Market Daily - Sources TheEdge, TheStar, Bernama, Bloomberg, Reuters, Business Times

Breaking News

• Indicators positive for Malaysia’s economy
• Economists expect Bank Negara to hold key interest rate steady
• Construction seen positive this year
• First social stock exchange in Asia to be set up by early next year
• Invest KL targets 10 MNCs annually

CFTC Is `Out of Step' With Global Derivative Rulemaking, Commissioner
Says

Goldman's Broadbent Sees U.K. Economy Weathering Government
Budget Squeeze
Asia Confronts Oil Shock as Central Banks to Meet on Rates
Taiwan's Debt Tops Asia as Rising Oil Prices Punish Indonesia
European Manufacturing Grows Fastest in a Decade
Consumer Credit in U.S. Increased $5.01 Billion in January

MARKET REVIEW

KLCI Update

Share prices on Bursa Malaysia ended lower yesterday as trading remained uninspiring with the ongoing conflict in oil-rich Libya continuing to rattle investors, said a dealer. The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) went down 6.87 points, or 0.45 per cent, to close at 1,515.74. It had opened 1.27 points lower at 1,521.34. Turnover dropped to 714.797 million shares worth RM1.097 billion from
1.13 billion shares worth RM1.9 billion last Friday with losers outpacing gainers by 584 to 184, while 243 counters were unchanged.

Regional Market

Japan’s stocks gained, led by oil companies after escalating violence in Libya drove prices higher. The Nikkei 225 (NKY) Stock Average rose 0.2 percent to 10,529.07 as of 9:41 a.m. in Tokyo. The broader Topix index advanced 0.1 percent to 942.92, with almost three times as many shares advancing as falling.

US Market

U.S. stocks slid, erasing last week’s advance, as escalating violence in Libya sent oil higher and chipmakers tumbled after Wells Fargo & Co. reduced its recommendation on the industry. The S&P 500 slumped 0.8 percent to 1,310.13 at 4 p.m. in New York after climbing as much as 0.5 percent earlier and advancing 0.1 percent last week. The Dow declined 79.85 points, or 0.7 percent, to 12,090.03. Oil
for April delivery surged as much as 2.4 percent at $106.95 a barrel.

MEDIA HIGHLIGHTS Malaysia

Indicators positive for Malaysia’s economy

Strong growth in the stock market and the rally in commodity prices should augur well for the country's economy this year, said Asian Strategy and Leadership Institute (Asli) chief executive officer and director Datuk Michael Yeoh. He said the country's gross domestic product was expected to grow at 6% due to the prices of crude palm oil and rubber as well as the recovery in the export sector. “More important, Bursa Malaysia is showing strong, resilient growth where it has crossed historical highs in January. This could create a wealth effect on the economy.

Economists expect Bank Negara to hold key interest rate steady

With the slower pace of economic growth this year compared with 2010, economists do not anticipate any interest rate hike in Bank Negara's monetary policy committee meeting on Friday. However, they believe that there is a 50:50 chance that there could be a 1% hike in the statutory reserve requirement (SRR). MIDF Research chief economist Anthony Dass said Bank Negara was likely to hold the overnight policy rate (OPR) at 2.75% for the time being, deeming it too early to be raised. AmResearch Sdn Bhd senior economist Manokaran Mottain also believes that the central bank will not raise interest rates at its upcoming meeting.

Construction seen positive this year

The construction industry is primed for a better year as seen by the slew of contracts and sub-contracts awarded recently to local construction companies for the building of a theme park and transportation projects. Sunway Construction Sdn Bhd, a wholly-owned subsidiary of Sunway Holdings Bhd, obtained a M257.9mil
contract to construct package 4 of Legoland Malaysia Theme Park Development from IDR Assets Sdn Bhd last week. Fajarbaru Builder Sdn Bhd (FBSB) was awarded a contract worth RM62.6mil by the Bina Puri Holdings Bhd-TIM Sekata joint venture for part of the light rail transit extension for the Ampang line. The
wholly-owned subsidiary of FajarBaru Builder Group Bhd also had a contract worth RM87.3mil from Trans Resources Corp Sdn Bhd to construct, complete, test and commission stations 1, 2 and 3 for the Kelana Jaya line extension.

First social stock exchange in Asia to be set up by early next year

Asia’s first social stock exchange - Impact Investment Exchange Asia (IIX), which is a social enterprise (SE), is expected to be set up and operational by early next year. While details of the IIX have yet to be ironed out, the organisation behind IIX, Impact Partners will be launching an online portal by the end of the month to bring together investors with socially impactful investments. According to IIX managing director Robert Kraybill, impact investing may be new in Asia but is was fast gaining traction in the United States and Europe. IIX directors believe there is much potential for impact investments in Asia as social issues such as poverty, deprivation and environment become more relevant.

Invest KL targets 10 MNCs annually

Invest KL, expected to be launched by end-April, is targeting to attract at least 10 multinational companies (MNCs) annually to invest in Kuala Lumpur and the Klang Valley. Invest KL is an organisation under the Federal Territories and Urban Well Being Ministry and the Malaysian Industrial Development Authority (Mida), which was formed to attract MNCs to Kuala Lumpur. Federal Territories and Urban Well
Being Minister Senator Datuk Raja Nong Chik Raja Zainal Abidin said that Invest KL had attracted two MNCs so far. “The companies are Schlumberger and Vale. We are looking for service-oriented MNCs that could create high-value jobs in Kuala Lumpur.


MEDIA HIGHLIGHTS Global

CFTC Is `Out of Step' With Global Derivative Rulemaking, Commissioner Says The Commodity Futures Trading Commission is “out of step” with U.S. and international efforts to write rules for the derivatives market, Commissioner Jill Sommers told bankers at a conference in Washington. CFTC and Securities and Exchange Commission proposals for governing new swap-execution facilities may lead to inconsistent regulation, Sommers said today in a speech at the Institute of International Bankers annual conference in the U.S. capital.

Goldman's Broadbent Sees U.K. Economy Weathering Government Budget Squeeze

Britain’s economy can withstand the government’s budget squeeze and an interest-rate increase, according to research published this week by Ben Broadbent, the Goldman Sachs Group Inc. (GS) economist who will join the Bank of England’s rate panel in June. “The fiscal adjustment that the government plans over the coming years is undoubtedly severe,” London-based economists including Broadbent wrote in an e-mailed note dated March 6. “Nevertheless, we take a more sanguine view than many of its impact over the medium term.” While it’s “hard to see much growth” in incomes and consumer spending this year, the economic impact from any potential interest-rate increases by the Bank of England may be limited, Broadbent wrote in the note with economists Kevin Daly and Adrian Paul.

ECONOMIC HIGHLIGHTS

European Manufacturing Grows Fastest in a Decade

European manufacturing growth accelerated to the fastest pace in more than 10 years in February, a further sign the economy is gathering strength. A gauge of manufacturing in the euro region rose to 59 last month from 57.3 in January, London-based Markit Economics said in an e-mailed report today, confirming a Feb. 21 estimate. That’s the highest since June 2000. A reading above 50 indicates expansion.

Consumer Credit in U.S. Increased $5.01 Billion in January

U.S. consumer borrowing increased for a fourth straight month in January, led by a gain in non- revolving loans such as those for automobiles and education, the Federal Reserve reported today. The $5.01 billion rise in credit followed a revised $4.09 billion gain in December that was less than the previous estimate, the Fed said in Washington. Economists projected a $3.5 billion increase in the measure of credit card debt and non-revolving loans, according to the median forecast in a Bloomberg News survey.