Thursday, March 18, 2010

20100318 1823 FCPO EOD Daily Chart Study.

FCPO closed : 2535, changed : +60 points, volume : higher.
Bollinger band reading : bearish biased market.
MACD Histrogram : dive deeper, seller dominated the market.
Support : 2521, 2500, 2470 level.
Resistant : 2550, 2570, 2590 level.
Comment :
Sharing the same fate with FKLI, 59 points range FCPO also closed weaker near the low of the day with increase volume transacted. What a buyer punishment day ! Technical chart wise, outlook has just started to turned bearish biased at the very initial stage but today's big fall and closed below lower Bollinger band seems a little overdone that may trigger a pullback effect. Expect market to trade downside biased with possible temporary pullback or side way range bound testing resistant level.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with larger cut loss and profit target.

20100318 1751 FKLI EOD Daily Chart Study.

FKLI closed : 1297, changed : -10 points, volume : lower.
Bollinger band reading : side way correction.
MACD Histrogram : continue to fall, seller gained control.
Support : 1295, 1290, 1285 level.
Resistant : 1300, 1307, 1315 level.
Comment :
Slam dunk action for FKLI in the second session as seller decided to attack the market without the present of buying interest and succeeded pushed price to closed right at the low of the day. Daily chart wise, negative sentiment increase as shown on today's big body down candle that closed near the middle Bollinger band(also temporary support) level but despite that the reading is still suggesting a side way range bound downward correction market that has yet to turn bearish on purely technical speaking.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20100318 1548 Malaysia Corporate News.

Dams, rivers and canals are drying up in Johor and the northern states of Peninsular Malaysia as well as Sabah due to the El Nino phenomenon which brings about less rainfall than usual. The Malaysian Meteorological Department said the situation is expected to last until next month for the peninsula while Sabah is expected to experience dry weather till May. Among the worrying developments:
  • No rain is expected to fall in Perlis, Penang, Kelantan, Terengganu and Sabah over the next week. 
  • Kudat, Sandakan and Tawau divisions in Sabah placed under drought alert; water rationing expected to start at any time.
  • The department’s Fire Rating System showed a very high probability of fires starting in Sabah and the northern part of the peninsula. (Star)
This is positive for CPO price and negative for FFB yields. A prolonged drought in the key palm oil regions in Malaysia could negatively impact palm oil yields leading to supply shortfall. This will be positive for short-term and medium term CPO price.

Genting Malaysia has completed the subscription of US$18m (RM60m) nominal amount 9% senior secured notes issued by MGM Mirage. The notes were offered as part of a US$845m placement exercise, the proceeds of which will be used by MGM to repay borrowings. The notes are secured by a mortgage on MGM Grand Las Vegas. (BMSB)
This news is only a slight positive surprise for us as this is GENM’s second subscription to MGM’s bonds .To recap, GENM first subscribed to some US$50m of MGM’s bonds in May-09. This latest subscription represents <1% of GENM’s RM5.3bn cash stash as at end-Dec 09. From an earnings perspective, this small subscription is estimated to have a negligible (<1%) enhancement to FY10-12 earnings.

Astro Holdings Sdn Bhd, a special purpose vehicle of Usaha Tegas, proposed a conditional RM8.3bn takeover offer to acquire all the shares in Astro for RM4.30/share cash. 18 shareholders with a combined stake of 72.9% have irrevocably accepted the offer, leaving the offer open to the remaining shareholders with a combined 27.1% stake over the next 60 days. The offer is conditional on Astro Holdings achieving more than 90% of the voting shares in Astro. Astro Holdings will pursue the delisting of Astro. The deal is expected to be completed in mid-June 2010. (BMSB)

AirAsia chief executive Datuk Tony Fernandes told Bloomberg yesterday that the airline’s first-quarter earnings are “looking strong” and it doesn’t need to raise more capital. During the interview, he said forward bookings for the second quarter were higher than last year, adding that the first-quarter passenger numbers were “very strong”. (Star)

Wah Seong made a proposal to buy troubled Italian pipe-coating company Socotherm about three weeks ago, to expand into the lucrative South American market. says deputy MD Giancarlo Maccagno. “We made a proposal about three weeks ago and we should know the result by the end of April”, says Giancarlo. He declined to disclose the offer price but said it will be funded internally as the company has RM400m in cash reserves.” They are a pipe-coating group that we know well and in a business that we know well. The synergistic value will be tremendous,” he said. If it succeeds, Wah Seong will become the world’s second-largest pipe-coating company, after US firm Bredero Shaw. (BT)

Top Glove unveiled plans for two new factories costing RM70m to meet expected increase in demand after quarterly profit doubled recently. Dubbed "Factory 22" and "Factory 23", the two new production facilities would be part of an on-going expansion exercise to increase capacity by 8.25bn pieces a year once the expansion is completed by May 2011, according to Top Glove's chairman Tan Sri Lim Wee Chai. For 2010, Top Glove estimates the world demand to reach 150bn pieces of gloves, up from 140bn pieces annually projected back in December 2009. (Malaysian Reserve)

Despite the global downturn last year, the Penang property market has not recorded any significant drop in prices and is expected to improve this year in line with the economic recovery. Henry Butcher Malaysia (Seberang Perai)'s senior manager Fook Tone Huat said that development land, especially in Seberang Perai, is still in good demand, particularly those near town areas. The Seberang Perai area is expect to record a 10% rise in appreciation rate due to its high population density compared to neighbouring states like Kedah and Perak, Fook said. On the outlook for 2010, Fook said the residential sector will still be the main player in the property market in Seberang Perai and among the hotspots to be developed are Raja Uda, Bagan Lallang, Juru, Bukit Tambun and Simpang Ampat. (Bernama, BT)

Ho Hup Construction shareholders voted out all the directors linked to deputy chairman Datuk Vincent Lye Ek Seang and replaced them with a group that effectively help the founding Low family back in control. All the resolutions were passed without any debate by shareholders. Newly appointed Tan Sri Kamaruzzaman Shariff and Hew Thin Chay said the new board would examine both the original and proposed plans to come up with one that was equitable to all shareholders. "We should be able to submit a new regularisation plan within two weeks," said Hew. (Financial Daily)

Johor Corp, the investment arm of the Johor state government, has another 2,000ha to be developed in the Iskandar Malaysia region, said CEO Tan Sri Muhammad Ali Hashim. "The landbank is there for future development of industries in the growth region," he said. While the newer part of the growth corridor located in the west of the state, namely in the Tanjung Pelepas and Nusajaya areas have attracted strong interest, Pasir Gudang and the Tanjung Langsat Port in the east, are equally vibrant. "With good infrastructure, power, electricity and gas readily available, industries can look to setting up operations here, while the new bridge linking to Desaru provides good connectivity." (BT)

Premium air travel is recovering amid the robust global trade and economic recovery, according to Iata.
  • Premium travel demand grew 5.5% yoy in January and was up 0.2% mom. The recovery has been so strong that premium demand is now 9.4% above its early 2009 low, but premium demand remains more than 16% below its previous peak. 
  • In 2009, revenue from premium passengers fell nearly 30% yoy. In January, premium revenue was up 20% from its 2009 low and showing positive yoy growth again, but remains 30% below early 2008 premium revenue levels are reached. 'It now looks as though the recession in premium travel has been cyclical rather than a permanent fall,' Iata said.
  • Economy passenger numbers grew 5.7% yoy in January. 'Passenger kilometres flown (RPK) is growing faster, by 6.4% in January, as average distances flown were increased by the concentration of the upturn in the relatively longer-route areas of Asia,' Iata said.
  • Average fares have risen around 10% for premium and economy seats since mid-2009, lifting international passenger revenue 20% from its mid-2009 lows by January. This comes after an 18% full-year decline in total international passenger revenue and a near 30% fall in revenue from premium passengers. Economy revenue is now 7% below the previous peak. (SBT)
Syarikat Takaful Malaysia expects at least 2,000 of its insurance agents to sign up under DiGi Telecommunication's special mobile voice and broadband package by the end of 2010. The two companies joined forces to introduce services that will enable agents to better meet customer demands. (BT)

Templeton Asset Management's unit Templeton Emerging Markets Group has emerged as a substantial shareholder with a 5% stake in KSL Holdings after taking up part of a placement of new shares by the property outfit. (Financial Daily)

Scomi Engineering (SEB) is exclusively negotiating with a foreign-listed multinational corporation to sell its entire oil and gas machine shop business for US$110m (RM363m). The purchase has given SEB a bank guarantee of US$2bn, representing 2% of the proposed sale consideration. "This corporate exercise is in line with the business strategy of SEB, to position itself as an Urban Transportation Solutions Provider focusing in monorail solutions," SEB president Syahrunizam Samsudin said. (Malaysian Reserve)

Malton plans to develop a RM2.5bn commercial and residential project in Kuala Lumpur on a parcel of land owned by Ho Hup Construction Company . The proposed development, which would be carried out over 10 years, is expected to comprise of shopping complex, shop offices, office tower, service apartments and hotel. Malton's unit Pioneer Haven is solely responsible to meet the cost of the proposed development. Under the joint agreement, Ho Hip's unit Bukit Jalil Development will receive 17% of the gross development value with a minimum of RM265m while the remaining balance of 83% would go to Malton's unit. (Malaysian Reserve)

20100318 1538 Malaysian Economic News.

Malaysia and Hong Kong are expected to expand their cooperation in the banking and financial sector, especially in Islamic financing. Finance Minister Datuk Seri Ahmad Husni Hanadzlah and Hong Kong's Secretary of Finance John Tsang discussed efforts to expand the level of cooperation between the two countries in the financing and banking sector, especially Islamic financing. (Bernama)

Malaysian and Yemeni business communities must continue efforts to venture deeper into each other's business terrain and form smart alliance to boost bilateral trade and investment. Malaysian Ambassador to Yemen, Abdul Samad Othman, said both business communities should focus on exchanging experience and knowledge, while at the same time explore and expand trade as well as investment opportunities for their products and services. (Bernama)

The New Economic Model (NEM) to be introduced will not abolish bumiputera rights but will focus on cooperation with non-bumiputeras, parliament was told. Minister in the Prime Minister's Department Datuk Seri Mohamed Nazri Aziz said the form of cooperation would be in politics and business promotions. "We want joint-ventures where both parties, bumiputeras and non-bumiputeras, stand to gain," he said. (Bernama)

Japanese ambassador Masahiko Horie said that Malaysia could lose out in foreign direct investments (FDIs) from Japan if the manpower shortage faced by the manufacturing sector prolongs and coupled with the threat of removal of fuel subsidy by the government. These two elements would weight heavily on FDIs and Malaysia may lose its advantage to other countries. He added that Japanese companies, especially those in the electronics and electrical (E&E) sector, were having a hard time employing production operators who were crucial to their operations. (Financial Daily)

Various efforts are being undertaken to step up food production to reduce the nation's dependence on food imports. Agriculture and Agro-based Industry Minister Datuk Seri Noh Omar said these included five high-impact projects, which would also help raise the nation's rate of food self-sufficiency. The projects were the Permanent Food Production Park, contract farming, National Feedlot Centre (NFC), Aquaculture Industrial Zone and development of 15,000 agro-based entrepreneurs. (Bernama)

Agriculture and Agrobased Industry Minister Datuk Seri Noh Omar indicated the need to continue with the agriculture subsidy, but its distribution to be reviewed, to ensure sufficient food supply in the country. He said the agriculture subsidy might not be abolished because there were also developed countries which still provided subsidy for their agriculture sector. The agriculture subsidy should be continued to overcome the current trade deficit in the agriculture sector because of high import. "We are facing a deficit of about RM5.2bn. We import more agriculture produce. The country's target is to achieve a trade surplus in food of RM1.2bn this year," he added. (Bernama)

20100318 1515 Global Economic News.

Producer prices in the US fell in February more than anticipated, led by a drop in fuel costs and signaling there are few inflation pressures building in the early stages of the economic recovery. The 0.6% decrease in prices paid to factories, farmers and other producers was the biggest since July and followed a 1.4% January increase. Excluding food and fuel, so-called core prices climbed 0.1%. (Bloomberg)

American Petroleum Institute reported US petroleum deliveries for February rebounded by 0.6% from January. With the exception of jet fuel, all major petroleum products experienced increases from January to February. February's gasoline demand (+2.2%) was the highest monthly demand for any February. However, key indicators of economic conditions - demand for distillate fuel (-6.0%) and jet fuel (-4.1%) -- were still below year ago levels. Crude inventories for February 2010 inched up for the second month in a row to 339.9m barrels. (Xinhua)

Fed Chairman Ben Bernanke made his strongest case yet to Congress on Wednesday for the Federal Reserve keeping its regulatory oversight powers over banks large and small. Bernanke told the House Financial Services panel he's "quite concerned" about proposals to limit the Federal Reserve's regulatory power to watching out for only the biggest banks. He called the proposal a "bad idea." (CNN Money)

Members of the US Congress threatened Beijing with duties on some of its exports if it fails to revalue its currency, pressuring the Obama administration to label China a currency manipulator. A bipartisan bill introduced in the US Senate merges previous legislative efforts to press China to change policies that critics say keep its yuan currency cheap, effectively subsidising Chinese exports and taxing competing imports. (Financial Daily)

The European Union (EU) warned that a dozen EU governments including Germany risk missing their deficit targets, a day after finance ministers adopted a bailout framework for debt-stricken Greece. Germany, France and 10 other EU nations are using “favorable” economic forecasts to draw up their deficit-cutting projections, the European Commission said. It told most of the countries to either take further steps or explain how they will bring their budget gaps back within the EU limit of 3.0% of GDP. (Bloomberg)

The best solution to Greece's debt woes is assistance from inside the Eurozone, but the southern European country is leaving all options on the table, including help from the International Monetary Fund if it is needed, the country's Prime Minister Georgios Papandreou said on Wednesday. Greece has a budget deficit more than four times the EU's stipulated limit and has committed to a strict austerity plan to cut it. But it has to refinance a large portion of its debt in the coming weeks and if it is unable to do so in the markets it could need to seek outside help. (Xinhua)

The current dollar-denominated global reserve system needs to be reformed to better fit economic reality and ensure global financial stability, the head of Asian Development Bank (ADB) said. ADB president Haruhiko Kuroda also said robust growth in developing Asia could prompt a surge in capital inflows to the region, leaving Asia vulnerable to more volatile exchange rates and exacerbating trade and other imbalances. (Financial Daily)

The combination of record mutual fund inflows and the fastest economic growth are failing to lift shares in the largest developing nations with valuations at the highest level versus advanced countries since at least 1995. Emerging-market stock funds lured US$86.6bn in the year through January, the most in 14 years of data, according to Cambridge, Massachusetts-based researcher EPFR Global. (Bloomberg)

World Bank forecast that China will achieve 9.5% GDP growth in 2010 (vs. a 9.0% growth in its previous forecast), generated by recovered exports and solid household consumption. "Exports are likely to continue recovering amidst a pick-up in the global economy and real estate activity is likely to grow strongly this year," it said. However, the report warned of macroeconomic risks that included a property bubble and strained local government finances. (Bloomberg)

The Bank of Japan (BoJ) doubled a lending program aimed at stoking credit growth after the government stepped up calls to arrest deflation that’s hampering the economic recovery. Governor Masaaki Shirakawa and his board increased the three-month loan facility to ¥20tr (US$222bn). They also held the overnight lending rate at 0.1% as expected by all economists. Shirakawa said there is no “miracle” cure to stem declines in prices that are deepening even as the economy sustains a revival from its worst postwar recession. (Bloomberg)

Japan’s tertiary index rose 2.9% mom in January (-0.9% in Dec 09), marking the highest increase in more than a decade and adding to evidence that the export-led recovery is starting to benefit households. Economists had projected for a 1.3% mom gain in the month. (Bloomberg)

Singapore’s exports grew at a faster pace by 26.4% yoy in February (22.7% in Jan) as electronics and pharmaceutical shipments gained, boosting the island’s economic recovery. Non-oil domestic exports rose 23.4% yoy (20.5% in Jan). Both exports and nonoil domestic exports numbers beat the market consensus of a 18.5% and 18.0% gain respectively for February. (Bloomberg)

20100318 1310 FKLI Mid Day Hourly Chart Study.

FKLI closed : 1308.5, changed : +1.5 point, volume : lower.
Bollinger band reading : side way range bound.
MACD Histrogram : reversed higher, both buyer and seller trying to gain control.
Support : 1307, 1300, 1295, 1290 level.
Resistant : 1315, 1325, 1335 level.
Comment :
Range trading market FKLI ended the morning session a little higher with lesser volume seems facing difficulties to decide which direction to go as not significant interest shown from both buyer and seller. Seems like the side way range bound market will stay a little longer as suggested on the hourly chart reading.

20100318 1253 FCPO Mid Day Hourly Chart Study.

FCPO closed : 2576, changed : -21 points, volume : moderate.
Bollinger band reading : side way range bound.
MACD Histrogram : weaker, seller still in control.
Support : 2570, 2550, 2521 level.
Resistant : 2590, 2620, 2650 level.
Comment :
Moderate volume FCPO eased lower within a tight 22 points range market ignoring a higher overnight soy oil futures price. Hourly chart reading still recommending a side way range bound market with a little downside biased as seller has yet to leave the market plus lack of buying interest from buyer.