Monday, May 14, 2012

20120514 1819 FCPO EOD Daily Chart Study.

FCPO closed : 3150, changed : -125 points, volume : higher.
Bollinger band reading : downside biased with possible pullback correction.
MACD Histogram : resume falling, seller in control.
Support :  3150, 3100, 3070, 3050 level.
Resistance : 3200, 3250, 3270, 3300 level.
Comment :
FCPO collapse badly down by nearly 4% with ultra high volume changed hand. Soy oil price currently falls by 2% after last Friday closed severely lower while crude oil price testing lower support level.
Rising U.S. Dollar as Euro continue to trade weaker after possible Greece exit from EU development resulted global commodities and FCPO to trade substantially lower while traders awaits tomorrow export figure.
Daily chart reading remained suggesting a downside biased market development with possible pullback correction.
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.

20120514 1736 FKLI EOD Daily Chart Study.

FKLI closed : 1562 changed : -13.5 points, volume : higher.
Bollinger band reading : downside biased with possible pullback correction.
MACD Histogram : falling lower, taking position.
Support : 1550, 1540, 1530, 1515 level.
Resistance : 1565, 1570, 1580, 1590 level.
Comment :
FKLI closed recorded substantial loss with increasing volume changed hand doing 13 points discount compare to cash market that closed lower. Last Friday U.S. markets closed lower and today Asia markets ended in negative territory except Japan while European markets currently falling lower.
Global markets sentiments turned bearish after worsening European political condition with Greece possible exit from EU, German Merkel's party lost state election and lower profit forecast from Citibank and JP Morgan despite after China moved to lower bank reserve ratio to stimulate its economy.
Technical chart study revised to suggesting a downside biased market development with possible pullback correction.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.

20120514 1709 Regional Markets EOD Daily Chart Study.

 DJIA chart reading : little downside biased.
 Hang Seng chart reading : downside biased with possible pullback correction.
KLCI chart reading :  downside biased.

20120514 1633 Global Market & Commodities Related News.

Asian shares fell after weekend talks to form a new Greek government failed and China's latest move to loosen monetary policy highlighted concerns its economy is faltering, prompting investors to further trim their exposure to risk. Shares of U.S. banks slumped on Friday after JPMorgan said it lost billions of dollars on bad trades, but the overall market ended only modestly lower, thanks to gains in technology shares.

The euro hit its lowest level in nearly four months after Greek political leaders failed in their latest efforts to form a ruling coalition, keeping investors on edge over the risk of the country exiting the euro zone.

FOREX-Euro hits 4-mth low on Greece jitters; Aussie dips
SINGAPORE, May 14 (Reuters) - The euro hit its lowest level in nearly four months on Monday after Greek political leaders failed in their latest efforts to form a ruling coalition, keeping investors on edge over the risk of the country exiting the euro zone.
"I think they will steer the rudder that way, even if that leads to costs on the inflation front. If that is the case, the direction would be toward weakness in the currency," he said.

U.S. soybean futures fell, extending falls from the previous session, on fund selling of long positions and as economic worries in the euro zone and top soybean buyer China weighed on the oilseed.

Argentine grains workers end strike, agree to talk
Workers at one of Argentina's biggest grains ports have lifted a strike and agreed to respect a Labor Ministry order for talks to resolve the pay dispute, union and industry sources said on Friday.

Brazil's 2012/13 coffee crop 55.3 mln bags-Neumann
Brazil's 2012/13 coffee harvest now starting will reach 55.3 million 60-kg bags, giant German coffee trader Neumann Kaffee Gruppe (NKG) said in a report seen by Reuters on Friday.

ISO sees global sugar surplus halving to 3 mln t 2012/13
The global sugar surplus is forecast to halve to around 3 million tonnes in 2012/13 (October-September) from a surplus of 6.5 million tonnes in 2011/12, the International Sugar Organization (ISO) said on Friday.

Brent crude slipped towards $111, continuing to drop for a third straight session, after talks to form a new government in Greece failed, deepening the euro zone crisis and cutting fuel demand further.

Euro Coal-Prices stable, S.African supply tight
LONDON, May 11 (Reuters) - European prompt physical coal prices were little changed on Friday with no fresh trades reported.
The European market is likely to remain burdened by oversupply despite strong coal consumption in Germany, the UK and Spain but prices are unlikely to drop below $85.00 a tonne, traders and utilities said.

Asia Coal-Australia prices slip to under $105/T, demand weak
PERTH, May 11 (Reuters) - Australia's thermal coal price index slipped to under $105 per tonne in the week after a brief spike earlier in the week that was attributed to a "fat finger" error as weak demand continued to weight on prices.  
Australia's Newcastle spot index  for the week to date closed Thursday at $104.36 per tonne, data provided by online trading platform globalCOAL showed.

Iron Ore-Shanghai rebar at 4-month lows on slow demand
SINGAPORE, May 14 (Reuters) - China steel futures fell to more than four-month lows on Monday, pressured by slow demand in the world's biggest consumer which has curbed appetite for raw material iron ore and pulled down prices to levels last seen in February.
The weakness, mirrored in other risky assets from copper to oil, came despite China's weekend move to cut banks' reserves to lift lending and boost a slowing economy. Analysts say increasing market liquidity may not solve China's woes.

Indonesia plans to limit miners' exports at 2009-10 volume
JAKARTA, May 11 (Reuters) - Indonesia plans to introduce new quotas to limit mineral exports, as well as a 20 percent duty on mineral exports by certain companies, Indonesian government officials said on Friday.
The government is in the process of introducing new regulations intended to protect Indonesia's resources and increase state revenue, but has been criticised for creating uncertainty in the mining sector which accounted for 12 percent of GDP in 2011.

China April refined copper output drops 3.7 pct m/m
HONG KONG, May 11 (Reuters) - China's production of refined copper fell 3.7 percent in April from March, data from the National Bureau of Statistics showed on Friday, indicating that the weaker-than-expected domestic demand had cut smelters' operating rates.
The monthly fall was the first since January when the Lunar New Year break slowed output. China's overall industrial production growth was at 9.3 percent in April, the weakest in nearly 3 years.

Nippon Steel revises up April-June output estimate
TOKYO, May 14 (Reuters) - Nippon Steel Corp , the world's No.4 steelmaker, said on Monday it sees its crude steel output at 7.6 to 7.7 million tonnes in the April-June quarter, up 100,000 tonnes from its April estimate, due to stronger-than-expected domestic car output.
It said it expects its crude steel output to rise further to around 8 million tonnes in July-September as Asia's steel market is bottoming out and the domestic construction steel market will improve.

London copper fell to near one-month lows, giving up early gains, as investors worried about slowing growth in top copper consumer China, which some think may need more than the unsurprising weekend cut in banks' cash reserves to recover.  

Gold edged up as bargain hunters lifted prices from four-month lows, but gains could be capped by fears about a worsening debt crisis in Europe, after an inconclusive Greek election raised the risk the country could exit the euro zone and the European Union.  

METALS-Copper hits near 1-month low on China doubts
SINGAPORE, May 14 (Reuters) - London copper fell to near one-month lows on Monday, giving up early gains, as investors worried about slowing growth in top copper consumer China, which some think may need more than the unsurprising weekend cut in banks' cash reserves to recover.
"I don't think the cut in the reserve requirement was something unexpected. Maybe the timing is a bit more debatable," said Thomas Lam, chief economist at DMG & Partners Securities.

PRECIOUS-Gold ticks up on bargain hunting; off 4-month low
SINGAPORE, May 14 (Reuters) - Gold edged up on Monday as bargain hunters lifted prices from four-month lows, but gains could be capped by fears about a worsening debt crisis in Europe, after an inconclusive Greek election raised the risk the country could exit the euro zone and the European Union.
"I think for as long as the crisis in Europe drags on, it's going to keep sentiment broadly in check. At the moment, gold has been painted with the risk brush. It's going to be very much a tracker of the equity markets," said Nick Trevethan, a senior commodity strategist at ANZ in Singapore.

Baltic sea index falls on weak freight demand
May 11 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Friday for a third day due to weakness in dry bulk shipments and analysts expect that a rebound is unlikely in the near term.
The overall index, which reflects the daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, fell 8 points or 0.7 percent to 1,138 points.

20120514 1120 Global Market & Commodities Related News.

GLOBAL MARKETS-Shares pressured by deepening Greece turmoil
TOKYO, May 14 (Reuters) - Asian shares eased on Monday as investors saw more reasons to cut risk after talks in Greece to form a new government failed, a German vote pointed to growing opposition to austerity steps and China took further steps to support its fragile growth.
"It's risk-off everywhere you look," said Yuji Saito, director of the foreign exchange division at Credit Agricole Bank in Tokyo.

COMMODITIES-Markets tumble on JPMorgan, China and Greece
NEW YORK, May 11 (Reuters) - Commodities fell on Friday, notching the biggest two-week loss of 2012 after top U.S. bank JPMorgan Chase & Co shocked the market by reporting huge trading losses, fueling risk aversion among investors already worried about the global economy.
"This is certainly not helping the bull case," said Michael Gross, a commodity futures analyst at in Tampa, Florida.

OIL-Oil dips as China data outweighs upbeat US consumers
NEW YORK, May 11 (Reuters) - Oil fell on Friday and posted a second straight weekly loss as pressure from weak industrial growth in China countered news that U.S. consumer confidence hit a four-year high.
"The complex was pushed and pulled in both directions today by the opposing forces of risk aversion related to the losses in the banking segment and support that spun off of the early rebound in the equities," Jim Ritterbusch, president at Ritterbusch & Associates, said in a note.

NATURAL GAS-US natgas futures end up for 5th day, hit 2-mth high
NEW YORK, May 11 (Reuters) - U.S. natural gas futures ended higher on Friday for a fifth day, backed by supportive industry data this week that showed a tighter supply-demand balance despite some early selling as investors took profits ahead of a mild weekend.
"I can say all day that the contract is looking toppy -- it surely does. Yet the chart is telling me to stay out of the way of this trend," Gelber & Associates analyst Pax Saunders said, adding milder weather could soon pressure prices.

EURO COAL-Prices stable, S.African supply tight
LONDON, May 11 (Reuters) - European prompt physical coal prices were little changed on Friday with no fresh trades reported.
"The market in Europe is miserable, it is a disaster, there are very few niches in which we can do some small spot business," one European trader said.

20120514 1101 Local & Global Economy Related News.

BNM retains OPR at 3% for sixth time
Bank Negara Malaysia retained its Overnight Policy Rate (OPR) at 3% for the sixth time, at its Monetary Policy Committee (MPC) meeting Friday. The central bank in a statement said while the Malaysian economy was affected by global developments, domestic demand continued to support growth, driven by firm consumption and investment activity. It added that this trend is projected to continue as private consumption is supported by stable employment conditions, income growth and public sector measures. Bank Negara said
investment activity was mainly led by domestic-oriented industries as well as the commodity and public sectors. On inflation, it said headline inflation is expected to moderate this year, with improved domestic supply and stable demand conditions. (Bernama)

China: Swap-rate drop signals more easing after ratio cut
China’s third cut in banks’ reserve requirements since November will be followed by more aggressive monetary easing as the economy’s slowdown deepens months before a once-in-a-decade leadership change, interest-rate swaps show. The People’s Bank of China on 12 May lowered banks’ reserve requirements by 50bps, a day after data showed April industrial production, new loans and retail sales grew less than forecast. The one-year swap rate, the fixed cost to receive the floating seven-day repurchase rate, fell 23bps last week to 3.13%, the biggest drop in six months. Premier Wen Jiabao is ensuring companies have sufficient cash, injecting funds into banks for seven straight weeks and approving record bond sales, to help arrest deceleration in the world’s second-largest economy. The deterioration further imperils global growth already weighed down by Europe’s intensifying crisis and America’s job-market woes. (Bloomberg)

Japan: Shirakawa urges Japan to cut deficit for yen stability
Bank of Japan Governor Masaaki Shirakawa urged reduction of the nation’s deficit to stabilize the yen as the bond market may come under pressure if investors lose trust in fiscal policy, the Asahi newspaper said. The yen might become unstable, triggering uncontrollable inflation should the central bank buy government bonds in an attempt to prevent a financial crisis, Shirakawa said. The BOJ is under pressure to add stimulus as a group of lawmakers proposed overhauling the BOJ’s governing law to ensure steps to end deflation afflicting the nation for more than a decade. The BOJ said its 1% inflation goal will be achieved before long after it expanded by JPY10trn (USD125bn) on 27 April its plan for government-bond purchases as the world’s third-largest economy showed signs of slowing. Prime Minister Yoshihiko Noda’s party sent a bill to parliament to double the sales tax by 2015 to rein in the world’s largest public debt over the objections of opposition lawmakers. (Bloomberg)

EU: Officials begin to weigh Greek exit from common currency
Greece’s possible exit from the euro area moved to the center of Europe’s debt-crisis debate, with officials beginning to weigh the fallout of a withdrawal even as authorities in Athens struggled to form a government. Meetings brokered by Greek President Karolos Papoulias are set to continue today after Syriza, the largest anti-bailout party, rejected a unity government following last week’s inconclusive elections. The country where the 2 1/2-year-old crisis began moved closer to a new vote, and to the possibility of a euro-area exit that was once a taboo among policy makers. Greek withdrawal “is not necessarily fatal, but it is not attractive,” European Central Bank Governing Council member Patrick Honohan said. An exit was “technically” possible yet would damage the euro, he said. (Bloomberg)

US: Consumer sentiment climbs to four-year high
Consumer confidence rose in May to the highest level in four years, led by gains among upper-income Americans that may contribute to a pickup in spending on expensive items like furniture and appliances. The University of Michigan preliminary sentiment index for May climbed to 77.8, the highest since Jan 2008, from 76.4 the prior month. For the first time since monthly data began in 1978, it advanced for a ninth-straight time. A jobless rate that has dropped to the lowest level in three years and a housing market that shows signs of stabilizing may be helping lift Americans’ spirits. The unexpected gain in confidence signaled consumer purchases, which account for 70% of the economy, can keep expanding after growing at the fastest pace in more than a year. (Bloomberg)

US: Economy in US buoyed with autos spurring glass-to-steel growth
Car sales that are running at the fastest pace in four years are poised to reverberate through the world’s largest economy as a spillover into production, profits and jobs for Americans may be starting. Auto purchases have exceeded a 14m annual rate in each month this year, the strongest performance since early 2008, according to Ward’s Automotive Group. Government data show motor-vehicle output contributed half of the first quarter’s 2.2% economic growth. General Motors Co., the world’s largest automaker last year, boosted its 2012 industry-sales forecast, Ford Motor Co. will add factory shifts and Chrysler Group LLC is stepping up hiring as demand rises. (Bloomberg)

20120514 1101 Malaysia Corporate Related News.

UDA’s dilemma on Pudu Jail project
UDA Holdings Bhd is still evaluating proposals of all parties for the redevelopment of its Pudu Jail land and wants the preferred bid to be the one that is in its best commercial interest. Even though the board has approved the proposal by Everbright International Construction Engineering Corp last year, the Finance Ministry (MOF) has directed UDA not to consider the company and instructed UDA to prepare a masterplan based on parcelling the land into three. Under Everbright's proposal, the China company will fund the entire development of the land that has been called Bukit Bintang City Centre (BCCC). Its proposal comes with a committed funding of US$1bn and Everbright will take the construction and financing risk, build a contiguous retail space of 2m sq ft, a car park and a convention centre and hand it over to UDA. (StarBiz)

Proposal to sell Mid Valley, Gardens malls
KrisAssets Holdings has proposed to sell Mid Valley Megamall, the Gardens Mall and their related assets to its parent IGB Corp for RM4.6bn. It said in a filing with the stock exchange that the disposal would be satisfied via cash and the issuance of 3.4bn units in IGB REIT, the retail real estate investment trust that the latter plans to list on the Main Market of Bursa Malaysia. It also proposed an offer for sale of 670m consideration units by Mid Valley City Gardens Sdn Bhd via the initial public offering (IPO) of IGB REIT. The company added that it wanted to distribute 2.73bn consideration units, as well as the remaining cash proceeds from the sale of the two properties and the IPO to its entitled shareholders at a date to be determined and announced later. (StarBiz Week)

Bintulu Port to fund Samalaju deepsea port project via equity, debt
Bintulu Port Holdings Bhd (BPHB) will fund the development of the RM1.8bn Samalaju deepsea port project through a combination of equity and debt. Chief executive officer Datuk Mior Ahmad Baiti Mior Lub Ahmad said the equity to debt ratio would be announced soon after it was finalised with BPHB's major shareholders. “We have discussed the proposed funding with the three major shareholders, Petroliam Nasional Bhd (Petronas), Sarawak State Financial Secretary and Kumpulan Wang Persaraan (KWP),” he told reporters after the company AGM here yesterday. Petronas, Sarawak State Financial Secretary and KWP have 32.79%, 30.68% and 9.52% stakes respectively in BPHB. (StarBiz Week)

South Korea's Posco keen to secure ETP projects
South Korean steelmaker Posco Group, which operates an electrolytic galvanised iron (EGI) plant in Port Klang, is targeting more projects here. The group, which has a market capitalisation of USD60bn (RM184.4bn), planned to bid for power and petrochemical plants, said Posco E&C executive vice-president Lee Dong-Man. Lee said Posco was also looking to bid for projects to build integrated steel mills and EGI facilities. EGI is used for producing engines for power generators and electrical appliances. (BT)

Pengerang folks can expect windfall via Rapid project
Coming on the heels of a RM15,000 windfall per family for Federal Land Development Authority (Felda) settlers, folks in Pengerang can also expect some good news. The RM60bn refinery and petrochemicals integrated development (Rapid) project in Pengerang, south-eastern portion of Johor, will possibly involve land acquisitions of nearly 6,000 acres. State oil company Petroliam Nasional (Petronas) is the main lead for the Rapid project. It is learnt that the total compensation can be as high as RM130m or more. The compensation may include the giving away of land and cash incentives by the Johor state government. (Malaysian Reserve)

SP Setia: Expands footprint in Penang
SP Setia is on the lookout to acquire more strategic pieces of land in Penang in a bid to  extend its footprint in the state. Presently, it is looking to buy 3 parcels of land on the island  by the middle of the year. The company, which currently boasts an undeveloped landbank  totalling close to 40 hectares in the state, is in the final stages of negotiation to acquire land  in Tanjung Bungah and Jelutong. SP Setia Property (North) general manager Datuk S.Rajoo  told Business Times the company is eyeing two parcels of land in Tanjung Bungah totalling  10.2ha while the parcel of land in Jelutong measures 3.6ha. He said they are hoping to  conclude the land acquisition deals by the middle of Jun and are planning mixed residential  housing projects on the plots. (Business Times)

MMC Corporation: Malakoff buys stake in Bahrain power, desalination plant
MMC Corporation 51%-owned subsidiary Malakoff International Ltd (MIL) has acquired the  entire issued and paid up capital of IP Middle East Holding Co Ltd (IPME) from International  Power Holdings Ltd (IPR) for US$113.4m (RM348m). MMC Corp said that as a result of the  acquisition, MIL will hold an indirect 40% equity interest in Hidd Power Company B S C (c)  Bahrain ("HPC") through IPME, which owns a 57.1% equity interest in IPSUM Hidd Holding Co  Ltd, which in turn owns a 70% equity interest in HPC. HPC is the owner and operator of a  'Build, Own and Operate' power generation and water desalination plant in Bahrain. The  filing confirmed a report by The Edge Financial Daily on May 3, which said that Malakoff Corp  had acquired a 40% stake in Hidd Power Co (HPC), a power and water generation provider  located in Bahrain. The deal was signed in Bahrain on Monday, citing reports by the Gulf  Daily News and the Bahrain News Agency. (Financial Daily)

Axiata Group: Zooms in on targets
Axiata Group is on track to achieve its headline key performance indicators (KPIs) this year.  Previously, Axiata missed all of its headline KPIs for 2011, including on revenue (KPI: 10%  growth; Actual: 5.3%) and on EBITDA (KPI: 10.3%; Actual: 1%). The company said it missed its  headline KPIs due partly to foreign exchange losses and changes in revenue mix. It was also  partly due to the slower-than expected growth in its Indonesian operations via its 66.7%- owned PT XL Axiata Tbk. The slower growth by XL was partly due to a price cut initiated by  one of its rivals early last year. This year, Axiata – under its headline KPIs –aims to achieve  revenue growth of 5.3%, growth in EBITDA of 1.8%, and ROCE of 11.3%, among others. It also  plans a RM4.4 bn in capital expenditure this year. (Business Times)

MAS: Upgrades facilities to meet rise in business class guests
Malaysia Airlines System (MAS) is upgrading its cabin baggage policy and golden lounge  waiting room facilities to cater for the anticipated increase in business class passengers.  Golden lounge manager Mohd Husaini Ariffin said the improvement  included major  renovation at the lounge, from May 9 to Jun 18, with the addition of new features such as  sports bar, kids room and games room. He said the improvement is part of the airline's  preparation to receive its first Airbus A380, which will contribute a higher number of  business class passengers, as well as its entry into the oneworld alliance by year-end. Among  the requirements of oneworld alliance was the sharing of golden lounges between its  members as well as check-in counters and expanded services such as more facilities at the  waiting room and bigger cabin baggage capacity per passenger. Mohd Husaini said after the  renovation, the seat capacity for business class in the golden lounge would increase to 320  passengers from 230 currently while that for first class would reduce to 50 passengers from  90 at present. (Bernama)

AirAsia: Thai AirAsia’s IPO to double its fleet
The impending listing of Asia Aviation Plc, a holding company that owns 51% of Thai AirAsia  (TAA) on the Stock Exchange of Thailand will help raise the proceeds to double TAA’s fleet  size and grow its network. The IPO of Asia Aviation is expected to take place in July and  media reports, quoting a filling with the Thai Securities and Exchange Commission, said the  company may raise US$150m (RM460.5m) to US$200m from the issuance of 750m new  shares representing a 15.46% stake. Asia Aviation will in turn use the proceeds to subscribe  for a rights issue at TAA, hence injecting new funds into the latter for expansion. TAA  communications executive Topaz Subunruk said about 1.5bn baht (RM148m) will be used to  finance the purchase of new aircraft in the immediate term. (Financial Daily)

AirAsia, MAS: Pact vital for open-sky challenge
Malaysia Airlines System (MAS), AirAsia Bhd and AirAsia X Sdn Bhd must join forces to face  the challenges when the Asean open-sky policy comes into force in 2015. AirAsia X chairman  Tan Sri Rafidah Aziz said all airlines in the country need to strengthen themselves to handle  the upcoming competition. The Asean open sky agreement allows regional air carriers to  take unlimited flights to all 10 Asean countries. She said the collaboration has nothing to do  with the share swap, adding that it is about collaborating for the joint purchases and joint  maintenance that will inevitably lead to lower costs and improved efficiency for customers  and passengers. (Business Times)

Malaysian Bulk Carriers: To scale back dividends, buys new vessels
According to a joint statement by Malaysian Bulk Carriers (Maybulk)’s executive chairman  Teo Joo Kim and CEO Kuok Khoon Kuan, the company plans to scale back dividends in order  to acquire vessels during the time when the prices are low. In addition, the duo added that  this would mean the company would be operating under tough conditions and would  therefore need considerable resources to face the challenges ahead. (Financial Daily)

Land & General: Eyes land worth RM1bn GDV
According to  Land & General (L&G)’s MD Low Gya Teck, the company is currently in talks  with several owners of prime land in the Klang Valley to either conduct joint developments  or acquire the land, with potential GDV of RM1bn. However, he did not disclose the location  of land in the interview with The Edge Financial Daily but conceded that the L&G is seeking  land in mature prime areas in Klang Valley due to the marketability factor. He said if  everything goes well, the talks will be concluded in the next few months. (Financial Daily)

Ho Hup Construction: Case goes to Federal Court this week
The long drawn out legal tussle over the development rights of Ho Hup Construction  Company’s 60 acre (24ha) land in Bukit Jalil will go before the Federal Court this week. The  company is seeking to overturn a decision by the Court of Appeal which prohibits the  company from carrying out any plans on the disputed parcel of land. The dispute revolves  around a joint development agreement (JDA) on the 60-acre plot, which was signed in Mar  2010 between Ho Hup’s subsidiary, Bukit Jalil Development Sdn Bhd and Malton’s unit  Pioneer Haven Sdn Bhd. (Financial Daily)

Kimlun Corporation: Gets RM148.54m apartment contract in Shah Alam
Kimlun Corporation secures RM148.54m apartment construction contract from Esquire  Corner Sdn Bhd in Selangor. It said that it had received a letter of award from Esquire for the  construction of apartments and ancillary buildings in Shah Alam, Selangor.  The project is  expected to contribute positively to the earnings and net assets of Kimlun group for the  financial years during the contract period. Kimlun said the construction was expected to be  completed by Sept 2013. (Financial Daily)

Puncak Niaga: Tipped to land marginal oilfield job
Puncak Niaga has emerged as one of the strongest contenders to bag marginal oilfield  projects, together with a foreign partner, when Petronas unveils its next batch of winners to  develop the oilfields. According to Upstream online, Puncak has tied up with London-based  Nio Petroleum Ltd, and the duo are among the 22 companies short-listed by Petronas for a  risk service contract (RSC) to develop marginal oilfields. (The Edge Weekly)

Xidelang Holdings: Exploring dual listing in Hong Kong
Xidelang Holdings (XDL) said it is exploring the possibility for seeking a dual listing on the  Hong Kong Stock Exchange. In a filing to Bursa Malaysia Securities on Friday, Xidelang said it  had engaged Dow-Capital, a financial advisory company in Hong Kong, to evaluate the  possibility of dual listing. However, the company said it has no intention to delist from Bursa  Malaysia Securities Bhd. (Financial Daily)

Tambun Indah Land: Seeks JV partners for Klang Valley projects
Tambun Indah Land is looking for JV partners to spread its wings out of Penang where its  flagship project is based. MD Teh Kiak Seng said that the company would like to expand into  the Klang Valley, but its focus will be more on the outskirts like Kajang and Rawang where  there is still plenty of land. He added that the company is in several discussions with  landowners for this purpose, but nothing has been firmed up. For now, Teh said he and his  team are focusing on their flagship project, the Pearl City integrated township in Simpang  Ampat, which will have a GDV of more than RM3bn when completed. The mixed residential  and commercial township sits on a 1,001-acre site which is expected to be fully developed by  2020, complete with a business park which will house schools, hotels and hypermarkets.  (StarBiz)

Kumpulan Jetson: Gets US$6.8m hospital job in Cambodia
Kumpulan Jetson has secured a contract worth US$6.8m to build a hospital in Phonm Penh,  Cambodia. It said on Friday that its unit Jetson Construction Sdn Bhd had entered into an  agreement with Nokor Tep Foundation in Cambodia to build the hospital. It said the project  was tentatively expected to commence in mid-2012 and to be completed within 24 months  from the date of commencement. (Financial Daily)

Banking: Changes imminent in regulation of financial services
Industry sources said that Bank Negara Malaysia was in discussion with bankers recently to  get their views on the proposed Financial Services Bill (FSB) and Islamic Financial Services Bill  (IFSB). It is understood that the bills, when passed, will result in a change in the regulation  and supervision of financial services groups. According to a source, these changes will involve  the obligation of a company to apply to become a financial holding company. This will be  triggered when there is intent to own more than 50% shareholding in licensed institutions.  (The Edge Weekly)

Construction: South Korea's Posco keen to secure ETP projects
South Korean steelmaker Posco Group, which operates an electrolytic galvanised iron (EGI)  plant in Port Klang, is targeting more projects here. Posco E&C executive vice-president Lee  Dong-Man said the group, which has a market capitalisation of US$60bn (RM184.4bn),  planned to bid for power and petrochemical plants. Lee said Posco was also looking to bid for  projects to build integrated steel mills and EGI facilities. (Business Times)

20120514 1050 Global Market Related News.

Asian Stocks Rise as China Easing Outweighs Europe Debt (Source: Bloomberg)
Asian stocks rose after China cut the amount of cash banks must set aside as reserves to boost economic growth, outweighing increasing speculation Greece may exit from the single European currency. Fanuc Corp., a maker of industrial robots that gets almost half its revenue from Asia outside Japan, rose 2.6 percent, while Nippon Sheet Glass Co. (6954), which counts Europe as its biggest market, slid 1 percent in Tokyo. Tencent Holdings Ltd. (700), China’s No. 1 Internet company, may be active in Hong Kong after a report its unit received licenses to sell mutual funds online. Celltrion Inc. (068270), a biopharmaceutical company, climbed 13 percent, extending its gains on May 11, after saying it plans to issue bonus shares to shareholders. The MSCI Asia Pacific Index (MXAP) rose 0.2 percent to 118.78 as of 10:05 a.m. in Tokyo, before the opening of Hong Kong and China markets. More than three stocks gained for every two that fell in the 1004-member gauge.
China’s reserve ratio rate cut is “an efficient means of them pushing liquidity into the market,” Timothy Riddell, head of global markets research in Singapore at Australia & New Zealand Banking Group Ltd., said on Bloomberg television. “We will be looking for more cuts through the reserve ratio rate through the rest of this year.” Japan’s Nikkei 225 Stock Average (NKY) increased 0.7 percent, while Australia’s S&P/ASX 200 Index gained 0.4 percent. South Korea’s Kospi Index (KOSPI) slid 0.1 percent. The Asian regional index rose 4.2 percent this year through May 11, compared with a 7.6 percent gain by the S&P 500 and a 3 percent advance by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 12.2 times estimated earnings on average, compared with a multiple of 12.9 for the S&P 500 and 10.5 times for the Stoxx 600.
The People’s Bank of China said May 12 that it is cutting the amount of cash that banks must set aside as reserves for the third time in six months, pumping money into the financial system to support lending after data showed a slowdown in economic growth is deepening. Reserve ratios will fall 50 basis points, effective May 18.

Asian Stocks Post Worst Week Since November on Europe, China (Source: Bloomberg)
Asian stocks fell, with a regional index posting its worst week in five months, amid concern Greece will be forced out of the euro and that austerity plans needed to contain the Europe’s debt crisis will be derailed. Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, sank 4.5 percent in Hong Kong this week as the nation’s export growth slowed. Hutchison Whampoa Ltd. (13), which operates ports in Spain and Germany, declined 5.6 percent in Hong Kong. Sony Corp. (6758) fell 11 percent to the lowest in more than 31 years after the maker of Bravia televisions and PlayStation game consoles forecast profit that lagged analyst estimates by half. “Europe remains the biggest issue facing markets,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “It’s not clear how deep the downturn is going to be and the effect this is going to have elsewhere.”
The MSCI Asia Pacific Japan Index (MXAP) declined 4.4 percent to 118.61 this week. That’s the steepest weekly slide since the last week of November as France’s political changes and instability in Greece threaten to derail austerity plans and worsen Europe’s debt crisis. Stocks extended losses yesterday as JPMorgan Chase & Co. said it had a $2 billion trading loss as positions in credit securities proved riskier than expected.

Japan Stocks Snap Three-Day Loss After China Cuts Reserve Ratios (Source: Bloomberg)
May 14 (Bloomberg) -- Japan stocks rose for the first time in four days after China moved to spur growth by cutting the amount of money banks must keep in reserve, outweighing concerns as policymakers began to weigh a Greek exit from the euro. Fanuc Corp. (6954), a maker of automation controls used in Chinese factories, led machinery manufacturing higher. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, paced gains among banks. Takeda Pharmaceutical Co., Asia’s leading drugmaker, lost 4.1 percent after profit plunged 50 percent, missing estimates. The Nikkei 225 Stock Average (NKY) rose 0.8 percent to 9,022.23 as of 9:59 a.m. in Tokyo after dropping 4.6 percent last week, the biggest weekly loss since August. The broader Topix Index added 0.5 percent to 762.20 with 23 of the gauge’s 33 industry groups rising.
“China’s ratio cut is boosting mainland-related shares,” said Yutaka Miura, a senior technical analyst at Mizuho Securities Co., a unit of Japan’s third-biggest lender by market value. “There’s a risk for shares to be sold in the afternoon because we don’t know what will happen to Greece and the U.S. isn’t in a great situation.” The Nikkei 225 has retreated 12 percent from this year’s high on March 27 as China’s economic growth slowed and on renewed concern about Europe’s debt crisis. A Greek backlash against austerity policies has led to speculation the nation will become the first nation to exit the euro.

Dow Drops Most in 2012 as Europe Concern Resurfaces (Source: Bloomberg)
U.S. stocks fell for a second straight week, driving the Dow Jones Industrial Average to the biggest loss of 2012, as political tension in Greece heightened concern about Europe’s debt crisis and JPMorgan Chase & Co. (JPM)’s $2 billion trading loss weighed on shares of banks. Financial and technology companies in the Standard & Poor’s 500 Index slipped at least 1.7 percent for the week as JPMorgan tumbled 11 percent and Cisco Systems Inc. (CSCO)’s forecasts missed analysts’ estimates. Macy’s Inc. (M) lost 7.6 percent and Fossil Inc. sank 39 percent amid disappointing projections. Walt Disney Co. (DIS) rose 6.1 percent to an all-time high after the movie “Marvel’s The Avengers” earned a record $200.3 million in its opening weekend and profit beat analysts’ estimates.
The S&P 500 fell 1.2 percent to 1,353.39, the lowest level in two months. The index dropped 3.6 percent over two weeks, trimming its 2012 gain to 7.6 percent. The Dow slipped 217.67 points, or 1.7 percent, to 12,820.60 for its biggest weekly decline of the year. “Europe is the big overlay,” Bernie Williams, a portfolio manager at USAA Investment, which oversees $52 billion in San Antonio, said in a phone interview. “People are relatively fearful, but the U.S. seems to be weathering this fairly well.”

S&P 500 Falls to 2-Month Low as Banks Tumble on JPMorgan (Source: Bloomberg)
U.S. stocks fell, sending the Standard & Poor’s 500 Index to a two-month low, as a slump in banks driven by JPMorgan (JPM) Chase & Co.’s $2 billion trading loss overshadowed an increase in a gauge of consumer confidence. Financial shares, which comprise 15 percent of the S&P 500, slid 1.2 percent for the biggest drop among 10 groups. JPMorgan sank 9.3 percent as Chief Executive Officer Jamie Dimon said the lender made “egregious” mistakes and trading losses were “self inflicted.” More than 216 million JPMorgan shares traded, breaking the prior one-day record set in 2008. Commodity shares slumped as China’s industrial production grew the least since 2009, spurring concern demand for raw materials will wane. The S&P 500 slid 0.3 percent to 1,353.39 at 4 p.m. New York time. It capped a two-week drop, falling 3.6 percent in the period. The Dow Jones Industrial Average lost 34.44 points, or 0.3 percent, to 12,820.60. About 6.6 billion shares changed hands on U.S. exchanges, in line with the three-month average.
“It’s a black eye for JPMorgan,” said Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees more than $1.9 billion. “It was considered to be one of the better big banks. There’s already a debate about regulation. Jamie Dimon will be in a weaker position to push back against it, JPMorgan will be in a weaker position.”

European Stocks Post Second Weekly Drop on Greek Election (Source: Bloomberg)
European stocks declined for a second week after an inconclusive election in Greece left political parties struggling to form a government, increasing speculation that the nation might fail to implement austerity measures. Mining companies led losses as Chinese industrial output cooled. Bankia SA slid 16 percent as Spain took control of the lender. Vallourec SA, a French producer of steel pipes for the oil and gas industry, tumbled the most since 2008 after cutting its forecasts. Royal KPN NV rose 20 percent after rejecting a 2.6 billion-euro ($3.4 billion) offer from Carlos Slim’s America Movil SAB for a bigger stake in the Dutch phone company.
The Stoxx Europe 600 Index (SXXP) retreated 0.4 percent to 251.97 this past week. The measure slid to the lowest level in almost four months on May 9, before rebounding 0.9 percent over the next two days. The gauge has retreated 7.5 percent since this year’s high on March 16 as concern grew that the euro area might fracture and Chinese economic growth missed forecasts. “Investors are starting to ask what happens after a country leaves the euro area, which was supposed to have been a rock-solid bloc,” said Henrik Drusebjerg, a senior strategist at Nordea Bank AB in Copenhagen, where he helps oversee $230 billion. “The risk is that it will take massive resources to keep interest rates under control in Italy and Spain if Greece leaves the monetary union.”

Euro Falls to 3-Month Low Before Greek Meeting, Output (Source: Bloomberg)
The euro fell to its lowest level in more than three months as European officials begin to weigh the prospect of Greece withdrawing from the currency union. The 17-nation euro weakened versus most of its 16 major counterparts before Greek President Karolos Papoulias is set to continue discussions with political party leaders on forming a national unity government. A report due today may show the euro area’s industrial production growth moderated in March. The U.S. dollar headed toward parity versus its Australian peer as Asian shares extended a global slide in equities, boosting appetite for haven assets. “As Greece emerges from the weekend without a government, we’re seeing some toll taken on the euro,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “Politics and debt sentiment aside, the big negative for the euro this year will be economic underperformance.”
The euro lost 0.2 percent to $1.2897 at 9:09 a.m. in Tokyo after earlier touching $1.2882, the weakest since Jan. 23. It fell 0.1 percent to 103.18 yen. The U.S. currency bought 80 yen, 0.1 percent above its close on May 11. The greenback fetched $1.0026 per so-called Aussie and earlier declined to $1.0008, the strongest this year. The MSCI Asia Pacific Index of shares fell 0.1 percent. The Standard & Poor’s 500 Index (SPX) lost 0.3 percent on May 11 when the MSCI World Index of developed-market equities fell 0.2 percent.

FOREX-Euro hits 3-1/2-mth low, Aussie eyes parity
LONDON, May 11 (Reuters) - The euro fell to a 3-1/2-month low while growth-linked currencies like the Australian dollar tumbled on Friday as news of JPMorgan's trading losses from a failed hedging strategy and soft Chinese economic data spooked investors.
"The Greek political situation, the Spanish banks' problems and now the souring risk dynamics are all negative for the euro," said Jeremy Stretch, head of currency strategy at CIBC World Markets.

Retail Sales Probably Cooled in April: U.S. Economy Preview (Source: Bloomberg)
Sales at U.S. retailers probably slowed in April as the weather turned more seasonable and consumers took a breather following a pre-Easter holiday buying spree, economists said before a report this week. The projected 0.2 percent gain in purchases would follow a 0.8 percent advance in March, according to the median forecast of 68 economists surveyed by Bloomberg News ahead of Commerce Department figures on May 15. Other data may show increases in the cost of living eased, home construction stabilized and manufacturing picked up. Demand at building material, clothing and even furniture stores probably suffered last month compared with a weather- induced gain in the first three months of 2012, the warmest on record. Smaller employment gains may also make it more difficult for consumer spending to match last quarter’s advance, the biggest in more than a year.
“Households are still spending at a fairly healthy clip -- not at a spectacular rate,” said Paul Dales, a senior U.S. economist at Capital Economics Ltd. in London. “Things aren’t too bad at the moment.”

JPMorgan Unit's London Staff May Go as Loss Prompts Exits (Source: Bloomberg)
The entire London staff of JPMorgan Chase & Co. (JPM)’s chief investment office is at risk of dismissal as a $2 billion trading loss prompts the first executive departures as soon as this week, a person familiar with the situation said. The firm is examining whether anyone in the unit, which employs a few dozen people in London, sought to hide risks, said the person, who requested anonymity because the deliberations are private. Ina Drew, who oversees the unit, is among three people set to leave, the Wall Street Journal reported yesterday, citing unidentified people familiar with the situation. Joseph Evangelisti, a bank spokesman, said Drew would have no comment.
Chief Executive Jamie Dimon, 56, announced the loss May 10, assailing his firm’s handling of trading in synthetic credit securities as “flawed, complex, poorly reviewed, poorly executed and poorly monitored.” Initially, he resisted accepting Drew’s resignation, the person said. The incident has given ammunition to proponents of stricter bank regulations. Drew, 55, is one of two women on the operating committee at JPMorgan, the biggest and most profitable U.S. bank. Her office oversees about $360 billion, the difference between money from deposits and what the bank lends. Dimon had encouraged her unit to boost earnings by buying higher-yielding assets, including structured credit, equities and derivatives, in an expansion of risk-taking led by Achilles Macris, ex-employees said in April.

China Plans Talks With Japan, Korea on Free-Trade Area (Source: Bloomberg)
The leaders of China, Japan and South Korea agreed to start negotiations this year on a free-trade accord between three of Asia’s four biggest economies. China’s Premier Wen Jiabao, Japanese Prime Minister Yoshihiko Noda and South Korea President Lee Myung Bak met in Beijing yesterday as their trade ministers signed an investment agreement described as the “first legal document on trilateral cooperation in the economic field.” The establishment of a free-trade pact will unleash the economic vitality of the region and give a strong boost to economic integration in East Asia, Wen said yesterday, according to a pool report. China has proposed coastal Shandong province as its base for a regional economic cooperation zone, Wen said, with Japan and South Korea to nominate appropriate locations of their own.
Cooperation among the three nations is “very important” to ensure that the Asia-Pacific region is the growth center of the world, Japan’s Noda said, according to the pool report. South Korea’s Lee, referring to economic problems facing the U.S. and Europe, added: “In times of crisis, if countries, for their own survival, carry out protectionist ideas, then the recovery of the economy will take a long time.”

China Lowers Banks’ Reserve Requirements to Support Growth (Source: Bloomberg)
China cut the amount of cash that banks must set aside as reserves for the third time in six months, pumping money into the financial system to support lending after data showed a slowdown in growth is deepening. Reserve ratios will fall 50 basis points, effective May 18, the People’s Bank of China said on its website yesterday. The level for the nation’s largest lenders will decline to 20 percent based on previous statements. Premier Wen Jiabao is increasingly shifting to supporting the nation’s expansion from fighting inflation and containing property prices. China’s import gains stalled in April while industrial output rose at the slowest pace since 2009 and new yuan loans were the lowest this year, adding to global growth concerns just as Europe’s debt crisis reignites.
“Growth momentum is still weak and external risk has risen sharply,” Liu Li-Gang, chief China economist at Australia & New Zealand Banking Group (ANZ) Ltd. in Hong Kong, said by e-mail yesterday. “We think another cut could be in mid-June.”

Japan to Experience Power Shortages This Summer, Panel Says (Source: Bloomberg)
Kansai Electric Power Co. (9503) and two other Japanese utilities may have power shortages this summer without supplies from nuclear reactors, a government panel said. Kansai Electric, the utility most dependent on nuclear power, may face the biggest shortage of 14.9 percent, the independent committee said in a draft report published May 12. Kyushu Electric Power Co. and Hokkaido Electric Power Co. may have shortages of 2.2 percent and 1.9 percent, the report said. Japan is reviewing its electricity outlook as it heads toward a nuclear-free summer while debating the first restart of atomic reactors idled for regular safety checks since the Fukushima disaster in March last year. Based on the conclusion of the panel, the government will decide on power-saving measures, which may include rolling blackouts. Kansai Electric’s service area may face a more severe power shortage than the deficit forecast in Tokyo Electric’s region last year, according to the report.
In addition to the Kansai region, power supply and demand are expected to be tight in Hokkaido, Shikoku and Kyushu.

Shirakawa Urges Japan to Cut Deficit for Yen Stability: Asahi (Source: Bloomberg)
Bank of Japan Governor Masaaki Shirakawa urged reduction of the nation’s deficit to stabilize the yen as the bond market may come under pressure if investors lose trust in fiscal policy, the Asahi newspaper said. The yen might become unstable, triggering uncontrollable inflation should the central bank buy government bonds in an attempt to prevent a financial crisis, Shirakawa said in an interview with the newspaper on May 11.
The BOJ is under pressure to add stimulus as a group of lawmakers proposed overhauling the BOJ’s governing law to ensure steps to end deflation afflicting the nation for more than a decade. The BOJ said its 1 percent inflation goal will be achieved before long after it expanded by 10 trillion yen ($125 billion) on April 27 its plan for government-bond purchases as the world’s third-largest economy showed signs of slowing. Prime Minister Yoshihiko Noda’s party sent a bill to parliament to double the sales tax by 2015 to rein in the world’s largest public debt over the objections of opposition lawmakers. “Japanese government bonds would be sold if Japan’s fiscal policy was seen as unsustainable, causing heavy losses to financial institutions holding the bonds,” Shirakawa was quoted as saying.

Billionaire Godrej Sees Growth in India With Real Estate: Retail (Source: Bloomberg)
Indian billionaire Adi Godrej said real estate will deliver his company’s fastest growth over the next five years as foreign rivals such as Unilever Plc (ULVR) and Procter & Gamble Co. (PG) constrain his flagship consumer-goods unit. “The strongest growth potential we see is in our property- development business,” Godrej, chairman of the Godrej Group, said in an interview at his office campus on the outskirts of Mumbai. “No one has any significant market share. It is divided among a large number of players.” Godrej Consumer Products Ltd. (GCPL), in which Temasek Holdings Pte. bought a 5 percent stake in January, has faced “tremendous competition” in recent years from international companies eager to tap India’s booming consumer market, said Godrej, 70. That trend is set to continue, he said.
Unilever, the world’s second-biggest maker of consumer goods, has almost a third of the beauty and personal-care market in India after more than a century operating in the country. In real estate, where investment rules constrain some global operators, Godrej said he mainly contends with smaller, domestic rivals. India’s property market is forecast to grow to $180 billion by the end of this decade from $66.8 billion in 2011, according to the India Brand Equity Foundation.

Euro Officials Begin to Weigh Greek Exit (Source: Bloomberg)
Greece’s possible exit from the euro area moved to the center of Europe’s debt-crisis debate, with officials beginning to weigh the fallout of a withdrawal even as authorities in Athens struggled to form a government. Meetings brokered by Greek President Karolos Papoulias are set to continue today after Syriza, the largest anti-bailout party, rejected a unity government following last week’s inconclusive elections. The country where the 2 1/2-year-old crisis began moved closer to a new vote, and to the possibility of a euro-area exit that was once a taboo among policy makers. Greek withdrawal “is not necessarily fatal, but it is not attractive,” European Central Bank Governing Council member Patrick Honohan said in Tallinn on May 12. An exit was “technically” possible yet would damage the euro, he said. German Finance Minister Wolfgang Schaeuble reiterated in an interview in Sueddeutsche Zeitung that member states seeking to hold the line on austerity for Greece could not force the country to stay.
The debate between growth and austerity will form the centerpiece of talks tomorrow between the newly installed French President Francois Hollande and German Chancellor Angela Merkel, who has championed an agenda of spending cuts. Euro finance ministers meet today and may discuss the international bailout for Greece, as well as the situation in Spain, where the government last week made a fourth attempt to clean up the country’s banks.

Greek Elections Loom as Key Bailout Opponent Defies Unity (Source: Bloomberg)
Greece’s political deadlock looked set to continue for a second week as President Karolos Papoulias failed to secure agreement on a unity government and avert new elections with the country heading toward a possible exit from the euro area. Greece’s biggest anti-bailout party, Syriza, defied overtures to join the government yesterday, deepening the impasse. Leader Alexis Tsipras won’t attend a new meeting called by Papoulias today for 7:30 p.m., state-run NET TV reported, without saying how it got the information. “Syriza won’t betray the Greek people,” Tsipras said in statements televised on NET TV after the meeting with Papoulias and the leaders of the New Democracy and Pasok parties. “We are being asked to agree to the destruction of Greek society.”
Papoulias spent the day trying to coax the country’s three biggest parties into a coalition after a week of talks failed to deliver on mandates to form a government. If Papoulias’s efforts fail, new elections will need to be called. Today’s meeting will be with the leaders of two of the three biggest parties, and the head of the smaller Democratic Left party, NET said.

Greek President to Meet Four Party Leaders Tomorrow (Source: Bloomberg)
Greek President Karolos Papoulias will meet with political party leaders at 7:30 p.m. tomorrow as discussions on forming a national unity government continue, state-run NET TV said, without citing anyone. New Democracy leader Antonis Samaras, Pasok leader Evangelos Venizelos and the head of the Democratic Left party Fotis Kouvelis will attend the meeting, NET reported. NET initially said that Syriza party head Alexis Tsipras was also expected to attend the meeting, but later reported he would not be taking part. Syriza is the second-largest party in Parliament and the biggest party opposed to the terms of the country’s international bailout. Greece may face new national elections unless a government is formed following the inconclusive voting on May 6. Kouvelis said he regretted that his proposal to form a unity government had failed.

Syriza Says It Won’t Join Greek National Unity Government (Source: Bloomberg)
Greece’s biggest anti-bailout party, Syriza, said for the second time in as many days that it won’t join a unity government, pushing the country closer to new elections that have sparked concerns about a euro-area exit. “Syriza won’t betray the Greek people,” leader Alexis Tsipras said in statements televised on state-run NET TV after a meeting brokered by President Karolos Papoulias between the party and the leaders of the New Democracy and Pasok parties. “We are being asked to agree to the destruction of Greek society.” Papoulias began a final bid to coax the three biggest parties into a coalition today after a week of talks which failed to deliver on mandates to form governments. He will meet later today the leaders of the four other parties to probe the likelihood of forming a national-unity government. If Papoulias’s efforts fail, new elections will need to be called.
Greece’s political impasse since inconclusive general elections May 6 has raised the possibility another vote will have to be held as early as next month, with polls showing that could boost anti-bailout Syriza to the top spot. The standoff has reignited concern the country will renege on pledges to cut spending as required by the terms of its two bailouts negotiated since May 2010, and, ultimately, leave the euro area.

ECB’s Honohan Says Greece Euro Exit Can Be Managed (Source: Bloomberg)
A Greek exit from the euro could be “technically” managed yet would damage confidence in the monetary union, said European Central Bank Governing Council member Patrick Honohan. A departure by Greece would be “a rather destabilizing kind of event” for the rest of the euro area and all sides are working to try to avoid it, Honohan told a conference in the Estonian capital, Tallinn, today. “It is not necessarily fatal, but it is not attractive.” The euro fell to a more than three-month low against the dollar yesterday as Greek politicians struggled to form a government following an inconclusive election on May 6 that saw a surge in support for anti-austerity parties. President Karolos Papoulias will meet tomorrow at 12:00 Athens time with the leaders of all parties in an attempt to form a unity government and avoid another vote as soon as next month.
Central bankers across Europe have started discussing the possibility of a Greek exit from the euro area and how to handle the fallout, Swedish Riksbank Deputy Governor Per Jansson said yesterday. ECB officials decided earlier this year to deal with any Greek exit on an ad-hoc basis rather than devising a templated set of responses because the fallout would be so unpredictable, said three euro region central bank officials.

ECB’s Demetriades Says Growth Needed More Than Austerity (Source: Bloomberg)
European Central Bank council member Panicos Demetriades criticized austerity and called for growth- oriented policies in his inaugural speech as the new central bank governor of Cyprus. “Both in Cyprus and in the euro area, it is now becoming understood that an austerity policy alone is not enough to put countries’ budgets back on a sound footing,” Demetriades said, according to a text of his speech in Nicosia today. “Growth is needed above all else.” Voters in Greece and France in May 6 elections challenged austerity as Europe’s sole prescription for the debt crisis, adding pressure on German Chancellor Angela Merkel to broaden her focus from debt reduction. Demetriades has inherited an economy in turmoil, with banks reeling from losses on their exposure to Greece and the government unable to borrow on financial markets. The Cypriot economy, the euro area’s third- smallest, will shrink 0.8 percent this year, the European Commission said yesterday.
Demetriades said he welcomed comments by ECB President Mario Draghi that a growth compact is needed in Europe to complement the fiscal compact.

20120514 1050 Global Commodities Related News.

Commodities Erase Gain for Year in Worst Run Since 2008 (Source: Bloomberg)
Commodities fell for an eighth straight session, wiping out gains for the year, after data from Asia showed a further slowdown in industrial output and JPMorgan Chase & Co. (JPM) said that it had a $2 billion trading loss. The Standard & Poor’s GSCI Spot Index of 24 commodities posted its longest slump since December 2008 and dropped to 640.46, the lowest since Dec. 22. The measure fell 0.8 percent to settle at 642.58 at 3:53 p.m., down 0.4 percent since Dec. 31. The last annual decline was in 2008, before a rally that saw the gauge double over the next three years. Twenty-one of the raw materials tracked by the GSCI fell, led by cotton, soybeans and lead. Crude oil and copper capped their second straight weekly losses after industrial output slowed in China and shrank in India, adding to concerns that economic growth is stalling as Europe struggles with a debt crisis. Jamie Dimon, JPMorgan Chase’s chief executive officer, said that the bank made egregious mistakes trading derivatives.
“The optimism we had at the end of 2011 that created a firm footing for a lot of commodities has slowly eroded,” said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity-markets newsletter in Sydney. “The outlook remains mixed to negative.”

Bullish Wagers Plunge Most in 2012 on Greek Impasse: Commodities (Source: Bloomberg)
Speculators cut bets on a rally in commodities by the most since November as Greece’s struggle to form a new government and weaker-than-expected industrial output in China erased this year’s gains in raw materials. Money managers reduced net-long positions across 18 U.S. futures and options by 19 percent to 723,239 contracts in the week ended May 8, the biggest decline since Nov. 22, Commodity Futures Trading Commission data show. The Standard & Poor’s GSCI Spot Index of 24 raw materials dropped 6.5 percent in eight sessions, the longest slide since December 2008.
The euro plunged to a three-month low on May 11 after inconclusive May 6 elections left Greece at a political impasse, threatening the implementation of austerity pledges and reigniting concerns that the country will have to leave the currency union. More than $1 trillion was wiped from the value of global equities last week as JPMorgan Chase & Co. reported a $2 billion trading loss, adding to speculation that global growth will falter and company earnings will slow. “The market isn’t believing the global growth story,” said Jeffrey Sherman, who helps manage about $30 billion of assets for DoubleLine Capital in Los Angeles. “You have this struggle in Europe, and most economists are forecasting a recession, and that’s dominating headlines.”

Wheat Market Recap Report (Source: CME)
July Wheat finished down 4 1/4 at 597, 7 off the high and 4 3/4 up from the low. December Wheat closed down 5 1/4 at 635 1/2. This was 4 1/2 up from the low and 7 1/2 off the high. July wheat closed 4 1/4 cents lower on the session and down 12 1/2 cents on the week. The market pushed to a new contract low and a new contract low close as the steep sell-off in the other grains, especially soybeans, helped to pressure. The market opened lower due to a bearish tone to outside market forces with a weaker tone for energy and metal markets and further weakness in global equity markets. However, talk of the oversold condition of the market and some end of the week short-covering pushed the market higher on the day shortly after the day session opening. Excellent weather for advancing the winter wheat crop to maturity and an excellent start to the spring wheat crop helped to pressure the market to new lows for the day into the mid-session. July KC wheat pushed to new lows for the move and closed 7 1/2 lower and right near the lows. July Minneapolis wheat closed lower for the ninth session in a row and also pushed to a new low for the move. July Oats closed down 4 at 332. This was 1 3/4 up from the low and 6 off the high.

New Argentine wheat plantings seen down 13 percent
BUENOS AIRES, May 10 (Reuters) - Argentina's 2012/13 wheat area is expected to shrink 13 percent from last season, a leading grains exchange said on Th ursday while analysts warned that the harvest will come in well under the previous season's crop.
The South American country is an important global wheat exporter and the main supplier to neighboring Brazil, but growers say low prices in the local market have discouraged them from sowing the grain. They blame the depressed prices on export quotas imposed by the government to help guarantee plentiful domestic supplies, and say reforms this year have failed to improve the situation.

India eyes govt deals to shift wheat surplus
NEW DELHI, May 10 (Reuters) - India is considering selling wheat to states in Africa, the Middle East and neighbours such as Afghanistan and Pakistan, its food minister said, to cut its huge stocks as lower global prices deter exports and keep the domestic market in surplus.
India, the world's second-biggest wheat and rice producer, lifted a ban on exports in September, as bumper harvests filled warehouses to overflowing.

Corn Market Recap for 5/11/2012 (Source: CME)
July Corn finished down 6 1/2 at 581, 11 1/2 off the high and 8 3/4 up from the low. December Corn closed down 2 at 505 1/4. This was 6 1/4 up from the low and 5 3/4 off the high. July corn saw a late-day bounce but still closed 6 1/2 cents lower on the session and down 39 1/4 cents for the week. Funds were noted as active sellers for the third day in a row. December corn pushed to 499 and the lowest level since December 17th of 2010 before closing at 505 1/4. Follow-through technical selling from the weak action yesterday plus bearish outside market forces plus good weather for advancing the planting progress were all seen as negative forces this morning to drive the market down to the lowest level since mid-March. Private exporters reported a sale of 300,000 tonnes of US corn to unknown destination split between the 2011/12 season and the 2012/13 season. Strong cash markets and ideas that the market was oversold plus a turn up in the US stock market helped to support higher trade on the day shortly after the opening but the market was lower on the day again into the mid-session. The sharp break in soybeans helped to pressure for much of the day but talk of the oversold condition of the market and ideas that China is still an interested buyer on breaks helped to support. July Rice finished down 0.085 at 15.705, 0.125 off the high and 0.025 up from the low.

SOFTS-Sugar, arabica coffee slip, eyes on harvests
LONDON, May 11 (Reuters) - Raw sugar and arabica coffee futures on ICE eased in early trading , as large crops loomed, weighing on prices.  Raw sugar futures on ICE fell towards Wednesday's 20-month low, with prices expected to remain rangebound, as a large Brazilian crop and expected global surplus were bearish, but physical offtake supported prices.

China to issue 1 mln T of cotton import quotas -traders
BEIJING, May 11 (Reuters) - China, the world's top cotton consumer, will soon issue about 1 million tonnes of extra cotton import quotas to help textile mills buy cheaper overseas cotton to cut costs, traders said on Friday.
The extra quotas, which would allow imports at sliding tariffs between 5 and 40 percent, would bring total import quotas issued so far this year to about 2.4 million tonnes, they said.

Brazil coffee crop seen at record 50.45 mln bags-govt
SAO PAULO, May 10 (Reuters) - Brazil's will produce a record 50.45 million 60-kg bags of coffee in the 2012/2013 season as producers in the world's largest coffee exporter planted more trees in response to strong prices, the agriculture ministry said on Thursday.
The forecast is in line with the December forecast of the ministry's crop supply agency Conab, which put the new crop at of 49 million to 52.3 million bags in its first forecast of the season.
Brazil's early 2012/13 sugar output down 34 pct
SAO PAULO, May 10 (Reuters) - Early sugar output from Brazil's main center-south cane belt fell 34 percent from a year ago, as the region struggled to recover from the first drop in output in a decade last season, the sugar milling industry association Unica said Thursday.    
The central-south, which accounts for 90 percent of Brazil's cane output, produced 541,500 tonnes of sugar by the end of the first month in the 2012/13 (April-March) season, down from the 817,600 tonnes a year ago, Unica said.

Cotton Extends Slump to 21-Month Low as Supplies Expand (Source: Bloomberg)
Cotton tumbled to a 21-month low, trimming costs for clothing retailers including Gap (GPS) Inc., after the U.S. forecast rising inventories and as industrial output slowed in Asia. World stockpiles will climb 10 percent to 73.75 million bales in the season that starts Aug. 1, the U.S. Department of Agriculture said yesterday. Industrial output slowed in China and shrank in India, adding to concern that the global economy will weaken as the European debt crisis worsens. Rains are improving prospects for crops in Texas that were hurt by drought last year. “If China’s slowing more than expected, then it drives the risk-off attitude in commodity markets,” said Michael Creed, an agribusiness economist at National Australia Bank Ltd. “The market is still trying to come to grips with the weakening global economy and a market that’s looking increasingly comfortable in terms of how well it’s supplied.”
The fiber has plunged 64 percent from a record in March 2011 as higher prices encouraged farmers to plant more and demand fell in China, the biggest user. The commodity was the worst performer today among the 24 raw materials tracked by the Standard & Poor’s GSCI Spot Index, which fell for an eighth straight session, the longest slide since December 2008. Cotton for July delivery sank 3.5 percent to settle at 78.97 cents a pound at 2:34 p.m. on ICE Futures U.S. in New York, after reaching 77.16 cents, the lowest for a most-active contract since July 30, 2010. Futures declined for an eighth session, the longest losing streak since June 4, 2010.

Naimi Says Brent Oil Should Drop to $100 as Supply Tops Demand (Source: Bloomberg)
Crude prices should fall because global supply is outweighing demand, according to Saudi Arabia’s oil minister, Ali al-Naimi. “We want a lower price than where it is now,” al-Naimi said in Adelaide today. “We need to get the price to a level of around $100” a barrel for London’s Brent crude, he said. Saudi Arabia is the world’s biggest oil exporter. Brent, a benchmark price for more than half the world’s crude, has dropped 6 percent this month amid concern Europe’s debt crisis will worsen and curb fuel demand. OPEC is working to bring prices down, the group’s Secretary-General, Abdalla el- Badri, said May 3. The producer group, scheduled to meet next month, is pumping 8.3 percent more crude than it considers necessary this quarter, figures from the Vienna-based group show. Brent crude for June settlement dropped 0.8 percent in the week to May 11 to $112.26 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate oil for June delivery slid 2.4 percent to $96.13 a barrel.

OIL-Brent falls below $112, euro zone woes weigh
SINGAPORE, May 11 (Reuters) - Brent crude dropped below $112 a barrel on Friday, tracking losses in the euro amid a political deadlock in Greece that has renewed worries about the fate of the debt-laden euro zone and clouded the outlook for global oil demand.
"Markets are seeing some more of that risk-off sentiment given concerns over Greece and the difficulties in forming a coalition government," said Natalie Robertson, analyst at Australia and New Zealand Bank.

Oil likely to stay high despite good supply - IEA
LONDON, May 11 (Reuters) - Oil prices are likely to stay high due to tension between the West and Iran, despite a dramatic improvement in world supply resulting in a big build in stocks, the International Energy Agency (IEA) said on Friday.
The agency, which advises 28 industrialised nations on energy policy, said soaring global oil supply from OPEC countries and the United States far outpaced global demand, curbed by poor economic activity in developed nations.

China April oil demand shows first on-year decline in 3 yrs
BEIJING, May 11 (Reuters) - China's implied oil demand fell in April to its lowest in six months and showed the first year-on-year decline in at least three years, as refineries scaled back crude runs to undergo maintenance.
Implied oil demand fell 0.5 percent in April from a year earlier to 9.31 million barrels per day (bpd), the lowest since October 2011, Reuters calculations based on preliminary government data showed on Friday.

Oil Drops to 2012 Low on Chinese Output, Europe Debt (Source: Bloomberg)
Oil dropped to a 2012 low after China’s industrial growth unexpectedly slowed in April and concern grew that Europe’s debt crisis will worsen, reducing fuel consumption. Futures fell 1 percent after industrial output increased in China by the least since 2009. Prices also slumped as Spain said it will force lenders to raise provisions against real estate holdings and JPMorgan Chase & Co. (JPM) reported a $2 billion trading loss. Crude declined a second week after U.S. supplies rose to a 21-year high. “There are a combination of factors pushing oil lower,” said Stephen Schork, president of the Schork Group in Villanova, Pennsylvania. “There’s a heck of a lot of oil out there, so supply isn’t a problem, and recent economic data along with the problems in Europe point to lower demand.” Crude for June delivery fell 95 cents to $96.13 a barrel on the New York Mercantile Exchange, the lowest settlement since Dec. 19. Prices slipped 2.4 percent this week and are down 2.7 percent this year.
Oil in New York may extend losses after settling below the 200-day moving average for the first time since Dec. 19. The technical indicator stood at $96.27. Buy and sell orders tend to be clustered near chart-support levels.

Rusal’s First-Quarter Profit Falls 84% on Weaker Aluminum Prices (Source: Bloomberg)
United Co. Rusal (486), the world’s largest aluminum producer, posted a 84 percent slump in first quarter earnings as prices of the lightweight metal declined. Net income was $74 million for the three months ended March 31, the Moscow-based company said in a statement today to the Hong Kong stock exchange. That compares with a restated $451 million a year earlier. Revenue declined 3.7 percent to $2.9 billion. Rusal, locked in shareholder disputes partly over its stake in OAO GMK Norilsk Nickel, suffered from lower aluminum prices. The metal averaged $2,219 a metric ton in the first quarter, down about 12 percent from the same period a year earlier.
“The first quarter of 2012 has proved to be a tough test for the aluminium industry with the global demand for the metal slowing down and the aluminum price weakening,” Chief Executive Officer Oleg Deripaska said today in the statement. The company is considering curtailing between 300,000 tons and 600,000 tons of high-cost smelting capacity in the second half, he said.

20120514 1049 Soy Oil & Palm Oil Related News.

Soybean Complex Market Recap (Source: CME)
July Soybeans finished down 49 1/4 at 1406, 55 3/4 off the high and 3 1/2 up from the low. November Soybeans closed down 37 3/4 at 1321 1/4. This was 2 1/2 up from the low and 45 1/4 off the high. July Soymeal closed down 16.1 at 408.5. This was 2.1 up from the low and 16.9 off the high. July Soybean Oil finished down 1.26 at 52.24, 1.34 off the high and 0.15 up from the low. July soybeans closed 49 1/4 cents lower on the session and closed down 72 1/4 cents for the week. This occurred during a week of a bullish USDA report with funds holding a near record high net long position. Aggressive long liquidation selling from funds emerged due to a "risk off" attitude from investors and from a lack of follow-through buying after the initial reaction to the report. The market fell as much as $1.10 in just 8 trading sessions. A bearish tone to outside market forces and general banking concerns helped to pressure commodity markets overnight and this tone spread to grains early this morning. Even with the strong recovery in the stock market and less pressure on energy markets, the soybean market failed to see much of a bounce. Fund trader long liquidation selling appears to be the dominate force for the market and July futures pushed to a new low for the day late in the session. A general sense that the USDA report did not bring in any "new" bullish factors for the longer-term outlook plus an excellent weather outlook for the US planting season helped to pressure. Meal and oil were also lower into the mid-session with July soybean oil pushing down to the lowest level since February 6th. Weakness in Malaysia palm overnight and weak economic news out of China added to the negative tone. Private exporters reported a sale of 139,500 tonnes of US soybeans to unknown destination for the 2011/12 season.

Argentina soy, corn output seen lower - Rosario
BUENOS AIRES, May 10 (Reuters) - Argentina's 2011/12 soy output was expected to fall to 40.9 million tonnes, down from last month's estimate for 43.1 million tonnes due to poor yields caused by a drought, Rosario grains exchange said on Thursday.  
It also cut its outlook for 2011/12 corn production to 19.0 million tonnes from 19.8 million tonnes in April.

VEGOILS-Palm falls to 9-week low on demand concerns
SINGAPORE, May 11 (Reuters) - Malaysian palm oil futures slipped to a 9-week low before ending more than 2 percent lower as political uncertainty in the euro zone and weak industrial production data in China weighed on the demand outlook for the edible oil.
"First, refining margins are negative and demand is anaemic," said a trader with a local commodities brokerage in Malaysia.

India's April vegoil imports jump 27 pct m/m -trade
MUMBAI, May 11 (Reuters) - India imported 925,334 tonnes of vegetable oils in April, up 27 percent from 727,706 tonnes in March as imports of soyoil and sunflower oil surged, a leading trade body said on Friday, higher than the average expectations in a Reuters survey.
India, the world's No. 1 importer of cooking oils, buys mainly palm oil from Indonesia and Malaysia and a small quantity of soyoil from Argentina and Brazil.

Brazil raises soy crop view after aggressive cuts
SAO PAULO, May 10 (Reuters) - The soybean forecast from Brazil's agriculture ministry on Thursday bounced back by more than a million tonnes, after the government overshot in April when it slashed more than 3 million tonnes from an earlier estimate of the drought parched crop.
The ministry's crop supply agency Conab said in its eighth forecast of Brazil's grain output that the 2011/12 (September-October) soybean crop would reach 66.7 million tonnes, up 1.1 million tonnes from the agency's April estimate of 65.6 million tonnes.

Forecasts for Brazil's 2011/12 soybean crop
SAO PAULO, May 10 (Reuters) - Brazil's 2011/12 soybean harvest is entering its final days after drought erased around to 10 million tonnes of potential output from the world's second largest producer of the oil seed.
The Brazilian agriculture ministry raised its estimate of the current soy crop to 66.7 million tonnes, up 1.1 million tonnes from April's forecast.  

India's April refined palm oil imports seen lower
NEW DELHI, May 10 (Reuters) - India's refined palm oil imports are likely to have fallen in April from March as prices rose and buyers had built up plenty of stock, traders surveyed by Reuters said.
Compared with a year ago, however, imports of the refined product are forecast to have risen a whopping 414 percent after tax changes by exporter Indonesia made crude palm oil less attractive.