to expand its business in India. (Financial Daily)
At the Geneva International Motorshow, Proton will be unveiling its first concept car, which was deisgned in collaboration with Italdesign Giugiaro and uses Lotus' Range Extender engine. The concept car, which is also a hybrid, is expected to be launched by Proton's adviser Tun Dr Mahathir Mohamad. In addition, Proton's subsidiary Lotus will be unveiling its Elise facelift at the motorshow. (Bernama, Starbiz)

YTL Corp is on the lookout for hotels and resorts in Asia-Pacific and Europe to grow its hospitality business. The company, which is sitting on a huge cash reserve of > RM10bn, wants to buy completed properties, or build new ones, and manage more assets, the resort manager for Pangkor Laut Resort, Jeffrey Mong, said.
  • By July, YTL will open a boutique hotel in France, called Muse, a new brand on an existing hotel in St Tropez which YTL bought in 2007. On the home front, YTL will set up two resorts in Sabah at a cost of some RM200m by mid-2011. (BT)
KNM Group’s poor 4Q09 results raise the question of whether the buyers would still be willing to go ahead with the plan to buy the group’s assets at the indicative price of 90 sen a share. To recap, Goldman Sachs private equity (GS Capital Partners VI Fund), Mettiz Capital Ltd and KNM’s major shareholder Lee Swee Eng have made a conditional offer to buy KNM’s assets at a price that works out to 90 sen a share.
  • The offer is conditional upon a due diligence that should be completed by March 22 and which includes a final valuation of the assets within the group. “The earnings numbers that have surfaced in Q4 is an indication that the value of the group’s assets may not be as high as expected. 
  • It will not be surprising if the valuation numbers change,” said an investment banker who is following the deal closely. Considering the conditionality of the offer, the buyers are entitled to lower their offer price or even withdraw their offer altogether based on their findings from their due diligence on KNM. (Starbiz)
Melewar Industrial Group has redesignated its CEO Datuk Lim Kim Chuan to executive director effective from March 1. Suhaimi Kamaralzaman has been appointed the managing director and chief executive officer, Melewar told Bursa Malaysia yesterday. (BT)

Soren Ravn, 36, has been appointed the managing director of Carlsberg Brewery Malaysia following the resignation of Soren Holm Jense, 41, yesterday. Ravn was formerly Carlsberg Hong Kong and Macau managing director. (Starbiz)

JT International has appointed Shigeyuki Nakano, the JT International group's Asia Pacific vice-president of consumer and trade marketing, managing director of Malaysian operations from March 1. He takes over from Martyn Fraser Griffiths, who resigned. (Starbiz)

20100302 0924 Malaysian Economic News.

The 6.0% economic growth for this year can be met if the Government’s machinery works at full steam, said Prime Minister Datuk Seri Najib Tun Razak. “If civil service can continue to be the prime mover for economic recovery, then 2010 will be the year when growth will be more than what we have forecast,” he said. (The Star)

Malaysia's targeted gross domestic product (GDP) growth of 6.0% for this year is achievable due to the improving global economic scenario, said Deputy Finance Minister, Awang Adek Husin. "Exports will improve when foreign economies are improving and this will be translated into stronger demand.
  • In the past, when exports surged, they will push our economy. We see improvement on domestic demand and the timely increase in exports will certainly push our economy," he said. (Bernama)

Traders are expected to hike up the price of fish by 20% beginning today as they expect a shortage following importers’ boycott of fish from Thailand and Indonesia started 1 Mar. The boycott, which began yesterday, is in protest at a ruling by the Fisheries Development Authority (LKIM) that all imported fish should be kept in food-grade insulated fish boxes. The ruling was enforced yesterday.
  • Chow Kit wet market fishmonger Mohd Najib Sukron said while sardines cost RM5.00 per kg yesterday, it could cost RM6.00 today if importers continued the boycott. However, wholesalers at the Selayang market have already increased the price of fish yesterday. (NST)
A total of 206,585 Social Security Organisation (Socso) recipients will get an increase in pension payments of between 0.6 -11.3%, to be backdated to Jan 08. Human Resources Minister Datuk Dr. S.Subramaniam said the new pension, which would cost an additional allocation of RM66.4m, would be paid starting April.
  • He said the pension increase, which was the highest in the history of Socso, was in view of the Consumer Price Index and the rise in the cost of living. The adjustment as a result of the backdated payment from 1 Jan 08 to 31 Mar this year involves RM142.4m, he said. (Bernama)
Malaysia’s government-linked companies and businessmen are being pressed to boost spending at home amid concern that more money is being invested abroad than flowing into the country. Fresh ideas to stimulate investment may be included in the government’s so-called New Economic Model, International Trade and Industry Minister Mustapa Mohamed said.
  • “In the past couple of years there’s been more outflows than inflows,” Mustapa said. “We are going to be more aggressive in promoting our people to invest in Malaysia. We have spoken to our GLCs, for example. They have got some plans, some of which have been presented to the government.” (Bloomberg)

20100302 0921 Global Economic News.

US manufacturing activity expanded in February for the seventh straight month, but at a slower pace, according to the Institute for Supply Management (ISM)'s manufacturing index. The index slipped to 56.5 from 58.4 in January. Economists expected the index to fall slightly to 58.
  • The ISM's new orders index and production index both fell to just below 60 in February. The ISM's production index was 58.4 (66.2 in Jan). The employment index rose to 56.1 (53.3 in Jan). This is the third month of employment growth and the highest reading since January 2005. (CNN Money)
US consumer spending increased in January for a fourth consecutive month. The 0.5% increase in purchases was more than anticipated and followed a 0.3% gain in December. The median estimate called for a 0.4% increase in spending. Adjusted for inflation, spending climbed 0.3% (+0.1% in Dec 09).
  • Incomes climbed 0.1% (+0.3% in Dec 09), short of expectations and reflecting declines in dividends and interest. Disposable income dropped 0.4%, the largest decrease since July, reflecting an increase in federal non-withheld income taxes. 
  • The inflation gauge tied to spending patterns rose 2.1% yoy, less than the 2.2% median forecast. The Federal Reserve’s preferred price measure, which excludes food and fuel, was unchanged in January from the previous month and was up 1.4% yoy. (Bloomberg)
European manufacturing index accelerated to 54.2 from 52.4 in January, marking the fastest pace in more than two years as reviving global demand boosted export orders. That’s above an initial estimate of 54.1 published on 19 Feb and the highest since Aug 07. (Bloomberg)

European Union Economic and Monetary Affairs Commissioner Olli Rehn said Greece must take more steps to cut its budget deficit and urged the government to announce new measures “in the coming days.” “Given that risks related to macroeconomic and market developments are materializing, additional consolidation measures are necessary” to meet this year’s deficit-reduction target, Rehn said. (Bloomberg)

Italy’s budget deficit almost doubled last year as the economy shrank the most since World War II. The shortfall rose to 5.3% of GDP compared with 2.7% in 2008. That matched a forecast by the European Commission in Nov 09. The budget gap was about half the size of shortfalls in Greece, Portugal, Ireland and Spain. (Bloomberg)

Japanese Financial Services Minister Shizuka Kamei said the central bank should contemplate directly purchasing government debt, increasing political pressure for the policy board to overcome deflation. “The central bank should consider underwriting debt to help the government create funds for fiscal stimulus,” Kamei said. By law, the Bank of Japan is prohibited from buying debt directly. (Bloomberg)

South Korea’s exports rose 31.0% yoy to US$33.3bn in February (46.7% in Jan), while imports climbed 36.9% to US$30.9bn (26.4% in Jan), resulting in a trade surplus of US$2.3bn (-US$0.5bn in Jan). Economists forecast the exports and imports would increase by 25.0% and 38.0% respectively in February. (Bloomberg)

China’s Purchasing Managers’ Index for manufacturing grew at a slower pace to 52.0 in February (55.8 in Jan). Another PMI, from HSBC Holdings Plc and Markit Economics, showed the weakest expansion in three months to 55.8 from 57.4 in January. A weeklong Chinese holiday last month may have affected the numbers. (Bloomberg)

China's central government has allocated RMB28.6bn (US$4.2bn) to support farmers, the Ministry of Finance said. The bulk of the funding -- RMB18.6bn -- would be used to subsidize farmers in growing improved varieties of crops such as rice, corn, and cotton. The financial support for agriculture came as a severe drought continues in the nation's west and south. (Xinhua)

Indonesia’s inflation accelerated to 3.81% yoy in February (3.72% in Jan), marking the fastest pace in nine months amid rising commodity and food prices, putting pressure on the central bank to raise interest rates this year. Market forecast for a 3.97% rise in February. (Bloomberg)

Indonesia’s exports rose 59.0% yoy to US$11.6bn in January (50% in Dec 09). That’s the biggest jump since at least Dec 95. Imports rose 44.6% yoy to US$9.5bn in January (33.8% in Dec 09), resulting in a trade surplus of US$2.0bn (US$3.0bn in Dec 09). Market forecast exports and imports would increase by 72.1% and 52.5% in January. (Bloomberg)

Singapore’s Senior Minister Goh Chok Tong has said this year's Budget may be seen as "unexciting" to some Singaporeans, but it is nonetheless strategically important because it is a "transformational" Budget. He said the aim of the Budget was to bring the economy to a higher level. (Channel News Asia)