Tuesday, May 25, 2010

20100525 1811 FCPO EOD Daily Chart Study.

FCPO closed : 2436, changed : -54 points, volume : higher.
Bollinger band reading : downside biased.
MACD Histrogram : reversed lower, seller taking chances again.
Support : 2400, 2370, 2340 level.
Resistant : 2450, 2470, 2500 level.
Comment :
Mr Bear dominated both the equity and commodities market today as major commodities also facing selling pressure and traded lower. The same goes to FCPO that ended the day lower right at the low with improved volume traded forming a wide range down bar candle. Daily chart reading shows that the downside biased market movement has resumed after a few days of correction testing the recent tested support level.
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.

20100525 1728 FKLI EOD Daily Chart Study.

FKLI closed : 1241, changed : -31 points, volume : higher.
Bollinger band reading : downside biased.
MACD Histrogram : continue lower, seller ruled.
Support : 1240, 1232, 1220 level.
Resistant : 1250, 1260, 1265 level.
Comment :
Bear haunted FKLI deliberatly punished all the buyer to closed almost at the low of the day with sustaining increase volume traded forming a scary wide range down bar candle way way seriouly way below the lower Bollinger band. Needless to mentioned, the daily chart reading continue to show a downside biased market that is 20 points away from a critical pivotal support level with potential pullback could take place soon.
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.

20100525 1327 FKLI Mid Day Hourly Chart Study.

FKLI closed : 1254.5, changed : -17.5 points, volume : high.
Bollinger band reading : downside biased.
MACD Histrogram : reversed upward, seller taking profit.
Support : 1250, 1240, 1232 level.
Resistant : 1260, 1265, 1270 level.
Comment :
Program selling still take place today as major regional market negative development continues lead FKLI to closed lower with sustaining volume changed hand. Hourly chart continue to record downside biased market reading without any sign of correction through the entire morning.

201000525 1315 FCPO Mid Day Hourly Chart Study.

FCPO closed : 2490, changed : unchanged, volume : low.
Bollinger band reading : side way range bound little upside biased.
MACD Histrogram : weakening, not much action from both buyer and seller.
Support : 2470, 2450, 2400 level.
Resistant : 2500, 2521, 2550 level.
Comment :
Not much excitement happening on FCPO that ended the first session flat although CME palm oil futures market kicked start yesterday. Hourly chart reading suggesting a side way range bound market with little upside biased potential. On the other hand ITS cargo surveyor announced export figure up 8.6% to 1,028,533 tonnes for the period 1 ~ 25 May 2010.

20100525 0948 Malaysia Corporate News.

Sime Darby will spend RM3 to RM5bn on its oil palm estates this year as global demand for the vegetable oil grows, a senior official said. Sime owns 530,000ha of estates planted with oil palm in Malaysia and Indonesia and has another 300,000ha-400,000ha of concessions from Liberia and Sarawak that are yet to be developed.
  • "If you are a big player like us, you will need to spend that kind of money to maintain plantations, get equipment and yes, buy more land," Sime Plantations MD Datuk Azhar Abdul Hamid said. He said some of the expenditure will be channeled to Liberia in West Africa for a 63-year concession to develop 220,000ha. Sime has already spent RM70m on the estates there and has set up a nursery. 
  • Sime is on the lookout for brownfield land in Indonesia and Malaysia and Azhar said the company was eyeing 50,000-80,000ha but would be happy with 30,000ha.
  • Sime, which is expected to produce 2.4m tonnes of crude palm oil for the financial year ending June 2010, has already committed 80% of its output. (Reuters) 
This is not a surprise to us. The group has mentioned its intention to add 300k ha of plantation land to its existing estates to the investment community in the past.

Mudajaya was offered term loan facilities from institutions and banks in India to finance the development of the remaining of phase 2 of the IPP venture in Chhattisgarh, India. Collectively, RKM, the JV company, has been granted a total term loan facilities of RM2.8bn or 75% of the total development expenditure for phase 2 comprising unit 2, 3 and 4 of the IPP Project. Therefore, financial closure for the entire project is fully secured. The balance of the funding is through equity capital injection from the shareholders of RKM. (BMSB)
This news is positive but not entirely a surprise. This development should address some concerns over the timing for the closure of the remaining funding requirement for phase 2 and is a major milestone for the project. All four units (1,440 MW) are scheduled to be fully commissioned by 2012.

The government is placing emphasis on enhancing smallholders' productivity through the adoption of better planting materials, automation, mechanisation and good agriculture practice. Smallholders, who account for 40% of the crude palm oil produced in the country, at present, only manage to yield an average of between 2.5 and 3 tonnes of oil per hectare per year.
  • "The industry average is about four tonnes and we want the smallholders to catch up to this level. The average can even go up to between 6-7 tonnes in the future. "There are 300,000 smallholders in the country and we have to see how they can benefit from the experience of bigger plantation companies," said Plantation Industries and Commodities Minister Tan Sri Bernard Dompok. (Bernama).
A dollar-denominated palm oil contract introduced by CME Group Inc., the largest futures exchange, may attract U.S. and European investors, according to Dorab Mistry, a director at Godrej International Ltd. The contract started trading yesterday. Final cash settlement prices are based on ringgit- denominated futures on the Malaysia Derivatives Exchange, where August-delivery was little changed at 2,496 ringgit ($753) a ton.
  • “The main players are likely to be U.S. and European consumers and investors who are not comfortable trading a ringgit contract,” said Mistry from Godrej, one of India’s largest traders of cooking oils. While local traders in Malaysia and Indonesia “may not be significant” participants, “refiners who export in dollars and crude palm oil shippers who export will find it an attractive hedge,” he said. “It’s an ideal arbitrage instrument for the palm-soya spread,” he said. (Bloomberg)
The palm oil industry continues to be blamed for loss of wildlife habitat and biodiversity in the country, thus making the efforts to readdress the negative image of the industry extremely tedious, said the Chairman of Malaysian Palm Oil Council, Datuk Lee Yeow Chor.
  • He said the media was flooded with a continuous stream of reports that alluded to abuses committed by the industry. "There is often little or no avenue to verify the sources and statistics of these reports but they surely leave a lasting adverse impression on the consumers," he said. 
  • Lee said it was no surprise that major food producers had been pressured to drop palm oil from their formulations. "When the public is brainwashed into believing that our palm oil is a culprit to be avoided, the efforts to readdress this negative image is extremely difficult," he said.
  • Fortunately, MPOC is now well geared to tackle such issues and provide responses to unfair comments and campaign much faster than before, he added. (Bernama)
Malaysia is unhappy with the EU Renewable Energy Directive (EU RED) which assigned a much lower value of 19% greenhouse gas (GHG) emission savings to palm oil, as this can disqualify the commodity as a biodiesel source for use in Europe, said Malaysian Palm Oil Council (MPOC) chairman Datuk Lee Yeow Chor.
  • The directive states that biofuel must result in GHG savings of at least 35% versus fossil fuel in 2009 and also increase over time to 50% by 2017. Based on the lifecycle carbon analysis (LCA) by experts over the past two years, the GHG savings from the LCA of palm oil is actually over 50% - much higher than the EU's estimate, Lee said. 
  • Lee said: “Having such ammunition in our hands will allow MPOC to continue negotiations with the EU. The Malaysian Palm Oil Board is also ready to publish its own LCA data.” Malaysia would be looking at laying the foundation for palm oil to qualify as an advanced biofuel source in the United States under its Renewable Fuels Standards 2 or RFS2, he added. (Starbiz)
Oil palm planters in Malaysia and Indonesia are joining hands to form a coalition to fight anti-palm oil lobby that has been intensifying recently. Fierce rivalry from competing vegetable oils grown in Europe and North America has prompted underhanded tactics by developed nations to curb the growth of the palm oil trade.
  • At a meeting, Malaysian and Indonesian oil palm planters did not discuss an alternative scheme to certify that palm oil is produced from sustainable methods. However, they agree to engage with the existing Roundtable on Sustainable Palm Oil (RSPO) for a more practical scheme. (BT)
The contribution of hydro to Sarawak’s power generation mix will rise to 74% from the present 8% when the Bakun and Murum dam projects are operational. Sarawak Public Utilities Minister, Datuk Amar Awang Tengah Ali Hasan said by 2020, the state’s expected installed capacity of 8,400MW would comprise 80% hydro, 13% coal and 7% gas.
  • Meanwhile, it is understood that Sarawak Hidro, which owns the Bakun dam, has yet to receive approvals to start impounding the dam, which was originally planned for Nov-09. (Starbiz)
Four major Australian companies are keen to embark on innovation and technology exchanges through trade and investment, especially under the Sarawak Corridor of Renewable Energy (Score), Australian Senior Trade and Investment Commissioner Paul Martins said.
  • Martins said he was confident that the Australian companies' capabilities in clean energy, mineral processing and project development would represent a great opportunity for both countries to work together with their direct interest in Score. (Bernama)
The board of EON Capital (EON Cap) is expected to send out to shareholders its EGM notice and circular on the RM5.06bn takeover offer from Hong Leong Bank (HLB) this week. It is understood that the banking group held a board meeting to discuss what would be written in the circular after it had decided to go ahead and table the proposed offer to shareholders despite facing resistance from its independent financial adviser (IFA), Credit Suisse Securities.
  • Credit Suisse said the proposal was “not fair from a financial perspective.” source familiar with the matter said the notice and circular could be send out earliest by tomorrow, with the board meeting for this purpose. After the circular is sent out, the EGM should be held within 14 days. (StarBiz)
EON Capital is “fully confident” of the level of provisions for impaired loans. “EON Bank group remains fully confident of the level of its provisions and its ability to conduct its business successfully and views such comments that the group is not observing prudential standards to be irresponsible,” the bank said.
  • The gross NPL rate had improved to 3.5% as at Mar 10 from 3.8% at Dec 09 while net NPL improved to 2.1% as March 10 compared with 2.3% as at Dec 09, it said. “Meanwhile, loan loss coverage continues to be strengthened to 88.2% at end-Mar 10 from 86.1% at end-Dec 09. Further to that, the banking group maintains a strong capital adequacy ratio of 14.7% as at end-Mar 10, compared with 14.1% as at end-Dec 09.” 
  • The bank said with the adoption of FRS139 effective 1 Jan this year, the gross impaired loans ratio had declined to 4.2% as at Mar 10 compared with 4.3% as at Dec 09. “The impaired loans coverage ratio stood at 83% as at end-Mar 10,” it said. (StarBiz)
Come June, there will be some excitement in the banking industry when Bank Negara reveals some of the successful recipients for foreign commercial banking licences in line with the financial sector liberalisation plan. Up to five new banking licences are expected to be issued in niche and up to two new takaful licences will also be announced.
  • ING, Allianz, Manulife, Great Eastern and AmAssurance are some of the insurers believed to have submitted their applications. An industry observer felt Great Eastern might be one of the successful applicants for the takaful licence. 
  • It is learnt that the proposed two Islamic banking licences expected to be issued next month may be delayed as the central bank is still assessing the applications of suitable candidates.
  • Although industry observers are still speculating on the possible foreign commercial banking licensees, names like DBS Bank, UOB, The National Bank of Abu Dhabi (NBAD) and Sumitomo Mitsui Banking Corp have been popping up of late on analysts' radar as among the potential candidates. 
  • Bank Negara has been tight-lipped about this matter but hinted that the licences to be issued would be to banks from Asia, Europe and the Middle East. (StarBiz)
Bank Simpanan Nasional's profit-after-tax and zakat for 2009 rose to RM347m from RM168m in 2008 on strong growth in loans, advances and financing. Group revenue rose to RM1.2bn from RM1bn previously, BSN GM cum CEO Datuk Adinan Maning said.
  • Its total loans, advances and financing rose 27.2% to RM5.9bn. BSN's total deposits edged up to RM17bn from RM15.4bn in 2008. Total assets rose to RM18.7bn from RM16.7bn, fuelled by a 49.2% rise in conventional loans and syariah-financing portfolios. 
  • The total assets are expected to grow to RM20bn this year, Adinan said. BSN's NPL ratio stood at 1.8% as at the end of 2009, a marginal increase over 1.5% in 2008.
  • Adinan said BSN will continue to expand its business presence by diversifying products and improving services. The bank aims to explore branchless banking via Internet banking as an alternative channel, he added. In micro-financing, BSN plans to expand branch network with four additional new centres, and an increase in staff strength to boost growth.
  • As at April this year, a total of RM36.8m was approved for micro-financing and about RM36.3m had been disbursed. 
  • BSN also plans to open a full-fledged Islamic banking branch with each state having three branches. About RM10m had been set aside for the purpose. (BT)
Indian telco minister A Raja expressed optimism that the broadband wireless access (BWA) spectrum auctions, which kicked off today, will be as good as the 3G auctions and that he expects to mop up over Rs 150bn (US$3.2bn) from the process. "We expect competition will be as high as that of 3G. We expect to get more than Rs 15,000 crore towards licence fee from the BWA auctions," he said. (Economic Times of India)

Malaysian mills plan to cut rebar prices by RM50-100 per tonne due to slow demand and cheaper imports."The mills have been talking about price cuts for the last few weeks. There is no decision on when to cut prices yet, but most likely, it will be this week," said an official at a major Malaysian mill.
  • Rebar continues to trade at RM2,250-2,350 per tonne in the domestic market on Monday, unchanged since early April due to slow demand. This is lower than mills' offer prices of RM2,350-2,400 per tonne, also stagnant for almost two months now. "There is just no demand in the market. Many big projects such as the Penang bridge is very slow to start," said another mill official. 
  • "It's really not surprising that the mills are thinking of cutting prices. They have to do it to be in line with international prices," said a Singapore-based trader with operations in Malaysia. Import prices from China and Turkey into the region have already fallen to US$620-670 per tonne cfr, he said. 
  • The first mill official confirmed that worry about competition from cheaper imports was a reason to cut prices. (Metal Bulletin)
Lafarge Malayan Cement has become the first Malaysian cement company to receive the Green Label certification from the Singapore Environment Council. The company's president and chief executive officer Bi Yong Chungunco said its two cement products, Mascrete LH and Phoenix, fulfilled the pre-requisites to become eligible for the Green Label certification.
  • According to Chungunco, the Green Label certification is a milestone in Lafarge Malayan Cement's journey to reduce its carbon footprint. She said the company already had undertaken several initiatives to reduce the consumption of non-renewable natural resources and save energy during product manufacturing and construction. (Bernama)
PowerSeraya, together with parent YTL Power, is seeking to expand its operations, which could include selling utilities, fuel trading, and oil storage, in the region, PowerSeraya’s CEO John Ng said. But he added that there were no immediate plans or targets on the company's horizon at this time. PowerSeraya is in the last stages of commissioning a new S$800m 800 MW co-gen combined cycle plant. The unit, which will come on line by end- June, will generate both electricity and steam. (Reuters)

MMC Corp’s Senai Airport Terminal Services Sdn Bhd has signed a MoU with Koreanbased STX Energy Co Ltd to lease land in Senai Hi-Tech Park to build a solar module and/or solar cell manufacturing facility. It also signed similar agreements with Universiti Teknologi Malaysia, Universiti Sains Malaysia and Universiti Malaysia Perlis for the development of research in the fields that will benefit all parties. (BT)

The medium-term note (MTN) holders of Transmile Group, a troubled air cargo carrier, will continue with their move to wind up the company. Sources said the five MTN holders, who are owed RM105m, believe they have priority over the assets. They had on April 28 met to appoint receivers for the company.
  • The company's other obligations included RM214m in syndicated term loans and RM209m in guaranteed convertible bonds. The five MTN holders are believed to be the Employees Provident Fund (EPF), Meridian Asset Management, OSK Group, Agrobank and AmBank Group. The EPF is believed to hold around half of the notes. (BT)
MBM Resources plans to spend RM100m over the next three years to expand its distribution network. Its managing director, Looi Kok Loon, said this year, RM20m was allocated to expand its Perodua, Hino and Volkswagen (VW) dealerships. "MBM will set up 3S centres (sales, service and spare parts) in Butterworth, Ipoh, Shah Alam, Johor Bahru, Batu Pahat and Kota Kinabalu to deliver growth potential," Looi said. (Bernama, BT)

IGB Corp is mulling over spinning off its assets into three separate REITs comprising its retail, hotel and commercial components, its top official said. Group MD Robert Tan Chung Meng said that should this plan take off, this could "potentially be the biggest REIT in Malaysia". It could also create history by being the first group to spin off three REITs. (BT)

Sunway City may place out about a fifth of its planned IPO of a REIT to cornerstone investors who have greater holding power for the shares, sources with direct knowledge of the deal said. It is in talks with seven local funds in the hopes of getting some of them to become cornerstone investors in the IPO which is expected to raise around US$500m (RM1.65bn), the sources said. (Reuters, BT)

Sarawak Cable, which is listing on the Main Market of Bursa Malaysia today, is bidding for a turnkey contract to build a 275kV substation in Samalaju, said its MD Aaron Toh. The company was also bidding for other sizeable projects, including the turnkey construction of the Murum-Murum Junction transmission line. The value of the jobs is not known but industry observers say a substation normally costs RM100m to construct. (Financial Daily)

IJM Plantations has redesigned chief operating officer Joseph Tek Choon Yee as its new CEO and MD effective May 23 following the retirement of Velayuthan Tan Kim Song. (Malaysian Reserve)

KrisAssets Holdings
, the owner and operator of Mid Valley Megamall, is aggressively seeking foreign shopping complexes to be injected into the company. Group MD Robert Tan Chung Meng said that the properties could either be in the US or in Europe. He added that KrisAssets has the muscle to raise RM1bn-2bn to fund the purchases.
  • There are many properties available and what is of interest to the group are the densely populated major areas like Florida, California and Chicago, he said. The plan may materialise in two to three months. "The next two years will be very interesting for us," Tan added. (BT)
Hiap Teck Venture has bought a 55% stake of Eastern Steel Sdn Bhd, which owns 240ha of land in Teluk Kalung, Kemaman in Terengganu, for RM110m. (BT)

Unimech Group has set a dividend policy to distribute 30% of the group’s net profits to shareholders for FYE12/10. (Financial Daily)

Malaysia Building Society Bhd (MBSB), a property finance company, has made enquiries on being a “development financial institution” and not as a full-fledged bank, an industry source said. “There has been an inquiry by (MBSB) on the possibility of it being considered a development financial institution under the purview of the central bank,” a source said. (StarBiz)

20100525 0937 Malaysian Economic News.

The government is to discuss plans to cut its subsidy bill at a cabinet meeting tomorrow, with cuts likely to be phased in over a period of five years, three government officials said. The proposals presented by the think tank had envisaged subsidy cuts starting in June, with price rises coming every six months over a five-year timeframe. The aim is to reduce bill from food, petrol, electricity and gas subsidies that official figures show had cost RM24.5bn in 2009 (15.3% of total federal government spending). (Financial Daily)

The government does not have a specific timeframe to transform state-owned enterprises or government-linked companies (GLCs) into fully commercial companies in the process of gradual transition. National Economic Advisory Council (NEAC) chairman Tan Sri Amirsham A. Aziz, in stating this, said the transformation of GLCs was however needed for the government to become more focused as the country progressed. (Bernama)

Information from the Population and Housing Census of Malaysia 2010 will shape government policies and meet the country's requirements for good planning to develop the economy. This census project will cost RM200m, an increase of RM2m from the previous census carried out in 2000. The census will increase government consumption under the country's GDP. It estimates about 29m total residences in this census (23.5m in 2000). (Bernama)

The government will restore the visa-free transit facility for nationals from Bangladesh, India, Pakistan and Sri Lanka from 1 July, DPM Tan Sri Muhyiddin Yassin said. The government felt that the facility would benefit the country's tourism industry. (Bernama)

The biotechnology industry is expected to generate RM45bn in income by 2013. Science, Technology and Innovation Minister Datuk Seri Dr Maximus Ongkili said the industry was already well on its way to achieving this target. The GDP growth for 1Q measured 2.2%. They hope to achieve the target of 2.5% by end of this year. This sector needs more than 20,000 knowledge workers by 2014. (NST)

Malaysia and Singapore have agreed to reduce the toll charges for the Second Link to increase the road connectivity between the two countries. The new toll charges will be announced within a month. PM Datuk Seri Najib Tun Razak and Singapore counterpart Lee Hsien Loong also announced that the Joint Ministerial Committee (JMC) on Iskandar Malaysia, tasked to increase the connectivity between the two countries, had agreed on several moves. (Bernama)

20100525 0935 Global Economic News.

US existing home sales in April rose 7.6% mom to an annual rate of 5.77m (5.36m in Mar), as buyers rushed to qualify for an expiring government tax credit, the National Association of Realtors said. This came in below market consensus (5.62m). The number of homes on the market surged by the most in a decade, while median prices showed the biggest gain in four years. (Bloomberg)

U.S. Treasury Secretary Timothy F. Geithner said that a more market-driven currency would help Chinese officials to sustain growth, keep inflation low and adjust the nation’s growth model. So far, China has resisted calls from trading partners to let the renminbi strengthen after maintaining a peg of about 6.83 to the U.S. dollar for 22 months as a crisis policy. (Bloomberg)

China’s central bank Governor Zhou Xiaochuan said monetary policy will mainly be determined by domestic factors even as the economy relies on exports. “China is a large country with a large population so most of the important factors that need to be considered are domestic ones,” Zhou said at a briefing on U.S.-China strategic and economic talks in Beijing yesterday. He spoke after being asked whether policy is driven by domestic aspects such as inflation or external ones like the European debt crisis. (Bloomberg)

President Hu Jintao said that China will move gradually and independently in making changes to the nation’s exchange-rate mechanism as talks with the U.S. opened in Beijing yesterday. China will continue to “steadily advance” reform “under the principles of independent decision-making, controllability and gradual progress,” said Hu, echoing language in a May 10 central bank outlook for policy making. (Bloomberg)

Taiwan’s industrial production climbed for an eighth straight month in April on surging exports to China, helping send the unemployment rate to a 15-month low. Output gained 31.38% yoy in April (39.49% in Mar), the Ministry of Economic Affairs said in Taipei yesterday. A separate report showed the jobless rate dropped to 5.43% in April from 5.64% in March. (Bloomberg)

Thailand’s economy expanded the most since 1995 last quarter, before the nation’s worst political violence in 18 years undermined the country’s recovery. GDP rose 12% yoy in 1Q10 (5.9% in 4Q09), beating the 9% median estimate in a Bloomberg News survey of nine economists. (Bloomberg)

Prime Minister David Cameron’s coalition said it wanted to send a “shock wave” through departments as it announced GBP6bn (US$8.6bn) of spending cuts, the first steps toward reducing Britain’s record budget deficit. The business and transport budgets will have to find the biggest savings as government freezes civil-service recruitment, slashes spending on technology, advertising and travel and renegotiates existing contracts with private companies. (Bloomberg)

The German government is to cut its budget by EUR10bn a year until 2016 in order to set an example for the eurozone and to comply with the budget deficit rules in the constitution, the Financial Times reported. The cuts could be achieved through tax increases, reduced spending and lowered subsidies for Germany’s federal states, despite a promise by the coalition government to put tax cuts at the centre of the plan. (Financial Daily)

Singapore’s consumer prices rose 3.2% yoy in April (1.6% in Mar), the fastest pace in 14 months as an accelerating economy and a booming labor market boosted housing and transportation costs. On a mom basis, prices rose 0.9% (0.1% in Mar), without adjusting for seasonal factors. Economists had projected for a 2.6% yoy and 0.3% mom gain in the month. (Bloomberg)

Thailand’s government will extend some property tax breaks for a month to June to help home buyers in the wake of political unrest that has disrupted economic life, Finance Minister Korn Chatikavanij said. House transfer and mortgage registration fees will be maintained at 0.01% until the end of June before returning to 2.0% and 1.0% respectively. This will need cabinet approval today. The finance minister will also offer tax incentives from June to attract foreign investors to set up regional operating centres in Thailand. (Financial Daily)

Vietnamese inflation slowed to 9.1% yoy in May (9.2% in Apr), marking the second month ease as ample food supplies cooled prices, giving policy makers room to spur growth by boosting credit and encouraging market interest rates to fall. On a mom basis, prices rose 0.3% in May. (Bloomberg)

Vietnam will take flexible but cautious monetary policy to maintain the macroeconomic stability to achieve economic growth of 6.5% this year, the State Bank of Vietnam said. It will take synchronous measures in the remaining months to secure the economic growth target and curb inflation below 7.0% this year. It will also continue to use monetary tools to boost cash flows for the economy in line with the targets of credit growth of 25.0% and total money supply at 20.0% this year. (Bloomberg)