Friday, December 17, 2010

20101217 0940 Global Economics News.

India: Bond-purchase plan may ease path to January rate increase
The Reserve Bank of India’s plan to address the biggest cash crunch in a decade with bond purchases may revive liquidity enough for the central bank to resume raising interest rates next month. The RBI left its benchmark repurchase rate unchanged at 6.25% after six increases in 2010 and unveiled plans to buy back INR480bn (USD10.6bn) of government bonds to ease a cash squeeze caused by a record INR1.1trn of share sales this year. (Bloomberg)

EU: Irish aid approved by IMF seeing unparalleled crisis
The International Monetary Fund’s board approved a three-year, EUR22.5bn loan facility for Ireland, the Washington-based fund said in a statement. The IMF aid, which the fund says is equivalent to USD30.1bn, is part of a EUR85bn rescue package put together by the IMF and European authorities to contain the region’s fiscal crisis. (Bloomberg)

EU: To create post-2013 crisis tool, spars over near-term moves
European Union leaders agreed to amend the bloc’s treaties to create a permanent crisis-management mechanism in 2013, while divisions flared over steps to prevent concern over debts from engulfing Portugal and Spain. Germany, the biggest contributor to Europe’s bailouts of Greece and Ireland, pushed through an accord to set up a system that would allow financial aid “if indispensable to safeguard” the euro area and might force bondholders to bear some of the costs of future rescues. (Bloomberg)

UK: Retail sales increase for second month on food
UK retail sales rose in November after a bigger than estimated increase in October, led by demand for food, toys and jewelry in the run-up to Christmas. Sales increased 0.3% from October, when they gained a revised 0.7%, the Office for National Statistics said. That matched the median forecast of 24 economists in a Bloomberg News survey. From a year earlier, sales rose 1.1%. (Bloomberg)

US: Fewer firings point to job-market gains
Fewer workers than forecast filed claims for unemployment benefits last week, pointing to a drop in firings that signals the US job market is improving. Applications for jobless insurance payments fell by 3,000 to 420,000, sending the average over the past four weeks to the lowest level since August 2008, according to data from the Labor Department. Other reports showed work began on more houses last month and manufacturing picked up in the Federal Reserve Bank of Philadelphia region in December. (Bloomberg)  

20101217 0939 Malaysia Corporate News.

TNB awards RM1bn jobs for hydropower project
Tenaga Nasional (TNB) yesterday awarded more than RM1bn worth of packaged jobs to build the Hulu Terengganu Hydropower on Sungai Terengganu, upstream of Kenyir Lake. The job packages involve the construction of two dams, installation of two hydro turbines and generators in an underground 250 megawatts (MW) power station. In its filing to the stock exchange yesterday, TNB said the hydropower project will take five years to complete. Payment will be made progressively and by October 2015, the plant is expected to start producing electricity. Loh & Loh Construction SB and Sinohydro Corp Ltd joint-venture were awarded RM828.3m contract to build two dams, a water transfer tunnel and an underground power house. The Consortium of Alstom Projects India Ltd and Alstom Hydro Malaysia SB were awarded separate contracts worth RM114m and RM127.6m to design, make, erect, test and commission two generators, each capable of generating 125MW. (BT)

AirAsia invests 40% stake in Philippine ops
AirAsia, which has formed a 40:60 joint venture (JV) with three Philippine partners, is investing USD8m for its 40% stake in AirAsia Philippines. We will be funding it internally via equity, group CEO Datuk Seri Tony Fernandes said after a signing ceremony between AirAsia and Antonio O. Cojuangco Jr, Dr Michael L. Romeo and Marianne B. Honours yesterday. He expects AirAsia Philippines to be profitable straight away and contribute to group revenue immediately as a lot of ground works had been done. The setting up cost is very low. There are already flights from Kuala Lumpur to the Philippines. Everything is there already, Fernandes said. AirAsia will hold 40% equity in AirAsia Inc, the JV company set up for AirAsia Philippines. The new airline is expected to begin operations in August 2011 with an initial working capital of US$25m. To a question, Fernandes said it was in the midst of getting approval from authorities for its airline operations in the Philippines. (StarBiz)

Securities Commission amends takeover code
The Securities Commission (SC) has introduced a revision to its takeover code that, among other things, requires more disclosures by parties looking to buy out listed companies and prohibits certain actions by companies to frustrate takeover bids. The Malaysian Code on Take-Overs and Mergers 2010 (2010 Code), which came into effect yesterday, requires a potential offeror or a potential target company, to make an announcement on possible offers where there are unusual movements in the price of shares of the latter. The potential offeror is now required to announce its intention to make a takeover offer or otherwise. However, if the potential offeror denies it is making an offer for the offeree, it is then prohibited from making a takeover offer for the same target company, for a period of six months. It is understood that this aspect of the new code places an onus on the target company to get in touch with the potential bidder, especially in instances where media reports have named the potential bidder or bidders. (StarBiz)

Proton: Persona replacement in 2012
Proton Holdings is to replace its existing Persona model with a new version in 2012, said its group managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir. However, he did not disclose which of the five Pahlawan concept cars shown at the recent KL International Motor Show would be replacing the Persona model. "Take a guess," Syed Zainal said, when asked by reporters to reveal more on the Persona replacement model. Industry talk has it that the Tuah concept, or code-named Espire, would be bound for production. It is learnt that the Tuah concept car shown to the public was not the final design approved as Proton is coming up with an improved version. Earlier, Syed Zainal witnessed the signing of a memorandum of understanding between AutoV Corporation Bhd with US-based ArvinMeritor Inc and Germany's Continental AG. (BT)

Four firms to be delisted on 21 Dec
Four companies, namely construction firm Putrajaya Perdana, water infrastructure specialist Loh & Loh Corp, property developer General Corp and planter Kurnia Setia, will be delisted on 21 Dec. The companies made the announcements to Bursa Malaysia yesterday. Putrajaya Perdana and Loh & Loh were being taken private by Javace SB and Sheikh Tarek Essam Ahmad Obaid for a cash offer price of RM4.85 per share respectively. General Corp was being taken private by Consistent Record SB, which was acquiring all the company's assets and liabilities for RM505.01m while Kreatif Selaras SB was taking private Kurnia Setia. (StarBiz)

MTD Cap unveils new toll rates for Philippine expressway project
MTD Capital (MTD Cap) announced to Bursa Malaysia yesterday that the new toll prices for Phase 1, Alabang, Muntinlupa City to Sto. Tomas, Batangas, of the South Luzon Expressway (SLEX) will be effective 1 Jan, 2011. It said South Luzon Tollway Corp (SLTC), a joint-venture firm between Philippines National Construction Corp (PNCC) and MTD Cap's subsidiary MTD Manila Expressways, yesterday received two letters from the Toll Regulatory Board (TRB). TRB informed that its board had approved and issued a certificate of substantial completion for Project Toll Road 3 of SLEX. In a separate letter, TRB handed over the matrix of the applicable toll prices for Phase 1, which SLTC must publish once a week for three consecutive weeks in a newspaper of general circulation. (StarBiz)

Mulpha sells Hilton Melbourne for RM327m
Mulpha International will use the RM327mil proceeds from the sale of its Hilton Melbourne Airport Hotel to repay its debt levels unless new investment opportunities arise. Executive chairman Lee Seng Huang, in an e-mail reply to questions from StarBiz, explained: While we have no current use of the proceeds, we will repay our outstanding facilities as much as possible. But if and when an opportunity comes up, we can redraw our loan facilities to make an acquisition. This is part of our treasury management to ensure we maximise returns on our cash resources. In a statement to Bursa Malaysia yesterday, Mulpha said that the proceeds, if used to repay debts, could bring down the group's debt levels from RM1.5bn to RM1.18bn. To recap, yesterday Mulpha said it's wholly-owned subsidiary Mulpha Australia Ltd, had sold the Hilton Melbourne Airport Hotel to Singaporelisted Pan Pacific Hotels Group for AUD108.89m (RM337.5m) cash, with the sale expected to be completed by the first quarter of next year. (StarBiz)

20101217 0932 Global Market News.

OIL: Oil up slightly on dollar weakness
SINGAPORE, Dec 17 (Reuters)- U.S. oil prices edged higher  on Friday as the dollar fell against the euro following an  agreement by European Union leaders to set up a permanent  crisis management mechanism.
Brent's premium against U.S. benchmark West Texas  Intermediate rose further to a fresh seven-month high at $4.01  at the close on Thursday, from $3.58 the previous session, the  highest since May 14. 

COMMODITY MARKETS: Markets down broadly as currencies gyrate
NEW YORK, Dec 16 (Reuters) - Commodities ended broadly lower on Thursday as gyrating currency markets prodded investors to take profits in thin volume before the year-end.
"It's also near month-end, quarter-end and year-end and people are looking to take profit as the euro continues to weaken," said Bruce Dunn, vice-president for trading at Auramet Trading in Fort Lee, New Jersey.
GLOBAL MARKETS: EU progress, US growth prospects lifts stocks
NEW YORK, Dec 16 (Reuters) - World stocks ended slightly higher, U.S. bond yields slipped, and the euro was firmer on Thursday after European leaders agreed to change the EU treaty to create a permanent financial safety net.
"Recent events do bode well for positive economic sentiment, said James Barnes, portfolio manager at National Penn Investors Trust Co in Wyomissing, Pennsylvania.

China Professors: China Grain Prices To Rise 4%-5% A Year (Source: CME)
China's grain prices are likely to increase 4% to 5% annually in the next few years, with soaring labor costs as the major reason, while domestic soybean output needs to be improved, China Academy of Science professors said. Grain demand will also rise more quickly than supply, helping push prices higher, Chen Xikang of the CAS's Center for Forecasting Science, said in a recent webcast on China Economy, the news portal of the state-owned Economic Daily newspaper. Chinese are consuming more and more meat and fish as living standards improve, resulting in a huge demand for animal feed, but China's grain output growth is limited by shrinking arable land, he said. "China can increase planted areas of some crops, but the (scope for) farmland expansion is very limited," he said. China had 121.7 million hectares of farmland at the end of 2008, down from 127.1 million in 2001, amid fast urbanization, according to official data.
Yields can be increased with technology such as new crop varieties and chemical fertilizers, but large enough increases to counteract rising demand and shrinking farmland will take time, he said. Development of biofuels globally may add to upward pressure on global grain prices, Wang Shouyang, director of the forecasting center, said during the webcast. He cited a surge in corn prices on the international market due to the fast development of corn-based ethanol sector in recent years. Chen said he expects China's grain output next year to reach 550 million tons, up from this year's 546.4 million tons. He said next year's grain demand will be about 540 million tons. China should do expand soybean planting areas and improve the quality of domestic soybeans by introducing genetically-modified technology, in an effort to reverse a heavy dependence on imports, he said. China's soybean output is estimated at only 15.2 million tons for crop year that ended on Sept. 30, the state-backed China National Grain and Oil Information Center said Thursday. In the January-November period, China imported 49.37 million tons of soybeans, up 31%.

PRECIOUS-Gold supported by physical buying, EU summit eyed
SINGAPORE, Dec 16 (Reuters) - Spot gold edged up on  Thursday as physical buying lent support amid a steady dollar  after upbeat U.S. data, while investors looked towards a  European Union summit that is expected to find solutions for  the region's debt crisis for trading cues.
U.S. industrial production rose at its fastest pace in  four months in November, implying a self-sustaining recovery  is now entrenched, but a mild gain in consumer prices  indicated still abundant slack in the economy.

FOREX-Euro edges up before EU summit, dollar pauses
LONDON, Dec 16 (Reuters) - The euro edged higher on Thursday ahead of an EU summit but remained vulnerable on euro zone debt concerns, while the dollar slipped back after a surge in U.S. Treasury yields ebbed.
EU leaders meet in Brussels on Thursday and Friday to try to agree on further action to tackle a year-long debt crisis that has consumed Greece and Ireland and threatens to spread to Portugal and Spain.

Soy ticks higher; wheat slips after gains
SINGAPORE, Dec 16 (Reuters) - U.S. soybean futures edged  up on Thursday while wheat retreated after racing to  four-month highs in the previous session as investors kept a  close tab on the dollar and weather outlook.   "I'm looking for the dollar to remain relatively well bid  and hopefully that would be a good thing because that will  take some heat out of the grain market," said

China 2010 corn output revised up to record -CNGOIC
BEIJING, Dec 16 (Reuters) - China's corn output in 2010 was estimated at a record 172.5 million tonnes, a 5.2 percent increase over last year, the latest estimate by the China National Grain and Oils Information Centre showed.
The higher output would leave China, the world's second-largest consumer, with a surplus of 7.5 million tonnes next year based on median consumption figure estimated by several institutions which could mean that China may not import large volumes of corn from abroad.But still the surplus may not be enough given that state reserves are at a very low level after more than 44 million tonnes have been sold to the market since last year.

Argentina raises wheat harvest, sowings forecast
BUENOS AIRES, Dec 15 (Reuters) - Argentina's 2010/11 wheat harvest is expected to come in at 13 million tonnes, higher than previously expected due to good yields and a bigger sowing area, the Agriculture Ministry said on Wednesday.
The ministry had previously estimated wheat output at 12.5 million tonnes.

Indonesia sees rubber exports up 7-8 pct in 2011
JAKARTA, Dec 16 (Reuters) - Indonesia's rubber association  said on Thursday it saw rubber exports rising 7-8 percent in  2011, in line with its forecast for production growth next year.Indonesia is the world's second largest rubber producer.

Mkts tread water ahead of EU meet, Spain in focus
LONDON, Dec 16 (Reuters) - European markets were little changed in thin trade on Thursday as investors digested a key Spanish debt auction ahead of a summit at which they hope EU leaders will agree fresh steps to tackle the region's debt crisis.
"We don't want Spain to get bailed out. If it does, it sends a big message to investors that if an economy as big as Spain is fragile, then the euro-zone may be a risky place to do business."

20101217 0930 Soy Oil & Palm Oil Related News.

Soy product futures ended lower, retreating in unison with soybeans. Fears of slowing demand for soybeans sparked profit taking pressure to pin prices in negative territory, analysts said. Soyoil did managed to regain some product value versus soymeal, buoyed by higher than expected weekly export sales released by USDA Thursday, analysts added. CBOT Jan soyoil ended 0.13c or 0.2% lower at 54.07 cents per pound, and Jan soymeal traded $2.30 or 0.7% lower at $343.80 a short ton. (Source: CME)

Palm at near 1-wk lows on exports;weather eyed
KUALA LUMPUR, Dec 16 (Reuters) - Malaysian palm oil  futures fell to a near one-week low on Thursday on  profit-taking due to lacklustre exports data, but supply  concerns kept a lid on prices.  "Trading was slow as investors are waiting for new leads to move the market," said a trader in Kuala Lumpur.

Palm oil down on poor exports
ROTTERDAM, Dec 15 (Reuters) - Palm oil eased on Wednesday on the European vegetable oils market  on disappointing exports in the first 15 days of December, market sources said.
"December 1-15 palm oil exports were almost a third down from same period last month, which weighed on prices, but palm oil futures ended off the lows on belief of smaller stocks in December as monsoon rains reduce production," one broker said.

Germany relaxes rule on biofuel sustainability
HAMBURG, Dec 15 (Reuters) - Germany has temporarily relaxed rules requiring raw materials for biofuels come from sustainable output, a move which industry bodies said on Wednesday will smooth imports of rapeseed and rapeseed oil for biodiesel use.
"This was a central demand and will prevent a looming threat to imports," said a spokesman for German oilseeds industry association UFOP. "There will now be enough flexibility and an interruption to trade will be avoided."

Extreme weather sparks global commodities rally
SYDNEY/LONDON, Dec 15 (Reuters) - Around the globe, the weather has turned extreme, driving up prices for commodities running the gamut from sugar and wheat to heating oil and orange juice.
Australia, for instance, is suffering from both extremes -- with drought in the west and deluges in the east. Heavy snow in Europe and sub-freezing temperatures in the United States are likewise fueling the weather rally in commodities.