Friday, August 6, 2010

U.S. jobs data sinks stocks, hits dollar

LONDON:'' Far worse than expected U.S. jobs data tipped European equities into negative territory, undermined the dollar and set Wall Street on the road towards a lower open on Friday, Aug 6.

The U.S. Labour Department said there was a net decline of 131,000 jobs in July as more temporary census jobs ended while private hiring rose by a net 71,000, pointing to an anaemic economic recovery.

Economists polled by Reuters had expected Friday's report to show a drop of 65,000 in non-farm payrolls in July with private employers expected to have added 90,000 jobs.

Wall Street stock index futures fell after the report, as did the dollar, which was down 0.2 percent against a basket of currencies having earlier been flat.

The pan-European FTSEurofirst 300 index was down nearly 1 percent. It was up 0.4 percent before the data.

Safe-haven bellwethers gained, with gold rising and yields on U.S. and German benchmark bonds down.

Investors are concerned globally that the U.S. economy is slipping back from recovery and threatening to take the rest of the world economy with it.- Reuters

#Flash* Focus Point sets new listing date, offers exit option

KUALA LUMPUR: Focus Point Holdings Bhd, which withdrew its listing in the 11th hour on July 27 over allegations that some of its outlets did not have an optometrist or optician to dispense contact lenses, has set Aug 23 as the new tentative date for listing.

In an announcement issued by OSK Investment Bank on Friday, Aug 6, it said that it has also given investors an option to exit. The exit window would be on Aug 7 and the deadline for acceptances was Aug 16. The refund cheques would be despatched on Aug 20.

Addressing the allegations made against the company, Focus Point added as of Friday, it had ceased the prescription and dispensing of contact lenses from outlets that do not have either an optometrist or optician who is qualified to prescribe or dispense contact lenses.

"Prior to this cessation, as at Dec 31, 2009, 38 of the group's 64 professional eye care centres were found to have been dispensing contact lenses over-the-counter without an optometrist or optician who is qualified to prescribe or dispense contact lenses," it said.

The company said the promoters of Focus Point have undertaken to fully indemnify Focus Point and any of its officers against any charge, fine or penalty imposed against the company or any of its officers in relation to the prescription or dispensing of contact lenses at Focus Point outlets without the presence of an optometrist or qualified optician, prior to July 27, 2010.

To recap, Focus Point had deferred the listing following allegations made against the company that contact lenses prescribed and/or dispensed by personnel were not qualified to do so.

The listing exercise involved the public issue of 41.2 million new shares and offer for sale of up to 15.8 million existing shares at 20 sen each at an offer price of 39 sen.

MIH had said the 8.25 million new shares offered to the public was oversubscribed by 2.08 times. MIH had also said the 35.55 million shares for private placement had been subscribed.

On the exit offer, the company said Malaysian Issuing House Sdn Bhd (MIH) will be despatching an exit form to all investors based on the address last maintained with Bursa Malaysia Depository Sdn Bhd.

Investors could also obtain a copy of the exit form from MIH or from Bursa Securities' website at or from the newspaper advertisements.

In the latest development, Focus Point said on Friday that as set out in the prospectus, according to the Optical Act 1991, only optometrists or qualified opticians that have fulfilled certain conditions under the Act, are allowed to prescribe
and dispense contact lenses.

It added that disposable contact lenses currently represent the majority of Focus Point's contact lens sales.

"While it is common industry-wide practice in Malaysia for the sale of disposable contact lenses to be conducted over-the-counter, such practice is actually in contravention of the Act.

"Focus Point risks possible action for contravening the Act where its outlets prescribe or dispense contact lenses (whether conventional or disposable) without the presence of an optometrist or qualified optician. A person who is convicted under the Act for prescribing or dispensing contact lenses without an optometrist or qualified optician is subject to a fine not exceeding RM1,000 for the first offence," it said.

On the remaining outlets, it said they were serviced by 13 optometrists and three opticians qualified to prescribe and dispense contact lenses, including optometrists and/or qualified opticians who practice in multiple outlets.

There may be instances whereby certain outlets dispense contact lenses without the physical presence of these qualified personnel.

Focus Point estimates that in the financial years ended Dec 31, (FYE) 2009, FYE 2008 and FYE 2007, approximately 64.80%, 59.99% and 55.53% respectively of total group sales of contact lens were generated from professional eye care centres that have either an optometrist or an optician who is qualified to prescribe or dispense contact lenses.

Stamford College to appeal Bursa rejection

KUALA LUMPUR: STAMFORD COLLEGE BHD [], whose proposed regularisation exercise was rejected by Bursa Malaysia Securities, has decided to appeal against the rejection.

The education services provider said on Friday, Aug 6 the board had deliberated on the rejection through various meetings and had on Thursday decided to appeal against Bursa Securities' decision within one month.

The proposed regularisation would involve the reduction of the share capital by cancelling 50 sen of the par value of each RM1 share. It would also involve venturing into steel manufacturing.

Bursa Securities had, i its rejection letter announced on July 26, said the rejection was premised on the concern that the plan did not comply with the Main Market Listing Requirements which specified the regularisation plan must be sufficiently comprehensive and capable of resolving all problems, financial or otherwise.

The steel manufacturing business undertaken by Stamford College had only started operations in February 2010 and had yet to show it was able to generate profits and positive cashflows or be proven to be a viable business.

Another factor was that the company's steel manufacturing business was highly dependent on a single supplier and single customer, which was a related party, to sustain its business operations.

Bursa Securities had highlighted that the education business is highly competitive with a low barrier to entry.

Selling in selected heavyweights, lower-liners pulls mart down

KUALA LUMPUR: Bursa Malaysia succumbed to selling pressures in selected heavyweights and low-liners to end lower on Friday, Aug 6, dealers said.

The FTSE Bursa Malaysia KUALA LUMPUR COMPOSITE INDEX [] (FBM KLCI) fell by 1.63 points, or 0.12%, to close at 1,360.45.

The benchmark index opened 2.12 points higher at 1,364.2 compared with Thursday's 1,362.08 close and moved between 1,359.72 and 1,364.2.

Dealers said market sentiment was bearish on the back of the weak close on Wall Street and sluggish regional markets.

Overnight S&P 500 fell 0.1% to 1,125.81, Nasdaq declined 0.46% to 2,293.06 and Dow Jones declined 0.05% to 10,674.98 on disappointing US initial weekly jobless claims data.

MIMB Investment Bank Bhd head of research Dr Mohd Nazri Khan said the local market has been undergoing a technical correction after recent gains.

"It is just a correction," he said, adding that the quiet market showed that some investors were awaiting the outcome of US non-farm payrolls data due for release later tonight.

However, he said, the market weakness was offset by buying spree in the laggard stocks.

The Finance Index rose 0.28 point to 12,285.55 and PLANTATION [] Index added 21.08 points to 6,489.75. The INDUSTRIAL INDEX [], however, fell 6.16 points to 2,655.1.

The FBM Emas Index decreased 13.141 points to 9,224.64, FBM70 [] Index eased 5.671 points to 9,253.27 and the FBM Ace Index fell 17.59 points to 3,827.66.

Losers led gainers by 367 to 328 while 281 counters were unchanged, 390 untraded and 27 others were suspended.

Volume declined to 866.076 million shares worth RM1.256 billion from 993.853 million shares worth RM1.575 billion Thursday. ' Bernama

Sime Darby: Details of forensic probe ready end-Sept

KUALA LUMPUR: SIME DARBY BHD [], whose shares came under selling pressure recently on concerns about mounting provisions for its energy and utilities (E&U) division, said details of forensic probe should be ready by end-September.

Sime said on Friday, Aug 6 that it would announce its fourth quarter results on Aug 26. It added that until then, it could not comment on the results of the group "except that we expect the company to report a profit for the year ended June 30, 2010 based on its best estimates".

"We wish to also inform that the result of the forensic investigations is expected to be announced by the end of September 2010," it said in a statement.

Sime shares closed unchanged at RM7.52 with 5.34 million shares done.

Keck Seng disposes of all Parkway shares, nets RM260m gain

KUALA LUMPUR: Keck Seng (Malaysia) Bhd has resolved to dispose of its entire stake in Singapore-listed Parkway Holdings Limited at S$3.95 per share to Khazanah Nasional Bhd.

Keck Seng said the'' proposed disposal of the 35.58 million shares to Khazanah's Integrated Healthcare Holdings Ltd would raise proceeds of RM327.49 million.

It expects a gain of RM260.14 million from the disposal of the stake when it accepted the offer made by Integrate Healthcare under its July 26 general offer announcement.

SC still reviewing affairs of Mudajaya

KUALA LUMPUR: The Securities Commission said it would conclude its review on MUDAJAYA GROUP BHD [] as soon as possible, after the company announced it had engaged with SC to clarify matters.

In an email reply to The Edge Financial Daily on Friday, Aug 6 it said it was still reviewing the affairs of Mudajaya, whose share price had tumbled 20.5% on Thursday and saw RM156 million erased from its market capitalisation.

The selldown on Thursday was sparked by concerns about SC's informal probe into the company, that is believed to be related to its independent power producer (IPP) project in India.

"As part of our review, we have engaged all the relevant parties, including the management of Mudajaya. We aim to conclude our review as soon as possible," said the SC spokesperson.

Before market opened on Friday, Mudajaya announced that it met up with the SC and provided the clarifications needed.

Market fears appeared to have been allayed by Mudajaya's announcement that its board of directors affirmed that the company had conducted its business in a professional manner.

The counter managed to recoup part of the recent losses on Friday, ending the day eight sen higher to RM4 with 17.64 million shares done.

"The board wishes to advise shareholders of the company to exercise caution not to trade in the company's shares based on rumours.

"Currently, the company has no borrowings and has a net cash position of approximately RM223 million. The company's focus remains on delivering and completing all our projects on hand. The board will update the shareholders of the company if and when is necessary," it said.

On Thursday, Mudajaya bought back one million of its shares for RM4.39 million, at prices ranging between RM3.90 and RM4.55. After the purchase, Mudajaya had 2.62 milllion treasury shares. No reasons were provided about the buyback.

Since the informal probe was announced by SC in June 22, the stock has plunged 34.4% from a recent high of RM6.10 to Friday's closing price at RM4.

Prior to the probe, Mudajaya's price rallied following news of a potential change in its substantial shareholding, with speculations that Tanjong plc and MMC CORPORATION BHD []'s unit Malakoff Corp Bhd eyeing a significant stake.

However, both Tanjong plc and MMC Corp had denied the market talk.

Based on its 2009 annual report, Mudajaya's major shareholders include Dataran Sentral (M) Sdn Bhd with a 24.43% stake and Mulpha Infrastructure Holdings Sdn Bhd with 21.45%.

Dataran Sentral's shareholders include managing director Ng Ying Loong and executive director Wee Teck Nam.

CPO at 3-month high

KUALA LUMPUR: Crude palm oil (CPO) futures rallied to a near three-month high of RM2,638 at midday on Friday, Aug 6 on concerns of flooding due to the rainy season.

At 12.30pm, the CPO for third-month delivery rose RM25 to RM2,638 per tonne. The highest was March 11 when it was at RM2,642.

The Mererorological Department was quoted by Bloomberg as saying there may be some flooding in the some of the main growing areas in November and December because of the La Nina weather conditions.

Meanwhile, Reuters reported U.S. wheat futures jumped more than 5 percent on Friday,taking weekly gains to around 25
percent as Russia's move to temporarily halt grain shipments sparked a buying frenzy.

Chicago Board of Trade (CBOT) front-month wheat futures have nearly doubled since prices bottomed on June 9 at $4.25-''
per bushel as the worst drought on record in Russia, the world's third-largest exporter, destroyed crops.

Bursa Suq Al-Sila' gets MOSTI's Islamic Innovation Award

KUALA LUMPUR:'' Bursa Suq Al-Sila' has been conferred the inaugural 'Islamic Innovation Award' by the Ministry of Science, TECHNOLOGY [] and Innovation (MOSTI) for being the first Shari'ah compliant trading platform to facilitate Islamic financing worldwide.

Under the Muamalat Financial Management System Innovative Product category, the award was given by MOSTI to this commodity financing platform in conjunction with the Islamic Innovation Carnival (IICC).

The award was presented by the Deputy Prime Minister of Malaysia, Tan Sri Muhyiddin Yassin in Putrajaya on Thursday night, Aug 5.

BURSA MALAYSIA BHD [] chief executive officer Datuk Yusli Mohamed Yusoff said the recognition by MOSTI further cemented its commitment in making Bursa Suq Al-Sila' the choice platform for financial institutions seeking financing and liquidity management tools.

'We are appreciative of MOSTI for being instrumental in promoting Malaysia as a progressive Islamic investment centre.

'This has given greater impetus to us in advancing further in the Islamic finance sector,' he said.

Yusli also said the award was timely as Prime Minister Datuk Seri Najib Razak called for greater development of innovative products and new discoveries in Islamic affairs which will in turn strengthen Malaysia as a model Islamic nation.

Bursa Suq Al-Sila' was selected as the frontrunner in the category of innovation for this award as it is the world's first end-to-end Shari'ah compliant commodity trading platform, designed to facilitate commodity-based Islamic financing and investment transactions under the Shari'ah principles of Murabahah, Tawarruq and Musawwamah.

Bursa Suq Al-Sila' was also recognised for its contribution towards the Islamic economic development of the country.
This award marked Bursa Suq Al Sila's continuous achievement since its inception a year ago.

This platform was earlier given the 'Most Outstanding Islamic Finance Product' recognition at the KLIFF Islamic Finance Awards in 2009 and recently bagged the 'Market Innovation' award by The Asset Triple A magazine.

Bursa Suq Al-Sila' is the first initiative of its kind in the world encompassing a hybrid market providing participants a choice between participating in the exchange through the traditional voice broking system or the faster automated electronic exchange system which is web-based. Crude palm oil is used as the launch commodity and this will expand to other Shari'ah approved commodities such as tin, coal and aluminium in the near future.

To date, it has registered 23 commodity trading participants locally, across Europe and in the Gulf Cooperation Council (GCC) markets.

Stocks rise, dollar flat as US jobs data looms

LONDON: Pending U.S. jobs data kept investors on edge on Friday, Aug 6 but not enough to stall the mid-year rally in global equities boosted by robust earnings.

In commodities markets, U.S. wheat futures jumped around 6 percent, taking weekly gains to some 25 percent after Russia's move to temporarily halt grain shipments sparked a buying frenzy. World stocks as measured by MSCI rose 0.3 percent for a gain of around 12 percent since the end of June. The Thomson Reuters global stock index rose 0.2 percent.

European shares led the way with the FTSEurofirst 300 gaining 0.4 percent.

Investor sentiment has been boosted by a series of generally positive earnings reports, particularly from the banking sector.

Among the latest were part-nationalised RBS in Britain, which reported a second-quarter operating profit of 869 million pounds and Europe's biggest insurer Allianz, which missed expectations with second-quarter net profit of 1 billion euros ($1.31 billion) because of lower asset sales but had stronger-than-expected operating profit.

The key focus on markets for the day, however, was the U.S. non-farm payrolls report for July at 1230 GMT, which will act as a snapshot of how strong or weak the U.S. economic recovery is.

"The U.S. data is very important. If the market reacts positively and closes near a new high this week, then we have a very good chance to go higher," said Giuseppe-Guido Amato, strategist at Lang & Schwarz in Frankfurt.

Economists polled by Reuters expect Friday's U.S. Labor Department report to show a drop of 65,000 in non-farm payrolls in July, hurt by the unwinding of the government's hiring for the census. Private employers, however, are expected to have added 90,000 jobs.

Data on Thursday showed new U.S. claims for unemployment benefits unexpectedly rose last week to the highest level since early April, pushing stocks on Wall Street lower.


The dollar hobbled near a 3 1/2-month low versus a currency basket ahead of the U.S. jobs report.

Currencies overall were little changed as many traders steered clear of big positions before the data, leaving the dollar near a three-month low against the euro and an eight-month trough versus the yen hit earlier in the week.

"We expect a (jobs) number slightly better than consensus, but it's questionable whether this will help the dollar as interest rates are so low and we have a divergence of softer U.S. economic data and stronger European data," said Marcus Hettinger, global currency strategist at Credit Suisse in Zurich.

The euro was at $1.3191.

Euro zone government bond yields were slightly higher on the day

Tech stocks falter, Notion VTec weighs

KUALA LUMPUR: TECHNOLOGY []-related counters including Notion VTec, Eng Teknologi, Unisem and MPI fell in the late afternoon trade as sentiment continued to be weighed down by the negative outlook for the hard disk drive (HDD) industry.

At 3.23pm, Notion was down 16 sen to RM2.04, with 2.99 million shares done while JCY was unchanged at RM1.24.

Chip maker Unisem fell nine sen to RM2.13 and MPI lost three sen to RM5.88. Eng Tek, which supplies parts for the chip sector, lost 11 sen to RM1.84.

Notion VTec has extended its losses in recent weeks, weighed down by concerns about the slowdown in the HDD industry. Notion VTec announced a set of weaker earnings and stayed cautious about the fourth quarter.

Its larger competitor JCY was flat at RM1.24.

There has been growing concern about the impact that solid state drives (SSD) will have on the HDD market.

Wkipedia explains SSD is a data storage device that uses solid-state memory to store persistent data. SSDs are distinguished from traditional HDDs which are electromechanical devices containing spinning disks and movable read/write heads.

SSDs, in contrast, use microchips, and contain no moving parts. Compared to traditional HDDs, SSDs are typically less susceptible to physical shock, quieter, and have lower access time and latency. SSDs use the same interface as hard disk drives, thus easily replacing them in most applications.

As of 2010, most SSDs use NAND-based flash memory, which retains memory even without power. SSDs using volatile random-access memory (RAM) also exist for situations which require even faster access, but do not necessarily need data persistence after power loss.

Bank Negara international reserves at US$95b

KUALA LUMPUR: Bank Negara Malaysia's international reserves as at July 30 declined in ringgit terms to RM301.6 billion from RM309.9 billion on July 15.

However, in terms of US dollars, the reserves rose to US$95 billion from US$94.8 billion.

In a statement on Friday, Aug 6, the central bank said the reserves position was sufficient to finance 7.9 months of retained imports and is 4.4 times the short-term external debt.

Notion VTec down 14c in late morning

KUALA LUMPUR: Shares of Notion VTec fell as much as 14 sen in the morning session on Friday, Aug 6 after the company announced a set of weaker earnings and stayed cautious about the fourth quarter.

At 11.19am, it was down 14 sen to RM2.06 with 1.68 million shares done.
The FBM KLCI fell 1.87 points to 1,360.21. Turnover was 333 million shares done valued at RM335 million.

On Thursday, Notion VTec reported net profit of RM2.97m in its 3Q ended June 30, 2010, down sharply from the RM11.1 million a year ago as earnings were impacted by the initial start-up cost of new projects and it is cautious about its 4Q.

CIMB Research said on Friday in view of the earnings uncertainty, poorer-than-expected execution, loss of investor confidence and rising industry risk, "we are cutting Notion from Outperform to Underperform".

The research house said the poor results are a potential de-rating catalyst, along with a longer-than-expected recovery/gestation period and slowdown of the overall hard disk drive market.

G Team owns 80.51% of Maika Holdings

KUALA LUMPUR: G Team Resources Bhd has raised its stake in Maika Holdings Bhd to 80.51% or 100.64 million shares at the close of the unconditional take-over offer.

CIMB Investment Bank said on Friday, Aug 6 that of the 80.51% stake, about 17.91% was subject to verification.
The offer closed at 5pm on July 30.

CIMB Investment Bank was engaged as the adviser and financier to G Team for this exercise. G Team is a special purpose vehicle established by Westports Malaysia Sdn Bhd executive chairman Tan Sri G Gnanalingam and Datuk S Kunasingam to take control of Maika with the objective of repaying shareholders their cost of investment in the company.

The offer price was was based on the original investment of Maika's shareholders of RM100 million and the 25 million bonus shares received in 1996.

Saudi, RIM talks progress as Blackberry ban looms

RIYADH/OTTAWA: Saudi Arabia and BlackBerry maker Research In Motion (RIM) are making progress in talks over access to the device's encrypted network, a source close to the negotiations said, and the kingdom had yet to carry out threats to cut its Messenger service early Friday morning, Aug 6.

Canada also said it is talking to Saudi Arabia and the United Arab Emirates (UAE) to resolve a fight over BlackBerry security that could jeopardise the growth of RIM, the country's most important tech exporter.

RIM is facing mounting pressure to open up its super-secure network to government scrutiny. A growing number of countries are demanding access to encrypted communications sent through the device, saying national security may be at risk.

In addition to Saudi Arabia and the UAE, India is in talks with the company over gaining access, and both Lebanon and Algeria, according to a newspaper report, are reviewing the situation and might soon also might join the list.

The Saudi talks have led Research In Motion to consider locating a server in the kingdom to handle some of the BlackBerry network's encrypted communications, Al-Hayat newspaper's online edition said on Friday in an unsourced report.

"RIM showed on Thursday a degree of flexibility that has not been there over the past three months. Progress is being made. We started debating the technicalities of new setups," the source told Reuters.

US Secretary of State Hillary Clinton, who has promoted Internet freedom as a basic human right, said the United States will hold talks with the UAE and other countries on the issue.

Canada, where RIM is based, is concerned about the looming ban and its "broader implications," Trade Minister Peter Van Loan said in a statement. He said Canadian officials were working with RIM, Saudi Arabia and the UAE to find a solution.

"Canada has been working closely with the officials at Research In Motion as well as with governments on the ground to assist them in dealing with these challenges," the minister told reporters in Ottawa.

Shares of RIM fell about 2% Thursday on the Nasdaq and Toronto stock exchanges. The stock has shed about 9% since the UAE threatened over the weekend to ban BlackBerry email, messaging and Internet services after three years of negotiations with RIM over access to user data.

RIM is in an unusual position of having to deal with government requests to monitor its clients because it is the only smartphone maker that manages the traffic of messages sent using its equipment.

Although the Gulf region accounts for only a small portion of RIM's more than 41 million subscribers, analysts said they were concerned about the impact on the Canadian company's reputation for providing iron-clad smartphone services.

"The company has to stand its ground... they've built their loyalty largely around security," said Nick Agostino, analyst at Mackie Research Capital Corp.

RIM has said its TECHNOLOGY [] will not allow a third party to monitor communications running through the BlackBerry's enterprise servers. Co-CEO Michael Lazaridis, in an interview with the Wall Street Journal, accused governments of picking on smartphones to score political points.

"This is about the Internet," Lazaridis was quoted as saying. "Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off."

Governments from China to Iran have become more vocal about controlling conversations on the Internet and on mobile phones, citing risks to national security.

Disputes between government regulators and technology providers have escalated into diplomatic disputes, such as the one between China and Google Inc over Internet censorship and cyber attacks earlier this year.

Clinton, who had also waded into the Google-China dispute, said on Thursday about the BlackBerry issue: "We are taking time to consult and analyse the full array of interests and issues at stake because we know that there is a legitimate security concern, but there is also a legitimate right of free use and access."

Some analysts said it may be difficult for governments to get what they want.

"I think their expectations are unrealistic over the long term to maintain the kind of control that they're looking for. They're really trying to put the genie back in the bottle here," said Kevin Restivo, a senior mobile phone analyst at IDC.

Algeria became the latest government to join the fray, saying it is reviewing the use of the BlackBerry and that it will ban the devices if it concludes they are a threat, according to a report early on Friday.

"We are looking at the issue. If we find out that it is a danger for our economy and our security, we will stop it," the El Khabar newspaper quoted Telecommunications Minister Moussa Benhamadi as saying."

Lebanon said on Thursday it was studying security concerns related to the BlackBerry and would begin talks with RIM.

India, worried that BlackBerry's secure messaging services could be misused by militants, has demanded more access for its security agencies, and the country's telecoms minister said it had not reached an agreement with the company.

"India has made these threats time and again and India's starting to sound like the boy that cried wolf, a little bit, because RIM continues to maintain service there and has talked to the government many times and come to resolutions over the course of time," said Restivo.

RIM has said BlackBerry security is based on a system where customers create their own keys. The company neither has a master key nor any "back door" to let RIM or third parties to gain access to data. ' Reuters

CIMB Research: Downside risk for Mudajaya limited

KUALA LUMPUR: CIMB Equities Research said MUDAJAYA GROUP BHD []'s share price has plunged 34% from the RM5.94 high it achieved on July 22, 2010'' to a low of RM3.92 on Thursday, wiping RM830 million from its market capitalisation.

'Working on the worst-case scenario of (i) no IPP component, and (ii) no EP profit in our CONSTRUCTION [] portion, we estimate that our RNAV would go down by 47% from RM9.92 to RM5.17, cutting our target price from RM7.94 to RM4.14 (unchanged 20% RNAV discount),' it said on Friday, Aug 6.

CIMB Research said if it just removed the IPP component but not the EP profits, RNAV would drop to RM8.16, leading to a target price of RM6.53. If only the EP profits for the construction component were removed, RNAV would drop by RM5.46, leading to a target price of RM4.37.

#Update* Mudajaya rebounds in early trade

KUALA LUMPUR: MUDAJAYA GROUP BHD []'s share price rose on Aug 6 after company said its management had met up with the Securities Commission and provided them with the clarifications requested.

At 9.41am, Mudajaya was up 24 sen to RM4.16 with 5.1 million shares traded.

In an announcement to Bursa Malaysia on Friday, Aug 6 the board of directors affirmed the company had conducted its business in a professional manner.

"The board wishes to advise shareholders of the company to exercise caution not to trade in the company's shares based on rumours.

"Currently, the company has no borrowings and has a net cash position of approximately RM223 million. The company's focus remains on delivering and completing all our projects on hand. The board will update the shareholders of the company if and when is necessary," it said.

#Flash* Sime Darby Marine GM pleads not guilty

KUALA LUMPUR: Sime Darby Marine division general manager pleads not guilty to two charges of corruptly leaking company information. Case mention set for Sept 28.

More details to come.

#Update* Sime Darby GM charged for selling company information

SHAH ALAM: The Malaysian Anti Corruption Commission (MACC) on Friday, Aug 6 pressed two charges against a Sime Darby official, Zamri Mohd Iderus, for corruptly leaking company information in relation to bid prices in 2008.

Zamri, 39, pleaded not guilty Friday morning when charged at the Shah Alam Sessions Court under Section 11(a) of the Anti-Corruption Act 1997.

According to the charge sheet, Zamri is the general manager of Sime Darby Marine / Business Development and Investments / International Projects.

For the first charge, Zamri is accused of corruptly receiving gratification in the form of two cheques worth RM50,000 and RM49,000 from a Kamarudin Husin on Nov 7, 2008 in a hotel in Subang Jaya restaurant near here.

Zamri, as an agent of Sime Darby Holdings Bhd, allegedly leaked information from Sime Darby Engineering to Kamarudin on the bid prices for an Arrow Platform (M) Sdn Bhd subcontract for architectural works worth RM14.43 million and a subcontract for copper nickel piping works.

If found guilty for the first charge, Zamri is liable to a jail term of not less than 14 days and not more than 20 years. He could also be fined not less than five times the sum or value of the gratification at the centre of the offence.

The MACC prosecutors, led by deputy public prosecutor Kevin Morais, also preferred an alternative charge under Section 132(2)(b) of the Companies Act 1965

Zamri also pleaded not guilty when read a second charge similar to the first.

For the second charge, Zamri was alleged to have "obtained direct profit" in receiving two cheques worth RM99,000 sometime in mid-November 2008 at the Sime Darby Complex in Subang Jaya from Kamarudin.

On this occasion, Zamri was accused of leaking information obtained on his position without the authorisation of Sime Darby Engineering on the bidding prices for a copper nickel piping project.

According to the charge sheet, Kamarudin, who is alleged to have given Zamri the cheques, has an interest in Arrow Platform. The company builds internal fabrication for oil platforms.

It is learnt that Kamarudin was not charged as prosecutors intend to call him as a witness in Zamri's trial.

If found guilty for the second charge, under Section 132(2)(b) of the Companies Act 1965, Zamri faces five years imprisonment, RM30,000 fine or both.

Judge Azhaniz Teh Azman Teh fixed bail at RM10,000 with one surety and ordered Zamri's passport to be impounded. Azhaniz also fixed Sept 28 for a mention of the charges against Zamri.

Zamri was represented by counsel Jason Tay.

CIMB Retail Research: MISC prices may pause soon

KUALA LUMPUR: CIMB Retail Research said MISC has been trading in the RM9.15-RM7.80 band for the past few months.

In a technical outlook issued on Friday, Aug 6 it said if history repeats itself, there is a high possibility that prices may take a breather soon. In the past, the odds usually favour the bears when the candles are hovering near the upper band of this trading zone.

'Indicators are showing subdued pattern, suggesting that future rebound could be weak. Both MACD and RSI signal lines have flattened out,' it said.

CIMB Retail Research said traders should use any rebound towards RM9.15 to sell into strength. However, put a buy stop at RM9.30, just in case.

'If this level is taken out, this would likely be a renewed uptrend trend. Otherwise, next downside targets are RM8.46 (its 200-day SMA), RM8.04 and RM7.80,' it said.

AmResearch has Buy on Ivory Properties

KUALA LUMPUR: AmResearch reaffirmed its'' BUY rating on Ivory PROPERTIES [] Bhd (Ivory) with unchanged fair value of RM1.75/share based on 35% discount to its NAV/share of RM2.70/share.

The research house said on Friday, Aug 6 that Ivory is buying prime seafront land (1.1 acres) at the Batu Ferringhi seafront area on Penang island for RM25 million - conditional on Ivory securing planning approval from the local council.

Project comprises 96 units of luxury condominiums with built up areas from 2,400sf to 8,000sf, housed in a 41-storey tower.

'With gross development value of RM159mil, market response is expected to be strong due to the project's scarcity premium and unique appeal,' it said.

AmResearch said potential enhancement to its earnings estimates and NAV is significant. Ivory will be stepping up presales from RM500mil in FY10F to RM750mil in FY11F.

'Current unbilled sales are RM385mil - and rising. Despite its share price outperformance, the stock is still at the early stages of a sustained re-rating cycle. At RM1.28/share currently, Ivory is trading at a steep 53% discount to our NAV of RM2.70/share.

'Forward PE multiples ' 3x-4x, are attractive with EPS CAGR of 63%. Taken together, Ivory remains an excellent transformational growth story,' it said.

HDBSVR: Market to trade in tight range, marginal negative bias

KUALA LUMPUR: Hwang DBS Vickers Research said just like in the past four days, it expects Bursa Malaysia to trade inside a narrow band with a marginal negative bias on Friday, Aug 6, as profit-taking activity persists.

HDBSVR said this was also a similar scene on Wall Street last night with key U.S. equity barometers dipping slightly between 0.1% and 0.5% at the closing bell. Essentially, sentiment was hurt by a rise in jobless claims which led to concerns that the economic momentum could reverse ahead.

'In terms of individual share price actions, the market focus will probably be on: (a) Sime Darby, which dropped 2.3% yesterday causing a 2.6-index point decline, after it rebutted a media report speculating that the conglomerate would slip into the red for the financial year ended Jun 10; and (b) recently beaten down stocks such as Mudajaya and Notion VTech, which may stage a moderate technical rebound from their oversold territories,' it said.

CIMB Retail Research: Sell Mulpha Intl into strength

KUALA LUMPUR: CIMB Retail Research said Mulpha International is still trapped in a declining channel.

In its technical outlook issued on Friday, Aug 6, it said in the past three attempts, prices failed to inch above the resistance trend line and it thinks it will be indifferent this time around.

'Currently, the candles are just holding above its 30-day and 50-day SMAs but sustainability remains a concern,' it said.

MACD histogram bars are beginning to lose pace while its RSI has also hooked down from the overbought territory. These do not bode well for any recovery effort.

'Sell into strength looks like the best option here. Unless prices can inch above the April high of 52.5 sen, we would prefer to stick with the bears' camp. Next downside targets are 40 sen and 35 sen,' it said.

FBM KLCI opens higher

KUALA LUMPUR: The FBM KLCI opened higher on Friday, Aug 6, lifted by gains at BAT, KLK, PLUS and IOI Corp.

At 9.05am, the index rose 1.16 points to 1,363.24. Volume was 26.49 million shares valued at RM22 million.

Nestle was the top gainer in early trade, and was up 60 sen to RM39.90.

Mudajaya, which said it said its management had met up with the Securities Commission and provided them with the clarifications requested, was also among the top gainers in early trade.

The stock added 36 sen to RM4.28 with 1.56 million shares traded.

BAT was up 26 sen to RM45.06, KLK 14 sen to RM167.02, Amway 10 sen to RM8.10 and Faber added eight sen to RM2.87.

PLUS gained six sen to RM3.85, IOI Corp up five sen to RM5.18 while DFZ Capital added four sen to RM3.74.

The top loser in early trade was Notion Vtec, which loser 13 sen to RM2.07. Other decliners included Genting, Sime Darby and Press Metal.

BlackBerry's armour has cracks, security experts say

BOSTON: Research in Motion's resistance to giving governments access to its BlackBerry network misses a major point -- authorities could probably hack the data on their own if they want it badly enough, security experts say.

Indeed, a major attack against BlackBerry users by a telecom in the United Arab Emirates employed that very tactic a year ago, according to RIM. Experts say other malicious programs are likely to be lurking around, readying to be sprung.

India, Lebanon, Saudi Arabia and the United Arab Emirates say they need RIM's cooperation so they can decode messages scrambled with BlackBerry's proprietary TECHNOLOGY []. They have threatened to restrict RIM's operations if the company won't meet their demands, which they say are driven by national security concerns.

But if RIM doesn't back down, the governments themselves could instead choose to hack into the BlackBerry network.

"I could design a good hundred ways to gain access," said Bruce Schneier, a security expert who is chief security technology officer for BT .

Officials with Canada's RIM did not respond to a request for comment.

Security experts say they'd almost certainly attack at the network's most vulnerable points: the BlackBerry smartphone itself and the BlackBerry server. Those two pieces of equipment sit at either end of the network where they offer would-be hackers access to unscrambled data.

Last year's attack in the UAE is a good example of how a hacker might work. It employed spyware created by SS8, a closely held U.S. security firm, RIM says.

Emirates Telecommunications Corp , the UAE's largest telecoms operator, sent the program to its BlackBerry disguised as a software update. It told its customers that the it would enhance the performance of their equipment, but RIM says it was mainly intended to tap into their communications.

The telecom declined comment at the time.

RIM said it quickly discovered the so-called "malware" because of a glitch in its implementation, and told users not to install it on their phones. But hackers might go undetected, experts say.

To prove the point, a security researcher named Tyler Shields released a spyware program earlier this year for attacking BlackBerries via the handset. It allows hackers to intercept messages that reach the device and use its microphone to tap conversations in the immediate vicinity of the phone.

"I wanted to demonstrate that BlackBerry handhelds are susceptible to spyware," said Shields, who works for the Burlington, Massachusetts-based security firm Veracode Inc.

The program, dubbed TXSBBSpy, did not include installation software as Shields never intended it to be used. He only wanted to show the BlackBerry was not unhackable.

A successful attack on a Blackberry Enterprise Server could prove even more devastating because each server manages data for hundreds of users.

Hackers could write code to take advantage of vulnerabilities in the software that runs those servers, said Chet Wisniewski, senior security adviser at Sophos, anti-virus software maker. Such a program would allow outsiders to view messages from all the users hooked up to the computer via their handsets. - Reuters

U.S. stocks drop, euro up ahead of payrolls

NEW YORK: U.S. and European stocks dropped on Thursday, Aug 5 after an unexpected rise in weekly U.S. jobless claims underscored the weakening economy, and the euro ended slightly stronger against the dollar a day ahead of the U.S. government's monthly payrolls report.

The number of Americans making new claims for jobless benefits rose by 19,000 to 479,000 in the week ended July 31 -- the highest level in nearly four months. The news, coming a day ahead of the U.S. government's closely watched monthly payrolls report, put investors on edge, as stubbornly high unemployment has fueled concerns on sustainable global growth.

Treasuries prices rose on a safety bid as investors braced for the employment report, and oil and commodity prices slipped on slowing demand. Copper prices were also hit by worries about the outlook for the real estate market in China, the world's largest consumer of the industrial metal.

China's banking regulator ordered lenders to test the impact of a fall in house prices of up to 50 percent in key cities where prices have risen sharply, banking and regulatory sources said on Thursday.

But the U.S. labor market stole the spotlight on Thursday following the surprisingly weak jobless claims report.

"The claims data today was miserable and obviously it has a negative implication for the non-farm number tomorrow," said Phil Orlando, chief equity market strategist at Federated Investors, in New York.

"But the important thing tomorrow is going to be what are the organic, permanent underlying trends in private payroll, manufacturing payrolls, household survey, etc."

Economists polled by Reuters expect Friday's U.S. Labor Department report to show a drop of 65,000 in non-farm payrolls in July, hurt by the unwinding of the government's hiring for the census. Private employers are expected to have added 90,000 jobs.

The Dow Jones industrial average was down 5.45 points, or 0.05 percent, at 10,674.98. The benchmark Standard & Poor's 500 Index was down 1.43 points, or 0.13 percent, at 1,125.81. The Nasdaq Composite Index was down 10.51 points, or 0.46 percent, at 2,293.06.

Weakness in consumer spending trends also stayed in focus as the 28 retailers tracked by Thomson Reuters reported July same-store sales that rose only 2.9 percent -- falling short of analysts' expectations for a 3.1 percent gain.

Shares of department store operator JC Penney Co Inc fell 7.7 percent to $22.12 while youth-oriented apparel chain Aeropostale Inc slumped 5.7 percent to $25.88.

"The sales data was unimpressive and points to a consumer who is tapped out," said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania. "If payrolls don't increase and incomes don't rise, it's going to be a bleak picture for retailers for the rest of the year."

Global equities measured by the MSCI All-Country World Index were up slightly, climbing 0.14 percent, while the Thomson Reuters global stock index rose 0.10 percent.

European shares closed lower. The pan-European FTSEurofirst 300 index of top shares shed 0.23 percent to 1,068.58 points, slipping from three-month highs hit earlier in the session.

Higher-than-expected profits from Barclays and Commerzbank failed to dispel concerns over the underlying health of Europe's top banks. The lenders shed 4.7 and 2.2 percent, respectively.

Japan's Nikkei closed up 1.7 percent, helped by top carmaker Toyota Motor Corp, which reported its best operating profit in two years.


After a volatile session, the euro ended the day slightly stronger against the dollar as investors positioned themselves ahead of the U.S. payrolls report.

The currency got a nice boost earlier Thursday by solid German industrial data and signs that Spain and Greece were making progress in trimming budget deficits.

The euro was up 0.21 percent at $1.3186. Earlier it rose to $1.3234 after the U.S. jobless claims data.

A strong debt auction in Spain and a vote of confidence from the International Monetary fund in Greece's efforts to cut the deficit also boosted euro buying during European trade.

Spain sold 3.5 billion euros in three-year bonds at a lower yield than a previous auction in June, suggesting solid demand as it copes with fiscal problems.

Earlier, both the Bank of England and the European Central Bank kept interest rates unchanged, as expected.

The ECB president, Jean-Claude Trichet, said third-quarter euro zone economic data has come in stronger than expected so far but the central bank still expects the bloc's economic recovery to be moderate and uneven.

Conversely, the dollar was down against a basket of major trading-partner currencies, with the U.S. Dollar Index dipping 0.16 percent at 80.766 from a previous session close of 80.892. Against the Japanese yen, the dollar was down 0.57 percent at 85.79 from a previous session close of 86.280.

U.S. Treasury debt prices were higher.

The benchmark 10-year U.S. Treasury note was up 13/32, with the yield at 2.91 percent. The 2-year U.S. Treasury note was up 2/32, with the yield at 0.53 percent. The 30-year U.S. Treasury bond was up 15/32, with the yield at 4.06 percent.

In energy and commodities prices, U.S. light sweet crude oil fell 43 cents, or 0.52 percent, to $82.04 per barrel, but spot gold prices rose 40 cents, or 0.03 percent, to $1195.60. The Reuters/Jefferies CRB Index was down 1.31 points, or 0.47 percent, at 277.67. - Reuters

Wheat surges as drought worsens; oil, metals fall

NEW YORK: U.S. wheat futures soared more than 8 percent on Thursday, Aug 5 to highs unseen in two years, after Russia said it would halt grain exports while it faces its worst drought on record.

Soybeans and corn also rose, pulled higher by wheat's surge. But other commodities fell as disappointing U.S. economic data on jobs and retail sales cast doubt on demand prospects. Oil and industrial metals fell, but gold rose as investors sought safety in the precious metal.

Global commodity sector benchmark, the RJ/CRB index of 19 commodities, fell 0.47 percent to 277.67, as commodity market trade ended.

The benchmark September wheat contract on the Chicago Board of Trade jumped 8.3 percent, its biggest daily percentage gain in three weeks. Wheat has soared 85 percent since the low of June 9, surging as a drought has devastated Russia.

Russian Prime Minister Vladimir Putin signed an order banning grain and flour exports from Aug. 15 to Dec. 31, with a spokesman saying this would apply to contracts that had been already signed.

Without shipments from the world's No. 3 wheat exporter, traders sent grain prices up by daily maximum allowed.

"Putin's announcement has everyone in a panic. It's money chasing money, and who knows how high we could go," said Paul Haugens, vice-president for Newedge USA.

Investors in most other commodities were setting up for the July U.S. employment report due out on Friday at 8:30 a.m. EDT(1230 GMT). A Reuters poll produced an average forecast for a decline of 65,000 in non-farm payrolls, but a gain of 90,000 private jobs in July.

On Thursday, data showed first-time filings for U.S. unemployment benefits jumped unexpectedly last week, giving investors reason to'' worry about demand prospects ahead of Friday's jobs report.

"Whatever happens with tomorrow's July numbers, you just have to keep in mind that you need approximately 125,000 jobs a month just to keep up with new entrants into the job market," said Scott Wren, senior equity strategist at Wells Fargo Advisors in St. Louis.

Disappointing monthly sales at U.S. retailers combined with higher jobless claims to send oil prices lower, feeding doubts about the outlook for energy demand a day after a government inventory report showed rising fuel stockpiles.

U.S. September crude futures fell 46 cents to settle at $82.01 a barrel, in the second day of losses.

Copper prices fell 1.5 percent after the jump in weekly U.S. jobless claims prompted some cautious investors to cash in ahead of Friday's labor market data.

"With the bump in jobless claims, there is a lot of nervousness in front of tomorrow's monthly unemployment numbers," said Sterling Smith, an analyst for Country Hedging Inc in St. Paul, Minnesota.

"A tepid recovery with a lack of jobs means lower demand for copper," he added.

Investors bought gold for its safe haven appeal and drove prices higher for a seventh consecutive session. It reached levels over $1,200 for awile on concern about the economy coupled with inflation worries related to the grain price rise, but settled just below that threshold.

"Concern over the suspension of grain export from Russia and escalating grain prices are triggering some concerns, which are feeding into gold," said James Steel, chief commodity analyst at HSBC in New York. - Reuters

#Stocks to watch:* Sime Darby, Mudajaya, Notion VTec, Genetec

KUALA LUMPUR: Key regional markets are expected to open softer, including Bursa Malaysia, on Friday, Aug 6 on concerns about a weakening US economy after Wall Street closed slightly lower.

On Wall Street, the Dow Jones industrial average was down 5.45 points, or 0.05%, at 10,674.98. The benchmark Standard & Poor's 500 Index was down 1.43 points, or 0.13%, at 1,125.81. The Nasdaq Composite Index was down 10.51 points, or 0.46%, at 2,293.06.

Reuters reported US and European stocks dropped on Thursday after an unexpected rise in weekly U.S. jobless claims underscored the weakening economy, and the euro ended slightly stronger against the dollar a day ahead of the U.S. government's monthly payrolls report.

The number of Americans making new claims for jobless benefits rose by 19,000 to 479,000 in the week ended July 31 -- the highest level in nearly four months

Stocks to watch on Bursa Malaysia are SIME DARBY BHD [], MUDAJAYA GROUP BHD [], NOTION VTEC BHD [], Fraser & Neave Holdings Bhd, Genetec TECHNOLOGY [] Bhd and Malaysia Airports Holdings Bhd (MAHB).

Company officials of Sime Darby Bhd said the company's performance for June 30, 2010 will not reach the levels of the alleged net losses of RM2 billion to RM2.5 billion, as reported by an online news portal.

However, the company expected to make profit for the full year ended June 30, 2010. Its share price came under selling pressure on Thursday on concerns of higher provisioning for its energy and utilities division.

News reports state a Sime Darby general manager is expected to be charged on Friday with graft totaling RM300,000.

Shares of Mudajaya continued their descent, plunging 20.5% on Thursday as news reports of a probe into the company by the Securities Commission (SC) and a circulating "poison-pen letter" made investors jittery. Shares of the CONSTRUCTION [] company tumbled RM1.01 to close at RM3.92, from RM4.

Notion VTec posted net profit of RM2.97m in its third quarter ended June 30, 2010, down sharply from the RM11.1 million a year ago as earnings were impacted by the initial start-up cost of new projects.

Revenue for 3Q rose 36% to RM60.8 million from RM44.71 million a year ago but expects the 4Q revenue to be lower due to lower orders from the'' hard disk drive (HDD) components sector.

Fraser & Neave posted net profit of RM70 million for its third quarter ended June 30, 2010 compared with RM59.12 million a year ago as it benefited from lower tax rate.

Group revenue increased 7% to RM893 million mainly driven by strong volume growth in soft drinks.

ACE-listed machine design specialist Genetec Technology Bhd is expecting a double-digit growth for its revenue for the financial year ended March 31, 2011, as expects to increase its order book.

The company has an outstanding book order of RM48 million''for the current financial year, and expects to secure more. Its unbilled RM48 million orders are expected to contribute to its earnings in the next few quarters.

Genetec expects the order book to exceed its total RM50 million order book last year.

MAHB plans to issue up to RM3.1 billion in debt notes to part fund its new terminal at the KL International Airport and/or refinance its existing borrowings.

Proceeds raised from the proposed sukuk programmes will be used to part finance the construction of a new terminal'' which is expected to be completed by the end of the first quarter of 2012 and/or to refinance MAHB's existing borrowings/financings which were utilised for Shariah-compliant purposes and/or for MAHB's Shariah-compliant general corporate purposes.

Bursa may see 2 more China firms listed by year-end

KUALA LUMPUR: The local bourse is expected to see the listing of two more Chinese companies by year-end boosted by Malaysia's newly-confirmed status as a Qualified Domestic Institutional Investors (QDII) investment scheme destination by the Chinese regulators, said Securities Commission (SC) chairman Tan Sri Zarinah Anwar.

According to Bernama, Zarinah said the SC had received a lot of interest from Chinese companies seeking listing on Bursa Securities.

In her keynote address at the Capital Market Forum 2010 here yesterday to explore business opportunities between the two countries, Zarinah said Malaysia's recognition as a QDII destination by the China Securities Regulatory Commission (CSRC) may boost the relatively low levels of cross-border investment between the capital markets.

'We hope that this new phase in the development of the relationship between our two markets will see greater interest from Chinese companies seeking to raise funds in the Malaysian market, complemented by deeper and more sustained interest in Chinese companies by Malaysian investors,' she said.

The liberalisation of Malaysian equity guidelines two years ago had seen the listing of four Chinese companies on the local bourse, she said. The four are K-Star Sports Ltd, Multi Sports Holdings Ltd, Xidelang Holdings Ltd and Xingquan International Sports Holdings Ltd.

In her speech, Zarinah recapped the SC's signing of a Letter of Exchange with the CSRC in late June 2010 recognising Malaysia as the 11th member of a 'small group of approved investment destinations' by both the CSRC and China Banking Regulatory Commission (CBRC).

She said the recognition would 'facilitate the pooling by fund managers, securities firms and financial institutions, of funds from domestic investors in China for investment in Malaysia securities".

The other jurisdictions are Australia, Canada, Hong Kong, Germany, Japan, Luxembourg, Singapore, South Korea, the United Kingdom and the United States.

'In addition, the rebound in the world capital markets has resulted in a new wave of QDII funds being offered to the Chinese market,' she said.

Zarinah said Malaysia's exports to China in the first five months of the year had risen 82.2% to US$19.1 billion (RM60.4 billion) from the same period last year, making China Malaysia's largest trading partner.

Thursday, August 5, 2010

CIMB bags 10 awards from Alpha Southeast Asia Magazine

KUALA LUMPUR: CIMB Group has bagged 10 awards from the Alpha Southeast Asia Magazine's Best Financial Institutional Awards 2010.

The group won the region's Marquee Awards For Best Islamic Finance Bank, Best Asset Manager and Best International Equity House.

It also lifted awards in Best Private Wealth Management Bank, Best Investment Bank, Best M&A House, Best Bond House, Best Institutional Broker, Best Retail Broker and Best Local Islamic Finance Bank, the magazine said in a statement on Aug 5, 2010.

Alpha Southeast Asia Magazine, the first and only institutional investment magazine focused on Southeast Asia's banking and capital markets, said CIMB's Best Investment Bank award followed scores of "first" in deals such as the US$1.25 billion (RM3.95 billion) 1Malaysia Global Sukuk, Petronas's US$3 billion Guaranteed Notes and US$1.5 billion Trust Certificates, Pengurusan Air SPV's Islamic MTN Programme of up to RM20 billion, and PLUS's RM4.5 billion MTN issue.

The CIMB Group netted both the Best Retail Broker and Best Institutional Broker awards by being the most active on the Bursa Malaysia Derivates with 80% of it business derived from onshore investors in Malaysia and a large proportion of its brokerage business originating from institutional clients.

The group derived 20% of capital from foreign funds.

Alpha Southeast Asia Magazine also announced that AmInvestment Bank emerged the Best Equity House (Malaysia), Maybank for Best Cash Management Bank and Best Trade Finance Bank. ' Bernama

#Today's Diary* What to expect on Aug 6, 2010

BOLTON BHD [] AGM at Holiday Inn Kuala Lumpur, Shah Alam, Selangor at 9.30am.

Keck Seng (Malaysia) Berhad EGM at Conference Room of Tanjong Puteri Golf Resort Bhd, Johor at 11am.

MALAYSIAN RESOURCES CORP []oration Bhd and Dewan Bandaraya Kuala Lumpur organises officiating of Jln Travers/Jln Bangsar bridge. Assembly point Zone B, Jln Stesen Sentral 5, KL Sentral at 2.30pm.

MEDIA PRIMA BHD [] launches a new experience in viewing by its subsidiary Alt Media Sdn Bhd at Sunway Pyramid Convention Centre, Selangor at 3pm.

Malaysian Resources Corporation Bhd and Pelaburan Hartanah Bhd organises the Nu Sentral Retail launch at Grand Ballroom, Level 6, KL Hilton at 7.30pm.

Bank of England holds rates steady at 0.5% as expected

LONDON: The Bank of England kept interest rates at a record-low 0.5% on Thursday, Aug 5'' and announced no new quantitative easing purchases, a decision universally expected in a Reuters poll of economists.

None of the 61 economists polled last week expected a change in policy, and most did not expect a rise in interest rates until April next year at the earliest.

Although consumer price inflation at 3.2 percent is well above the BoE's 2 percent target, most policymakers view the factors that pushed it up -- sterling weakness, higher sales tax and higher oil prices -- as one-offs that will fade away.

Most economists predict growth will slow from the unexpectedly strong 1.1 percent recorded between April and June because of looming government spending cuts, weak European demand for UK exports and banks' continuing reluctance to lend.

For the past two months, Andrew Sentance has been the only policymaker to vote for a rise in rates and last month the Monetary Policy Committee as a whole considered loosening policy for the first time since February.

The MPC will have had access to a quarterly update to the BoE's growth and inflation forecasts, which will be published on Aug. 11, while minutes of this MPC meeting are due on Aug. 18.

The BoE cut interest rates to 0.5 percent in March 2009 during the depths of Britain's recession, and launched a programme of quantitative easing, buying 200 billion pounds ($316.5 billion) of assets -- mostly gilts -- by February 2010 to pump money into the economy.

August's meeting was the first to include former economic think tank director Martin Weale, the replacement for long-serving MPC member Kate Barker, who stepped down after May's meeting. - Reuters

Notion VTec 3Q earnings slip to RM2.97m, cautious on 4Q

KUALA LUMPUR: NOTION VTEC BHD [] posted net profit of RM2.97m in its third quarter ended June 30, 2010, down sharply from the RM11.1 million a year ago as earnings were impacted by the initial start-up cost of new projects and it is cautious about the fourth quarter

It said on Thursday, Aug 5 revenue for 3Q rose 36% to RM60.8 million from RM44.71 million a year ago but expects the 4Q revenue to be lower due to lower orders from the'' hard disk drive (HDD) components sector. Earnings per share shrank to 1.92 sen versus 7.88 sen.

"The lower earnings is mainly attributable to initial start up cost of new projects such as R&D, depreciation of machinery, materials and labour whereas the earnings will only come on stream in the following quarters," it said.

Notion VTec said there were quality issues for one of its HDD components which resulted in rectification and compensation cost. The group were also affected by the weaker US dollar and euro for the quarter under review.

"The group recorded pre-tax profit of RM3.9 million as compared to the immediate preceding quarter of RM15.5 million, a decrease of 74.8%," it said.

Faber posts RM32.47m net profit in 2QFY10

KUALA LUMPUR: FABER GROUP BHD [] net profit for the second quarter ended June 30, 2010 jumped to RM32.47 million from RM13.85 million a year ago, on the back of a 58.5% increase in revenue to RM270.22 million.

Earnings per share was 8.94 sen while net assets per share was RM1.16.

In said on Thursday, Aug 5, its integrated facilities management (IFM) business recorded a positive variance of RM106.8 million mainly due to business expansion in the UAE as well as higher variation orders, higher bed occupancy rates and additional new facilities at the government hospitals within the group's concession area.

In addition, the commencement of new housekeeping projects in India also contributed towards the positive variance, it said.

Faber said its property division recorded lower revenue by RM4.5 million mainly due to the completion of Phase 3 Laman Rimbunan, Kepong as most of the revenue for the project was already recognised in the preceding 2 years based on the percentage of work progress.

On its prospects for the current financial year, Faber said it was committed to improve contribution from all business divisions and focus its efforts on IFM business expansion, local and overseas.

It said the property division would improve its contribution to the group's revenue from the proposed new project launches in the second half of the year. 'We expect to meet our KPI targets for the year,' it said.

The company has targeted a revenue growth of between 12% to 15% for this year, and 15% to 18% return on equity (ROE).

Share prices mixed at close

KUALA LUMPUR: Share prices on Bursa Malaysia ended Thursday, Aug 5 mixed on persistent buying of selected lower liners and heavyweights, dealers said.

At 5pm, the FTSE Bursa Malaysia KUALA LUMPUR COMPOSITE INDEX [] (FBM KLCI) ended 0.66 points or 0.05% lower at 1,362.08 dragged by Sime Darby and Mudajaya.

The benchmark index opened 1.42 points higher at 1,364.16 and moved within 1,358.52 and 1,364.82 points.

Dealers said the recent sell-off was overdone and buying pressure was overwhelming after the recent gains seen last month.

MIMB Investment Bank Bhd head of research Chan Ken Yew said buying was boosted by an overnight uptrend in Wall Street as US employment data indicated modest improvement.

The Dow Jones Industrial Average rose 44.05 points to 10,680.43, the Standard & Poor's 500 index gained 6.78 points to 1,127.24 and Nasdaq was up 20.05 points to 2,303.57.

One dealer said the market was expected to fair better due to active buying interest with technical indicators remaining bullish over the longer-term.

The Finance Index rose 0.739 points to 12,285.27, the PLANTATION [] Index added 37.31 points to 6,468.67 while the INDUSTRIAL INDEX [] fell 9.83 points to 2,661.26. The FBM Emas Index increased 6.24 points to 9,237.78, the FBM70 [] Index increased 34.841 points to 9,258.94 and the FBM Ace Index went up 22.71 points to 3,845.25.'' ''

Market breadth was positive with gainers leading losers 362 to 349 while 276 counters were unchanged, 382 untraded and 30 others were suspended.'' ''

Volume rose to 993.853 million shares, valued at RM1.575 billion, from 811.414 million shares, worth RM1.188 billion, registered on Wednesday. ' Bernama

F&N 3Q earnings up 18.4% to RM70m

KUALA LUMPUR: Fraser & Neave Holdings Bhd posted net profit of RM70 million for its third quarter ended June 30, 2010, up 18.4% from RM59.12 million a year ago as it benefited from lower tax rate.

It said on Thursday, Aug 5 group revenue increased 7% to RM893 million, boosted by strong volume growth in soft drinks.

"Soft drinks revenue improved 26% with all main product portfolios registering commendable volume growth on the back of strong promotional activities around some major sport events such as the Thomas Cup and the FIFA World Cup," it said.

As for the dairies division, it saw a 3% decline due to lower exports for both Malaysia and Thailand operations. Property revenue was lower due to completion of Fraser Business Park ' Phase II.

Group operating profit for the quarter improved 17% mainly due to volume growth of soft drinks which was partly offset by higher raw material prices of the dairies division.

F&N said group profit after taxation for 3Q of RM72 million was 35% above the same quarter last year. Group effective tax rate declined to 20% from 29% previously, benefiting from the tax incentives secured last year for the new dairy plant investment in Rojana, Thailand.

China may cut required reserves by end-Sept, says group

BEIJING: China may cut banks' reserve requirements in the next two months as part of a modest loosening of monetary policy, the country's semi-official banking association said in a quarterly report.

The National Association of Financial Markets Institutional Investors (NAFMII), a body which comes under the People's Bank of China (PBOC), said the central bank would mainly rely on open-market operations for its fine-tuning of policy in the third quarter.

"There is the possibility that it will cut the deposit reserve ratio," NAFMII said.

"With an economic slowdown, 'maintaining growth' will again become a priority in macro-economic controls," it added.

China has increased the proportion of deposits that banks must keep in reserve three times in 2010. A cut would be a powerful signal from Beijing that it was leaning towards policy relaxation ' and it would also come as a surprise.

In a Reuters poll last month, most economists forecast that the reserve requirement ratio for big banks would remain unchanged at 17 percent over the next 12 months. ' Reuters

China poised to set gold market alight as it opens up

SINGAPORE/BEIJING: China's moves to free up its gold market open the way for foreign players and local banks to tap growing demand for the precious metal, offering citizens a more attractive investment and promising to boost the country's clout over global prices.

With the Shanghai Composite Index down 20% this year, and gold prices still up 9% despite a correction from a lifetime high hit in June, more retail investors are buying bullion as they diversify their wealth.

A clampdown on rampant property speculation could also drive investors to shift some hot money into gold, which many see as a sign of status and good fortune, as hopes for more Chinese demand pushed gold to a two-week high above US$1,200 (RM3,804) an ounce this week.

"What's happening in China right now is that a lot of wealth is being switched out of the property markets into the gold market," said Mark Pervan, senior commodities analyst at ANZ in Melbourne.

"This is an ongoing theme. This theme is likely to put a very high floor of price on the gold market. The property investor is very concerned the government is trying to cool that market. They've made a lot of money in property."

Investors have long bet that China will eventually overtake India as the world's top consumer, and Beijing's move to allow more domestic banks to export and import bullion underscores the hunger for gold among the country's burgeoning middle class.

More foreign firms are likely to become members of the Shanghai Gold Exchange and analysts also expect Beijing to ease curbs on gold investment products such as exchange traded funds.

Although China is the world's largest gold producer, it still requires imports as demand can easily outstrip domestic output by more than 100 tonnes annually.

China's share of global gold demand jumped to 11% in 2009 from 5% in 2002, when the Shanghai Gold Exchange opened, and consumption is likely to double in the next decade from around 420 tonnes as income grows, the World Gold Council says.

The People's Bank of China said on Tuesday, Aug 3 it would allow banks to hedge bullion positions in overseas markets, urge banks to lend more to domestic gold firms looking to go abroad, and actively develop more yuan-denominated gold derivatives.

China is likely to let second-tier institutions such as Minsheng Banking Corp and China Merchants Bank join forces with four major state banks, including Bank of China, that are already allowed to offer such services ' bringing the number to at least eight.

"China's gold market is going to play an important role in the global gold market," said Albert Cheng, Far East managing director of the World Gold Council.

"It will become more accessible for both international and domestic players. Investors in China will benefit from greater availability of physical gold and gold-related financial products. Naturally this is very positive for gold."

Analysts say China wants more banks to trade with overseas counterparts, reduce their reliance on the Shanghai Gold Exchange for hedging and invite more foreign banking institutions to trade on the Exchange, where trading volumes have risen by more than half in the first half of this year.

Five banks, including HSBC and Standard Chartered, are members of the Shanghai Gold Exchange.

Most gold investors trade via the Exchange but banking sources say more clients are chasing products such as gold saving accounts and gold bars while hedging services to miners have gone up ' suggesting a shift from equities or property markets.

Beijing has repeatedly stressed its determination to curb speculative demand and rein in overly fast price rises in the real estate market despite a slowdown in economic growth.

"Investment demand for gold is expanding very fast, as we are now in a bull market and prices will rise in the mid- and long-term," said a wealth manager specialising in precious metals at a state bank in Guangzhou.

"No matter if it's the stock, property or gold market, Chinese people always flock in when prices are rising."

Will China boost reserves after announcing the new measures? The answer may be no because Beijing will focus on bringing more gold into the country to satisfy demand, rather than stirring up global prices through official purchases.

China has increased its official gold holdings by more than 400 tonnes in the past few years to 1,054 tonnes ' the world's sixth largest.

"The PBoC comments should not be taken as a sign the official sector will buy gold, but rather that current restrictions on gold imports and gold investment products, such as exchange-traded funds, will gradually ease," HSBC said in a report.

Indeed, business is booming in downtown Beijing.

"There has been a big jump in interest in gold over the past year," said Zhang Qi, a salesman surrounded by gold commemorative items on display in a store of China Golddeal, the country's only official minting company, on Financial Street.

"Everybody can see how the government is trying to control the real estate market, so there is more confidence that gold is something that will be able to hold its value. Parents want to pass gold on to their children because they think it is safe." ' Reuters

Europe shares edge higher ahead of rate decisions

LONDON: European shares drifted higher in morning trade on Thursday, Aug 5 ahead of fresh interest rate decisions from the European Central Bank and the Bank of England, with investors staying cautious before Friday's key U.S. jobs data.

At 0851 GMT, the FTSEurofirst 300 index of top European shares was up 0.4 percent 1,074.74 points. The index ended little changed on Wednesday.

The Bank of England and the European Central Bank hold meetings later on Thursday, although no policy changes are expected. The focus of the post-rate decision news conference will be whether the ECB sees the euro-zone economy maintaining its recent blistering form.

Among financials, KBC jumped 4.1 percent after the Belgian bank beat expectations with growth in second-quarter profit before one-offs, led by lower costs and reduced bad debt provisions.

"Corporate earnings will keep helping the market for some more time, but if macro-economic numbers are going to take over, then good earnings will not be enough to support the market," said Koen De Leus, economist at KBC Securities.

"Nervousness is now about the U.S. jobs data as expectations of the markets are really linked to these numbers. If they are better than expected, then concerns of a double dip will fade very fast. If that's not happening, then we might see a correction."

The U.S. Labor Department report is expected to show on Friday non-farm payrolls fell by 65,000 in July after declining by 125,000 in June as temporary workers hired to conduct the country's decennial census were dismissed.

Elsewhere in the financials sector, Barclays fell 3 percent even after lower bad debts propelled it to higher than expected profits, as investors focused on its investment banking performance, rising costs and Spanish bad debts.

"Given the high dependence on investment banking activities, Barclays is vulnerable to a slowdown in volumes and/or further deterioration in the economic environment which could result in higher writedowns," J.P. Morgan Cazenove said in a note.

"Barclays is also exposed to the economic cycle through its lending exposure in particular to the UK credit cycle, South Africa and Spain. Being a retail bank it is also exposed to the interest rate environment."

Among individual movers, consumer goods giant Unilever fell 1.6 percent, warning of increased competition and higher commodity costs after lagging forecasts with a 3.6 percent rise in second-quarter sales.

Elsewhere, Zurich Financial Services, Europe's fourth-largest insurer, fell 2.8 percent after first-half profits fell 10 percent on high catastrophe payouts and provisions to shield against loan losses in the UK and Ireland.

The Euro STOXX 50, the euro zone's blue-chip index, was up 0.5 percent to 2,837.86 points. It hovered just above its 200-day moving average and the 61.8 percent Fibonacci retracement of the index's fall from an April high to a May low, generally a positive signal. - Reuters

Perodua MD open to collaboration with Proton

KUALA LUMPUR: Perusahaan Otomobil Kedua Sdn Bhd says it is open to collaboration with PROTON HOLDINGS BHD [] but it has never been officially approached over a proposed merger.

Perodua managing director Aminar Rashid Salleh said on Thursday, Aug 5 that it had never been "officially approached" over such a merger.

According to news reports in July, the suggestion that Proton and Perodua should consider a merger was floated after Prime Minister Datuk Seri Najib Tun Razak said at Proton's 25th anniversary celebration that if overcapacity was an obstacle, auto companies should merge to create a stronger, bigger and more able company.

Proton was positive about the benefits of a merger and its group managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir was quoted saying a merger would enhance economies of scale, reduce costs and help exports.

Genetec sees double-digit growth with RM48m order book

BANGI: ACE-Market listed machine design specialist Genetec TECHNOLOGY [] Bhd is expecting a double-digit growth for its revenue for the financial year ended March 31, 2011, as expects to increase its order book.

Its managing director Chin Kem Weng said on Thursday, Aug 5 that the company has an outstanding book order of RM48 million'' for the current financial year, and expects to secure more.

'This is going to be a good year as the unbilled RM48 million is expected to contribute to our earnings in the next few quarters. It should exceed our total RM50 million order book that we received last year,' he said at the AGM.

Chin said that it had been working closely with some customers keen to convert their old machinery and processes to improve their production capacity.

'We are working with them to come up with new prototypes which would improve their manufacturing yields and efficiencies. As such, they have raised their budgets," he added.

#Update* Mudajaya falls to lowest since November

KUALA LUMPUR: Selling pressure accelerated on MUDAJAYA GROUP BHD [], pushing the share price to the lowest since November last year as worries resurfaced about impact of the Securites Commission's probe into company.

At 3.46pm, it was down 89 sen to RM4.04 with 7.7 million shares. It fell to a low of RM3.75 earlier, lowest since early November.

The FBM KLCI was down 2.56 to 1,360.18.

Market speculation had it that the SC probe followed a complaint about the company's independent power producing project in India, with some analysts noting the company had exceptionally high margins compared with its bigger peers.

However, OSK Research had on Wednesday, maintained a buy on Mudajaya at RM5.08 with a target price of RM7.33.

"Based on our estimates, Phase 1 (RM762 million) hit 41.9% completion as of June versus 23.2% in January. We understand that deliveries for the key plant components are slightly delayed to August from June as scheduled earlier due to minor specification changes," it said.

OSK Research said nonetheless, the management reaffirmed that the entire project is on track for completion by end-2012.

"We expect the bulk of the revenue recognition for Phase 1 to take effect this year. There are also plans to expand capacity by another 2x360MW when the existing four plants near completion.

"This means Mudajaya could land another EP contract estimated to be worth RM1.7 billion," it said.

Malaysia's 2010 growth target on track, says Mustapa

SINGAPORE: Strong activity in the first half will help Malaysia achieve its target of 6 percent economic growth in 2010, despite a possible deceleration later in the year, the country's minister for international trade and industry said on Thursday, Aug 5.

The firmer Malaysian ringgit was not an obstacle to exports or growth, Datuk Seri Mustapa Mohamed said, attributing the strength to the country's solid economic fundamentals.

"It is not a hindrance, not an obstacle to the continued growth in trade and Malaysian economy. Malaysian exporters continue to be competitive," Mustapa told reporters in Singapore where he led a Malaysian investment promotion delegation.

Malaysia's June exports rose a slower-than-expected 17.2% on year, data showed on Tuesday, suggesting a weaker expansion in the Southeast Asian economy's second quarter.

Trade-dependent Malaysia's gross domestic product performance in the second quarter will be announced on Aug 18. the economy expanded 10.1% in the first quarter from a year earlier.

Mustapa said despite some deceleration of the trade numbers in June, Malaysia's trade growth would be able to hold up for the rest of 2010.

The ringgit has strengthened by around 8% against the US dollar since the start of the year, making it the best performing currency in Asia ahead of the yen.

Mustapa also confirmed that Malaysia had begun talks for a free trade agreement with the European Union.

Although he said the talks were at a "preliminary stage", the minister said he hoped to complete them within a year.

Such a pact could open markets in spirits, cars and services to Europe and bring more investment to the Southeast Asian country, diplomats said. ' Reuters

2Q global silicon wafer area shipments at highest level ever

KUALA LUMPUR: Global silicon wafer area shipments rose 7% to 2,365 million square inches (MSI) in the second quarter ended June 30 from the first quarter and jumped 40% from a year ago.

The US-based SEMI Silicon Manufacturers Group (SMG) said on Wednesday, Aug 4 that new quarterly total area shipments were 40% above than 2Q 2009 shipments and were at their highest levels ever.

In its quarterly analysis of the silicon wafer industry, it said total silicon shipped in terms of MSI has finally exceeded the high-water mark set in the second quarter of 2008.

"We are encouraged by five consecutive quarters of growth in silicon shipments and expect silicon shipments to continue to trend with devices," said Takashi Yamada, chairman of SEMI SMG and general manager SUMCO.

Shipments are for semiconductor applications only and do not include solar applications

Silicon wafers are the fundamental building material for semiconductors, which in turn, are vital components of virtually all electronics goods, including computers, telecommunications products, and consumer electronics.

The highly engineered thin round disks are produced in various diameters (from one inch to 12 inches) and serve as the substrate material on which most semiconductor devices or "chips" are fabricated.

MAHB to issue up to RM3.1b debt notes

KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAH) to issue up to RM3.1 billion in debt notes to part fund its new terminal at the KL International Airport and/or refinance its existing borrowings.

MAHB said on Thursday, Aug 5 the debt notes comprised of Islamic commercial papers (ICP) and Islamic medium term notes (MTN) with a combined aggregate nominal value of up to RM3.1 billion (with a sub-limit of RM1 billion in nominal value for the ICP programme).

MAHB said proceeds raised from the proposed sukuk programmes will be used to part finance the CONSTRUCTION [] of a new terminal'' which is expected to be completed by the end of the first quarter of 2012 and/or to refinance MAHB's existing borrowings/financings which were utilised for Shariah-compliant purposes and/or for MAHB's Shariah-compliant general corporate purposes.

Regional markets mixed, FBM KLCI down

KUALA LUMPUR: Asian markets were mixed in the morning session on Thursday, Aug 5 on some profit taking'' while at Bursa Malaysia, losses by Sime Darby and banks weighed on sentiment.

The FBM KLCI shed 1.83 points to 1,360.91 at the mid-day break, dragged by losses including at Sime Darby, CIMB, Public Bank and Petronas Dagangan. Losers edged gainers by 310 to 298, while 238 counters traded unchanged. Volume was 492.06 million shares valued at RM638.46 million shares.

Crude palm oil futures for the third month delivery fell RM10 per tonne to RM2,575; crude oil shed 39 cents per barrel to US$82.08 while gold fell 82 cents per ounce to US$1,194.13.

Japan's Nikkei 225 +1.25% 9,608.13 Singapore Straits Times Index +0.18% 3,005.18 Korean Kospi Index -0.75% 1,775.87 Shanghai Composite Index -0.60% 2,622.81 Taiwan's Taiex Index -0.54% 7,929.86 Hang Seng Index -0.04% 21,541.13 ''

Among the major losers, Sime Darby fell 16 sen to RM7.54 after online portal The Malaysian Insider said the conglomerate would next month announce that potential losses could top RM2 billion, and go as high as RM2.5 billion.

"Most of the losses are down to ill-advised investments in the energy and utilities sector in Qatar as well as tardy business practices in the development of the Bakun dam in Sarawak," the report said, without citing any source.

Also, RHB Research Institute Sdn Bhd lowered its sum-of-parts-based fair value for Sime Darby to RM8.00 (from RM8.15) and maintained its underperform recommendation on the stock.

Petronas Dagangan fell 10 sen to RM10.40; CIMB, Public Bank and IOI Corp lost two sen each to RM7.37, RM11.98 and RM5.10, respectively, while Hong Leong Bank shed three sen to RM3.99.

Mudajaya fell 30 sen to RM4.63, Tasek 26 sen to RM6.74, while Panasonic, Metrod, F&N and HELP lost 10 sen each RM19.30, RM3.65, RM14.30 and RM3.60, respectively.

BAT was the top gainer this morning and added 78 sen to RM44.64; Nestle gained 28 sen to RM39.08, Genting PLANTATION []s 21 sen to RM7.40, Chin Teck 17 sen to RM8.12, Tan Chong 16 sen to RM5.15 while Hong Leong Industries gained 13 sen to RM5.23.

Timecom was the most actively traded stock this morning with 49.85 million shares done. The counter added four sen to 69 sen. Other actives included Time, Zelan, AirAsia, Sinotop, Eden, Ranhill and Samudra.

Indonesia's economic growth beats forecast

JAKARTA: Indonesia's economy grew a faster-than-expected 6.2% in the second quarter (2Q) on strong exports, investment and consumer demand, fuelling market expectations of full-year growth above 6% and increased price pressures.

Southeast Asia's biggest economy has started to attract more interest from foreign direct investors this year, with a flurry of announcements just this week suggesting it may see far more commitments in the coming months.

"Growth in the third quarter may peak and full-year growth may be above 6%," said Slamet Sutomo, a senior official at the Statistics Bureau. A breakdown of the data showed strong growth in exports and imports, as well as spending on infrastructure.

Analysts had forecast annual gross domestic product growth would pick up to 6.0%, the highest since 6.25% in the third quarter of 2008, mainly thanks to strong domestic consumption and exports.

"This portends well for the rest of the year," said Wellian Wiranto, economist at HSBC in Singapore.

"We know the strength of Indonesia is the domestic consumption story and that is still resilient but increasingly, down the road, we might see the second engine of growth warming up, which is the investment cycle.

"We will see newer FDI [foreign direct investment] investors coming in and while that may not have translated to the 2Q figure just yet, we will see that contributing to growth down the road. So it's still good news for Indonesia, basically."

Indonesia's domestic demand story remains strong, with car sales up 78% to a total of 196,132 units in the second quarter from a year ago, after rising 74% to 100,257 units in the first quarter from a year ago.

But more recently, several foreign investors have announced new projects in the resource-rich archipelago.

South Korea's Hankook Tire and steel giant Arcelor Mittal are considering investments in Indonesia, of US$1 billion and US$5 billion (RM3.17 billion and RM15.85 billion) respectively, officials said on Wednesday, Aug 4.

Earlier this week, the state-owned enterprises minister said that China Investment Corp (CIC) may invest up to US$25 billion in Indonesia.

While investors are attracted by the growth story, it lags BRIC rivals India and China in delivering a much higher pace.

The main impediment for Indonesia is infrastructure. Lack of investment in roads, railways, power plants and networks, ports, ferry services, sewerage and irrigation over a period of many years has taken its toll, adding to the cost of transporting goods and doing business.

The country needs to spend billions of dollars on building infrastructure and upgrading its existing systems.

President Susilo Bambang Yudhoyono set up a presidential delivery unit last year to speed up the development of infrastructure projects, and a new law is expected to be passed soon which would make it easier to acquire land needed for infrastructure projects. ' Reuters

China acts on property speculation, tests banks anew

BEIJING: China's banking regulator has ordered lenders to test the impact of a fall in house prices of up to 50 percent in key cities where prices have risen sharply, banking and regulatory sources said on Thursday, Aug 5.

The China Banking Regulatory Commission (CBRC) has also instructed banks to stop extending mortgages to people buying their third homes in four of the cities -- Beijing, Shanghai, Shenzhen and Hangzhou, the sources said.

The move, which runs counter to speculation in some quarters that China might ease some curbs before long to boost the slowing economy, is a fresh demonstration that Beijing is intent on fighting property speculation and deflating record high prices.

The government fears sky-high prices in major cities are feeding on themselves and making it impossible for ordinary people to get a foot on the housing ladder.

"This is another key signal that the government is trying to give -- that it is quite determined to keep property prices under control, even though it's quite unlikely that there will be any new tightening measures in the short term," said David Ng, a property analyst with Royal Bank of Scotland in Hong Kong.

"It certainly won't have any loosening measures for now," he added.

An earlier stress test nationwide showed that Chinese banks could sustain a drop in housing prices of up to 30 percent without a sharp rise in non-performing loan ratios.

"This is a new round and will be carried out only in key cities where prices have risen fast," a banking official said on condition of anonymity.

The CBRC was not immediately available for comment.


Three other banking sources said the CBRC has also instructed banks to tighten mortgage terms for third-home buyers in cities other than Beijing, Shanghai, Shenzhen and Hangzhou.

Banks must now require a down payment of at least 60 percent and charge interest of at least 1.5 times the central bank's benchmark rate, they said.

The new requirements clarify cabinet guidelines issued in April, which instructed banks to "substantially increase" down payments and mortgage rates for third-home buyers.

Depending on their assessment of risks, banks can also stop lending to such buyers in cities where prices are too high or rising too fast or where homes are in short supply, the State Council said.

A source with Industrial and Commercial Bank of China <1398.HK> <601398.SS> in Shanghai said it stopped making loans to third-home purchasers in the city this week.

Almost all banks in Beijing had suspended such lending, the sources said.


Xia Bin, an academic adviser to the central bank, said the clampdown on the real estate market, fuelled by record surge of lending last year, had achieved the desired results.

Property prices in 70 major Chinese cities fell 0.1 percent in June from May, the first month-on-month drop since February 2009. Sales volumes in big cities have also fallen sharply.

Writing in the China Daily, Xia said increasing the capital gains tax might be an effective short-term measure to curb speculation.

More broadly, he said, it was too early for the government to relax its curbs, which include a reduced lending target.

"These macro-controls must be implemented stringently in the coming months as well," he said. [ID:nTOE67400U]

Shanghai's property share index fell by over 2 percent in early trade, underperforming the broad market <.SSEC>.

By 0330 GMT, China Vanke lost 2.8 percent, while China Overseas' Hong Kong-listed shares fell 1.6 percent, lagging their main stock market indices.

The two firms are China's top listed developers by sales and market value, respectively.

"The negative impact on property share prices will be subdued for now. The most important thing to watch out for will be its impact on developers' sales over the next 1-2 months," said Ng at RBS.

"If developers are forced to cut prices significantly because of a sharp fall in transactions, that's going to be a major drag on property shares," he said. - Reuters