Latest Business News

Good news raises hopes recovery won't fizzle

2009-11-25T18:33:00.000-08:00

Good news raises hopes recovery won't fizzle
Good economic news allays fears economy will tip into `double-dip' recession

WASHINGTON (AP) -- A flurry of good news this week -- including falling jobless claims, stronger consumer spending and higher new-home sales -- suggests the economic rebound, modest though it is, might just be here to stay.

While analysts caution that the recovery will be too sluggish to stop the unemployment rate from rising, the reports are at least encouraging enough to calm fears of a dreaded "double-dip" recession.

"This recovery continues to trudge ahead," said economist Ken Mayland, president of ClearView Economics. "It is not a gallop. But it is still forward movement."

Looked at together, the reports the government issued Wednesday signaled that the final quarter of 2009 at least got off to a decent start. And holiday sales should be slightly better than last year's figures, which were the worst since at least 1969.

The number of newly laid-off workers filing applications for unemployment aid fell by 35,000 last week to 466,000, the Labor Department said. It marked the fewest new filings since September of last year.

Jobless claims would still have to drop to near 400,000 for several weeks to signal actual growth in employment. Companies have slowed the pace of layoffs, but most aren't ready to ramp up hiring.

Another report showed that Americans stepped up their shopping in October. Consumer spending rose 0.7 percent, after a 0.6 percent drop in September, the Commerce Department said.

It was the best showing since a 1.3 percent jump in August, when the government's since-ended Cash for Clunkers rebate program enticed people to buy cars.

The rebound in spending shows that consumer spending -- which powers 70 percent of the economy's activity -- is managing to hold up despite tight credit, high debt levels and an unemployment rate above 10 percent.

Spending on costly manufactured goods, such as cars and appliances, led the way in October. Americans also spent more on gas, food, clothes and services.

Incomes, the fuel for future spending, rose 0.2 percent for the second straight month. But that gain came from bonuses and other benefits, interest and other kinds of income. Wages and salaries were flat.

With spending rising faster than incomes are, Americans' personal savings rate -- how much they put away as a percentage of after-tax income -- dipped to 4.4 percent in October from 4.6 percent in September.

Despite the sudden burst in spending, analysts predict it won't be nearly as energetic the rest of this quarter. And concerns remain that spending will slow early next year.

With Treasury rates at record lows, people who rely on interest from savings, such as money in certificates of deposit, have been watching their income fall for months. That's raised doubts about their ability to sustain their spending.

"We should not expect people to start 'shopping till they drop' again," said economist Joel Naroff, president of Naroff Economic Advisors.

Most of all, rising joblessness will likely weigh on shoppers. The nation's unemployment rate, now at a 26-year high of 10.2 percent, is expected to keep climbing into 2010.

Under some projections, it could rise as high as 11 percent by the middle of the year. Federal Reserve officials think the unemployment rate could stay elevated for several years, according to documents released Tuesday.

"The good news eases worries about a relapse, but it has to be taken with a bit of caution," said Oscar Gonzalez, economist at John Hancock. "The labor market remains quite weak. That, to me, is what will really affect how consumers behave in the coming months and how the recovery fares."

The economy has lost 7.3 million jobs since the recession started in December 2007 and is expected to lose 145,000 more in November. It would have to add 125,000 jobs a month just to keep the unemployment rate from rising.

Some optimism was raised by a separate report Wednesday that sales of new homes rose last month to the highest level in more than a year. All the strength came from a big increase in sales in the South. Sales in all other regions dropped.

In addition, many buyers last month rushed in because of uncertainty over whether Congress would extend a special tax credit of up to $8,000 for people buying their first home. Earlier this month, lawmakers did extend the credit -- and expanded it to some existing homeowners, too.

There's still reason for caution. Orders for costly manufactured goods fell unexpectedly last month. Much of the weakness came from a big drop for goods related to defense. Excluding those, orders for other types of manufactured goods rose slightly -- by 0.4 percent.

Orders for electrical equipment, appliances, commercial airplanes, parts and metals all rose last month. Orders for cars, machinery, computers and communications equipment fell.

Surveying all the economic barometers, "I don't see how you get anything other than a slow recovery," said Mark Vitner, economist at Wells Fargo. "It's still a pretty dicey environment."

AP Business Writers Martin Crutsinger and Alan Zibel in Washington and Anne D'Innocenzio in New York contributed to this report.

Judge tells Reserve Primary fund to pay out assets

2009-11-25T18:28:00.000-08:00

Judge tells Reserve Primary fund to pay out assets

Judge orders fallen Reserve Primary fund to pay out remaining $3.5B to shareholders

NEW YORK (AP) -- A federal judge on Wednesday ordered The Reserve Primary Fund, which last year roiled the $3 trillion money-market industry by "breaking the buck," to pay out its remaining assets to shareholders waiting to get their money back.

The Securities and Exchange Commission said investors were likely to get back at least 99 cents on the dollar.

The fund has about $3.5 billion left and U.S. District Court Judge Paul Gardephe ordered the money be distributed -- minus $83.5 million set aside for legal expenses -- on a "pro rata" basis, proportionate to how much each investor held in the fund.

The fund, managed by New York-based Reserve Management Co., had held more than $64 billion shortly before Sept. 16, 2008, when the value of its assets fell below the level needed to cover every dollar invested in the fund, known in the industry as "breaking the buck."

The fund declared $785 million it held in Lehman Brothers debt worthless after the investment bank filed for bankruptcy protection. That sank the fund's net asset value to 97 cents, leading to the fund's collapse as institutional investors demanded cash back and fund managers were forced to sell assets at steep discounts amid plunging markets.

The episode was the first such investor exposure to money-market losses since 1994, and created fears about the safety of the more than $3 trillion in assets held in money-market funds that are normally considered nearly as safe as cash.

"We are pleased with the court's order adopting the SEC's distribution plan in the Reserve Primary Fund case," SEC Chairman Mary Schapiro said in a statement. "It is estimated by the Reserve Fund that the amount to be returned would be 99 cents on the dollar, or more."

The SEC plan approved by the court eliminates shareholder claims on the fund's assets, which the SEC said numbered more than 30. An SEC complaint filed in May accused Reserve Management and two executives of withholding key facts from investors around the time of the fund's collapse.

The judge also said the court had no grounds to "claw back" money from investors who received full dollar-for-dollar redemptions after 8 a.m. on Sept. 15, 2008, in excess of what other fund shareholders who won't get full paybacks will ultimately get.

Stocks push higher after drop in jobless claims

2009-11-25T18:27:00.000-08:00

NEW YORK (AP) -- A drop in unemployment claims and a rise in home sales pulled the stock market higher in light trading ahead of Thanksgiving.

Modest gains Wednesday left the Dow Jones industrial average and the Standard & Poor's 500 index at 13-month highs.

The economic news, as well as a drop in the dollar, stoked investors' appetite for higher-returning but riskier investments like stocks. For months, investors have been weighing their desire for bigger returns with fears that the stock market will falter if the economy looks like it won't maintain a recovery.

Investors drew confidence from a handful of promising economic reports. The government said new claims for unemployment insurance fell by 35,000 last week to 466,000. That's the fewest since September last year, and better than the 500,000 that economists had expected.

The drop in claims suggests the job market is healing, but concern remains that the improvement will be temporary. The jobless rate hit 10.2 percent in October and many analysts believe it will keep rising before starting to improve next summer.

In other economic reports, new home sales rose 6.2 percent to an annual rate of 430,000. That's above what economists surveyed by Thomson Reuters had expected.

The government also said consumer spending rose a brisk 0.7 percent last month, after falling in September. It was the best showing since August, when the government's now-defunct Cash for Clunkers programs enticed people to buy cars. The report was a welcome sign as the holiday shopping season goes into full swing.

Doug Roberts, chief investment strategist at Channel Capital Research in Shrewsbury, N.J., said investors are still worried about the sustainability of a recovery but are afraid of missing more of the market's eight-month rally.

"People may not believe in this market but they're reluctantly being pulled into it with each of these reports," he said.

The Dow Jones industrial average rose 30.69, or 0.3 percent, to 10,464.40, its second gain in three days and its best finish since October 2008.

The broader Standard & Poor's 500 index rose 4.98, or 0.5 percent, to 1,110.63, and the Nasdaq composite index rose 6.87, or 0.3 percent, to 2,176.05.

U.S. markets are closed for Thanksgiving and finishing early on Friday.

Major stock indicators are up more than 6 percent for November after a slowdown in October on worries that the market's advance had been too rapid. The quiet trading Wednesday followed a 133-point jump in the Dow on Monday as the dollar weakened. Tuesday brought a modest drop. Analysts say the market's gyrations signal that investors are lacking conviction about what's happening with the economy.

Haag Sherman, chief investment officer at Salient Partners in Houston, said light trading around Thanksgiving doesn't necessarily mean that investors have concluded that an recovery has taken hold. "The market's reaction has been in kind of a muted," he said.

The dollar fell against most other major currencies, while gold rose for the ninth straight day, advancing $21.20 to settle at $1,188.60 an ounce on the New York Mercantile Exchange. It touched a record $1,191.80 during trading.

When the dollar falls commodities become more affordable to buyers outside the U.S.

The drop in the dollar fanned the price of oil. Crude rose $1.94 to settle at $77.96 per barrel on the Nymex.

Bond prices were mixed. The benchmark 10-year Treasury note rose, pushing its yield down to 3.28 percent from 3.31 percent late Tuesday. The yield on the three-month T-bill was flat at 0.03 percent.

The Chicago Board Options Exchange's Volatility Index, known as the market's fear index, fell during trading to 20.05, its lowest level since August 2008. That's a signal that investors aren't as worried about big swings in the market.

Beyond the increase in consumer spending, earnings from Tiffany & Co. boosted confidence about how much consumers might spend for the holidays. The jeweler's third-quarter profit topped expectations and the company raised its full-year profit forecast. Tiffany rose $2.06, or 4.9 percent, to $43.89.

The reports came ahead of the unofficial start of the holiday shopping season on Friday. Investors will be looking for any signals in the coming weeks from retailers about consumer spending, the primary driver of the economy.

Two stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 3.1 billion, the lowest level of 2009. Volume was 3.8 billion Tuesday.

Overseas, Japan's Nikkei stock average rose 0.4 percent. Britain's FTSE 100 rose 0.8 percent, Germany's DAX index rose 0.6 percent, and France's CAC-40 rose 0.7 percent.

Augstums reported from Charlotte, N.C.

AIG cuts salaries to 3 top executives

2009-11-25T18:12:00.000-08:00

AIG cuts salaries to 3 top executives
Insurer AIG cuts salaries to 3 top execs to comply with government rules on bailed-out firms

SAN FRANCISCO (AP) -- Insurer American International Group Inc. said it has cut the salaries of three top executives to comply with pay restrictions for companies that took federal bailout money, according to a regulatory filing Wednesday.

The government has provided AIG with a bailout package worth up to $182.5 billion in exchange for an 80 percent stake in the company. The package includes restrictions on compensation for the insurer's 100 highest-paid employees.

AIG said it would now pay Chief Financial Officer David Herzog a $350,000 annual salary, pro-rated for the period from Nov. 1 to Dec. 31. That's down from the $675,000 annual salary he earned in 2008.

He will also get $3.1 million in stock and is also eligible to receive $833,333 in restricted stock if he meets certain performance goals.

None of the three executives were given stock grants in 2008, according to a June filing with the Securities and Exchange Commission.

Kristian P. Moor -- who was named CEO of the company's spun-off property casualty and general insurance business Chartis in July -- will be paid $450,000 in annual salary pro-rated for Nov. 1 to Dec. 31. That is down from the $959,615 in salary he earned in 2008.

Moor will also get $4.7 million in stock and potentially another $2 million in performance-based restricted stock.

Win J. Neuger, chief executive of AIG Investments, will receive $425,000 in annual salary pro-rated for the period. In 2008, as AIG's chief investment officer -- a position he relinquished in January of this year -- he was paid a $1 million salary. Neuger is ineligible for stock awards because he will leave AIG after the sale of its asset-management business.

AIG also said it had suspended accruals to a supplemental retirement plan and other nonqualified deferred compensation plans for the three executives.

On Tuesday, AIG said it would go ahead with a previously announced pay package for its new CEO Robert Benmosche of $7 million in cash and stock. Benmosche, who took over as CEO of the embattled insurer three months ago, will receive an annual salary of $3 million in cash and $4 million in AIG common stock under the pay agreement.

AIG shares rose 16 cents to $34.84 in after-hours trading Wednesday after closing at $34.68, down 32 cents from a day earlier.

Oil prices slide on high stocks, demand concerns

2009-11-24T23:35:00.001-08:00

Oil prices slide on high stocks, demand concerns
World oil prices shed more than one dollar on Tuesday on the back of high crude inventories and lingering concerns about weak energy demand, analysts said.

World oil prices shed more than one dollar on Tuesday on the back of high crude inventories and lingering concerns about weak energy demand, analysts said.

New York's main contract, light sweet crude for January delivery, sank 1.06 dollars to 76.40 dollars a barrel.

Brent North Sea crude for January delivery dipped 1.58 dollars to 75.98 dollars.

"Despite the economic recovery optimism, the near-term facts are that the market is still burdened by high inventories," said Andy Lebow, MF Global's senior vice president for energy, cited by Dow Jones Newswires.

VTB Capital commodities analyst Andrey Kryuchenkov added: "We still expect resurfacing demand concerns to cap the upside in oil."

Oil prices have slumped from record highs of above 147 dollars reached in July 2008 to about 32 dollars in December last year, as the economic downturn hit world demand for energy.

Crude futures have slowly won back ground as major industrialised nations emerge from recession but oil demand remains weak despite reportedly rising for the first time in seven quarters.

World oil demand rose between July and September after falling during the previous six quarters, the Centre for Global Energy Studies said in a monthly report published on Monday.

The London-based CGES added that global oil demand was set to record its first year-on-year gain during the fourth quarter, although crude oil prices should continue to trade between 70 and 80 dollars a barrel.

Crude futures were likely to stay under 80 dollars also because of high oil inventories in the United States, the world's biggest energy-consuming nation, according to analysts.

New York oil last Wednesday breached 80 dollars a barrel after government data showed crude reserves in the United States fell 900,000 barrels in the week ending November 13.

However levels remain relatively high with demand struggling to recover following the financial crisis.

OPEC president Jose Maria Botelho de Vasconcelos has signalled that 75-80 dollar oil is an adequate level to allow for a global economic recovery.

The Organization of Petroleum Exporting Countries (OPEC), which pumps about 40 percent of the world's oil, holds its next meeting to discuss output levels on December 22.

OPEC member Nigeria on Tuesday said its 2010 budget will be based on an oil price of 57 dollars a barrel.

"The benchmark for crude oil sales is 57 dollars per barrel," a senior advisor to President Umaru Yar'Adua told reporters on Tuesday as the draft budget was presented to parliament.

Ireland hit by public sector strike against cuts

2009-11-24T23:34:00.000-08:00

Ireland hit by public sector strike against cuts
Recession-hit Ireland was severely disrupted by a one-day strike Tuesday as about 250,000 public sector workers protested at planned austerity cuts in next month's budget.

Recession-hit Ireland was severely disrupted by a one-day strike Tuesday as about 250,000 public sector workers protested at planned austerity cuts in next month's budget.

Most schools were shut, non-emergency procedures were cancelled in hospitals, swine flu clinics were suspended and social welfare offices were shut.

Public sector workers did however maintain work in areas badly affected by flooding, including Cork, Ireland's second largest city.

Unions are angry that eight months after they were handed a seven-percent pay cut in an emergency budget pension levy, the government plans another 1.3 billion euro (1.9 billion dollars) in cuts in December's budget.

Prime Minister Brian Cowen told parliament he was "disappointed" by the strike and said that talks between the unions and the government would resume on Wednesday, in advance of the budget.

"I am disappointed there is any strike. When you are in discussions with people it is far better to conduct the discussions," Cowen said.

"It is better to proceed by agreement than not, but at the same time government has its responsibilities to discharge and will do so."

But unions warned they would hold a second one-day strike on December 3 if renewed talks with the government fail to produce an alternative to plans for pay cuts, compulsory redundancies and changes to pensions for state employees.

Peter McLoone, chairman of the public services committee of the Irish Congress of Trade Unions (ICTU), said he believed an alternative could be hammered out.

"However, today's national public service strike has demonstrated that our members have the resolve and the strength to resist the government if it pursues an unfair and counter-productive course of further pay cuts," he said.

Employers' body IBEC warned that Tuesday's strike would cause "havoc".

"We hope to see unions engage in constructive talks with the government around their terms and conditions, rather than take to the streets," said IBEC director general Danny McCoy.

The Irish Small and Medium Enterprises Association (ISME) condemned the action as "nonsensical".

"The reality is, whether union bosses realise it or not, the economy is in crisis and, as a country, we are spending more than we are earning.

"With that stark reality the government has no option but to reduce the cost of running the public sector. The alternative is bankruptcy," said ISME chief executive Mark Fielding.

After a decade of "Celtic Tiger" economic growth and big pay awards to public servants, Ireland was the first eurozone country to plunge into recession as a result of the global financial crisis.

Irish tax revenues have fallen back to 2003 levels and the country is borrowing over 400 million euros a week to bridge a yawning public finances gap.

More shoppers, cautious spending seen for Black Friday

2009-11-24T23:28:00.000-08:00

More shoppers, cautious spending seen for Black Friday
Shoppers are expected to come out in force but cling a bit tighter to their wallets for the kickoff of the holiday gift-giving season this weekend, new surveys showed Tuesday.

Shoppers are expected to come out in force but cling a bit tighter to their wallets for the kickoff of the holiday gift-giving season this weekend, new surveys showed Tuesday.

The National Retail Federation said it expects 134 million people to be out shopping on "Black Friday," the big shopping day after Thursday's Thanksgiving Day holiday, and the following Saturday and Sunday.

"Regardless of what we've already seen these last few weeks in terms of promotions, retailers still have a few tricks up their sleeves to excite Black Friday shoppers," said Tracy Mullin, NRF president and chief executive.

"With retailers fully aware that shoppers are looking for incredible deals, Americans can expect huge sales on popular items like toys, electronics and apparel."

The retail group confirmed its forecast calling for a one percent decline in holiday spending to 437.6 billion dollars.

A separate report by the International Council of Shopping Centers showed 26 percent of US households will see members out shopping on Friday, including 36 percent of consumers aged between 18 and 34 years old.

The ICSC survey showed one third of shoppers may be at the stores for early-bird specials between 4 am and 8 am.

"Bargain Friday shopping has become a tradition in America when consumers search for the best bargains that retailers offer," said Michael Niemira, ICSC director of research and chief economist.

"Bargain Friday's performance typically is not a precursor of the entire holiday season's sales picture -- which ICSC projects will post a modest gain -- yet ICSC anticipates a very strong Bargain Friday."

ICSC predicts a rise in overall holiday retail sales of between one and two percent for 2009.

A Western Union survey meanwhile found that 65 percent of Americans plan to skip Black Friday holiday shopping this year, citing crowded stores as a major reason.

The survey also found that 51 percent of Americans said cash is the gift they would most like to receive this year.

Bank of England reveals huge secret loans to RBS, HBOS

2009-11-24T23:27:00.000-08:00

Bank of England reveals huge secret loans to RBS, HBOS
The Bank of England admitted Tuesday it lent a total of 61.6 billion pounds to Royal Bank of Scotland and HBOS in secret during last year's financial crisis, adding that the cash had been repaid.

The Bank of England admitted Tuesday it lent a total of 61.6 billion pounds to Royal Bank of Scotland and HBOS in secret during last year's financial crisis, adding that the cash had been repaid.

The British central bank revealed the loans, equivalent to 68 billion euros or 102 billion dollars, in a statement to coincide with governor Mervyn King's appearance before a Treasury Select Committee hearing.

The BoE said that in autumn 2008 it had offered emergency lending to Royal Bank of Scotland (RBS) and HBOS bank, which is now part of Lloyds Banking Group (LBG).

The bank said the loans could now be revealed because it judged that there was no longer a risk of a "potentially systemic disturbance" to the financial system.

"Now that RBS has signed up for the asset protection scheme and Lloyds has embarked on its alternative strategy for capital raising, the bank judges that there is no longer a need for the assistance to remain secret," the BoE said.

RBS borrowed a maximum of 36.6 billion pounds on October 17, 2008, and HBOS borrowed a maximum of 25.4 billion pounds on November 13, 2008. The groups repaid the cash in December and January respectively.

Junior finance minister Paul Myners defended the move, and declined to say if other secret loans had been made to banks.

"This is precisely what a central bank does in terms of providing lender of last resort facilities to support the banking system," he told Channel 4.

"The future of the banks matters to parliament and parliament recognises that the Bank of England occasionally needs to act covertly and has given the Bank of England the legal power to do that."

Struggling HBOS was bought by rival Lloyds TSB in a government-brokered deal that created Lloyds Banking Group earlier this year.

However, LBG fell under state control as a result of the global financial crisis and is now 43-percent owned by the taxpayer.

Royal Bank of Scotland was also ravaged by the credit crunch and the takeover of Dutch giant ABN Amro at the top of the market in 2007. The state now owns 84 percent of RBS after an enormous bailout.

Another British bank, Northern Rock, was nationalised in February 2008 after it ran into severe funding problems because of the global credit crunch.

Pirates kill seaman in W.Africa tanker attack

2009-11-24T23:26:00.000-08:00

Pirates kill seaman in W.Africa tanker attack
Pirates attacked an oil tanker off the coast of west Africa, killing a Ukrainian officer before escaping with the contents of the ship's safe, the ship's owners and Benin's navy commander said Tuesday.

Pirates attacked an oil tanker off the coast of west Africa, killing a Ukrainian officer before escaping with the contents of the ship's safe, the ship's owners and Benin's navy commander said Tuesday.

Commander Maxime Ahoyo said the officer on the Monrovia-flagged Cancale Star was shot dead when he confronted the pirates after they boarded the vessel in darkness 18 nautical miles (33 kilometres) off the coast of Benin.

The tanker's Latvian captain, Jaroslavs Semenovics, said around six or seven pirates had approached the tanker in a speed boat.

"They came on deck, pointed a pistol to the head of one of the sailors, marched him to the cabin," Semenovics told AFP.

"They asked me to open the safe and they collected all the cash," he added. He did not say how much was stolen.

The 230-metre (750-foot) Cancale Star was carrying 89,000 cubic metres of crude from Nigeria's Niger Delta, the captain said.

The tanker's owners Chemikalien Seetransport said in a statement issued from Germany that the vessel's chief officer, or second in command, "has tragically lost his life in a piracy attack off the coast of Benin in the early hours of November 24".

"It is not the chief engineer but the chief officer of the vessel," said Chemikalien's spokesman Cor Radings, contradicting Ahoyo who had earlier identified the Ukrainian officer as the chief engineer.

Ahoyo was speaking on board the Cauris, a Beninese navy boat which went to the assistance of the tanker and managed to dock alongside it.

Medics aboard the vessel said four other crew members were wounded in the attack, one seriously.

The pirates fled after a member of the tanker's crew raised the alarm by sounding a siren, with the crew managing to overpower a pirate and hand him over to police for questioning.

The captured pirate said he was from a Nigerian border town.

The multinational crew of 24 includes Russians, Filipinos, Latvians and Ukrainians, Radings said.

Piracy in oil-rich west African waters is on the rise, according to the International Maritime Bureau, with more than 100 cases last year.

Most attacks occur while ships are at anchor or close to the shore, unlike in east Africa, where Somali pirates have netted millions of dollars in ransoms in exchange for the release of ships captured hundreds of miles from the coast.

The IMB's Live Piracy Report has highlighted the risk to shipping in Tema, Ghana, and in the Lagos and Bonny River areas of Nigeria, immediately east of Benin.

It said that pirates have attacked and robbed vessels and kidnapped crews along the coast and rivers, anchorages, ports and surrounding waters.

Officials voiced fears earlier this year that west African pirates would copy the tactics of Somali gangs.

From January to September of this year, the International Maritime Organisation reported 160 acts of piracy off the coast of Somalia, including 34 hijacked vessels and more than 450 people made hostage.

The world's naval powers last year started deploying warships in the Gulf of Aden in an attempt to curb attacks by ransom-hunting pirates that were seen as a threat to one of the globe's most important maritime trade routes.

Pirate groups have since shifted their focus to the wider Indian Ocean, a huge area much more difficult to patrol, and started venturing as far as the Seychelles and beyond.

Banking sector back to profit, insurance fund in red: FDIC

2009-11-24T22:23:00.000-08:00

Banking sector back to profit, insurance fund in red: FDIC
The US banking industry returned to profit in the third quarter, but the government insurance fund went into deficit for the first time since 1992, regulators announced Tuesday.

The US banking industry returned to profit in the third quarter, but the government insurance fund went into deficit for the first time since 1992, regulators announced Tuesday.

The Federal Deposit Insurance Corp. said commercial banks and thrifts earned a collective 2.8 billion dollars in the third quarter.

This came after a collective 4.3 billion dollar loss in the second quarter, and the profit was well above the 879 million dollars the industry earned in the same period in 2008.

But the sector is still feeling the effects of the deep financial crisis triggered by a collapse of the US housing market and global credit crunch.

"Today's report shows that, while bank and thrift earnings have improved, the effects of the recession continue to be reflected in their financial performance," said FDIC chairman Sheila Bair.

More than 26 percent of all insured institutions reported a net loss in the latest quarter, and total loan balances declined by the largest percentage since quarterly reporting began in 1984, the FDIC said.

As projected in September, the FDIC's deposit insurance fund balance fell below zero for the first time since the third quarter of 1992.

The fund balance of negative 8.2 billion dollars reflects a 38.9 billion dollar contingent loss reserve that has been set aside to cover estimated losses over the next year.

The FDCI report showed total loans and leases declined by 210.4 billion dollars, or 2.8 percent, during the quarter.

Loans to commercial and industrial borrowers declined by 6.5 percent, residential mortgage loan balances fell by 4.2 percent, and real estate construction and development loans dropped 8.1 percent.

"There is no question that credit availability is an important issue for the economic recovery," Bair said.

"We need to see banks making more loans to their business customers. This is especially true for small businesses that rely on FDIC-insured institutions to provide over 60 percent of the credit they use."

The FDIC noted that 124 banks had failed so far this yer, and the number on the "problem list" grew to 552,the highest number in 16 years.

"For now, the credit adversity we have been discussing for some time remains with us, and we expect that it will be at least a couple of more quarters before we see a meaningful improvement in that trend," Bair said.

"Despite the challenges, I am optimistic that if we address these problems head-on, we will see clear signs of improvement in bank earnings and lending in 2010

The FDIC noted that it has 23.3 billion dollars of cash and marketable securities on hand. It has moved to bolster its position by approving a measure on November 12 to require insured institutions to prepay three years' worth of deposit insurance premiums -- about 45 billion dollars -- by the end of 2009.

"This measure will provide the FDIC with the funds needed to carry on with the task of resolving failed institutions in 2010, but without accelerating the impact of assessments on the industry's earnings and capital," Bair said.

Facebook changes stock structure but 'no plans to go public'

2009-11-24T22:22:00.000-08:00

Facebook changes stock structure but 'no plans to go public'
Hot social networking site Facebook said Tuesday it has introduced a dual-class stock structure but has no plans to go public for the moment.

Hot social networking site Facebook said Tuesday it has introduced a dual-class stock structure but has no plans to go public for the moment.

"Facebook is a private company so we don't typically share details on stock-related matters," the Palo Alto, California-based company said in a statement.

But the firm said it introduced a dual-class stock structure "because existing shareholders wanted to maintain control over voting on certain issues to help ensure the company can continue to focus on the long-term to build a great business."

Facebook said creating the new stock structure did not mean it was preparing an initial public offering.

"This revision to the stock structure should not be construed as a signal the company is planning to go public," the statement said. "Facebook has no plans to go public at this time."

The Wall Street Journal said Facebook was converting the shares of all current shareholders into Class B stock, which carries 10 times the voting power of Class A stock.

The newspaper noted that Facebook chief executive and co-founder Mark Zuckerberg, the company's largest shareholder, has said that it plans to go public eventually.

A Russian Internet company offered in July to purchase 100 million dollars worth of stock from Facebook employees in a deal that valued the company at 6.5 billion dollars.

US software giant Microsoft bought a 1.6 percent stake in Facebook in 2007 for 240 million dollars, valuing the social network on paper at 15 billion dollars.

Facebook announced in September that it had signed up its 300 millionth member.

US third quarter growth revised down to 2.8 percent

2009-11-24T22:09:00.000-08:00

US third quarter growth revised down to 2.8 percent
The US economic rebound in the third quarter was weaker than initially estimated, the Commerce Department said Tuesday in cutting its estimate to a 2.8 percent annual pace of expansion.

The US economic rebound in the third quarter was weaker than initially estimated, the Commerce Department said Tuesday in cutting its estimate to a 2.8 percent annual pace of expansion.

The gross domestic product (GDP) figure was revised down from last month's estimate of 3.5 percent growth.

The growth figure was in line with most analyst forecasts, taking into account updated data, notably on consumer spending and trade.

Despite the downward revision, the report showed the first expansion for the economy after four straight quarters of contraction, including a 0.7 percent drop in the second quarter.

The data from the July-September period show the world's biggest economy appearing to emerge from its brutal recession, but with less momentum than previously thought.

Sal Guatieri, economist at BMO Capital Markets, said the revised figure does little to change his outlook for steady if less than spectacular growth.

"We still think the economy will expand at a three percent annual rate in the fourth quarter," he said.

"We're looking for modest growth in 2010 of about 2.5 percent."

Separately, the Federal Reserve raised its outlook for US economic growth in 2010 to a range of 2.5 to 3.5 percent, and said the troubles in unemployment appeared to be near a peak.

In a new forecast accompanying minutes from the Fed's policy meeting November 3-4, the central bank said participants "anticipated that economic recovery would be gradual, with real gross domestic product growing at a moderate pace and the unemployment rate declining slowly over the next few years."

The range for 2010 growth was boosted slightly from a July projection of between 2.1 and 3.3 percent.

The new forecast also suggests that unemployment, which hit a 26-year high of 10.2 percent in October, could ease in early 2010.

"Participants generally anticipated that the unemployment rate would rise somewhat further during the final months of 2009 and then decline steadily over the next few years," said the forecast accompanying minutes from the Federal Open Market Committee meeting.

The government's third quarter report showed personal consumption expenditures -- the main driver of economic activity -- increased 2.9 percent in the quarter, revised down from an estimate last month of 3.4 percent.

Even though consumer spending rose, a large portion of that came from the auto sector, with sales boosted by the government's "cash for clunkers" incentives to trade in older vehicles.

The revised figures showed exports of goods and services increased 17.0 percent in the third quarter, but imports grew at a faster pace of 20.8 percent, a factor that hurts GDP.

Augustine Faucher at Moody's Economy.com said the data showed a jump of 10.6 percent in corporate profits, and added, "this bodes well for near-term hiring and investment."

Faucher said the latest report "points toward continued economic expansion in the near term, but with growth that is below the economy's potential."

Others said the report showed a still-struggling economy.

"For all the fiscal and monetary stimulus, the best we could do was 2.8 percent," said David Rosenberg, chief economist at Gluskin Sheff & Associates.

"It's sad really but to be completely expected amid a collapse in private sector credit and shrinking household balance sheets. Strip out the government-administered medication, and the economy was flat on the quarter... Even if the recession is over, and we have yet to be fully convinced, there is no recovery."

Although many economists say the US recession is over, an official declaration has yet to come from the private National Bureau of Economic Research, seen as the official arbiter of business cycles.

The NBER panel does not use the definition employed in many countries of recession as two consecutive quarters of declining GDP. It says a recession is "a significant decline in economic activity spread across the economy," with drops in output, income, employment and sales.

136 contractors keen on RM7bil LRT extension project

2009-11-24T18:10:00.001-08:00

136 contractors keen on RM7bil LRT extension project

KUALA LUMPUR: A total 136 companies have shown interest to participate in Syarikat Prasarana Negara Bhd’s open tender bidding for the RM7bil extension of its two light rail transit (LRT) lines project in the Klang Valley.

Group managing director Datuk Idrose Mohamed said the 136 contractors had collected pre-qualification forms from Prasarana to be submitted in a month’s time for assessment and shortlisting of candidates to bid for the project.

StarBiz had previously reported that analysts predicted UEM Builders Bhd, IJM Corp Bhd, Gamuda Bhd and Malaysian Resources Corp Bhd are likely major contractors to be involved, based on their experience in LRT projects.

Prasarana would also assess the feedback from the three-month public display for the proposed LRT line extension ending Dec 14, said Idrose.

Datuk Seri Ahmad Husni Hanadzlah (second from left) having a light moment with (from left) Datuk Idrose Mohamed, Tan Sri Izzuddin Dali and UITP secretary-general Hans Rat at the seminar yesterday.

“If everything goes well, the construction of the LRT extensions will start in the first quarter of next year,” he told reporters after the opening of the International Association of Public Transport (UITP) Asia Pacific Seminar by Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah yesterday.

When completed in three years, the LRT extension is expected to double the current daily passenger volume of 170,000 for Ampang LRT and 180,000 for Kelana Jaya LRT.

On a more short-term development of Prasarana, Husni said the company would start its four-car train service in stages beginning next month.

“Four sets of the train will be delivered every quarter in 1½ years,” he said, adding that RM1bil had been invested in acquiring 35 sets of the four-car trains.

In terms of buses, he said the open tender to supply 400 new buses for Prasarana that closed recently attracted 12 bidders.

“The company is currently evaluating the bidders and the delivery of the buses will be in stages starting from the first quarter of next year,” he said.

Husni said these positive developments was in line with the Government’s national key result areas to increase public transport usage to 25% by 2012 from the current 16%.

The three-day seminar with the theme Making Public Transport of Tomorrow Happen is organised by Prasarana subsidiary, Rangkaian Pengangkutan Integrasi Deras Sdn Bhd, will see some 100 international delegates discuss issues in the public transport industry.

Prasarana chairman Tan Sri Izzuddin Dali said the seminar provides a platform for world-wide cooperation, business development and sharing of know-how of the industry.

Fed audit push gives impetus to gold rally

2009-11-24T18:08:00.000-08:00

Fed audit push gives impetus to gold rally

AUDITING the Federal Reserve may or may not be a good idea, but one thing seems pretty sure: just discussing it seriously will tend to drive the price of gold higher.

The US House of Representatives Financial Services Committee last week voted to approve an amendment that would bring about an audit of the Fed, its monetary policy and lending programmes, since when gold has gone its merry way higher, hitting an all-time high of US$1,174 per ounce on Monday.

The amendment, a provision to a broader financial services reform bill that is still under consideration, was co-sponsored by Republican representative Ron Paul, author of the book End the Fed, and the man least likely to be found chairing a panel at Jackson Hole or Davos.

The Fed, understandably, hates the idea, saying it will compromise its hardwon independence, the administration loathes it, and really it will almost certainly never become effective in a recognisable form.

Even so, and even interpreting the vote as a populist cry of the heart against Washington and Wall Street, the fact that it has gotten this far will cause some serious people without an ideological dog in the Fed fight to buy a bit of gold, which is really a sort of anti-currency, as a hedge against increased political influence in the process of making monetary policy.

Undoubtedly many people who think keeping the Fed on a short leash attached to an elected body is a good thing also think the Fed should have been much less aggressive in creating money and risking inflation. History shows that the risks are actually skewed the other way: tighter political control of central banks more often means more inflation and a higher risk of a debased currency.

In other words, the people who support this because they think the Fed shouldn’t debase the currency are probably raising the risk that the currency is debased. This just adds to the bid for gold, which is already being supported by concerns that current monetary policy and deficits put inflation and the dollar at risk. These risks are not high, they are tiny, but they are disturbingly more worth discussing now than two years ago.

Thus we are in the bizarre situation of watching the price of gold being driven higher both by people who don’t trust the Fed and people who don’t trust the people who don’t trust the Fed.

It has to be said; the very idea of buying gold, which adds nothing to the creation of wealth or innovation and is only conceivably a hedge against bad actions of other people, is dispiriting. If you buy gold you cannot tell yourself that you are doing well by doing good, as perhaps you can with a biotech or fertiliser company.

You are simply limiting the damage that can be done to you, and then only in very particular circumstances.

What’s more, many of the people who advocate it as an asset show a disconcerting monomania; the type who if they sit next to you on a commuter train makes you consider pretending the next stop is yours.

Gold’s real virtue is negative. It is not used for much industrially but there is limited supply and real physical constraint on producing more. Unlike, say dollars, you can’t simply flip a switch and make more.

Dylan Grice, strategist at Societe Generale in London (who, by the way, I’d happily sit next to on a train) points out that the value of the gold held by the Fed only equals 15% of the US monetary base and that the price would have to rise to US$6,300 per ounce to make the currency fully backed by gold reserves.

Of course, gold is not just going up against the dollar, it is going up against an array of major and minor currencies, indicating that the worries are not simply about the Fed or US policy but about the interplay between fiat currencies and policy around the world. A tremendous amount of debt has been created and socialised and a lot of money has been created.

Which brings us back to the Fed and the politics of monetary policy, or as perhaps we will begin to see it the politics of politics. The betting has to be that the Fed emerges with its independence intact, if not its power as a regulator.

From a market’s point of view the Senate confirmation hearings for Ben Bernanke’s second four-year term as chairman kick off next week and offer the next opportunity for populist fireworks.

I am looking forward to having fewer conversations about gold, but I am not expecting it.

Tune Talk eyeing 400,000 subscribers

2009-11-24T18:03:00.000-08:00

Tune Talk eyeing 400,000 subscribers

It hopes to achieve target by leveraging on AirAsia and Tune group

KUALA LUMPUR: Mobile service operator Tune Talk Sdn Bhd is targeting to achieve 400,000 subscribers by year-end by leveraging its links with low-cost carrier AirAsia and the Tune group.

The company has already secured over 200,000 subscribers since its launch on Aug 19.

Chief executive officer Jason Lo said he was confident that Tune Talk would breach the 300,000 subscriber-mark by year-end based on the “rate it was going”.

“We’re looking at 300,000 to 400,000 subscribers by year-end,” he said after presenting prizes to its 100,000th and 200,000th subscriber yesterday, adding that Tune Talk was on track to signing up one million customers within a year of operations.

Lo said Tune Talk was currently registering an average of 4,000 new subscribers per day with an average revenue per user of RM45 per month. He said the company was targeting 6,000 subscribers per day by year-end.

The Tune group is the brainchild of AirAsia Bhd group chief executive officer Datuk Seri Tony Fernandes, who is also chairman of Tune Talk.

Lo said Tune Talk started offering its starter packs on board AirAsia flights last week.

“We are on board AirAsia flights and hope to maintain that partnership with them. We feel that we can become a relevant player in Asean, especially if we can leverage off AirAsia’s extensive network,” he said.

“Tune Hotels will also be launching 50 hotels by 2012. Right now, Tune Hotels (which has hotels in Malaysia and Bali, Indonesia) is doing 60,000 to 70,000 guests per month.

With 50 hotels, that’s three million guests and we have to service that as well,” Lo added.

He also said Tune Talk was in preliminary talks with two of Singapore’s three mobile operators to expand its services to the island republic and potentially offer zero or reduced roaming to its subscribers.

Tune Talk has been offering AirAsia E-Gift vouchers daily and RM100,000 personal accident coverage to its subscribers since its launch.

Operating as a mobile virtual network operator on Celcom (M) Bhd’s 2.5G network, Tune Talk charges a flat rate of 22 sen per minute for calls to any operator in Malaysia while an SMS costs 5 sen each.

It claims that its IDD rates are 10% to 30% cheaper than other operators.

Melewar Industrial eyes 20% of PAAB’s water jobs

2009-11-24T18:01:00.001-08:00

Melewar Industrial eyes 20% of PAAB’s water jobs

KUALA LUMPUR: Melewar Industrial Group Bhd is hopeful of obtaining 20% of the works involved in Pengurusan Aset Air Bhd’s (PAAB), nationwide renewal and replacement pipe programme.

“We believe that there’s a strong possibility that PAAB will start investing in renewing water pipes soon, hopefully it will come through next year,” group chairman Tunku Yaacob Tunku Abdullah said.

He said the entire project, believed to be valued at about RM20bil, had yet to be opened for bidding.

The company hoped to get “a fair chunk” of about 20%, he said after a shareholders’ meeting here yesterday.

Melewar Industrial group is involved in a variety of business segments which include iron and steel, steel tube operations and cold rolled coil (CRC) operations .

On Mycron Steel Bhd, the group’s CRC operations subsidiary, Ya’acob said prospects were “very good”.

“Demand is picking up so yes, Mycron should be in the black in the financial year ending June 30, 2010,” he said.

Mycron reported a net loss of RM2.86mil for its first quarter ended Sept 30.

Ya’acob said with an emphasis on higher grade quality CRC, Mycron would see a boost in production by 22% to 220,000 tonnes per year from the current 180,000 tonnes.

Pelikan to start franchising in South-East Asia

2009-11-24T17:52:00.000-08:00

Pelikan to start franchising in South-East Asia

SUBANG JAYA: Pelikan International Corp Bhd, through wholly-owned subsidiary Pelikan Asia Sdn Bhd, plans to embark on a franchising model with its branded retail outlets in South-East Asia from 2011.

Pelikan Asia vice-president and head of South-East Asia business operation Kenny Kang said the company hoped to obtain the necessary approvals for the Malaysian market by next year.

“We are still working on the business models in Malaysia, which may be either a franchising or licensing sturcture,” he told a press conference during the soft launch of its first branded outlet, PeliStation, yesterday.

He said the company aimed to open five other PeliStations next year, which would involve a total investment of RM1.5mil to RM2mil. The Subang Jaya store is a prototype for its franchising model.

“The model is ideal for entrepreneurs scouting for effective and innovative business opportunities by leveraging on a 171-year-old brand,” he said, adding that the company would open outlets in Thailand and Singapore in 2011 and introduced the franchising models in the two countries later.

“In today’s economic environment, franchising has proven to be an effective business model,” he said.

The company aims to open 10 to 20 outlets under the franchising model in Malaysia in the next three years.

“A few parties have shown interest in the franchising business,” Kang said, adding that this model would further enhance its presence, in addition to the existing distribution network that it was working with.

Kang said the primary purpose of the PeliStation was to showchase the full range of Pelikan products and services. The retail outlet will also carry the PeliFill machine, which provides express ink refill service for the cartridge.

Through this service, the company is promoting the recycle, reuse and reduce concept, while introducing cost savings of up to 70% to its customers. The PeliStation’s target markets include offices and students.

Price of gold eases

2009-11-24T17:51:00.000-08:00

Price of gold eases
By LEONG HUNG YEE

Investors locking in gains as US dollar rebounds

PETALING JAYA: Gold price, which surged to a historic high of US$1,174 an ounce on Monday, fell slightly as the US dollar rebounded, reducing the metal’s appeal as a hedging instrument.

Over the past two weeks, gold prices had increased almost 10%. Year-to-date the precious metal appreciated more than 35% from a low of US$811.70 on Jan 14. As at 6.34pm local time yesterday, gold was trading at US$1,170 an ounce.

A local commodities dealer said some investors sold gold to lock in gains following the rally.

He said the slumping dollar, which initially boosted gold’s appeal as an alternative investment asset, had rebounded and pressured gold price to retreat.

AIMS Asset Management managing director David Crichton Watt said in a report to clients: “Gold, having been repulsed four times since March 2008 in its attempt to climb above US$1,000 an ounce, did not appear now to have established itself above that psychological barrier.

“It has achieved this admidst considerable scepticism with analysts recommending that nimble traders sell bullion and repurchase when it falls to US$950 an ounce.”

Watt said each time the price had broken through resistance it had “made large upward movements of more than 50% before experiencing a meaningful correction.”

Meanwhile, Standard Chartered Plc (StanChart) expects gold to average US$1,300 per ounce in the fourth quarter next year, buoyed partly by central banks’ buying.

It said the investment case for gold had become increasingly compelling with the central banks buying and a structural change in interest for gold as an investment product among retail customers.

Global head of commodity research Helen Henton said that although the upside (gold price) would be capped by lower jewellery demand, increased availability of scrap gold as prices surged to new highs and periodic dollar strength in the first half of 2010 would see gold moving higher to average US$1,300 per ounce once the dollar resumed its weakening trend. Gold has averaged US$955 an ounce so far this year.

“Platinum will outperform gold in 2010, supported by the upward momentum provided by gold prices and due to supply issues, including rising costs and a vulnerable power grid in South Africa,” StanChart forecast in its commodities quarterly report.

Bank of America Merrill Lynch was quoted by Bloomberg that gold would likely advance to US$1,500 an ounce within the next 18 months. It said gold was in the second stage of a rally to US$1,500 that began with the credit crisis in August 2007.

The second stage was marked by dollar weakness while the third stage, a recovery in energy and commodity prices, would boost investment in precious metals, the bank said.

Locally, Tomei Consolidated Bhd group managing director Ng Yih Pyng was still optimistic of the industry.

He said gold prices had been on an uptrend and there were no signs of people cutting down on gold purchases over the past few months.

Ng told StarBiz that higher gold prices meant that consumers would get a smaller piece of jewellery for the same amount of money. He said when prices were high, some consumers actually traded in their jewellery.

It was reported that Habib Jewels managing director Datuk Meer Sadik Habib believed gold price could hit US$1,300 to US$1,500 an ounce by 2010.

Bank Negara leaves benchmark interest rate unchanged

2009-11-24T17:43:00.000-08:00

Bank Negara leaves benchmark interest rate unchanged

PETALING JAYA: Bank Negara has decided to keep the benchmark interest rate – the overnight policy rate – unchanged at 2% as inflation remained benign in October and economic recovery continued apace. The central bank’s decision confirmed a number of analysts’ expectations.

Morgan Stanley Research said policy hikes were expected to begin from the second-quarter of next year “with a cumulative raise of 200 basis points by 2010 year-end”.

Bank Negara said in a statement following the monetary policy committee meeting yesterday that domestic economic conditions continued to improve while price pressures and inflation expectations were expected to remain contained going forward.

It said “the current monetary policy stance is appropriate and will continue to provide support for economic activity.”

Bank Negara said the latest indicators continued to signal further improvements in the international and financial conditions with economic activity in the advanced economies showing broader signs of recovery supported by the impact of policy measures.

“While these positive developments are expected to continue going into 2010, the recovery is likely to be gradual and uneven, with the outlook remaining uncertain once the effects of the policy support begin to diminish,” it added.

Bank Negara said the domestic economy’s pace of recovery was gaining momentum with domestic demand in the form of private consumption and public sector spending to provide support for growth.

“Inflation is expected to turn positive in the coming months, as domestic economic conditions strengthen,” it said, adding that inflation for October continued to decline at a slower rate and expected to remain modest in 2010.

Stock market recovery: too fast, too soon

2009-11-24T17:40:00.000-08:00

Stock market recovery: too fast, too soon

This year, the Sensex is up 110% from the lows it made in March. So the pace of the recovery in the market has been far sharper

This economic recovery is different. During the last recovery in 2003, the benchmark Sensex index on the Bombay Stock Exchange had moved up 65% in November 2003 from the low it made in April that year.

This year, the Sensex is up 110% from the lows it made in March. So the pace of the recovery in the market has been far sharper.

It could be argued, of course, that the fall too had been greater, but there are a number of other indicators which suggest that although the market continues to power ahead, it faces strong headwinds. The chart shows the differences between the 2003 recovery and the current one.

Starting with growth in gross domestic product (GDP), in 2003-04, GDP growth was a high 8.5%, much higher than the 6.75% growth estimated this fiscal by the Prime Minister’s economic advisory council. Yet this lower GDP growth has been accompanied by a stronger market. That has stretched valuations, seen from the fact that while the past price-earnings multiple for the Sensex was 15.2 in November 2003, it’s as high as 21.6 now.

That’s not all. In November 2003, the yield on the 10-year government bond was around 5.1%, while it’s much higher at around 7.2% now. Similarly, prime lending rates of banks are higher than what they were in November 2003. That’s the result of higher credit-deposit ratios with the banking system. In November 2003, the credit-deposit ratio was a low 54.72%, but this ratio is much higher at 69.39% at present. Despite all the current talk of liquidity, interest rates are higher now than they were in 2003.

Non-food credit growth, at 10.3% year-on-year (y-o-y), is much lower than its growth rate of 16% y-o-y in November 2003. But one reason for that is seen in the much higher amounts mopped up by initial public offerings (IPOs) this year. Between April and October, IPOs totalled Rs14,626 crore, compared with a mere Rs1,515 crore in the same period in 2003. That’s besides the substantial amounts raised through qualified insitutional placements, which didn’t exist in 2003.

Clearly, companies are tapping non-banking sources for funding. The other problem lies in inflation. While it’s true that Wholesale Price Index inflation is much lower at present than what it was in 2003, inflation according to the Consumer Price Index is much higher. Also, money supply growth is much higher than what it was earlier. This puts pressure on the Reserve Bank of India to tighten monetary policy.

In short, while the markets have run up considerably, conditions now are less favourable for a sustained boom than what they were at the same stage of the recovery in 2003.

Asia Roundup: Marts ignore bullish lead from Wall St

2009-11-24T17:36:00.000-08:00

Asia Roundup: Marts ignore bullish lead from Wall Street

HONG KONG: Asian markets fell yesterday as dealers shrugged off a strong lead from Wall Street, with deflation fears pushing Japan lower while Shanghai and Hong Kong dropped on liquidity fears in China.

TOKYO: Down 1.01 per cent. The Nikkei-225 lost 96.10 points to 9,401.58.

Investors pulled funds away from Japanese assets on worries over growth outlook, Tachibana Securities equity strategist Kenichi Hirano told Dow Jones Newswires.

SYDNEY: Down 0.68 per cent. The S&P/ASX200 eased 32 points to 4,685.

Dealers said the market rose in early trade following positive leads from overseas but later reversed on profit-taking in mining and banking stocks.

SHANGHAI: Down 3.45 per cent. The composite index, which covers both A and B shares, was down 115.14 points at 3,223.53.

The loss is its biggest on a single-day since August 31.

SEOUL: Down 0.78 per cent. The Kospi lost 12.63 points at 1,606.42.

Analysts said investors ignored the positive lead from Wall Street to take profit in banks and offload technology stocks on concerns about continued dollar weakness, which hits exporters' competitiveness.

TAIPEI: Up 0.36 per cent. The weighted index rose 27.41 points to 7,714.56.

Tom Tang of Masterlink Investment said he expected the market to trade in the 7,500-7,800 range in the run-up to local elections on December 5.

BANGKOK: Down 2.06 per cent. The composite index lost 14.19 points to close at 676.22 and the blue-chip index dropped 10.24 points to 472.97.

JAKARTA: Down 0.38 per cent. The composite index lost 9.53 points to 2,471.88.

"Late buying by foreign funds lifted the main index from its low," a trader told Dow Jones Newswires.

Dealers said they expected shares will continue to consolidate today ahead of a long weekend.

MANILA: Up 0.87 per cent. The composite index added 26.66 points to 3,074.66, while the all-share index added 0.36 per cent or 6.93 points to 1,909.45.

The market was buoyed by gains on Wall Street and soaring gold prices, dealers said.

MUMBAI: Down 0.29 per cent. The 30-share Sensex lost 49.1 points to 17,131.08.

Weak regional markets pulled the Sensex down, but sporadic buying was seen in mid- and small-cap stocks.

Wall Street dips after GDP growth cut

2009-11-24T17:25:00.000-08:00

Wall Street dips after GDP growth cut

NEW YORK: US stocks drifted lower Tuesday after the government revised down economic growth in the third quarter and a new survey showed lackluster consumer confidence.

The Dow Jones Industrial Average shed 17.24 points (0.16 per cent) to 10,433.71, moving down from its highest close since October 2008.

The tech-heavy Nasdaq dipped 6.83 points (0.31 per cent) to 2,169.18 and the broad-market Standard & Poor’s 500 index lost a fractional 0.59 points (0.05 per cent) to 1,105.65.

Stocks declined from the opening bell as the market digested fresh government data showing gross domestic product (GDP) in the July-September period expanded 2.8 per cent, down from the initial estimate of 3.5 per cent.

But shares regained part of the losses after the Federal Reserve raised its outlook for US economic growth in 2010 to a range of 2.5 to 3.5 per cent, and said the troubles in unemployment appeared to be near a peak.

Although the United States economy expanded for the first time in the third quarter after a year of contraction, analysts said the government’s revised figure exposed weakeness in the world’s largest economy.

“The disappointment in the revision is that it shows the US economy, while growing, is still growing below its potential, which is not a positive consideration as far as prospective job growth is concerned,” said Briefing.com’s analyst Patrick O’Hare.

Analysts at Charles Schwab & Co cited personal consumption in the data, which was smaller than initially reported and “short of expectations.

They also said that inflation readings came in below forecasts which might have dampened some hopes that the Federal Reserve was close to beginning to tighten its monetary policy to stave off an overheating of the economy.

Separately, the Conference Board, a key research firm, said that US consumer confidence rose slightly in November after two months of declines but remained mired in the doldrums.

Asian growth should outperform the rest

2009-11-24T17:22:00.000-08:00

Asian growth should outperform the rest

Citi forecasts emerging Asia’s growth at 7.8% in 2010

PETALING JAYA: Led by China, Asia’s growth should continue to outperform globally despite a weak consumer outlook in the United States and Europe, according to Citi Investment Research and Analysis.

In its latest update, the research house said Asia’s recovery would continue to gain momentum in 2010 after having an earlier and sharper rebound than the rest of the world, aided by inventory-restocking, aggressive policy stimulus and strong final demand from China.

Citi forecasts emerging Asia’s growth in terms of gross domestic product (GDP) to improve from 5.1% in 2009 to 7.8% in 2010.

“China leads the pack but many other countries are expected to post more than 5% GDP growth such as the more domestic demand-driven economies like India, Indonesia and Vietnam, alongside sharp cyclical rebounds in the more export-oriented countries led by Singapore and South Korea,” the report said.

Manufacturing production and exports across Asia would be sustained as a result of inventory correction in the developed markets and resilient emerging market demand until at least the first half of 2010, Citi added. “There is still room for re-stocking in the United States and Europe to support Asia’s export and manufacturing sector,” the report said.

Policy stimulus would only be gradually unwound in the Asian region while interest rates were likely remain unchanged for most of 2010, Citi noted.

In terms of debt level, Citi said Asia’s fiscal trajectory next year would likely remain manageable with debt trajectory rising the most in South Korea and Malaysia by about 10% from the 2007 levels.

“While some withdrawal of budget stimulus would likely to be pursued in more fiscally-vulnerable countries like Malaysia, we believe China and South Korea are unlikely to meaningfully withdraw stimulus,” the report said.

On the monetary front, assuming headline inflation rises on average by 2% to 3% in 2010, Citi expects overnight policy rate hikes to range between 50 (Malaysia) and 125 basis points (India, Indonesia and South Korea).

Malaysia’s overnight policy rate is currently at 2% while the country’s inflation declined by 2.3% year-on-year in the third quarter largely due to the effect of the cumulative downward adjustment to retail fuel prices since the June 2008 price increase.

On foreign exchange, Citi expects currency appreciation in emerging Asia in the short and medium term.

“We expect the won, rupee and rupiah to lead the region’s currency appreciation in the short and medium term,” the report said.

The research house viewed that some of the currency strength would take place within three months as the US dollar would continue to weaken while risk appetite remained buoyant among investors.

TA Research economist Patricia Oh concurred that emerging economies would perform much better than developed economies.

“Even this year, despite the crisis, countries such as China and India did not see a slowdown in growth,” Oh said.

As for the Malaysian fiscal deficit, 7.4% this year was within expectations while it was projected at 5.6% next year due to reduced budget expenditure, according to Oh.

“The country’s fiscal deficit at this level is still manageable,” she noted.

MISC rights issue well received by market

2009-11-24T17:19:00.000-08:00

MISC rights issue well received by market
PETALING JAYA: Huge cash calls are usually brutal on the share price of the company involved, but MISC Bhd’s surprise move to raise as much as RM5.2bil by selling new shares at a steep discount was relatively well received by the market.

The stock barely wavered yesterday and even closed three sen higher, despite the shipper’s dismal second-quarter results and the proposed rights issue announced in separate statements on Monday.

“We were disappointed with the results, but are excited over the proposed rights issue as it suggests a potential acquisition,’’ said OSK Research analyst Ng Sem Guan, who attended an analysts’ briefing by MISC yesterday.

On Monday, MISC announced a plan to sell up to 744 million new shares at RM7 each to raise RM5.2bil. The rights shares will be offered to shareholders on the basis of one rights share for every five shares held at a later date to be announced.

Almost the entire amount was allocated for capital expenditure at home and abroad, and to “partially finance projects for floating production systems.’’

RHB Research Institute noted in a report yesterday that MISC had committed about RM2bil in recent years to its offshore facility business.

At RM7 apiece, the rights shares were at least 20% cheaper compared with MISC’s closing price of RM8.83 yesterday.

The company said on Monday the rights shares were priced at a 18% discount from the theoretical ex-right price of RM8.53 based on a five-day volume weighted average market price up to Nov 20.

Petroliam Nasional Bhd, which owns a 63% stake in MISC, has given its written undertaking to purchase its entire allotted portion, and to take up all shares not subscribed by other shareholders.

The Employees Provident Fund (EPF) has a 11.1% equity interest in MISC, while Permodalan Nasional Bhd – through its various unit trust schemes – has a 8.4% stake.

That brings the combined holding of the three cash-rich institutions in MISC to just over 82%.

The rights issue will bring down MISC’s net debt from RM8.8bil to RM3.6bil, which translates to a net gearing of 0.15 times.

“With a low net gearing, MISC could gear up to fund expansion or a merger and acquisition at other divisions, particularly the petroleum and chemical tanker segments as and when opportunities arise,’’ RHB Research Institute said.

MISC called off a RM3bil deal to take over shipyard owner Ramunia Holdings Bhd in November last year.

According to CIMB Research, five-year-old very large crude carriers are now fetching US$80mil each in the secondary market, a sharp reduction from US$160mil price tag seen in the middle of last year.

Together with the RM2bil cash holding and RM1bil from the proposed Islamic bond issuance, the rights “will give MISC more than US$2bil in cash to buy distressed vessel or companies,’’ it said.

MISC’s second quarter ended Sept 30 was hit by a sharper-than-expected decline in shipping rates and less cargo movement.

The group’s container division reported an operating loss of RM325mil, while its energy shipping division saw a 29% drop in profit. Its offshore and heavy engineering unit was the bright spot, reporting a 38% jump in earnings before interest and tax.

The group’s half-year net profit was RM315mil, and on an annualised basis, had missed analysts’ full year estimate by at least 50%.

http:///sitemap.xml

Lots of news for investors in shortened week

2009-11-24T01:52:00.000-08:00

Lots of news for investors in shortened week
NEW YORK - Investors are heading toward the final month of the year with more questions about the economy than they had just a few weeks ago.

The uncertainty, which follows some downbeat reports on housing and employment, will likely mean choppy trading, especially as volume dwindles during the holiday season.

In this week, which will be abbreviated due to Thanksgiving, investors will look to reports on home sales, unemployment and consumer confidence and the start of the holiday shopping season on Friday for more insight into the direction of the economy.

The government also will revise its early estimate of the gross domestic product that said the economy grew at an annual pace of 3.5 percent during the third quarter. Many analysts now expect a smaller increase in GDP because of recent reports on housing and retail sales.

If more reports signal a slow economic rebound, investors could continue selling stocks and buying safe-haven assets like the dollar and short-term Treasurys, as they did last week.

Stocks fell from 13-month highs during the latter half of last week on disappointing housing reports and worries about a slump in demand at technology companies. The Dow Jones industrials ended the week with a paltry 0.5 percent gain, while broader indexes finished with losses. And the three-month Treasury bill's yield briefly turned negative, which meant that investors were willing to in effect pay the government to park their cash in a safe place.

Investors have again become more cautious about risk after months of taking advantage of record low interest rates to borrow cheaply and pump money into stocks and commodities. Uneven reports showing small improvements in some industries like manufacturing but still weak numbers in areas like employment and housing, have investors worried that the recovery will be slow and subdued. Not wanting to risk losing the big gains they've amassed since March, investors are locking in profits and padding their portfolios with more safe havens.

"It's a two steps forward, one step back continuum here," said Matt Lloyd, chief investment strategist at Adivsors Asset Management. "The economy is recovering, but not in every area."

Still, the market's moves have been orderly, and analysts say that some consolidation is warranted, even healthy, after a 61.3 percent rise in the Standard & Poor's 500 index since early March.

"At some point, you've got to have that shift from enthusiasm over what was based on unquestionably good news, back to the recognition that this can't keep up indefinitely," said Jim Baird, partner and chief investment strategist at Plante Moran Financial Advisors.

Concerns over the direction of the dollar and when the Federal Reserve might raise interest rates could put more pressure on stocks through the end of the year. With anxiety about the economy running high, demand for the dollar may increase. A stronger dollar is bad for commodities producers and exporters because it makes their goods and services more expensive overseas. And U.S. companies that do business in foreign markets make less money when their earnings are translated from other currencies into dollars.

But the Fed has pledged to keep interest rates low for the foreseeable future to support the economy's recovery, which should keep a lid on the dollar for the time being.

Still, the dollar is sensitive to many outside forces. Last week, the dollar got a boost after European Central Bank President Jean-Claude Trichet said the ECB plans to start reining in some of its stimulus programs.

Which direction stocks and the dollar take next depends on what this week's reports have to say about the economy. Many analysts are expecting the data to continue to be mixed, which could lead to erratic trading.

"I wouldn't be surprised to see back and forth (trading)," Lloyd said. "When you have that much data, you usually bounce around."

The week will start with figures on September home sales from the National Association of Realtors. Also Monday, investors will likely keep a close watch on quarterly figures from computer and printer maker Hewlett-Packard Co. for any signs of improving demand after a disappointing outlook from Dell Inc. last week.

The following day, the Commerce Department will release its revised GDP figure. Investors will also get the Standard & Poor's/Case-Shiller index on home prices for September and the third quarter, as well as the Conference Board's reading on consumer confidence for November. Additionally, the Federal Reserve will issue the minutes from its most recent policy meeting.

Wednesday brings government reports on durable goods orders, personal income and spending and new home sales, as well as the Labor Department's weekly report on initial claims for jobless benefits.

And Friday marks the start of the holiday shopping season. The day after Thanksgiving, commonly known as Black Friday, is traditionally considered the day when a surge of shoppers pushes retailers into the black for the year.

While retail sales have shown some improvement, forecasts for this year's holiday season are conservative. Analysts expect intense competition among retailers as they struggle to attract shoppers who are still worried about losing their jobs and paying their bills.

http:///sitemap.xml

Stocks end with big gains, helped by home sales

2009-11-24T01:47:00.000-08:00

Stocks end with big gains, helped by home sales
Fed official: Central bank should keep program that holds interest rates low

NEW YORK - The stock market ended a three-day losing streak Monday, closing broadly higher as a weaker dollar and upbeat home sales numbers encouraged investors to take on more risk.

Major stock indexes soared more than 1 percent, including the Dow Jones industrials, which rose 133 points to a 13-month high. Volume was light as Thanksgiving approached, and that likely padded some of the market's advance.

Investors who fled to the safety of the dollar and Treasurys in recent days found plenty of reasons to return to stocks Monday. The day's developments pointed to two key trends, a recovering economy and interest rates that are expected to stay low The dollar resumed its long slide, sending prices for commodities including gold and oil higher and in turn, the stocks of companies that produce them.
The National Association of Realtors reported that October home sales rose more than 10 percent revived investors' optimism after disappointing data on the housing industry last week raised concerns about the strength of the economic recovery.
Charles Evans, head of the Federal Reserve Bank of Chicago, was quoted as saying he saw little risk that the economy would slide back into recession, although unemployment is unlikely to fall until next summer. And James Bullard, president of the Federal Reserve Bank in St. Louis, said the U.S. Fed should continue to buy mortgage-backed securities after the program is supposed to expire in March. That would continue to keep interest rates low.
Meanwhile, bond prices retreated as investors regained their appetite for risk.

Low interest rates and the resulting slide in the dollar have been big drivers behind the stock market's eight-month rally. Low interest rates allow investors to borrow cheaply and buy assets like stocks and commodities that have the potential to earn higher yields than cash.

Investors were buying Monday on somewhat contradictory forces. The strength in housing is a sign of an improving economy, which could argue in favor of raising rates, while the dollar's weakness points to rates remaining low. Analysts say investors who still have plenty of available cash are primed to buy, and so the market may also be rising on its own momentum.

Phil Orlando, chief equity market strategist at Federated Investors, said some investors will look for dips in the rally as a way to get into the market, not wanting to end the year without participating in some of the big gains stocks have made.

"Bearish managers are sweating bullets that they're not going to be able to get that cash in the market and they need to do that," he said. "That is why any pullback we've seen this year has been met with a wave of cash that has pushed stocks up higher."

At the same time, many portfolio managers have cooled their buying, not wanting to risk losing the big returns they've made since stocks began rallying in March. Those opposing forces are likely to result in choppy trading over the next few weeks, analysts said, which will be exacerbated by light volume as the holidays approach.

The Dow rose 132.79, or 1.3 percent, to 10,450.95, after losing 120 points over the previous three days. It was the Dow's highest close since Oct. 2, 2008.

The Standard & Poor's 500 index rose 14.86, or 1.4 percent, to 1,106.24, while the Nasdaq composite index rose 29.97, or 1.4 percent, to 2,176.01. The index is up 63.5 percent from a 12-year low in March.

Four stocks rose for every one that fell on the New York Stock Exchange, where volume came to a low 979.9 million shares, compared with 1.1 billion Friday.

The ICE Futures U.S. dollar index, a measure of the dollar against other major currencies, fell 0.7 percent. As the dollar fell, gold prices surged to a new high of $1,174 an ounce. Oil rose 9 cents to $77.56 a barrel on the New York Mercantile Exchange.

The spike in commodities lifted energy companies and materials producers. Chevron Corp. rose $1.97, or 2.6 percent, to $78.74. Weyerhaeuser Co. gained $1.25, or 3.3 percent, to $39.11.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.36 percent from 3.37 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.02 percent from 0.01 percent.

The yield on the three-month bill briefly turned negative last week as worries about the economy took hold and investors retreated to safe havens like the dollar and government debt as they sold stocks.

Investors wanting to lock in profits for the year are willing to earn little to park their cash somewhere safe.

"It's not a time for taking chances," said Quincy Krosby, market strategist at Prudential Financial.

The National Association of Realtors said home sales rose 10.1 percent in October to the highest level in two and a half years, spurred by a tax credit for first-time homebuyers. Analysts had been expecting a 1.4 percent increase in sales. The credit, due to end at the end of the month, has been extended into 2010.

"You could be completely cynical and say this market is moving up today because volume is low and the dollar is weak, but I would have to add that we're getting confirmation on the sustainability of the economic recovery by the actual fundamentals," Krosby said, referring to the housing report.

In other trading, the Russell 2000 index of smaller companies rose 10.13, or 1.7 percent, to 594.81.

Overseas, Britain's FTSE 100 rose 2 percent, Germany's DAX index soared 2.4 percent, and France's CAC-40 jumped 2.3 percent. Markets in Japan were closed for a holiday.

http:///sitemap.xml

the Japanese economy is "picking up"

2009-11-24T01:45:00.001-08:00

the Japanese economy is "picking up"

The Bank of Japan released its monthly report for recent economic and financial developments today. The bank raised its assessment for economic conditions saying that the economy is picking up due to stimulus measures taken in Japan and around the world.

The Bank of Japan kept interest rates unchanged at 0.1% and decided to end corporate debts purchases by the end of this year as it was scheduled, while the bank decided to extend the limitless lending program till March 31 accepting the low rated debts as a collateral till the end of next year.

The bank said that the stimulative effects from low borrowing costs have been limited given the low level of economic activity and corporate profits. As for credit conditions, the bank ensured that companies as a whole can see the improvements in credit conditions, despite many firms see financial institutions lending attitudes as "severe".

However, the pace of increase in bank lending has slowed, as some companies reduced the on hand liquidity they accumulated, in other words credit demand declined.

Economic conditions in Japan are improving and deteriorations in the business sector eased, that was why the decline in business fixed investment is coming to a halt, especially after cheerful corporate earnings we witnessed in the third quarter. The BOJ signaled private consumption is picking up especially consumption of durable goods.

Exports and production continued to show improvements supporting economic recovery, worth mentioning that industrial production in Japan rebounded 2.1% in September to record the seventh straight rise backed by increasing demand from Japan's main markets.

Moreover, the Japanese economy expected exports and production to continue improving reflecting the continuous improvements in overseas economic conditions.

Yearly consumer prices excluding fresh food declined due to low crude oil and raw materials prices, which is lower than last year's levels. The BOJ anticipated the drop in consumer prices to moderate as petroleum prices are recovering.

Finally, conditions in the world's second largest economy is getting better, despite recovery appear to be fragile. Japan economy expanded 1.2% in the third quarter from the previous three months, while it expanded an annual 4.8% following a revised expansion by 2.7%.

http:///sitemap.xml

Europe Ahead: Germany's GDP Unrevised as Imports and Exports Rise

2009-11-24T01:39:00.000-08:00

Europe Ahead: Germany's GDP Unrevised as Imports and Exports Rise
Germany, the biggest nation in the euro zone, continued to expand in the third quarter as a result of restocking inventories and more spending on machinery and equipment. Also, the expansion in the economy was led by higher exports and imports; while exports are the biggest factor that fuel economic growth.

Germany's GDP seasonally adjusted for the third quarter's final reading was unrevised at 0.7%, which was also inline with expectations; while non-seasonally adjusted stood contracting at -4.7%, steady with projections; meanwhile, working days adjusted contracted at -4.8% unchanged from the prior and predicted readings.

By taking GDP data into details; we see that re-stocking contributed 1.5% to GDP, while investments in factories and machinery added 0.1%. Companies are boosting production and stocking up, as exports are slowly rising, thus hinting that demand is improving despite of the fragile job market.

Also, coming out was imports for the third quarter final reading rising to 5.0% from the revised preceding reading of -5.4% from -5.1%, which is higher than the anticipated reading of 3.5%. As for exports, for the same time period they rose to 3.4% from the revised prior reading of -0.8% from -1.2%, yet lower than the forecasted reading of 4.1 percent.

The higher imports and exports were some of the main factors that helped boost growth levels and since exports are rising, they will have great impact on growth levels and are helping end the economic turmoil.

The improvements taking place in the economy were due to Chancellor Angela Merkal using 85 billion euros to jolt Germany out of its current recession and stimulate economic conditions, the stimulus plan also boost confidence levels in the economy.

Germany today is also going to release its IFO survey's regarding the business climate, current assessment and expectations in which all projections show will incline from the prior readings; therefore supporting the fact that the worst of the global recession is over.

Starting off; we see that IFO business climate for the month of November is expected to rise to 92.5 from 91.9. This is showing us that businesses are looking forward to conditions, since banks are have finally slowly started lending to businesses once again; therefore boosting their confidence in the overall outlook of the nation.

In addition, the IFO current assessment for November, where projections show that it will incline to 88.0 from prior 87.3. Although the reading is slowly rising, yet is further giving us evidence that the government interventions and the ECB actions into recovering economic growth are doing a difference in the economy.

Also, IFO expectations for the same time period, where anticipations show that will also climb to 97.3 from 96.8. Prsently, while looking carefully at this reading, we see that the expectations are to our favor while they are inclining, which means that surely the pace of economic deterioration is easing.

Although the outlook is bright; we can not forget that they are dealing with high unemployment rates, which mean that growth prospects will be undermined as Germans are euro-less; therefore it becomes harder for them to spend in the nation. The curtailed consumption is a major factor that is weighing on outlook, while projections by a German economist claim that production and growth will not return to normal levels or where there are major difference between how they used to be before recession until middle of 2012.

http:///sitemap.xml

Obama: US economy has 'core strengths'

2009-11-24T01:36:00.000-08:00

Obama: US economy has 'core strengths'
WASHINGTON (AP) -- President Barack Obama said Monday the nation's economy is in good shape for the long term thanks to "core strengths" such as its universities, its innovation and a dynamic workforce.

But he also noted again how 2009 has been a sobering year for millions of newly unemployed people.

"We cannot sit back and be satisfied given the extraordinarily high unemployment levels that we've seen," Obama said in wrapping up a pre-Thanksgiving session with his Cabinet as other senior aides packed the meeting room. "We have only taken the first step in curing our economy."

The unemployment rate stands at a 26-year high of 10.2 percent, overshadowing more upbeat indicators such as a return in growth of the overall economy.

Obama told reporters that his Cabinet discussion included matters of national security and the upcoming budget, but the emphasis was on job creation. He recapped both his administration's efforts to help stabilize the financial sector and the web of challenges that have slowed an overall recovery.

"Something that our economic team emphasized is that there are core strengths to the American economy that will put us in good stead over the long term," Obama said. He said the key is bridging that gap toward a more prosperous time and promised he won't let up "until businesses are investing again and businesses are hiring again."

Obama's line about the underlying "core strengths" of the economy offered echoes of a phrase he mocked during last year's presidential campaign. As the financial sector was collapsing in September 2008, Republican nominee John McCain assured Americans that "the fundamentals of our economy are strong," a statement Obama quickly used as evidence that the Arizona senator was out of touch. President George W. Bush had also been known for using that phrase.

Sitting between Secretary of State Hillary Rodham Clinton and Defense Secretary Robert Gates, Obama told his Cabinet to get some rest over the Thanksgiving holiday. But he said he also reminded his advisers that they have the chance to help millions of struggling people, and "we need to take advantage of that."

The president took no questions and did not respond to a reporter's query about the president's Afghanistan war review.

http:///sitemap.xml

Weak dollar, home sales data carry stocks higher

2009-11-24T01:28:00.000-08:00

Weak dollar, home sales data carry stocks higher
NEW YORK (AP) -- The stock market ended a three-day losing streak Monday, closing broadly higher as a weaker dollar and upbeat home sales numbers encouraged investors to take on more risk.

Major stock indexes soared more than 1 percent, including the Dow Jones industrials, which rose 133 points to a 13-month high. Volume was light as Thanksgiving approached, and that likely padded some of the market's advance.

Investors who fled to the safety of the dollar and Treasurys in recent days found plenty of reasons to return to stocks Monday. The day's developments pointed to two key trends, a recovering economy and interest rates that are expected to stay low:

- The dollar resumed its long slide, sending prices for commodities including gold and oil higher and in turn, the stocks of companies that produce them.

- The National Association of Realtors reported that October home sales rose more than 10 percent revived investors' optimism after disappointing data on the housing industry last week raised concerns about the strength of the economic recovery.

- Charles Evans, head of the Federal Reserve Bank of Chicago, was quoted as saying he saw little risk that the economy would slide back into recession, although unemployment is unlikely to fall until next summer. And James Bullard, president of the Federal Reserve Bank in St. Louis, said the U.S. Fed should continue to buy mortgage-backed securities after the program is supposed to expire in March. That would continue to keep interest rates low.

Meanwhile, bond prices retreated as investors regained their appetite for risk.

Low interest rates and the resulting slide in the dollar have been big drivers behind the stock market's eight-month rally. Low interest rates allow investors to borrow cheaply and buy assets like stocks and commodities that have the potential to earn higher yields than cash.

Investors were buying Monday on somewhat contradictory forces. The strength in housing is a sign of an improving economy, which could argue in favor of raising rates, while the dollar's weakness points to rates remaining low. Analysts say investors who still have plenty of available cash are primed to buy, and so the market may also be rising on its own momentum.

Phil Orlando, chief equity market strategist at Federated Investors, said some investors will look for dips in the rally as a way to get into the market, not wanting to end the year without participating in some of the big gains stocks have made.

"Bearish managers are sweating bullets that they're not going to be able to get that cash in the market and they need to do that," he said. "That is why any pullback we've seen this year has been met with a wave of cash that has pushed stocks up higher."

At the same time, many portfolio managers have cooled their buying, not wanting to risk losing the big returns they've made since stocks began rallying in March. Those opposing forces are likely to result in choppy trading over the next few weeks, analysts said, which will be exacerbated by light volume as the holidays approach.

The Dow rose 132.79, or 1.3 percent, to 10,450.95, after losing 120 points over the previous three days. It was the Dow's highest close since Oct. 2, 2008.

The Standard & Poor's 500 index rose 14.86, or 1.4 percent, to 1,106.24, while the Nasdaq composite index rose 29.97, or 1.4 percent, to 2,176.01. The index is up 63.5 percent from a 12-year low in March.

Four stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 3.9 billion shares, compared with 3.8 billion Friday.

The ICE Futures U.S. dollar index, a measure of the dollar against other major currencies, fell 0.7 percent. As the dollar fell, gold prices surged to a new high of $1,174 an ounce. Oil rose 9 cents to $77.56 a barrel on the New York Mercantile Exchange.

The spike in commodities lifted energy companies and materials producers. Chevron Corp. rose $1.97, or 2.6 percent, to $78.74. Weyerhaeuser Co. gained $1.25, or 3.3 percent, to $39.11.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.36 percent from 3.37 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.02 percent from 0.01 percent.

The yield on the three-month bill briefly turned negative last week as worries about the economy took hold and investors retreated to safe havens like the dollar and government debt as they sold stocks.

Investors wanting to lock in profits for the year are willing to earn little to park their cash somewhere safe.

"It's not a time for taking chances," said Quincy Krosby, market strategist at Prudential Financial.

The National Association of Realtors said home sales rose 10.1 percent in October to the highest level in two and a half years, spurred by a tax credit for first-time homebuyers. Analysts had been expecting a 1.4 percent increase in sales. The credit, due to end at the end of the month, has been extended into 2010.

"You could be completely cynical and say this market is moving up today because volume is low and the dollar is weak, but I would have to add that we're getting confirmation on the sustainability of the economic recovery by the actual fundamentals," Krosby said, referring to the housing report.

In other trading, the Russell 2000 index of smaller companies rose 10.13, or 1.7 percent, to 594.81.

http:///sitemap.xml

Strong banks, weak credit: Treasury rethinks TARP

2009-11-24T01:26:00.000-08:00

Strong banks, weak credit: Treasury rethinks TARP

WASHINGTON (AP) -- Big banks are roaring back. At crisis' edge last year, they are repaying billions of dollars dumped into their vaults to rescue them. Dividend checks are accumulating at the Treasury. Taxpayers won't recoup the full sum of the government's unprecedented infusion to the financial sector, but the returns are ahead of schedule.

With large bets on bonds, commodities and exotic financial products, big banks are reporting third-quarter profits.

Of the $250 billion that the government initially set aside to spend in direct assistance to banks, it has spent $205 billion and the Treasury is already taking steps to bring that program to an end. The ledger: Banks have paid back $71 billion of the infusions. They have also paid the Treasury nearly $7 billion in dividends.

If propping up much of the teetering financial markets was the goal of the government's $700 billion Wall Street rescue, then mission accomplished.

But there were other objectives for the Troubled Asset Relief Program, too: greater lending to consumers and businesses, mitigating foreclosures and helping banks shed toxic mortgage-backed assets.

On that, it's unfinished business.

A program announced with fanfare four weeks ago that would funnel money to small banks at low rates to increase small business lending is still being designed. Treasury officials are looking at plans that could cost taxpayers between $10 billion and $50 billion but are encountering reluctance from small banks.

"I'm told by banker associations and banks, 'Hey, this is good capital, we'd like to have it, but we don't want to be the only bank in town who takes your capital because the others will advertise against us,'" Herbert Allison Jr., the assistant Treasury secretary in charge of TARP, said in an interview. "There is a stigma and it's frustrating, frankly."

Meanwhile, TARP is set to expire Dec. 31. But with about $140 billion still uncommitted (even more, about $300 billion, unspent), the Obama administration is considering extending at least a portion of the huge fund until next October.

"We are winding it down and will close it as soon as we can," Treasury Secretary Timothy Geithner told a congressional committee. But he stiffly opposed any congressional effort to force the program to end. The struggle facing Treasury is how to continue TARP as insurance against further instability without having Congress use it as a source of new spending.

Officials are keeping a wary eye on smaller banks, which have been failing at the highest rate since 1992 due largely to losses from commercial real estate loans.

"The financial system is stable, but it is not normal and it could be derailed again, and you need to guard against that possibility," said economist Mark Zandi, head of Moody's Economy.com and a regular adviser to congressional Democrats.

Extending TARP as insurance for banks wouldn't be a popular move. Conservatives and liberals object to the direct assistance to big banks and insurance conglomerate American International Group. Republicans have called for the program to end and assigning the unused money to debt reduction. Some liberals want the money for jobs programs.

Overall, the bank infusions alone could end up costing taxpayers about $14 billion, according to estimates by Economy.com. While banks are paying money back, not all of them can be saved. Earlier this month, a San Francisco bank became the first bailed-out institution to fail. More could fall. And two weeks ago small business lender CIT Group, which received $2.3 billion in rescue funds, filed for bankruptcy protection with little hope of repaying taxpayers.

Add to that the money injected into the auto industry, AIG and a $50 billion mortgage assistance program, and Economy.com estimates taxpayers could be left with a bill totaling $155 billion.

For instance, General Motors announced it would pay back a $6.7 billion in U.S. government loans by 2011, four years ahead of schedule. But that still leaves more than $40 billion that the government lent to GM in exchange for a common equity stake. Moody's estimates taxpayers could recoup half of that.

The mortgage assistance program, off to a slow start, has now helped 650,000 homeowners with trial loan modifications, with average savings of $500 a month. The administration aims to help between 3 million and 4 million over three years, but that is $50 billion that won't get repaid directly to the Treasury.

The potential cost to taxpayers illustrates the dramatic change in TARP's purpose from the fall of 2008 when President George W. Bush proposed using the entire $700 billion to help banks get rid of toxic mortgage-backed assets. "We expect that much, if not all, of the tax dollars we invest will be paid back," Bush said on Sept. 24 of last year.

Administration critics say Geithner has not spelled out with clarity how the program will ultimately end.

"Suppose they didn't renew it; there would be shock," said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and an economic adviser to Republican John McCain's 2008 presidential campaign. "There is an implicit expectation that they'll do something. But there is not a nicely framed expectation of how they will exit."

If stabilizing the financial sector was TARP's main goal, increasing lending was the other.

Treasury Department figures released this month show that outstanding loan balances by TARP recipients in September, the latest available data, were 3.8 percent lower than they were in February when the economy was at its worst. Lending by the largest banks that received TARP money declined for the eighth straight month in September.

Analysts and Treasury officials attribute the decline to decreased demand from borrowers and continuing skittishness by banks in the face of economic weakness. "TARP giveth, but unemployment taketh away," said Scott Talbott, chief lobbyist for the Financial Services Roundtable, which represents large banking institutions.

Lending volume has declined less than it did during the 1991-92 recession, even though this downturn was deeper. But Allison said there is still a widespread perception that banks could be lending more.

"That's what the business community is telling us uniformly," he said.

Given that, the administration has a dual message for banks that are regenerating their capital.

"We want to see them using their capital for lending as much as they reasonably can," Allison said. "We want to see banks that took TARP capital, especially the larger banks, paying it back when they are able to."

http:///sitemap.xml

Oil slips to near $77 amid mixed demand signals

2009-11-24T01:21:00.000-08:00

Oil slips to near $77 amid mixed demand signals

SINGAPORE -Oil slipped to near $77 a barrel Tuesday in Asia amid mixed signs about the global economy and crude demand.

Benchmark crude for January delivery was down 11 cents to $77.45 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 9 cents to settle at $77.56 on Monday.

Investor optimism was buoyed by a report Monday from the National Association of Realtors that October home sales rose more than 10 percent, suggesting strength in the U.S. economy. But crude refiner Valero Energy said it shut down a plant last week because demand for oil products such as gasoline has been weak.

Crude has bounced between $76 a barrel and $82 for more than a month as a weakening dollar offsets concerns about tepid consumer demand. Oil often trades inversely to the strength of the dollar as investors buy commodities as a hedge against inflation.

Societe Generale said weakness in the dollar and expectations of higher inflation have provided for a floor for the oil price, limiting losses. "The ceiling has been set by weak refining margins, lackluster demand and a global economic recovery that is expected to be sluggish," it said in a report.

In other Nymex trading, heating oil fell 0.1 cent to $1.9789 a gallon. Gasoline for December delivery dropped 0.19 cent to $1.9813 a gallon. Natural gas for December delivery slid 3.3 cents to $4.44 per 1,000 cubic feet.

In London, Brent crude for January delivery rose 6 cents to $77.49 on the ICE Futures exchange.

http:///sitemap.xml

Asia markets lower amid China warning to banks

2009-11-24T01:14:00.000-08:00

Asia markets lower amid China warning to banks

BANGKOK (AP) -- Asian stock markets retreated Tuesday as China's warning to banks to control their lavish lending underlined the risks to an economic recovery driven by easy credit. European shares were lower.

Asia also got a poor cue from Japan, where stocks fell on pessimism about the strength of the world's No. 2 economy. Gold retreated from a record and oil prices slipped to near $77.

Investors shrugged off Wall Street ending a three-day losing streak Monday and figures showing that U.S. home sales rose 10 percent in October.

News that China's central bank was warning banks to control a lending spree underscored there are limits to the easy credit which has underpinned Asia's rapid recovery from the global recession.

"The central bank has been concerned about lending to the property sector," said Francis Lun, general manager of Fulbright Securities Ltd. in Hong Kong. "If they can put on the brakes to avoid an asset bubble it is likely to be better for the longer term," he said.

China's Shanghai index tumbled 115.14, or 3.5 percent, to 3,223.53 as investors fretted the central bank's warning - which comes ahead of the government's annual economic planning meeting - could foreshadow more measures to reduce liquidity. The index had been up 11.4 percent so far this month.

In Hong Kong, the Hang Seng index slid 348.25, or 1.5 percent, to 22,423.14 on weakness in Chinese financial stocks. Bank of China slumped 4 percent.

Japan's Nikkei 225 stock average dropped 96.10, or 1 percent, to a fresh four-month low of 9,401.58.

"Investors are becoming pessimistic about Japan's economy. They are frustrated and very disappointed the government has not been able to launch measures to spur the economy," said Masatoshi Sato, a market analyst at Mizuho Investors Securities Co. Ltd.

Besides doubts about the economy, sentiment was also hurt by a strong yen, which pressures Japanese exporters by eroding their overseas profits.

Among Japanese blue chips, Japan Airlines Corp. tumbled 8.4 percent to a record low amid worries over a possible bankruptcy. Toyota Motor Corp. - the world's No. 1 automaker - declined 1.7 percent.

Elsewhere, South Korea's Kospi dropped 0.8 percent to 1,606.42 and Australia's S&P/ASX 200 index declined 0.7 percent to 4,685 on losses in banks and miners. Markets in India, Singapore and Thailand also fell.

Major indexes in Britain, Germany and France were down 0.6 percent or more in early European trade.

In the U.S. on Monday, the Dow rose 132.79, or 1.3 percent, to 10,450.95, after losing 120 points over the previous three days. It was the Dow's highest close since Oct. 2, 2008. The Standard & Poor's 500 index rose 14.86, or 1.4 percent, to 1,106.24.

Stock futures pointed to losses Tuesday on Wall Street. Dow futures were off 27, or 0.3 percent, at 10,395.

Oil slipped to near $77 a barrel in Asia amid mixed signs about crude demand. Benchmark crude for January delivery was down 10 cents to $77.46 a barrel. The contract rose 9 cents to settle at $77.56 on Monday.

In currencies, the dollar fell to 88.62 yen from 88.97. The euro fell to $1.4918 from $1.4964.

http:///sitemap.xml

Economic recovery likely not quite that energetic

2009-11-24T01:06:00.000-08:00

Economic recovery likely not quite that energetic
WASHINGTON (AP) -- Remember the economy's return to growth last quarter? Well, it probably wasn't as energetic as first thought.

A government report due out Tuesday morning is expected to show that the economy expanded at a pace of 2.9 percent from July through September, according to Wall Street economists surveyed by Thomson Reuters. If they are right, it would mark a slower expansion than the 3.5 percent pace reported a month ago. Most of that rebound reflected federal support for spending on homes and cars.

The main forces behind the expected third-quarter downgrade: commercial construction was weaker, the nation's trade gap was more of a drag, businesses trimmed more of their stockpiles and consumers didn't spend as much.

So, the good news is the economy finally started to grow again, after a record four straight losing quarters. The bad news: The rebound, now and in the months ahead, probably will be lethargic.

Federal Reserve officials and other economists say growth won't be strong enough to quickly drive down the nation's unemployment rate. The nation's current 10.2 percent jobless rate marks only the second time in the post-World War II period that unemployment has topped 10 percent.

"It's a half-speed recovery," said Stuart Hoffman, chief economist at PNC Financial Services Group. "We're in the slow lane."

Some economists think growth will slow to around a 2.5 percent pace in the current quarter, although a few say it could clock in at about 3 percent if holiday sales come in better than expected.

Most say they think the economy will weaken again next year, with growth at a pace of around 1 percent as the impact of the $787 billion stimulus package fades and consumers keep tightening their belts under the strain of high unemployment and hard-to-get credit.

In the third quarter, the popular Cash for Clunkers rebates and an $8,000 tax credit for first-time homebuyers juiced up sales of cars and homes. The clunkers program is over now, but the tax credit has been extended and expanded beyond first-time buyers.

What's not clear is whether the recovery can continue after government supports are gone.

If consumers clam up, the economy could tip back into recession. President Barack Obama recently cautioned that the economy could suffer a "double dip" downturn.

Fed Chairman Ben Bernanke, however, says he doesn't think that will happen. But last week the Fed chief did warn the recovery faces "important headwinds," such as tight credit and a weak job market that will make consumers cautious in their spending.

Those factors "likely will prevent the expansion from being as robust as we would hope," Bernanke said.

The government takes three cracks at estimating economic activity for any given quarter. Each estimate is based on more complete data. Tuesday's will be the second reading of the third-quarter GDP data.

The return of economic growth puts the White House in a delicate position: The president wants to take credit for ending the recession, but unemployment is still causing pain and anxiety throughout the country.

Millions have yet to feel a benefit from the recovery in the form of a new job or even an easier time getting a simple loan. Even those with jobs are reluctant to go on a spending spree. The values of their homes and 401(k)s remain shrunken.

Some economists think the jobless rate could climb as high as 11 percent by the middle of next year before making a slow descent. It could take at least four years for the unemployment rate to drop back down to more normal levels.

"The best thing we can say about the labor market right now is that it may be getting worse more slowly," Bernanke said last week.

Against that backdrop, Obama said he's weighing tax breaks that could encourage businesses to hire again.

Unlike past rebounds that were driven by the spending of everyday Americans, this one appears to hinge on spending by businesses, foreigners and - until it runs out - the government.

In 1980, businesses led an economic recovery. It quickly fizzled, and the economy fell into a severe recession in 1981 and 1982. The unemployment rate climbed to 10.8 percent, the post-World War II high.

http:///sitemap.xml

Dow Breaks Losing Streak

2009-11-24T00:44:00.000-08:00

Dow Breaks Losing Streak

Investors bid blue chips to the highest level in 13 months Monday following strong housing data and comments from a Federal Reserve official favoring continued support of the credit markets.

The Dow Jones Industrial Average rose 132.79 points, or 1.3%, to snap a three-day losing streak and hit a 13-month closing high at 10450.95. The Nasdaq Composite Index and the S&P 500 rose 1.4% each, finishing just below their 2009 highs reached Nov. 17.

All the S&P's sectors rose, led by a 2.6% gain in the telecommunications category.

Volume was again light, but for those traders who stuck around, the so-called risk trade was back in vogue. That strategy, which involves putting cash earning little interest to work in the financial markets, fell out of favor late last week, fueling the stock market's three-day slide.

Traders said Monday's solid gains vindicated the idea that last week's retreat to safe havens was an anomaly. Many on Wall Street believe that sessions like Monday's will remain the norm heading into 2010, aided by the likelihood that interest rates in the U.S. are likely to remain near rock bottom.

"I think the Federal Reserve at this point is very aware of the risk of hiking rates too soon," which could choke off the nascent U.S. economic recovery, said Steve Auth, executive vice president at Federated Global Investment Management in New York. "We may not have spectacular [economic] growth ahead, but coming off of a tough time, you could get a couple years of decent growth," to support share prices and profits, he said.

The stock market drew early support on Monday from remarks by St. Louis Fed President James Bullard, who said Sunday in an interview with Dow Jones Newswires that the U.S. should continue buying mortgage-backed securities past the first quarter of 2010, when asset purchases are due to end.

Mr. Bullard's comments were in contrast to remarks from the European Central Bank last week and helped fuel the view that policy makers in the U.S. will lag their counterparts in other countries in raising interest rates and removing the massive liquidity pumped into markets since last year to stimulate growth. Reflecting that divergence in interest-rate expectations, the euro gained almost 1% from Friday, touching the psychologically significant $1.50 level.

The U.S. Dollar Index was down 0.7% Monday. Such declines have often tended to support stocks and commodities lately.

As commodity prices benefited from the dollar's slide, the Dow Jones-UBS Commodity Index was up 0.3%. Gold, which is especially sensitive to weakness in the U.S. currency, rose to a seventh straight record, $17.90 higher, up 1.6%, at $1,164.30 per ounce, up 5.3% over its seven-day winning streak on the New York Mercantile Exchange's Comex division.

Oil posted a narrow gain to snap a two-day skid. Crude futures were up eight cents to $77.55 a barrel.

"It's hard to fight the flood of liquidity that open on this market on any day when the dollar weakens," said Art Hogan, chief market analyst at Jefferies & Co. "We saw things go back the other way a little bit last week, but now those floodgates are back open again."

The market also got a boost Monday from data from the National Association of Realtors, which said home resales increased by 10.1% to a 6.10 million annual rate from 5.54 million in September. Economists surveyed by Dow Jones Newswires expected a 2.3% increase in sales during October.

Trading volume, which has been below-average through most of the month, was again light on Monday. Composite turnover in New York Stock Exchange-listed companies was 4 billion shares, well below the daily average around 5.7 billion for 2009.

Among stocks in focus, LDK Solar jumped 6.9% after the Chinese maker of solar wafers and modules posted a surprise profit for the third quarter, breaking a string of three consecutive quarterly losses.

Deere rose 2% after being upgraded to an "overweight" rating from "equal weight" by Morgan Stanley analysts.

Treasury prices were muted following well-bid auctions of 3-month and 6-month bills. But demand for two-year debt was weak. The benchmark 10-year note was up 4/32 to yield 3.356%.

http:///sitemap.xml

European Stocks to Open Lower

2009-11-24T00:41:00.000-08:00

European Stocks to Open Lower
LONDON -- European stocks were expected to open lower Tuesday, as traders look to take some cash off the table after Monday's strong gains while trying to gauge the outlook for the global economy.

"After a bumper start to the week, there's perhaps no surprise that the major European indexes are going to see a degree of profit taking in the short term, although there still seems to be upward momentum in the market, confounding the pessimists at least for the time being," said Ben Potter, research analyst at IG Markets.

Banking stocks are set to garner much of a the day's attention after Lloyds announced a discounted rights issue of £13.5 billion ($22.4 billion). It priced the shares at 37 pence each, a 60% discount from Monday's closing price.

On Wall Street Monday, the Dow Jones Industrial Average reached a new 2009 closing high as energy and telecommunications stocks led a broad rally. The Dow closed up 1.3% at 10450.95, snapping a three-day losing streak and reaching its highest close since Oct. 2, 2008. The S&P 500 climbed 1.4% to 1106.24.

Monday's rise came as investors' confidence in stocks was renewed by better-than-expected existing home sales data, and after St. Louis Fed President James Bullard said Sunday that the U.S. should continue buying mortgage-backed securities past the first quarter of 2010, when asset purchases are due to end.

Those factors pushed investors back toward the riskier areas of the market they fled late last week. They shifted their money away from the safety of the dollar and into commodities such as crude oil and gold, with gold reaching a new record closing high.

The positive close on Wall Street failed to lift Asian stock markets, which were mostly lower Tuesday as concerns about the economic outlook dragged shares down in Tokyo. Japan's Nikkei 225 was off 1.0%, having been shut for a holiday Monday, South Korea's Kospi Composite was down 0.7% and Hong Kong's Hang Seng Index was off 1.3%.

Reduced risk appetite helped the dollar, the yen and bond prices, while hitting gold and oil prices. The euro was recently trading at $1.4898, down from $1.4961 in New York late Monday. However, the dollar eased to ¥88.69 from ¥88.97.

Some traders believe the dollar's outlook remains bearish. "The fundamental picture for the U.S. dollar is still not strong. The Fed is unlikely to move on rates anytime soon and U.S government yields remain near record lows," said Danica Hampton, a strategist at the Bank of New Zealand.

She said that ahead of the U.S. Thanksgiving holiday Thursday, currency markets would be focused on the raft of upcoming U.S. data, including third-quarter gross domestic product, consumer confidence reports and the Federal Open Market Committee minutes.

In commodities, spot gold was trading at $1163.35 per troy ounce, down $4.10 from the New York close, after rising to a new high at $1173.50 Monday. But HSBC analyst James Steel said expectations the Fed would keep U.S. monetary policy loose for some time would support gold.

Nymex crude oil for January delivery was at $77.13 per barrel, down 43 cents from New York.

In the European bond markets, December bunds were up 0.22 at 122.67.

http:///sitemap.xml

XOX Com Confident Of One Million Subscribers By End 2010

2009-11-24T00:37:00.000-08:00

XOX Com Confident Of One Million Subscribers By End 2010

KUALA LUMPUR, Nov 24 (Bernama) -- New mobile operator XOX Com Sdn Bhd (XOX Com) is confident of reaching one million subscribers by the end of next year from the 100,000 currently, said its president, Ng Kok Heng.

"With our innovative packaging and marketing, XOX Com is confident of reaching this goal by the end of next year," he told reporters after launching the company's latest prepaid package called, XinXun mobile prepaid, here on Tuesday.

He also said that the introduction of postpaid and mobile internet services in two months time will further support XOX Com's efforts to achieve the subscriber target.

According to Ng, the services will be offered at a competitive rate.

XOX Com is the country's first mobile virtual network operator (MVNO) with the 010 prefix, leveraging on Celcom's extensive network to offer a spectrum of services ranging from the GSM, GPRS, 3G to 3.5G.

Ng said XOX Com is also planning to increase its dealer network to 10,000 nationwide by the middle of next year from the 7,500 currently to support the growing subscriber base.

On the new XinXun mobile prepaid service, he explained that it was innovated to be the first of its kind in Malaysia, with the 'Short Call Service' feature.

A XinXun mobile prepaid call is priced at eight sen for the first 15 seconds.

"We have priced it affordably as lots of people use less than 15 seconds to say a quick greeting to loved ones, or check on status updates," Ng said.

XinXun mobile prepaid which means 'new telco' in Chinese, has three call rates, namely classic, silver and gold.It offers a cheaper rate when the customer reloads for a higher sum.

"For example, if you reload RM20, the rates are 32 sen per minute. However, if you reload for RM50, the call rates are 15 sen per minute. The rate is similar to that for postpaid," Ng explained.

In addition, XOX Com is also offering the XinXun mobile prepaid subscribers 150 free SMS every month and special low rates to call and SMS to any 15 postpaid and prepaid family as well as friends.

"Having invested close to RM10 million to market, produce and brand the XinXun mobile prepaid, XOX Com is confident of receiving good response for it," Ng said.

http:///sitemap.xml

Malaysia Debt Ventures To Up Financing To RM5 Billion

2009-11-24T00:34:00.000-08:00

Malaysia Debt Ventures To Up Financing To RM5 Billion

KUALA LUMPUR, Nov 24 (Bernama) -- Malaysia Debt Ventures Bhd expects to approve over RM4.9 billion fund to locally-incorporated companies engaged in the information and communications technology (ICT), biotech and emerging technology sector by March next year.

Todate, Debt Ventures had approved RM4.1 billion to 348 locally- incorporated companies since its inception in 2002, said Managing Director and Chief Executive Officer Md Zubir Ansori Yahaya.

"Since May last year, we have disbursed RM286 million to 17 locally-incorporated biotech companies," he told reporters after an agreement signing with Holista Colltech Ltd here Tuesday.

Holista Colltech is a biotech and wellness company listed on the Australian Stock Exchange.

It was established following a merger of Colltech Ltd and Holista Biotech Sdn Bhd, a wholly-owned Malaysian BioNexus company in July this year.

Under the agreement, Debt Ventures will fund Holista Colltech's RM2 million food grade collagen project for further development and to commercialise its food grade ovine collagen in Malaysia.

The repayment for the financing was seven per cent interest for five years, Md Zubir said.

"We have sufficient funds to continue supporting the local biotech companies and hope players will take advantage of this opportunity," he said.

Holista Colltech Chief Executive Officer Datuk Dr Rajen M said the company was looking to generate RM9.5 million in revenue next year due to increased demand for the collagen product.

He said the company might require three to four years to break even.

"We will try to enter the global market and pursue joint ventures in China and India to tap the Middle East market," he added.

http:///sitemap.xml

AFB funded assets may reach RM1.5b The bank has large deals in the pipeline

2009-11-24T00:28:00.000-08:00

AFB funded assets may reach RM1.5b The bank has large deals in the pipeline

KUALA LUMPUR: Asian Finance Bank Bhd (AFB) foresees its funded assets growing to RM1.5bil by the end of its next financial year ending Dec 31 from RM1bil expected this year, supported by large deals in the pipeline.

Chief executive officer Datuk Mohamed Azahari Kamil said AFB was poised to chart further growth in its funded assets next year as it already achieved RM1bil in terms of approved and accepted applications to date.

“The bank also has deals of RM300mil to RM400mil in the pipeline involving Government-linked companies (GLCs) and public-listed companies (PLCs) for their expansion in the Middle East and South Korea.

Datuk Mohamed Azahari Kamil ... ‘Our focus is to bring the Malaysian GLCs and PLCs looking for investment opportunities in the Middle East market there and vice versa.’
“We also expect robust loan growth of between 20% and 30% next year,” he told a media briefing on AFB’s maiden profit for the three cumulative quarters ended Sept 30 yesterday.

Azahari said the demand for AFB’s products had been tremendous due to its expertise in the Middle East.

“Our focus is to bring the Malaysian GLCs and PLCs looking for investment opportunities in the Middle East market there and vice versa.

“We believe we will be able to assist these Malaysian companies due to our advisory (experience) and network in the Middle East,” he said.

In line with the positive prospects, AFB was also looking at a capital injection before year-end, Azahari said.

“Our shareholders have agreed in principle to the capital injection and the amount will be duly announced,” he said.

AFB has a current paid-up and authorised capital of RM355mil and RM1bil respectively.

AFB is also strengthening its physical foothold via establishing more representative offices and banking facilities in the region.

Azahari said AFB would upgrade its representative office to a banking facility in Indonesia by end of next year, establish a representative office in Brunei and a new branch in Kuching.

This is to take advantage of the development of Islamic capital market and financial structures.

“Indonesia is a market that we plan to penetrate aggressively as it is home to about 200 million Muslims,” he said.

In South Korea, AFB together with parent company Qatar Islamic Bank and QInvest, a global investment Islamic bank, were working with a local investment bank to develop a sukuk product there.

“We hope to clinch a deal in South Korea in the first quarter of next year,” he said.

AFB recorded a pre-tax profit of RM4.41mil in the nine months ended Sept 30 against a loss of RM10.92mil in the previous corresponding period.

Azahari attributed the significant turnaround in the performance to a 232% year-on-year surge in its financing assets to RM614.5mil for the period under review compared with RM185.1mil a year ago.

“The bank’s total funded income also grew 171% to RM19.77mil for the nine months against RM7.29mil before.

“Our non-performing financing ratio stood at 0% as at Sept 30,” he said, adding that the AFB expected a full year profit of RM8mil to RM10mil this year.

http:///sitemap.xml

Islamic deposit insurance to create level playing field among banks

2009-11-24T00:25:00.000-08:00

Islamic deposit insurance to create level playing field among banks

KUALA LUMPUR: The role of Islamic deposit insurance is to create a level playing field between Islamic and conventional banks apart from maintaining a foundation for public confidence to the banks, says Malaysia Deposit Insurance Corp (MDIC) chief executive officer Jean Pierre Sabourin.

“Apart from that, the role of Islamic deposit insurance is to reinforce the consumer protection aspects that are inherent in Islam,” he said at the 3rd Islamic Financial Services Board (IFSB) Public Lecture on Financial Policy and Stability yesterday.

In his lecture on the Role of Islamic Deposit Insurance in Providing Stability to the Islamic Financial System, Sabourin said the Islamic deposit insurance system in Malaysia, established in September 2005, was to provide equivalent protection for insurable Islamic deposits.

“Endorsed by the Syariah Advisory Council of Bank Negara and administered by MDIC, fund reserves under Islamic deposit insurance is invested only in syariah-compliant instruments and syariah-compliant activities,” he said.

Earlier, the Council of IFSB admitted eight new organisations into its membership after being approved at its 15th meeting. IFSB is an international standard-setting organisation to promote and enhance the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry.

The council also appointed governor of the Central Bank of Sudan Dr Sabir Mohamed Hassan and governor of the Central Bank of Jordan Dr Umayya Toukan as chairman and deputy chairman of the council respectively for 2010.

The meeting was chaired by the governor of the Saudi Arabian Monetary Agency and attended by the president of Islamic Development Bank, central bank governors and representatives of the IFSB 21-member council.

Bank Negara hosted both the council meeting and the subsequent IFSB public lecture.

http:///sitemap.xml

Biggest cribs recall in US history

2009-11-24T00:21:00.002-08:00

Biggest cribs recall in US history

WASHINGTON: More than 2.1 million drop-side cribs by Stork Craft Manufacturing are being recalled, the biggest crib recall in U.S history, following reports of four infant suffocations.

The Consumer Product Safety Commission said late Monday the recall involves 1.2 million cribs in the United States and almost 1 million in Canada, where Stork Craft is based.

Sales of the cribs being recalled go back to 1993.

Nearly 150,000 of the cribs carry the Fisher-Price logo.

The CPSC said it is aware of four infants who suffocated in the drop-side cribs, which have a side that moves up and down to allow parents to lift children from the cribs more easily.

The agency also said there have been 110 incidents of drop-sides detaching from the cribs.

The Stork Craft cribs have had problems with their hardware, which can break, deform or become missing after years.

CPSC said there can also be problems with assembly mistakes by the crib owner.

These problems can cause the drop-side to detach, creating a dangerous space between the drop-side and the crib mattress, where a child can become trapped.

The commission is urging parents to stop using the cribs until receiving a free repair kit from Stork Craft.

The kit will convert the drop-side into a fixed side.

The cribs, which were manufactured and distributed between January 1993 and October 2009, were sold at major retailers including BJ's Wholesale Club, Sears and Wal-Mart stores and online through Target and Costco.

They sold for between US$100 and $400, and were made in Canada, China and Indonesia. Calls to Stork Craft were not immediately returned.

This is the second big recall this year for the company.

It recalled about 500,000 cribs in January because of problems with the metal brackets that support the mattress.

Some of the same models in the earlier recall were also part of Monday's announcement, CPSC said.

Consumer advocates have complained for years about drop-side cribs.

More than 5 million of them have been recalled over the past two years alone - recalls that were associated with the deaths of a dozen young children.

ASTM International, an organization that sets voluntary industry safety standards for everything from toys to the steel used in commercial buildings, approved a new standard last week that requires four immovable, or fixed, sides for full-size cribs - essentially eliminating the manufacture of drop-side cribs.

CPSC is also considering new rules for making cribs safer and could adopt the ASTM voluntary standard as a mandatory one, outright banning the cribs.

Nancy Cowles, executive director of Chicago-based Kids In Danger, said the agency must include more rigorous testing for crib durability. "Parents should be able to trust that their child is safe in their crib," said Cowles.

Toys"R"Us started phasing out drop-side cribs earlier this year and will no longer carry them next month.

In the Stork Craft recall, the manufacture date, model number, crib name, country of origin, and the firm's name, address and contact information are located on the assembly instruction sheet attached to the mattress support board.

The firm's insignia "storkcraft baby" or "storkling" is inscribed on the drop-side teething rail of some cribs.

http:///sitemap.xml

Tell the Malaysian story to global investors, says Najib

2009-11-24T00:21:00.001-08:00

Tell the Malaysian story to global investors, says Najib

NEW YORK: Datuk Seri Najib Tun Razak said Malaysia's message of reforms and transformation needs to be told to foreign investors consistently or risk being overshadowed by countries like China and other emerging economies.

The Malaysian Prime Minister also said Malaysia may need to introduce further measures to make its capital market more attractive to foreign fund managers if it does not want to be marginalised by them.

Following a series of meetings with American fund managers and investors as well as corporate figures here on Monday, Najib said: "I think they like the Malaysian story, but they want us to continue our reform measures because they say that the outcome is very important."

Speaking to the Malaysian media covering his visit to New York, he said they were also receptive to the proposed re-listing of Maxis Bhd.

"They were saying that it's a move in the right direction as this will give them a bigger opportunity to invest in bigger companies as some of them are managing funds worth trillions of dollars," he said.

Elaborating further, the Prime Minister said American financiers and investors had pointed out the lack of suitable companies for them to invest in Malaysia.

"They would like to see more Malaysian companies with big market capitalisation. They're not keen on small companies. So, size in terms of market capitalisation is important for them. They want to see more companies like Maxis Bhd," said Najib.

He also said the investors indicated that prospective Malaysian companies should also adhere to the principles of good governance.

"In addition, they would like entities like Employees Provident Fund, Khazanah Nasional Bhd and Permodalan Nasional Bhd to reduce slightly their holdings in companies so that shares are available on the open market," he said

Najib said he would raise all suggestions and feedback gathered in New York with the National Economic Advisory Council for further discussions and decision.

"We need to study all the suggestions, including the implications of listing certain companies," said Najib who is visiting the United States for the first time as Prime Minister.

Najib said the government would need to read the signals coming out of New York correctly and act accordingly in order to make the Malaysian capital market more attractive.

"Malaysia is no longer the darling of the world's capital markets. So, we have to make Malaysia more exciting by engaging them and asking them what else do we need to do. And, we'll decide whether those things are doable," he said.

To a question, the Prime Minister said the government would do more to attract foreign direct investments (FDIs), including from the United States.

"I'm not happy because overall FDIs has gone down. We need to do whatever we can to resuscitate FDIs and domestic investment as well," he said.

Earlier, Najib held talks with Genting Chairman Tan Sri Lim Kok Thay, Chelsea Property Group Chief Executive Officer John Klein, CIMB Chief Executive Officer Datuk Seri Nazir Tun Razak and Forbes Inc President, Steve Forbes.

The Prime Minister disclosed that the factory outlet centre in Iskandar Malaysia, a collaboration between Genting and the Chelsea Property Group, would be ready by mid-2011, with construction scheduled to begin in the first quarter of next year.

It aims to attract four million visitors a year.

"I'm happy that the outlet is to be sited in Malaysia. Besides promoting tourism, Malaysian small-and-medium industries will have the opportunity to get involved," he said, adding that local products like batik would likely be featured alongside international brands.

Najib also said he has been invited to attend a nuclear security summit in the United States April next year and to deliver a lecture at the Harvard Business School.

On his meeting with the publisher of Forbes magazine, the Prime Minister said Forbes proposed that Malaysia host the Forbes Global CEO Conference in 2011.

"I've decided in principle that we can accept the invitation for Malaysia to host the conference again," he said, adding that Forbes was happy with the one hosted by Malaysia in September.

The 2010 edition will be held in Australia. Najib and his wife Datin Seri Rosmah Mansor later left New York for Washington, enroute to Trinidad and Tobago, for the Commonwealth Heads of Government Meeting. - Bernama

http:///sitemap.xml

Liquidity management infrastructure needed for Islamic finance

2009-11-23T23:23:00.000-08:00

Liquidity management infrastructure needed for Islamic finance

KUALA LUMPUR: The ability of Islamic financial institutions to manage liquidity needs to be addressed urgently, says Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz.

She said the recent financial turmoil in advanced economies has clearly demonstrated the consequences of liquidity constraints and underscored the importance of a strong and well-developed liquidity management infrastructure.

In order to facilitate effective cross-border management of liquidity, Zeti said it required the development of shariah-compliant financial instruments and a well-developed international market infrastructure.

Thus, she said the Islamic Financial Services Board (IFSB), in collaboration with the Islamic Development Bank (IDB), established a liquidity management task force, early this year, to develop a liquidity management framework.

"We hope to have the framework in place sometime in 2010," she said at a Bank Negara conference on financial stability here Tuesday.

Zeti said it was also important that the regulatory and supervisory framework be strengthened.

Apart from the implementation of these prudential standards, she added that there was also a need to ensure the supervisory and legal infrastructure remained relevant to the rapidly changing Islamic finance landscape.

"In Malaysia, these efforts are also supported by a comprehensive financial safety net that includes a deposit insurance scheme which protects depositors.

"It also prompts effective resolution of the financial system to facilitate re-capitalisation of Islamic financial institutions as well as institute programmes to remove troubled assets from the books of financial institutions," she explained.

Malaysia, she said, has an efficient functioning Islamic money market which has accorded greater monetary flexibility in the Islamic financial system.

"While, the market is traded in the domestic currency, it has drawn wider participation from the international financial community," Zeti added.

The Governor said the Islamic banking system today has emerged as a vibrant financial system in Malaysia with Islamic banking assets accounting for 18.8 per cent of the total banking assets.

"As Islamic finance continues to become an integral part of the global financial system, there is scope for the current framework of cooperation to be strengthened and broadened to address the new challenges that have emerged," she added. - Bernama

http:///sitemap.xml

Lukewarm debut for TA Global

2009-11-23T18:55:00.000-08:00

Lukewarm debut for TA Global

Property firm opens at par before shedding 5% at the close

KUALA LUMPUR: TA Global Bhd made its debut on the Bursa Malaysia main market yesterday, the same day its holding company TA Enterprise Bhd was listed 19 years ago on the main board, closing at 47.5 sen, down 5% from its offer price of 50 sen.

The second most active counter for the day traded at a high of 51 sen and low of 47 sen. Some 387 million shares changed hands.

TA Enterprise managing director and chief executive officer Datin Alicia Tiah said the 50 sen opening price was “within expectations”.

“Some analysts say that TA Global is worth much more. I would say that a lot of shareholders are getting TA Global shares for free from their holding of TA Enterprise shares. I would say weak holders are the ones selling now,” she told a press conference.

TA Global executive director Datuk Mohamed Abid (left), Datin Alicia Tiah and executive chairman Datuk Tony Tiah (right) at the listing ceremony on Monday.

The company’s initial public offering (IPO) of 460 million 50 sen shares comprised an offer for sale of 90 million shares allocated to the bumiputra public, 360 million shares for approved bumiputra institutions and investors and 10 million shares to eligible directors and employees of TA Global group and TA Enterprise group.

TA Enterprise shareholders received three TA Global shares and three preferred shares for every five TA Enterprise shares held. The preferred shares are valid for five years and are convertible from year three onwards. After the listing, TA Enterprise will have a 57.3% stake in TA Global.

TA Global is the property division of the TA Group with its primary businesses of hotel operations, property management, investment and development.

Tiah said what was important was what investors thought of the company’s potential.

“Right now we don’t have many development projects. Next year, we will be launching Seri Suria, U-Thant and hopefully Dutamas,” she said adding that these projects were scheduled to be launched earliest by the second quarter.

She said the company was actively looking to partner local and foreign landowners for projects.

“Our two main targets will be Canada and Australia because TA already has a presence there,” she said. The Avaa Whistler Hotel in Canada was scheduled to open on Nov 26 and be “in full swing by the Winter Olympics in January 2010”.

“We are looking to do more things there because we have enough local knowledge to be a success. Australia is another country we are interested to explore further other than just having a hotel as a passive investment. We are actively looking to see if we can do something more than hospitality,” she said.

In Australia, TA Global owns the Radisson Plaza Hotel in Sydney and Westin Melbourne. It also owns Terasen Centre in Vancouver, Canada.

On whether the company had plans to acquire more hotels, Tiah said : “If all things go well, we will be making an announcement at the end of the year. We are still negotiating the terms.”

http:///sitemap.xml

Proton’s profit up from higher sales and bigger mart share

2009-11-23T18:44:00.000-08:00

Proton’s profit up from higher sales and bigger mart share

SHAH ALAM: Proton Holdings Bhd reported a higher profit and revenue during its second quarter as the company sold more cars and enjoyed cost savings from the consolidation of its sales and vendor network.

The national car maker, which saw its market share rise to 29% from 26% a year ago, is seeking to ratchet up export sales as it engineers a new cost efficiency programme that aims to bring in an additional half billion ringgit.

“The consolidation effort has given us significant improvement,’’ said managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir when announcing the group’s results yesterday.

For its second quarter ended Sept 30, Proton posted a net profit of RM82.1mil, or 14.9 sen a share, compared with RM43.8mil, or 8 sen a share, in the previous corresponding period.

Datuk Syed Zainal Abidin Syed Mohamed Tahir announcing the group’s second quarter results on Monday. Beside him is CFO Azhar Othman and behind them the Proton logo

Revenue rose 14% to RM2.1bil from RM1.85bil as the company’s sales bucked the industry-wide trend by showing a strong increase.

“Proton has beaten the consensus by a mile,’’ said AmResearch Sdn Bhd analyst Hafriz Hezri.

Hafriz attributed the strong performance to a favourable model mix where larger numbers of the higher margin Exora were sold and also cost gains from the consolidation of the vendor and dealer network.

“Improvement on our operating profit was largely due to the increase in domestic sales volume and profit margins which continued to strengthen through a better product mix,” said chairman Datuk Mohd Nadzmi Salleh in a statement.

“Our domestic sales volume grew by 11% compared with the immediate preceding quarter and this was primarily driven by the increase in sales of our top three models – the Persona, Saga and Exora.’’

The best selling models account for 86% of total sales and demand for the Saga has exceeded initial expectations with the company having to ramp up production to meet the 7,500 bookings a month.

Proton will be exporting the Saga to Australia and Egypt

Apart from better domestic sales, ongoing efforts to cut cost – the latest through the rationalisation of its dealer and vendor network – has borne fruit.

Syed Zainal in the briefing said the cost per unit was down, along with administration and manufacturing charges.

To help cut cost further, Syed Zainal said consultants had been hired to look at the entire process and systems of the company.

Proton is going to spend RM150mil on new systems and information technology infrastructure but aims to reap conservatively RM530mil in EBITDA (earnings before interest, tax, depreciation and amortisation) savings by its 2012/13 financial year.

Proton is also expecting a revenue and profit bump from its partner in China Youngman as the latter starts with its CKD programme.

“As we move forward, volume from China will be more significant,’’ Syed Zainal said.

Apart from expecting gains from the China market, Proton is also seeking export growth from other markets in the Middle East and in the future, India.

“As for export, next month we will be launching the Exora in Thailand, as well as the Saga in Australia and Egypt. Notwithstanding the challenges, the group believes that sales volume prospects will be resilient,’’ said Syed Zainal.

In the pipeline is a global car, where styling and design, along with key components, are done outside of Proton.

Proton is already exploring green technology and aims to launch a fleet programme with the Government where between 50 and 100 of its electric cars would be used by the civil service.

Proton is also looking to develop a new powertrain.

“We will continue to focus on enhancing our returns by investing in the development of new value-for-money products, expansion into key selected markets and the execution of operational efficiency initiatives such as the rationalisation of dealers and suppliers, improvements in quality and capacity optimisation,’’ Syed Zainal said.

http:///sitemap.xml

Perodua MD New Alza will be top-selling MPV

2009-11-23T18:37:00.000-08:00

Perodua MD: New Alza will be top-selling MPV

Alza launched

KUALA LUMPUR: Perusahaan Otomobil Kedua Sdn Bhd (Perodua) is confident its newly launched Perodua Alza will be the top-selling multi-purpose vehicle (MPV) in 2010.

Managing director Datuk Syed Abdull Hafiz Syed Abu Bakar said Perodua was targeting to sell between 3,500 and 4,000 units of the model per month, adding that it had already received 3,500 bookings for the Alza since Nov 13.

Deputy Prime Minister Tan Sri Muhyiddin Yassin viewing the Perodua MPV Alza by accompanied by Perodua chairman Tan Sri Asmat Kamaludin(left), MD Datuk Syed Hafiz(right) and PMSB MD Osamu Oaki((2nd right) during the official launch of the MPV at the KL Convention Centre

“Based on our target of 4,000 units a month, it should be the highest (selling MPV),” he told a press conference before the launch of Alza yesterday.

Hafiz said he expected the local MPV segment to grow to 30% of total industry volume in 2010 compared with 10%–11% currently.

He said the Alza was targeted at young families and urban singles, adding that the bulk of the pre-launch orders were for the automatic variants.

The Alza is available in standard, premium and advanced variants. All variants are available in both manual and automatic transmissions.

With a starting price of RM56,000, the Alza (which means “to rise” in Spanish) is the cheapest MPV in the market. The vehicle maker will in March launch the advanced variants, priced at between RM67,000 and RM70,000.

Asked about the potential impact of Proton Holdings Bhd’s newly launched Exora Basic variant, which has a starting price of RM57,548, Hafiz said: “I don’t think it would affect us significantly.”

“We did a survey and found that 30% of the respondents would purchase an MPV if it was affordable,” Hafiz said.

As of October 2009, Perodua had sold 138,000 vehicles compared with 142,000 units a year earlier. It currently commands a 31.1% market share of TIV.

Hafiz said the Alza would boost its market share to 31.5% of an estimated TIV of 520,000 units by the year-end. Perodua expected its market share to reach 33.3% next year when the TIV was projected to hit 530,000, he added.

Currently, Myvi and Viva account for 55% and 41% respectively of Perodua’s sales. Hafiz said the vehicle maker was on track to achieving RM7bil sales this year.

For 2010, Hafiz said the Alza would contribute 28% to total sales, with Myvi and Viva contributing 40% and 32% respectively.

http:///sitemap.xml

Positive GDP seen for Q4

2009-11-23T18:33:00.000-08:00

Positive GDP seen for Q4

Government measures to boost demand continue to take effect

PETALING JAYA: Malaysia’s economy should show positive year-on-year growth in the fourth-quarter following two consecutive quarters of quarter-on-quarter growth as measures undertaken by the Government to boost domestic demand continue to take effect.

Collectively, a total of RM67bil in spending, tax cuts and other measures were announced last November and this March by the Government as exports collapsed in the wake of the global economic recession.

Economists expect gross domestic product (GDP) to turn positive in the final quarter of the year even as exports continue to feel the effects of sluggish demand mainly from the US, Japan and the European Union.

Exports for September showed a drop of 1.1% to RM47.2bil from a month earlier while on a year-on-year basis, it contracted by 24.2%.

GDP, according to Government statistics, contracted by 1.2% in the third quarter and 3.9% in the second quarter on a year-on-year basis while on a quarter-on-quarter basis, the economy saw growth in the second quarter of 4.8% and 5.7% in the third quarter.

Maybank Investment Bank Bhd chief economist Suhaimi Ilias told StarBiz leading indicators such as the purchasing managers’ indices (PMIs) of the larger economies had shown sequential growth since August and recent data showed growth trends would continue.

“Even if growth moderates this quarter compared with the third quarter, we expect there to be a 2.2% growth compared with a year ago based on the positive trends from around the world,” he said.

The euro-zone’s PMI for manufacturing and services rose to 53.7 in November from 53 in October according to data released by Markit Economics yesterday. Any reading above 50 is considered an expansion. This was the 16-member euro-zone’s fourth month of expansion.

The Institute for Supply Management’s US manufacturing index expanded to 55.7 in October, the third consecutive month of expansion while China’s PMI for manufacturing expanded to 55.4 last month according to HSBC Holdings plc.

TA Securities Holdings Bhd economist Patricia Oh said of immediate concern for the economy was for domestic demand to be sustainable.

“Any drop in growth will not come due to lower exports as the trade balance is still in surplus, it may come from private consumption as prior to the economic recession, there was an 8% to 10% growth,” she added.

Private consumption grew 1.5% in the third quarter from 0.5% in the second quarter while it contracted 0.7% in the first quarter.

Oh said the services and construction sectors would support growth in GDP for the final quarter.

http:///sitemap.xml

PLUS’ traffic increases, higher dividends expected

2009-11-23T18:23:00.000-08:00

PLUS’ traffic increases, higher dividends expected
By DANNY YAP

PETALING JAYA: Analysts are upbeat on PLUS Expressways Bhd in view of a potentially higher dividend based on overall traffic volume improvement for the nine months ended Sept 30.

An analyst with HwangDBS Vickers Research said PLUS registered strong traffic volume. “For the first nine months, net profit grew 11% year-on-year to RM871mil, slightly above our estimate and consensus estimates,” he said.

The analyst said revenue grew 7% year-on-year to RM2.3bil driven by an estimated 7.8% robust traffic volume growth in the nine months at PLUS (North-South Expressway, New Klang Valley Expressway, Federal Highway Route 2, Seremban-Port Dickson Highway), North-South Expressway Central Link, Malaysia-Singapore Second Crossing and Butterworth-Kulim Expressway.

He said traffic volume growth had clearly decoupled from gross domestic product growth, and was partially aided by a lower base in 2008 (fuel price hike) and timing of Hari Raya holidays which fell in September this year, as opposed to October last year.

“We anticipate the company to potentially deliver higher dividends as a result of a mild upside surprise in its third quarter result which has prompted us to raise financial year ending Dec 31, 2009 (FY09) to FY11 forecast and earnings per share,” said the analyst.

PLUS has said it would for FY09 maintain if not exceed the 16 sen dividend it paid out last year. For the second quarter ended June 30, it declared an interim dividend of 6.5 sen.

The analyst also said PLUS was expected to exceed some of its 2009 key performance indicators (KPIs).

“With the commencement of its Bhiwandhi-Kalyan Shil Phata highway in India on Aug 22, PLUS’ lane-km growth for 2009 is now 28.1% (versus target of 30%),” he said, adding that the 7% revenue growth also exceeded KPI growth of 5%.

The brokerage had a “buy” call on the stock and a target price of RM4.

An analyst with Kenanga Research shared similar optimism on PLUS. He said PLUS’ traffic growth was ahead of the broking house’s expectations.

“The North-South Expressway traffic jumped significantly by 26% (year-on-year) due to lower base effect as last year’s Hari Raya was in the fourth quarter. There was also an increase in local travel over fear of catching the A (H1N1) virus from overseas travel,” said the analyst.

“The Hari Raya festive season (likely) helped improve the third quarter traffic volume by 3% and net profit improved from RM241.7mil to RM311mil due to marginal cost savings (1.4%) from the refinancing of PLUS’ Islamic bond,” he said.

The analyst said the company’s newly started highway in India saw some traffic diversion which could potentially halve the traffic growth projection.

“The management has requested for compensation (non-cash) on top of an earlier compensation for the delays in land acquisition, construction cost overrun and the construction of pedestrian bridge.

“When in full operation, the India venture is expected to contribute RM25mil to RM30mil a year to the company’s revenue,” he noted.

The brokerage has maintained a “buy” recommendation with a target price of RM4.05 (previously RM3.81) as it had rolled over its forecast to FY10 and revised upwards traffic growth assumptions for FY09.

“Our traffic growth assumption is revised to 5% (for FY09) from 3% previously. The management is committed to a minimum of 16 sen dividend for FY09 as stated in its KPIs,” he said.

http:///sitemap.xml

Research houses optimistic on local stock market

2009-11-23T18:03:00.000-08:00

Research houses optimistic on local stock market
By IZWAN IDRIS

PETALING JAYA: The current corporate earnings season so far has yielded more upgrades than downgrades from analysts, and Bank Negara confirmed last week that the country is well on its way out of recession by the year-end.

Put together, this can be a potent concoction to drive up investors’ interest in the stock market.

However, except for a one-day spurt of high volume that accompanied Maxis Bhd’s massive re-listing on Nov 19, market activity in these past weeks can be described as sluggish at best.

It looks as though investors are holding back after pushing the FTSE Bursa Malaysia KL Composite Index (FBM KLCI) 45% higher year-to-date.

If the FBM KLCI ends the year at this level, it would be the index’s biggest annual rise since 1993. The FBM KLCI closed at an 18-month high of 1,280 points on Nov 17.

The index ended at 1,270.88 points yesterday, starting the week down 3.48 points, on total volume of 808 million shares worth RM880mil. It has remained within a tight 20-point range over the past two weeks.

HwangDBS Vickers Research said yesterday the market would probably continue to move sideways in the coming days, taking more strides forward and fewer steps backward.

“Any market pullback will probably be shallow and short, as has been the case since March this year,’’ it said in a report.

The firm remained optimistic the FBM KLCI would continue to plot “higher highs and higher lows” in the coming weeks.

This week will be another busy one on the earnings calendar, with big planters Sime Darby Bhd and IOI Corp Bhd, along with Malaysian Airline System Bhd and MISC Bhd, expected to release their latest quarterly results before the month-end deadline.

So far, OSK Research said in a recent report, the firm’s earnings upgrade/downgrade ratio for companies under its coverage stood at three ups for every one cut. This is the best ratio since at least 2003.

The strong results so far have convinced OSK that the market would continue to move higher over the next five to six months. The firm has raised its 2010 fair value target for the FBM KLCI to 1,345 points.

MIDF Research head Zulkifli Hamzah is also “optimistic” about the stock market, at least for the first half of next year.

Using the upcoming World Cup 2010 football to be staged in Cape Town, South Africa in June, as an analogy, he said 2010 “will be a game of two halves, with good scoring opportunities in the first half.’’

Picking the right team – or right theme – would be the key to winning, Zulkifli said although it would be almost impossible to match this year’s strong returns.

But despite the FBM KLCI’s 45% gain year-to-date, or 48% if measured in US dollar returns, the index remained a laggard compared with its regional peers. Measured in US dollar terms, the FBM KLCI’s return was the worst among all Asia-Pacific stock market indices, except for Japan and New Zealand.

http:///sitemap.xml

Billionaire Ananda, Khazanah in Aussie Internet TV venture

2009-11-23T17:54:00.000-08:00

Billionaire Ananda, Khazanah in Aussie Internet TV venture

PETALING JAYA: Billionaire T. Ananda Krishnan, together with Khazanah Nasional Bhd, are reported to have invested in an Australian Internet TV company called Fetch TV.

According to The Australian newspaper, the investment could be via Astro All Asia Networks.

Astro had not replied to queries, while Khazanah declined to comment.

The report, quoting unnamed sources, said Ananda was keen to tap opportunities in Australia presented by the country’s ambitious national broadband network, which aimed to wire up Australian homes and businesses with high-speed fibre optic connections.

Called an “open access network”, the plan is to allow third-party service providers to ride on the network to reach customers, not too different from Malaysia’s high-speed broadband project.

Fetch TV is a start-up company run by former employees of telecommunication companies in Australia. It is expected to be launched in Australia early next year and plans to shortly start testing low-cost pay-TV as well as on-demand TV and movie services.

Ananda, who controls Astro, should be able to help Fetch TV with securing its content for its TV service, often seen as the most important success factor in a new TV service.

However, no details have surfaced yet as to how much the investment was worth but indications are that Ananda (possibily through Astro or his private vehicle Usaha Tegas Sdn Bhd) and Khazanah have emerged as the major shareholders of Fetch TV.

“It would not be difficult to replicate the Malaysian (Astro) model in Australia but remember it is a small and competitive market, with a population similar to that of Malaysia,” an analyst said.

The Australian explained that the Fetch TV business model relied on signing up a number of second and third-tier telcos and Internet service providers (ISPs).

The telcos and ISPs would then package Fetch TV’s Internet-enabled set-top box and video content to its broadband customers.

That would enable smaller ISPs to compete directly with the Tbox (an IPTV service) unveiled by Telstra, Australia’s incumbent telco, last week.

Telstra intends to launch its Tbox next year to its 2.3 million broadband customers. It is understood the nation’s third-largest ISP, iiNet, is inking a deal with Fetch TV, although the company would not confirm the deal.

“It is believed that Fetch TV’s digital TV set-top box will receive digital free-to-air channels; include access to more than a dozen pay-TV channels; act as a personal video recorder; offer photo storage and other media centre services; include a pay-per-view movie and TV show download service; and allow people to view other Internet content,” the paper reported. Ananda, who pursued his tertiary education at the University of Melbourne, had invested in a troubled newspaper company in Britain, Johnston Press, in 2008.

Khazanah is the second-largest shareholder in Astro with a 21.4% stake. The largest shareholder is Ananda, with a 42.35% stake.

Last week, Ananda – together with Saudi Telecom Co Ltd – had just offered for sale 2.25 billion shares, or 30% stake, in Maxis Bhd in an initial public offering that raised RM11.2bil.

http:///sitemap.xml

Oil price higher on weak US$

2009-11-23T17:47:00.000-08:00

Oil price higher on weak US$

NEW YORK: Oil prices jumped Monday and nearly touched $80 before falling, on a weakening dollar and surprising housing numbers which lifted hopes of an economic rebound.

Benchmark crude for January delivery rose 9 cents to settle at $77.56 a barrel on the New York Mercantile Exchange.

It traded as high as $79.92 earlier in the day.

The National Association of Realtors said U.S. home sales rose 10.1 percent in October.

That is the highest level in more than two years and helped push crude prices higher on expectations of increased demand.

Still, crude in storage is above normal levels for this time of year and refiners that turn oil into gasoline, jet fuel and diesel are cutting back because demand is so weak.

Valero Energy became the latest to shut down a refinery Friday, the largest U.S. facility shut down so far this year.

That follows other refiners like Sunoco and Western Refining, who have shut down plants in recent months and off almost 1,000 workers.

Refiners say they can't raise the price of gasoline and jet fuel because people aren't traveling as much, but they must pay higher prices for crude because of the weak dollar.

Investors holding stronger currencies can buy more dollar-based crude when the U.S. currency falls.

But the refiners that turn crude into gasoline, jet fuel and diesel are cutting back because demand is so weak Air travel is projected to decline 6.7 percent, or 2.3 million travelers this year compared to 2.5 million in 2008.

The dollar began the week lower as a Federal Reserve official urged the continuation of stimulus programs and as home sales in October greatly exceeded market expectations, revving up traders' taste for higher-yielding assets.

In late New York trading Monday, the 16-nation euro rose to $1.4973 from $1.4857, while the British pound jumped to $1.6621 from $1.6481.

The dollar was nearly flat at 89.02 Japanese yen from 88.96 yen.

And gold prices surged to a new record high of $1,174 an ounce as investors looked for an alternative investment to a declining buck.

The commodity is considered a hedge against the greenback because of its stable store of value.

In other Nymex trading, heating oil rose less than a penny to settle at $1.9799 a gallon.

Gasoline for December delivery fell less than a cent to settle at $1.9794 a gallon.

Natural gas for December delivery rose about 5 cents to settle at $4.473 per 1,000 cubic feet.

In London, Brent crude for January delivery fell 26 cents to settle at $77.46 on the ICE Futures exchange.

http:///sitemap.xml

US stocks higher, Dow at 13-month high

2009-11-23T17:44:00.000-08:00

US stocks higher, Dow at 13-month high

NEW YORK: Investors halted a three-day losing streak on the stock market Monday, sending prices broadly higher on a weaker dollar and better-than-expected home sales numbers.

Major stock indexes soared more than 1 percent, including the Dow Jones industrials, which rose 133 points to a 13-month high.

Volume was thin ahead of the Thanksgiving holiday, which can exaggerate the size of swings in the market.

Investors found plenty reasons to buy as the day's developments pointed to two trends: an improving economy and interest rates that are expected to stay low.

_ The National Association of Realtors reported that October home sales rose more than 10 percent revived investors' optimism after disappointing data on the housing industry last week raised concerns about the strength of the economic recovery.

_ Charles Evans, head of the Federal Reserve Bank of Chicago, was quoted as saying he saw little risk that the economy would slide back into recession, although unemployment is unlikely to fall until next summer. And James Bullard, president of the Federal Reserve Bank in St. Louis, said the U.S. Fed should continue to buy mortgage-backed securities after the program is supposed to expire in March. That would continue to keep interest rates low.

_ The dollar, a key factor in stock trading in recent months, extended its pullback, sending prices for commodities including gold and oil higher and in turn, the stocks of companies that produce them.

Meanwhile, bond prices retreated as investors regained their appetite for risk. Low interest rates and a resulting slide in the dollar have been big drivers behind the stock market's eight-month rally.

Low interest rates enable investors to borrow cheaply and buy assets like stocks and commodities that have the potential to earn higher yields than cash.

Investors were buying Monday on somewhat contradictory forces in the market.

The strength in housing is a sign of an improving economy, which could argue in favor of raising rates, while the dollar's weakness points to rates remaining low.

Analysts say investors who still have plenty of available cash are primed to buy, and so the market may also be rising on its own momentum.

"There's still $2 trillion of cash that needs to find its way into the stock market," said Phil Orlando, chief equity market strategist at Federated Investors.

Orlando said investors will continue to look for dips in the rally as a way to get into the market, not wanting to end the year without participating in some of the big gains stocks have made.

"Bearish managers are sweating bullets that they're not going to be able to get that cash in the market and they need to do that," he said.

"That is why any pullback we've seen this year has been met with a wave of cash that has pushed stocks up higher."

At the same time, many portfolio managers have cooled their buying, not wanting to risk losing the big returns they've made since stocks began rallying in March.

Those opposing forces are likely to result in choppy trading over the next few weeks, analysts said, which will be exacerbated by light volume as the holidays approach.

The Dow rose 132.79, or 1.3 percent, to 10,450.95, after losing 120 points over the previous three days.

The Dow rose as much as 177 points to a 13-month trading high of 10,495.61.

The Standard & Poor's 500 index rose 14.86, or 1.4 percent, to 1,106.24.

The Nasdaq composite index rose 29.97, or 1.4 percent, to 2,176.01.

Four stocks rose for every one that fell on the New York Stock Exchange, where volume came to a low 979.9 million shares, compared with 1.1 billion Friday.

In other trading, the Russell 2000 index of smaller companies rose 10.13, or 1.7 percent, to 594.81.

Many traders were already on vacation for Thanksgiving, and the decreased volume can contribute to price swings.

The ICE Futures U.S. dollar index, a widely used measure of the dollar against other currencies, fell 0.7 percent.

As the dollar fell, gold prices surged to a new high of $1,174 an ounce.

Oil rose 9 cents to $77.56 a barrel on the New York Mercantile Exchange.

The spike in commodities lifted the shares of energy companies and materials producers.

Chevron Corp. rose $1.97, or 2.6 percent, to $78.74. Weyerhaeuser Co. gained $1.25, or 3.3 percent, to $39.11.

Bond prices were mixed.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.36 percent from 3.37 percent late Friday.

The yield on the three-month T-bill, considered one of the safest investments, rose to 0.02 percent from 0.01 percent.

The yield on the three-month bill briefly dipped into negative territory last week as worries about the economy took hold and investors retreated to safe havens like the dollar and government debt as they sold stocks.

Investors wanting to lock in profits as the year comes to a close are willing to earn very little to park their cash in a safe place.

"It's not a time for taking chances," said Quincy Krosby, market strategist at Prudential Financial.

The National Association of Realtors said home sales rose 10.1 percent in October to the highest level in two and a half years, spurred by a tax credit for first-time homebuyers.

Analysts had been expecting a 1.4 percent increase in sales.

The credit, due to end at the end of the month, has been extended into 2010.

"You could be completely cynical and say this market is moving up today because volume is low and the dollar is weak, but I would have to add that we're getting confirmation on the sustainability of the economic recovery by the actual fundamentals," Krosby said, referring to the housing report. - AP

http:///sitemap.xml

Gold price record high, silver copper highest for year

2009-11-23T17:43:00.000-08:00

Gold price record high, silver copper highest for year

NEW YORK: A weaker dollar carried gold prices to a new record Monday and also boosted silver and copper to their highest levels of the year.

Oil prices finished slightly higher, while agricultural futures fell.

Gold for December delivery rose as high as US$1,174 an ounce before settling at $1,164.70, up $17.90, or 1.6 percent, from Friday's close.

Year to date, prices are up 31.7 percent.

December silver rose to its highest close of the year, gaining 17 cents to $18.61 an ounce.

Earlier, prices rose as high as $18.935, the highest since July 2008.

March copper futures also finished at a fresh 2009 high, rising 2.8 cents to $3.162 a pound.

Prices touched a fresh 14-month high of $3.204 earlier in the session.

The latest surge in metal prices came as the dollar resumed its decline against other major currencies.

The dollar, which rose late last week, has been on a steady decline since March as record-low interest rates encourage investors to buy stocks, commodities and other assets that have the potential to earn higher returns than cash.

A weaker dollar makes commodities less expensive for foreign buyers. Gold's tie to the dollar, though, is different from other commodities.

The precious metal is seen as an inflation hedge and an alternative to a weak currency.

Investors have been padding their portfolios with more gold to protect themselves from a further decline in the dollar.

"Where most people get off track is looking at gold as a mere commodity," said Nick Barisheff, president and CEO of Toronto-based Bullion Management Group, a precious metals investment company.

Barisheff sees gold rising as high as $1,400 in the near term, and as high as $2,000 a year from now.

The dollar fell Monday after Federal Reserve official James Bullard said the central bank should continue to buy mortgage-backed securities after the program is currently scheduled to expire in March.

That would help keep U.S. interest rates low, further pressuring the dollar.

The ICE Futures US dollar index, which tracks the dollar against other major currencies, fell 0.7 percent in afternoon trading.

Though the spike in gold could be setting the market up for a pullback, most analysts say the long-term trend is a weaker dollar and higher gold.

A continued drive for deficit spending from governments around the world will push gold prices even higher, Barisheff said.

In other Nymex trading, December platinum rose $25.70, or 1.8 percent, to $1,464.40 an ounce.

Crude oil for January delivery rose as high as $79.92 in early trading due to the weaker dollar before settling up 9 cents at $77.56 a barrel.

Other energy futures were little moved. Gasoline futures fell 0.12 cent to $1.9794 a gallon, while heating oil futures rose 0.43 cent to $1.9799 a gallon.

On the Chicago Board of Trade, March wheat futures dipped 2.25 cents to $5.785 a bushel, while corn for March delivery fell 3.75 cents to $4.0325 a bushel.

January soybeans lost 4 cents to $10.42 a bushel.

Among other soft commodities, January sugar slipped 0.33 cent to 21.57 cents per pound, while cocoa for December delivery fell $3 to $3,242 a ton.

http:///sitemap.xml

Citi bank group upgrades global 2010 economic growth forecast

2009-11-23T17:40:00.000-08:00

Citi bank group upgrades global 2010 economic growth forecast

NEW YORK: Citigroup Inc. upgraded its 2010 economic growth forecasts for several countries on Monday, and said it expects a sustained but uneven global recovery next year.

The annual report, released by Citi's global research unit, said almost all major economies exited recession in the second and third fiscal quarters.

Central banks are unlikely to hike key interest rates through next year, and the threat of global inflation appears contained, according to the report.

Citi said a recovery looks to be even across major economies in the beginning of the year, while Asia - excluding Japan - will see sustained momentum.

While the U.S. will see fairly strong economic growth, Europe and Japan will experience a more gradual recovery.

Citi lifted its 2010 growth domestic product outlook for the U.S., Japan, Britain, Australia, New Zealand, Hong Kong, Korea, Argentina, Hungary, Poland, Czech Republic and Turkey.

However, it said credit availability will likely be limited for at least another year or two as banks seek to raise extra capital.

Michael Saunders, Citi's global head of developed markets economics, warned that countries will need to adjust some fiscal policies.

"Global economies need central banks and governments to successfully manage the exit strategies from extreme monetary accommodation, without creating further instabilities and denting future growth prospects," he said.

Saunders expects the rankings of global economies to change drastically in the next 15 years as resource-rich regions like the Middle East, Africa, Latin America, Russia and Brazil see growth.

Meanwhile, as emerging markets industrialize, consumer spending there is expected to fill the gap left by moderate spending in the U.S. and other industrial countries.

http:///sitemap.xml

Rising unemployment taxes could hinder hiring

2009-11-22T19:39:00.000-08:00

Rising unemployment taxes could hinder hiring
WASHINGTON (AP) -- As if small businesses needed another reason not to hire, consider their latest financial burden: The cost of rising unemployment itself.

Employers already are squeezed by tight credit, rising health care costs, wary consumers and a higher minimum wage. Now, the surging jobless rate is imposing another cost. It's forcing higher state taxes on companies to pay for unemployment insurance claims.

Some employers say the extra costs make them less likely to hire. That could be a worrisome sign for the economic recovery, because small businesses create about 60 percent of new jobs. Other employers say they'll cut or freeze pay.

- Chuck Ferrar, who owns a liquor store in Annapolis, Md., expects to pay $9,000 in unemployment taxes next year, up from $3,000 this year. Health care costs for his employees will rise by $8,000, or 17.5 percent. "When you start adding this up, it turns into real money," he said. "If I lose an employee through attrition, I will not replace him. You can't afford to do it."

- Sam Schlosser, owner of Plymouth Foundry Inc. in Plymouth, Ind., said his unemployment tax bill could double next year. Revenue at the family-owned company, which makes iron castings for machine parts, has fallen about 50 percent, he said. In case of higher taxes, his company may have to consider layoffs, he said.

- Marjorie Feldman-Wood, president of Al's Beverages in East Windsor, Conn., which makes soda fountain syrup, said higher taxes would make pay raises less likely. Connecticut is borrowing from the federal government, and employers fear the state will have to raise taxes soon to repay the loan. "There's only so much money at the end of the day," she said.

Bruce Meyer, a University of Chicago economics professor, said his studies show that higher unemployment taxes usually lead to lower pay for employees.

Behind the trend are widespread layoffs. The number of people claiming jobless aid has tripled since the recession began. The demand has drained the funds that many states use to pay jobless claims. Nearly half the states are borrowing from the federal government.

Now the bills are coming due. States reset their unemployment insurance taxes at the end of each year, and 33 states will raise them next year, according to the National Association of State Workforce Agencies. The states' tax revenue in the last fiscal year fell $42 billion short of what's needed for unemployment aid.

Most of the tax increases are being triggered by laws requiring higher taxes to make up for a decline in state funds to pay for benefits. In some cases, cuts in jobless aid are required, too.

Florida's minimum unemployment tax, for instance, will skyrocket next year to $100.30 per employee from $8.40. The maximum will rise to $459 per worker from $378. Like most states, Florida taxes companies more if they've recently laid off workers who draw benefits.

Hawaii will raise its average unemployment tax 10-fold next year, from about $90 per employee to more than $1,000. And Maryland's minimum tax will more than triple from $51 per employee to $187. Its maximum will jump from $765 to nearly $1,150.

Federal law requires states to build up unemployment insurance trust funds in good times so they can pay benefits during downturns. The idea is to avoid having to raise taxes or cut benefits in a recession.

But the severity of this recession has bankrupted many states' trust funds and forced them to borrow from the federal government. States eventually must pay back the loans. Otherwise, the federal government can raise taxes on their businesses.

The tax increases will have "a small, negative effect on hiring" because they will raise employers' costs, said Wayne Vroman, an economist at the liberal Urban Institute.

Contributing to the problem is that many states cut their unemployment taxes earlier this decade when the economy was healthier. That left them unprepared for the waves of layoffs that began last fall. Some experts say business groups pushed for the cuts and set the stage for tax increases.

States have been swamped by a jump in recipients, from 2.8 million in May 2008 to nearly 9 million now.

The federal government is paying for about 4 million of those beneficiaries. These people exhausted the 26 weeks states typically provide and are receiving extended federal benefits. The unemployed can get up to 73 weeks of extra aid, for a total of 99 weeks, the longest extension on record.

http:///sitemap.xml

Investors look to data-heavy week for more clarity

2009-11-22T19:38:00.000-08:00

Investors look to data-heavy week for more clarity

NEW YORK (AP) -- Investors are heading toward the final month of the year with more questions about the economy than they had just a few weeks ago.

The uncertainty, which follows some downbeat reports on housing and employment, will likely mean choppy trading, especially as volume dwindles during the holiday season.

In this week, which will be abbreviated due to Thanksgiving, investors will look to reports on home sales, unemployment and consumer confidence and the start of the holiday shopping season on Friday for more insight into the direction of the economy.

The government also will revise its early estimate of the gross domestic product that said the economy grew at an annual pace of 3.5 percent during the third quarter. Many analysts now expect a smaller increase in GDP because of recent reports on housing and retail sales.

If more reports signal a slow economic rebound, investors could continue selling stocks and buying safe-haven assets like the dollar and short-term Treasurys, as they did last week.

Stocks fell from 13-month highs during the latter half of last week on disappointing housing reports and worries about a slump in demand at technology companies. The Dow Jones industrials ended the week with a paltry 0.5 percent gain, while broader indexes finished with losses. And the three-month Treasury bill's yield briefly turned negative, which meant that investors were willing to in effect pay the government to park their cash in a safe place.

Investors have again become more cautious about risk after months of taking advantage of record low interest rates to borrow cheaply and pump money into stocks and commodities. Uneven reports showing small improvements in some industries like manufacturing but still weak numbers in areas like employment and housing, have investors worried that the recovery will be slow and subdued. Not wanting to risk losing the big gains they've amassed since March, investors are locking in profits and padding their portfolios with more safe havens.

"It's a two steps forward, one step back continuum here," said Matt Lloyd, chief investment strategist at Adivsors Asset Management. "The economy is recovering, but not in every area."

Still, the market's moves have been orderly, and analysts say that some consolidation is warranted, even healthy, after a 61.3 percent rise in the Standard & Poor's 500 index since early March.

"At some point, you've got to have that shift from enthusiasm over what was based on unquestionably good news, back to the recognition that this can't keep up indefinitely," said Jim Baird, partner and chief investment strategist at Plante Moran Financial Advisors.

Concerns over the direction of the dollar and when the Federal Reserve might raise interest rates could put more pressure on stocks through the end of the year. With anxiety about the economy running high, demand for the dollar may increase. A stronger dollar is bad for commodities producers and exporters because it makes their goods and services more expensive overseas. And U.S. companies that do business in foreign markets make less money when their earnings are translated from other currencies into dollars.

But the Fed has pledged to keep interest rates low for the foreseeable future to support the economy's recovery, which should keep a lid on the dollar for the time being.

Still, the dollar is sensitive to many outside forces. Last week, the dollar got a boost after European Central Bank President Jean-Claude Trichet said the ECB plans to start reining in some of its stimulus programs.

Which direction stocks and the dollar take next depends on what this week's reports have to say about the economy. Many analysts are expecting the data to continue to be mixed, which could lead to erratic trading.

"I wouldn't be surprised to see back and forth (trading)," Lloyd said. "When you have that much data, you usually bounce around."

The week will start with figures on September home sales from the National Association of Realtors. Also Monday, investors will likely keep a close watch on quarterly figures from computer and printer maker Hewlett-Packard Co. for any signs of improving demand after a disappointing outlook from Dell Inc. last week.

The following day, the Commerce Department will release its revised GDP figure. Investors will also get the Standard & Poor's/Case-Shiller index on home prices for September and the third quarter, as well as the Conference Board's reading on consumer confidence for November. Additionally, the Federal Reserve will issue the minutes from its most recent policy meeting.

Wednesday brings government reports on durable goods orders, personal income and spending and new home sales, as well as the Labor Department's weekly report on initial claims for jobless benefits.

And Friday marks the start of the holiday shopping season. The day after Thanksgiving, commonly known as Black Friday, is traditionally considered the day when a surge of shoppers pushes retailers into the black for the year.

While retail sales have shown some improvement, forecasts for this year's holiday season are conservative. Analysts expect intense competition among retailers as they struggle to attract shoppers who are still worried about losing their jobs and paying their bills.

http:///sitemap.xml

Senate Democrats at odds over health care bill

2009-11-22T19:07:00.000-08:00

Senate Democrats at odds over health care bill

WASHINGTON (AP) -- Moderate Senate Democrats threatened Sunday to scuttle health-care legislation if their demands aren't met, while more liberal members warned their party leaders not to bend.

The dispute among Democrats foretells of a rowdy floor debate next month on legislation that would extend health care coverage to roughly 31 million Americans. Republicans have already made clear they aren't supporting the bill.

Final passage is in jeopardy, even after the chamber's historic 60-39 vote Saturday night to begin debate.

"I don't want a big-government, Washington-run operation that would undermine the ... private insurance that 200 million Americans now have," said Sen. Ben Nelson, a conservative Nebraska Democrat.

Nelson and three other moderates - Democratic Sens. Mary Landrieu of Louisiana and Blanche Lincoln of Arkansas and Connecticut independent Joe Lieberman - agreed to open debate despite expressing reservations on the measure. Each of them has warned that they might not support the final bill.

One major sticking point is a provision that would allow Americans to buy a federal-run insurance plan if their state allows it. Moderates say they worry the so-called public option will become a huge and costly entitlement program and that other requirements in the bill could cripple businesses.

"I don't want to fix the problems in our health care system in a way that creates more of an economic crisis," said Lieberman.

The sway held by such a small group of senators has annoyed their more liberal colleagues, who could vote against a final bill if it becomes too watered down.

Sen. Sherrod Brown, D-Ohio, said he didn't think rank-and-file Democrats would feel compelled to go that far. At the same time, Brown warned Democratic leaders not to make too many concessions.

"I don't want four Democratic senators dictating to the other 56 of us and to the rest of the country - when the public option has this much support - that (a public option is) not going to be in it," said Brown.

The Senate bill would require most Americans to carry insurance and provide subsidies to those who couldn't afford it. Large companies could incur costs if they did not provide coverage to their work force. The insurance industry would come under significant new regulation under the bill, which would first ease and then ban the practice of denying coverage on the basis of pre-existing medical conditions.

Congressional budget analysts put the legislation's cost at $979 billion over a decade and say it would reduce deficits over the same period while extending coverage to 94 percent of the eligible population.

The House approved its version of the bill earlier this month on a near party-line vote of 220-215.

Sen. Dick Durbin of Illinois, the No. 2 Democrat in the Senate, said the health care bill must be passed by the end of the year so that President Barack Obama and lawmakers can shift their attention to the economy and improving employment rates.

Such a timeline also would enable Obama to claim victory on a major domestic priority when he delivers his State of the Union speech in January.

But with one-third of Senate seats up for election in 2010, politics will factor heavily into the outcome of the debate on health care.

Sen. Michael Bennet, a junior Democrat who will be seeking his first full term next year in Colorado, where many districts lean conservative, said he would support the health care overhaul even if doing so means losing his seat.

"The thing that our working families need more than anything else is to end these double-digit cost increases that they're having every single year with health insurance," Bennet said.

Democratic Sen. Chuck Schumer of New York said he believes there are enough votes to include a public insurance option in the bill as long as states are allowed to opt out. To do so, all 58 Democrats and independent Sens. Lieberman and Bernie Sanders of Vermont would have to support it.

Sanders issued a statement Sunday saying, "I strongly suspect that there are a number of senators, including myself, who would not support final passage without a strong public option."

Lieberman and Nelson have said they object to the public option. On Sunday, Nelson said he is open to negotiating the provision; he said he would prefer allowing states to opt into the program, instead of having to remove themselves.

Senate GOP leader Mitch McConnell said the lingering reservations by moderate Democrats indicate that the party's leaders have gone too far. On Saturday, no Republican voted to begin debate on the bill, which they said would cripple industry and drive up costs for the average American.

"I believe there are a number of Democratic senators who do care what the American people think and are not interested in this sort of arrogant approach that everybody sort of shut up and sit down, get out of the way, we know what's best for you," said McConnell.

Brown, Bennet and McConnell appeared on CNN's "State of the Union." Lieberman appeared on NBC's "Meet the Press." Nelson appeared on ABC's "This Week."

Associated Press writers Lolita C. Baldor and Philip Elliott contributed to this report.

http:///sitemap.xml

Japan markets closed Monday

2009-11-22T18:57:00.002-08:00

Japan markets closed Monday

TOKYO: Japanese financial markets were closed Monday due to a public holiday.

The markets will reopen Tuesday. - AP

http:///sitemap.xml

UPS raises 2010 rates by 4.9%

2009-11-22T18:57:00.001-08:00

UPS raises 2010 rates by 4.9%

CHICAGO: United Parcel Service Inc (UPS), the world’s largest package delivery company, said on Friday that it plans to raise air and ground freight rates by an average 4.9% in 2010.

The company also said it planned to change its fuel surcharges in an effort to “decrease fuel surcharge volatility when fuel prices fluctuate.”

In September, UPS’s chief rival, FedEx Corp, announced a 3.9% increase in air freight rates for 2010. It has not yet announced its new ground rate schedule. — Reuters

http:///sitemap.xml

Hershey ponders US$17bil solo bid for Cadbury

2009-11-22T18:52:00.000-08:00

Hershey ponders US$17bil solo bid for Cadbury

It is believed to have lined up deal funding and also weighing a joint bid with Ferrero

PHILADELPHIA: US chocolate maker Hershey Co is considering launching a bid of at least US$17bil for British chocolatier Cadbury Plc as it seeks to trump a hostile offer by Kraft Foods Inc, a source familiar with the matter said on Friday.

Hershey had lined up deal funding from Bank of America and JPMorgan Chase & Co to make a solo offer for Cadbury, but was also still weighing a joint bid with Italy’s Ferrero Spa, the source said.

The interest from Hershey could add new pressure on Kraft to sweeten its US$16.5bil offer, which Cadbury rejected as derisory.

(Top) A Hershey’s Candy pillow is seen inside a store in New York and (below) a Cadbury chocolate product is seen on a supermarket’s shelves in central London. — Reuters/AP

“It’s still very fluid and there are multiple prongs to this,” the source said. “It’s still very early. But they need at least US$17bil to top Kraft.”

Citing people familiar with the matter, the Wall Street Journal reported on Friday that the impetus for the Hershey bid came from the charitable trust controlling the company.

The trust was pushing Hershey chief executive David West to compete with Kraft’s offer, but wanted to structure a deal so that it remained in charge of Hershey, the report said.

Officials for the Hershey Trust were not immediately available for comment. Hershey, Kraft and Cadbury declined to comment.

A solo Hershey bid would be the most transformative move the company has made in its 100-year history. The company’s market capitalisation stands at US$8.3bil, while Cadbury is valued at US$18.1bil.

“Given that they generate 85% of their sales from the domestic market, gaining access to Cadbury’s platform would be highly advantageous,” said Erin Swanson, analyst at Morningstar, noting Cadbury’s presence in emerging markets.

She added that Hershey would be able to expand its candy and gum business. But a deal would mainly aim to capture new growth as there is little overlap between the companies’ businesses and therefore slim opportunity for cost savings.

Hershey’s offer could include at least US$10bil in cash from Hershey and US$2bil in new Hershey shares, plus US$3bil to US$5bil from outside investors in exchange for equity in Hershey, according to the Journal.

That would trump the US$6.74bil in cash indicated in Kraft’s cash-and-stock offer for Cadbury, though Kraft has secured US$9.2bil in financing and could raise the cash component of its offer.

But one source familiar with the situation questioned whether Hershey was getting ahead of itself. “Buying a company more than twice its size could be a risk and the Trust has previously shied away from risk, given its mandate,” the source said.

A key figure in any Hershey bid is Byron Trott, a favourite banker to Warren Buffett, whose Berkshire Hathaway is the largest investor in Kraft. The Kraft connection goes further, as Hershey chief executive West was formerly an executive of the world’s No. 2 food maker.

In another development, Bloomberg reported yesterday that Swiss food giant Nestle may consider a bid for Cadbury. The company was still weighing its options and may decide against a bid, Bloomberg said, citing two sources.

Nestle declined to comment. — Agencies

http:///sitemap.xml

Sands China raises US$2.5bil from listing

2009-11-22T18:47:00.000-08:00

Sands China raises US$2.5bil from listing

The amount is lower than the company hoped for

HONG KONG: Sands China Ltd, the Macau operation of Las Vegas Sands, raised US$2.5bil through its initial public offering (IPO) in Hong Kong, a source familiar with the deal said on Saturday, hitting the bottom of an indicated range.

While lower than the company hoped for, the IPO allows Las Vegas Sands to cash in on the gambling industry boom in Macau, a former Portuguese colony an hour’s ferry ride from Hong Kong that is now the world’s largest gaming hub.

The offering, together with a US$1.75bil in bank financing, would help Sands China to restart its Macau’s Cotai strip project, which was suspended in November 2008 due to the global economic downturn.

The Las Vegas-based gaming and casino company, struggling under a heavy debt load, is looking to raise cash and boost the group’s overall valuation by listing its Macau division in Hong Kong’s red hot IPO market.

Wynn Resorts, another Las Vegas casino group, recently spun off its own Macau unit.

Sands China sold 1.87 billion shares, or about 24% of its enlarged share capital, at HK$10.38 each, compared with a range of HK$10.38 to HK$13.88, the source said. The source was not authorised to speak on the record about the pricing.

”Investors are cautious with Sands China, because the post-market performance of Wynn Macau was disappointing,” said Peter Pak, vice-president at BOCI Research Ltd. Shares of Wynn Macau, which raised US$1.87bil through its Hong Kong IPO this month, were trading 7% lower than their offering price of HK$10.08.

On a 2010 enterprise value to earnings before interest, tax, depreciation and amortisation ratio, Sands China trades at 13.5 times based on its low-end price range, versus Wynn Macau’s about 14 times.

By comparison, Melco Crown Entertainment and Galaxy Entertainment Group traded at 11.5 times and 12.1 times, respectively, according to a UBS research report.

Sands China, founded by billionaire Sheldon Adelson, could be valued at US$10.8bil based on the low end of its price range. Wynn Macau has a market value of US$6.3bil.

Sands was the first US casino operator to enter Macau in 2004 after the government opened the gambling market to outsiders. Sands China owns Venetian Macau Ltd, one of the six concessionaries that are permitted to own and operate casinos in Macau, with 24% and 25% market shares of gross gaming revenues in Macau in 2008 and the first half of 2009. — Reuters

http:///sitemap.xml

GE, Vivendi close to sealing NBC Universal deal

2009-11-22T18:42:00.000-08:00

GE, Vivendi close to sealing NBC Universal deal

NEW YORK: General Electric and Vivendi are moving closer to a deal on NBC Universal, with Vivendi agreeing to accept payment for just one-third of its stake until a related deal with Comcast closes, according to a source familiar with the situation.

Talks between Vivendi SA and General Electric Co have been holding up Comcast Corp’s plan to buy a controlling stake in NBCU. Vivendi has to agree to sell its 20% stake to GE before the Comcast deal, which would be the biggest in media this year, can progress. — Reuters

http:///sitemap.xml

ISO 31000 will be more helpful in supporting corporate governance

2009-11-22T18:39:00.000-08:00

ISO 31000 will be more helpful in supporting corporate governance
By EDY SARIF

KUALA LUMPUR: The new global standard for risk management, ISO 31000, will be more helpful in supporting corporate governance for risk management among companies and enterprises, most of which have adopted the current standard of risk management, AS/NZS 4360: 2004 (Standards Australia/New Zealand approach).

Risk management standards expert Kevin Knight said ISO 31000 was a more concise, clear and flexible set of guidelines developed for risk management.

Ideas to conceptualise it started in 2004 when six meetings were held among 30 countries of ISO Meeting Group to come out with better standard of guidelines.

ISO 31000 is more focus on the process of risk management: RISK MANAGEMENT STANDARDS EXPERT KEVIN KNIGHT
“ISO 31000 is more focused on the process of risk management in companies and enterprises.

“By this, it gives more direction to the organisation on managing the uncertainty or risks that may happen,” he told StarBiz.

Knight chairs the World ISO working group developing the new ISO 31000 risk management standards.

Knight said one of the shift points of the new ISO 31000 to the existing standards was the way the organisation conceptualised the risk and it addressed the entire management system that supported the designs, implementation, maintenance and improvement of risk management process.

“By this, the whole process will involve every single person in the organisation, from the board of directors down to the lower levels. When the whole organisation understands how to manage risk, it will help achieve the organisation’s objectives in the business,” he said, saying that with ISO 31000, risk was now defined as “effect of uncertainty on objectives”.

He added that ISO 31000 would fit into the existing risk management requirements among companies and enterprises, as they now needed only to enhance the existing standards to develop their new risk management plans.

“Companies or organisations that follow the ISO 31000 standards will not get special certificates as we believe organisations should not waste their efforts in seeking to gain a certificate. Instead, the focus should be more on efforts in improving corporate governance on risk management matters,” he said.

He also said the time taken to adapt to the new approach would vary between companies and organisations.

“I would say that it may take three to five years for bigger organisations to fully change their risk management standards as it will involve culture change in the organisation. We are talking about the complexity of certain big organisations here that may make it difficult for them to change their way of managing risk,” he said.

Knight said companies and enterprises could purchase a copy of the new ISO 31000 guidelines on the International Standards Organisation website (www.iso.org) or from consulting firms.

ISO 31000 was published as a standard on Nov 15 and Malaysia was among the first to be exposed to this new standard at The Q-Radar Trail Blazer Alumni Conference here last Thursday.

http:///sitemap.xml

BoA chief Lewis may delay retiring

2009-11-22T18:20:00.000-08:00

BoA chief Lewis may delay retiring

NEW YORK: Bank of America Corp chief executive Kenneth Lewis has said he would consider postponing his retirement if directors need more time to find a successor or smooth the transition to the next CEO, the Wall Street Journal reported on Friday.

Citing a person close to the executive, the newspaper said Lewis’s willingness to stay at the Charlotte, North Carolina-based bank beyond his planned Dec 31 retirement date was the latest sign of the difficulties directors had faced in finding a replacement.

Tensions had mounted as various internal and external candidates were floated, approached and vetted, people familiar with the discussions said, according to the Journal.

Some people inside the company claimed the process was leaving the bank adrift without cohesive leadership as it tried to navigate the recession and other problems, the report said.

Ken Lewis could act as a ‘bridge’ until a successor is found. — Reuters
Lewis, 62, had no plans to backtrack on his Sept 30 retirement announcement, indicating only that he could act as a “bridge” until a successor was found, according to the Journal’s source.

While BoA directors had shown no obvious interest in the idea so far, “the door isn’t shut,” the person told the newspaper.

The board had completed its interviews of inside and outside CEO candidates, according to another person familiar with the discussions, the Journal said.

The list of prospects had been narrowed to two BoA executives, consumer and small-business banking chief Brian Moynihan and chief risk officer Gregory Curl, and at least two outsiders, the report said.

http:///sitemap.xml

Chinese bank wants to play active role in Malaysia

2009-11-22T18:15:00.000-08:00

Chinese bank wants to play active role in Malaysia

KUALA LUMPUR: Industrial and Commercial Bank of China (ICBC), one of the world’s largest banks in terms of market value and profitability, describes the proposed opening of a subsidiary bank in Malaysia as a significant breakthrough in ICBC’s globalisation strategy.

“It is also a reflection of the fast expanding trade, economic and commercial ties between China and Malaysia,” it said in a statement yesterday.

ICBC was granted the banking licence by Bank Negara on Nov 20. Previously, its application had been approved by the China Banking Regulatory Commission.

“After its establishment, ICBC’s subsidiary bank in Malaysia will vigorously integrate itself into the local financial market and play an active role in servicing bilateral economic exchanges and trade as well as boosting Malaysia’s economic development through leveraging on ICBC group’s extensive customer base, capital strength, network and state-of-the-art technology,” it said.

It said Malaysia was one of China’s most important trading partners in Asean, with bilateral trade standing at US$53.469bil in 2008, representing about one quarter of total trade volume between China and the Asean countries.

In August 2009, two-way trade reached RM11.56bil, making China the biggest export market for Malaysian products. In the same period, Chinese exports to Malaysia accounted for more than 13% of Malaysia total imports, making China the biggest source of imports for Malaysia.

“The ever-increasing economic, trade and investment ties between China and Malaysia have laid a solid foundation for the development of the financial service industry and raised new demands for cross-border banking services,” it said.

“Amid the ongoing global economic and financial integration and with the huge demand from ‘go-out’ Chinese enterprises for cross-border financial services, ICBC has been proactively implementing its globalisation strategy. It is accelerating overseas deployment and expanding business scopes in order to enhance its cross-border financial service capabilities,” it said.

As at the end-September, ICBC has 155 branches and offices in 15 countries and regions and 1,393 correspondent banks in 125 countries and regions.

At the end of the third quarter of 2009, ICBC had total assets of 11.67 trillion yuan (RM5.75 trillion) and recorded after-tax profit of 100.54 billion yuan (RM49.57bil).

http:///sitemap.xml

EU allocates RM2.4mil more to boost EU-Malaysia business

2009-11-22T18:11:00.000-08:00

EU allocates RM2.4mil more to boost EU-Malaysia business

KUALA LUMPUR: The European Union (EU) has allocated 600,000 euros (RM2.4mil) to further boost Malaysia-EU business cooperation, said Ambassador and head of delegation of the European Commission to Malaysia Vincent Piket.

“We are about to start a new strategic project for promoting business-to-business cooperation in the services sector, with emphasis on financial services, and environmental and green technology services.

“I expect this new project to serve as a major boost to Malaysia-EU business cooperation in priority areas for Malaysia’s new economic model,” he told Bernama in an interview.

He said the project would be implemented by the EU-Malaysia Chamber of Commerce and Industry, in partnership with the Chambers of Commerce of EU member states and Malaysian partners, including the Federation of Malaysian Manufacturers.

Piket also said between 2006 and 2009, the EU funded 10 trade promotion and business facilitation projects in Malaysia with a total EU contribution of four million euros (RM20mil). — Bernama

http:///sitemap.xml

Daya’s first phase of global transformation

2009-11-22T18:02:00.002-08:00

Daya’s first phase of global transformation

Its unit inks deal with a major tank repair and service firm

PETALING JAYA: Daya Materials Bhd’s first phase of international transformation has begun, kick-started by a memorandum of understanding (MoU) that will see the company recognising revenue from tank service ventures regionally, and eventually in the United States.

Daya’s wholly owned subsidiary, Daya Clarimax Sdn Bhd, has entered into an MoU with NCHO Engineering & Services Pte Ltd, a major ISO-certified tank repair and services company based in Singapore.

The MoU is expected to materialise in a 60:40 joint venture in Malaysia, focusing on ISO-level tank repairs.

Importantly, the joint venture will translate into a ready and sizeable customer base for Clarimax when it begins operations early next year.

Datuk Mazlin Md Junid (left) and Nathan Tham

NCHO is already operating one of the largest tank repair businesses in Singapore, servicing some of the biggest multinational tank owners in the world. With the signing of the accord, some of these multinational customers will instantly become Daya’s customers.

“The attraction of this JV is that it is very scaleable and allows Daya to jointly participate in tank service ventures with NCHO in Indonesia, Taiwan, China and eventually the US, which are several times the size of the Malaysian market,” said Daya executive vice-chairman Datuk Mazlin Md Junid.

“Our tank services factory on Pulau Indah, Port Klang will be able to clean and repair up to 300 tanks per month, which will be taken up almost instantly as soon as we begin operations,” he said.

Clarimax, which has not yet contributed to the group’s bottom line, will make significant revenue and net profit contribution in 2010 and beyond with this JV.

Significantly, too, Clarimax is laying the foundation for its solvent recovery and waste-oil recycling business towards the end of 2010. It is believed to be one of only two or three players in Malaysia that have a licence from the Environment Department to undertake this business.

“The plant has been built on Pulau Indah. We are in the midst of finalising and getting the technology, equipment and a team of technical people in place,” Daya executive director Nathan Tham said. “Once completed, this will significantly strengthen the business model of Daya. Technical services will be a major growth driver going forward.”

Financially, the group has never been better. It is in a net cash position despite the acquisitions of 80% of Daya Proffscorp Sdn Bhd in April and 45% of Daya Clarimax in September, collectively valued at more than RM28mil.

With over RM30mil in cash, significant unused debt capacity and a further RM20mil coming in from strategic private equity fund CMS Opus Capital by end-November, Mazlin said the group was eyeing several acquisitions in the oil and gas (O&G) sector, especially in downstream services.

“We are studying two possible acquisition targets in Malaysia and one in Indonesia,” he said.

Prospects for its oil and gas division remain good. It is currently the largest supplier of downstream specialist chemicals in Malaysia.

It expanded into Brunei in the second quarter, and is aiming to penetrate Singapore and Indonesia within the next two quarters.

There is also a strong possibility of the group venturing into Western Australia, selling the same chemicals the group has been distributing for the past 10 years in Malaysia.

Daya is also in the midst of institutionalising its stock to broaden its investor base. To this end, Daya is looking to attract institutional investors, especially bumiputra funds, to be its long-term strategic partners.

Earlier this month, Daya was transferred to the Bursa Malaysia main market from the ACE market.

For the third quarter to Sept 30, Daya reported a 70% jump in pre-tax profit to RM6.4mil from RM3.7mil previously. On a nine-month basis, Daya delivered a pre-tax profit of RM16.4mil.

The growth was achieved on the back of stronger performance at its oil and gas and technical services divisions.

http:///sitemap.xml

Hg Solution enters Thai market

2009-11-22T18:02:00.001-08:00

Hg Solution enters Thai market

Firm bidding for jobs in three other countries

BANGKOK: Hg Solution Sdn Bhd, one of few firms in the region involved in the management of mercury contamination, has entered the Thai market and is also bidding for projects in the Philippines, Vietnam and Oman.

Ahmad Afdzal Md Isa, executive director of technical operations, said the company had appointed PJ Energy Services as its partner as it sought to penetrate the Thai market.

“It’s a niche market where our services are used to detect mercury in the oil and gas industry.

“We offer a comprehensive ‘cradle to grave’ service and in Thailand, we support PJ Energy in its offshore operations in Songkhla,” he said after Hg Solution signed an agreement with PJ Energy here.

Hg Solution executive chairman Zainal Bahari with PJ Energy managing director Pranee Kouwain after the signing ceremony. – Bernama

Malaysia’s Ambassador to Thailand Datuk Husni Zai Yaacob witnessed the ceremony held on the sidelines of the Ninth Asean Council on Petroleum Conference and Exhibition.

PJ Energy executive director Jamel Salleh said his company also signed an agreement with South Korea’s Dotec to supply oil and gas industry valves in Thailand, Myanmar, Cambodia and Pakistan.

Ahmad Afdzal, a former researcher with Petronas, said there were fewer than five companies specialising in the management of mercury contamination in the region and Hg is the only Malaysian company among them.

He said the company, set up in 2005, with a fully-functioning laboratory in Paka, Terengganu, has been growing steadily, adding that there was vast potential in the sectors.

There is a high probability that the highly toxic liquid metal can be found in the region. — Bernama

The company, with 21 full-time staff and 30 to 60 contract workers, offers services from analysing the level of mercury and its distribution in an operation, to training personnel in mercury awareness and cleaning all the contaminated parts of machinery and equipment. – Bernama

http:///sitemap.xml

How GST affects small, medium businesses

2009-11-22T17:57:00.001-08:00

How GST affects small, medium businesses
By CHEW THEAM HOCK and TAN ENG YEW

Awareness of compliance requirements vital before it’s introduced

THE goods and services tax (GST), if implemented, will not only affect big businesses. The compliance requirements apply once a business achieves a certain prescribed annual sales turnover level. This registration threshold has not been announced.

However, it is worthwhile noting that the licensing threshold for sales tax and service tax, which GST will replace, currently ranges from RM100,000 to RM300,000. If this is any indication, GST registration will be an obligation for many smaller businesses. This is taking into account that GST will be imposed on practically all supplies of goods and services and at every stage of the supply chain.

Credit offset mechanism: In simple terms, businesses supplying taxable goods and services have to charge GST on supplies made (referred to as output tax). The GST paid on purchases (input tax), including capital equipment, supplies and materials can be offset against the output GST. This is referred to as the credit offset mechanism.

The net amount would have to be remitted to the Royal Malaysian Customs. Businesses that are largely export-oriented are likely to be in a refund position. To claim the credit offset, businesses are required to obtain and keep tax invoices from suppliers. While this may sound simple, the tracking, record keeping and reporting can be a challenge to many businesses.

Chew Theam Hock
Below are some thoughts for small and medium-scale enterprises (SMEs) as the Government ponders on the implementation of the GST, particularly the registration threshold.

Awareness of responsibilities: Notwithstanding the size of the business, the law imposes the same compliance obligations once the registration threshold is reached. Once the registration threshold is announced, affected businesses will need to follow closely the developments and to understand their responsibilities under the GST regime.

While the business is essentially just collecting and remitting GST for the Government, non-compliance will result in penalties on the business itself.

It is hoped that the Government would leverage off the experience from other countries that have successfully implemented GST and roll out comprehensive awareness programmes to help, in particular SMEs, prepare for the GST. These could include organising briefings at various locations, setting up small offices, kiosks, helpdesks and hotlines throughout the country.

Compliance cost: GST imposes additional compliance costs for businesses. These come in the form of additional work to account for the tax, tracking of the input taxes paid, undertaking reconciliations and filings of GST returns.

In addition, where a business pays cash or has short credit periods from its suppliers, this may result in the business needing extra finances to purchase supplies when GST is first introduced. This is a timing issue which should iron itself out over time as credits are claimed. In this respect, there have been requests that the tax return cycles for SMEs be extended to ease the cashflow burden under the GST regime.

Tan Eng Yew
Customer reactions: As often happens, customers react to news of discounts or price increases. It is generally anticipated that GST will result in a price hike on certain goods.

The level of increase depends partly on the rate of tax announced. Experiences in other countries have shown that customers generally go on a shopping spree shortly before the introduction of the tax, followed by a period of relative inactivity after the tax is introduced.

Anticipating this, it may be necessary to do some stock planning to cater for a pre-GST rush. This, however, has to be balanced by the fact that stock in hand when GST is introduced, may not be entitled to any input tax credit.

Purchase of business assets: Like customers, businesses should also plan their purchases during the GST transition period. This is because currently many goods (particularly capital goods) have an embedded sales tax in them which is not deductible or creditable.

On the other hand, buying the same goods by the business after GST would allow the business to claim a credit for the GST (which will replace sales tax). This is an advantage for the business and the effective cost of the goods would then be lower (other things remaining equal).

As a rule of thumb, while household consumers are likely to shop before GST is introduced, businesses which are GST registration candidates should perhaps delay purchases to a time when GST is effective. This does, however, require some assumption that prices will otherwise remain static.

To register or not to register: Some businesses will inevitably fall below the registration threshold. While it may appear a good thing that the business is not subject to the compliance burden of the tax, other factors need to be taken into consideration whether or not to register.

For one, unless the business is licensed, it would not be entitled to claim the input tax credits on purchases. This leads to input tax paid being a cost to the business (this may be a good thing from the customers’ perspective; GST is not imposed when they purchase the goods).

However, in a situation where the customers of the business are other GST registered businesses, the supplier may be obligated to license itself as it is likely that the customer would insist on buying from another registered person to enable him to claim the input tax credit.

Noting the additional burden that GST puts on SMEs, the Government could consider making concerted efforts in conducting education campaigns as well as addressing and deciding on compliance issues before the introduction of GST. Treatment of specific transitional issues needs to be announced upfront to facilitate a smooth transition to the GST regime.

● The writers are executive directors of KPMG Tax Services Sdn Bhd.

http:///sitemap.xml

Maybank Targets RM100 million in New 1Malaysia Momentum Structured Deposit

2009-11-22T17:45:00.000-08:00

Maybank Targets RM100 million in New 1Malaysia Momentum Structured Deposit

Maybank has launched its 1Malaysia Momentum (M3) Structured Deposit, a capital protected investment plan for investors seeking potential gain regardless of the market conditions, with a target fund size of RM100 million.

The M3 is a five-year investment product issued by Maybank via Floating Rate Negotiable Instruments of Deposit (FRNID) that comes with 100% capital protection if the FRNID is held to maturity or autocalled. The product is offered to investors at a minimum investment amount of RM65,000, with additional investment in multiples of RM5,000.

The M3 structured deposit investment is based on a strategy represented by the 1Malaysia Momentum (M3) Index, which provide investors with the opportunity to gain exposure into underlying assets that are closely related to the Malaysian economy, namely the domestic stock market, as well as five commonly-traded commodities comprising of crude oil, gold, natural gas, cocoa and palm oil.

"M3 Index adopts a ‘closer to home investment strategy', providing exposure to underlying assets closely tied to the Malaysian economy. The investment strategy of this structured deposit aims to provide investors with consistent returns, irrespective of market conditions, where the strategy is expected to benefit from both rising and falling markets," said Lim Hong Tat, Senior Executive Vice President and Head of Consumer Banking Maybank.

"The underlying assets of M3 Index which have been carefully selected are also assets that investors are familiar with. Malaysian Equities is one of the underlying assets and commodities such as Natural Gas, Palm Oil, Crude Oil and Cocoa represent a large part of Malaysia's exports, while gold has traditionally been a safe haven in times of volatility," added Lim.

M3's unique feature offers investors with three chances to receive potential returns as long as the M3 Index performs above the initial index level or when it terminates early due to the autocall feature. The autocall feature allows for potential early termination of the investment, thus enabling investors to enjoy gains earlier than the maturity tenure. The autocall trigger levels start from 107% of the M3 Index Initial Fixing Level in the first year to 135% in the fifth year.

If the M3 Index performs below the initial index level, the investor will still stand to receive 100% of their initial principal investment if held till maturity. The principal amount is not guaranteed in the event of early redemption and the redemption amount will depend on the indicative bid price of the investment at the time of redemption in accordance with the prevailing market conditions.

The closing date of M3 is December 31, 2009 or earlier if fully subscribed.

The 1Malaysia Momentum Structured Deposit is the second structured deposit with autocall feature launched by Maybank this year. In April, Maybank Autocall Structured Deposit was launched to tap opportunities in China.

http:///sitemap.xml

US stocks could sputter this week

2009-11-22T17:42:00.000-08:00

US stocks could sputter this week
By LEAH SCHNURR

NEW YORK: US stocks could sputter this week as volumes dry up in holiday-shortened trading and with a slew of economic reports likely to illustrate the recovery is still fragile.

Investors will also get a glimpse of how holiday shopping could shape up with Black Friday, which traditionally marks the start of the season as retailers slash prices to tempt shoppers. It will be difficult for the economic recovery to make much headway without a pick-up in consumer spending as it accounts for two-thirds of the economy.

A raft of data is squeezed into the first half of the week, shortened by Thursday’s Thanksgiving holiday. The delicate nature of the recovery has analysts split on whether the economy will advance from here or still faces another leg down.

The debate has plagued the rally throughout its run but now that the S&P 500 is up more than 60% from March’s 12-year lows, investors are more wary of taking risks. With just six trading weeks left in the year, market watchers are keen to hold onto profits.

“There’s simply more risk where we are,” said Lawrence Creatura, equity market strategist and portfolio manager at Federated Clover Capital Advisors, in Rochester, New York.

A Macy’s Christmas window is displayed in New York City. Black Friday, the day after Thanksgiving, will be watched closely with analysts anxious for signs consumers will be opening up their wallets. — AFP

“We’re at a higher altitude and even though in some ways it doesn’t feel like it, it’s less safe now than it was in March.”

Data have largely shown an economy that is recovering slowly but is still weak, particularly in areas like employment.

Reports include home sales, consumer confidence, durable goods and the second reading of gross domestic product (GDP).

Also, the Federal Open Market Committee (FOMC) will release the minutes from November’s rate-setting meeting. Investors will be looking for insight as to how the central bank will eventually start to remove its extraordinary stimulus measures and its view on the health of the economy.

S&P faces resistance

The Dow and S&P 500 made 13-month highs this week before easing off, and recent sessions suggest the market is struggling to justify more gains.

Last week, the Dow rose 0.5%, the S&P 500 fell 0.2% and the Nasdaq shed 1%. The S&P failed to hold above the key 1,100 level and will continue to face resistance there.

Volume is expected to be light throughout the week with US markets closed on Thursday for Thanksgiving and shutting early on Friday. Low volume can make stocks more volatile as fewer participants make it easier to move prices.

Black Friday, the day after Thanksgiving, will be watched closely with analysts anxious for signs consumers will be opening up their wallets.

The phrase Black Friday is used by retailers to refer to the start of the holiday period when their business moves into the black, or turns a profit.

Early data on shopper traffic and anecdotal evidence will give the first snapshot of the day’s performance and a clearer picture will emerge the following week when stores report November retail sales.

“The American consumer historically will continue to spend until there are physically no dollars in their pockets,” said Creatura. “So the question is: Are there dollars in their pockets? We’ll know after Black Friday.”

Recent statements from retailers as they reported quarterly earnings have signalled Wall Street shouldn’t get too carried away with their expectations for the holiday season. Discount retailers Target Corp and Wal-Mart both forecast holiday-quarter profit that could miss expectations.

The two rivals have already announced deep discounts for the holidays.

“It is very, very hair-raising for retailers because this year hasn’t been wonderful and make or break is right upon us,” said Cummins Catherwood, managing director at Boenning and Scattergood, in West Conshohocken, Pennsylvania.

“The question to me is how long can you keep discounting the stuff you used to sell at whole retail prices and still earn a living?”

Data deluge

Third-quarter preliminary GDP is expected to come in at 2.9%, revised down from an advance reading of 3.5% last month, according to Reuters data. Analysts have been scaling back expectations for economic growth after data last week showed a larger-than-expected trade deficit.

Weekly initial claims for jobless benefits will be released on Wednesday, a day earlier than usual. Analysts expect first-time claims to dip slightly to 500,000.

“The direction of the economic data continues to be positive, but investors face a two steps forward, one step back scenario,” said Michael Sheldon, chief market strategist at RDM Financial, in Westport, Connecticut.

Likewise, the FOMC minutes will be released tomorrow, a day earlier than previously scheduled. Other data include new and existing home sales, consumer confidence for November and durable goods for October.

http:///sitemap.xml

Can you work from home without going to office?

2009-11-22T17:30:00.000-08:00

Can you work from home without going to office?

THERE was a time in my life when I was a full-time homemaker and a part-time freelancer. I left the workforce to take care of my two boys, and my wife became the sole breadwinner.

I must confess that those were the most cherished years of my life. My wife was also able to take her turn at home when I went back to work.

We learnt to survive on one income. And it was a lot of fun for the boys.

The Public Works Department recently allowed 35 of its draughtsmen to work from home for three months.

The Chief Secretary Tan Sri Mohd Sidek Hassan has given his nod of approval, stating that the work-from-home concept is workable if employees have the integrity to do the work at home as well as it would have been done in the office.

The Chief Secretary to the Government, Tan Sri Mohd Sidek Hassan, says: “The civil service is a very big organisation that is outcome-driven, and if working from home will increase productivity, that is something we will definitely recommend to the Government.”

“The civil service is a very big organisation that is outcome-driven, and if working from home will increase productivity, that is something we will definitely recommend to the Government,” he said.

“I also work from home. But I also work from my car, and when I go back to my hometown, I take my work with me. In this age of the Blackberry and Internet, it is not impossible to work from one’s home.”

If you have ever sent Sidek an email, you will learn that he walks the talk because his response is virtually instant. And not just an automated reply, mind you.

Although I spent most of my time at home playing with the boys, I also did the occasional part-time work to supplement the household income and also to keep my brain active.

In those days, such information technology was not available, but that did not prevent me from doing work for an overseas client whom I never even met.

This was a project for a UN body in Cambodia. It involved them sending me the material via a diskette (no CDs or thumb drives in those days) by courier. I edited and laid out the publication and then couriered a draft back to them for approval.

After the okay was given via fax, I proceeded to print the book in Puchong and had the order shipped to Phnom Penh.

They promptly sent me a cheque by mail.

Today, such a project would have seen me fully using the whole plethora of IT tools, including SMS, email and video chat. If the client so desires, I could easily email the book files to any printer in the world. And payment would have been instant through e-banking.

Technology has made so many things possible, not just for the able-bodied people, but also the disabled, and those recovering from serious illness.

Yet, in reality, working from home is not something embraced by most employers.

Somehow, there is the fear that employees cannot be trusted if they are not physically around.

The result is we end up with many employees, not necessarily the most productive ones, hanging around the office way after official working hours, when they could be at home enjoying family time.

The work-from-home concept should be encouraged in both the public and private sectors.

My son, who used to switch off my computer in the midst of work during my stay-at-home days so that I could take him to the park, is now a graduate tutor at a college. When he has to mark the papers, he has the option to do so at home.

It is about integrity, as Sidek rightfully points out. The point is that employers must start to trust their employees more and not just let those who will shirk or shortchange them determine the policy of the company.

Deputy executive editor Soo Ewe Jin believes we can marry modern technology with good old-fashioned values to truly enhance our quality of life in both the workplace and the home.

TAGS: Data Entry Work From Home,Free Work Home Jobs,Legitimate Work From Home,Work From Home Companies,Moms Work From Home,Part Time Work From Home,Work From Home For Free,Work From Home Typing,WORK FROM HOME,JOB AT HOME

http:///sitemap.xml

AirAsia to expand in Asia

2009-11-22T17:29:00.000-08:00

AirAsia to expand in Asia
By LEE KIAN SEONG

KOLKATA: AirAsia Bhd is gearing up for network expansion in India with more destinations after achieving a wide coverage in China.

The company currently has about 200 flights a week to seven cities in China.

AirAsia regional head of commercial, Kathleen Tan, said the budget carrier had been looking at the Indian market for a long time and that it took a while to go there due to a lot of documentation issues.

“There is a lot of demand for flights between India and Kuala Lumpur. The expansion of the Indian routes will help open up the tourism industry in both countries and stimulate the labour market as well,” she told reporters in Kolkata last Friday at an event to commemorate the inaugural KL-Kolkata flight.

From left: Sanja Budhia, Kathleen Tan, Manabendra Mukherjee and Salman Ahmad lighting a diya, or oil lamp

Present at the event were Consul of Malaysia to India Sanjay Budhia, Tourism Minister of West Bengal Manabendra Mukherjee and Malaysia Tourism Promotion Board deputy director for international marketing division covering South Asia, West Asia and Africa, Salman Ahmad.

Tan said the airline was looking to serve Bangalore and Hyderabad in India from KL next year and its associate AirAsia X would look to serve Mumbai and New Delhi.

“We have a hub in Bangkok within our network and we are planning to do the Bangkok-Kolkata, Phuket-Kolkata as well as Bangkok-Mumbai and Bangkok-Delhi routes,” she said.

Following the start of service to Trichy last year, AirAsia launched three new routes from KL to Kolkata, Kochi and Trivandrum which opened for ticket sales on Oct 15, 2009.

Kolkata is recognised as one of four major metropolises in India along with New Delhi, Mumbai, and Chennai.

The city in West Bengal is home to renowned personalities like Nobel Laureate Rabindranath Tagore, philosopher Ramakrishna and film director Satyajit Ray.

Kolkata is a haven for food lovers and is well connected to many Indian cities as a majority of domestic airlines have direct services to and from Kolkata.

Tan said Kolkata was one of the busiest cities in India and there was demand for the Kolkata-KL route as it had not been served from KL directly in the last few years.

“We have sold over 30,000 seats as of today (Friday) for the new route. It is a significant achievement for this market,” she said, adding that the airline targeted various segments for this route, including those travelling for business, holiday or religious purposes.

AirAsia is confident the route will provide a boost for tourism and stimulate the economies of India and Malaysia.

Furthermore, the route provides a direct connection between West Bengal and Malaysia via the KL hub, which in itself is a gateway to many destinations across Asia, the UK and the Middle East.

“With Kolkata added to our extensive network, AirAsia is unlocking the potential of international air travel from KL to eastern India and its surrounding areas. We are thrilled to be serving Kolkata direct, a huge market that no other airline is serving direct,” Tan said.

For all the flights to India, AirAsia uhses the Airbus A320.

http:///sitemap.xml

US Fed under unprecedented fire as public anger mounts

2009-11-22T17:22:00.000-08:00

US Fed under unprecedented fire as public anger mounts
By TOM RAUM

WASHINGTON: Suddenly the Federal Reserve has become a punching bag for Americans upset over the economy.

Strip the Fed of its bank regulation powers, some in Congress are demanding.

Get probing audits of its behind-the-scenes operations, others say.

The chairman of the Federal Reserve Board is always fair game for criticism and second-guessing, usually over interest rate actions.

But this year the criticism is much broader as Congress responds to widespread public anger that the Fed bailed out Wall Street but not ordinary Americans, and with unemployment in double digits.

Former Fed chairman William McChesney Martin Jr. famously said that the central bank's job was to yank away the punchbowl just when everybody is starting to party.

And while Fed Chairman Ben Bernanke has signalled the Fed will keep interest rates low for now, a round of higher rates inevitably will come.

The Fed finds itself both the punchbowl keeper and the punching bag.

Imagine the outcry when it does begin to crank up rates - perhaps just ahead of next year's midterm elections.

Fireworks seem likely at Senate confirmation hearings early next month on President Barack Obama's nomination of Bernanke to a second four-year term as chairman.

Many economists and Fed watchers say congressional efforts to rein in the Fed's powers could interfere with the central bank's ability to help guide the fragile economy to recovery.

The Fed's very independence and its unique ability among U.S. institutions to create money out of thin air enabled it to act quickly to stabilize the nation's financial system after it froze up last September following the bankruptcy of the Lehman Brothers investment house, Fed backers say.

"It might have been the Fed's finest moment when it had to jump into the market," said David M. Jones, a former Fed economist and president of DMJ Advisors, a Denver-based consulting firm.

"We still have to wait to see how effective the Fed is in its exit strategy and whether it can keep inflation in check. But this badgering by Congress, even if there is populist sentiment, is inappropriate."

The Fed's aggressive intervention also set the stage for the current criticism. Many lawmakers question whether the Fed's money machine has mainly benefited financial markets and not the broader economy.

Lamakers are also peeved that the central bank acted without congressional involvement when it brokered the 2008 sale of failed investment bank Bear Stearns and engineered the rescue of insurer American International Group.

Bernanke, first appointed by President George W. Bush, has worked closely with both Treasury Secretary Timothy Geithner and Bush Treasury Secretary Henry Paulson in confronting the worst financial crisis in decades.

Geithner also has gotten his share of congressional wrath, mainly for his administering of the $700 billion bank bailout fund.

"In the past, the Federal Reserve was held in very high esteem," said Rep. Ron Paul of Texas, a libertarian who ran a quixotic campaign for the Republican presidential campaign in 2008. Now, it's "the source of our problem," suggests Paul, author of the bestseller "End the Fed."

Usually an outlier, Paul suddenly has found an army of at least 307 House colleagues and 30 senators marching behind his legislation to subject the Fed to intense scrutiny by Congress' Government Accountability Office.

The House Financial Services Committee endorsed Paul's approach 43-26 last week over objections from its chairman, Rep. Barney Frank, a Massachusetts Democrat.

The bill would authorize Congress to audit not only the Fed's lending programs but its basic decisions to set monetary policy by raising or lowering interest rates.

Paul has been introducing a version every year since the early 1980s, but this is the first time it has garnered any serious attention.

Senate Banking Committee Chairman Chris Dodd, who will preside over Bernanke's confirmation hearings, has proposed legislation that would strip the Fed of its bank-regulation authority and give the Senate a role in selecting the 12 regional Federal Reserve bank presidents.

Dodd says his measure would return the Fed to its core mission of setting monetary policy, claiming it proved itself "an abysmal failure" by not cracking down on risky lending practices that led to the financial meltdown.

Dodd is in an extremely tight battle for re-election in Connecticut, even though he has served in Congress for 35 years.

"I don't think it ever hurts to have a member of Congress stand up and denounce the Fed. There is a lot of anger out there, and this is basically a therapeutic gesture," said Ross Baker, a political scientist at Rutgers University.

Still, Baker said, it probably isn't wise to tamper with the formula that makes the Fed "very much an anomaly in American government. It's independent, it has to be. You don't want the Fed to be under the control of the president. And it kind of sits out there - not in the executive branch, not in the legislative branch, not in the judicial branch. Sort of its own little element in the separation-of-powers constellation."

While the Fed is subject to some congressional oversight, its decisions don't have to be ratified by the president or Congress. Fed officials are not paid with money appropriated by Congress.

Should Bernanke be worried?

"Not only should be worried, he's clearly ratcheted up his game in terms of his communications with Congress," said Norman Ornstein, a senior fellow at the American Enterprise Institute.

Ornstein said the Fed bashing this time is different from before, with "a broader base of support.

And it's coming from people who in the past would not have hit the Fed. There's a lot of populist anger out there - on the left, in the center and on the right. And politicians are responsive to that."

http:///sitemap.xml

Cadbury won't bite on Hershey's US$17bil offer

2009-11-22T17:19:00.000-08:00

Cadbury won't bite on Hershey's US$17bil offer

LONDON: British candy company Cadbury PLC will reject an expected 10.3 billion pound ($17 billion) takeover bid from U.S. confectionary giant Hershey Co., a newspaper reported Sunday.

Britain's Sunday Times cited an unnamed industry source as saying Cadbury is reluctant to do a deal unless Hershey raises its valuation of the company, which makes the Dairy Milk chocolate bar.

The Wall Street Journal reported Friday that Hershey Co. is preparing a bid, but that it won't be ready for around two weeks.

It said the offer is expected to include at least $10 billion in cash from Hershey, plus $2 billion in new Hershey shares and another $3 billion to $5 billion in cash from investors in exchange for equity in Hershey.

That bid would top a recent $16.5 billion hostile offer by Kraft Foods Inc. for the British confectioner.

Both Kraft and Hershey are seeking access to Cadbury's presence in developing markets, including in Mexico and India.

About 250 million bars of the company's famous Dairy Milk are sold every year in 33 countries.

Cadbury on Sunday declined to comment on the speculation.

"We have always said that we would give proper consideration to any serious offer that delivers full value for the company," the company said in a statement.

"Unless and until we find ourselves in that situation we have nothing to comment upon."

http:///sitemap.xml

German railway operator signs US$26bil Qatar railroad deal

2009-11-22T17:15:00.000-08:00

German railway operator signs US$26bil Qatar railroad deal

DOHA, Qatar: An investment company owned by Qatar's sovereign wealth fun on Sunday signed a $26 billion deal with Germany's national railway operator to build a railroad network, a key part of the natural gas-rich Gulf sheikdom's expansion plans.

Under the deal, the Qatari Diar Real Estate Investment Company and Deutsche Bahn AG will set up a joint venture to develop a metro system in Qatar's capital, as well as a national rail network and a long-distance connection to neighboring Bahrain.

Qatar will hold a 51 percent stake in Qatar Railways Development Company and the German state-held railway will have a 49 percent stake

"This announcement represents the next step in the creation of this visionary Qatari project that will truly revolutionize the ease and convenience by which people travel," said Ghanim Bin Saad al-Saad, Qatari Diar's chief executive.

The railroad network will take about 15 years to complete, but the national railroad and the local commuter system for Doha is expected to be 70 percent built by 2017 to support the tiny Gulf nation's bid for the World Cup in 2022 and the Olympics in 2020.

Qatari Diar is a property investment company owned by the natural gas-rich state's sovereign wealth fund, the Qatar Investment Authority. It was established in 2004.

http:///sitemap.xml

Europe Stocks Rise; Asia Ends Mixed

2009-11-20T01:19:00.000-08:00

Europe Stocks Rise; Asia Ends Mixed

LONDON - European stock markets rose modestly Wednesday after a mixed session in Asia as investors looked for renewed direction from key U.S. economic figures on inflation and housing due for release later in the day.

In Europe, the FTSE 100 index of leading British shares was up 11.96 points, or 0.2%, at 5,357.89, while Germany's DAX rose 30.39 points, or 0.5%, at 5,808.82. The CAC-40 in France was 16.48 points, or 0.4%, higher at 3,845.54. Wall Street was poised to open steady after a largely flat session on Tuesday. Dow Jones Industrial Average futures were up 3 points at 10,401 while the broader S&P 500 futures were down 0.1 point at 1,107.30.
Traders were waiting for U.S. data later in the day for clues about the pace of recovery in the world's largest economy.
"Hopefully economic data released later will produce fresh direction one way or the other," said Richard Griffiths, senior equity trader at Spreadex.
In particular, investors will focus on U.S. inflation data for October. Analysts expect inflation to have risen on the back of higher energy prices, with consumer prices up 0.1% during the month.
Monthly figures for housing starts are also due, with analysts expecting a further 1.7% rise in October to an 1l-month high of 600,000.
Stock markets have rallied strongly since the March lows as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound, partly because of a recovery in the housing market.

The state of household spending in the U.S. is also key for recovery -- U.S. consumer spending accounts for around 70% of the nation's economy -- and earnings so far this week have been mixed.

Despite the lack of direction in equities in recent days, analysts do not believe markets have run out of steam. "While momentum has been in short supply so far today, this looks to be a consolidation rather than another major correction," said Anthony Grech, market strategist at IG Index.
Stock market investors are also keeping a close eye on the dollar, which has a major impact on the movement in commodity and energy price stocks, as well as any suggestions that U.S. borrowing costs will be rising sooner than anticipated, as much of the rally in stocks since March has been due to investors borrowing cheap dollars to finance potentially more lucrative purchases.
"The main concern for investors at this stage is that the currently lucrative carry trade in which people are taking advantage of low rates on the dollar to invest in equities might blow up and send equities downhill," said Grech.
The dollar won a brief respite over the last couple of days after Federal Reserve Chairman Ben Bernanke and European Central Bank President Jean-Claude Trichet seemingly attempted to talk up the U.S. currency, which has slid to multiyear lows against the yen and to near 15-month lows against the euro.
Much of the gains made in the early part of the week were lost Wednesday as the euro recovered 0.5% to $1.4944 and the dollar fell 0.2% to 89.08 yen.

Earlier, Japan and Hong Kong led the Asia's declines, with Tokyo's Nikkei 225 stock average losing 53.13 points, or 0.6%, to 9,676.80 and Hong Kong's Hang Seng shedding 73.82, or 0.3%, to 22,840.33.

Oil prices rose further, closing in on $80 barrel after an unexpected drop in U.S. crude supplies suggested demand could be improving. Benchmark crude for December delivery was up 79 cents to $79.93 a barrel in electronic trading on the New York Mercantile Exchange. Gold was trading up 0.7% at a new record of $1,147.60.

http:///sitemap.xml

Asia Stocks Fall on Weak Tech Shares

2009-11-20T01:09:00.000-08:00

Asia Stocks Fall on Weak Tech Shares

BANGKOK -- Asia stock markets mostly retreated Friday following a glum session on Wall Street as evidence of a weak economic recovery continued to pile up. Benchmarks in Tokyo and Hong Kong fell, and technology stocks were weak after Sony's(SNE Quote) turnaround plans failed to inspire confidence and Dell (DELL Quote) warned that sales of its computers to big businesses remain sluggish.
Reports on the U.S. economy gave investors little reason to hold on to stocks. Figures from the Labor Department indicated that employers are still shedding jobs, and the Mortgage Bankers Association reported a surge in foreclosures.
Markets, especially in Asia, have rallied hard since their nadir in March as investors anticipated the global economy would rebound quickly from its worst recession in decades.
Major economies are growing again, according to the latest figures, but the rebound is moderate and many economists expect growth rates in Asia and the West to fall short of pre-crisis levels for several years.
That's made investors increasingly nervous about driving markets even higher as company earnings -- temporarily bolstered by massive cost cutting and layoffs -- could be disappointing.
In Japan, the Nikkei 225 stock average fell 0.5%, despite the central bank upgrading its assessment of the world's No. 2 economy.
More tellingly, the Bank of Japan left its key interest rate unchanged at a super low 0.1% -- a sign of how fragile the economic recovery is -- while top officials warned of the dangers posed by months of falling consumer prices.

Elsewhere, Hong Kong's Hang Seng declined 0.8%.

Stocks in London, Frankfurt and Paris were higher at 3:50 a.m. EST Friday. In the U.S. Thursday, the Dow Jones Industrial Average fell 93.87, or 0.9%, to 10,332.44, after being down as much as 170. It was the Dow's biggest point drop since Oct. 30.
The broader S&P 500 index fell 14.90, or 1.3%, to 1,094.90, while the Nasdaq composite index fell 36.32, or 1.7%, to 2,156.82.
Stock futures pointed to a mixed open for Wall Street on Friday.
Benchmark crude oil for January delivery rose 20 cents to $78.25 a barrel in electronic trading on the New York Mercantile Exchange.
In currencies, the dollar fell to 88.90 yen from 88.98 yen. The euro slipped to $1.4896 from $1.4922.

http:///sitemap.xml

Wall Street hit by tech sector jitters

2009-11-20T01:04:00.000-08:00

Wall Street hit by tech sector jitters
Published: 2009/11/20
PDF
EMAIL
PRINT
CURRENCY CONVERTER
LARGER TYPE
SMALLER TYPE
TOOLS
DICTIONARY :
THESAURUS :

US stocks followed global markets lower yesterday on renewed jitters about the pace of economic recovery and a downgrade of key American firms in the technology sector.

The Dow Jones Industrial Average slipped 93.87 points (0.90 per cent) to end at 10,332.44, in a second consecutive losing session.

The tech-heavy Nasdaq tumbled 36.32 points (1.66 per cent) to 2,156.82 and the broad-market Standard & Poor’s 500 index retreated 14.90 points (1.34 per cent) to 1,094.90.

Wall Street opened with the main European and Asian markets showing losses, after a forecast from the Organization for Economic Cooperation and Development of a “modest” rebound from the global economic slump and leading economies facing a dilemma over huge debt and rescue spending.

“Sentiment has soured around the globe,” said Michael Bratus at Moody’s Economy.com.

Camilla Sutton at Scotia Capital said the OECD report was viewed in a negative context because it noted “that there are strong headwinds that will leave unemployment levels high and inflation well contained for some time.”

Joseph Hargett at Schaeffer’s Investment Research said the technology sector was facing pressure after a brokerage downgrade of key firms in the sector.

“The bull rally is apparently beginning to wane on Wall Street, and traders appear ready to take some profits off the table,” he said.

He said Bank of America Merrill Lynch’s downgrade of eight microchip companies, including Intel and Texas Instruments, was based on “concerns that inventories are too high unless there’s a sharp upturn from the global economy.”

Gregory Drahuschak at Janney Montgomery Scott said that the market “opened lower and took another step down following the report on mortgage delinquencies.”

He said the market reacted to a survey from the Mortgage Bankers Association showing the seasonally adjusted delinquency rate for mortgage loans on one-to-four-unit residential properties rose to 9.64 per cent.

Among key stocks, Intel slumped 4.08 per cent to US$19.30 on the latest broker comments, while rival semiconductor firm Texas Instruments skidded 3.38 per cent to US$24.88.

Investment fund Blackstone shed 1.74 per cent to US$15.28 dollars after a company its controls, Pinnacle Foods Group, agreed to buy Birds Eye Foods, the largest US frozen food company, for US$1.3 billion.

Time Warner fell 1.58 per cent to US$32.30 after providing details on its spin-off of its AOL Internet division, including plans to cut about one-third of its workforce.

The caution on equities helped bonds. The yield on the 10-year US Treasury bond fell to 3.349 per cent from 3.366 per cent on Wednesday and that on the 30-year bond dipped to 4.288 per cent from 4.299 per cent. Bond yield and prices move in opposite directions.

http:///sitemap.xml

KL shares mostly lower at mid-day

2009-11-20T01:01:00.000-08:00

KL shares mostly lower at mid-day
Published: 2009/11/20
PDF
EMAIL
PRINT
CURRENCY CONVERTER
LARGER TYPE
SMALLER TYPE
TOOLS
DICTIONARY :
THESAURUS :

SHARE prices on Bursa Malaysia were mostly lower at mid-day close today amid a weaker sentiment, but the FBM KLCI was up on bargain hunting in key finance counters, said a dealer.

At lunch break, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) rose 0.33 of a point to 1,276.98. It had opened 0.99 of a point lower at 1,275.66.

He said the market is expected to wait for the country's third quarter growth figures before taking any new positions.

" If it indicates that the worse is over, banking and other consumer- related stocks will be attractive," said the dealer.

Bank Negara Malaysia is expected to announce the growth rates later today.

The FBM Emas Index fell 1.811 points to 8,520.51, the FBM Top 100 declined 0.93 of a point to 8,326.08 and the FBM 70 slipped 13.12 points to 8,247.74.

The FBM ACE shed 4.11 points to 4,383.49, the Industrial Index declined 3.35 points to 2,685.1, the Plantation Index eased 1.63 points to 6,248.91 but the Finance Index jumped 14.43 points to 11,037.42.

Losers led gainers by 327 to 185 while 247 counters were unchanged and 516 others untraded.

A total of 447.998 million shares worth RM615.059 million were transacted.

Actives, Scomi Group-Loan Rights was flat at 1.5 sen, Maxis dipped three sen to RM5.39 and Affin Holdings-Warrants 3 edged up five sen to 30 sen.

Heavyweights, Sime Darby slipped eight sen to RM8.93, Maybank jumped three sen to RM6.87, CIMB Group added 10 sen to RM13.10 and Tenaga Nasional eased two sen to RM8.45.

http:///sitemap.xml

CIMB Thai shares hit 7-year high

2009-11-20T00:53:00.000-08:00

CIMB Thai shares hit 7-year high

SHARES in CIMB Thai Bank jumped again at the opening today after rising 118 per cent since its parent, Malaysia’s CIMB Group, announced a plan to list in Bangkok.

The CIMB Thai stock rose for the fourth day on talk that the Malaysian bank would buy up the remaining shares now it plans to list in Bangkok itself.

At 0301 GMT, the stock was up 24.6 per cent at 4.82 baht, the highest since September 2002. The main Thai index was down 0.44 per cent.

The Malaysian bank, which owns 93.15 per cent in CIMB Thai Bank, plans to raise about US$136 million from a public offering in the Thai market by the middle of 2010. - Reuters

http:///sitemap.xml

Canada Leading Indicator

2009-11-20T00:49:00.001-08:00

Canada Leading Indicator

The Canadian economy released its leading indicator for the month of October coming in lower than the previous 1.1% which got revised to 1.2%, to reach 0.7% in line with markets expectations.

http:///sitemap.xml

U.S Stocks Market

2009-11-20T00:45:00.000-08:00

U.S Stocks Market

The U.S stocks declined by the end of today’s trading session as the worse than expected fundamentals released from the U.S. economy, whereas US Leading Indicators for October plunged to 0.3%; worse than the forecasted reading of 0.4% and the prior reading of 1.0%.

However, we witnessed a drop in financial stocks, as concerns mounted concerning a recovery in the world's largest economy, knowing that today's US news regarding the labor sector and the overall economic conjuncture came in worse than forecasted.

The Dow Jones Industrial Average index shed 93.87 points or 0.90% to close at 10332.44 levels, The Standard & Poor’s 500 Index lost 14.90 points or 1.34% to close at 1094.90 levels, The NASDAQ Composite Index declined 36.32 points or 1.66% to close at 2156.82 levels.

http:///sitemap.xml

Market News Friday November 20 , 2009 07:11 GMT German PPI less than expectations

2009-11-20T00:41:00.000-08:00

German PPI less than expectations

The German Producer Prices rose to show a flat reading in October, compared with prior reading that fell 0.5% but worse than projections that referred to 0.1%, the yearly reading of the index dropped by 7.6% which came inline with previous but worse than expectations that referred to a decline by 7.5%.

http:///sitemap.xml

Euro Zone's Current Account Deficit Widens Despite of Improvement in Trade Balance

2009-11-20T00:40:00.000-08:00

Euro Zone's Current Account Deficit Widens Despite of Improvement in Trade Balance

The data released today in the euro zone showed a widened deficit in the current account, in spite of the better-than-expected trade balance released yesterday; showing a widened surplus in September.

In August, the current account seasonally adjusted showed a deficit of 1.3 billion euros from the revised 3.7 billion euros; while the non-seasonally adjusted reading turned into a deficit of 5.0 billion euros from the revised 9.3 billion euros.

Today, the euro zone current account, seasonally adjusted for September, revealed a widened trade deficit to 5.4 billion euros from the revised prior surplus of 0.6 billion euros from -1.3 billion euros; while the non-seasonally adjusted also showed that the deficit widened to 5.0 billion from the revised previous deficit of 3.5 from 5.0 billion euros.

The improvement was estimated after the surplus which had hit the trade balance, the largest component of the current account. The trade deficit for September turned to 3.7 billion euros surplus from the revised -2.3 billion euros, while trade balance seasonally adjusted showed a widened surplus to 6.8 billion euros from the revised 2.2 billion euros, according to the data released yesterday. However, the deficit widened today.

The trade data reflects the improvement that occurred in the third quarter; where the GDP showed a growth of 0.4% from 0.2% contraction in the second quarter and 2.5% in the first quarter. Net Trade contributed positively to the positive growth figures.

The 16-nation economy emerged from recession after the wise monetary interventions by the ECB, which cut the benchmark interest rate to 1% and announced 60 billion euros plan to purchase bonds to boost liquidity and spending. These policies, in addition to other fiscal policies, managed to jolt the economy out of recession.

European exports surged to the highest level in more than 18 months in September as global demand recovered, giving an impetus to exports which edged up 5.5% from a month earlier when they slumped 4.1%, according to the European Union’s statistics office.

Sales overseas are considered the catalyst for growth in many European economies, especially Germany, which is regarded as the world's biggest exporter.

Exports inclined, despite the dollar's fall against the euro, which is reducing the appeal of European commodities by making it less competitive. The dollar has lost near 20% versus the dollar in the past seven months and it dropped to the lowest level in 15 months against the European single currency in November.

ECB in the bulletin released in November, raised their growth forecasts for the euro zone to a 3.9% drop in 2009, instead of 4.5% expected previously. In 2010, the bank expects growth to reach 1% from 0.3% and in 2011; where it will record 1.6% instead of 1.5%.

http:///sitemap.xml

Singapore economy expanded 0.6% in the third quarter

2009-11-20T00:38:00.001-08:00

Singapore economy expanded 0.6% in the third quarter

Singapore's economy expanded in the third quarter of this year, recording the second straight expansion proving that the Asian economy is recovering from the worst financial crisis since the great depression, worth mentioning that the government raised its inflation expectations amid increasing housing prices.

Singapore's GDP final reading grew 0.6% in the third quarter from a year earlier compared with a previous contraction by 3.3% in the second quarter and the reading came more than analyst's estimates of 0.5%. On quarterly basis, gross domestic product expanded 14.2% from a preliminary 14.9%, while forecasts referred to 14.0%.

The Trade Ministry said the economy is expected to shrink between 2.0% and 2.5% this year before it expands between 3% and 5% in 2010. Regarding inflation expectations, consumer prices are anticipated to gain between 2.5% and 3.5% amid higher house prices compared with earlier forecasts of 1% to 2.

However, the manufacturing sector that accounts for about quarter of the economy, rebounded 6.6% in the third quarter from a year earlier after it dropped 1.1% in the quarter ended June. The world stimulus plans helped to spur demand for Singapore products, encouraging manufacturers to enhance productivity which is supporting economic recovery.

Singapore exports also had a big role in supporting economic growth, despite non oil domestic exports fell 6.1% in October from a year earlier. The government raised its forecasts for exports as overseas shipments are anticipated to shrink between 10% and 11% less than previous forecasts of a decline by 12%, while exports are anticipated to incline between 7% and 9% during next year.

Since Singapore economy depends on electronics and pharmaceutical exports, it suffered from deeper recession than other countries in the Asian region as demand for electronics and pharmaceutical products declined sharply before global stimulus spending supported demand to pick up. Lim Hng Kiang Singapore's Trade Minister said that the government aims at keeping the manufacturing sector an "integral" part of the economy in order to accelerate economic growth.

The services industry declined 2.2% in the third quarter following a drop by 4.9% in the previous three months, while the construction industry rose 12.8%. Yet, the Central Bank of Singapore expects the building industry to weaken next year after construction projects are completed.

http:///sitemap.xml