Subject: Market Updates: 24 May 2010

Malaysia - Equity

The stock market ended the week sharply lower last Friday, in tandem with the weak regional bourses on rising concerns over the economic situation in Europe and the US.


The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI), in range-bound trade, hit an almost five-month low, led by falls in CIMB Group and Axiata Group.

The FBM KLCI fell by 18.43 points, or 1.4 per cent, to close at 1,285.73, off its low at 1,280.63. It had opened 13.65 points lower at 1,290.51.

The local bourse has been trading in negative territory for the sixth consecutive day, mainly due to weaknesses in overseas markets.


The FBM Emas Index fell 131.99 points to 8,625.67, FBM70 Index declined 138.28 points to 8,423.03 and the FBM ACE Index dipped 89.38 points to 3,836.73.
The Finance Index plunged 225.54 points to 11,590.88, Industrial Index shed 28.49 points to 2,612.63 and the Plantation Index dipped 67.09 points to 6,089.73.

There were 678 gainers and 145 losers, while 169 counters were unchanged, 384 untraded and 32 others suspended.

Trading volume rose to 886.436 million shares worth RM1.764 billion from 765.419 million shares worth RM1.415 billion on Thursday.

Leading the actives, Talam eased half sen to 14 sen, Advance Information was up half sen to 14.5 sen and CIMB Group dropped 21 sen to RM6.86.

Among the gainers, Nestle jumped 50 sen to RM34.48, UMW Holdings advanced six sen to RM6.25 and Petronas Gas rose four sen to RM9.80.

Of the heavyweights, Tanjong lost 48 sen to RM17.50, Maybank fell 16 sen to RM7.32 and Axiata Group declined 11 sen to RM3.61.

Hong Leong Bank Bhd fell 10 sen to RM8.55. This is despite an announcement by EON Capital Bhd (EONCap) that its directors had accepted a buyout offer from HLB. Shares of EONCap was flat at RM6.92.

RM

The ringgit ended lower against the US dollar Friday.

At the close, the local currency was traded at 3.3180/3230 against the greenback compared with 3.2720/2750 on Thursday.


The ringgit was easier against the Singapore dollar at 2.3534/3603 from 2.3277/3321 on Thursday and also against the yen at 3.6858/6918 from 3.5850/5902 previously.

Against the euro, it fell to 4.1488/1561 from 4.0579/0620 on Thursday and against the British pound it depreciated to 4.7802/7881 from 4.7045/7091 previously.

CPO

Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives ended firmer Friday despite the easier crude oil and soyaoil futures market.

Crude palm oil prices usually move in tandem with crude petroleum oil prices which fell to US$70 (US$1.00 = RM3.22) per barrel on Thursday.

The market was active judging from the number of open positions which rose to 68,244 contracts from 65,043 contracts previously.


At close, June gained RM38 to RM2,531 per tonne, July added RM16 to RM2,511, August increased RM15 to RM2,491 and September increased RM16 to RM2,480.

News

EON Capital Bhd (EONCap) ( 5266 ) will recommend that shareholders accept a RM5.06 billion takeover bid from bigger rival Hong Leong Bank Bhd to create the country's fourth largest banking group. EONCap said all but one of its board members felt that the takeover offer is credible and in the company's best interest.The board took into consideration Credit Suisse's independent advice that the offer was "unfair from a financial perspective", as well as international adviser Goldman Sach's views, and decided to take "a holistic approach", it said.It plans to let shareholders vote on the offer, which works out to RM7.30 a share, an improvement from a previous offer of RM7.10 a share, at an extraordinary general meeting (EGM). It is believed that the meeting is being targeted for end-June.The views of Credit Suisse and Ng Wing Fai, the board member who is opposing the deal, will be included in a circular to shareholders.Ng is the managing director of EONCap's single largest shareholder, Hong Kong's Primus Pacific Partners Ltd, which holds a 20.2 per cent stake.Primus had a high entry cost of RM9.55 a share in 2008, which is much higher than the takeover price.Hong Leong's offer values EONCap at 1.4 times book value.




Transmile Group Bh, which is in the midst of formulating a long-overdue debt restructuring plan, said its main stumbling block in this exercise was a group of creditors who holds the company's RM105 million worth of medium term notes (MTNs).It was reported that the group is believed to be led by the Employees Provident Fund (EPF), which held around half of the MTNs.Apart from the RM105 million worth of MTNs, Transmile's debt obligations include a syndicated term loan (STL) of US$66.9 million (RM214 million) and guaranteed convertible bonds of US$65.6 million (RM209 million). In the same statement, Transmile said it is still in the process of disposing of its fleet of four MD-11s amid current economic conditions.

DAYANG Enterprise Holdings Bhd said its wholly-owned unit, Dayang Enterprise Sdn Bhd, has won a RM150.9 million hook up and commissioning contract from Petronas Carigali Sdn Bhd. It is expected to complete the works within six to twelve months.

AIRASIA Bhd has been named the world's best low-cost airline for the second straight year by London-based aviation consultants Skytrax. AirAsia came out tops in the independent survey of about 18 million travellers globally that measures airlines' product and service standards.

TDM Bhd, a plantation group owned by the Terengganu state government, plans to expand its land area in Kalimantan, Indonesia, in the next seven to nine years. The chairman of the group, Senator Datuk Roslan Awang Chik, said the company now has a total of 25,000ha in Kalimantan for oil palm plantation and plans to increase it by 80 per cent. Among its other operations, TDM is building new hospitals. The latest hospital the company is building is at Indera Mahkota in Kuantan, Pahang, for RM200 million, which will be completed in 2012. Meanwhile, the company is still looking for a buyer for its poultry business.

Lebuhraya Kajang Seremban (Lekas) may see a lower average daily traffic volume of between 70,000 and 80,000 in the first year of its full opening, instead of the initial projection of some 100,000 vehicles. The lower traffic volume projection is due to a shortfall in local movement such as from Kajang Selatan to Semenyih, said Lekas Sdn Bhd chief executive officer Neoh Soon Hiong.The highway concession, which was awarded to Lekas with IJM Corp and Kaseh Sdn Bhd as the equity shareholders, is expected to break even in eight to 10 years. According to IJM's 2009 annual report, Lekas recorded a turnover of RM1.63 million and a pre-tax loss of RM6.26 million since starting sectional tolling due to amortisation of the highway asset, financing cost and low initial traffic volume from an incomplete highway.

The manager of AmanahRaya Real Estate Investment Trust (AR-REIT), which plans to increase its asset size to RM1.5 billion within the next two years, is in early talks to buy three to four commercial properties. The properties, which comprise office buildings and shopping centres, are mainly in the Klang Valley.

SIME Darby Bhd has clarified that an internal probe it is conducting over losses incurred in the Middle East and the Bakun hydroelectric dam project remains confined to its energy and utilities division. It was reported yesterday in the New Straits Times that Sime Darby chairman Tun Musa Hitam had said that the probe had been extended to all the group's six business divisions. What Musa said at the press conference on Thursday was that the huge losses incurred by the energy and utilities division had provided the group an opportunity to look also at its other business units.

PETRA Perdana Bhd has sold and will lease back two boats ? Petra Liberty and Petra Excelsior ? to Mount Bintang LLC for US$18 million and US$25 million (RM60 million and RM83 million) respectively.
In a statement, Petra said the deal is in the ordinary course of business and in line with the fleet renewal and expansion plan.

Meanwhile, Petra Perdana Bhd has sued its former directors Tengku Datuk Ibrahim Petra Tengku Indra Petra, Tiong Young Kong and Wong Fook Heng for breach of fiduciary duties in their capacity as the then directors of Intra Oil Services Bhd. Intra Oil is a wholly-owned subsidiary of Petra Perdana.Petra directors said the suit involves, among others, the issuance of two press statements which created a public impression that Intra Oil was being mismanaged as well as the hiring of an independent party that issued a report of mismanagement in the company. In response, Tengku Ibrahim, Tiong and Wong jointly said they have always acted in the best interests of both Intra Oil and Petra Perdana.

Talam Corp Bhd is hopeful of getting out of the Practice Note 17 (PN17) list if auditors give it a clean bill of health Bursa Malaysia has requested for more information after the company made a submission to be uplifted from the PN17 list on April 30 Talam and its adviser, RHB Investment Bank Bhd, are still collating the necessary documents. This will include the audited accounts for financial year ended Jan 31, 2010, which is expected to be out this week The company, which has been on the PN17 list since Sept 1, 2006, has taken longer than expected to exit from the troubled companies list because of prolonged negotiations on assets disposal. It plans to dispose land and buildings to pay off its outstanding loans.

The sustainability criteria in the European Union (EU) Renewable Energy Directive (RED), due to come into force on December 5, will not affect Malaysia's palm oil exports to the region. EU ambassador and head of delegation to Malaysia Vincent Piket said there will be no change for crude palm oil (CPO) imports.

Malaysia's Cabinet is to meet next Wednesday, May 26 to discuss wide-ranging proposals to reduce the country's hefty subsidy bill, according to Reuters. Previous efforts to reduce the subsidy bill, that accounted for 15.3 percent of federal government operating expenditure in 2009, have been voted down by the cabinet. The government has charged an independent body, led by former Malaysian Airlines Chief Executive Idris Jala, with presenting new proposals.Malaysia posted its biggest budget deficit in more than 20 years at 7 percent of gross domestic product in 2009 as a result of the global economic slowdown as well as subsidy spending on petrol and food which has more than doubled since 2006.

THE Northern Corridor Economic Region (NCER) is poised to attract investments exceeding last year's RM800 million as the economy improves. Prime Minister Datuk Seri Najib Razak will announce next month a new major investment by a foreign company, Northern Corridor Implementation Authority (NCIA) chief executive officer Datuk Redza Rafiq Abdul Razak said. He said that new initiatives were in place, including a collaboration with a multinational company to invest in manufacturing in Penang as well as SynGas to offer green technology for a diesel-producing plant in Perlis.


MALAYSIA Airports Holdings Bhd (MAHB) plans to issue bonds by the end of next month to raise RM2.5 billion to finance development of the new low-cost carrier terminal. The bonds will comprise both US and ringgit issuances, amounting to US$500 million (RM1.7 billion) and close to RM1 billion respectively.Reuters, quoting sources, reported yesterday that MAHB planned to issue both Islamic and conventional bonds.It said that MAHB was issuing RM1 billion in Islamic bonds and US$500 million in conventional bonds.
According to the news wire, CIMB is handling the Islamic portion of the bonds while Citigroup will manage issuance of the conventional papers. The pricing and tenure of the bonds will only be determined when the road show starts sometime in the middle of June.

MALAYSIA'S consumer prices rose 1.5 per cent in April 2010 from a year ago and economists expect this trend to continue in coming months although not at worrying levels. They expect Bank Negara Malaysia to continue with its normalisation of interest rates in its next monetary policy meeting, raising the Overnight Policy Rate (OPR) by another 25 basis points to 2.75 per cent from 2.50 per cent now. The Statistics Department said the country's Consumer Price Index (CPI) increased from 111.5 to 113.2, although it was flat compared with March. The CPI for the January-April 2010 period increased by 1.3 per cent to 113.2 compared with that of 111.7 in the same period last year.

THE international reserves of Bank Negara Malaysia totalled RM314.2 billion as at May 14 2010, up from RM313.9 billion on April 30. The reserves position is sufficient to finance 8.3 months of retained imports and is 4.4 times the short term external debt.

Results

PLUS EXPRESSWAYS BHD [ ] net profit for the first quarter ended March 31, 2010 rose 7.4% to RM299.13 million from RM278.61 million, mainly due to higher revenue and better cost management.This higher revenue comes despite higher finance costs following the issuance of additional Islamic securities with higher issue amount in the middle of 2009 Its revenue for the period rose 10.2% to RM813.2 million from RM737.76 million a year ago, while earnings per share was 5.98 sen The higher revenue was on the back of traffic volume growths of expressways PLUS (9.1%), Elite (14.7%), Linkedua (22.4%) and (KLBK 11.8%).

WCT BHD [ ]'s net profit for the first quarter ended March 31, 2010 fell 11% to RM34.95 million from RM39.22 million a year ago, while revenue fell to RM400.12 million from RM968.95 million. Earnings per share was 4.45 sen, while net assets per share was RM1.58.In a filing to Bursa Malaysia Securities on Friday, May 21, the company said that despite the challenging macro economic outlook, it was confident of achieving satisfactory results for the remaining period of the financial year ending Dec 31, 2010.
Tradewinds Platation Bhd posted a net profit of RM24.94 million for the first quarter ended March 31, 2010, compared to a net loss of RM9.43 million a year ago due mainly to the increase in prices of palm oil products.Its revenue for the period rose 37.8% to RM183.4 million from RM133 million a year earlier. Earnings per share jumped to 3.96 sen from loss per share of 1.5 sen


ASIA
The biggest drop in more than a year on Wall Street triggered fresh turmoil in Asian markets friday, amid heightened anxiety over the eurozone debt crisis and doubts over the strength of the US economy.

However, dealers halted their frantic selling of the euro, sending it slightly up against other major currencies and limiting earlier heavy share losses.

After government data showed the largest number of Americans lining up for unemployment insurance claims in five weeks, US shares plunged 3.60 per cent with investors also gripped by deepening fears over Europe's debt.

The bearish US data and euro fears prompted fresh concern in Tokyo, with government officials fretting as investors piled into the yen. Against the dollar, the Japanese unit hovered around 90.22 yen, sharply up from 91.39 yen seen in Tokyo on Thursday afternoon.

Asian markets tumbled in response, with several markets hitting lows not seen for several months.

The Hong Kong market was closed for a public holiday. Bangkok was closed for a second straight day friday as the Thai capital clears up after deadly clashes between anti-government protesters and security forces earlier in the week.

SINGAPORE: STOCKS lost further ground friday, ending the week at more than a 14-week low

The Straits Times Index 1.90 per cent, or 52.31 points, to 2,701.20. The benchmark indicator has fallen by 5.3 per cent this week.

Lenders DBS Group Holdings and Oversea Chinese Banking Corp, plus Singapore Telecom all fell more than 2.3 per cent.

TOKYO: Tokyo dived 2.45 per cent, or 245.77 points, to close at 9,784.54, its lowest level since December 2.

SYDNEY: Sydney ended 0.26 per cent, or 11.1 points, lower at 4,305.4 after slumping 2.9 per cent to a 10-month low earlier.

"This eurozone saga is turning into a bad horror movie," Phillip Securities economist Joshua Tan told Dow Jones Newswires. "You think the monster is dead but it keeps coming back."

Australia has invited Chinese companies to take part in talks on a proposed tax on so-called "super profits" of the Asian-driven mining boom, after Beijing expressed concern about the levy. Trade Minister Simon Crean said the government was consulting mining companies on the implementation of and transition to the tax - but that the level at which it kicks in and the 40 per cent rate would not change. The proposed tax has angered mining companies which have placed billions of dollars worth of projects on hold or under review as a result and have warned that it will lead to job losses and investment going offshore.
Crean said Beijing had expressed concern that the tax would affect the price of commodities such as iron ore. - a key ingredient used in steel-making and critical to China's economic development.

SHANGHAI: Shanghai rose 1.08 per cent or 27.58 points to 2,583.52 due to expectations China will likely hold off on further tightening measures.

TAIPEI: Taipei fell 2.51 per cent, or 186.72 points, to 7,237.71. The loss came despite data showing the island's biggest quarterly growth in 30 years.

JAKARTA: Jakarta lost 2.64 per cent, or 71.03 points, to 2,623.22.

MANILA: Manila closed 1.07 per cent, or 34.44 points, lower at 3,179.36.

MUMBAI: Mumbai fell 0.45 per cent, or 74.07 points, to 16,445.61.


EUROPE
A late rally for banks prevented European shares closing at their lowest in more than eight months, though euro zone sovereign debt crisis persisted and drained investor confidence worldwide.

The FTSEurofirst 300 index of leading European shares fell 0.5 per cent to a close of 970.00 points. Its lowest since early September.

London's FTSE 100 closed at 5062.93 points, down 10.2 or 0.20 per cent on the day, and losing 199.92 points over the week.

In Frankfurt, the DAX index ended at 5829.25 points, down 38.63 or 0.66 per cent, shedding 227.46 points since last Friday.

In Paris, the CAC-40 index closed at 3430.74 points, down 1.78 or 0.05 per cent, losing 129.62 over the week.


US
Stocks ended higher Friday, finding momentum at the end of a very choppy session in which concerns about global growth vied with investor willingness to scoop up shares beaten down in the recent sell-off.

But selling earlier in the week left the major gauges lower for the week, with the Dow and S&P 500 both down around 4% and the Nasdaq off around 5%.

The Dow Jones industrial average rose 125 points or 1.3%, after having fallen as much as 150 points earlier in the session.

The S&P 500 index gained 16 points or 1.5% and the Nasdaq composite gained 25 points or 1.1% after having been on both sides of breakeven throughout the session.

The CBOE Volatility index, the VIX, Wall Street's fear gauge, fell 12% to 39.88 as investor anxiety lessened. However, the VIX had fallen more substantially in the early afternoon. On Thursday, the VIX spiked to a 14-month high of 45.48.

Stocks were volatile through the session as worries about the European economy and the weak euro were countered by some buying interest now that the market is more than 10% off 2010 highs. A decline of more than 10% on a closing basis is technically considered to be a correction.

Since peaking at roughly 18-month highs in late April, the Dow had lost 10.2% and the S&P 500 had lost 12%. The Nasdaq was at a 22-month high at its peak and is down 12.9% as of Thursday's close.

Thursday's session intensified the recent wave of selling, with the three major gauges losing between 3.6% and 4.1%, making for the worst day on Wall Street since February 2009 at the height of the financial crisis. The sell-off also pushed the S&P 500 below the 200-day moving average, a key technical level traders watch.

Stocks fell again in the morning Friday, dropping below the lows from the early-May "flash crash" -- in which erroneous computer trading sent the Dow down by almost 1,000 points, before it recovered near the close.

Hitting those lows again Friday seemed to bring in some new buyers, with market pros using those earlier lows as a good point to tiptoe back into the market. But the advance Friday was never especially robust, with stocks seesawing through the session. Market breadth was positive. On the New York Stock Exchange, winners beat losers three to one on volume of 2.3 billion shares. On the Nasdaq, advancers topped decliners by two to one on volume of 3.36 billion shares.

What's moving: Big bank stocks sustained gains through the afternoon, with Dow components JPMorgan Chase, Bank of America and American Express all rising.

A broad financial sector rally propelled the KBW Bank sector index by 4%. Passage of the long-in-the-works Wall Street reform bill may have sparked the buying, as it removed an uncertainty hanging over the sector.

But gains on the day were broad based, with 28 of 30 Dow components ending higher. In addition to the financial shares, gainers included Boeing, Caterpillar, Chevron, IBM, 3M and Exxon Mobil.

In company news, Google got the regulatory OK for its $750 million purchase of mobile advertising firm AdMob, following a six-month antitrust investigation. The Federal Trade Commission approved the deal since rival Apple recently purchased a mobile advertising service, Quattro Wireless.

Wall Street reform: On Thursday night, the Senate passed a far-reaching Wall Street reform bill that is part of legislation that aims to prevent another financial crisis.

The nearly 1,600-page bill establishes a new consumer regulatory agency, sheds light on complex financial products and provides a new way for the government to deal with so-called too big to fail financial firms.

The bill has to be reconciled with a similar measure the House of Representatives passed in December before it can be sent to President Obama to sign.

Company news: Dell reported higher quarterly earnings and revenue that topped expectations, after the close of trading Thursday. Strong business spending fueled the sales gain. However, the company's gross margins, a key measure of profitability, were lower than what many analysts were expecting. Dell shares fell 6.8% Friday.

Job market: More than half of all states saw lower unemployment rates last month, according to state-by-state figures released Friday morning.

Euro/dollar: The euro gained 0.7% versus the dollar, rising for the third day in a row, although investors don't seem to be taking any comfort from the modest recovery in the European currency. The euro has seesawed over the last few days after plunging to a four-year low of $1.2234 on Monday.

The dollar rose 0.4% versus the yen.

World markets: Markets in Europe cut bigger losses to close with modest declines. The British FTSE 100 fell 0.2%, the German DAX lost 0.7% and the French CAC 40 ended barely lower.

Asian markets were mixed. The Japanese Nikkei fell 2.5%, but China's Shanghai Composite turned higher, gaining 1%. Hong Kong markets were closed.

Commodities: U.S. light crude oil for July delivery fell 76 cents to settle at $70.04 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $12.50 to settle at $1,176.10 an ounce. Bonds: Treasury prices rose, lowering the yield on the 10-year note to 3.20% from 3.26% late Thursday.