Tuesday, May 11, 2010

20100511 1810 FCPO EOD Daily Chart Study.

FCPO closed : 2505, changed : -24 points, volume : lower.
Bollinger band reading : side way range bound downside biased.
MACD Histrogram : weakening, no significant exposure by both buyer and seller yet.
Support : 2500, 2470, 2450 level.
Resistant : 2521, 2550, 2570, 2600 level.
Comment :
One day up one day down FCPO closed lower today in deminishing volume. Daily chart reading started to shows a side way range bound market with some downside biased potential.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant/strength/breakdown with quick cut loss and profit target.

20100511 1723 FKLI EOD Daily Chart Study.

FKLI closed : 1332.5, changed : -5.5 points, volume : higher.
Bollinger band reading : side way range bound.
MACD Histrogram : receovering, clash of bull and bear.
Support : 1330, 1325, 1318 level.
Resistant : 1337, 1345, 1350 level.
Comment :
Higher volume FKLI closed lower despite a stronger FBM KLCI Index closing resulting a 7.5 point discount compare to cash market. Daily chart still suggesting a side way range bound market with a lot of testing effort to identify the underlying strenght of the market.
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.

20100511 1254 FKLI Mid Day Hourly Chart Study.

FKLI closed : 1333.5, changed : -4.5 points, volume : high.
Bollinger band reading : side way range bound little upside biased.
MACD Histrogram : weakening, buyer locking profit.
Support : 1330, 1325, 1318 level.
Resistant : 1337, 1345, 1350 level.
Comment :
Following a weaker major Asia market development, FKLI surrender partial of yesterday gained to closed the morning session lower in sustaining volume traded. Hourly chart reading shows that price touched the middle Bollinger band level and bounce back up slightly indicate that there is temporary support avoiding market to fall lower and market is likely to trade side way range bound with still little upside biased but selling pressure remained strong.

20100511 1237 FCPO Mid Day Hourly Chart Study.

FCPO closed : 2510, changed : -19 points, volume : low.
Bollinger band reading : side way range bound downside biased.
MACD Histrogram : weakening, lack of interest from buyer to support the market.
Support : 2500, 2470, 2450  level.
Resistant : 2521, 2550, 2570 level.
Comment :
Quiet side way range bound FCPO opened and eased lower after yesterday climb. Hourly chart shows a side way range bound downside biased market is likely to develop in the near term.

20100511 1210 Malaysia Corporate News.

Palm oil stockpiles in Malaysia fell for a second month as output declined. Inventory of the edible oil fell 2% to 1.63m tons from a revised 1,66m tons in March, the Malaysian Palm Oil Board said. Output dropped 5.84% to a one-year low of 1.3m tons from a revised 1.39m tons in March. Exports fell 8.17% to 1,3m tons from a revised 1.39m tons in March. The official export data was higher than the forecasts of two independent cargo surveyors. (BT)

Malaysians, mainly from Johor Baru, have been flocking by bus loads to Singapore to visit the two new integrated resorts (IRs). A check showed that most of the takers were older Chinese. More than 3,000 Malaysians were flocking to both casinos every weekend, the source said. “Basically, the trip is just another way to attract people to gamble and it is just over an hour’s drive away. The drive to the other casino in Malaysia takes more than four hours,” the source added. (NST)
This news is not a surprise. Both IRs have cited Malaysians as a key target market and Johor Baru is naturally a focus given its close proximity to Singapore. For Genting Malaysia’s Resorts World Genting (RWG), it remains to be seen if the diversion caused by the two new IRs is sustainable. Our earlier channel checks suggest that RWG continues to attract a steady stream of punters especially over the weekend.

Kuala Lumpur Kepong (KLK) plans to buy Uniqema GMBH & Co KG (UG) and its assets at Emmerich, Germany, for €60.5m (RM251.08m). UG manufactures basic oleochemicals such as fatty acids and glycerine for use in the manufacture of food additives, detergents, fabric softeners and cosmetics and its Emmerich plant has a production capacity of 150,000 tonnes per year. (BT)
We are positive on this news as: (1) the consideration for the oleochemical assets is attractive at around 1x of asset values after stripping off working capital, (2) the assets are strategically located, (3) the purchase will allow the group to grow their European clienteles, and (4) the acquisition will allow the group to raise their global oleochemical capacity by around 10%. We gathered the business posted an EBITDA of around €5m in FY09 but KL Kepong hopes to improve the future profitability of the business by raising the efficiency of the plant. Overall, we estimate the acquisition could add 1-2% to our FY9/11 earnings estimates.

Malaysia’s palm oil exports rose 21.8% in the first 10 days of May, independent market surveyor Intertek said. A total of 354,504 metric tons of the commodity were tracked on May 1 to 10, versus 291,033 tons in the same period in April, Intertek said. (Bloomberg)

Kumpulan Perangsang Selangor's (KPS) unit Konsortium Abbas has obtained the court's nod to recover some RM70m from Syabas. KPS said the amount of RM70.14m as at Mar 31, 2010 with a 8% interest p.a. is related to short payment of electricity costs and purchase of water by Syabas. "Konsortium Abbas shall consult its solicitors on the next steps to be taken in relation to recovery or execution of the judgment sum and will update the exchange accordingly," KPS said. (Financial Daily)
Although this is a negative surprise, we think this issue will be a protracted one, as Syabas' ability to pay its suppliers of treated water, eg. Konsortium Abbas, hinges on the status of the compensation from the Selangor state government for not being granted the 37% water tariff hike last year. This, all-in-all, depends on the progress of the consolidation of all water assets in the state. The RM70m claims would shave Puncak Niaga’s FY10 EPS by as much as 36%, and cut target price by as much as 17 sen/share.

CIMB Group has obtained the approval of Cambodia's central bank to offer banking services in the country. It said the in-principle approval allows its commercial banking arm, CIMB Bank, to operate a wholly owned subsidiary in the country of 14m people. The group is required to set up its operations within six months.
  • "The group plans to establish its headquarters in Phnom Penh as soon as possible," says group chief executive Datuk Seri Nazir Razak. Other Malaysian banks with a presence in Cambodia include Malayan Banking and Public Bank. (BT)
Malaysia Airlines (MAS) has agreed to defer the implementation of the differential fee for bookings done on non-Abacus global distribution system (GDS). The fee was supposed to be effective May 15 but the move, announced without consultations with the Malaysian Association of Tour and Travel Agents (Matta), was opposed by its members.
  • In a joint statement yesterday, Matta and MAS said they had met and would work together to resolve the matter. MAS senior general manager Datuk Bernard Francis, said the carrier would make another attempt to negotiate with the GDS providers. 
  • "Travel agents are an integral part of our business and we want to ensure that it is a winwin situation for both sides. Under the now deferred ruling, MAS tickets issued through non-Abacus GDS by travel agents will be charged US$3 per sector. (Bernama)
In an interesting development that could impact the 3G spectrum auction even in its concluding stages and hold serious implications, the Telecom Regulatory Authority of India (Trai) plans to allow spectrum sharing between operators on commercial terms.
  • “The telecom regulator is poised to come out with full-blown spectrum-sharing guidelines, including spectrum-sharing charges, in its much-awaited recommendations on overall spectrum management and review of licence terms and conditions,” sources said. However, spectrum trading between telcos will not be permitted. (Economic Times of India)
The Indian telecom regulator will unveil sweeping new rules that could strain the finances of some of India’s top mobile phone companies and set the stage for consolidation in a crowded and ultra-competitive market.
  • In recommendations, due out on Tuesday, the Telecom Regulatory Authority of India, or Trai, will say that GSM operators with more than 6.2 MHz of 2G airwaves must pay a one-time fee to keep spectrum beyond this limit, those aware of the recommendations said. 
  • If the Trai proposal is implemented, companies such as Bharti Airtel, Vodafone Essar, Idea Cellular and BSNL, all of which hold up to 10 MHz of radio frequencies in several circles, must pay hundreds of crores each. The fee will be linked to the price of 3G spectrum that is now being auctioned. (Economic Times of India)
Revenue from the Indian 3G spectrum sale touched the Rs 540bn (US$12bn) mark with the bid for all-India 3G spectrum rising to Rs 134.7bn (US$3bn) on Day 26 of the auction on Mon. At the current all-India bid price for radio waves, the government is assured of at least Rs 540bn (US$12bn).
  • The key point in Monday’s auction was Gujarat slipping into the negative demand zone after remaining on the radar of bidders for quite some time. Kerala, Haryana, Rajasthan, Madhya Pradesh, Himachal Pradesh, West Bengal and Jammu & Kashmir also witnessed the same fate. (Economic Times of India)
UMW Holdings is confident that its oil and gas division will become the group's biggest revenue contributor in the near future due to strong growth potential. Its president and group CEO Datuk Abdul Halim Harun said it had targeted 35% contribution from the division compared with the current 20%. "We can see a positive growth sign. Currently, the division is very busy bidding for a few projects locally," he said. (Bernama)

Sapura Auto is proposing the disposal of a piece of land in Kuala Lumpur, which presently houses an automobile showroom, to Sime Darby Motor Division for RM49m, cash. Sapura Auto, a subsidiary of Sapura Resources, said the proposed disposal could result in a net gain of RM22.98m and address the continued losses arising from the group's automotive business. Sapura Auto bought the land and the building for RM26.1m in Nov 06. (Bernama)

Berjaya Corp has acquired about a 0.83% stake in Berjaya Land. This brings BCorp’s holdings in BLand to 53.08%. The purchases were made at an average cost of RM3.86 apiece. (BT)

Sunway City’s units are disposing eight retail assets worth RM3.7bn to Sunway REIT. The assets are Sunway Pyramid Shopping Mall, Sunway Resort Hotel & Spa, Pyramid Tower Hotel, Menara Sunway, Sunway Carnival Mall, Sunway Hotel Seberang Jaya, Suncity Ipoh Hypermarket and Sunway Tower.
  • The disposal consideration which is subject to price adjustment mechanism will be satisfied by issuance of 1.025bn in Sunway REIT, credit facility of RM1.1bn and proceeds from the proposed IPO of the REIT. The proposed disposals are expected to result in a gain of RM327.8m at Sunway City’s level. (Bernama)
Sunway Holdings has signed a memorandum of understanding (MOU) with China’s Xuan Cheng Municipal Government to develop a 2m sqm land into an integrated city in Xuan Cheng, 260km east of Shanghai.
  • The project will feature an international-standard entertainment park, an exhibition centre, hotels, shopping malls, offices and residential units on land owned by the Xuan Cheng Municipal Government. Under the MOU, Sunway will be the master developer and will undertake a feasibility and market study on the proposed development. (BT)
Plenitude's wholly-owned subsidiary Plenitude Bayu signed a sale and purchase agreement (SPA) with Geotrade to buy a piece of land in Batu Ferringhi in Penang for RM45m. The land measures about 165,000 sqm and the transaction costs about RM273 per sqm or RM25 psf.
  • Plenitude said it wants to develop "medium-high end, semi-detached houses and condominiums" and that this would provide the company with a new sustainable source of income and also enhance its position in the property development sector. (Financial Daily)
Mulpha Land has proposed to reduce its share capital by cancelling 90 sen of each RM1 share, which will give rise to a credit of RM82.2m to fully set off its accumulated losses with the balance to be credited to the company's capital reserves. (Financial Daily)

Naim Holdings plans to partner Cahya Mata Sarawak Bhd (CMS) and a local government agency to build a RM1.5bn township in Samalaju, Sarawak, which will cater for the expected boom in the working population. The Samalaju Industrial Park is located 80km north of Bintulu and the proposed township will be home to those who will work at a giant aluminium smelter and other high-technology industries.
  • The new township, covering an area in excess of 2,200ha a few kilometres from the Samalaju Industrial Park, will cater for the estimated 50,000 workers and their families. Construction will start next year and the township will be developed over 10 years. 
  • "The township is really required there. It won't work to have the workers commute between Bintulu and Samalaju," says Bintulu Development Authority (BDA) GM Datuk Mohidin Ishak. The state government has already approved the town's master plan, he said. Yesterday, BDA signed a memorandum of understanding with Naim and CMS to form a joint-venture company. Naim will hold 60% of the tie-up, with CMS having 30% and BDA the balance. (BT)
MMC Corp plans to officially launch its RM8.1bn Senai Airport City (SAC) project and new Aero Mall complex in Johor this month. MMC has inked several MOUs and is expecting to sign on an educational institution and logistic and transport service provider soon. MMC is likely to opt for a combination of leasing or outright sale for the land parcels and facilities. (Malaysian Reserve)

Penang Port (PPSB) is adamant that it wants Penang Port to remain in Penang. PPSB chairman Datuk Seri Dr Hilmi Yahaya said he had made known his intention to the relevant authorities, including the Transport Ministry. He said to show PPSB meant business, it had embarked on a multi-million expansion project using its own coffers while awaiting for allocation under the 10th Malaysian Plan (10MP). The port expansion project is expected to cost more than RM300m. (BT)

QSR Brands has signed a deal with Royal Group of Co Ltd to form a 51:49 JV to operate broiler and processing production in Phnom Penh. QSR holds the master franchise to operate KFC and Pizza Hut restaurants in Cambodia. The initial paid-up capital for the JV is US$300,000. (BMSB)

20100511 1200 Malaysian Economic News.

The Malaysian government will be issuing the Sukuk 1Malaysia 2010 amounting to RM3bn on 21 Jun 10, the Ministry of Finance (MoF) said. The Sukuk, which will be scripless and based on Syariah principles, will have a three-year tenure and offer a return of 5% p.a. (Bernama)

Export sales of the Malaysian American Electronics Industry (MAEI) this year is forecast to decline by 18.1% to RM57.3bn (RM70.0bn in 2009) as more companies engage contract-manufacturing services abroad. But assuming these E&E companies do not outsource their production, export sales are forecast to grow by 10.8% in 2010.
  • Last year, the MAEI contributed 16.3% of exports of manufactured goods and also 30.7% of the total value of electrical and electronics (E&E) exports. (Bernama, Financial Daily)
The severe shortage of foreign workers at the more than 2,500 vegetable farms in Cameron Highlands is threatening to disrupt the nation’s vegetable supplies, which contributes about 30% of the country’s vegetable needs, said Cameron Highlands Vegetable Growers Association. (BT)

Sarawak has emerged as the top state for the second consecutive year from 2008 for investments approved by the Malaysian Industrial Development Authority (MIDA). International Trade and Industry Minister Datuk Seri Mustapa Mohamad said in 2008, Sarawak obtained RM15.2bn out of the RM62.8bn investment nationwide. (Malaysian Reserve)

Malaysia’s economic growth is on track with a 20% increase in trade with the United Arab Emirates (UAE) in the first two months of this year. Malaysian ambassador to the UAE, Datuk Yahya Abdul Jabar said that they hope this year’s exports to UAE would recover to the level of 2008. (Malaysian Reserve)

20100511 1154 Global Economic News.

The U.S. Federal Reserve will restart its emergency currency-swap tool by providing as many dollars as needed to European central banks to keep the continent’s sovereign-debt crisis from spreading. The swaps with the European Central Bank, Bank of England and Swiss central bank will allow them to provide the “full allotment” of U.S. dollars as needed, the Fed said late yesterday in a statement in Washington.
  • A separate swap line with the Bank of Canada will support as much as US$30bn, the Fed said, and the Bank of Japan said it approved reactivating its U.S. line. The swaps were authorized through January 2011. (Bloomberg)
The European Union leaders reached agreement Sunday on a massive show of force to support struggling countries in the region. Separately, the U.S. Federal Reserve joined central banks in Canada and Europe in re-establishing a program meant to improve lending conditions.
  • The European rescue, valued at more than US$900bn (720bn euros), has three main components: (i) The biggest provision -- at nearly US$570bn (440bn euros) -- takes the form of government-backed loans to shore up confidence in shaky credit markets. The action puts the weight of the economies of Germany and France behind weaker members of the European Union, such as Greece, Portugal and Spain; 
  • (ii) A second measure is the expansion of a US$77bn (60bn euros) stabilization fund; and 
  • (iii) the International Monetary Fund said it would contribute US$284bn (220bn euros). (CNNMoney)

Euro-area central banks said they are buying government bonds as part of a program to counter a sovereign debt crisis and defend their common currency. The Bank of France and Bank of Italy also said they have started purchasing government bonds. The euro strengthened 2% after European policy makers unveiled a US$960bn loan plan overnight to end a crisis of confidence in the currency that was triggered by Greece’s budget deficit. (Bloomberg)

The Bank of England kept its bond- purchase plan on hold for a fourth month and its interest rate at a record low of 0.5% to nurture the recovery as the post-election power vacuum and the Greek debt crisis overshadowed the economy. The nine-member Monetary Policy Committee, led by Governor Mervvn King, maintained the target for its bond holdings at 200bn pounds (US$300bn), as predicted by all 36 economists in a Bloomberg News survey. (Bloomberg)

China’s trade surplus shrank 87.0% yoy to US$1.68bn in April (-US$7.24bn in Mar) as imports grew faster than exports because of stimulus-driven domestic demand. Imports gained 49.7% (66.0% in Mar). Exports rose 30.5% (24.5% in Mar), topping the 28.9% median estimate. (Bloomberg)

Thai demonstrators may delay ending their two-month campaign on Bangkok’s streets, testing Prime Minister Abhisit Vejjajiva’s patience after he offered a reconciliation plan that included cutting his term by 13 months. The protesters, who largely support exiled former leader Thaksin Shinawatra, are drafting an alternative “road map” to the one outlined by Abhisit a week ago, one of the group’s leaders, Weng Tojirakarn, said. (Bloomberg)

Bank of Japan Deputy Governor Hirohide Yamaguchi said Greece’s deepening fiscal woes aren’t hurting Japan’s economy and that policy measures taken around the world will help contain the European sovereign-debt crisis. Yamaguchi said at a press conference after holding an unscheduled meeting to resume a U.S. currency-swap deal. (Bloomberg)

Japan’s monetary policy board also voted unanimously to keep the key interest rate unchanged at 0.1%. The bank said it would pump 2trn yen (US$21.7bn) into the financial system for a second day, the first back-to- back same-day operations since October 2008, as investor concern about European debt spurred a decline in stocks worldwide. (Bloomberg)

Crude oil surged more than 4.5% in New York, its biggest jump in seven months, on speculation an emergency fund by European policy makers will contain sovereign debt risks and maintain economic growth. Prices may return to US$80 to US$85 a barrel once the debt crisis is resolved, Algerian Energy Minister said today.
  • Crude oil for June delivery rose US$1.64 or 2.2% to US$76.75 a barrel at 9:03 a.m. on the New York Mercantile Exchange. Futures rose as much as US$3.40 to US$78.51, the biggest gain since Sept. 30. Crude has increased 31% in the past year. (Bloomberg)
European investor confidence fell the most in almost two years in May as the Greek budget crisis shook markets. An index measuring sentiment in the 16-nation euro region decreased to -6.4 in May (2.5 in Apr), the biggest drop since Jul 08. A gauge of current business conditions rose to -4.75 from -7, while expectations dropped to a 13-month low of -8 from 12.5. (Bloomberg)

Europe’s rescue package will free Chinese officials to focus on containing asset prices and inflation at home rather than worrying about the global recovery, central bank adviser Li Daokui said. “The double-dip risk in the world economy is likely to be reduced to a minimum,” Li said.
  • “China’s growth rate is not a problem this year, and the main policy focus should be on preventing excessive gains in asset prices and liquidity.” His comments are a personal view, he said. (Bloomberg)

The Bank of Korea may keep interest rates unchanged for a 15th month as concern at the impact of the European debt crisis adds to government unease that the nation’s recovery isn’t strong enough to withstand higher borrowing costs. Governor Kim Choong Soo and his board will leave the seven-day repurchase rate at a record-low 2% tomorrow, according to all 12 economists surveyed. (Bloomberg)

European Central Bank President Jean-Claude Trichet indicated the bank’s decision to buy government and private bonds wasn’t supported by all 22 Governing Council members. “On some of the decisions there was unanimity, I won’t give details, and on some there was an overwhelming majority,” Trichet said. “On bond purchases we had an overwhelming majority.” (Bloomberg)

Indonesia's gross domestic product (GDP) grew 5.7% yoy in 1Q10 due to strong domestic demand and low inflation. Southeast Asia's biggest economy accelerated in the January-March period at its fastest pace since 3Q08, but was only just better than the 5.4% in 4Q09. Non-seasonally adjusted quarterly growth was 1.9%, a reversal of the previous quarter's 2.4% contraction. (AFP)