Gold Price Monitor Chart (KFH) 26.08.2011

Malaysia's solar charge

US-based Solexel has vowed to invest RM2.8 billion to build a photovoltaic cell manufacturing plant in Senai Hi-Tech Park in Johor.

Read more: Malaysia's solar charge http://www.btimes.com.my/articles/rup23000/Article/#ixzz1VunKB4Sw

Putrajaya: Malaysia continues to reinforce its reputation as a solar industry hub with US-based Solexel Inc pledging to invest RM2.8 billion to build a photovoltaic (PV) cell manufacturing plant in Senai Hi-Tech Park in Johor. As at June this year, the total solar energy investments totalled RM15.8 billion, involving various businesses that are due to create about 14,300 jobs. "The emergence of these major companies has spurred the solar value chain, providing opportuni-ties as well as a catalyst to others to start operations in Malaysia," said Deputy International Trade and Industry Minister Datuk Mukhriz Mahathir. Mukhriz said Solexel's investment follows that of global PV players in the country. First Solar from the US and Q-Cells from Germany have already started to export their products, while others like Sun Power in Malacca has just begun operations. Malaysia has approved 23 such projects and 19 are already in production or active planning. The companies make anything from silicon PV, solar wafers, and cells, to modules and panels that are used to generate electricity from sunlight. The revenue forecast for the 23 companies over the next three years amounts to RM10 billion. The Senai plant, the first for Solexel outside its base in California, will have a capacity of more than one gigawatt of solar PV cells per year. The company signed a memorandum of understanding with Senai Hi-Tech Park yesterday for the facility, which will be developed on a 40ha site. Prime Minister Datuk Seri Najib Razak, who witnessed the ceremony, said Solexel's investment will include research and development. It will also attract and build a local supply chain for chemicals used in complex high-technology solar and semiconductor manufacturing. Solexel president and chief executive Michael Wingert said construction will start in 2012, and the plant will provide jobs for more than 2,300 people. The plant, which production expected to be underway in 2014, may generate export revenue of more than RM3 billion per year. "Solexel is keen to contribute to the development of a domestic market for solar PV modules to address Malaysia's growing need for clean, renewable power." The company has decided on Senai Hi-Tech Park because of its proximity to a sea port and airport as well as the availability of land for infrastructure.

Petronas project boost to Malaysia players

Kuala Lumpur: The new gas exploration project by Petroliam Nasional Bhd (Petronas) is due to benefit a slew of local service providers, analysts said.

Read more: Petronas project boost to Malaysia players http://www.btimes.com.my/articles/jason/Article/#ixzz1Vum869qX

OSK Research analyst Jason Goh said the first beneficiary of the RM15 billion North Malay Basin project would be upstream players like Kencana Petroleum Bhd in new oil and gas structure fabrication, SapuraCrest Petroleum Bhd for laying pipes and Dialog Group Bhd in constructing and managing centralised tanks. "Then, it would flow to hook-up and commissioning as well as other brown-field service providers like Kencana, Dayang and Petra Energy Bhd. Also, vessel players like Perdana Petroleum, Alam Maritim and Tanjung Offshore should not be forgotten as they are needed to carry the fabricated oil and gas structures to the respective oil and gas offshore field," he said. MIDF Amanah Investment Bank Bhd added names like Petronas Gas Bhd, Wah Seong Bhd and Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) to the list. Its analyst Belford Chang Kee Zheng said Petronas Gas will benefit from services like gas processing and transportation, while Wah Seong in the area of pipe coating. "While Kencana and MHB are in the areas of engineering, procurement, construction and commissioning works for offshore structure. Kencana can also play its role in the subsea engineering and services, as well as drilling services." An analyst from TA Securities Holdings named Pantech, SapuraCrest and Wah Seong as the three prime beneficiaries. He expects Pantech, which has expertise in subsea piping, to benefit from pipe fabrication, including pipe bending. The analyst said other beneficiaries would include Scomi Group for the initial stages of drilling for the nine oil fields. "We expect the KNM group to do process equipment for the structures, and Perdana Petroleum and SapuraCrest to get contracts for hook-up commissioning. We believe Kencana and Ranhill Bhd will also stand to benefit from the project," he said.

Kuala Lumpur: English football club Manchester United has hired a slew of banks including Malaysia's CIMB Group for its planned listing on the Singapore stock exchange, according to news portal FinanceAsia.

Read more: CIMB among banks hired for planned MU listing http://www.btimes.com.my/articles/mubank/Article/#ixzz1VulMK3NX 

The portal, in a report yesterday, cited sources as saying that the US-based Glazer family, which owns 100 per cent of the popular club that has a strong Asian fan base, last Friday mandated JPMorgan and Morgan Stanley as joint bookrunners for the initial public offering (IPO). The two US investment banks will work alongside Credit Suisse, which had earlier been hired as the global coordinator. It will also be a bookrunner. According to the report, the Glazers have also hired Hong Kong-based BOC International, Malaysia's CIMB, Singapore's DBS and pan-Asian investment bank CLSA as joint lead managers, in a move that suggested the owners are keen to get a well-diversified regional spread of investors. It said the Glazers have already filed a listing application with the Singapore bourse. The portal's sources said MU had an aggressive timetable in mind for its IPO and investor education may start as early as the second half of September. They said the Glazers went for Singapore instead of Hong Kong as they want to be able to list shares with "different" voting power, which is something Hong Kong's listing rules no longer allow. "It is still unclear exactly what kind of share structure the company is planning, but supposedly the current owners want to ensure that they will be able to retain control of the team even if some family members choose to sell," the portal reported. Previous news reports have suggested that it could be a US$1 billion (RM2.98 billion) IPO, with up to 30 per cent of the company being put up for sale. - By Adeline Paul Raj

Gold Price Monitor Chart (KFH) 24.08.2011

Gold Price Monitor Chart (KFH) 22.08.2011

Tenaga's power plan

Kuala Lumpur: Tenaga Nasional Bhd is proposing that first generation power contracts are allowed to expire and an open bidding process be used to replace the lost capacity.

Read more: Tenaga's power plan http://www.btimes.com.my/articles/noxtend/Article/#ixzz1VluuM8Kn

"To me, the PPA (power purchase agreement) renegotiations did not bring any results. It is probably time for the parties to decide what to do," TNB chief executive officer Datuk Seri Che Khalib Mohamad Noh told Business Times in an interview recently. Apart from the failed two rounds of talks, the scarcity of gas is also a factor. If gas continues to be scarce, it will be better for the country to have new plants that are more efficient and can last another 25 years. New plants that are more efficient will be able to produce more power using the same amount of gas. Building new gas-fired plants will also help the country reduce its carbon footprint, he explained. "Because gas is becoming more scarce, we better think seriously about this," Che Khalib said. TNB's proposal means that independent power producers with contracts that will start expiring in stages from end-2015 will bid to supply new capacity from 2016 onwards. It also means that IPPs must be told sometime in 2012 or 2013 if their PPAs won't be renewed. This will give them time to bid and build new plants. There are five first-generation PPAs signed in 1993 that are binding for 21 years. The IPPs are YTL Power Generation Sdn Bhd, Genting Sanyen Power Sdn Bhd, Segari Energy Ventures Sdn Bhd, Powertek Bhd and Port Dickson Power Sdn Bhd. These IPPs have a collective generation capacity of around 4,100MW and the PPAs would expire in stages from end-2015. It was reported that a new government unit called MyPower Corp will review PPAs between TNB and IPPs and make recommendations to three ministries, said Energy, Green Technology and Water Ministry deputy secretary-general Badaruddin Mahyuddin. MyPower is headed by Datuk Abdul Razak Majid, formerly TNB's senior vice-president of corporate affairs. "Part of its (MyPower) task is to review and discuss the contents of the PPAs and come up with suggestions for both TNB and IPPs. Before submitting these recommendations to the three ministries KeTTHA, Prime Minister's Office and Finance Ministry, the unit will jointly discuss them with the Energy Commission," Badaruddin reportedly said.

Gold Price Monitor Chart (KFH) 18.08.2011

Critical shortage of gas supply

Kuala Lumpur: Malaysia is running its power plants close to breaking point due to a prolonged shortage of gas supply, which is also hurting the state-owned national utility.

Read more: Critical shortage of gas supply http://www.btimes.com.my/articles/bigstretch-2/Article/#ixzz1VOtaajC3

Although the supply shortage was due to be resolved in June, the situation is still the same now as the power sector receives a third less gas than what it's supposed to get, said Tenaga Nasional Bhd (TNB) president and chief executive officer Datuk Seri Che Khalib Mohamad Noh. "It can't go on like this. Probably we can avert (any problems) this time but I don't know how many times we can be lucky," he told Business Times in an interview yesterday. The power sector has been allocated 1,350 million standard cubic feet per day (mmscfd) by Petroliam Nasinal Bhd (Petronas) but supply has consistently been below 1,000 mmscfd since the start of 2011. Supply is now hovering around 900-950 mmscfd and it even hit a low of 595 mmscfd at one point. The shortage is mainly due to frequent Petronas' maintenance at its gas facilities. "The supply is still not stable. It is far less than what we need. This is not sustainable," Che Khalib said. Apart from having to spend more to buy alternative fuels like distillates and medium fuel oil to run power plants, the shortage could also hurt the country's power supply if it is not fixed soon. Already, coal plants are now running flat out at maximum capacity and TNB had to forgo maintenance at some plants just to ensure continuous electricity supply. In some cases, it had to ask for a special waiver from the government because not carrying out scheduled maintenance would be a breach of industrial requirements. TNB also has to use distillates for its gas plants. This fuel costs five times more than gas. "Gas plants are not designed to run on distillates for a long time because it will have a negative impact," he said. Burning distillates for gas plants would also stress the equipment. This means the plants must be maintained more often. Although TNB can contend with one plant taken off the national power grid, it is worried about breakdowns at multiple plants due to the stress put on the equipment. But it is working hard to avoid this. In fact, Malaysia literally ran out of distillates on June 17 this year due to TNB's purchases and Che Khalib said he had to make frantic calls to oil companies for extra supply from abroad. "We have to ensure the country has electricity at any cost." And the cost has been quite high for TNB. In July, it posted its first quarterly loss in almost three years because of higher fuel costs.

Personal Comment: Price will go down reacting to this news... but after a solution to this problem arises... price will surely go up...

Gold Price Monitor Chart (KFH) 16.08.2011

3 words: VOLATILE, REAL OPPORTUNITY!

Dear investors and jittery friends,

Like many people, you must be nursing some doubts and anxieties based on the overwhelming information on what’s happening in the US and global markets, following S&P’s downgrading US currency from AAA to AA+. I’ve attached some articles to support the following train of thought.

Let me break it down for you :

The real impact is uncertain as it will be largely sentiment-driven. Reason is S&P is merely confirming what the world has known for a long time and what China’s Xinhua News Agency coined very accurately in its editorial on Saturday:

‎"To cure its addiction to debts, the United States has to reestablish the common sense principle that one should live within its means.It hould also stop its old practice of letting its domestic electoral politics take the global economy hostage and rely on the deep pockets of major surplus countries to make up for its perennial deficits."

Good sense must prevail. The investing community need to (as the Chinese would agree) continue to STICK TO the FUNDAMENTALS of INVESTING.

Let me break it down further for you:

1. If you are an EPF investor, and you’re below 50, that means you have a long term horizon for your investment – THIS IS CHEAP SALE TIME. We have been waiting for this cheap sale FOR A LONG TIME. It’s time to buy now and accumulate units of your tested and proven high performance funds.

2. If you are an EPF investor aged 53-54 and close to retirement ie. needing your EPF invested money entirely in the next 12 months – you would already have exited the market as we would have advised you to be cautious.

Reminder: your EPF invested amount comes from your Account 1, touchable only when you’re 55.

3. If you are a lump sum or regular cash investor and need your cash in the next 12 months, it’s also a time to exit as caution is a better play.

4. If you are a lump sum or regular cash investor and your investment horizon is in 3 -5 years and above, THIS IS CHEAP SALE TIME. We have been waiting for this cheap sale FOR A LONG TIME. It’s time to buy now and accumulate units of your tested and proven high performance funds.

Recession 2011: No double-dip recession; US to emerge unscathed



WASHINGTON DC: Relax: the world is unlikely to plunge into a double-dip recession, notwithstanding the crash in global stock markets and the US loss of AAA rating from Standard & Poor's. However, the global economy is slowing down, and slow global growth may persist for years - this typically happens when a recession arises from a financial crisis.

The fall in stock markets looks more a buying opportunity than the start of another slide to recession levels. US politicians managed to increase the country's debt ceiling on August 2 just in time to avoid technical default. The stand-off between Democrats and Republicans was seen by alarmists as political paralysis with grave future portents.

In fact, it was political theatre, a variation of a similar drama that played out in 1995. Remember, the conflict between Mukesh and Anil Ambani over their industrial inheritance was terribly bitter, but nobody thought for a minute that it would lead to Reliance defaulting on its debts.

The same holds for the US: partisan battles can be bitter and can lead to gridlock, even technical default, but not to real inability to pay up. Even if the US had technically defaulted by being unable to issue cheques for a few days - as actually happened in 1995 - nobody doubted that the cheques would become cashable with a small delay.

Indeed, in the past few days global investors have exited emerging markets and rushed into dollars as a safe haven. That underlines the point that, no matter how big the problems of the US may be, no other country looks a safer haven. Investors may desire an alternative to the American dollar as the main global currency, but neither the euro nor yen look remotely capable of taking its place.

The US remains unrivalled in its innovation and academic strength. The problems of Europe are deeper. The Eurozone was created as a monetary union of European countries without a corresponding fiscal union. This has turned out to be unsustainable. One alternative is for the weaker countries of southern Europe to abandon the euro and regain flexibility over their own currencies.

The second alternative is for Eurozone countries to go for some sort of fiscal union, in which the stronger countries guarantee the debts of the weaker economies. Politicians find both alternatives too radical to contemplate, and so preferred one fudge after another.

Markets Apprehensive

The markets can see this, and so are apprehensive. Yet fudging is indeed possible for quite some time. Voters in Germany and some other northern countries are dead against repeated rescues of what they regard as the profligate and ungrateful south. So a formal fiscal union of all Eurozone countries is impossible.

But it is entirely possible for the weaker countries to be given the right to issue Eurobonds - bonds guaranteed by all countries of the European Union. Since Germany and France are among the guarantors, the bonds will be seen as safe, and interest rates will come down to sustainable levels. This fudge can continue for years before the contingent liability of the northern countries begins to look excessive.

No double-dip recession but Europe a worry: Greenspan

WASHINGTON | Sun Aug 7, 2011 1:50pm EDT

(Reuters) - Former Federal Reserve Chairman Alan Greenspan on Sunday downplayed the risk of a double-dip recession in the United States, saying its domestic economy was in better shape compared to its European peers.

A double-dip recession "depends on Europe, not the United States," Greenspan told NBC television's "Meet the Press." "The United States was actually doing relatively well -- sluggish, but going forward -- until Italy ran into trouble."

The U.S. economy stumbled badly in the first half of 2011 and came dangerously close to contracting in the January-March period, raising fears that the economy was sliding back into recession.

Those fears were calmed somewhat last week when a debt deal was agreed before the August 2 deadline as well as data showing that employers added 117,000 jobs in July. But Standard & Poor's downgrade of the country's top-notch "AAA" credit rating late on Friday to "AA+" could hurt the recovery.

"With all of this bickering going on, the economy is slowing down," Greenspan said. "You can see it in all the data. I don't see a double-dip, but I do see it slowing down."

Europe, which buys a quarter of U.S. exports and houses the operations of many American companies, would determine the course of the U.S. economy's recovery, Greenspan said.

European leaders are struggling to contain a sovereign debt crisis, which has spread to Italy, the euro zone's third-largest economy, and is causing turmoil in global financial markets.

Greenspan said Italy's troubles could contribute to destabilizing the European and U.S. economies.

"When Italy showed signs of significant weakness in selling its bonds ... it created a massive problem within Europe because Italy is a very large country that ... indeed cannot be bailed out," he said. "And that's what's causing our problem."

Greenspan said despite the S&P downgrade, U.S. Treasury bonds, unlike Italian bonds, were still a safe investment.

"This is not an issue of credit rating. The United States can pay any debt it has because it can always print money to do that. There's zero probability of default," he said. "What I think the S&P (downgrade) did was to hit a nerve. ... It's hit the self-esteem of the United States, the psyche. And it's having a much profounder effect than I conceived could happen."

Markets in the Gulf region and in Israel, among the first to trade since the U.S. credit downgrading, tumbled on Sunday amid worries the U.S. downgrade and European debt woes may trigger another global downturn.

Greenspan said the same was likely to happen worldwide when global markets open on Monday

Barclays: Some Short-Term And Long-Term Implications Of The Downgrade

Joe Weisenthal



Realistically, nobody knows exactly what impact the S&P downgrade of US sovereign credit from AAA to AA+ means.

But it'd be boring and foolish not to guess.

Here's a snip from a note from Barclays' Ajay Rajadhyaksha.

First, the near-term implications:

Investor sentiment is clearly fragile after the drop in all risky assets over the last several days. But the near-term impacts of this one-notch downgrade should be minimal for the US bond markets, in part because sentiment is so fragile.

· We do not anticipate forced selling of US Treasuries from any significant investor base. Foreign central banks maintain a large share of their FX reserves in USTs because it is the deepest and most liquid bond market. This is unlikely to change due to a ratings downgrade. Mutual fund investment guidelines retain significant flexibility regarding the handling of this action. The US banking system should not be forced to sell as well because the Fed has issued a guideline noting no change in risk weights. Similarly, insurance companies are also unlikely to be forced to sell as the NAIC has already de-emphasized ratings for regulatory capital requirements.

· Haircuts in the repo market may rise but since haircuts or margins are meant to protect cash lenders from daily price fluctuations in the collateral, they are more likely to depend on changes in price volatility of Treasuries, rather than just a downgrade in itself.

· Similarly, in the derivatives market, most CSAs do not explicitly draw a link between the eligibility of US Treasuries as collateral and their AAA rating. In addition, given that major US banks are several notches below AAA, a single-notch downgrade should not lead to downgrades in the credit ratings of banks. Even if that were to occur, additional collateral requirements would be manageable in our view.

And then some long-term implications:

Being the world's reserve currency seems incongruous with a AA rating. The longer-term effects are driven primarily by whether markets eventually also downgrade the US. In that case, the biggest impact should be through the effect on the USD as a reserve currency.

· Based on prior research, we believe that a one-notch downgrade would lead to an increase of 25bp in borrowing costs. But this is not a function of a specific rating action, but of the market downgrading the sovereign rating.

· A downgrade could increase diversification away from the USD. Foreign investors have supplied 30-40% of non-financial credit creation in the US over the past few years. An increase in the pace of diversification should be an economic drag, as domestic savings would have to rise to pick up the slack

Templeton's Mobius sees high degree of uncertainty, volatility

Written by Reuters

SINGAPORE: Mark Mobius, executive chairman of Templeton Emerging Markets group, said on Sunday he sees a high degree of uncertainty and volatility in financial markets in the wake of Standard & Poor's decision to downgrade the U.S. credit rating.

Mobius warned that the U.S. dollar's role as an anchor to the global investor community was deteriorating and said emerging market currencies and stocks could become safe havens.

"The initial reaction will be a high degree of uncertainty and thus volatility since investors will not know where to turn for safety," said Mobius, whose unit oversees $50 billion in emerging market assets.

"During the sub-prime crisis safety was in U.S. Dollars and U.S. Treasuries. Now that anchor to the global community is deteriorating," he said in an email to Reuters. – Reuters

Gold Price Monitor Chart (KFH) 12.08.2011

Showing signs of going back down... but may be temporary...

And the new MAS MD is...

Kuala Lumpur: The new managing director (MD) of Malaysia Airlines (MAS) is - your guess is as good as mine. At least that is what analysts are saying.

Read more: And the new MAS MD is... http://www.btimes.com.my/articles/maai4f/Article/#ixzz1UmNb8MhN

While they expect an MD to be named in the next couple of weeks, a source believes that he or she could be named as early as today. The MAS executive committee (exco) is believed to have had its first official meeting yesterday. While analysts agree the person will be independent of all the three parties in the deal - Khazanah Nasional Bhd, AirAsia Bhd and MAS, no one has a clue as to who could be the likely candidate. "I think it's safe to say the person won't be from (Time) Warner," quipped one analyst who declined to be named. At the possibility of a foreigner coming in to run the troubled carrier, he said the exco seemed to brush off the idea when asked. Another analyst opined that having a foreigner would not be a politically sound move. "The new guy will probably just come out of the blue, just like how (Tan Sri) Tony Fernandes came out of the blue and bought Tune Air Sdn Bhd for RM1," he said. At the possibility of MAS' newly appointed executive director Mohammed Rashdan Yusof becoming the new managing director, an analyst said "definitely not". Furthermore, he would have already been made the chief if Khazanah had wanted him to be from the start, another reckoned. One of the biggest challenges for the new MD is to deal with the airline's eight unions and 19,000 employees. The new boss will also have to contend with a new board of directors who are known to be strong personalities. MAS and AirAsia stocks were the two top most traded shares yesterday, with MAS shares inching higher by 8 sen, extending gains seen on Wednesday, to close at RM1.80. AirAsia shares fell by another 4 sen, ending the day at RM3.50.

Pay hikes to filter through oil palm industry

Plantation companies have to adopt the Malayan Agricultural Producers Association's pay hike plan to attract Malaysian workers to join the labour-strapped sector, say industry executives.

Read more: Pay hikes to filter through oil palm industry http://www.btimes.com.my/articles/MAPAHIK/Article/#ixzz1UmHciSB0

Kuala Lumpur: Malaysia's oil palm plantation industry is expected to gradually adopt the Malayan Agricultural Producers Association (Mapa) pay hike proposal for some 157,270 plantation workers nationwide. Industry executives say the plantation companies have no choice but to offer the same thing to avoid losing staff and more importantly attract local workers to join the already labour-strapped sector. Johor-based Kim Loong Resources Bhd managing director Gooi Seong Heen said the sector has to follow suit to prevent workers from jumping ship. "Labour cost will go up but it will not be significant. Hopefully with the pay hike, the workers will work harder and plantation companies will get higher productivity," Gooi told Business Times. From September 1, some 157,270 plantation workers will get a 10 per cent pay increase and are guaranteed a minimum monthly pay of RM850. Malaysia has some 500,000 plantation workers, half of which are foreigners. Most of Malaysia's plantation companies in Peninsular Malaysia are members of Mapa while only a handful from Sabah are Mapa members. The pay hike by Mapa follow closely Sime Darby Bhd's unprecedented pay hike effective July 1 for its 37,000 estate workers. Separately, Genting Plantations Bhd, the plantation arm of Genting Group, is also giving all of its more than 12,000 estate and oil mill workers and non-executive staff a RM200 pay increase a month, effective September 1 in conjunction with Mapa's scheme. CIMB Investment Bank analyst Ivy Ng Lee Fang said over time, other plantation companies will have no choice but to respond with incentives for their staff to work harder. "But I think, most of the plantation companies in Malaysia will wait until September 1, to get a clearer picture of the scheme. This is because most plantation companies in Sabah are not members of Mapa and for now they are not adopting to it yet. They would want to evaluate it first, talk to their human resource department, go on the ground and talk to their workers first and learn about it more before implementing it," she said. She added although raising pay will increase production cost, this could be offset by higher worker productivity if the salaries are linked to performance. A TDM Bhd official said the hike is long-awaited as foreign workers are known to work harder than their local counterparts, which leads to their salaries being almost equal or higher than that of Malaysian workers. "Cost of production will definitely go up but plantation companies have no problems in absorbing it. Hopefully, the higher cost will be offset by higher productivity from the workers who are happy with their pay hikes," said the official.

Asian stock marts dive

Analysts and fund managers in Malaysia have mixed advice for investors: some suggest a disposal of stocks in any rally and others urge investors to hold on to their positions

Read more: Asian stock marts dive http://www.btimes.com.my/articles/bloodb/Article/#ixzz1UmGciTHX

Kuala Lumpur: Stock markets in Asia were a sea of red yesterday as investors panic-sold shares on fears that the US may go into another recession. This followed rating agency Standard and Poor's move last Friday in downgrading the credit rating of the world's biggest economy for the first time ever, by one level to AA+. Key markets in Asia, led by China, fell by between 3 per cent and 5 per cent in the morning, before calming down somewhat in the afternoon. At home, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) plunged as much as 48.19 points (or 3.1 per cent) in the morning session to 1,476, with less than 30 of 1,000-odd counters posting gains. It, however, gained some ground in the afternoon session, closing 27.44 points (1.8 per cent) lower to 1,496.99, its lowest in about five months. Some RM34 billion in market capitalisation was wiped out. China's Shenzhen Composite Index (down 4.4 per cent lower to 1,113.37 points), Singapore's Straits Times Index (down 3.7 per cent to 2,884) and Korea's Kospi Index (down 3.8 per cent to 1,869.45) were among the worst performing indices in the region. Analysts and fund managers here had mixed advice for investors, with some suggesting a disposal of stocks in any rally and others asking investors to hold on to their positions while waiting for greater clarity on the situation. They expect Asian markets to take direction from Wall Street over the short term. Markets in US had yet to open for Monday trade as at press time, but key European markets were down by between one per cent and 2.5 per cent in early trade. "It's a dynamic situation ... we have to watch Wall Street closely over the next few days," said Terence Wong, head of research at CIMB Research. Wong noted that the pullback in the last two trading days, though strong, is still within a bull-market pullback. "We don't think it's game over for the bulls yet. We're advising investors to hang on to their positions and seek greater clarity," he told Business Times. Investors will also be looking for clues at a Federal Open Market Committee meeting in the US today. "There could be added expectations for the policymakers to announce fresh economic stimulus initiatives, or at least prevent confidence from tanking further by spelling out contingency plans should the world's largest economy threaten to slip into a double-dip recession, while keeping interest rates low for an extended period," HwangDBS Vickers Research said in a note to clients yesterday. The weaker fundamentals in the US and persistent debt worries in the eurozone are taking a toll on investor sentiment and causing investors globally to liquidate on any and every rebound rally in markets, analysts said. "We believe the market concerns will continue to overwhelm sentiment, and the downshift in equities will persist," said Yap Huey Chiang of RHB Research Institute. OSK Research cut its year-end target for the index to 1,557 from 1,680, and downgraded its recommendation on the Malaysian market to "neutral". Other research houses, like CIMB, said they may follow suit after looking at the current slew of corporate earnings to come out. "As of now, based on both technical and quantitative analyses, the downside risk is heightening," Kenanga Research said. Maybank Investment Bank urged investors to dispose of stocks on any rally and keep more cash rather than equity. "Any attempt to bargain hunt will be futile and shortlived. Therefore, any quick bargain hunting profits may quickly erode if clients do not take their positions off the table swiftly," its head of retail research Lee Cheng Hooi said in a note to clients yesterday. Losers thumped gainers 67 to 1,051 losers, with 99 counters unchanged. Top gainers included Nestle (up 48 sen to RM47.60) and Shell (up 16 sen to RM10.28). Some 1.9 billion shares worth RM3.6 billion changed hands in the market.

Bursa sees RM60.6b wiped out in two days

Good news is that, analysts say, the selling over the past two days may be overdone and a short-term rebound may be under way.

Read more: Bursa sees RM60.6b wiped out in two days http://www.btimes.com.my/articles/juniper08/Article/#ixzz1UmFrahRj

Kuala Lumpur: The stock market has lost more than RM60.6 billion in value over the past two trading days, but situation could worsen if more selling pressure is in the offing, as this may trigger a series of margin calls by brokerages. "If the markets go down a bit more, broking houses will likely require its clients to top up cash, failing which investors who are trading on margins will have their shares foresold," said a stock broker, adding for now none of the major firms have made the margin call. Jupiter Securities head of research Pong Teng Siew said when the margin call is made, the market will dip again. "We can certainly expect another round of dumping," said Pong, adding analysts were also concerned of "sell orders" by foreign funds. "We need to keep a close watch on how the foreign market perform over the next few days, for signs of any possible sell orders," said Pong. Over the past two trading days, the value of the local stock market has gone down from RM1.34 trillion to about RM1.28 trillion. Yesterday alone, market value lost was RM33.76 billion. Good news is that, analysts said that the selling over the past two days may be overdone and a short-term rebound may be underway. The Relative Strength Index (RSI) of the benchmark KLCI yesterday was at 20.36. The RSI measures the momentum of a security to determine whether it is in an overbought or oversold condition. A reading between 70-80 warns users of an overbought condition and is likely to encounter a downward correction. Reading between 30-20 are considered oversold condition, and warns users of an imminent upward correction. Stocks that may rebound include DRB-HICOM Bhd (share price fell 3.17 per cent to RM2.14 yesterday), Coastal Contracts Bhd (down 8.25 per cent to RM2.11), UEM Land Bhd (down 8.86 per cent to RM2.16), Malaysian Building Society Bhd (down 2.4 per cent to RM1.61), Gamuda Bhd (down 4.76 per cent to RM3.20), Malaysia Resources Corp Bhd (down 3.95 per cent to RM2.19) and SP Setia Bhd (down 4.64 per cent to RM3.70). According to analysts, these are some of the many stocks that they were optimistic over in the long run, backed by fundamentals. DRB-HICOM has a target price of as high as RM3.95, Gamuda RM5.63, UEM Land RM3.90, Coastal Contracts has a target price of more than RM3.80, SP Setia more than RM5.40, and MRCB above RM3.00. There were also 47 stocks that were trading at the 52-week low yesterday. They included Bursa Malaysia Bhd, Naim Holdings Bhd, Star Publications Bhd, UOA Development Bhd, Alam Maritim Resources Bhd, YTL Corp Bhd, YTL Power Bhd, KNM Group Bhd, Ma-xis Bhd, Kinsteel Bhd, Puncak Niaga Holdings Bhd, JCY International Bhd, Berjaya Land Bhd and KLCC Property Holdings Bhd.

World rallies to tame debt crisis, avoid market sell-off

World rallies to tame debt crisis, avoid market sell-off

Read more: World rallies to tame debt crisis, avoid market sell-off http://www.btimes.com.my/articles/mame/Article/#ixzz1UmEV9OnW

Frankfurt: The G20 vowed to bolster stability and the European Central Bank went shopping for eurozone bonds yesterday to stem a debt crisis gone global but economists raised doubts and battered markets were knocked back down. Finance ministers and central bankers from the Group of 20 industrialised and emerging economies pledged to "take all necessary initiatives in a coordinated way to support financial stability and to foster stronger economic growth in a spirit of cooperation and confidence." Their statement came after Asian stock markets posted substantial losses while European trade saw promising gains disappear by midday, with Friday's unprecedented US ratings downgrade adding to the toxic mix. A sharply-worded editorial in the Chinese People's Daily - the mouthpiece of China's Communist Party - said Western nations threatened global prosperity by "ignoring their responsibility" to the rest of the world. The G20 stressed that members would "cooperate as appropriate, ready to take action to ensure financial stability and liquidity in financial markets." - AFP

Gold Price Monitor Chart (KFH) 10.08.2011

Is this really a surprise?

Maxis broad plan

The data business is where the company is in the investment mode, says Maxis chief executive officer

Read more: Maxis broad plan http://www.btimes.com.my/articles/maxisceo/Article/#ixzz1UNsxLsEm

Kuala Lumpur: Maxis Bhd, the country's largest mobile operator, expects its operating margin to improve in as early as three years, once its broadband customer base reaches critical mass. The company, which has been registering an earnings before interest, tax, depreciation and amortisation (Ebitda) margin of more than 50 per cent for more than three consecutive years, has recently guided that margins are expected to ease over the near term. "I believe in the next three to four years, you will see margins coming up because we would have then achieved the critical mass of broadband users," said chief executive officer Sandip Das in an interview recently. The company expects easing of margin in the short term to be driven by investments in the data business (such as broadband) and beyond telecom business (like machine-to-machine and cloud computing). But he stressed that this does not mean that the conventional voice and text messaging business is dwindling. "Sometimes, people misunderstand me when I say our Ebitda margin will go down," he said. Maxis, controlled by tycoon T Ananda Krishnan, currently has three businesses - the "cash-cow" voice and text messaging business, the data business and the beyond telecom business. Sandip said its existing voice business has now reached maturity and does not require much capital expenditure (capex), as its network has covered more than 95 per cent of the country. "This is where growth is marginal but Ebitda margin is at its peak. This is the part of business where we can make 50-51 per cent margin for as long as we can," said Sandip. However, in order for the company to continue growing, it needs to venture into new businesses. One of it is the data business. This is where the company offers broadband services via smart phones and USB dongles. "The data business is where we are in the investment mode ... it is not as big as the voice business, so it is not generating enough revenues at this point in time for that kind of Ebitda margin. "But there will come a time when we will not have to invest anymore in network but the business will reach critical mass. Like right now, we only have 600,000 odd broadband customers, but voice we have 13 million, the day I have my broadband users go into millions, my margins will become higher," explained Sandip. The company is also exploring into businesses that are "beyond telecoms", such as IPTV, machine-to-machine solutions and cloud computing. "However, it's still too early to really determine what will work, what will not work, how long it will take, the incubation period, and others. But because this is a smaller fraction of the overall business today, so it will not affect so much on the overall margin," he said. Of all the potential beyond telecom services, he sees the trend of machine-to-machine picking up in Malaysia. "The machine-to-machine will be a trend in the future. For example, we can put chips in the vending machines, so soft drink companies can monitor their stock level in the vending machines remotely," he said. Like any new trends, Sandip believes it will take time before a new one emerges. "I remember 12 to 15 years ago, one of my friends told us that we can send text messages using the mobile phone, and all of us sitting in the room said who has the time to type. But, as you can see, SMS has exploded. "Once ecosystem is established, reliability established, consumer behaviour will change. "We have so many applications and solutions in our pipeline, some may succeed, some may not. A lot of it is a function of time," he said.

Khazanah to remain MAS' single largest shareholder

Khazanah clarifies reports that AirAsia founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun would end up as the single biggest investors

Read more: Khazanah to remain MAS' single largest shareholder http://www.btimes.com.my/articles/kaz/Article/#ixzz1UNs1p5wW

Kuala Lumpur: Khazanah Nasional Bhd, which owns nearly 70 per cent of Malaysia Airlines (MAS), said it will stay as the single largest shareholder of the national carrier as the company undergoes a transformation plan. It was clarifying weekend reports that AirAsia founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun would end up as the single biggest shareholder in MAS. "These reports are incorrect. The aviation sector is a strategic sector to the economy and MAS remains a core holding in Khazanah's portfolio," the investment group said in a statement. In a separate statement, Fernandes and Kamarudin also said it was not true that they would end up as the single largest shareholder. "As the major shareholders of AirAsia Bhd and AirAsia X Sdn Bhd, we are committed to increasing shareholder value in both our core investments by continuously exploring various opportunities to enhance our franchise," they said. It was reported that MAS would partner Asia's largest budget carrier, AirAsia, and an official announcement is likely to be made by the government this week. It is learnt that MAS will swap shares with AirAsia in a move that could see AirAsia chief executive officer Fernandes getting a 20 per cent stake in the national carrier. This will allow both Malaysian carriers to rationalise their fleet frequencies and destinations within the country and abroad while ensuring MAS returns to becoming a premier airline. Khazanah, in its statement, did not deny that a revamp was on the way. "As an active strategic investor, Khazanah constantly reviews ways to improve the performance of its portfolio companies and concurrently the competitiveness of key strategic sectors of the economy."

Nod for merger

Kuala Lumpur: The RM11.85 billion merger of Sapuracrest Petroleum Bhd and Kencana Petroleum Bhd is literally "one big approval" away before officially creating the country's largest oil and gas service provider by asset size.

Read more: Nod for merger http://www.btimes.com.my/articles/SAKEN-2/Article/#ixzz1UCNBeBMF

The board of directors of SapuraCrest and Kencana yesterday approved the merger exercise, deciding to take up the offers made by special purpose vehicle (SPV) Integral Key Sdn Bhd (IKSB). This leaves the need for both companies to secure at least 75 per cent shareholders nod as the next big hurdle before the deal goes through. SapuraCrest and Kencana are expected to call for special shareholders' meetings to vote on the deal soon. Overall, the companies are expecting the whole merger exercise that will create a new entity with some RM6 billion of assets to be completed by the first quarter of next year. SapuraCrest and Kencana yesterday issued a statement each to say that their board of directors had decided to accept IKSB's offers. "The board ... has resolved to accept the offer by IKSB to acquire the SapuraCrest business for a total consideration of RM5.87 billion," SapuraCrest said in its announcement to Bursa Malaysia yesterday. "The board is not seeking other alternative bids to make an offer to acquire the SapuraCrest business," it added. IKSB has offered to buy all the assets and liabilities of SapuraCrest and Kencana under a cash and share swap deal. The SPV will pay almost RM5.98 billion or RM3 per Kencana share satisfied by the issuance of 2.5 billion new IKSB shares at RM2 apiece and a cash payment of RM968 million. For SapuraCrest, IKSB will pay RM5.87 billion or RM4.60 per SapuraCrest share. This will be satisfied by the issuance of 2.5 billion new IKSB shares, also at RM2 apiece and a cash payment of RM875 million. Kencana, in its announcement to Bursa Malaysia yesterday, cautioned that moving forward, there will be no assurance that the merged entity will be able to attain a higher or equivalent combined earnings. This is after taking into consideration the cultural and management differences, possible customer overlap, and the additional borrowings amounting to about RM1.8 billion repre-senting the total cash payments, which will be incurred by IKSB pursuant to the merger offer. Kencana and SapuraCrest posted a net profit of RM136.2 million and RM231.4 million respectively in their last financial year. Once the deal is completed, IKSB will be listed on Bursa Malaysia's Main Market, in place of Sapura-Crest and Kencana. Analysts estimate that the Sapura group founder Tan Sri Shamsuddin Abdul Kadir and his family will own slightly over a fifth of IKSB, and Kencana's Datuk Mokhzani Mahathir about 16 per cent. Norwegian rig contractor Seadrill will also be a substantial shareholder given its current 23.6 per cent stake in SapuraCrest.

KLIFD takes shape

Kuala Lumpur: 1Malaysia Development Bhd (1MDB), the government-owned firm in charge of setting up the Kuala Lumpur International Financial District (KLIFD), has picked Akitek Ju-rurancang (Malaysia) Sdn Bhd and its international partner, Machado Silvetti and Associates (MSA), as the project's master planners.

Read more: KLIFD takes shape http://www.btimes.com.my/articles/imbi/Article/#ixzz1UAoMMiup

The US$8 billion (RM23.7 billion) KLIFD, one of Malaysia's biggest projects, aims to tightly cluster financial institutions and top global firms on 30.3ha of land in the Imbi area, fronting Jalan Tun Razak here. A detailed masterplan of the project is expected to be completed in the first quarter of next year, 1MDB said in a press statement yesterday. The project is a joint venture between 1MDB and Mubadala Development Corp, Abu Dhabi's investment arm. 1MDB had, in late 2010, organised a design competition for master planners, attracting some of the world's best. "The two companies (Akitek Jururancang and MSA) represent the fusion of local and international talents that best translate 1MDB's vision for the future financial district, through their concept and rendering of the masterplan," said Datuk Azmar Talib, chief operating officer of 1MDB Real Estate Sdn Bhd, a subsidiary of 1MDB. He said the two companies share a vision for a "highly functioning, interesting, innnovative and aesthetically pleasing urban district" that would establish KLIFD as a financial centre of choice. Construction work is expected to take off in June, according to news reports earlier this year. The project is seen to be providing significant stimulus for the construction and related industries. It will leverage on Malaysia's existing strength in Islamic finance and play on its strategic location to complement other financial centres within the region. The RHB banking group is expected to be the first to set up presence there. According to 1MDB, the Akitek Jururancang-MSA partnership is to deliver a sustainable, modern and progressive KLIFD. This will be projected through buildings, a pedestrian-friendly green public realm and seamless links to public transportation. "We have a real contribution to make to the urbanscape of Kuala Lumpur in line with the objective of the Greater KL initiative to make Kuala Lumpur a world-class city. The increasing emphasis on the greening of the city - as manifested in the recent River of Life and upgrading of the Lake Gardens - signals a welcome reception of KLIFD's unique 'Financial Centre in the Park'," Akitek Jururancang's managing director Datuk Seri Esa Mohamed said in the same statement. The River of Life is a project name for the beautification of a 10.7km stretch of the Klang and Gombak river. Akitek Jururancang's partner MSA, a US-firm based in Boston, has worked on projects like The Mint Museum (Charlotte, North Carolina) and the Boston Public Library. It won an architecture prize last year for its work on the Suliman S. Olayan School of Business at the American University of Beirut, Lebanon.

Affin scraps plan to buy Indonesian bank

Kuala Lumpur: Affin Holdings Bhd has become the first casualty of a possible foreign ownership cap rule for Indonesian banks when it calls off plans to buy PT Bank Ina Perdana.

Read more: Affin scraps plan to buy Indonesian bank http://www.btimes.com.my/articles/afnobuy/Article/#ixzz1UAo2OITR

"In view of the study (by Bank Indonesia to cap foreign ownership) ... Affin and the (selling) parties are of the view that it would be in the best interest of all parties to discontinue with the existing agreements," Affin said in a statement to Bursa Malaysia yesterday. However, it may renegotiate the deal to buy 80 per cent of Bank Ina for RM138 million after Indonesia's central bank announces its new policy. Current rules in Indonesia make it possible for foreigners to hold up to 99.9 per cent stake in banks. This may be cut to 50 per cent, Bank Indonesia deputy governor Halim Alamsyah told Financial Times in an interview on Wednesday. Affin was in the final stages of completing the deal, which was signed a year ago. The bank's shares closed unchanged at RM3.39 yesterday.

Gold Price Monitor Chart (KFH) 05.08.2011

Gold Price Monitor Chart (KFH) 04.08.2011

Fund Price Daily Monitor (Islamic Balanced Growth Fund) 03-08-2011

Bears hold grip

Kuala Lumpur: Malaysian stocks fell to their lowest in two months yesterday on concerns of weak US economic data but analysts think improving private investments may help cushion the local economy.

Read more: Bears hold grip http://www.btimes.com.my/articles/stockbear-2/Article/#ixzz1U0ILj48E

Consumer spending in the US, Malaysia's fourth biggest export destination, declined in June, the first drop in nearly two years, hin-ting that the economy is stalling at midyear. "With the US borrowing limit issue solved, investors are now concerned on the long-term challenges to US public finance," said Jupiter Securities Sdn Bhd head of research Pong Teng Siew when contacted. The US deficit has now reached about 9 per cent of the country's economy, close to the highest since World War II. US lawmakers approved a plan to cut US$2.1 trillion (RM6.24 trillion) in spending over the next 10 years. However, analysts remained split on the likelihood of a US recession this year. Pong believes there's a 50-60 per cent chance of a US recession this year, while Chris Eng, head of research of OSK Research, believed otherwise. "I think there's a 20-30 per cent chance that the US will enter into a recession this year. There're risks, but they're minimal. We believe, if a recession were to happen in US, it would probably be next year," added Eng. Investors will also keep a close watch on rating agencies' next move. Moody's, which maintained its US ratings for now, assigned a negative outlook to the "AAA" ra-ting. This means a downgrade is possible in the next 12-18 months. Standard and Poor's, which has been tougher than its rivals, threatened to downgrade by mid-October if lawmakers do not come up with a plan to meaningfully cut the budget deficit. The FTSE Bursa Malaysia KLCI fell by as much as 1 per cent yesterday before recouping losses to end 0.6 per cent lower to 1,545.10 points yesterday. Casualties were across all sectors - from banks and plantation companies to gaming and tobacco companies. Top losers include British American Tobacco (Malaysia) Bhd (down 44 sen or 0.9 per cent), MISC Bhd (down by 17 sen or 2.25 per cent), Nestle Bhd (down 16 sen or 0.3 per cent) and Genting Plantation Bhd (down 9 sen or 1.1 per cent). The decline is in line with the regional market performance. Stocks in Singapore, Hong Kong, South Korea, Indonesia, Thailand, fell by as much as 3 per cent yesterday. Although the Malaysian stock market will not be spared should the US enter a recession and Europe's sovereign debt crisis worsen, the negative impact on local stocks and economy may be cushioned. "The Economic Transformation Programme (ETP) is going to play an important role in cushioning the effects of these global issues. I think the ETP came at the right time and without the ETP, we would be in a much, much worse situation," said Pong. Nevertheless, this may not be able to prevent a downgrade by local analysts, as they are now considering lowering their year-end forecasts on the benchmark index. Jupiter has a 1,640-point target on the FBM KLCI, and may lower its forecast once it obtains more data. OSK remained optimistic of its 1,680 target.

Gold Price Monitor Chart (KFH) 01.08.2011