FBM KLCI Ends Lacklustre Day 0.3% Lower

Investors returned from the one-day Merdeka holiday to lacklustre trading on the local bourse on Tuesday, Sept 1.

Regional markets had fallen sharply on Monday, when Bursa Malaysia was closed, triggered by a plunge in China’s stock market. Thus, while most regional markets traded flat to slightly higher on Tuesday, shares on the local bourse played “catch-up” with the rest of its peers.

Fortunately though, the extent of falls here was relatively small, but the market saw one of its slowest trading days in recent months.

The FBM KLCI closed 2.99 points lower at 1,171.3. Losers beat gainers by a 2.6-to-1 ratio on very thin volume of 498 million shares.

Actively traded stocks include KNM, Multi-Sports, Bumiputra-Commerce, TM, Genting and AMMB. Major gainers include Bumiputra-Commerce, Tanjong plc and Amway. Losers include BAT, Bursa and Parkson.

Volatility in the Chinese stock market has been a major factor influencing Asian bourses in recent weeks. Investors are fearful of fresh credit tightening measures to cool an overheating economy and curb the sharp growth in property and stock prices.

The Shanghai Composite Index fell 2.9% last Friday, followed by a 6.7% plunge on Monday. It recovered some 0.6% on Tuesday, due to positive Chinese manufacturing data. In Aug 2009, China’s manufacturing grew the fastest in 16 months.

China’s stimulus packages and aggressive bank lending has boosted growth and asset prices this year. This in turn, provided some resilience to Asia in 1H09, when the US, Europe and Japan were mired in deep recession. But equally though, the rest of the world is also starting to recover from recession conditions, albeit slowly, but investors are fearful of pricking China’s bubble.

The volatility in China will continue to keep investors at bay. Meanwhile, investors are also bracing for more volatility on Wall Street with a barrage of economic data due this week, the most important of which will be the August unemployment report, due on Friday.

BURSA MALAYSIA >>> Midday In Pics And Images

SHARE prices on Bursa Malaysia ended the morning trade lower today despite bargain hunting in selective heavyweights such as Bumiputra-Commerce, Tanjong and DiGi.Com, said a dealer. At lunch break, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) dropped 4.59 points to 1,169.68 after opening 6.8 points lower at 1,167.47 ............

At lunch break, the spot month September 2009 shed 1.5 points to 1,167.5, October 2009 was a point lower at 1,163.0, December 2009 was unchanged at 1,177.5 and far month March 2010 declined five points to 1,153.0 Volume stood at 2,887 lots while open interests totalled 14,562 contracts.The underlying index was 4.59 points lower at 1,169.68.

HAPPY TRADING FOLKS & GOODLUCK2ALL !!!

BT Biznewz4u 02 Sept 2009

Sime Darby Bhd (SIME MK, Hold, TP: RM8.10), the world’s biggest publicly traded oil palm planter, will spend RM3bn (US$851m) over four to five years on refineries in China to meet rising demand for cooking oil. “China’s potential is huge,” chairman Musa Hitam said. Food such as instant noodles, cookies and ice-cream all use palm oil and “that’s the biggest potential in the long run.” Sime’s investment may boost its palm oil sales to the nation, which expects imports of the commodity to reach a record 5.3m tons in 2009. Profits at Sime, which also sells Caterpillar Inc earthmovers, may rise next year as output expands and prices stabilize at RM2,000 to RM2,200 a metric ton, Musa said. (Bloomberg)
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Malaysia Airlines (MAS) (MAS MK, Sell, TP: RM2.00) has appointed Tengku Datuk Azmil Zahruddin managing director/chief executive officer (CEO) succeeding Datuk Idris Jala, who resigned on Friday. Aznik, who was MAS executive director/chief financial officer (CFO), joined the national carrier in 2005 from Penerbangan Malaysia Bhd. Jala said in a statement he had worked with Azmil through thick and thin. “He is absolutely the right man for the job and I am confident that he will steer MAS to greater heights.” (StarBiz)
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Media Prima Bhd (MPB) (MPR MK, Buy, TP: RM1.69) will ensure it remains competitive through greater adoption of new media in its content delivery, said its new group managing director Datuk Amrin Awaluddin. He said his key focus would be on ensuring that MPB’s contents are disseminated through more channels and that he used both Facebook and Twitter to help him understand the market better. “The biggest challenge is keeping up with the times and ensuring that the company is still relevant five years down the line.” Amrin said his personal vision as managing director was to continue to grow the company and meeting stakeholders’ expectations. (Financial Daily)
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Malaysia will have its maiden nuclear power plant 15 years from the day it starts working on the project, Tenaga Nasional Bhd (TNB MK, Buy, TP: RM9.90) president and chief executive officer Datuk Seri Che Khalib Mohamed Noh said.
The national electric utility is pushing for the use of nuclear energy to head off a power crunch expected in the future, and has asked for a decision from the government around 2013. Che Khalib, however, stressed that TNB would not simply "jump into developing a nuclear power plant" as an easy way out to meet future energy demand. It would do so only when the country's main fuel energy sources are exhausted. Such requirement appears imminent as our gas reserve is depleting fast, while coal - an imported energy source - is getting scarce, making it more costly to buy. (BT)
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Celcom (M) Bhd, the domestic mobile unit of Axiata Group Bhd (AXIATA MK, Hold, TP: RM2.85), is set to embark on the second phase of its transformation programme following a successful turnaround in the last three years, says chief executive officer Datuk Seri Shazalli Ramly. He said that the second phase would entail strategies to sustain Celcom’s growth, “with specific aims for what we want to be in three years,” premised on three pillars – business strategic development, human capital and talent management and organisational development.
Having chalked up its 13th consecutive quarter of revenue growth, Celcom is confident of maintaining this momentum for the rest of its financial year ending Dec 31. Chief executive officer Datuk Seri Shazalli Ramly said the 2H was historically better than the 1H for the company, partly due to the festive season. ”We are wary of non-controllable factors in the market but I don’t think they are a threat as the economy was very uncertain in the 1H,” Shazalli said. He added that the Influenza
A(H1N1) pandemic could impact its inbound and outbound roaming services as subscribers cut their travelling. (StarBiz)
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IJM Land, a unit of IJM Corporation Bhd (IJM MK, Hold, TP: RM5.10), expects to rake in about RM230m of sales from My Space Plan 2 (MSP2) following the success of the first edition which managed to hit above target with more than RM250m in sales. Managing director Datuk Soam Heng Choon said MSP2 runs from July until the end of October and features incentives that were most popular during the first phase. “The first campaign generated more than RM250m in sales,
therefore we continued with the popular incentives and hope to match – if not top – the earnings of the first campaign,” he said. (The Malaysian Reserve)
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PLUS is an important company for the government and it provides a lot of cash for Khazanah Nasional, says Prime Minister Datuk Seri Najib Razak. The government has no plans to sell its stake in the country’s biggest toll road operator, the Prime Minister said. Plus Expressway Bhd expects net profit and revenue to grow this year because of higher traffic volume on its highways, said their MD Noorizah Abd Hamid. She said that PLUS is registering an average daily traffic volume of 1.1m a day
as opposed to 1.05m a day last year. She added that PLUS initially targeted 2.5% growth in traffic volume but year to date, it has achieved 4% growth and believes this rate sustainable to the end of the year. (BT)
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PBB Group Bhd’s 55%-owned subsidiary Chemquest Sdn Bhd is buying a 99.37% stake in Malaysian Adhesive & Chemicals Sdn Bhd (MAC) from Chemquest’s own Asia Pacific Microspheres Sdn Bhd (APM) for RM38.26m. PBB told Bursa Malaysia last Friday that the proposed acquisition was part of Chemquest group’s internal streamlining exercise. (The Malaysian Reserve)
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Wong Engineering Corp Bhd has secured projects with an estimated RM20m to RM30m from customers in the United States and Europe. The projects were for the fabrication of enclosures for equipment used in the medical, oil and gas, semiconductor and industrial equipment sectors, said executive chairman Datuk Freddy Wong. To undertake the projects, he said the group recently invested about RM4.5m in a production line that used laser cutting and turret punch process to
manufacture enclosures and chassis. He added that the company expects the revenue contribution of air detoxifiers to grow to 10% from 5% presently for the fiscal year ending Oct 31. (StarBiz)
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The RON95 petrol which will replace RON97 will be retailed at RM1.80 per litre beginning today. RON97 had been upgraded as a premium petrol with a price of RM2.05 per litre. “Petrol RON92 will be phased out given that its use is rather low, that is around 5% of the total petrol sales in the country,” said Domestic Trade, Cooperative and Consumerism Minister Datuk Seri Ismail Sabri Yaakob. Ismail Sabri clarified that the RON95 petrol price had to be raised by five sen from RM1.75 per litre as announced in May as the world fuel prices had changed. The government expects to be able to reduce the subsidy by RM420m per year with the introduction of RON95 as its subsidy price was lower at 38.81 sen per litre compared with the subsidy for RON97, which was 42.72 sen per litre. (Financial Daily)
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Bank Negara announced on Friday rules for a standard application of the murabahah financing structure, seeking a common reading of Islamic law to help the industry grow. Bank Negara’s murabahah guidelines follow other recent efforts at harmonisation by Islamic banks and Bahrain-based industry body AAOIFI, which would make it cheaper to conduct syariah transactions and encourage cross-border deals. (StarBiz)
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State-run Indian lender Bank of Baroda aims to acquire banks in Malaysia and Thailand to help it expand in the region, the Financial Express reported yesterday, citing an unnamed bank official. The bank is in the process of identifying targets in both countries and hopes to finalise plans by the first quarter of the fiscal year beginning in April next year. “Probably, the acquisition in Malaysia would happen first,” it quoted the official as saying. The decision to look for acquisitions was prompted
by difficulty to get licenses to convert existing representative offices into full-fledged branches, the official said. (Financial Daily)
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SUNSHINE DAYS >>> Q2 earnings signal better times ahead

A better second half is expected as far as earnings are concerned, though overall earnings for the year are still likely to be lower than last year's, says OSK research head.

The recently concluded April-June reporting season has strengthened analysts' view that better times are just around the corner although most Malaysian top firms registered lower profits.

The analysts believe that corporate earnings are staging a recovery, after hitting bottom between October last year and March this year.

A look at the top 10 companies showed that six posted lower net profit during the recent quarter compared to a year ago.

However, compared to the first quarter, it was an improvement. In the January-March period, nine out of 10 posted lower quarterly net profit.

"I think most companies hit bottom during the fourth quarter of last year. It appears that companies' earnings are recovering.

"We are expecting a better second half as far as earnings are concerned. However, overall earnings for the year are still likely to be lower than last year's," OSK Research Sdn Bhd head of research Chris Eng said when contacted.

There were several highlights, including Malayan Banking Bhd's fourth quarter net loss due to provisioning, Axiata Group Bhd's best quarterly performance and Malaysian Airline System Bhd's worse-than-expected operating loss.

"The plantation sector was a disappointment," Aberdeen Asset Management Sdn Bhd managing director Gerald Ambrose said.

Companies in the steel, automotive and telecommunications industry should benefit from a better economy in the second half of the year, analysts said.

The Malaysian economy contracted at a slower rate of 3.9 per cent in the second quarter compared with -6.2 per cent in the first.

Bank Negara Malaysia governor and chairman Tan Sri Dr Zeti Akhtar Aziz said the smaller contraction was due mainly to positive growth in consumer and government spending.

"Next year, companies are expected to do better. We are positive on the oil and gas, automotive, steel and construction sectors for 2010," said Eng.

Red End to Dow's Best August Since Year 2000

Wall Street’s best August in nearly a decade came to a disappointing end on Monday as plunging Chinese stocks and tumbling oil prices sent the Dow to a rare two-day losing streak. Both stocks and commodities spent the entire session trading with considerable weakness as a broad-based selling effort took hold following a steep sell-off in China's Shanghai Composite Index.

The Wall Street action came after the market closed on Friday up some 50 per cent from lows hit in March, but with investors beginning to turn cautious. The Shanghai Composite index .SSEC fell nearly 7 percent to a three-month low on fears that China's government is trying to moderate economic growth and choke off speculation in its stock market by tightening bank lending.

"China is a very important engine of growth to the rest of the world," said Craig Hester, chief executive of Hester Capital Management in Austin, Texas. "People need to see China continue its growth, and a slowdown in the stock market there will slow us down, too."

Heading into a traditionally soft period of the year for stocks, investors are increasingly becoming more worried about a pullback after a 50 percent rally from multi-year closing lows in March.

Today's Markets
The Dow Jones Industrial Average fell 47.92 points, or 0.50%, to 9496.28, the Standard & Poor's 500 lost 8.31 points, or 0.81%, to 1020.62 and the Nasdaq Composite dropped 19.71 points, or 0.97%, to 2009.06.

Wall Street stocks followed major European stock indices lower in the wake of sell-offs in Asia as investors worried about the Chinese economy and Japanese election results.

In China, the Shanghai Composite index plunged 6.7 per cent, its biggest one-day drop since June 2008, as concerns over slowing lending growth and a new share supply glut weighed on sentiment, dealers said.

On Friday the blue-chip Dow fell 0.38 per cent, snapping an eight-day winning streak. The Nasdaq edged up 0.05 per cent and the S&P 500 slipped 0.20 per cent.

"Widespread losses in foreign markets, which were led by a minus 6.7 per cent decline in the Shanghai Composite, have prompted valuation concerns that are interfering with the bullish sentiment,'' Patrick O'Hare of Briefing.com said.

"We suspect the understanding that September has been the weakest month historically for the stock market hasn't been lost on participants either.''

The question now is whether or not this two-day slide is the start of a “healthy” pullback that even some bulls have been calling for, a one-time blip or a larger selloff like the one in China.
“I personally think it’s going to continue for a while,” remark NYSE trader Ben Willis of VDM Institutional Brokerage , adding that he sees the S&P testing the 1000 level. “That’s not really a bearish a call. I think it’s very healthy for a bull market to be able to have pullbacks where you can regroup before you march forward.”

Oil Swoon Below After Chinese Stocks Spiral
Skepticism for the strength of the global economic recovery pushed oil below $70 a barrel on Monday.

Benchmark crude for October delivery lost $2.78 to settle at $69.96 on the New York Mercantile Exchange, the first time oil has ended a trading day below $70 in about two weeks.

Commodity traders seem to be wary of a full blown recovery. Specifically, concerns are being raised about China, where government officials have suggested they might scale back on lending, a move that would certainly curtail growth.

Chinese stocks are way down with the latest 6.7% Shanghai Composite Index spiral.

“Despite the winning ways of the US stock market, oil traders are increasingly focused on Asia which has had a rough go as of late,” PFGBest analyst Phil Flynn wrote in a report.

“Last week China raised red flags for the commodity bulls as they seemed to suggest they would cut back on bank lending in coming months, essentially removing some of the unprecedented stimulus they have added to the Chinese economies,” Flynn added.

“Not only that, they said they were studying ways to reduce over capacity in commodity consuming industries, lowering oil demand expectations. The market is concerned whether or not the Chinese government can engineer a soft landing.”

Oil has traded near $70 a barrel for most of the last few months as investors struggle to gauge how robust the U.S. recovery will be. Crude has tried and failed several times to break through the $75 level, held back by key fundamentals that remain bearish.