Friday, November 19, 2010

20101119 1132 Local & Global Economics News.

Malaysia: Malaysia-India trade expected to double by 2015
Trade between Malaysia and India is expected to double by 2015 as a result of many landmark agreements signed between two countries. Prime Minister Datuk Seri Najib Razak said among them were the Comprehensive Economic Cooperation Agreement, multiple memoranda of understanding in the fields of tourism, information technology and services, traditional medicine as well as in research and development collaboration. (Financial Daily)

Malaysia: Signs MoU with South Korea
Malaysia has signed a memorandum of understanding (MoU) on Governing Mutual Administrative Assistance and Cooperation in Origin Certification and verification with South Korea to further facilitate exports of goods under the Asean-Korea Trade in Goods Agreement. The MoU will ensure smooth implementation of the Sean- Korea Free Trade Agreement which came into force on 1 Jan this year. (Financial Daily)

Singapore: Forecasts record growth this year
Singapore said its economy will expand by a record 15% this year, the fastest pace in Asia, even as slowing global growth threatens to damp export demand. GDP would grow 4% to 6% in 2011, the Trade Ministry said. The economy, vulnerable to swings in demand for its drug and electronics, shrank less than previously estimated in the 3Q. (StarBiz)

Taiwan: 9.8% growth affirms an Asian expansion stoking inflows
Taiwan’s economy expanded faster than estimated, underscoring the strength of Asia’s recovery and the risk of asset bubbles as more capital flows into the region. GDP rose 9.8% in the three months through September from a year earlier, after climbing a revised 12.86% in the second quarter, the statistics bureau said in Taipei. The median estimate in a Bloomberg News survey of 17 economists was for 8.34% expansion. (Bloomberg)

EU: Greece pledges cuts to bring 2011 deficit to 7.4%
Greece’s government plans to cut the budget gap by EUR5bn (USD6.8bn) in 2011 by reducing spending, including wages at state companies, and increasing sales taxes to meet targets under a European Union-led rescue. The deficit will decline to 7.4% of GDP, or EUR17bn, from 9.4% of GDP this year, according to an emailed statement from the Athens-based Finance Ministry. That compares with a target of 7.6% under the May agreement with the EU and the International Monetary Fund to secure EUR110bn in emergency loans. (Bloomberg)

EU: Ireland turns to EU as Trichet says ECB aid limited
Ireland said it may ask for an international bailout as European Central Bank President Jean- Claude Trichet signaled debt-laden nations can’t rely on him to keep their financial systems afloat forever. Finance Minister Brian Lenihan said in Dublin he would welcome the creation of “substantial contingency capital funding” for Irish banks, as they became “unmanageable for the state itself.” In Frankfurt, Trichet said in a speech that policies first used to fight the global credit crisis can’t “evolve into a dependency as conditions normalize.” (Bloomberg)

US: Jobless claims in US increase less than forecast
Fewer workers than forecast filed claims for US jobless benefits last week, a sign the labor market is starting to improve. Applications for unemployment insurance payments rose by 2,000 to 439,000 in the week ended 13 Nov, Labor Department figures showed in Washington. The total number of people collecting unemployment insurance dropped to the lowest level in two years, while those receiving extended payments climbed. (Bloomberg)

US: Prime US mortgage foreclosures increase to record
Foreclosures on prime fixed-rate mortgages in the US jumped to a record in the third quarter as unemployment strained household budgets of the most creditworthy borrowers. The inventory of homes in foreclosure financed by prime fixed-rate loans rose to 2.45% from 2.36% in the previous three months, the Mortgage Bankers Association said in a report. New foreclosures rose to 0.93% from 0.71%. Both numbers were the highest in the 12 years since the Washington-based trade group started tracking the categories. (Bloomberg)

20101119 1129 Malaysia Corporate News.

US Stocks Rally on Manufacturing, Prospects for Irish Bailout
U.S. stocks rallied, sending major equity benchmarks to their biggest gains in two weeks, as speculation grew that Ireland will accept a bailout to rescue indebted banks and reports on manufacturing and jobless claims bolstered optimism about the economy. Caterpillar Inc. advanced 2.4% as the world’s largest maker of construction equipment said global retail sales of machines soared 48%. General Motors Co. rose 3.6% on its return to public trading following a USD20bn initial public offering. The Standard & Poor’s 500 Index gained 1.5 percent to 1,196.69 at 4 p.m. in New York. The Dow Jones Industrial Average added 173.35 points, or 1.6 percent, to 11,181.23. (Bloomberg)

KNM lands RM676m job in Uzbekistan
KNM Group has secured a USD216m (RM676m) gas condensate project in Uzbekistan from Russian oil and gas major Lukoil Uzbekistan Operating Co. In a filing to Bursa Malaysia yesterday, KNM said the two year project was secured via its wholly owned subsidiary KNM Process System SB, involved the supply of technical documentation, equipment and services for the development of gas condensate fields. According to Lukoil’s website, the firm is the second largest private oil company in the world in term of hydrocarbon reserves. The firm with 1% global oil reserves accounts for 2.4% of global oil output it said. (Financial Daily)

RM427m offer for Leong Hup, Emivest
The Lau Brothers have made bids worth a combined RM427m to buy all of the business of Leong Hup Holding and Emivest, in what appears to be a privatization exercise of the poultry companies. The four brothers, led by Tan Sri Lau Tuang Nguang, are making the bids through Emerging Glory SB (EGSB), in which they hold an equal stake. It is not immediately clear why they are doing this, nor did they say what they plan to do with the business after completing the deal. The brothers are already major shareholders of the two companies. However, the two offers are inter-conditional, which means that the two offers will not happen if one is not accepted. "The board (of Leong Hup and Emivest) will appoint the relevant advisers in due course and deliberate on the terms of the offer(s)," Leong Hup and Emivest said in separate statements. (BT)

Hong Leong Industries ups ante, restructures operations
Hong Leong Industries, a tile producer controlled by tycoon Tan Sri Quek Leng Chan, is buying a concrete pile maker and investing in a cement manufacturer as part of its restructuring plan. Under a slew of proposals, Hong Leong Industries will acquire Hume Industries (M) SB for RM235.2m, to be financed by share issuance, and take up preference shares in Hume Cement SB worth up to RM175m, according to a filing to Bursa Malaysia yesterday. Once the acquisitions are completed, Hong Leong will undertake a one-for-two right issue, which could raise a maximum of RM231.6m, to repay bank loans followed by a de-merger of Malaysian Pacific Industries by returning 60.23% of its stake to shareholders to exit the semiconductor business. (Malaysian Reserve)

Penang lifts stop-work order on double track project
The Penang government has lifted its stop-work order on the RM13bn Ipoh-Padang Besar Electrified Double Track Project that runs through Seberang Prai. Penang Chief Minister Lim Guan Eng said the order was lifted after the contractor, MMC-Gamuda Joint Venture Sdn Bhd, yesterday gave a guarantee letter promising flood prevention measures and mitigation for flood victims. “We received a letter from MMC-Gamuda and I feel this fulfils the conditions the state needed. The Seberang Prai Municipal Council (MPSP) has withdrawn the stopwork order,” Lim said after officiating a Penang Develop-ment Corporation Deepavali open house. A copy of the guarantee letter, which was distributed to the press, stated that MMC-Gamuda would, at its own cost, demolish or clear any obstructing construction materials to allow clear water flow and bear any compensation costs for flood victims, if future floods were proven to be a result of the double-tracking project.(Star)

AirAsia X takes off for Paris on 14 February
AirAsia X, the long-haul budget affiliate of AirAsia, will start flying to Paris from next Valentine's Day, more than a year after getting the rights to do so. The carrier will start four times weekly direct flights from 14 February 2011, between Paris-Orly International Airport and Kuala Lumpur International Airport's low cost carrier terminal. Yesterday, the airline announced that it would launch the route with an all-in-fare from RM499 one way. It is available for booking online from 22-24 Nov 2010. This will be the carrier's second European destination after London. The new route will be serviced by the Airbus A340 aircraft with 327 passenger capacity including 18 premium seats. (BT)

MRCB, IJM Land shares rise after merger talk
Shares of Malaysian Resources Corp (MRCB) and IJM Land perked up amid a weak broader market yesterday after a popular finance blog speculated on a possible merger. The rise comes as retail investors have become more active in the market recently. Last month, they accounted for almost half of the volume traded. IJM securities, namely the mother share and the warrants, were among the top 10 most-actively traded securities yesterday. Meanwhile, MRCB, the master developer for the KL Sentral development in Brickfields, ended the day 9 sen higher at RM2.10 with more than 11m shares traded. The Malaysia-Finance Blogspot, under a post headlined "Does a MRCB-IJM Land merger make sense?” noted that "the word had switched from an IJM Land privatization to a merger with MRCB. Something along the lines of a UEM Land-Sunrise deal it seems". Early this month, UEM Land Holdings launched a RM1.4bn conditional takeover offer for Sunrise. (BT) 

20101119 0902 Global Market News.

Russia seen keeping wheat export ban till late 2011
GENEVA, Nov 18 (Reuters) - Russia's ban on wheat exports, imposed after drought ravaged crops, could very well be extended until the end of 2011 if mounting worries about the next crop are confirmed, exporters, traders and analysts said.
Moscow said in August it would suspend all grain exports until the end of the year and officials have hinted the ban was likely to be extended until the end of the 2010/11 season on July 1-- step participants at a 3-day Global Grain conference in Geneva this week said was inevitable.

Gold holds gains as Ireland worry eases
SINGAPORE, Nov 19 (Reuters) - Gold prices steadied, holding onto gains from the previous session, as a  cure is seen imminent for Ireland's debt crisis, which helped  boost the euro.
"I think a rate hike, if materialized over the weekend, is   likely to exert a bit of volatility for commodities, including   precious metals," said Yingxi Yu, an analyst at Barclays Capital.

Oil extends gains to $82 as Irish worries ease
TOKYO, Nov 19 (Reuters) - Oil extended gains to near $82 a  barrel on Friday, continuing to get support from an improved  outlook for Ireland's debt crisis, which weakened the dollar  and boosted appetite for stocks and other commodities.
"Precious metals such as silver and palladium are climbing  and so are stocks, boosting market sentiment," said Shuji  Sugata, manager at Mitsubishi Corporation Futures. 

U.S. corn, soy drop on talk of China rate hike, wheat dips
SINGAPORE, Nov 19 (Reuters) - U.S. corn futures slid  nearly 1 percent, while soybeans lost 0.7 percent as  fears of possible steps by China, the world's biggest soy  importer, to curb food inflation weighed on the grain markets.
"Soybeans and corn are being driven by talk of rate hike  in China," said Garry Booth, a trader with MF Global Australia.

More China corn imports decided by market-official
BEIJING, Nov 19 (Reuters) - China's grain deputy chief said commercial companies and market prices would decide if more corn would be imported into the country while the government holds ample reserves and can ensure supplies.
"Corn imports currently are conducted by enterprises, not at the needs of the government in ensuring domestic supplies," Zeng Liying, deputy director of the State Grain Administration, told state media.

OIL: Crude rises above $82/bbl on Ireland hopes
TOKYO, Nov 19 (Reuters) - U.S. crude futures extended gains to above $82 a barrel on Friday as hopes for economic recovery increased after worries about Ireland's debt crisis began to diminish, pushing the dollar lower and boosting appetite for stocks and other commodities.
Energy futures drew additional support from economic data showing manufacturing activity in the U.S. mid-Atlantic region touched a one-year high this month and that new U.S. claims for jobless benefits barely rose last week.

COMMODITY MARKETS: Relief over Ireland sparks commodities rally
NEW YORK/LONDON, Nov 18 (Reuters) - Oil broke a four-day fall and gold snapped its longest losing streak in almost six months as a multibillion-dollar bailout plan for Ireland restored calm in commodity and financial markets on Thursday.
"We're seeing a little bit of confidence starting to creep back into these markets," said Daniel Smith, an analyst at London's Standard Chartered.

GLOBAL MARKETS: GM's IPO, US data drive stock and commodity gains
NEW YORK, Nov 18 (Reuters) - A blockbuster General Motors Co stock offering dovetailed with upbeat U.S. economic data and easing Irish debt tensions to lift global stocks on Thursday, while the dollar gained on the yen and cut losses versus the euro.
"This is bigger than just an IPO. It's an American icon coming back onstream and it is feeding optimism to the stock market," said Bernie McGinn, president of McGinn Investment Management in Alexandria, Virginia. 

Hong Kong On Alert After Bird Flu Case; Downplays Threat(Source: CME)
Hong Kong health authorities are on alert following the discovery of the city's first human case of bird flu in seven years, even as they downplayed the threat of a major new outbreak. Officials, meanwhile, are still struggling to determine if the 59-year-old woman who tested positive for Influenza A (H5), a variant of the avian flu, contracted the disease within the city. York Chow, the secretary for food and health, said the risk of avian flu in Hong Kong is "not significantly higher than before." Nonetheless, he said all public hospitals are operating at the serious response level under the government's preparedness plan for an influenza pandemic, requiring visitors to wear surgical masks, limiting the number of visitors and shortening visiting hours. The Center for Health Protection is also testing all severe pneumonia cases for the bird flu. The city's last case of avian flu in humans was in 2003.
In 1997, Hong Kong was home to the world's first major outbreak in humans, when six people died from the virus' mutation. The government will also increase testing of chickens that cross the border with mainland China. In addition, the Agriculture, Fisheries and Conservation Department will inspect 30 Hong Kong farms and obtain samples for further testing. The victim, currently in serious condition at Princess Margaret Hospital, traveled in mainland China for 10 days before returning to Hong Kong Nov. 1. She developed her first symptom, a runny nose, the next day. Mr. Chow said it is "most likely" she contracted the flu in the mainland, where she didn't have contact with live poultry and didn't visit farms, but officials haven't confirmed how the flu originated since the incubation period can range from one day to two weeks.

Inflating the Risks To China's Economy (Source: CME)
The fight against inflation in China is getting ever more serious. Beijing's top body, the State Council, is now mulling price controls for some consumer staple goods. It's also cracking down on speculators, who've been driving up vegetable prices, while giving extra welfare payouts to poorer families. Such announcements help the government give the impression it is doing all it can to fight inflation, particularly in the cost of food. The consumer price index's spike to 4.4% on-year in October was mostly due to a 10.1% on-year rise in food prices. Politically it's an important move, showing Beijing's keen to prevent social unrest that might result from a sharp uptick in the basic cost of living. Still, the greater war it has to fight is to bring down the excess money swilling around China's economy. That's a result of the main of the credit Chinese banks pumped into the economy over the last two years, now exacerbated by potential hot money inflows on the back of loose U.S. monetary policy.
There's certainly reason to be skeptical price controls will work. Mark Williams, Capital Economics' China economist, says that when such measures were implemented in January 2008, wholesale food prices still rose 17% over the following two months because controls weren't always comprehensively implemented. Price caps can become counterproductive for consumers, if, for example, producers respond by limiting their output or increasing exports, leading to domestic shortages of key goods. Even if price controls do have a temporarily beneficial effect, Chinese policy makers will continue to face problems if they don't tackle the causes of inflation rather than its symptoms. Back in 2008, high food inflation was mostly a result of supply bottlenecks.

Federal Reserve officials see need for full QE2
WASHINGTON, Nov 17 (Reuters) - Federal Reserve officials said on Wednesday the U.S. central bank is likely to follow through on its entire $600 billion bond buying program based on an anticipated weak economic recovery.
"As the forecast looks right now it looks like we'll be purchasing at this pace through the end of the second quarter to add up to $600 billion," St. Louis Federal Reserve Bank President James Bullard told reporters on the sidelines of a conference.

PRECIOUS-Gold rebounds as euro recovery benefits commodities
LONDON, Nov 18 (Reuters) - Gold rose more than 1 percent on Thursday, recovering after four sessions of losses, as hopes for a rescue package for Ireland boosted the euro, helping commodity prices recoup some of this week's hefty losses.
Spot gold  was bid at $1,356.20 an ounce at 1241 GMT, against $1,335.70 late in New York on Wednesday. U.S. gold futures for December delivery  rose $19.20 to $1,356.10.

FOREX-Euro rises as Ireland optimism fuels speculative rally
LONDON, Nov 18 (Reuters) - The euro rallied on Thursday as optimism that Ireland's debt crisis may be easing fuelled speculative buying, but the move was seen as undermined by peripheral risks elsewhere and position-squaring into the year-end.
The dollar was broadly softer after subdued U.S. inflation data on Wednesday reinforced the U.S. Federal Reserve's case for monetary easing.

US wheat, corn rise; weak dollar prompts bargain hunting
SINGAPORE, Nov 18 (Reuters) - U.S. wheat gained 1 percent  , rising for a second straight session, while corn  future added 0.6 percent as the grain markets recovered from  over three-month lows, with a weaker dollar prompting  bargain-hunting.   
"Grains are slightly firmer today which is not surprising  as   there has been a large selloff in the last few of days," said   Brett Cooper, a senior manager of markets at FCStone Australia.   "There is possibly some profit-taking. After commodities  selloff   its probably some bargain-hunting today."   

Volatile markets cool US corn, soy export demand
CHICAGO, Nov 17 (Reuters) - Highly volatile markets have chilled export demand for U.S. corn and soybeans, but demand for wheat has picked up as prices have fallen to multimonth lows, traders and analysts said on Wednesday.
They said demand for corn and soybeans would come roaring back once markets stabilize, fueled by narrowing supplies and rising consumption in China where soaring food costs have driven consumer price inflation to a 25-month high.

Stocks, euro gain as Ireland worries ebb
LONDON, Nov 18 (Reuters) - Global stocks rebounded , while the euro recovered ground against the dollar on optimism that Ireland may soon see a solution to the debt problems which have recently dogged financial market sentiment.
"It's absolutely vital for the authorities to take proactive steps in order to try to resolve this crisis as soon as possible. The market should see some relief in relation to that," said Henk Potts, equity strategist at Barclays Wealth.

20101119 0901 Soy Oil & Palm Oil Related News.

La Nina triggering heavier monsoon in Malaysia-Met Dept
KUALA LUMPUR, Nov 19 (Reuters) - The La Nina weather pattern will trigger heavier-than-usual monsoon rains this year for Malaysia's key oil palm growing region on Borneo island, the country's weather office said on Friday.
Director General of the Malaysian Meteorological Department Yap Kok Seng said the weather condition will induce five to six episodes of heavy rain in the world's second largest palm oil producer and No.3 rubber supplier.

Soy product futures rallied in unison with soybeans as broad-based commodity gains and the easing of Chinese monetary concerns buoyed prices. Soyoil led the upward charge, with spillover support from crude oil futures and higher-than expected weekly export sales underpinning prices, analysts said. CBOT December soyoil ended 1.98 cents, or 4%, higher at 50.92 cents per pound, and December soymeal traded $7.00, or 2.1%, higher at $335.00 a short ton. (Source: CME)

USDA Chief: Food Costs Won't Surge (Source: CME)
Skyrocketing prices in the agricultural futures markets won't translate into as big a bump in food costs for consumers, U.S. Department of Agriculture Secretary Tom Vilsack said on Wednesday. "I'm not sure that commodity prices necessarily translate directly and proportionately into food costs," Mr. Vilsack said in an interview, adding, "They go up and down all the time." Prices for grains such as corn and soybeans soared to two-year highs in the futures market last week, while sugar prices spiked to a 30-year high. The gains were widely attributed to fears that harvests would be too small to comfortably meet rapidly growing demand from China and other emerging markets. But farmers aren't reaping the full benefit of higher prices, and consumers don't pay the full cost, Mr. Vilsack said.
"There are a lot of people in the food chain that are taking a bite out of the apple," he said. Food prices rose only 0.1% in October, the Labor Department said on Wednesday, even as corn futures shot up nearly 20% and sugar futures rose 15%. But large food producers, including General Mills Inc., have said recently that they will soon scale back promotions that have kept consumer prices subdued. The USDA estimates food prices this year will rise by between 0.5% and 1.5%, the smallest increase since 1992, although the rate is expected to pick up to a more normal 2% to 3% in 2011. Businesses across the agricultural sector also have low debt levels, making it easier to weather volatile markets, Mr. Vilsack said. "If you're highly leveraged and you're basically banking on high commodity prices to get you out of a high leveraged circumstance, you're in big trouble," he said. "But if you've got $1 debt to $9 or $10 in asset value, you've got a little bit of time to deal with the vagaries of the market."
A "significant cushion" between debt and asset values also should keep rising farmland prices from turning into a bubble, Mr. Vilsack said. Prices for irrigated land in the western farm belt rose 9.6% in the third quarter, according to a survey put out last week by the Federal Reserve Bank of Kansas City. The rapid rise has some observers concerned about the risk of an equally sharp correction. "While the credit structure underlying U.S. farmland does not appear to involve excessive leverage or inappropriate loan products, this is a situation that will continue to require close monitoring," Sheila Bair, chairman of the Federal Deposit Insurance Corp., said last month.

Palm oil up as concerns over Ireland debt crisis eases
KUALA LUMPUR, Nov 18 (Reuters) - Malaysian crude palm oil futures rose 1.6 percent , lifted by broad commodity markets that rebounded as tension on financial markets eased over Ireland's debt crisis.
"Traders took profit in the morning session as they were worried about the China's pledge to control food prices, but it followed the rally in the overseas market before the market closed," said a trader with Kuala Lumpur-based foreign brokerage.

Paraguay soy output seen edging down to 7 mln T
ASUNCION, Nov 17 (Reuters) - Paraguayan farmers will finish sowing 2010/11 soybeans in the next few days and production is expected to dip slightly to about 7 million tonnes, an industry group said on Wednesday.
Paraguay is the fourth-largest soybean exporter, though it trails far behind neighboring agricultural giants Brazil and Argentina. The landlocked country produced a record-high crop of 7.4 million tonnes last season.