Thursday, July 22, 2010

20100722 1712 Local & Global Economic News.

Malaysia: Inflation up 1.7% y-o-y in June
Malaysia’s inflation rose for the fourth consecutive month in June this year, spurred mainly by costlier food and non-alcoholic beverages, beside higher transport expenses, and utility bills. The country’s inflation as measured by the consumer price index (CPI) rose by an annual pace of 1.7% in June, translating into a cumulative 1.4% rise in the CPI during the first half of this year, according to a statement by the Department of Statistics.(Financial Daily)

China: Investors defy Rogoff warning as yuan property bonds rise
China bond investors are betting government measures to cool property prices won’t hurt real estate companies as money managers and economists warn of a crash that may slow the economy leading global growth. Yields on China developers’ local-currency notes fell to the lowest ever relative to government debt this year, with the spread on Poly Real Estate Group Co.’s 4.3bn yuan (USD634m) in 7% bonds due 2013 narrowing to a record 95bps on 8 July, according to Shanghai Stock Exchange prices on Bloomberg. (Bloomberg)

EU: Euro passes own stress test as debt panic ebbs, bank exams loom
Europe may already have passed its biggest stress test. The euro has rallied 8% from a four-year low last month. Greece, Spain and Portugal have managed to sell 50bn euros (USD64bn) of debt since 10 May when the need to save the single currency forced finance ministers to create a nearly USD1trn rescue fund and European Central Bank President Jean-Claude Trichet to begin buying bonds. (Bloomberg)

EU: Banks may disclose sovereign-debt holdings with stress tests
Europe’s largest banks may give breakdowns of their sovereign-debt holdings when they release stress-test results, according to a document from the Committee of European Banking Supervisors. European regulators asked the region’s biggest banks to publish a list of each lender’s gross and net exposure to central and local governments in 30 countries in the region, including Greece, Spain, Ireland, Italy and Portugal, according to a confidential draft template obtained by Bloomberg News. (Bloomberg)

UK: BOE considered expanding stimulus in 7-1 vote against Sentance
Bank of England policy makers considered expanding stimulus this month after the economic outlook “deteriorated a little,” overruling Andrew Sentance’s repeated call for an interest-rate increase. The Monetary Policy Committee, led by Governor Mervyn King, voted 7-1 to keep the benchmark rate at 0.5%, according to minutes of the July 8 decision released in London. Sentance favoured an increase to 0.75%, arguing that inflation had “shifted sufficiently to justify beginning to raise interest rates gradually.” (Bloomberg)

Brazil: May raise rate to 11% to slow growth, prices
Brazil’s central bank will probably maintain its “aggressive” pace of interest rate increases and raise borrowing costs for a third straight meeting to slow growth to a level that won’t stoke a resurgence of inflation. Policy makers will raise the Selic benchmark rate 75bps to 11% from 10.25%, according to 46 of 49 economists surveyed by Bloomberg. Three analysts expect a half- point increase, in line with traders’ bets after a report showed that prices unexpectedly fell in the month through mid-July. (Bloomberg) US: Bernanke says Fed is prepared to act as needed Federal Reserve Chairman Ben S. Bernanke said central bankers “remain prepared” to act as needed to aid growth even as they get ready to eventually raise interest rates from almost zero and shrink a record balance sheet. While Fed officials plan for the exit, “we also recognize that the economic outlook remains unusually uncertain,” Bernanke said in testimony to the Senate Banking Committee. (Bloomberg)

U.S: Housing starts fell in June to the lowest level in eight months after the expiration of a U.S government tax incentive caused sales to slump. The retreat following the end of government support shows it will be difficult for the industry that precipitated the recession to sustain a recovery. (Source: Bloomberg)

U.S: Senate approved an extension of unemployment insurance that restores aid to 2.5million people who lost their benefits during a fight over whether to add the USD34b cost to the federal deficit. The nationwide unemployment rate was 9.5%.(Source: Bloomberg)

U.K: Bank of England policy makers voted 7-1 to maintain rate at 0.5% , to keep interest rates at a record low this month as the economic outlook had "deteriorated a little," overruling Andrew Sentance's call for an increase for a second month. (Source: Bloomberg)

Thailand: Exports rise the most in more than 18 years to surpass the record value set before the global financial crisis, adding to evidence of the economy's resilience to Europe's debt woes and domestic political unrest. Shipments jumped 46.3% in June from a year earlier to an unprecedented USD18.04b, Commerce Minister Porntiva
Nakasai said in Nonthaburi province on the outskirts of Bangkok. (Source: Bloomberg)

Philippine: Budget deficit in the first half of 2010 exceeded an earlier forecast as spending rose and tax revenue missed targets. The shortfall was PHP34.6b (USD744m) in June, President Benigno Aquino's three-week-old government said in a statement in Manila. (Source: Bloomberg) 

20100722 1710 Malaysia Corporate News.

Wilmar buys NatOleo from Kulim for RM450m
Kulim (Malaysia) will sell its entire stake in its oleochemical products manufacturing unit to Singapore's Wilmar International Ltd for RM450m. It entered into a share sale agreement yesterday with Wilmar's unit PGEO Group SB to dispose of its entire 91.38% stake, or 186.6m shares, in Natural Oleochemicals SB (NatOleo). The remaining 8.62% stake in NatOleo is held by National Land Finance Co-operative Society Ltd. The principal activities of NatOleo are the manufacture and export of oleochemical products such as fatty acids, its fractions and glycerine. Meanwhile, its subsidiaries manufacture soap noodles, palm wax as a feedstock for manufacturing of candles and process esters. (BT )

Mudajaya to see new shareholder?
Market speculation of a potential change in a substantial shareholding of Mudajaya Group has sent shares of the construction-cum-independent power (IPP) player surging. Mudajaya was the top performing stock on the local bourse yesterday, rising 55 sen or 10%, to RM5.71 on heavy volume of over two million shares. (Financialdaily) 

Khazanah sells 5% stake in Telekom Malaysia
Khazanah Nasional, Malaysia’s sovereign wealth fund, sold RM581.3m worth of shares in state-control-led Telekom Malaysia as part of the government’s plans to reduce its local business holdings. Khazanah sold 178.9m shares, or 5%, of the fixed-line phone and Internet service provider, at a fixed price of RM3.25 a share. That’s a 2.7% discount to the stock’s RM3.34 closing in Kuala Lumpur yesterday. (MalaysianReserve)

Khazanah unit gets good response for Parkway offer
In a blow to Fortis Healthcare Ltd, Khazanah Nasional’s unit, Integrated Healthcare Holdings, says it has secured 50.5% approval to date from Parkway shareholders who have voted for its partial offer. This means that it has met one of the two criteria for the partial offer to go through – which is to secure a 50% approval of the stakeholders, as well as to receive acceptances for no less than 313m shares. In an update to the Singapore stock exchange, Integrated Healthcare said it had received an aggregate of 604.93m valid votes from offer shareholders on the partial offer. This represents about 70% of the total number of shares which are eligible to vote on the offer. Of these valid votes received, about 50.5% were to approve the partial offer. In addition, 15.7m shares have been tendered as acceptances. These represent about 5% of the 313m offer shares. (Starbiz)

Time engineering sells 40m Time dotCom shares
Time Engineering (TEB) sold 40.3m shares in Time dotcom in the open market between 12 July and 15 July. Based on an average price of about 52 sen, the Time dotCom’s share sale would have raised RM20.96m for TEB. Time dotCom’s share price closed the day at 57.5 sen. Despite the sale, TEB still holds some 685.88m shares, or 27.1% stake in the company. Shares of TEB and Time dotcom have been rising in the past two trading weeks on speculation that UEM Group, which controls TEB with a 45% stake, was reported to be interested in selling its entire stake in the company as its moves to focus on its core property, construction, maintenance and expressway business. (MalaysianReserve)

Petra Energy to set up new onshore fabrication facility in Sabah
Petra Energy is identifying a suitable site for its new onshore fabrication and logistics facility at Sabah’s oil and gas (O&G) hub in Kimanis. Executive Kamarul Baharin Albakri said the new onshore fabrication facility was part of the group’s strategy to leverage on the growing opportunities in the brown field sector of the upstream O&G industry in the state. (Starbiz)

QSR buys 1.94m KPJ REIT units
QSR Brands has acquired 1.947m units in KPJ Real Estate Investment Trust (REIT) from the open market on 20 July for about RM2.012m. The purchase was funded via internally generated funds. The acquisition was based on better return on investment of about 7.3% (based on current dividend yield) as against the current fixed deposit interest rate of about 2.5% to 3.0%. (Starbiz)

Kulim: Selling NatOleo to Wilmar for RM450m.
Kulim (Malaysia) will sell its entire stake in its oleochemical products manufacturing unit to Singapore's Wilmar International Ltd for RM450m. Kulim said the proposed disposal gives it an exit strategy to unlock its investment value in NatOleo. (Source: Business Times)

Markets: SC approves RM12.6b IPOs, bond issues in 2Q.
The Securities Commission (SC) had in the 2Q this year approved a total of 3 IPOs (RM170m) 15 and bond issues (RM12.43m) that were aimed at raising a combined RM12.6b. (The Edge Financial Daily)

Mudajaya: To see new shareholder?
Share price soared on speculation that an IPP player may purchase a major stake. Unconfirmed market speculation is that IPPs Tanjong plc and MMC Corporation Bhd's unit Malakoff Corp Bhd may be among the parties planning to purchase a significant stake in the company. (The Edge Financial Daily)

Malaysian Mosaics: RM49m plan to privatise Malaysian Mosaics.
The two largest shareholders of Malaysian Mosaics Bhd (MMB), a ceramic tiles manufacturer, plans to privatise the company by paying back a total of RM49m to selective stockholders. (Source: Business Times)

20100722 1256 FKLI Mid Day Hourly Chart Study.

FKLI closed : 1339 changed : +5.5 points, volume : low.
Bollinger band reading : side way little downside biased.
MACD Histrogram : getting lower, buyer profit taking, seller testing market.
Support : 1337, 1330, 1325 level.
Resistant : 1345, 1350, 1360 level.
Comment :
Tiny volume tight range market FKLI ended the first session lower with much action by moving side ways through out the whole morning. Hourly chart reading suggesting a side way range bound little downside biased lack of participation market.

20100722 1246 FCPO Mid Day Hourly Chart Study.

FCPO closed : 2485, changed : +28 points, volume : high.
Bollinger band reading : upside biased.
MACD Histrogram : continue higher, buyer expand operation.
Support : 2470, 2450, 2400 level.
Resistant : 2500, 2520, 2550 level.
Comment :
FCPO spike up and continue to move upward in higher volume transaction as buying activities accelerate despite a weaker soy oil and crude oil futures price. Hourly chart wise market opened nearly unchanged, tested immediate support level and surge upward to near resistant level to closed a little off the high. Outlook wise, market continue to record upside biased reading with possible pullback correction to take place soon.

20100722 1131 Global Market News.

World stocks boosted by Apple results
LONDON, July 21 (Reuters) - World stocks and oil rose while government bonds slipped after strong earnings and forecasts from Apple  raised expectations of solid second-quarter results from other heavyweight companies. "So far so good, but the emphasis will be on Q3 guidance increasingly," said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.

20100722 1129 Soy Oil & Palm Oil Related News.

Soyoil futures stumbled, retreating on adjustments in the meal/oil spread relationship, building stocks amid slower domestic usage and spillover weakness from crude oil futures, analysts said. Crude oil influences soyoil due to its use in making renewable fuels. December soyoil settled 0.14 cent, or 0.4%, lower at 39.05 cents per pound.(Source: CME)

Crude Oil To Fall On Reduced Stimulus; Grains Sideways -Analysts(Source: CME)
Crude oil prices could drop by 40% by the end of the year as the U.S. government pulls back on its stimulus efforts, an energy analyst said Wednesday.
Phil Flynn, analyst for PFGBest, said at a midyear commodities outlook that the U.S. government's stimulus has artificially inflated crude oil prices by $20 to $30 per barrel. Prices have been trading around $75 this month.
"We should see the $40 handle by the end of the year," he said at a midyear Dow Jones Indexes-UBS commodity outlook conference. He later projected prices in a $44-$49 range.
Flynn said that assuming the Federal Reserve raises interest rates, crude oil prices might initially climb, as investors see it as a sign the economy is on the mend. But that reaction will then give way to bearishness in the crude market, as traders recognize that the pull-back of stimulus will strengthen the dollar.
Crude prices climbed close to $150 in 2008. Flynn said that rally was a sign of trouble in the economy, and that investors started to buy crude as a hedge against bank failures, which they expected to hammer the U.S. economy while sparing global markets. Analysts were less bearish on other commodities. Matt Zeman, a commodity futures broker with La Salle Futures Group, said that "financial mayhem" will continue to fuel prices in gold, which he said has become an alternative currency.
Problems in the European Union are going to persist, he said, and U.S. interest rates are going to remain at "exceptionally low" levels.
"People are going to be looking for something they feel safe with," he said.
Zeman projected average gold prices at $1,350 an ounce over the next year. On Tuesday, gold for August delivery settled up $9.80, or 0.8%, to $1,191.70 an ounce on the Comex division of the New York Mercantile Exchange.
In the grains markets, Price Futures Group Vice President Jack Scoville said he expects prices to continue in a broad sideways pattern for the foreseeable future.
"Generally good demand against good supplies means moderate prices, and that's what I expect to see," Scoville said.
Investors are generally pessimistic about the economy and are holding a lot of assets in cash "while they figure out what to do with their money," said Jon Fraade, managing director for UBS Securities LLC.
However, despite the low appetite for risk, there is "cautious buying" in commodities currently by pension funds, because they see more upside than downside in the markets, and because their level of investment is below a 3% to 5% benchmark.
The Dow Jones-UBS Commodity Index is down 9.66% so far this year.

Palm rebounds on hopes of good demand, weather concerns
JAKARTA, July 21 (Reuters) - Malaysian crude palm oil rose at midday, recouping the previous day's losses on expectations of good demand and that weather concerns in the U.S. will continue to support grain markets.
"Market fundamentals have not changed. We are moving in to Ramadan month, we still expect strong demand to come in," a trader at a foreign brokerage said.

Argentina says soyoil sales rise despite China row
BUENOS AIRES, July 20 (Reuters) - Argentine soyoil exports rose 65 percent in June from the same month last year despite a boycott by top buyer China that has halted shipments to the Asian country since April, the government said on Tuesday.
Argentina's government says it expects the trade row with China to be resolved in the near future, but there has been no clear sign of a deal and exporters have been forced to sell soybean oil elsewhere and at lower prices.