Saturday, July 17, 2010

#Stocks to watch:* Titan, Southern Steel, Lafarge, Fitters

KUALA LUMPUR: Key regional markets including Bursa Malaysia could see downside pressure in the week ahead, starting Monday, July 19 after the sharp fall on Wall Street on Friday.

The fall on Wall Street was triggered by dismal consumer sentiment data and anemic revenues from GE and two big banks'' -- Bank of America and Citigroup.

Bank of America and Citigroup shares fell as the banks' results highlighted the sluggishness of the U.S. economic recovery and costs of potential regulation, offsetting better-than-expected quarterly profits on lower credit losses.

The slide in the S&P 500 was a decisive break of an 8% rise over the last two weeks as investors lost hope that strong earnings could overcome doubts about the economic outlook.

The Dow Jones industrial average dropped 261.41 points, or 2.52%, to 10,097.90. The Standard & Poor's 500 Index slid 31.60 points, or 2.88%, to 1,064.88. The Nasdaq Composite Index lost 70.03 points, or 3.11%, to 2,179.05.

At Bursa Malaysia, stocks to watch are Titan Chemicals Corp Bhd, SOUTHERN STEEL BHD [], LAFARGE MALAYAN CEMENT BHD [] (LMC) and FITTERS DIVERSIFIED BHD [].

South Korea's Honam Petrochemical Corp has launched a takeover of Titan Chemicals Corp Bhd, to acquire remaining 72.32% stake or 1.249 billion shares for RM2.93b or RM2.35 a share.

Its major shareholders Union Harvard Investments S.R.L, CGDC Investments Corporation, Permodalan Nasional Bhd, and AmanahRaya Trustees Bhd had signed agreements to sell their collective stakes to Honam.

Southern Steel Bhd has received a notice of conditional take-over offer from Signaland Sdn Bhd to acquire all the shares, which it does not own, for RM2.05 cash per share.

It should be noted the shares jumped 13 sen to end at RM2.04 last Friday, ahead of the announcement. Its 52-week high was RM2.69 and its 52-week low was RM1.58.

'The board does not intend to seek an alternative person to make a take-over offer for the offer shares,' Southern Steel said.

Signaland had acquired 113.38 million shares or 27.03% at RM2.05 per share for RM232.43 million shares from NatSteel Holdings Pte Ltd.

Prior to the acquisition, the offeror and persons acting in concert, owned 181.25 million shares or 43.21% stake. After the acquisition, the offeror and persons acting in concert, saw their collective interest increase from 43.21% to 70.24%.

Should they hold more than 90% of the listed shares, it would seek to delist Southern Steel. However, if it receives more than 75% or less than 90% of the listed shares, it would explore various options to address the public shareholding spread.

In LMC, Lafarge SA had placed out an 11.2% stake or 95.15 million shares in LMC at RM6.24 a share. This was a 3.7% discount to Thursday, July 15's closing price of RM6.48 and a 4.0% discount to the five-day VWAP price of RM6.50).

In Fitters Diversified, its managing director Datuk Richard Wong Swee Yee attracted attention with his acquisitions of shares and warrants in the fire fighting equipment manufacturer.

His and family's equity interest in the company is just short of the 33% required to trigger a general offer. He owns 32.85% or 47.39 million shares as at May 27. More in The Edge weekly.

Wall St dives on weak consumer sentiment and revenues

NEW YORK: Dismal consumer sentiment data and anemic revenues from GE and two big banks slammed U.S. stocks on Friday, July 16 driving down major indexes more than 2 percent.

The slide in the S&P 500 was a decisive break of an 8 percent rise over the last two weeks as investors lost hope that strong earnings could overcome doubts about the economic outlook.

"Economic recoveries rarely go smoothly," said Gail Dudack, chief investment strategist at Dudack Research Group in New York.

"They're very sensitive to anything that helps or hurts confidence, on the corporate side and the consumer side."

General Electric Co, Bank of America Corp and Citigroup Inc joined the list of major companies that beat Wall Street's expectations, but investors unloaded some shares of all three after the companies reported a drop in quarterly revenues.

"The next step for earnings has to be top line or revenues, and revenues slowed down along with the consumer and the economy in the second quarter," Dudack said.

Bank of America, the biggest U.S. bank, slid more than 9 percent and the S&P financial index dropped 4.4 percent as investors fretted about how banks will make money going forward.

The Dow Jones industrial average dropped 261.41 points, or 2.52 percent, to 10,097.90. The Standard & Poor's 500 Index slid 31.60 points, or 2.88 percent, to 1,064.88. The Nasdaq Composite Index lost 70.03 points, or 3.11 percent, to 2,179.05.

Volume picked up late in the day after waning since the beginning of July.

For the week, the Dow fell 1 percent, while the S&P 500 dropped 1.2 percent and the Nasdaq gave up 0.8 percent.

During Friday's session, GE's stock fell 4.6 percent to $14.55, while Citigroup lost 6.3 percent to $3.90. Bank of America was down 9.2 percent at $13.98.

Weak energy costs pushed consumer prices down for a third straight month in June, U.S. government data showed. That report and the Thomson Reuters/University of Michigan data were the latest in a string of economic indicators showing the pace of the recovery is slowing.


Google Inc shares also sagged after the company missed profit expectations for the first time in two years. The stock was down 7 percent at $459.61.

Among the Nasdaq's other leading decliners, Gilead Sciences Inc tumbled 8.5 percent to $31.94 after Jefferies cut its price target on the stock to $38.00 from $48.00.

The Thomson Reuters/University of Michigan survey of consumers showed U.S. consumer sentiment fell far more than expected to 66.5 in a preliminary July reading, down sharply from 76.0, June's final number. Earlier, the U.S. Labor Department reported the U.S. Consumer Price Index dipped 0.1 percent in June, which was weaker than the forecast for no change.

The S&P's consumer discretionary sector was among the biggest losers; the sector's index fell 3.5 percent. - Reuters

Bank of America, Citi results show hurdles ahead

CHARLOTTE/NEW YORK: Bank of America and Citigroup shares fell as the banks' results highlighted the sluggishness of the U.S. economic recovery and costs of potential regulation, offsetting better-than-expected quarterly profits on lower credit losses.

Following JPMorgan Chase & Co on Thursday, the banks reported on Friday, July 16 that investment banking profits fell between 20 and 40 percent from the first quarter because trading dried up in the wake of the "flash crash" and the European debt crisis. That is a bleak sign for Goldman Sachs Group Inc and Morgan Stanley, due to report next Tuesday and Wednesday.

Revenue was down broadly at Bank of America and Citi from a year earlier and they, like their rivals, are grappling with how their businesses will be affected by the financial reform bill passed by the U.S. Congress on Thursday.

Executives at Bank of America Corp and Citigroup Inc said the impact of the bill was uncertain.

In a presentation to analysts, Bank of America said the costs from credit card reform would total $1 billion this year, changes to service charges and other fees could cost up to $2 billion annually, while debit card reform could cost up to $2.3 billion. The bank will also report a goodwill charge as large as $10 billion this quarter, due to new debit card fee rules.

Citi executives, like those of JPMorgan on Thursday, said they were unable to quantify the possible costs for their business.

Banks will have to eke out revenue and cut costs wherever they can and try to make up elsewhere any revenue losses from financial reform, said Nancy Bush, an analyst at NAB Research.

"It's going to be this way for the next several years," she said. "It's an extremely tough environment." U.S. unemployment hovers around 10 percent and a report on Friday showed that consumer sentiment dropped to a near one-year low in July.fell their most in more than a year, down 9 percent to $13.98, wiping more than $10 billion from its market capitalization of $154.5 billion on Wednesday. Citigroup, which is No. 3 behind JPMorgan, slumped more than 6 percent to $3.90. Bank of America and Citigroup were the top two most-traded shares on Friday.

Shares of No. 4 Wells Fargo & Co, which reports results next Wednesday, fell 5.7 percent to $26.24. The KBW Banks Index was down 5.7 percent.


Bank of America and Citigroup said credit costs broadly eased in the second quarter, allowing them to put less money aside against future losses. Bank of America and Citi both released about $1.2 billion net of taxes, equivalent to about 38 percent and 43 percent of their profit, respectively.

"Both reports reflect a significant improvement in credit quality but little in the way of identifying how they're going to go from that to revenue growth," said Marshall Front, chairman of Front Barnett Associates.

Loans at Bank of America slipped about $20 billion or 2 percent to $956 billion compared to the first quarter, while at Citi total loans fell about $30 billion, or 4 percent to $692.2 billion. Analysts and investors expressed concern about bank executives' comments that credit demand was still weak.

"I don't see a great deal of demand in the near term, at least until this uncertainty is removed," said Citigroup Chief Financial Officer John Gerspach, on a call with reporters.

To boost earnings without relying on reducing loss reserves, banks are likely to increase cost-cutting, Bush said.

Bank of America Chief Executive Brian Moynihan told analysts on a conference call, "Over the next several years, costs are going to be an issue for our industry, especially on the consumer side."

Moynihan, Wall Street's newest CEO, took over from Kenneth Lewis at the start of the year and has largely been lauded for his work at the bank. He has worked to reestablish ties to the investor community and regulators, relationships that became strained through the financial crisis and a probe into Bank of America's acquisition of Merrill Lynch & Co Inc.

Bank of America also reported $1.1 billion in pretax gains from sales of stakes in two Latin American banks. Citigroup reported that it reduced its special asset pool for housing toxic assets such as subprime mortgages by $38 billion. That unit, known as Citi Holdings, now makes up less than a quarter of Citigroup's balance sheet.


In recent quarters, banks have depended on their investment banking units to perform well while their consumer business was hit by rising losses. Now, as consumer loan losses are less of a worry, trading revenue has suffered as stock markets were hit by a "flash crash" in the United States and sovereign debt problems in Europe.

Revenue at Bank of America's investment bank slumped to $6 billion in the second quarter from $9.8 billion in the first quarter. A large part of that drop was from fixed income, currencies and commodities trading, which fell 58 percent or $3.2 billion to $2.3 billion. Citigroup also said its securities and banking revenue fell, down 26 percent from the first quarter to $6 billion.

These units were also hurt by a tax the banks paid on UK bankers' bonuses. The tax looks set to cost the five major U.S. banks with businesses in London about $2.5 billion in all.

Bank of America, which bought investment bank Merrill Lynch & Co at the end of 2008, said Merrill's brokerage unit saw profit fall 12 percent and its assets under management were down 3 percent. - Reuters

Friday, July 16, 2010

Bank of America posts net income of US$3.1b

CHARLOTTE (North Carolina): Bank of America Corp, the largest U.S. bank by assets, reported higher-than-expected second-quarter profit as credit costs declined.

The Charlotte, N.C.-based bank said on Friday, July 16 net income was $3.1 billion, or 27 cents per share, down from $3.2 billion, or 33 cents per share, a year earlier. Analysts had expected 22 cents per share, according to Thomson Reuters I/B/E/S.

"Our quarterly results show that we are making progress on our strategy to align around our three core customer groups -- consumers, businesses and institutional investors," Chief Executive Brian Moynihan said in the company's earnings announcement.

Bank of America's profit beat came despite an 11 percent drop in revenue. Revenue net of interest expenses decreased to $29.4 billion from $33.1 billion.

The bank's shares were down 4.4 percent to $14.71 in premarket trade.

Noninterest income fell 23 percent to $16.2 billion due to lower equity investment and mortgage banking income, and a decline in trading account profits.

But the bank's credit costs declined for the fourth straight quarter. Its provision for credit losses was $8.1 billion, down $1.7 billion from the first quarter and down $5.3 billion from a year earlier.

During the quarter, the bank recognized $1.1 billion in pretax gains from sales of noncore assets, including its main investment stakes in two Latin American banks -- Itau Unibanco and Santander Mexico.

The bank must raise $3 billion through asset sales by year's end as a condition of repayment of its government bailout.

The bank's shares fell 20 percent during the second quarter, outpacing a KBW Bank Index decline of 11 percent, amid an industry sell-off as the U.S. Congress debated financial reform. - Reuters

Citigroup second-quarter earnings fall 37%

NEW YORK: Citigroup Inc posted a $2.7 billion quarterly profit, down 37% from the same quarter last year, hurt by lower revenue in its investment banking business.

The third-largest U.S. bank posted second-quarter profit of 9 cents a share, compared with $4.28 billon, or 49 cents a share, a year earlier.

Analysts on average expected 5 cents a share before special items, according to Reuters Estimates.

Through Thursday's stock market close, the company's shares had risen 26 percent this year, while the broader U.S. banking sector had risen 17 percent. - Reuters

GE ends long slump with 16 pct profit growth

BOSTON: General Electric Co reported a 16.1 percent rise in profit, topping analysts' expectations and ending a streak of nine quarters of decline, on strong demand for healthcare and oil and gas equipment.

The largest U.S. conglomerate said on Friday, July 16 that orders, which indicate future sales, rose 8 percent, and Chief Executive Jeff Immelt reiterated plans to raise the dividend in 2011.

GE shares rose 1 percent in premarket trading, though investors noted that revenue came in lower than they had expected.

"GE's economic environment continues to improve," said Immelt, who has been driving the company to scale back its hefty finance unit after that business proved to be its weak spot during the recent recession. "We expect to grow earnings and dividends in 2011 and beyond."

That marked a brighter tone on the economy for Immelt.

GE said net earnings attributable to common shareholders came to $3.03 billion in the second quarter, up from $2.61 billion a year earlier.

The result, which worked out to 30 cents per share from continuing operations, topped Wall Street's forecast of 27 cents per share, according to Thomson Reuters I/B/E/S.

Revenue eased 4.3 percent to $37.44 billion, lower than the $38.37 billion analysts had expected.

"It's a nice beat on the bottom line on EPS, but the revenue number is still light," said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors in Cincinnati, which holds GE shares. "Cash flow was surprisingly stronger than I expected. That's a material improvement. It looks like it's still a cost-cutting story."

The company is in the process of pruning its finance arm -- which Immelt says he allowed to grow "too big" -- in order to focus on financing equipment purchases, commercial lending and investing in real estate. Continuing that trend, on Thursday GE reached a $1.9 billion deal to sell its controlling stake in Latin American bank BAC-Credomatic to Colombia's Grupo Aval.

Given the progress in scaling back GE Capital, investors may be willing to look past lower-than-expected revenue, said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire, which holds GE shares.

"You can forgive them that shortfall" De Gan said. "Anything that gets them to a smaller GE Capital balance sheet with less risk is going to be viewed positively."

Profit increased 93 percent at GE Capital as credit losses and impairments declined through the quarter. Earnings at the company's TECHNOLOGY [] infrastructure arm fell 11 percent, hurt by weak demand for railroad locomotives.

GE, the world's biggest maker of jet engines and electricity-producing turbines, experienced an uptick in demand for hospital equipment such as CT-scan machines during the quarter.

GE shares rose to $15.47 in premarket trading. The shares are little changed this year, up 0.5 percent, compared with a drop of 0.6 percent in the blue-chip Dow Jones industrial average.

The company slashed its dividend by 68 percent during the financial crisis.

The Fairfield, Connecticut-based company expects to close the year with about $25 billion in cash, after the NBC sale closes. Part of that money is earmarked to buy back the $3 billion in preferred shares GE sold to Warren Buffett's Berkshire Hathaway Inc in October 2008. - Reuters

Mild bargain hunting

KUALA LUMPUR: Share prices on Bursa Malaysia closed broadly higher on Friday, July 16, supported by mild bargain hunting activities as investors lauded the government's subsidy rationalisation programme, dealers said.

The FBM KLCI closed 2.57 points or 0.19% higher at 1,336.65. The 30-stock index, which opened 0.22 of a point lower at 1,333.86, recorded an intra-day high of 1,336.65 and an intra-day low of 1,332.68.

The INDUSTRIAL INDEX [] shed 4.45 points to 2,655.03, the PLANTATION [] Index slipped 9.88 points to 6,289.5 but the Finance Index surged 51.931 points to 12,100.61.

The FBM Emas Index improved 29.02 points to 9,048.43, the FBM70 [] Index increased 23.71 points to 9,085.5 but the FBM Ace Index eased 1.71 points to 3,764.61.

Gainers led losers 476 to 206 while 263 counters were unchanged, 423 untraded and 28 others were suspended. Total volume improved to 793.61 million shares, worth RM1.196 billion.

MIMB Investment Bank's Head of Research Chan Ken Yew said buying interest was mostly seen in small-and-medium cap counters as well as consumer-driven stocks like glove, finance and banking related stocks.

"Consumer-driven stocks like glove and banking are still doing good especially with increasing public consumption activities that continues to drive the country's growth," he said.

Chan also said the government's move was also timely as public consumption would likely be among the main driver of the domestic economy. ''

On Thursday, the government announced the reduction of subsidies for petrol, diesel, liquefied petroleum gas (LPG) and sugar as a first step towards the gradual subsidy rationalisation programme effective Friday.

Newly-listed CapitaMalls Malaysia Trust closed at 98 sen, or two sen below its reference price of RM1.

Bina Puri surged 31 sen to RM1.42 after the company announced during the midday break that its joint venture with UEM CONSTRUCTION [] Sdn Bhd had been appointed the main contractor for the construction of KL International Airport (KLIA) New Permanent LCCT complex at the KLIA. The total contract value is RM997.23 million.

Scomi Engineering jumped 36 sen to RM1.51 after the company announced a total gross special interim dividend of 29.5 sen per share. The special interim dividend will be paid on Aug 26.

Lafarge Malayan Cement advanced 16 sen to RM6.64 after Lafarge SA place out an 11.2% stake in the former at RM6.24 a share.

AgBank closes $19.3 bln IPO with tepid HK debut

HONG KONG: Agricultural Bank of China's $19.3 billion IPO limped across the finish line on Friday after a three-month sprint, its modest Hong Kong debut reflecting concerns over valuations and investor cautiousness.

The near-record deal, kicked-off by surprise just ahead of a long Easter weekend, marks the final step in Beijing's effort to list its top four banks and removes a giant overhang for China's stock markets that are braced for more share sales.

AgBank's main rivals plan multi-billion-dollar offerings in the coming months to bolster their capital ratios after a lending binge last year, while sources say American International Group plans to spin-off its Asian unit in a Hong Kong IPO that could raise $15 billion.

Shares in AgBank hit a high of HK$3.31 versus an issue price of HK$3.20 and closed up 2 percent at HK$3.27 in trading volume one-sixth of the overall Hong Kong market on Friday.

Though the IPO lacked the pop of its rivals, it came to market at a difficult time, as it pushed through the deal while global jitters loomed.

"You can't really compare it with the sterling performance of ICBC and other banks as those happened in a different market backdrop," said Alfred Chan, chief dealer at Cheer Pearl Investment. "At HK$3.30, (AgBank) reflects full value so there is no rush among retail investors to jump in and buy."

Industrial & Commercial Bank of China and Bank of China both soared 15 percent on their Hong Kong openings after listing at the start of a bull market in 2006.

This year, Hong Kong's Hang Seng index is down about 8 percent, while the Shanghai Composite has shed more than a quarter, battling Greece for the dubious honour of the world's worst performing market.

AgBank's Shanghai-listed shares rose less than 1 percent on their first day's trade on Thursday.


Founded in 1951 by Mao Zedong as the rural unit of the central bank, AgBank is the last China's "Big Four" state-owned lenders to list its shares.

With almost 24,000 branches and some 441,000 employees, AgBank has almost double the staff and twice as many outlets as Bank of China, and a slightly smaller asset base. ICBC, the world's largest bank by market capitalisation, has 16,000 branches and 386,000 employees.

The underwriters worked hard to beef up the deal size with early investors, while giving top treatment to mutual funds who agreed to early commitments on the order book.

But the IPO generated lacklustre demand from Hong Kongers, with the retail portion of its deal only 5.9 times covered, making it the worst among the state banks' IPOs to appeal Hong Kong investors interests.

"Certainly the performance of (AgBank) will impede demand for the likes of Bank of China or ICBC's funding," Ben Collett, Head of Equities at Louis Capital Markets, said in a Reuters Insider television interview, citing waning appetite for bank shares.

AgBank's IPO could still rise to a world record $22.1 billion if additional shares set aside in an over-allotment option are sold in the coming weeks. Its $128 billion market capitalisation ranks it the sixth largest bank in the world, with its main China rivals occupying three of the five spots above it.


Executives at the Beijing-based bank gave a crystal model of the company's headquarters to the Hong Kong Stock Exchange.

Hong Kong legislators including CEO Donald Tsang were on hand to watch, as were CICC banking head Levin Zhu and Deutsche Bank CEO Josef Ackermann.

Also present were the investment bankers tasked with selling the offering to mutual funds and arranging the cornerstone investors which accounted for $5.45 billion of the Hong Kong IPO.

The banks worked for months without knowing who would be the top coordinator, nor what fee they'd earn. In the end, the earned 1.4 percent for the Hong Kong portion, the lowest IPO fee among China's top four banks. For both Hong Kong and Shanghai, the total payout to investment bankers was around $250 million.

"To be honest, we're all exhausted," said a banker involved in the deal but who did not want to be named. The three months involved meetings at all hours, morning attendance records and daily report cards, a process run by Pan Gongsheng.

Pan, AgBank's vice president, is the man credited with being the driving force behind the IPO process, having led ICBC in its record $21.9 billion float in 2006.

In an interview with Reuters on Friday, Pan said he was confident that 2010 net profit will exceed its previously announced target of $12.2 billion, citing net interest margins widenening, higher intermediate business income, and low credit costs.

"The economic growth in China's rural areas is faster than that of cities," the 46-year-old executive said. "With the development of China's rural economy, the key indications of our rural business will see a gradual increase among all".


AgBank's Chairman Xiang Junbo, a war hero and award winning script writer, was relaxed in the morning, eating breakfast alone at Hong Kong's Shangri-La hotel before the listing.

"After this listing, the bank will enhance its competitiveness in the market and its risk management," he said at the ceremony, sporting a red tie.

One factor weighing on AgBank's IPO is the slight premium to Bank of China in terms of price to book value, leading some fund managers to view the stock expensive.

The bank was historically the weakest of China's top four lenders, though a capital injection and a hive-off of bad loans have brought the company back to health.

The offering price represents 1.65 times AgBank's forward book value, just above BoC, but below that of ICBC and CCB.

CICC, Goldman Sachs, and Morgan Stanley led the Hong Kong offering, with JPMorgan, Macquarie, Deutsche Bank and AgBank's own securities unit also involved. CICC, Citic Securities, Galaxy and Guotai Junan Securities handled the Shanghai portion. - Reuters

Maxis to increase household penetration in East Coast to 80%

KUALA LUMPUR: Telecommunication company Maxis Bhd plans to increase its household penetration in the East Coast to 80% by adding 50% more transmission sites.

The RM1.4 billion modernised network project was working progressively well, said its vice president and head of products, devices and innovation T Kugan, after launching FINDER301, a new application from Maxis, here on Friday, July 16.

"Maxis always welcomes partners in sharing the transmission towers," he said in response to a question.

FINDER301 is a directory service that allows Maxis customers to locate and share information.

Customers can find the closest service points in the country for key services such as emergency services and products from leading merchants, including banks.

Maxis said FINDER301 could help the customer in choosing the right product or service destination and provide a map according to the location's relative distance from the customer.

There is no premium or registration charge to use the directory and only normal SMS and data charges apply, the company said.

"Today, FINDER301 offers customers Malaysia's largest food directory with over 12,000 listings of food outlets sourced by teams on the ground," Kugan said.

He said Maxis was pleased to offer a boost to Malaysian business through the service, enabling them to communicate their locations, touch points and promotions to customers. ' Bernama

RBS arranges for Lafarge SA sale of 11.5% LMC stake

KUALA LUMPUR: The Royal Bank of Scotland (RBS) arranged for Lafarge SA to place out an 11.2% stake in LAFARGE MALAYAN CEMENT BHD [] at RM6.24 a share.

RBS said on Friday, July 16 the 11.2% stake, representing 95.15 million shares, was placed out at RM6.24 a share (a 3.7% discount to Thursday, July 15's'' closing price of RM6.48 and a 4.0% discount to the five-day VWAP price of RM6.50).

It said the final offer size in value was 143.9 million euros or US$185.5 million.

RBS said this was the largest share placement successfully completed in Malaysia this year. It added the final pricing at RM6.24 was a 3.7% discount to last close of RM6.48

"Top quality investor participation - more than 25 quality institutional investors in Asia, Europe and the US," it said.

Lafarge SA, which had held 62.2% or Lafarge Malayan Cement, had earlier announced its decision to explore the potential sale of a minority interest of up to 11.2% in the latter.

After the sale, Lafarge S.A. would remain the majority shareholder, with a minimum 51% shareholding and management control of the company.

#Flash* Korea's Honam Petrochemical launches RM2.93b takeover of Titan Chemicals

KUALA LUMPUR: South Korea's Honam Petrochemical Corp has launched a takeover of TITAN CHEMICALS CORP. BHD []., to acquire remaining 72.32% stake or 1.249 billion shares for RM2.93b or RM2.35 a share.

Titan said on Friday, July 16 that its major shareholders Union Harvard Investments S.R.L, CGDC Investments Corporation, Permodalan Nasional Bhd, and AmanahRaya Trustees Bhd had signed agreements to sell their collective stakes to Honam.

Bursa 2Q10 net profit down by 21% to 27.5m

KUALA LUMPUR: BURSA MALAYSIA BHD []'s net profit for the second quarter ended June 30, 2010 (2Q10) fell by 21% or RM7.5 million to RM27.5 million from RM35 million a year ago.

In a statement on Friday, July 16, it said 2Q revenue dipped to RM84.27 million from RM94.58 million a year ago. For the six months ended June 30, Bursa's net profit rose to RM55.55 million from RM50.52 million a year earlier.

The stock market operator declared an interim single-tier dividend of 9.5 sen per share.

Bursa said equities trading revenue decreased by 23% to RM36.8 million in 2Q10 compared to 2Q09. Daily average trading value for on-market trades (OMT) and direct business trades (DBT) was lower at RM1.29 billion (2Q09: RM1.56 billion), it said.

Derivatives trading revenue decreased by 23% to RM9 million in 2Q10 compared to 2Q09. Total contracts traded in 2Q10 were 1.44 million compared to 1.88 million traded in 2Q09.

Stable revenue increased by 13% to RM26.7 million in 2Q10 compared to 2Q09 primarily due to higher listing fees and issue fees as a result of an increase in initial public offerings (IPOs), structured warrants and secondary issues.

The increase in stable revenue was also due to the recognition of CDS fees billed to Authorised Depository Agents from September 2009, said Bursa.

Other operating revenue increased by 7% mainly due to the new processing fee income streams effective August 2009.'' This was partially offset by lower interest earned from participants' contributions in 2Q10 compared to 2Q09, it said. Other income remained fairly stable at RM7.8 million in 2Q10 and 2Q09, it said.

Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff said its financial performance reflected its continued focus on delivering sustainability and overall business growth.

As demonstrated by the higher trading value for the period under review, the market sentiment improved somewhat although many investors still adopted a cautious outlook.

Nonetheless, we hope to see greater interest in our market moving forward with the inclusion of new investment "offerings such as Exchange Traded Funds (ETFs) and Real Estate Investment Trusts (REITs), as well as Callable Bull/Bear Certificates (CBBC).

"In addition, as a result of the recognition given by China's Qualified Domestic Institutional Investor (QDII) which now allows the inflow of China funds to the Malaysian finance and capital markets, we hope to see greater foreign investor attention,' added Yusli.

FBM KLCI claws back into the black

KUALA LUMPUR: The FBM KLCI bucked the trend clawed back into positive territory at the mid-day break on Friday, July 16, as most of regional peers suffered losses on persistent concern about the health of the US economy and worries that a slowdown in China's growth would affect exports.

The dollar weakened broadly after reports that growth in industrial production had slowed sharply, offsetting a bright start to the US earnings season earlier this week which had briefly boosted markets, according to Reuters.

At the regional markets, Japan's Nikkei 225 fell 2.51% to 9,442.68, the Shanghai Composite Index loset 1.2% to 2,395.31, the South Korean Kospi Index down 0.51% to 1,742.33, Taiwan's Taiex Index 0.14% to 7,693.61 and Hong Kong's Hang Seng Index slipped 0.09% to 20,236.53. The Singapore Straits Times Index rose 0.17% to 2,948.46.

At Bursa Malaysia, the FBM KLCI gained 1.62 points to 1,335.70 at the mid-day break, lifted by gains including at CIMB, Genting, Public Bank and Tanjong.

Gainers led losers by 311 to 232, while 275 counters traded unchanged. Volume was 400.42 million shares valued at RM530.31 million.

Crude palm oil for the third month delivery surged RM44 per tonne to RM2,455; gold fell 60 US cents per ounce to US$1,207.65 (RM3,864.48), while crude oil shed 16 US cents per barrel to US$76.46.

Among the major gainers on Bursa Malaysia, CIMB added six sen to RM7.13, Genting nine sen to RM7.48, Public Bank and Tanjong rose eight sen each to RM12.08 and RM17.46, while AMMB and PLUS were up two sen each to RM5.12 and RM3.59.

Scomi Engineering jumped 34 sen to RM1.49, Kossan 26 sen to RM8.44, Tomypak and Hup Seng up 17 sen each to RM3.67 and RM1.74, HELP added 16 sen to RM3.66 while Jetson rose 15 sen to RM1.70.

Among the losers, BAT fell 40 sen to RM43.50, Goodway, F&N and PetDag fell 14 sen each to 66 sen, RM14.06 and RM9.53, while Keck Seng lost nine sen to RM5.62.

Time was the most actively traded counter with 23.68 million shares done. The stock added two sen to 43 sen.

Other actives included Scomi, Scomi Marine, Timecom and CapitaMalls Malaysia Trust.

Bina Puri-UEMC JV lands RM997.23m LCCT job

KUALA LUMPUR: BINA PURI HOLDINGS BHD []'s joint venture with UEM CONSTRUCTION [] Sdn Bhd (UEMC), a UEM Group Bhd subsidiary, has been appointed the main contractor for the construction of KL International Airport (KLIA) New Permanent LCCT complex at the KLIA.

The total contract value is RM997.23 million.

In a filing to Bursa Malaysia Securities on Friday, July 16, Bina Puri said its group managing director Senator Tan Sri Tee Hock Seng had accepted the letter of award in the name of UEMC-Bina Puri JV from Malaysia Airports Holdings Bhd.

Bina Puri's acceptance of the award confirms a report by The Edge on July 5 that the JV beat the likes of heavyweights MALAYSIAN RESOURCES CORP [] Bhd and Sunway Construction Sdn Bhd to the job.

Bina Puri said with the award, the group's current order book stood at RM2.7 billion as at to date.

The total value of contracts it had secured in 2010 was RM1.51 billion, adding that the LCCT project was expected to be completed within 20 months, it said.

"The contract is expected to contribute positively to the earnings of Bina Puri Group for the financial year ending Dec 31, 2010," it said.

Boeing: Market for 30,900 new commercial airplanes worth US$3.6t over next 20 years

KUALA LUMPUR: Boeing forecasts a US$3.6 trillion (RM11.52 trillion) market for new commercial airplanes over the next 20 years as world economies rebound and strong demand for new and replacement aircraft spurs growth.

The Boeing 2010 Current Market Outlook (CMO), released on Thursday, July 15 in London, foresees a market for 30,900 new commercial passenger and freighter airplanes by 2029.

The report, now in its 46th year of public release, is widely regarded as the most comprehensive and respected analysis of the commercial aviation market, and reflects the improving, yet still unstable conditions facing the industry.

"The world market is doing much better than last year, but there are still challenges," said Randy Tinseth, vice-president of marketing for Boeing Commercial Airplanes, in a statement to Bernama on Friday.

'Looking at 2010, we see a world economy that continues to recover. We expect the world economy to grow above the long-term trend this year. As a result, both passenger and cargo travel will grow this year. Airline revenue and yields are up, but fuel prices remain volatile."

Passenger traffic is expected to grow at a 5.3% annual rate over the long-term, driven by economic growth from regions with diverse airplane needs.

The single-aisle airplane segment will continue to dominate growth worldwide due to the proliferation of low-cost carriers, emerging markets such as India, China and Southeast Asia, and continuing instability of fuel prices.

The single-aisle segment has outpaced long-haul markets over the last decade and will continue to trend upward as older fleets are retired.

The Asia-Pacific region shows the most robust market gains, with China leading the way.

"Today, about one-third of all airline traffic touches the Asia-Pacific region, and as a result of the growth in this market, by 2029 almost 43% of all traffic will be to, from, or within the region," said Tinseth.

The airlines of the Asia-Pacific region will also be the largest buyer of twin-aisle airplanes ' about 40% of the total demand.

The Middle East, which has been one of the fastest growing regions for air travel in recent years, represents another very strong market.

Airlines in the Middle East have been growing rapidly by taking advantage of geography, demographics, airplane TECHNOLOGY [] and well-coordinated growth and investment plans.

The North American and European markets will see substantial demand for replacement airplanes as they retire aging less-efficient jets.

Robust growth in emerging markets with dynamic populations and growing incomes will lead towards a more balanced airplane demand worldwide.

Boeing predicts that airlines will grow by responding to their passengers' preference for more flight choices, lower fares and direct access to a wider range of destinations.

Air carriers will focus on offering more flights using more efficient airplanes, rather than on using significantly larger airplanes. As a result, the market for large airplanes (747 and larger) is small at 720 aircraft.

But it remains an important market segment with a value of US$220 billion. It is a market largely for replacement of existing airplanes, not additional growth, with 45% of the demand from Asian customers and 23% from Middle East customers.

Boeing projects the world freighter fleet to increase from 1,750 to 2,980 airplanes ' an increase of more than two-thirds. This growth will require 2,490 freighters.

Additions to the fleet will include 740 new-production freighters (worth US$180 billion at today's catalog prices) and 1,750 airplanes converted from passenger models.

Large (more than 80 tonnes/88.2 tons capacity) freighters will account for 520 new-build airplanes. Medium (40 to 80 tonnes/44.1 to 88.2 tons) freighters will total 210 airplanes.

Virtually all of the standard-body freighters (less than 45 tonnes/49.6 tons) are expected to come from conversions of passenger airplanes.

The recession resulted in significantly reduced air cargo traffic in 2009, the base year for the Boeing forecast.

From this low-traffic base, Boeing forecasts that world air cargo traffic will increase at an annual average of 5.9% through 2029. Included is the current strong year traffic growth that Boeing estimates will reach nearly 14% over full-year 2009 levels ' a significant spike in the 20-year growth projection.

"The inclusion of the high-traffic growth levels in 2010, following the recession, is driving our cargo forecast upward," said Tinseth.

"However, the strength of the industry and its growth will continue to be driven by sound fundamentals ' speed and reliability, consumer product innovation and global industrial interdependence."

The report and a feature, which provides an interactive database of forecast numbers, can be found at For a brief video of Randy Tinseth talking about Boeing's Current Market Outlook, visit ' Bernama

FBM KLCI stays in the red amid lacklustre trade

KUALA LUMPUR: The FBM KLCI remained in negative territory at 10am on Friday, July 17 in line with regional markets as concerns that a slowing economic growth in China could hit exporters caused investors to take profit.

Also, the overnight flat closing at Wall Street had given rise to worries that the pace of economic growth could be slower than expected.

At Bursa Malaysia, the FBM KLCI shed 0.34 of a point to 1,333.74, with losses including at PPB and Petronas Gas (PetGas). Gainers led losers by 151 to 132, while 198 counters traded unchanged. Volume was 133.42 million shares valued at RM114.26 million.

At the regional markets, Japan's Nikkei 225 fell 1.6% to 9,530.49, the Shanghai Composite Index 0.74% to 2,406.48, the South Korean Kospi down 0.52% to 1,742.21, Taiwan's Taiex down 0.29% to 7,682.13 and Singapore's Straits Times Index slipped 0.02% to 2,942.92.

Hong Kong's Hang Seng Index, however, opened 0.2% higher at 20.293.61.

On Bursa Malaysia, the top loser at 10am was F&N, which fell 18 sen to RM14.02. PPB and PetGas lost 14 sen each RM17.26 and RM10.16 respectively, Batu Kawan down eight sen to RM10.68, Tahps seven sen to RM3.65 and MPI down six sen to RM6.22.

Pharmaniaga shed five sen to RM5.45, while Perduren and UMW lost four sen each to RM1.01 and RM6.30 respectively.

Meanwhile, CapitaMalls Malaysia Trust (CMMT), which made its debut on the Main Market of Bursa Malaysia on Firday, slipped two sen to 98 sen with 7.47 million units done.

Kossan was the top gainer and added 28 sen to RM8.46.

Scomi Engineering, which announced a total gross special interim dividend of 29.5 sen per share, rose 25 sen to RM1.40.

Hup Seng, Jetson and Jetson warrants added 16 sen each to RM1.73, RM1.71 and 99.5 sen, respectively, while Cocoaland added 14 sen to RM1.92.

Time was the most actively traded counter with 11 million shares done. The counter gained 2.5 sen to 43.5 sen.

Other actives included Jetson, CMMT, Timecom and Berjaya Corp.

Nomura Research: HP rates could rise further in near term

KUALA LUMPUR: Nomura Research views that hire purchase rates in Malaysia could rise a further 20 bps in the near term following the 25 bps hike in the overnight policy rate by Bank Negara last week.

It said on Friday, July 16 that it noticed the lending rate for the purchase of cars has risen faster than the OPR increases.

Nomura Research said the quoted flat rate for a new non-national car was 3.5% last week, translating to an effective rate of about 6.5%. This is up from 2.8% (effective: 5.3%) in early 2010, translating to an increase of about 120bps versus the 75bps increase in the OPR over the same period.

"We believe that this is to compensate for the stiff competition in late 2009/early 2010 when effective lending rates fell about 100bps. We view that hire purchase rates could rise a further 20bps in the near term following the latest rate hike," it said.

The research house said following the 25bps hike in the OPR to 2.75% from 2.50%, all banks have increased their base lending rates (BLR) by a similar 25bps to 6.30%.

However, the increase in fixed deposits announced by banks on 13 July has lagged the BLR increase.

Its channel checks show fixed deposit rates for the larger banks (Maybank, CIMB and Public) have been raised by 25bps for shorter tenures and by 5bps for the 12-month rate and are now identical across the one month, three months, six months, nine months and 12 months.

Previously, Public Bank had the highest FD rates in the 3M-12M tenures. As a result, the spread between the 1M and 12M deposit rate has declined to just 10bps from 30bps.

"As 12-month deposits account for about 30% of total fixed deposits, we view this as positive for overall net interest margins," it said.

Among mid-sized banks, both AMMB and RHB Capital have relatively higher term deposit rates with the 6M, 9M and 12M FD rates at a 15-25bps premium to that offered by the big 3 banks. These have been raised by 10-30bps.

On the lending side, our channel checks show that mortgage rates are still being quoted at BLR minus 1.8-1.9%, which is unchanged from end 2009, Nomura Research said that for certain foreign banks, the rates could be 10-20bps lower.

Meanwhile, we noticed that the lending rate for the purchase of cars has risen faster
than the OPR increases.

The research house said it was maintaining its positive view on Malaysian banks. Interest margins will see a temporary expansion as variable rate loans (about 65% of total loans) will reprice faster than deposit rates while longer term deposits (12M) have been rising at a slower pace than the OPR/BLR.

"Our economists believe that there will be another OPR hike by year end to bring the rate to 3.0%. Our top picks within the
sector are Maybank, AMMB and AFG. While AMMB will be adversely affected by OPR hikes, this would be partly offset by active hedging by management as well as strong improvements in loan growth, car hire purchase rate hikes and better asset quality, in our view," it said.

Food stocks edge higher

KUALA LUMPUR: Consumer stocks, especially food related counters are up in late morning on Friday, July 16, with Hup Seng and Cocoland among the gainers

At 11.04am, biscuit maker Hup Seng is up 16 sen to RM1.73, Cocoland 16 sen higher also at RM2.54, London Biscuits 13 sen to RM1.22 while Kawan and Apollo advanced 10 sen each to RM1.40 and RM3.10.

However, some mild profit taking is seen in F&N, down 18 sen to RM14.02 with 33,000 shares done. F&N rallied to a record high on Thursday on expectations of a capital repayment.

Glove makers also see rising interest with Kossan 30 sen to RM8.48 and Supermax advancing 18 sen to RM6.37 and Adventa 10 sen to RM3.23.

OSK Research: Tenaga, Gamuda, MMC may gain from subsidy cut

KUALA LUMPUR: OSK Research said the government's decision to undertake an early subsidy cut, but at a smaller scale, were within its expectations.

It said on Friday, July 16 that as petrol prices are to be raised by only some 2.8% for now, it expects the impact on the auto, toll road and retail sectors to be limited.

The sugar price increase of 15% should see some costs being passed on to consumers but again, the impact on disposable income should be mild.

OSK Research said it expects more cuts in these and other goods possibly in 2011. It also identified three potential beneficiaries, namely TENAGA NASIONAL BHD [] which may secure its tariff hike, GAMUDA BHD [] and MMC Corp Bhd, which may lobby for subsidy savings be used to fund the KL MRT project, which may then kick off earlier rather than later.

"Overall, the cuts are a signal that economic reform is pushing ahead and we remain bullish on theFBM KLCI, particularly for 4Q, with an unchanged target of 1465 pts at year-end," it said.

CIMB Research: Sell on SEGi at RM1.94

KUALA LUMPUR: CIMB Equities Research has a Sell call on SEG INTERNATIONAL BHD [] at RM1.94.

It said on Friday, July 16 prices have rallied strongly to a high of RM2.06 on Wednesday, where a spinning top was formed. Again, here it sees signs that this uptrend is slowing down.

"MACD Histogram and RSI show bearish divergence which is usually a precursor to a reversal. At this point, it is still possible to climb towards the RM2.06-2.10 levels but we doubt the sustainability of it.

"Another bearish candle today could confirm that prices are taking a breather in the days and weeks ahead. A minimum retracement is about its 38%FR, which is around the RM1.40 levels. Bulls should remain vigilant in the days ahead," it said.

At RM1.94, the education service provider is trading at price to book value of 2.7 times.

Scomi Engineering up on special dividend

KUALA LUMPUR: SCOMI ENGINEERING BHD []'s share price jumped on Friday, July 16 after the company announced a total gross special interim dividend of 29.5 sen per share. The special interim dividend will be paid on Aug 26.

At 9.40am, Scomi Engineering was up 25 sen to RM1.40 with 1.92 million shares done.

It declared an interim dividend of six sen per share (gross) less 25% income tax; an interim tax exempt dividend of 11 sen per share; and an interim single tier exempt dividend of 12.5 sen per share.

The dividends would be paid to shareholders whose names appear on the record of depositors on July 30.

FBM KLCI opens lower

KUALA LUMPUR: The FBM KLCI opened lower on Friday, July 16 and was down 0.16 of a point to 1,333.92 at 9.10am, in line with the decline at Asian markets due to profit taking amid worries of a slowdown in the US economic growth.

Wall Street ended flat after spending much of Thursday in negative territory after an unexpected fall in regional factory activity and a third straight month of decline in producer prices raised concerns about deflation, cooling enthusiasm for the strong start to the earnings season, according to Reuters.

JPMorgan Chase & Co reported quarterly earnings that beat expectations, but offered a cautious outlook on the economy, it said.

At Bursa Malaysia, F&N was the top loser in early trade and fell 10 sen to RM14.10. Pharmaniaga and IOI Corp lost five sen each to RM5.54 and RM5.05 respectively, while George Kent slipped two sen to RM1.30.

Newly-listed CapitaMalls Malaysia Trust fell on its debut, down 1.5 sen to 98.5 sen with 5.37 million units done.

The top gainer was Scomi Engineering, which is rewarding its shareholders with a total gross special interim dividend of 29.5 sen per share. The stock jumped 25 sen to RM1.40. Meanwhile, its loan stocks gained 10 sen to RM1.18.

Jetson shares rose 22 sen to RM1.77, while its warrants added 16.5 sen to RM1. Top Glove added 11 sen to RM7.35, Ajinomoto and Tomypak up 10 sen each to RM4.49 and RM3.60 respectively, while DFZ Capital rose nine sen to RM3.57.

No near term catalyst for Bursa Malaysia: HDBSVR

KUALA LUMPUR: HwangDBS Vickers Research (HDBSVR) expects Bursa Malaysia, which will announce its 2Q earnings on Friday, July 16, to be weak, dragged by lower turnover value, volume and velocity.

The research house lowered FY10-12F earnings by 10-11% to reflect the softer market. Capital market activities were slower than expected.

"Valuation is demanding at 26x forward PE vs Asian market average of 24x and with no near term re-rating catalyst. Maintain Fully Valued and lowered TP to RM6.20," it said.

HDBSVR said Bursa's 2Q's average daily turnover volume dropped 20% to 788m (vs 1Q's 986m) while average daily turnover value fell 16% to RM1.16bn (vs 1Q's RM1.38bn).

For 6M10, average daily value held up well at RM1.26bn (with the exception of June which fell 31% m-o-m to RM907m). This was in line with the research house's full year estimate of RM1.23bn.

"However, the average daily volume fell short of our estimates (6M10 at 883m vs ours at 1.03bn) due to lower trade volume by retailers and trading of large cap stocks by institutions.'' Derivatives trading remained soft as volume fell 6% q-o-q. ''

"Capital market activities in 2Q were slower than expected especially in the equity front with only RM688m raised from secondary listings and IPOs (vs 1Q's RM5.1bn) despite having 9 IPOs in 2Q vs 3 in 1Q. However, debt market improved with RM15.3bn raised vs RM4.7bn in 1Q," it said.

HDBSVR said given the lackluster data, it expects weaker revenue from equity, derivatives and stable income. We estimate velocity of 29% and net profit of RM20-25m for 2Q.

"We lowered our earnings by 10-11% after reducing our average daily trading volume assumptions by 13% for FY10-12 to 896m, 986m and 1.1bn, respectively. Our FY10-12 average daily value assumptions remained unchanged at RM1.2bn, RM1.3bn and RM1.5bn, respectively.

"We have also cut our velocity assumption to 30% from 35% to reflect a softer market. Our TP is lowered to RM6.20 based on 23x FY11F EPS (previously 25x), the target multiple is derived from a correlation relationship with market velocity. Our TP is consistent with DDM valuation," it said.

CIMB Research: Gamuda uptrend losing momentum

KUALA LUMPUR:GAMUDA BHD []'s uptrend from the breakout of its triangle appears to be losing steam, according to CIMB Equities Research in a technical outlook note issued on Friday, July 16.

The research house said with Wednesday's long legged doji candle and Thursday's partial confirmation, it said prices should pull back in the short term.

CIMB Equities Research said technical indicators are waning, with its MACD and RSI showing bearish divergence. A slip below the uptrend channel support at RM3.30 would confirm it.

"This pullback could potentially turn into a bearish reversal if prices fall below the 200-day SMA. For now, we expect prices to pull back towards RM3.00-RM3.04 if the RM3.14 support gives way as well," it said.

At RM3.31, Gamuda is trading at a FY11 price-to-earnings of 17.8 times and price-to-book value of 2.0 times.

Google profit misses Wall Street view, shares fall

SAN FRANCISCO:'' Google Inc missed Wall Street's profit estimates in its second quarter after a spike in expenses offset a 24 percent revenue jump, a rare stumble for a company accustomed to shattering financial expectations.

Shares of Google fell 4.5 percent on Thursday, July 15 on investor worries about a one-fifth increase in costs as the search engine leader -- expanding into new products and markets in hopes of maintaining the growth momentum Wall Street also looks for -- spent heavily on research and development and hired aggressively.

Some analysts said headwinds from weakening foreign currency did not hurt revenue growth as much as anticipated, as Google managed to surpass targets for net revenue.

"They're throwing more money into R&D than people were expecting and a little bit less into sales and marketing," said BGC Partners analyst Colin Gillis. "Google has been pretty clear that it's going back into investment mode. They added 1,200 people in the quarter, which means more expenses are going to kick in in September."

Google, the world's No. 1 search engine, posted net income of $1.84 billion, or $5.71 a share, in the second quarter -- up from $1.48 billion, or $4.66 a share, in the year-earlier period.

Excluding items, Google's EPS was $6.45, below the average analyst estimate of $6.52, according to Thomson Reuters I/B/E/S.

Some analysts said a 22 percent year-on-year surge in total costs -- which includes research, marketing and general expenses -- hurt the bottom line.

"Operating expenses overall were higher than we had estimated, which dragged down the earnings per share," said ThinkEquity analyst Aaron Kessler.


Google has beaten Wall Street revenue expectations in five of the past seven quarters and exceeded profit estimates in each of the past seven. Its shares sold off after its last two better-than-expected earnings reports when, analysts said, some investors' expectations of blow-out results were missed.

Thursday's results were a rare outright earnings miss.

Google is increasingly pitting itself against rivals beyond its usual competitors Yahoo Inc and Microsoft Corp, as it ventures into smartphone operating systems, mobile advertising and other areas in search of future growth.

Google, which has made a string of acquisitions in recent months, added more than 1,100 employees to its payroll during the second quarter.

Revenue in the three months ended June 30 totaled $6.82 billion, up from $5.52 billion in the year-earlier period.

Net revenue, which excludes costs that Google shares with website partners, was $5.09 billion, above the $4.98 billion expected by analysts polled by Thomson Reuters I/B/E/S.

Shares in Google fell to $472.00 after closing at $494.02 on Nasdaq. The stock is down roughly 22 percent from its 52-week high of $629.51, though shares have risen more than 13 percent from an intraday low of $433.63 earlier this month.

Some analysts highlighted strong 24 percent growth in revenue as signs that Google was weathering well a difficult economic and advertising environment.

"I was pleased with the revenue coming ahead of expectations, driven by the strength in the U.S.," said Richard Fetyko of Merriman Curhan Ford. "Even with the forex headwinds from international, they came in $100 million ahead of expectations." - Reuters

Wall St recoups losses on BP, Goldman; Google off late

NEW YORK: U.S. stocks ended little changed on Thursday, July 15 recouping losses late in the day, led by a sudden turnaround in Goldman Sachs and BP.

BP's U.S.-listed shares jumped 7.6 percent after the company said no oil is leaking from its blown-out well in the Gulf of Mexico for the first time since the accident began in April.

Goldman Sachs' gains coincided with the Securities and Exchange Commission saying that it would make a "significant announcement" later in the afternoon. The announcement prompted speculation the SEC was going to settle fraud charges with Goldman Sachs, which proved to be true. Shares of Goldman rose 4.4 percent to $145.22.

The potential resolution of two major overhangs -- BP's oil spill and fraud charges against Goldman Sachs by U.S. regulators -- was enough to turn market sentiment around in the last half hour.

"In essence, you'll have 'closure' on two issues," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

"An announcement along the lines of BP's announcement, and the Goldman Sachs issue closed, if that's what it is, that would help the tone of the market quite handsomely."

Goldman said it would pay $550 million to settle SEC charges that it misled investors in a subprime mortgage product. Goldman's shares continued to climb after the bell, rising 2.9 percent to $149.40.

The Dow Jones industrial average dipped 7.41 points, or 0.07 percent, to end at 10,359.31. The Standard & Poor's 500 Index added 1.31 points, or 0.12 percent, to 1,096.48. The Nasdaq Composite Indexwas off 0.76 of a point, or 0.03 percent, to 2,249.08.

Despite the turnaround, the Dow and Nasdaq both ended a hair lower, snapping a seven-day winning streak.

BP ended up at $38.92 after it said initial results showed a newly placed cap had completely contained the flow of oil from the ruptured well.

The three major U.S. stock indexes spent most of the day in negative territory, weighed down by a subdued outlook on the economy from JPMorgan Chase & Co and disappointing factory data.

An unexpected fall in regional factory activity and a third straight month of decline in producer prices raised concerns about deflation, cooling enthusiasm for the strong start to the earnings season that had lifted stocks off recent lows.

JPMorgan Chase & Co reported quarterly earnings that beat expectations, but offered a cautious outlook on the economy. Much of the company's gains came from areas that cannot be a stable source of income in the future.

The stock recovered to add 0.3 percent to $40.46, but its sober economic view hit the shares of competitors Citigroup Inc, down 1.2 percent at $4.16, and Bank of America Corp, which dropped 1.8 percent to $15.39. Both report their earnings on Friday. The S&P Financial Index dipped 0.1 percent.


Earnings and guidance from bellwethers such as Alcoa and Intel have been strong, but that has done little to counter the disappointing economic data, given that market leaders can do well even in a weak economy.

But Google Inc disappointed after the bell, reporting profit that missed expectations and driving its shares down 4.7 percent to $470.79 in extended-hours trading.

On the bright side for TECHNOLOGY [], Advanced Micro Devices Increported results after the bell that topped expectations as corporate spending on tech hardware strengthened. Its shares climbed 4.6 percent to $7.75 in extended-hours trading.

Meanwhile, the U.S. Congress approved a broad overhaul of financial regulation, sending it to President Barack Obama to sign into law. Senate Democratic Leader Harry Reid said he believes Obama will sign the bill into law later in the day.

In a busy day for economic news, the Philadelphia Federal Reserve Bank said factory activity in the mid-Atlantic region fell unexpectedly, while the New York Federal Reserve Bank said New York manufacturing hit the lowest since December 2009.

The U.S. Labor Department said the Producer Price Index declined for a third straight month. In June, the PPI fell 0.5 percent, compared with the dip of 0.1 percent expected by economists polled by Reuters. - Reuters

AMD beats Street view, shares leap

LOS ANGELES: Advanced Micro Devices Inc posted better-than-expected second-quarter results as corporate spending on tech hardware strengthened, sending its shares up 4 percent after hours.

AMD's earnings report came two days after far larger rival Intel Corp set a bright tone for semiconductor industry earnings, signaling a resurgence of IT enterprise spending after years of straitened budgets.

AMD President and CEO Dirk Meyer said the strong earnings report was a reflection of demand for the company's combination of microprocessor and graphics chips and its recently launched Vision platform for notebooks.

AMD said on Thursday, July 15 that revenue rose 40 percent to $1.65 billion in the period, beating expectations of $1.55 billion according to Thomson Reuters I/B/E/S.

It posted net income, excluding items, of $83 million, or 11 cents a share, versus a net loss of $244 million, or 37 cents a share, in the year-ago period. That surpassed expectations for 6 cents a share.

AMD joins Intel in exceeding Wall Street expectations for sales. Patrick Wang, analyst with Wedbush Securities, said there was a disconnect between what analysts had expected from Intel and AMD earnings and what the companies reported.

"I'm kind of curious where all these (computers) are going. Maybe everybody in China has two computers now," Wang said.

"There continues to be a disconnect here in terms of overall demand shipments."

Looking forward, AMD estimated a seasonal rise in third-quarter revenue. Analysts had been expecting revenue of $1.66 billion for the period.

AMD's gross margin rose to 45 percent from 27 percent in the year-ago period and 43 percent in the first quarter. Profitability has steadily improved since AMD spun off its chip manufacturing arm last year.

"If they can walk the margins up in the back half of the year, you're going to get a lot of investors that are more bullish on the name," Wang said.

Shares of Sunnyvale, California-based AMD rose 3.9 percent to $7.70 in after-hours trading, after closing nearly flat at $7.41 on the New York Stock Exchange. - Reuters

#Stocks to watch:* Scomi Eng, CapitaMalls, Olympia

KUALA LUMPUR: Key regional markets could see cautious trading on Friday, July 16 in line with the lacklustre overnight close on Wall Street.

On Wall Street, US stocks ended little changed on Thursday, recouping losses late in the day, led by a sudden turnaround in Goldman Sachs and BP.

The Dow Jones industrial average dipped 7.41 points, or 0.07 percent, to end at 10,359.31. The Standard & Poor's 500 Index added 1.31 points, or 0.12 percent, to 1,096.48. The Nasdaq Composite Indexwas off 0.76 of a point, or 0.03 percent, to 2,249.08.

Despite the turnaround, the Dow and Nasdaq both ended a hair lower, snapping a seven-day winning streak.

Stocks to watch on Bursa Malaysia are SCOMI ENGINEERING BHD [], CapitaMalls Malaysia Trust (CMMT), OLYMPIA INDUSTRIES BHD [] and the callable bull certificates issued by CIMB Bank over AIRASIA BHD [], Gamuda'' Bhd, GENTING BHD [], Berjaya Corp Bhd.

Also on the watch list will be Selangor water companies after the federal government's Pengurusan Aset Air Bhd (PAAB) said it hoped to complete its planned acquisition of water assets in Selangor by the end of the year.

Scomi Engineering is rewarding its shareholders with a total gross special interim dividend of 29.5 sen per share. The special interim dividend will be paid on Aug 26.

It declared an interim dividend of six sen per share (gross) less 25% income tax; an interim tax exempt dividend of 11 sen per share; and an interim single tier exempt dividend of 12.5 sen per share.

The dividends would be paid to shareholders whose names appear on the record of depositors on July 30.

Meanwhile, CMMT will make its debut. The institutional price was fixed at RM1 per unit and the final retail price at 98 sen per unit.

Under the offer for sale, the 65.5 million units offered to the public, there were 3,480 applications for 70.11 million units, representing a subscription rate of 1.07 times.

Olympia could see some trading interest over its proposed disposal of its entire 100% stake in Dairy Maid Resort & Recreation Sdn Bhd.

Olympia acknowledged and confirmed the terms and conditions on the appointment of Messrs. Rahim & Co. to conduct a second valuation on Menara Olympia and the adjoining leased car park.

The valuer has been appointed by Bursa Malaysia Securities Bhd to determine the market value of the property for the purpose of submission to Bursa.

The time frame to complete the valuation is 15 working days from the date of confirmation of instruction, receipt of documents/information as required by the valuer and inspection of the property.

More details about the significance of the announcement in Friday's The Edge FinancialDaily.

CIMB Bank has issued 50 million callable bull certificates each over the shares of AirAsia Bhd, GAMUDA BHD [], Genting Bhd and Berjaya Corp Bhd and they will listed on Friday, July 16.

The issue price for AirAsia'' bull certificates is 16 sen; Gamuda at 15 sen, Genting'' 16.5 sen, and Berjaya Corp 16 sen.

Columbia Asia opens 7th hospital at Afiat Healthpark

JOHOR BAHRU: Malaysian-based international healthcare provider, Columbia Asia has opened its seventh hospital in the country at Afiat Healthpark in Nusajaya.

Developed at a cost of RM70 million, the hospital is the first to be in operation in an area tailored specifically for healthcare services in Iskandar Malaysia.

A full service community hospital, Columbia Asia Hospital targets at middle-income families within a 15km radius of'' the hospital.
"Columbia Asia is well positioned to become the preferred choice for employers, insurance companies and middle-income earners here," said CEO of Columbia Asia Hospitals in Malaysia, Kelvin Tan.

Speaking at a media briefing yesterday, Tan said the hospital was working closely with insurance companies to ensure reasonable medical charges for patients.

Apart from Nusajaya, there are six other Columbia Asia hospitals in operation in Malaysia ' in Seremban, Taiping, Miri, Bintulu, Shah Alam and Puchong.

Columbia Asia is 30%-owned by the Employees Provident Fund and 70% by Columbia Asia Healthcare Sdn Bhd. ' Bernama

CBS' proposed transfer hits snag

KUALA LUMPUR: CBS TECHNOLOGY [] BHD []'s proposed transfer to the Main Market of Bursa Malaysia Securities has hit a snag with a legal suit pending.

In a statement on Thursday, July 15, CBS said the Securities Commission was unable to process its application for the proposed transfer until a litigation case by Bank Simpanan Nasional (BSN) against its subsidiary Cyber Business Solutions Sdn Bhd (CBSSB) had been resolved.

It said the litigation pertained to a project contract where CBSSB was to develop, install and integrate a new loan management system for BSN. BSN filed a suit in October 2009 against CBSSB for alleged breach of contract. CBSSB denied BSN's claim and has filed a defence and further counter-claimed against BSN.

"The board of directors will seek a meeting with the SC to clarify the SC's decision on the company's application for the proposed transfer and will decide on the next course of action," CBS said.

Bursa issues consultation papers on disclosure, governance

KUALA LUMPUR: Bursa Malaysia published two consultation papers on Thursday, July 15, seeking public feedback on proposals that are aimed at promoting further transparency, quality and efficiency of the Malaysian capital market. ''

In a statement, Bursa said the first paper sought feedback on various proposed amendments to its listing requirements (LR) on the listed issuers' disclosure obligations, corporate governance practices and other obligations (Consultation Paper No 3/2010). ''

The second paper is on the proposed corporate disclosure guide which seeks to provide clarification and guidance on the listed issuers' disclosure obligations under the LR (Consultation Paper No 4/2010).

'The proposed amendments are part of the exchange's ongoing efforts to enhance the regulatory framework for listed issuers to ensure the competitiveness and attractiveness of Bursa Malaysia as a listing and investment destination. ''

'Maintenance of market integrity remains our key focus in formulating the proposed amendments, and in so doing, we strive to strike a careful balance between enhancing market regulation and promoting business efficacy,' said Bursa Malaysia chief regulatory officer Selvarany Rasiah.

The consultation paper seeks the public's views on the following key areas:
' enhancing the continuing disclosure and financial reporting obligations of a listed issuer
' enhancing the corporate governance requirements
' reviewing the framework of share scheme for employees
' allowing listed issuers to dispatch documents to its securities holders via electronic means, if permitted under the laws
' facilitating listed issuers to pay dividends in shares to their shareholders through a scheme known as 'dividend re-investment scheme'.

'The proposed CD Guide seeks to provide greater clarity and guidance to help listed issuers in better understanding and complying with their disclosure obligations under the LR,' said Selvarany. The consultation papers can be downloaded from the exchange's website at The deadline for feedback is Aug 29.

Thursday, July 15, 2010

#Today's Diary* What to expect on July 16, 2010

Listing of CapitaMalls Malaysia Trust at Bursa Malaysia, KL at 8am.

Maxis Bhd media launch FINDER301, a location-based Malaysian mobile directory at Sultan Lounge, Mandarin Oriental Hotel, KL at 10am.

UTAR organises the opening ceremony of The International Conference on Malaysia-China Relations: Challenges and Opportunities at UTAR, Block PB, Auditorium 3, 13 Jln 13/6, PJ, Selangor at 9am.

F&N Dairies (M) Sdn Bhd unveils the new packaging makeover Tea Pot range of sweetened condensed milk and evaporated milk products at Ciao Ristorante, Off Jln Tun Razak, KL at 9.30am.

HAISAN RESOURCES BHD [] EGM at Crystal Crown Hotel, No 217, Persiaran Raja Muda Musa, Pelabuhan Klang, Selangor at 10am.

Keladi Maji Bhd AGM at Best Western Premier Seri Pacific Hotel Kuala Lumpur, Bunga Kenanga Room, Level 3, Jalan Putra, KL at 10.30am.

The Outstanding Young Malaysian Awards 2010 press conference and launch at 4th Flr, Youth & Sports Ministry, Menara KBS, No.27 Persiaran Perdana, Precinct 4, Putrajaya at 11am.

Human Resources Minister Datuk Dr S Subramaniam opens Limkokwing Academy of Creativity and Innovation at Limkokwing University, Inovasi 1-1, Jalan Teknokrat 1/1, Cyberjaya at 2.30pm.

Bursa Malaysia's half year 2010 financial results announcement at Conference Room 1, Ground Flr, BURSA MALAYSIA BHD [], KL at 3pm.

Press conference and signing of MoU between Al-Waatasemu Charity Foundation of Libya and NCB Engineering Sdn Bhd, a subsidiary of NAIM HOLDINGS BHD [] for the investment, design and CONSTRUCTION [] of the Gaddafi Tower 50 Storey situated at Tripoli City Centre in Libra at Parkview 2, Level 2, Mandarin Oriental Hotel, KL at 4pm.

MICPA holds its 52nd Annual Dinner to be officiated by Minister of Finance II at Nusantara Ballroom, Level 2, Sheraton Imperial Hotel, KL at 7.30pm.

Blue chips snap winning streak

KUALA LUMPUR: Blue chips on Bursa Malaysia snapped their seventh-day winning streak on Thursday, July 15 as investors took the opportunity to lock in gains on the shares which had recently run up.

The FBM KLCI closed 7.0 points lower at 1,334.08, off its two-month high recorded on Wednesday. Turnover was 619.73 million shares valued at RM1.12 billion.'' Decliners led advancers 390 to 242. Year-to-date, the 30-stock index is up 4.82%.

Stocks which had a strong run-up in recent days, especially those paying high dividends, fell in relatively thin trade.

Panasonic Malaysia fell 36 sen to RM18.52 but with 2,800 shares done, Nestle shed 20 sen to RM35.80 and Parkson 11 sen to RM5.46 while BAT gave up 10 sen to RM43.90.

Tanjong lost 10 sen to RM17.38 while GENTING BHD [] lost nine sen to RM7.39 on concerns about the impact of a US state Supreme Court judge ordered a halt to the latest Aqueduct bidding process.

The New York Business reported that a state Supreme Court judge ordered a halt to the latest Aqueduct bidding process so he can consider a developer's lawsuit against the state for rescinding its lucrative racino contract.

The newspaper said a Lottery Division spokeswoman declined to comment, noting the agency hasn't been officially notified of the lawsuit or the temporary restraining order.

Meanwhile, Kumpulan Jetson's securities rebounded despite concerns about an impending boardroom tussle. Jetson rose 44 sen to RM1.55 and Jetson-WA 45.5 sen to 83.5 sen in active trade. Jetson-LA added 43 sen to RM1.54 in thin trade.

F&N was the top gainer, adding 60 sen to RM14.20 on expectations of a special dividend while KFCH extended its gains, rising 20 sen to RM11.12 and Cocoland also 20 sen to RM2.38.

Meanwhile, Reuters reported Southeast Asian stock markets mostly fell on Thursday, with Indonesia ending a rally that took it close to a record high and Singapore retreating from a 10-week peak as investors turned wary over the U.S. economy.

Investors cashed in on recent gainers across the region as the Philippines, which earlier scaled a 2-1/2-year peak, ending slightly lower and Vietnam falling 0.4 percent.

Indonesia's benchmark index hit an intra-day peak of 2,987.04, close to the record of 2,996.41 set on May 4, 2010. Bucking the trend, Thailand inched up 0.2 percent on late buying.

Despite the weakness, investors for the most part remained optimistic about the outlook for share markets in the region as strong Asian economies boded well for corporate earnings.

In its Asia Equity Strategy, Credit Suisse said it was staying overweight on Indonesia, seeing palm oil and coal as the most undervalued sectors, while Thailand and the Philippines were on its list of cheapest markets.

The ING Investor Dashboard survey showed that Southeast Asian emerging markets were looking increasingly attractive to wealthy Asian investors as they grew less optimistic about prospects in Greater China.

In Bangkok, Thai analysts raised their end-2010 target for Thai stocks to 849 as growth in the domestic and global economy plus the government's stimulus spending should bolster earnings. The index closed at 821.02 on Thursday.

The Thai stock exchange's president, Charamporn Jotikasthira, said a market roadshow in London this week got positive feedback from investors.

"The feedback was favourable, although there were still concerns about domestic political factors and problems at Map Ta Phut," he said, referring to the suspension of projects at the eastern industrial estate because of environmental concerns.

Thai stocks are the second-cheapest in the region by valuation after Vietnam. Bangkok trades at a 12-month forward price to earnings ratio of 10.8, after Vietnam's 10.7, according to Thomson Reuters StarMine.

Gainers in Bangkok included Siam Commercial Bank, which rose 0.6 percent ahead of quarterly results next week, and condominium developer LPN, which jumped 6.7 percent after it told Reuters it targeted 20 percent revenue growth this year.

Among losers in Jakarta, where the index trades at a 12-month forward price to earnings ratio of 13.8, the highest in Southeast Asia, coal miner Bumi Resources fell 3.7 percent and Adaro Energy dropped 1.2 percent.

In Singapore, property shares were mixed, with CapitaLand up 0.3 percent, City Development up 2.7 percent but Keppel Land falling 1.1 percent.

Broker DMG & Partners has downgraded Singapore's property sector to "neutral" due to slowing sales, massive supply and deteriorating affordability.

JPMorgan Chase 2Q earnings surge to US$4.8b

NEW YORK: JPMorgan Chase & Co posted higher second-quarter earnings on Thursday, July 15 beating analysts' expectations, after setting aside less money for loan losses.

The second-largest U.S. bank by assets said earnings jumped to $4.8 billion, or $1.09 a share, from $2.7 billion, or 28 cents a share, in the year-earlier period.

JPMorgan reported a benefit of $1.5 billion, or 36 cents a share, from trimming its loan loss reserves in the quarter.

Excluding that benefit, the earnings beat analysts' average forecast of 67 cents a share, according to Thomson Reuters I/B/E/S.

The bank said its losses on consumer credit, such as mortgages, credit cards and other loans, dipped in the second quarter compared with both the first quarter and the 2009 second quarter.

But Chief Executive Jamie Dimon sounded a cautious note on the outlook for the U.S. economy. "It is too early to say how much improvement we will see from here," he said in a statement.

JPMorgan, the first big U.S. bank to report second-quarter results, posted a charge of $550 million related to a tax on UK bankers' bonuses. It previously warned about such a charge and said it would be a "significant" item in the quarter.

U.S. stock index futures rose following the earnings report by the bank, a component of the Dow Jones industrial average.

JPMorgan shares climbed 0.6 percent in premarket trading to $40.58. The shares are down 3 percent this year. - Reuters

Titan Chemical major shareholders plan corporate proposal

KUALA LUMPUR: Titan Chemical Corp Bhd, which reported second quarter earnings of RM72.13 million, has requested that trading in its shares be suspended on Friday, July 16.

It said on Thursday, July 15 the voluntary suspension was pending an announcement of a corporate proposal involving the major shareholders of the company.

Union Harvard Investments is the largest shareholder with 31.17% stake or 546.4 million shares in Titan, followed by Amanah Raya Bhd at 24.25% and Permodalan Nasional Bhd at 5.5%.

Meanwhile, the company said second quarter earnings were lower at RM72.13 million compared with RM174 million a year ago. Revenue was RM1.69 billion compared with RM1.37 billion. Earnings per share were 4.17 sen versus 9.97 sen.

Its net asset per share was RM2.42.

The share price closed seven sen higher at RM1.85, the highest since February 2007.

#Flash* Scomi Eng rewards shareholders with 29.5c dividends

KUALA LUMPUR: SCOMI ENGINEERING BHD [] is rewarding its shareholders with a total gross special interim dividend of 29.5 sen per share.

It said on Thursday, July 15 the special interim dividend will be paid on Aug 26.

Scomi Engineering declared an interim dividend of six sen per share (gross) less 25% income tax; an interim tax exempt dividend of 11 sen per share; and an interim single tier exempt dividend of 12.5 sen per share.

The dividends would be paid to shareholders whose names appear on the record of depositors on July 30.

RHB IB buys more SunREIT units

KUALA LUMPUR: RHB Investment Bank (RHB IB), which is the stabilising manager for the Sunway Real Estate Investment Trust (SunREIT), has acquired a further six million units over the past two days, pursuant to the price stabilisation mechanism.

Filings by SunREIT showed that RHB IB bought the six million units over two days, July 13 and 14, at prices ranging between 87.5 sen and 88.5 sen.

The latest acquisitions take RHB IB's total buys to 35 million units.

Earlier filings by SunREIT showed that RHB IB bought 16 million units on July 8 at prices ranging from 87.5 sen to 89 sen. It acquired another 13 million units on July 9 and 12 million for between 87.5 sen and 88.5 sen each.

RHB IB was over-allotted 87.1 million SunREIT units and as the stabilising manager, it may buy up to 87.1 million units to undertake the stabilising action.

Under a Securities Commission (SC) regulation that has been in place since January 2008, the stabilising mechanism allows the underwriter to over-allot a certain number of shares in an IPO, with an undertaking by the to-be-listed company to issue new shares towards covering the over-allotment, if need be.

SunREIT closed unchanged at 88 sen on Wednesday with 5.1 million units done. The IPO was priced at 90 sen for institutions and 88 sen for retail investors.

Worst over for Genting Malaysia?

KUALA LUMPUR: Nomura Securities Research Malaysia says the worst is over for Genting Malaysia (GentingM) after the recent sell down and downgrades by the market.

"We believe that all the bad news has been priced in. Fundamentally, we see earnings upgrades as the key catalyst going forward," it said on Thursday, July 15.

Trading at 4x FY11F EV/EBITDA, the research house said GentingM looked appealing on a risk-reward basis. Its proposed acquisitions of UK and US casinos will exhaust most of its cash, removing the overhang of concern on its plan for its huge cash reserves. Upgrade to BUY; target price RM3.70.

The consensus earnings upgrades post 2Q10 earnings, scheduled to be released in August 2010, would likely trigger a re-rating of the stock.

GentingM offers investors good exposure to the strong and rising domestic consumption story. Competition for its mass market business is likely to be shortliv! ed. Its domestic operation should continue to generate strong cash flows.

Nomura Research said GentingM's latest move, of proposing to spend most of its cash reserves on two acquisitions, confirmed its view that paying out its cash reserves in the form of higher dividends was the last thing it was contemplating.

The research house said after a series of downgrades by the Street attaching zero value to its cash reserves, there is nothing much left for the market to discount. The latest move also helped remove an overhang on its intention for its cash reserves.

China's economy slows moderately, as Beijing wants

BEIJING: China's economy slowed in the second quarter as the government steered monetary and fiscal policy back to normal after a record credit surge last year to counter the global crisis.

Annual gross domestic product growth moderated to 10.3 percent from 11.9 percent in the first quarter, the National Bureau of Statistics (NBS) said on Thursday, July 15. The reading was slightly below market forecasts of 10.5 percent growth.

Other data suggested that curbs on lending to home buyers and local authorities, along with an ebbing of government stimulus spending and an end to inventory rebuilding, were biting with greater force as the quarter drew to a close.

Economists expect no dramatic policy response to Thursday's data. The government has engineered the slowdown -- markets feared overheating earlier this year -- and Premier Wen Jiabao has said the economy is going in the expected direction.

"The GDP and other activity data are basically in line with expectations, and consistent with our view that China's recovery is slowing from the fast pace set in the first quarter but remains relatively solid so far," said Brian Jackson, strategist at Royal bank of Canada in Hong Kong.

Factory growth slowed to 13.7 percent in the year to June, below forecasts for 15.3 percent and May's 16.5 percent growth.

"The good news is the economy is holding up. The bad news is investment is coming down, hence demand for commodities will fall," said Dong Tao, chief non-Japan Asia economist for Credit Suisse in Hong Kong.

Offshore yuan forwards showed little reaction to the figures, which have circulated widely in China's markets since Tuesday. The Shanghai stock market edged up 0.5 percent and stocks in Asia-Pacific outside Japan pared early losses and were broadly steady in a sign of relief that the data brought no major negative surprises.


But the slower growth makes it increasingly likely that the pace of monetary tightening will slow, as Shanghai money markets have been speculating this week.

The government should refrain from any further policy tightening as the economy may slow more sharply than expected in the second half of the year, the official China Securities Journal said on Thursday.

"In the second half of the year, external demand will gradually weaken and the dividend from the trade surplus will fall. This requires an increase in overall social investment and a halt to tightening of both fiscal policy and monetary policy," an editorial said.

Financial markets have been increasingly jittery that the government is applying the brakes too hard to an economy that has been a major engine of the global recovery from the deepest recession in 80 years.

China last year became the leading trade partner of Brazil, India and South Africa. German exports to China of machinery are booming.

Unlike many of its Asian peers, most recently Thailand on Wednesday, China has not raised interest rates this year.

But year-on-year growth in the stock of outstanding yuan loans slowed to 18.2 percent at the end of June from 33.8 percent as recently as November. Growth in the M2 measure of money supply moderated to 18.5 percent from 29.7 percent over the same period.

And half-year figures are expected to show that China, in contrast to deeply indebted Western governments, ran a fairly big budget surplus, according to market sources.


It is hard to judge the immediate impact of the tightening from year-on-year data and China does not issue seasonally adjusted month-on-month or quarter-on-quarter statistics.

But Thursday's figures reinforce the view that the first quarter marked the cyclical peak for China, which is set to overtake Japan this year as the world's second-largest economy after the United States.

Consumer price inflation fell to 2.9 percent in the year to June from 3.1 percent in May, below forecasts of a 3.3 percent rise. Consumption was resilient, even though annual retail sales growth eased to 18.3 percent in June from 18.7 percent in May.

Export growth has also remained robust, but the exit from last year's super-loose monetary policy and tightening measures for the housing market are now having an impact on infrastructure and real-estate spending.

Year-to-date investment in fixed-assets such as flats and factories slowed, growing 25.5 percent against a year ago period after a 25.9 percent rise in May.

The swing factor, many economists say, is how abruptly private residential CONSTRUCTION [] slows in response to the campaign against property speculation and whether the government can compensate for it by ramping spending on public housing.

A Reuters poll of economists released on Wednesday pointed to full-year growth of 10 percent in 2010, slowing to 9.0 percent in 2011. - Reuters

Markets take a breather

KUALA LUMPUR: Stocks on Bursa Malaysia took a breather on Thursday, July 15 as some investors decided to take profit after seven days of straight gains, taking their cue from key regional markets and the mixed close on Wall Street.

At 12.30pm, the FBM KLCI fell 6.37 points to 1,334.71, with losses at key blue chips including Genting, Maybank, CIMB and YTL Corp. Losers beat gainers by 352 to 181, while 262 counters traded unchanged. Volume was 313.11 million shares valued at RM514.55 million.

Crude palm futures for the third month delivery rose RM12 per tonne to RM2,375; gold rose US$3.05 per ounce to US$1,211.35 while crude oil shed 18 cents per barrel to US$76.86.

The US Federal Reserve minutes suggested additional measures may be needed for the economy. The minutes of the Fed's June meeting showed officials were concerned with the pace of economic recovery, adding to jitters stoked by a report showing June retail sales fell more than expected.

However, the Asian stocks reversed most of their early losses after data from China showed that the economy was slowing gradually but delivered no nasty surprises.

China's annual economic growth eased to 10.3% in the second quarter from 11.9% in the first quarter, a touch weaker than expected, in response to credit curbs and the fading of government fiscal stimulus, according to Reuters.

Nevertheless, the data showed concerns abut a steep slowdown in the world's third-largest economy were overblown. Inflation at the producer and consumer level also eased in June from May, reducing the need for further policy tightening, it said.

Nikkei 225 -0.94% 9,702.74 Hang Seng Index -0.47% 20,464.40 Shanghai Composite Index -0.36% 2,461.61 Kospi Index -0.31% 1,752.64 Singapore's Straits Times Index -0.14% 2,948.61 Taiex Index -0.10% 7,706.94 ''

Among the major losers, Panasonic fell 34 sen to RM18.54, Cepco lost 30 sen to RM2.25, and Nestle and Hong Leong Financial Group lost 10 sen each to RM35.90 and RM8.35.

Genting fell nine sen to RM7.39 and Genting Malaysia lost six sen to RM2.70 on reports that a US state Supreme Court judge ordered a halt to the latest Aqueduct bidding process.

Other decliners this morning included Maybank, Axiata, Public Bank, CIMB, PLUS, YTL and Boustead.

F&N was the top gainer, adding 40 sen to RM14; Jetson's mother share and loan stocks jumped 33 sen each to RM1.44 each, respectively while its warrants rose 30 sen to 68 sen.

LPI Capital added 30 sen to RM17.92, Keck Seng and KFCH up 22 sen each to RM5.42 and RM11.14, Shell up 16 sen to RM10.86 while C.I.Holdings rose 13 sen to RM2.77.

Time dotCom was the most actively traded counter with 27.2 million shares done. The stock added one sen to 53 sen. Other actives this morning included XDL, Titan, KNM, Jetson, Time, Kimlun, CIMB, Tenaga and Maybank.

CIMB Bank issues callable certificates over AirAsia, Gamuda, Genting, BCorp

KUALA LUMPUR: CIMB Bank has issued 50 million callable bull certificates each over the shares of AIRASIA BHD [], GAMUDA BHD [], GENTING BHD [] and Berjaya Corp Bhd and they will listed on Friday, July 16.

CIMB Bank, which is the issuer, said on Thursday the issue price for AirAsia'' bull certificates is 16 sen; Gamuda at 15 sen, Genting'' 16.5 sen, and Berjaya Corp 16 sen.

It said the proposed issuance for AirAsia certificates would be 50 million European-style non-collateralised cash-settled callable bull certificates over AirAsia.

It will be at an exercise ratio of two'' to one at an exercise price of RM1, which is 84% of the closing price of AirAsia shares on the price fixing date on July 1.

It said the call price is RM1.05, being 84% of the closing price of the shares on the price fixing date. The issue price is 16 sen, being (i) 25.6% of the closing price of the shares on the price fixing date, (ii) divided by two (the exercise ratio).

For Gamuda, CIMB Bank is issuing up to 50 million bull certificates. The exercise ratio is five to one, exercise price is at RM2.55, call price RM2.70, issue price 15 sen (23.58% of the closing price on the price fixing date, divided by five (the exercise ratio).

As for Genting, CIMB Bank is issuing 50 million bull certificates. The exercise ratio is 10 to one, exercise price is RM5.80, call price RM6.15. The issue price is 16.5 sen, equal to 22.92% of the closing price on the price fixing dateand also divided by 10 (being the exercise ratio).

CIMB Bank also said for Berjaya Corp, the exercise ratio is two to one and the exercise price is 98 sen, or 79.03% of the closing price on the price fixing date while the call price is RM1.06. The issue price is 16 sen.

Agricultural Bank of China opens 2.2% higher

SHANGHAI: Shares of Agricultural Bank of China opened higher in their Shanghai trading debut on Thursday, July 15.

Reports said AgBank, China's third-largest bank by assets, opened at 2.74 yuan (US$0.41), up 2.2% from its'' IPO price of 2.68 yuan ($0.40), lagging the first-day rise enjoyed by many of its rivals.

Reuters had earlier reported that AgBank's historic IPO was likely to lag the first-day jump in share price enjoyed by its rivals, as it aims to raise a record $22 billion in markets worried about growth and other equity sales.

A successful debut would lend support to bank stocks, help stabilise a Shanghai market that has tumbled about 25 percent this year and bode well for upcoming fundraisings by peers including Industrial & Commercial Bank of China (ICBC) and Bank of China.

"AgBank's IPO has such far-reaching implications for China in that a successful listing is seen as politically crucial, so a drop is unlikely," said Fang Jiang, strategist at Founder Securities.

However, a limited supply of liquidity and generally weak demand for initial public offerings are likely to weigh on AgBank's debut, making the initial jump that its predecessors enjoyed more difficult to achieve, analysts said.

AgBank's debut may therefore buck the typical trend, rising less than 5 percent on the first day, compared with first-day pops of up to one-third for rival Chinese banks.

AgBank, the last of China's "big four" state banks to go public, was founded by Mao Zedong in 1951 and now has some 441,000 employees in more than 23,000 branches. Its customer base of about 350 million is larger than the population of the United States.

A drop below AgBank's IPO price of 2.68 yuan in Shanghai and HK$3.20 in Hong Kong is unlikely as some institutions are expected to help stabilise its price, analysts said.

"If AgBank's listing is smooth and its shares steadily rise afterwards, that would benefit the whole market as well as other banking stocks," Wu Songkai, Huatai United Securities analyst, said.

AgBank, chaired by former soldier and scriptwriter Xiang Junbo, begins trades on Thursday in Shanghai, and a day later in Hong Kong.

Should the offering show strong demand in the first few weeks, China's third-largest lender will exercise an over-allotment, boosting the $19.3 billion raised last week by nearly $3 billion, making it the largest IPO ever.

AgBank is braving a stock market that is struggling to find its feet amid investor concerns over monetary tightening, the economy's health and a flood of new share issues.

Investors are also casting doubts over Chinese banks' growth prospects after last year's lending spree weakened their balance sheets and threatened asset quality.

AgBank, which was technically insolvent just three years ago and had non-performing loans of around 24 percent, sold 22.2 billion yuan-denominated shares in Shanghai at the top of an indicated range. The Hong Kong deal priced in the middle of its original range.

The IPO price, which represents 1.6 times 2010 forecast book value, is largely in line with rivals and leaves little room for price gains in the secondary market, analysts said.