Friday, July 20, 2012

20120720 1028 Local & Global Economy Related News.

The drought in US is hurting the livestock industry in Malaysia and may push up chicken and pork prices. The Federation of Livestock Farmers‟ Association said the cost of chicken feed had gone up by RM1.50, pushing the price of a 50kg bag of feed to RM91.50. The price of imported soybean meal, which cost between RM1,300 and RM1,400 a tonne at the beginning of the year, had risen to about RM1,800 at the end of May and up to RM2,300 in June. The feed prices usually accounted for at least 80% of production costs. One observer commented that there is not enough supply of alternatives for livestock feed such as palm oil kernel for the local industry, as it is not easy to substitute corn and soybean meals as they are still the cheapest ingredients. (The Star)

There is still upside potential for residential property prices in Iskandar Malaysia, Johor, as the infrastructure is being completed and catalytic projects to lure more investments are still coming in. (Starbiz)

The International Trade and Industry Ministry is ready to grant generous incentives to car manufacturers from both national and non-national assemblers to encourage the production of hybrid and cost-effective models for the ASEAN market. These incentives would include tax exemption apart from the current customised incentives that were already in place for such industry players of hybrid cars. (Starbiz)

Rentals for purpose-built offices in suburban areas outside KL are expected to rise with vibrant business activities, good information and communications technology (ICT) and government projects there, said the valuation and property services Department (JPPH) of the Finance Minsitry. According to the recently launched Purpose-Built Office Rent Index (PBO-RI), the KLCC-Golden Triangle region was the most sought after location in the city in 2010, with the highest average rentals among the four regions the index covers. (Starbiz)

Liberalisation of the country’s services sector is a key factor in attracting more foreign direct investments, especially Japanese investors, said Embassy of Japan counsellor and chief of its economic section Misako Takahashi. She said “Japanese companies are ready to invest, pending liberalisation.” She added if the process of acquiring a license was made more convenient, more service providers would be more willing to invest in Malaysia. She said that foreign equity limitation such as in the insurance sector where the limit is 30%, is a major impediment to investment. (Edge Financial Daily)

More foreign investors are expected to invest in Selangor this year, particularly in the services sector, Malaysian Investment Development Authority (Mida) Selangor Assistant Director Farez Amha Abdullah said. Selangor has been a key driver for the services sector in the country, contributing consistently between 22% and 23% to GDP. From Jan to Mar this year, Selangor has had about 200 approvals with more than RM4bn worth of proposed investments. (Malaysia Reserve)

Malaysia should look into further liberalizing the services sector, licensing issues and foreign equity limitation to ensure continuous influx of Japanese investments. There were crucial issues to address to stem Japanese investments from going to other Asean countries offering attractive investment packages, Embassy of Japan counselor and economic section chief Misako Takahashi said. (StarBiz)

The Federal Government has listed 107 projects capable of generating economic growth for Penang under the Ninth Malaysia Plan ((MP) and 26 projects under 10MP. According to information from the Implementation and Coordination Unit (ICU) in the Prime Minister‟s Department, among the projects are upgrading of the Prai Industrial Area at a cost of RM53m to retain the MNCs operating there and to attract new investments. Other projects include aRM64m upgrading of the hill railway in Bukit Bendera to boost tourism, RM250m expansion of the Penang International Airport and the construction of the second Penang Bridge connecting Batu Kawan on the mainland and Batu Maung on the island at a cost of RM4.5bn. (NST)

The US Conference Board’s index of leading indicators lost 0.3% mom in Jun (a revised +0.4% in May), worse than consensus of -0.1%, weighed down by the new orders index, consumer expectations, building permit, jobless claims, stock prices, and new orders for non-defense capital goods excluding aircraft. (Bloomberg)

US existing-home sales fell 5.4% mom in Jun to a 4.37m annual pace, the lowest of the year (a revised 4.62m pace in May), falling short of consensus of 4.65m. (Bloomberg)

US jobless claims rose 34,000 in the 14 Jul week to 386,000 (a revised 352,000 in the earlier week), overshooting consensus of 365,000. (Bloomberg)

China's yuan is increasingly being used to settle trade transactions in Asia, gradually cementing its way to becoming a regional 'anchor' currency to help “the region to integrate their economies, cooperate on monetary and finance issues as well as gradually open up the (Chinese) financial market,” the Asian Development Bank said. (AFP)

Chinese President Hu Jintao said China would offer US$20bn in new loans to Africa, double the amount Beijing agreed to lend to Africa at the last forum on co-operation with the resource-rich continent in 2009. (AFP)

China's big four state banks doubled their pace of lending in the first half of Jul from a month earlier, although Chinese banks' total new lending in the month is expected to fall by about a third to Rmb650bn, state-run Shanghai Securities News said, citing sources. (Reuters)

Japan’s composite index of coincident economic indicators for May dropped a revised 1.2 points from the previous month, unchanged from a preliminary reading, the Cabinet Office said. The leading index dropped 0.4 pt to 95.2, down from a rise of 0.3 pt in the preliminary report earlier. (The Daily Yomiuri)

Germany's parliament approved by a large majority a European aid package worth up to €100bn for crisis-wracked Spanish banks. (AFP)

Italy: Parliament gives final approval to bill ratifying ESM
The Italian Parliament gave final approval to the European Stability Mechanism (ESM), the euro-region’s permanent bailout fund. The Rome-based lower house, or Chamber of Deputies, voted 325-53 in favour of the bill ratifying the ESM. The Senate passed the bill on 12 July. The EUR500bn fund still requires German ratification before it can take effect. It needs countries representing 90% of the voting weight of the 17 euro nations to give their approval. Italy represents nearly 18% of that measure. (Bloomberg)

UK: Housing market confidence falls
Britons’ confidence in the housing market fell in June compared with three months earlier as the outlook for the economy worsened, according to the Halifax. A gauge of the outlook for property prices slipped to 15 from 19 in March, the mortgage unit of Lloyds Banking Group said. 34% of those surveyed expect prices to rise in the coming 12 months, while 19% forecast a decline. (Gulf News)

UK: Retail sales let down by weather and lack of jubilee bounce
The diamond jubilee failed to produce the promised "bunting boost" and retail sales flat-lined in June, fuelling fears the UK could remain mired in recession for a third quarter. Retail sales grew by just 0.1% in June, compared with expectations of a rise of 0.6%. Cancelled barbecues meant food sales dropped from June 2011 levels and the four-day jubilee weekend had no significant impact on sales. (The Guardian)

Spanish lawmakers approved tough austerity legislation, after the country's borrowing costs neared a new record high at a morning bond auction and its budget minister warned the government is running out of cash to pay its bills. (WSJ)

Fitch affirmed Italy's 'A-' ratings with a 'Negative' outlook, citing the struggling eurozone country's efforts to stabilise its strained public finances and get the economy growing. (AFP)

Australia: Business outlook dims
Australian businesses grew less optimistic about near-term prospects, signalling a slowdown in the fastest-growing developed economy that economists predict will force the central bank to cut interest rates again. The business conditions index for the next three months dropped to 5, the lowest reading since the second quarter of 2009, National Australia Bank said. The second-quarter confidence index slipped to minus 2, the lowest since the third quarter last year, it showed. (Gulf News)

India may offer tax relief to individual investors in equities, with a scheme likely to be launched by the end of this month, an official said, as the government seeks to deepen the country's capital market. (WSJ)

Free trade agreements cannot be credited for the increase in intra-Asian trade as they are often restrictive in scope and difficult to implement, the Asian Development Bank said. Indeed, only a fraction of the region's exporters and importers are using the agreements, despite there being 190 FTAs involving at least one Asian country at the last count in Jan. (AFP)

FDI in Vietnam’s textiles and garment sector has fallen from an annual average of US$460m during the peak period of 2000-08, to an annual average of US$450m for the last three years, and the number of FDI projects has also decreased during the past three years. (Vietnam News)

Vietnam's Foreign Minister Pham Binh Minh and his Indonesian counterpart Marty Natalegawa – have reaffirmed their nations' commitment on the centrality of the Association of Southeast Asian Nations (Asean) in all regional issues. (Asia News Net)

The Thai Industries Sentiment Index (TISI) dropped to 102.7 in Jun, down from 106 in May. The decrease in TISI is the result of the decline in the number of orders, sales, output and profits. (The Nation)

Thailand’s Jun car exports registered at 94,727 units, a 25-year high and marks a 25.2% yoy and 10.1% mom increase. The export value was at THB46.3bn, increasing by 38% yoy. (Thai Financial Post)

Indonesia expects that the increase in non-taxable income (PTKP) limit to be implemented no sooner than Sep 2012, which will see an increase in the amount of non-taxable income from Rp15.8m per year to Rp24m per year. (IFT)

Bank Indonesia data shows that the Financial Stability Index in Jun 2012, closed at above 1.7%, up 0.05% pts, compared to 1.65% in Dec 2011. Compared to the same period last year, the Index increased 0.02% pts. (IFT)

The Philippines’ balance of payments (BOP) surplus dropped to US$14m in Jun, bringing the first-semester surplus to US$1.316bn. However, foreign currency net inflows in Jun was just 6% of the US$222m recorded in the same month of 2011. (Philippine Daily Inquirer)

The World Bank raised its 2012 growth forecast for the Philippines upward to 4.6% from 4.2% for 2012. (AFP)

Japan’s all –industry activity index fell 0.3% mom in May (+0.1% in the Apr reading), matching consensus expectations. On a yoy basis, the measure slowed to 3.2% from 4.1% in Apr. (RTTNews)

The eurozone's current account surplus grew to €10.9bn in May from a revised €5.5bn the previous month, European Central Bank data showed. (WSJ)


Banking: Indonesia's new bank rules may not hit Maybank, CIMB
Indonesia's central bank has issued new rules limiting single ownership in domestic banks at 40% but allows exemptions that could let Malaysia's top two lenders hold on to their controlling stakes in banks there. Bank Indonesia, in a statement on Wednesday, said publiclisted financial institutions will be allowed to keep their current ownership structures in Indonesian banks, provided they maintain high levels of corporate governance and financial health, including a tier-1 capital ratio of over 6%. From December 2013, those that see their corporate governance and financial health ratings fall to unacceptable levels for three consecutive reporting periods will have to sell their stakes down to the new limit. Maybank, in a statement on Thursday, said it was "pleased" with the Bank Indonesia announcement. (Business Times)

Property: Medini gets boost with condo project
Medini Iskandar Malaysia Sdn Bhd on Thursday formalised its JV with China's Zhuoda Real Estate Group to build 2,600 units of high-end condominiums in Medini, Johor. The condominiums, with an estimated GDV of RM2.6bn, will be developed over two phases and completed in 5 year's time. The project is Zhuoda's maiden overseas venture.  (Business Times)

Property: Setia Haruman RM20bn investment plan on track
Cyberjaya's flagship developer Setia Haruman Sdn Bhd's RM20bn investment plan is on track and now it wants to attract 10 high-impact companies to set up operations in the ICT hub of Malaysia. Under its RM20bn investment plan over the next 4 years, the developer said RM2bn had been invested in 1H 2012. Setia Haruman's strategy is to develop purpose-built projects that will fulfill the needs of foreign companies seeking a footing in Cyberjaya. Chairman Tan Sri Mustapha Kamal Abu Bakar said at a media conference on Thursday that Cyberjaya developments needed a paradigm shift from merely developing commercial buildings to creating a liveable environment for the companies' staff. He said they have come to a tipping point where they cannot get investors to come in if they do not provide facilities for the investors. (StarBiz)

Timber: Sarawak may opt for foreign participation in forest estates
The Sarawak government may opt for foreign participation in developing forest plantations to achieve its target of having 1m ha by 2020. The state Resource Planning and Environment Ministry’s Permanent Secretary, Datuk Sudarsono Osman said the foreign involvement would only happen if local companies were unavailable to achieve the target. He said the state aimed to have 15m cubic metres of raw material to be supplied from planted forests in 8 years. Based on last year’s figure, he said Sarawak produced 9.6m cubic metres of logs from natural forests, and this was insufficient in meeting the requirements of the domestic industry. (StarBiz)

Thai Beverage to pay S$2.78b for OCBC's stake in F&N
Thai Beverage pcl, Thailand's biggest beer maker, agreed to pay S$2.78 billion (RM6.9 billion) for Fraser & Neave Ltd's (F&N) shares held by Oversea-Chinese Banking Corp (OCBC) and its partners. The Thai company will buy 313 million F&N shares at S$8.88 each, or about 22 per cent of Singapore's biggest beverage maker from OCBC, its unit Great Eastern Holdings Ltd and Lee Rubber Co, according to a statement on Wednesday. (Source: Business Times)

BAT Q2 profit up on lower expenses
British American Tobacco (Malaysia) Bhd (BAT) posted a 20% increase in net profit to RM220.85mil for the second quarter ended June 30, 2012 (Q2’12), compared with RM184.14mil in the corresponding period last year. In its filing with Bursa Malaysia yesterday, BAT attributed the increase to lower operating expenses of 25%, comparable to the same period in the previous year. (Source: The Star)

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