- PM: Housing prices still manageable
- Growth affected if oil prices are too high
- Global demand for palm oil growing rapidly
- Labuan licensed firms can have dual locations
- CME: Bursa key strategic partner
- U.K. Trade Deficit Narrows More Than Forecast as Exports Surge to a Record
- Greece Debt Default Bets Increase as Spain Exits 'Sick List': Euro Credit
- Asia Central Banks Step Up Inflation Fight With Thai, Vietnam Rate Rises
- Tokyo Exchange Plans Merger Talks With Osaka, President Says
- U.S. Wholesale Inventories Climb More-Than-Forecast 1.1% Amid Sales Growth
- Consumer Comfort in U.S. at Highest Level Since ‘08
MARKET REVIEW
KLCI Update
Share prices on Bursa Malaysia ended firmer yesterday as investors' interest stayed focused on sectors related to the Economic Transformation Programme (ETP) initiatives, primarily plantation and oil and gas, dealers said. At 5pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) rose 6.03 points or 0.40 per cent to 1,523.69. At the opening, the FBM KLCI was 1.52 points higher at 1,519.18. Thereafter, it moved between 1,519.18 and 1,525.69. Turnover rose to 1.50 billion shares worth RM2.24 billion from 1.17 billion shares worth RM1.75 billion on Tuesday with gainers outpacing losers 575 to 211 while 267 counters were unchanged.
Regional Market
Japanese stocks advanced, sending the Topix index to its first gain in three days, as a decline in oil prices eased concern higher energy costs will impede the global economic recovery. The Topix increased 0.6 percent to 944.29 at the 3 p.m. close in Tokyo, paring gains after rising earlier as much as 1.3 percent. The Nikkei 225 (NKY) Stock Average rose 0.6 percent 10,589.50.
US Market
U.S. stocks fell, sending the Standard & Poor’s 500 Index lower a third time in four days, as escalating violence in Libya tempered optimism that the biggest equity rally since 1955 will extend into a third year. The S&P 500 dropped 0.1 percent to 1,320.02 at 4 p.m. in New York. The Dow Jones Industrial Average fell 1.29 points, or less than 0.1 percent, to 12,213.09 as IBM, which makes up about 10 percent of the Dow, propped up the 30-stock gauge. Oil slid 0.6 percent to settle at $104.38 a barrel as a surge in supplies at a U.S. hub overshadowed concern about violence in Libya.
MEDIA HIGHLIGHTS
Malaysia
PM: Housing prices still manageable The rise in residential property prices is still manageable and measures such as the My First Home Scheme will allow those in the lower-income brackets to own homes. Prime Minister Datuk Seri Najib Tun Razak said at a press briefing yesterday, following the annual meeting with Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz, that the rise in house prices was being monitored. We're watching the increase in property prices closely which we think is still manageable,” he said, adding that the My First Home Scheme, which was launched on Tuesday for those earning less than RM3,000 a month, was a people-friendly measure to enable the lower income groups to own houses.
Growth affected if oil prices are too high Malaysia, as an oil exporting nation. stands to benefit as oil prices rise up to a certain point where super high oil prices would be more of a drag on the overall economy, said economists. With oil prices averaging US$90 to US$100 per barrel, oil subsidies by the Government could increase to some RM14bil from RM10.3bil last year. As of Wednesday, Nymex crude oil was trading around the US$104 band. MIDF Research economist Anthony Dass said that the first round effect from higher oil price will be positive, raising real GDP by 0.4% or for every US$10 per barrel. “On the fiscal budget, it is estimated that every US$1 per barrel rise in oil price will boost federal revenue by RM300mil to RM400mil over two years. Fuel subsidies too will rise amid a gradual approach towards subsidy reduction,” said CIMB Research head of Economics Lee Heng Guie. Global demand for palm oil growing rapidly.
The global market has become increasingly dependent on palm oil but major producers like Malaysia and Indonesia are facing tougher operational challenges to cater to the rapidly growing global demand. Palm oil, which accounts for 57% of world vegetable oils exports, stands to lose its leadership position if Malaysia and
Indonesia failed to address the issues amicably, Thomas Mielke, the executive director of ISTA Mielke GmBH, which publishes Oil World, said at the closing of the 22nd Palm and Lauric Oils Conference and Exhibition (POC 2011) organised by Bursa Malaysia yesterday. Mielke projected that by 2015 about 62 to 63 million tonnes of palm oil would be required versus 45.5 million tonnes in 2010.
Labuan licensed firms can have dual locations
Labuan International Business and Financial Centre (Labuan IBFC) licensed insurance and takaful firms can now locate their management and operational offices in Kuala Lumpur, or any other city within Malaysia, in line with the ongoing process of co-location and the movement towards a fully abstract international business and financial centre. This allowance is part of the financial sector liberalisation package initially introduced by Labuan Financial Services Authority in 2009, which provides for similar concessions to Labuan Holding companies, Labuan Banks and Investment Banks. The extension to Labuan insurance and takaful entities underlined the important role insurance and takaful played in the growth and success of Labuan IBFC, said Labuan FSA director-general Datuk Azizan Abdul Rahman.
CME: Bursa key strategic partner
CME Group Inc, the world’s largest derivatives exchange, has maintained that Bursa Malaysia is its key strategic partner in terms of trade-matching services, product licensing and minor cross-equity investments in the region. Its managing director (commodities products) Timothy J. Andriesen said: “We wish to clarify that CME Group has not entered into any type of agreement with the Indonesia Commodity and Derivatives Exchange (ICDX).” The collaboration with CME Group is part of the local bourse’s efforts to globalise Malaysia’s crude palm oil (CPO) futures market, thus facilitating a robust derivatives exchange.
MEDIA HIGHLIGHTS
Global
U.K. Trade Deficit Narrows More Than Forecast as Exports Surge to a Record The U.K. trade deficit narrowed more than economists forecast in January as exports surged to a record and imports of aircraft declined. The goods trade gap shrank to 7.06 billion pounds ($11.4 billion) from a record 9.69 billion pounds in December, the Office for National Statistics said today in London. The deficit is the smallest in 11 months and compared with the 8.5 billion- pound median forecast of 17 economists in a Bloomberg News survey. Exports rose 5.4 percent and imports fell 4 percent. Greece Debt Default Bets Increase as Spain Exits 'Sick List': Euro Credit Investors are becoming more discriminating about European creditworthiness, increasing bets that Greece, Ireland and Portugal may restructure their debts while Spain and Italy survive the euro region’s deficit crisis. The average annual cost of protecting of Greek, Irish and Portuguese bonds in the credit-default swaps market for five years exceeded the average of Spanish and Italian contracts by a record $496,000 this week. That’s up from $384,000 on Feb. 2 and $77,000 a year ago. Swaps on Greece signal a 60 percent probability of default in five years. The division between peripheral nations widened this week after Greece was downgraded deeper into junk by Moody’s Investors Service and speculation increased that the European Union will fail to agree on a comprehensive package to end the crisis. Traders are betting Spain will avert an EU bailout as budget cuts and growth help repair its balance sheet.
ECONOMIC HIGHLIGHTS
U.S. Wholesale Inventories Climb More-Than-Forecast 1.1% Amid Sales Growth Inventories at U.S. wholesalers rose more than forecast in January as distributors tried to keep pace with sales that rose by the most since November 2009. The 1.1 percent increase in stockpiles followed a revised 1.3 percent gain in December that was bigger than initially estimated, the Commerce Department said today in Washington. The median projection in a Bloomberg News survey was for a 0.9 percent rise. Sales jumped 3.4 percent in January, led by cars, computers and commodities. Consumer Comfort in U.S. at Highest Level Since ‘08
Consumer confidence climbed last week to the highest level since April 2008 as Americans grew less pessimistic about their finances. The Bloomberg Consumer Comfort Index, formerly the ABC News U.S. Weekly Consumer Comfort Index, was minus 39.6 in the period to Feb. 20, compared with minus 43.4 the prior week, a report today showed. Forty-nine percent of those polled held positive views on their financial situation, the most in a year. The biggest two-month drop in the jobless rate since 1958 may be helping lift households’ spirits, boosting the odds that spending, which accounts for about 70 percent of the economy, will keep growing.
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