Saturday, August 14, 2010

#Stocks to watch:* Berjaya Retail, BHIC, DRB-Hicom, Petra Energy

KUALA LUMPUR: Blue chips may trade in a narrow range with some downside pressure this week, starting Monday, Aug 16, as investors would be hard to ignore the negative news from the US.

On Friday, Aug 13, the Dow Jones industrial average dropped 16.80 points, or 0.16 percent, to 10,303.15. The Standard & Poor's 500 Index dropped 4.36 points, or 0.40 percent, to 1,079.25. The Nasdaq Composite Index dropped 16.79 points, or 0.77 percent, to 2,173.48.

The recent data in US failed to shore up investors' confidence. US retail sales rebounded last month, as did the overall July Consumer Price Index, but the data was consistent with an economy that has slowed in recent months.

Reuters expect US stock investors to brace for further signs of weakness in the US recovery next week, as earnings from key retailers are expected. Industrial production, housing and inflation data will come under scrutiny as well, just as stocks wrapped up their worst week in six.

In Malaysia, MALAYSIAN AIRLINE SYSTEM BHD [] is due to report its second quarter earnings on Monday while Bank Negara is scheduled to release its second quarter GDP data on Wednesday, Aug 18 and expectations are that it would be in the high single digit.

However, expectations are that the economy will grow at a slower pace in the second half.

At'' Bursa Malaysia, Berjaya Retail Bhd will be listed on'' Bursa Malaysia. Analysts had value BRetail at 51 sen, based on 14 times FY11 EPS, in line with their sector retail price-to-earnings ratio (PER) of 14 times.

BRetail operates the 7-Eleven chain of convenience stores; and marketing and direct selling of consumer durables on instalment option schemes, via Singer.

Its plans for 7-Eleven include expanding its franchise programme; offering new premium fresh F&B items; Expanding its distribution network by the opening of 150 new outlets in CY2010; and opening of new logistics centre to maximise efficient receiving, processing and distribution of goods.

As for Singer, the plans include modernisation and refurbishment of Singer branches, to attract and generate sales from walk-in customers; and expanding its distribution network to 1,000 branches (from 561 branches in May 10 or +78%) within the next five years.

Two contracts valued at more than RM1.2 billion to BOUSTEAD HEAVY INDUSTRIES CORP [] Bhd (BHIC) to undertake the in-service support for two of the navy's Scorpene submarines.

BHIC's subsidiary Boustead DCNS Naval Corporation Sdn Bhd had received the letter of award for total contract sums of 193 million euros (RM784.22 million) and RM532 million for the period ending Nov 30, 2015.

DRB-HICOM BHD [] and Volkswagen AG (Volkswagen) will collaborate on the assembly and manufacturing of Volkswagen vehicles in Malaysia at the former's plant in Pekan, Pahang.

DRB-Hicom's group managing director Datuk Seri Mohd Khamil Jamil said both parties would jointly plan the production of Volkswagen models in Malaysia and this included strengthening Volkswagen's existing sales activities and market presence in the country.

PETRA ENERGY BHD []'s unit Petra Resources Sdn Bhd has secured three contracts worth RM26.35 million from Petronas Carigali Sdn Bhd.

Petra Energy said the first contract was to provide the hook-up and commissioning work.

CAHYA MATA SARAWAK BHD []'s (CMSB) subsidiary PPES Works (Sarawak) Sdn Bhd has secured a road CONSTRUCTION [] project in Miri from the federal government valued at RM101.3 million.

CMSB said PPES had received a letter of acceptance of tender to build an access road from Pekan Beluru'' to Batang Tinjar.

GENTING BHD [] provided the spark for the lacklustre market on Friday, rallying blue chips higher to snap its three straight day of losses. The fresh optimism saw the FBM KLCI closing 10.82 points or 0.8% higher to 1,360.15.

Fed's Hoenig-Keeping rates low 'dangerous gamble'

LINCOLN, Nebraska: The Federal Reserve is undertaking a "dangerous gamble" by keeping rates at near zero for so long, and it must start raising rates or risk damaging the nascent U.S. recovery, a top Federal Reserve official said on Friday, Aug 13.

"To be clear, I am not advocating a tight monetary policy," Kansas City Reserve Bank President Thomas Hoenig told a town hall meeting organized by the Lincoln, Nebraska, Chamber of Commerce and U.S. Representative Jeff Fortenberry.

"I am advocating a policy that remains accommodative but slowly firms as the economy itself expands and moves toward more balance."

Hoenig has been the lone dissenter on the Fed's policy-setting panel, which on Tuesday repeated the U.S. central bank's pledge to keep interest rates extraordinarily low for an "extended period."

The Fed also said it would begin reinvesting cash from maturing mortgage bonds to buy more government debt. The decision reflected its concern over the slowdown in the economic recovery it helped bring about by cutting rates to near zero in December 2008 and buying nearly $1.3 trillion in mortgage-linked debt to shore up the housing market.

However, Hoenig said on Friday he believes the economy "barring specific shocks and bad policy ... should continue to grow over the next several quarters."


The Fed should raise its short-term target to 1 percent, pause to wait for the economy to adjust, and then raise it to 2 percent once it is clear the recovery is on a reasonable growth path, he said, repeating a proposal he has made before.

"I believe that zero rates during a period of modest growth are a dangerous gamble," Hoenig said on Friday.

Stephen Stanley, chief economist at Pierpont Securities, said in a note to clients, in reference to Hoenig's speech:

"In the era of inflammatory bloggers, talk radio, and 24-hour news opinion, I realize this might seem tame at first glance, but remember that this is a member of the FOMC absolutely ripping his own Committee's policies."

Hoenig said the United States is expanding at a faster pace than in two previous economic recoveries, corporate profits are up, and certain parts of the economy, like investments in software and other aspects of high tech, are growing at double-digit rates.

Though Fed officials have said they will tighten monetary policy again when conditions merit, such promises usually aren't kept, Hoenig added.

"There is always always a strong commitment, when you are putting money into the system ... that when the time is right, you pull it out," he said. "Well, we never do. We wait ... because you never know if the economy is strong enough to pull it out."

He said it was dangerous now to keep in place a policy meant to provide an emergency jolt to an economy in freefall.

"The issue is not that we don't have enough money and liquidity in the system. The issue is, we don't have enough confidence to lend and borrow," he said.

Confidence will return as the economy improves, he said.

This week, Hoenig dissented for a fifth straight meeting from the vow to keep rates low, and said he believed the economy did not need further help.

"We need to get off of the emergency rate of zero, move rates up slowly and deliberately," he said. "This will align more closely with the economy's slow, deliberate recovery so that policy does not lag the recovery."


U.S. central bank policies weren't the only targets of Hoenig's criticism. Hoenig also expressed doubt that international and domestic policies designed to prevent another financial crisis would be effective.

Internationally, the Basel Committee, which is working on new global banking standards, has agreed to establish capital-to-asset ratios for the largest global banks at levels that leave too small a margin for error, he said.

"It is a level of risk that I judge unacceptable," he said.

And Hoenig added that recent Wall Street reform in the U.S. to tighten financial regulation would only be successful to the extent that authorities implemented the new law well.

U.S. officials have said their next target for reform are the giant mortgage lenders Fannie Mae and Freddie Mac, which were seized by the government at the height of the 2008 financial crisis because they were in danger of failing.

Hoenig said he did not think the lenders should be reprivatized, but should stay under government control.

Stanley of Pierpont Securities summed up his reaction to Hoenig's "stunning speech" in his note to clients:

"I have to say that I have never, in nearly 20 years of watching the Fed, seen a speech quite like this from a member of the FOMC. Within the constraints of how Federal Reserve officials operate, I would call this a scathing critique of monetary policy now and over the last 10 years." - Reuters

Wall St ends worst week in six with another down day

NEW YORK: U.S. stocks closed out their worst week in six with a whimper on Friday, Aug 13 slumping toward the close as economic data gave little reason to reverse a string of sell-offs.

In a thinly traded session, indexes posted their fourth day of losses though selling pressure was limited in the Dow by strength in Bank of America Corp.

U.S. retail sales rebounded last month, as did the overall July Consumer Price Index, but the data was consistent with an economy that has slowed in recent months.

Positive corporate earnings and improved technicals helped the market rally through July and early August, but sentiment soured this week and stocks turned negative for the year after a darker assessment of the economy by the Federal Reserve and renewed concerns about China's economic growth rate.

For the week, the Dow fell 3.3 percent, while the S&P slid 3.8 percent and the Nasdaq lost 5 percent.

"We've seen a succession of bad news this week that was punctuated by the Fed's comments, so while we have some semblance of self-sufficiency, it's clear we'll be in a slow-growth period for a long time," said Steven Baffico, senior managing director at Claymore Securities in Lisle, Illinois.

The S&P 500 relinquished its hold on the 200-day moving average that had generated some positive momentum and was trading below its 50-day moving average on Friday.

The Dow Jones industrial average dropped 16.80 points, or 0.16 percent, to 10,303.15. The Standard & Poor's 500 Index dropped 4.36 points, or 0.40 percent, to 1,079.25. The Nasdaq Composite Index dropped 16.79 points, or 0.77 percent, to 2,173.48.

Consumer sentiment stabilized this month after a sharp drop in July, the Thomson Reuters/University of Michigan Surveys' preliminary August reading showed. Meanwhile, the Commerce Department said business inventories rose slightly more than expected in June.

Alan Gayle, the senior investment strategist at the Richmond, Virginia-based RidgeWorth Investment, said that even though sentiment was better than expected in the month, it was coming off of a low level, which "suggests that consumers remain very uncertain in this environment."

Bank of America was the Dow's top percentage gainer, rising 1.3 percent to $13.23.

The S&P Consumer Discretionary Index fell 1.1 percent after the data and disappointing outlooks from both Nordstrom Inc and J.C. Penney Co Inc. Nordstrom tumbled 7.2 percent to $31.05 and J.C. Penney lost 4.7 percent to $19.82.

The S&P Retail index slid 1.4 percent while the S&P Department store sub-industry index slumped 3.2 percent.

Retailers will remain in focus next week, as a number of sector bellwethers, including Wal-Mart Stores Inc, Gap Inc and Target Corp are scheduled to report their quarterly results.

Apollo Group Inc was the top percentage loser in the Nasdaq 100, falling 3.8 percent to $38.94 alongside other education companies. The sector was hit as brokerages cut price targets on the stocks and the government said it would hire more investigators to prevent fraud by for-profit colleges.

Eli Lilly and Co fell 2.5 percent to $35.70 after the drugmaker lost a patent case that cleared the way for generic competition for Strattera, its attention deficit disorder drug.

On the upside, shares of both Nvidia Corp and Rambus Inc rallied after Rambus granted patent licenses to Nvidia, raising hopes for an end to a lengthy legal battle.

Nvidia shot up 4.8 percent to $9.39 while Rambus gained 3.8 percent to $18.71. - Reuters

#Flash* Asian stocks rebound, yen extends retreat

SYDNEY: The yen inched further away from 15-year peaks on Friday as talk swirled that Japan's authorities may soon intervene to curb it, while Asian stocks edged up to claw back some of the week's heavy losses.

After a week of sharp moves in the market on global growth angst, some analysts said steady prices on Friday was a normal snap back from over-sold or over-bought regions.

Yet, they warned in the same breadth the lull may not last, especially given Friday's ream of U.S. data releases. U.S. retail sales, consumer confidence and consumer prices are due later and markets fear disappointment.

"The market had probably been pretty oversold although given the sentiment out there and the week we've had, there's a risk things could drift heading into the afternoon," said Cameron Peacock, an equity analyst at IG Markets in Sydney.

The dollar nudged up to 86.02 yen, up from 85.84 in New York, but still in sight of a 15-year trough of 84.72 hit on Wednesday.

Likewise, Asian stocks, which had taken a beating this week, got some reprieve early Friday. The MSCI index for Asian stocks outside Japan nudged up 0.25 percent.

For the week however, it was still down 3.2 percent, its worse performance in five weeks.

South Korea's stock index led regional gains, rising 0.5 percent from one-month lows, helped by TECHNOLOGY [] stocks such as LG Electronics.

Oil prices also snapped back after a week of heavy selling. U.S. crude futures rose to above $76 a barrel having shed 7 percent in the past three sessions.


Japan's Nikkei average was a laggard among Asian stocks with a 0.4 percent drop, no doubt hurt in part by the strong yen, which squeezes Japan's mainstay exporters.

Export powerhouses such as Sony Corp fell 0.7 percent, and Toyota Motor Corp lost 0.5 percent. Honda Motor Co retreated 1.1 percent.

A local report that Prime Minister Naoto Kan and Bank of Japan (BOJ) Governor Masaaki Shirakawa may meet next week to discuss possible action to deal with the strong yen made traders wary of pushing the currency higher for now.

But speculation of how Japanese authorities may intervene raged on. Talk that authorities may choose outright sales of yen for dollars got a boost after the BOJ confirmed on Thursday it had checked currency rates that day.

But some analysts doubted a direct market intervention was on the cards and argued instead the BOJ may opt for more quantitative easing.

"The Japanese authorities have no appetite for FX intervention," analysts at JPMorgan said.

"Not only do they doubt the efficacy of intervention, but yen-selling would be difficult to justify, given strong G7 rhetoric against currency manipulation," they wrote in a note to clients. "It is politically unpopular given the magnitude of the losses on Japan's foreign currency reserve."

Market snaps 3-day losses, buoyed by Genting

KUALA LUMPUR: The market snapped its three days of losses on Friday, 13, as sentiment perked up among key regional markets despite the weaker overnight close of Wall Street, aided by a rebound in commodities.

At Bursa Malaysia, the FBM KLCI rebounded, aided by gains in GENTING BHD [] after AmResearch raised its fair value for the stock to RM10.67 from RM7.66 previously.

At 12.30pm, the FBM KLCI rose 8.07 points to 1,357.40. Turnover was 554.27 million shares valued at RM651 million. There were 391 gainers, 222 losers and 240 stocks unchanged.

Light crude oil rose 95 cents to US$76.69 while crude palm oil futures climbed RM33 to RM2,673.

Nikkei 225 +0.24%
9,234.77 Hang Seng Index +0.07% 21,120.46 Shanghai Composite Index +0.38% 2,585.38 Singapore Straits Times Index +0.41% 2,939.10
Genting Bhd rose 47 sen to RM8.17, pushing up the 30-stock FBM KLCI Index up by a hefty 4.23 points.'' Genting Singapore-C6rose 25 sen to 48.5 sen, Genting Singapore-CA rose 12.5 sen to 23 sen while Genting PLANTATION []s added 15 sen to RM7.28. Genting Malaysia rose five sen to RM2.79.

AmResearch said Genting's FY10F net profit forecast was now at RM2.8 billion from RM1.3 billion due to higher contributions from Genting Singapore.

BAT rose 44 sen to RM44 and F&N 30 sen to RM13.88.

Sinotop was the most active with 42.72 million shares done, unchanged at 17 sen.

Nestle fell 20 sen to RM39, PPB 18 sen to RM17.18, KLK 16 sen to RM16.94.

Hewlett-Packard directors sued over CEO Hurd exit

NEW YORK: Hewlett-Packard Co's (HP) directors have been sued by a Massachusetts pension fund that alleges they violated their fiduciary duties in connection with the abrupt departure of chief executive Mark Hurd, causing the company's shares to fall.

The shareholder derivative lawsuit accused the directors of failing to properly disclose the existence of an internal probe into Hurd's activities, failing to "police insider trading" by company executives, and trying to give Hurd tens of millions of dollars of severance he did not deserve.

"HP lost significant credibility," according to the lawsuit by the Brockton Contributory Retirement System, filed Tuesday in the Superior Court of Santa Clara County, California.

Hurd resigned as chairman and chief executive after the investigation found that he had allegedly falsified expense reports to cover a relationship with a female marketing consultant. The probe also examined a sexual harassment claim, but found it lacked merit.

Michael Holston, HP's general counsel, concluded that Hurd had demonstrated a "profound lack of judgment that seriously undermined his credibility."

The Palo Alto, California-based company's market value has fallen about US$14.4 billion (RM45.79 billion) since Hurd's resignation was announced after the Aug. 6 stock market close, including about US$8.6 billion on Monday alone, Reuters data show.

Hewlett-Packard shares closed down 1.5% on Thursday, Aug 12 at US$40.14.

Hewlett-Packard did not immediately return a request for comment. Mary Blasy, a lawyer for the Connecticut-based firm Scott + Scott LLP representing the pension fund, also did not return a request for comment.

Among the defendants in the lawsuit is Cathie Lesjak, the company's chief financial officer who became interim chief executive after Hurd's departure.

The complaint seeks a variety of governance changes, an order that the individual defendants pay Hewlett-Packard damages, the imposition of a constructive trust on Hurd's severance and profits from alleged improper trading activities, punitive damages, and other remedies.

Shareholder derivative complaints are filed on behalf of companies to assert claims that management or directors failed to make. ' Reuters

India to target Google, Skype messaging next, says FT

SINGAPORE: India may shut down Google and Skype Internet-based messaging services over security concerns, the Financial Times (FT) reported on Friday, Aug 13, as the government threatened a similar crackdown on BlackBerry services.

The FT quoted from the minutes of a July 12 meeting between telecommunication ministry security officials and operator associations to look at possible solutions to "intercept and monitor" encrypted communications.

"There was consensus that there more than one type of service for which solutions are to be explored. Some of them are BlackBerry, Skype, Google etc," according to the department's minutes. "It was decided first to undertake the issue of BlackBerry and then the other services."

On Thursday, the Indian government became the latest of several nations that have threatened to cut off Research In Motion's (RIM) encrypted BlackBerry email and instant messaging services if the Canadian company does not address national security concerns.

India has set an Aug 31 deadline for RIM. It wants access in a readable format to encrypted BlackBerry communication, on grounds it could be used by militants. Pakistani-based militants used mobile and satellite phones in the 2008 Mumbai attacks that killed 166 people.

India's demands follow a deal with Saudi Arabia, where a source said Research In Motion agreed to give authorities codes for BlackBerry Messenger users. The United Arab Emirates, Lebanon and Algeria also seek access.

Officials say RIM had proposed tracking emails without sharing encryption details, but that was not enough.

The FT report said representatives from two of the telecom operator associations present confirmed the details of the meeting earlier this month.

"At the last security meeting, the agencies were talking about BlackBerry. They were also coming out heavily on Skype and Google," said Rajesh Chharia, president of the Internet Service Providers Association of India.

A shutdown would affect one million users in India out of the smartphone's 41 million users. India is one of RIM's fastest growing markets.

RIM, unlike rivals Nokia and Apple, operates its own network through secure servers located in Canada and other countries, such as Britain.

RIM's shares ended more than 2% lower at C$56.44 (RM171.79) in the Toronto market.

In a matter of a few weeks, the BlackBerry device ' long the darling of the world's CEOs and politicians, including US President Barack Obama ' has become a target for its sealed email and messaging services with governments around the world. ' Reuters

FBM KLCI rebounds

KUALA LUMPUR: The FBM KLCI rebounded on Friday, Aug 13 after three days of losses and stayed firmly above the 1,350-point level, lifted by gains including at Genting, Axiata, Maybank and CIMB.

At 10am, the benchmark index rose 6.87 points to 1,356.20. Gainers beat losers by 230 to 127, while 183 counters traded unchanged. Volume was 217.4 million shares valued at RM206.44 million.

Genting advanced and was among the most actively traded stocks Friday morning after AmResearch raised its fair value for Genting to RM10.67.

At 10am, Genting was up 36 sen to RM8.06 with 7.31 million shares done.

Among the other major gainers, Axiata added seven sen to RM4.32, Maybank rose five sen to RM7.71, CIMB up three sen to RM7.31, IOI Corp two sen to RM5.11 while BAT added 44 sen to RM44.

Genting PLANTATION []s and F&N gained 12 sen each to RM7.25 and RM13.70 respectively, MTD and Jerneh rose nine sen each to RM5.34 and RM3.43 respectively, while Tan Chong added eight sen to RM4.96.

Hap Seng was the top loser and fell nine sen to RM2.66. KESM fell seven sen to RM2.13, Oriental Holdings and Dominant Enterprise down five sen each to RM5.30 and 59 sen respectively, while Shell and Uzma fell four sen each to RM10.70 and RM1.50 respectively. Other decliners included PPB, Star and Huat Lai.

Sinotop was the most actively traded stock with 28.1 million shares done. The counter was unchanged at 17 sen. Other actives included P&O, SIG Gases, Talam, Tiger Synergy and Timecom.

Most regional markets also recovered this morning, with the South Korean Kospi up 0.56% to 1,731.41, the Singapore Straits Times Index up 0.48% to 2,940.96 and. Taiwan's Taiex up 0.35% to 7,856.88.

Shanghai's Composite Index was up 0.33% to 2,583.94 while Hong Kong's Hang Seng Index opened little changed at 21,095.39. Japan's Nikkei 225, however, shed 0.29% to 9,186.32.

Wilmar misses 2Q profit forecast, eyes sugar expansion

SINGAPORE: Wilmar International, the world's largest listed palm oil PLANTATION [] firm, posted an unexpected 15 percent decline in its second-quarter net profit, hit by losses on convertible bonds and weaker margins.

The company, which has plantation estate in Indonesia and a number of edible oil processing facilities in China, said it remains positive on the prospect of Asian economies and is planning a major expansion into sugar.

Wilmar said the second quarter net profit was affected by a negative change in valuation of $41.7 million for convertible bonds as its share price slumped.

Margins for merchandising and processing of palm oil and related products were lower due to tighter supply of crude palm oil and the uncompetitive pricing of palm oil versus other edible oils, it said in a statement.

Wilmar is making a big bet on sugar with an offer to buy Sucrogen, the sugar assets of Australia's conglomerate CSR (CSR.AX) in a $1.5 billion deal.

The acquisition is expected to enable Wilmar to maintain its high growth while it also speeds up the development of its 200,000 hectares of land in Indonesia's Papua, dedicated for sugar plantation.

"The group is planning a major expansion into sugar with the proposed acquisition of Sucrogen Ltd and the development of sugar in Indonesia," CEO Kuok Khoon Hong said in a statement.

"This is expected to be a significant contributor in the long term."

Kuok, ranked fourth on Forbes' Singapore rich list, is a nephew of Malaysian billionaire Robert Kuok. The family controls the second largest company in Singapore bourse.

Wilmar also reiterated that it was still in talks to buy a minority stake in a small Indonesian palm oil plantation Kencana Agri Ltd. Sources told Reuters that Wilmar plans to buy 20 percent stake in Kencana.

Wilmar, which has a market value of $29 billion, posted its lowest profit in two years as it earned $344 million for the quarter ended June, down from $407 million posted last year and analysts forecast of $417 million.

Its revenue climbed 18 percent to $6.8 billion for the April-June quarter.

Wilmar shares have declined 2.5 percent since the start of the year, underperforming the broader Singapore market .FTSTI which gained 1 percent.

Some analysts said the ongoing investigation of tax fraud allegation on the company by Indonesian authorities have weighed the share prices. - Reuters

Mieco shares at 3-year high

KUALA LUMPUR: Shares of MIECO CHIPBOARD BHD [] rallied to a three-year high in intra-day trade on Friday, Aug 13 as the stock attracted heavy trading on news that BANDAR RAYA DEVELOPMENTS BHD [] (BRDB) confirmed it was in talks with a Chinese party for a potential collaboration with Mieco.

Mieco, which is 56.76% owned by BDRB, rose to an intra-day high of 96 sen, the highest since August 2007.

At 2.37pm, it was up 14 sen to 93 sen with 21.97 million shares done.

BRDB said earlier this week the collaboration could possibly involve equity participation in Mieco. The property developer said the discussion was preliminary and exploratory in nature at this stage.

According to Mieco's first quarterly earnings ended March 31, 2010, net profit was RM1.43 million verus a net loss of RM20.12 million a year ago. The better performance was due to better margins, lower operational costs and foreign exchange gains.

Group revenue fell 5% to RM42.44 million'' from RM44.7 million a year ago due to lower sales volume of particleboard, despite higher sales of value-added products.

However, the company had also said there was a 36% decline in pre-tax profit from the fourth quarter ended Dec 31, 2009 due to lower sales and production volume against the preceding quarter's results.

Investors should note Mieco's trade receivables were RM30.07 million as at March 31, 2010, while retained earnings were'' RM102.51 million. Borrowings were RM139.16 million and trade payables at RM21.83 million. Its net asset per share was RM1.52.

Proton/Perodua to provide feedback on merger discussions to the govt

PETALING JAYA: Valuable feedback from discussions held between PROTON HOLDINGS BHD [] and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) on a possible merger will be forwarded to the government.

The government is expected to deliberate on the outcome before making recommendations to the Cabinet by year-end. "The discussions are already underway. We have engaged and surely from time to time, give feedback and information to the government.

"This will help the government form opinions and make recommendations to the Cabinet," said Proton's managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir.

He was speaking to reporters here on Friday, Aug 13 after the exchange of documents between Proton and Sirim Bhd to facilitate the production of a reality television programme entitled, "Idea: Malaysian Inventors' Challenge", here.

The programme, supported by the Ministry of Science, TECHNOLOGY [] and Innovation will be aired on TV3 on Sept 25 to support and encourage creativity and innovation among Malaysians.

The document exchange was witnessed by Fadillah Yusof, the Deputy Minister of Science, Technology and Innovation (Mosti).

"Both companies have a strong desire to explore collaboration and consolidation. But, let's not make any judgment today. Let's wait a few months before the government makes a decision," said Syed Zainal.

He added it was important for a company to explore the best synergies whether it is a consolidation or merger, adding that a consolidation in the banking industry had resulted in great efficiency.

"I believe there is an opportunity for us to cooperate or consolidate. The form of consolidation, I am not here to make any assumptions. Any consolidation to happen must be meaningful to both companies," he said.

On Proton's performance, Syed Zainal said sales in the first-half of this year increased between eight and nine per cent, from the same period last year, thanks to aggressive marketing activities.

He added that Malaysians were more satisfied and confident with Proton's products and the company would continue with activities to boost domestic sales and exports.

Syed Zainal said Proton aimed to sell 170,000 units of the Saga, Persona and Exora models in the domestic market this year.

For the current year ending March 2011, he said Proton aimed to export more than 220,000 units to Asean, China, India and Middle East.

"In the long-term, we cannot rely on the domestic market to sustain ourselves because the volume is small. The export revenue will play a much more important role in the next five years," he said. ' Bernama

EPF sells 11.42m Maybank shares

KUALA LUMPUR: The Employees Provident Fund Board disposed of 11.42 million shares of MALAYAN BANKING BHD [] on Aug 6 and 9, reducing its stake to 759.62 million shares.

A filing with Bursa Malaysia on Friday, Aug 13 showed the EPF had also acquired two million shares on Aug 6.

The recent transactions showed the EPF's shareholding in Maybank was reduced to 10.73%.

Maybank rose six sen to RM7.72 as at 3.12pm with 1.64 million shares done.

The Edge FinancialDaily reported on Friday that the EPF has been selling down its stakes in several companies in the first week of the month, with the more notable ones being the disposal of large blocks in IOI CORPORATION BHD [] and TELEKOM MALAYSIA BHD [] (TM).

The report said while it was unclear as to whether the transactions at more than 10 counters resulted in gains or losses, but it certainly was a sensible action by the provident fund to limit losses given the recent slump in equity markets.

P&O gets BNM nod for talks with Prudential

KUALA LUMPUR: Pacific & Orient Bhd (P&O) has confirmed that it received the approval from Bank Negara to begin preliminary negotiations for a proposed disposal of stake in its insurance unit to Prudential Holdings Limited.

P&O said on Friday, Aug 13 that the central bank, had via a letter dated Aug 11, granted its approval for the company to begin preliminary negotiations for the proposed divestment of an equity interest in Pacific & Orient Insurance Co. Bhd. to Prudential.

P&O share price was unchanged at RM1.24 at midday.

MARC withdraws ratings on Ingress Sukuk's debt notes

KUALA LUMPUR: Malaysian Rating Corp Bhd has withdrawn its DIS ratings on Ingress Sukuk Bhd's RM160 million sukuk Al Ijarah Programme with immediate effect.

The ratings agency said on Friday, Aug 13 the withdrawal followed the full redemption of the sukuk and cancellation of the programme on July 2, as confirmed by its facility agent, HSBC Bank Malaysia Bhd.

Time Engineering disposes of 22.18m Time dotCom shares

KUALA LUMPUR: TIME ENGINEERING BHD [] had further disposed of 22.18 million shares in TIME DOTCOM BHD [] (TdC) or 0.88% in the open market for RM14.38 million.

Time Engineering said on Friday, Aug 13 the shares disposed were part of the shares which it held and had been pledged to Bank Pembangunan Malaysia Bhd. It did not state the time frame of the disposals.

It added the pledged shares were as security for the 712.5 million redeemable secured loan stocks (RSLS) at nominal value of 48 sen each issued to Bank Pembangunan on June 11, 2009.

"The disposal proceeds will be paid to Bank Pembangunan for the redemption of the RSLS. Pursuant to the disposal transaction, the company's shareholding in TdC had been reduced to 24.95%," it said.

Time Engineering said the disposal was undertaken in accordance with the shareholders' mandate obtained at the company's EGM held on Aug 21, 2009.

"The proceeds received from the Disposal Transaction will first be paid to Bank Pembangunan for any redemption of the RSLS. Upon full redemption of the RSLS, any excess proceeds received would be utilised for working capital purposes of the
company," it said.

Time Engineering said it registered RM3.73 million gain from the disposal for the financial year ending Dec 31, 2010 and the interest savings arising from the early redemption of part of the RSLS via the proceeds will enable it to reduce its interest expense on the RSLS of about RM290,000 per annum.

July vehicle sales at 53,482 units, up 2.9% on-year

KUALA LUMPUR: Vehicle sales picked up marginally in July, 2010, recording a 2.9% increase to 53,482 units from 51,967 units a year ago but the Malaysian Automotive Association (MAA) expects sales volume to pick up in August.

The MAA said on Friday, Aug 13 it expects an improvement in August sales due to a "rush for deliveries in conjunction with the Hari Raya season, which is supported by higher production".

For July, out of the 53,482 vehicles sold, passenger vehicles accounted for 48,143 units and commercial vehicles 5,339. ''

It said the higher sales in July was due to the fulfillment of back orders carried over from the previous month and also due to countermeasures taken by car companies to negate the impact of the increase in hire purchase rates.

The MAA said during the seven-month period up to July, vehicle sales rose to 354,559 units, an increase of 51,287 units or 16.9% from 303,272 units in the previous corresponding period.

The data showed car manufacturers had ramped up production in July to 58,004 units, which was a 23.2% increase from the 47,073 units a year ago. Of the 58,004 units, passenger vehicles accounted from 53,629 units and the rest commercial vehicles.

For the seven months ended July, production increased by 27% to 351,787 units from the 276,915 units in the previous corresponding period.

Hong Kong moves further to cool property prices

HONG KONG: The Hong Kong government tightened mortgage lending on Friday, Aug 13 for bigger flats as their prices head for historic highs, fuelling asset bubbles in the Chinese territory.

Property shares will likely feel pressure next week on the news, after late losses pushed the Hang Seng index'' to its worst weekly performance since early July.

Hong Kong, home to property tycoons such as Li Ka-shing and Lee Shau-kee, faces overheating in its real estate sector, driven by record-low interest rates, abundant liquidity partly due to mainland Chinese buying and Asia's strong economy.

"We need to take preventive measures before an asset bubble forms," Hong Kong Financial Secretary John Tsang told a news conference after the government announced economic data.

"Experience indicates when the property market heats up, a lot of speculation takes place in the market," he said. "I will not hesitate to introduce further measures if necessary."

In a separate news conference, the Hong Kong Monetary Authority announced tighter rules for lending, lowering the mortgage loan ceiling to 60 percent from 70 percent for PROPERTIES [] with transaction prices of HK$12 million ($1.5 million) or above.

Previously, mass market apartments usually have a higher loan ceiling of 70 percent, while luxury apartments are categorised as those that cost HK$20 million or more.

The government will also raise the forfeit of deposits for buyers who cancel apartment transactions to 10 percent, up from 5 percent, to discourage speculators.

While trying to increase the housing supply, the government has also set a limit on debt servicing ratios of mortgage applicants to 50 percent, rather than the current 50-60 percent.

"This is quite a powerful move to clamp down speculation in the property market," said Alva To, head of consulting for North Asia at property services firm DTZ.
The latest moves will likely dampen sentiment in the stock market next week.

"That is going to have a bit of pressure on the share prices, but not by too much. Actually if you look at the share prices, they have not performed that well if you compare that to the physical market," Eva Lee, an analyst at Macquarie Securities.

Housing prices have risen by another 10 percent since the start of 2010, after gaining about a third last year. Property stocks fell 1.3 percent since the beginning of this year. Tsang said prices for large flats had surpassed previous highs of 1997 and were fast approaching historic highs.

Earlier this year, the government slapped a higher stamp duty on luxury apartments to try and rein in prices.

It is also increasing scrutiny of Hong Kong property developers such as Henderson Land Development Co Ltd, which was investigated by police after announced sales of several units at one of its luxury apartment developments ultimately failed to close. - Reuters

Petra Energy awarded RM26.35m Petronas Carigali contracts

KUALA LUMPUR: PETRA ENERGY BHD []'s unit Petra Resources Sdn Bhd has secured three contracts worth RM26.35 million from Petronas Carigali Sdn Bhd.

Petra Energy said on Friday, Aug 13 the first contract was to provide the hook-up and commissioning work for a pipeline rejuvenation project valued at RM15 million. Thes work order was effective July 22.

The second was to provide the hook-up and commissioning for phase one of the ERB West Development project, with the contract valued at RM5.60 million. The work order was effective July 1.

The third was also for the hook-up and commissioning Phase II of the Betty Revisit 4 project valued at RM5.75 million. This work order was effective April 8.

DRB-Hicom, VW to collaborate on assembling, manufacturing VW cars

KUALA LUMPUR: DRB-HICOM BHD [] and Volkswagen AG (Volkswagen) will collaborate on the assembly and manufacturing of Volkswagen vehicles in Malaysia at the former's plant in Pekan, Pahang.

DRB-Hicom's group managing director Datuk Seri Mohd Khamil Jamil said both parties would jointly plan the production of Volkswagen models in Malaysia and this included strengthening Volkswagen's existing sales activities and market presence in the country.

The companies had on Friday, Aug 13 signed a memorandum of understanding for the collaboration at the Volkswagen Centre in Singapore.

"This MoU is the culmination of intense discussions and both parties anticipate the production of the CKD models in Malaysia," he said at the signing ceremony. VOlkswagen was represented by its senior vice president, group manufacturing overseas, Dr Christof Spathelf and Volkswagen head of sales for China and Asean, Soh Wei Ming.'' ''

Both parties assemble the Volkswagen CKD models in Pekan, which is one of DRB-Hicom's automotive manufacturing plants.

"We hope the entry of Volkswagen, Europe's biggest vehicle manufacturer into Pekan, would help to spur its transformation into a vibrant and self-sustaining regional automotive hub, as envisioned under the East Coast Economic Region initiative,"'' said Mohd Khamil.

DRB-Hicom, he added, would look at engaging the full participation of its component manufacturing companies to support Volkswagen's localisation programme.

CMSB secures RM103m road construction contract

KUALA LUMPUR: CAHYA MATA SARAWAK BHD []'s (CMSB) subsidiary PPES Works (Sarawak) Sdn Bhd has secured a road CONSTRUCTION [] project in Miri from the federal government valued at RM101.3 million.

CMSB said on Friday, Aug 13 that PPES had received a letter of acceptance of tender to build an access road from Pekan Beluru'' to Batang Tinjar.

The project is expected to be completed in 36 months.

#Flash* Govt awards RM1.2b in-service support contracts for 2 submarines to BHIC

KUALA LUMPUR: The government has awarded two contracts valued at more than RM1.2 billion to BOUSTEAD HEAVY INDUSTRIES CORP [] Bhd (BHIC) to undertake the in-service support for two of the navy's Scorpene submarines.

BHIC said on Friday, Aug 13 its subsidiary Boustead DCNS Naval Corporation Sdn Bhd had received the letter of award for total contract sums of 193 million euros (RM784.22 million) and RM532 million for the period ending Nov 30, 2015.

"The difference in contract value being awarded from the initial letter of intent, announced on the June 4, 2009, is due to the inclusion of a full submarine integrated logistics support package," it said.

BHIC said this consisted of a comprehensive spare parts package as well as the outfitting of workshop equipment, respective yard facilities and equipment, submarine safety conditioning facilities and their corresponding upkeep and maintenance.

The contract also covers tug boat services and the operation and maintenance of the shiplift, transfer system and submarine 'umbilical services'.

BHIC said in accordance to the National Defence Industry Policy, emphasis would be placed on the transfer of TECHNOLOGY [], know-how and skills-set from the French to the Malaysian personnel to ensure local participation, self reliance and local content.

BHICH expected the contract tol have a material effect on the earnings for the financial year ending Dec 31, 2010 and will contribute positively to the future earnings of BHIC group.

Genting rallies blue chips higher

KUALA LUMPUR: GENTING BHD [] provided the spark for the lacklustre market on Friday, Aug 13, rallying blue chips higher to snap its three straight day of losses.

The fresh optimism saw the FBM KLCI closing 10.82 points or 0.8% higher to 1,360.15. Turnover surged to nearly one billion units at 996 million shares while value was RM1.36 billion. Advancing counters beat decliners 502 to 228.

Most key Asian markets were also higher after they were recently oversold on worries about global economic growth. However, some analysts raised concerns whether the lull may not last, especially given Friday's ream of U.S. data releases. U.S. retail sales, consumer confidence and consumer prices are due later and markets fear disappointment, according to Reuters.

Nikkei 225 +0.44% 9,253.46 Shanghai Composite Index +1.21% 2,606.70 Kospi +1.42% 1,746.24 Singapore's Straits Times Index +0.44% 2,939.97 Hang Seng Index -0.16% 21,071.57 ''

At Bursa Malaysia, Genting Bhd advanced 48 sen to RM8.18 after AmResearch raised its FY10F net profit forecast to RM2.8 billion from RM1.3 billion due to higher contributions from Genting Singapore.

'New fair value for Genting Bhd is RM10.67/share versus RM7.66/share previously,' it said.

GentingS-C6 added 27 sen to 50.5 sen and Genting PLANTATION []s 21 sen to RM7.34'' and GenS-C2 6.5 sen higher at 14 sen.

F&N managed to rebound 40 sen to RM13.98 after coming under some selling pressure over the week. Glove maker Hartalega added 15 sen to RM7.90.

Mieco rose seven sen to 86 sen but it was off its intra-day high which saw the share price rallying to a three-year high of 96 sen.

The stock attracted heavy trading on news that BANDAR RAYA DEVELOPMENTS BHD [] (BRDB) confirmed it was in talks with a Chinese party for a potential collaboration with Mieco. BDRB owns 56.76% of Mieco.

KL Kepong fell the most, down 30 sen to RM16.80 but with just 542,900 shares done only. Nestle lost 20 sen to RM39 while Hong Leong Bank shed 10 sen to RM8.70.

Friday, August 13, 2010

#Stocks to watch:* EON Cap, Gadang, P&O, JTI

KUALA LUMPUR:'' The FBM KLCI is likely to extend its third-straight day of losses on Friday, Aug 13, which saw RM8 billion wiped out from the market capitalization, reducing it to RM1.086 trillion.

The FBM KLCI futures closed at 1,346, or three points below the cash market's 1,349.33. The weaker closing on Wall Street will continue to weigh on the local market and also key regional bourses.

U.S. stocks ended down for a third straight day on Thursday as an unexpected rise in jobless claims and a sobering revenue outlook from Cisco underscored the hurdles to economic recovery.

Thursday's drop comes a day after all three major indexes posted their worst percentage declines in more than a month, erasing gains for the year in the aftermath of a gloomier outlook from the US Federal Reserve.

The Dow Jones industrial average slipped 58.88 points, or 0.57%, to 10,319.95. The Standard & Poor's 500 Index dropped 5.86 points, or 0.54%, to 1,083.61. The Nasdaq Composite Index tumbled 18.36 points, or 0.83%, to 2,190.27. However, as at 7.50am, the DJIA futures is up 22 points or 0.21% to 10,293.

Stocks to watch on Bursa Malaysia include EON CAPITAL BHD [], GADANG HOLDINGS BHD [], Pacific & Orient Bhd (P&O) and JT INTERNATIONAL BHD [] (JTI).

EON Cap reported a strong set of earnings for the second quarter ended June 30. It reported net profit of RM113.3 million, up 15.8% from the first quarter. But the earnings declined from RM124.60 million from a year ago when there was a one-off tax writeback.

Gadang Holdings Bhd is stepping up its CONSTRUCTION [] ventures, having put in over RM2 billion in tenders for mostly government projects.

Meanwhile, it was reported that Bank Negara has approved Prudential Holdings Ltd to begin negotiations to acquire a stake in P&O. P&O shares rallied on Thursday on expectations of the approval.

JTI posted RM33.56 million in net profit for the second quarter ended June 30, up 12% from RM29.97 million a year ago, riding on the higher cigarette prices.


Revenue rose 3.3% to RM298.51 million from RM288.89 million. Earnings per share were 12.83 sen. It declared an interim dividend of 15 sen a share. The increase in revenue and profit before tax were attributed to higher sales volume and cigarette prices.


Genting Singapore plc's'' UK operation, which it is divesting to Genting Malaysia Bhd, saw an improved business volume in the second quarter ended June 30, 2010.

U.S. jobless claims rise highlights economy's ills

WASHINGTON: The number of U.S. workers filing new claims for jobless benefits unexpectedly rose last week to the highest level in close to six months, the latest evidence the economy's recovery is faltering.

The data on Thursday, Aug 12 came two days after the Federal Reserve spooked investors by downgrading its assessment of the economy. The increase in jobless claims added to worries in the stock market, which has failed to make any gains this year.

The number of new claims for state unemployment insurance rose by 2,000 to 484,000 in the week ended Aug. 7, the second straight increase, the Labor Department said. Economists had expected claims to edge down to 469,000.

"This is not a good number," said John Brady, an analyst at MF Global in Chicago. "Claims are going the wrong way. That has the market concerned."

U.S. stocks closed down for a third straight day, pressured by the data and a disappointing revenue forecast from tech bellwether Cisco Systems Inc.

"We are seeing a large number of mixed signals in both the market and from our customers' expectations," Cisco CEO John Chambers told analysts on Wednesday. "We think the words 'unusual uncertainty' are an accurate description of what is occurring," he added, echoing Fed Chairman Ben Bernanke's recent comments on the economy. For more, see:

While prices for U.S. government debt eased as investors locked in recent gains, the dollar rose broadly on Thursday as traders worried about the global outlook sought a safe haven.

The Fed said on Tuesday that the economy's recovery was likely to be more modest than expected and said it would take steps to ensure its support for the economy does not dwindle.

The central bank's downbeat view, signs that growth in China is slowing and trade and inventory data that suggested U.S. growth was weaker in the second quarter than had been thought combined on Wednesday to erase the year's gains in U.S. stocks.

Casting a further cloud over the global outlook, the euro zone's statistical agency said on Thursday that industrial production in the 12-nation currency bloc declined in June, a suggestion that growth could have softened as a generally vigorous second quarter ended.


Data for the United States has been decidedly weak over the past couple of months, with private-sector job growth lagging expectations and the unemployment rate stuck at 9.5 percent. That has fed concerns the economy could be at risk of a renewed recession or face a debilitating bout of deflation as the bleak jobs market pressures incomes and prices.

"Whatever recovery we have seen is an outgrowth of inventory restocking and government largess and neither one is sustainable," said Bob Andres, chief investment strategist at Merion Wealth Partners in Berwyn, Pennsylvania.

An NBC News/Wall Street Journal poll released on Wednesday showed economic pessimism was rising, a bad sign for incumbent lawmakers facing voters in November. Majority Democrats are at risk of losing control of the House of Representatives and possibly even the Senate.

The poll found that almost two-thirds of Americans believe the U.S. economy will worsen before it gets better, up from 53 percent who felt that way in January. Nearly six in 10 of those surveyed said the country is headed in the wrong direction.

The government said last month that the economy advanced at a 2.4 percent annualized pace in the April-June quarter, far more slowly than the first quarter's 3.7 percent rate.

A wider-than-expected trade gap and signs businesses were stockpiling fewer inventories than thought have led analysts to warn the economy may have grown in the second quarter at less than half the pace the government estimated on July 30.


The Labor Department said in a separate release that a rise in oil prices pushed the cost of imported goods higher in July for the first time in three months, though at half the pace economists had expected.

Import prices rose 0.2 percent last month after falling 1.3 percent in June and a revised 0.8 percent in May. That left the three-month cumulative total down 2.0 percent, the largest decline since the three months ended February 2009.

Oil import prices rose 2 percent last month after falling for two months. In recent days, oil prices have been declining.

Prices excluding oil fell 0.2 percent in July, signaling a lack of underlying inflation pressure from imports.

In its report on jobless claims, the department said a four-week moving average of new filings, which economists prefer because it smooths out weekly fluctuations, rose 14,250 to 473,500. Like the initial claims figure, that was the highest level since the week ended Feb. 20.

The number of people still collecting unemployment benefits after an initial week of aid fell 118,000 to 4.45 million in the week ended July 31, the lowest level since late June. Economists had expected 4.53 million.

The weak jobs market and rising foreclosures will curb demand for housing and keep home prices mostly flat through 2011, a Reuters poll of economists showed.

Still, most of the economists said the battered sector would avoid another major downturn. - Reuters

Wall St ends lower for third day on jobs data, Cisco

NEW YORK: U.S. stocks ended down for a third straight day on Thursday, Aug 12 as an unexpected rise in jobless claims and a sobering revenue outlook from Cisco underscored the hurdles to economic recovery.

Thursday's drop comes a day after all three major indexes posted their worst percentage declines in more than a month, erasing gains for the year in the aftermath of a gloomier outlook from the U.S. Federal Reserve.

Cisco Systems Inc fell 9.6 percent to $21.45 and was the top drag on both the Dow and Nasdaq a day after it forecast sales below consensus, prompting several analysts to downgrade the stock.

The number of U.S. workers filing new claims for unemployment benefits unexpectedly rose to nearly a six-month high, increasing ongoing fears about the weak labor market. It was the second straight week of increases.

Concerns that tech spending would weaken were underlined by comments from Cisco's influential Chief Executive John Chambers, who warned of "unusual uncertainty" about the economy.

"The market is upset by all the uncertainty created by the forecast, and that's weighing on the whole sector," said Janna Sampson, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

"Right now it isn't clear whether these issues are solely related to Cisco, or if they'll hit names across the sector."

Telecom stocks advanced, with the S&P telecom services sector up 0.9 percent and Verizon Communications Inc, up 2.5 percent at $30.31, providing the biggest boost to the Dow. The sector is generally considered a defensive play.

The Dow Jones industrial average slipped 58.88 points, or 0.57 percent, to 10,319.95. The Standard & Poor's 500 Index dropped 5.86 points, or 0.54 percent, to 1,083.61. The Nasdaq Composite Index tumbled 18.36 points, or 0.83 percent, to 2,190.27.

Semiconductor stocks added to the Nasdaq's loss after BMO Capital Markets downgraded the sector, along with stalwarts Intel Corp and Texas Instruments Inc, on concerns about rising inventories.

Texas Instruments shares lost 2.2 percent to $24.41, while one semiconductor index fell 1.3 percent.

The S&P 500 fell below its 50-day moving average of 1,088, breaking a key technical support level that could exacerbate the sell-off.

"All of this -- Cisco, the jobless claims -- is feeding into the market's correct conclusion that the economy is getting worse," said Chip Hanlon, president of Delta Global Advisors in Huntington Beach, California.

Kohl's Corp fell 2.7 percent to $46.50 after giving a weak profit outlook. The S&P Department Store sub-industry index lost 1.7 percent.

On the upside, General Motors Co recorded its biggest quarterly profit in six years on Thursday, a day ahead of its expected filing for an initial public offering. - Reuters

GM CEO steps down on cusp of IPO filing

DETROIT: General Motors Co Chief Executive Ed Whitacre resigned on Thursday, Aug 12 in an abrupt move that renewed questions about leadership at the automaker as it readied a stock offering critical to paying back its controversial U.S. government bailout.

Dan Akerson, 61, a veteran private equity investor little known in auto circles, replaces Whitacre, 68, as of September. Akerson had been appointed by the Obama administration as one of the directors meant to safeguard the government's $50 billion financing to restructure GM.

Whitacre's departure had been expected, but the timing of his announcement caught even GM insiders off guard, just a day before GM was expected to file the paperwork for a landmark stock offering that would mark its reemergence as a publicly traded company a year after bankruptcy.

Whitacre, who continued to commute from his home in Texas during his stint as CEO of the Detroit-based company, had said repeatedly he would be an interim leader.

"It was obvious that I was not going to be at GM for the long haul," Whitacre said at the end of a conference call to discuss the company's second-quarter earnings.

Jeffrey Sonnenfeld, a management expert at the Yale School of Management, said Whitacre was having a positive impact at GM and should have stayed on under normal circumstances.

"The instability certainly is a shock to insiders; it's stunning to outsiders and you don't usually have that happen," Sonnenfeld said. "There is a story here that we are not getting. Clearly this was not part of a planned succession."

A former AT&T Inc chief executive, Whitacre had been expected to stay on at GM through the filing of the IPO. As recently as last week, he described plans for a series of meetings with big investors to tout the offering.

The sudden management change could delay GM's planned IPO filing on Friday by a few days, as the documents are reviewed and new management is added as a risk factor in the filing, reflecting the shake-up, a source familiar with the matter said.

The U.S. Treasury said GM's board made the decision, which did not require government approval.

"We have put a strong foundation in place, so I am very comfortable with my timing," Whitacre said.

Akerson, also a former CEO at Nextel, will become GM's fourth chief executive in just a year and a half, underscoring the challenge in remaking the corporate culture of an automaker still in the early stages of a turnaround.

A managing director of The Carlyle Group for the past seven years, Akerson spearheaded some of the private equity firm's biggest recent deals, including the buyout of energy company Kinder Morgan.

Analysts said Akerson's appointment could head off any investor concern about succession issues at GM. But the move also thrusts an executive known for quiet deal making into the spotlight as salesman in chief for the top U.S. automaker.


Separately, GM posted a second-quarter profit of $1.3 billion as evidence of a turnaround driven by cost-cutting in its 2009 bankruptcy and better sales in the United States.

The second-quarter profit was the largest since 2004, when the U.S. auto market was still booming with annual sales of near 17 million vehicles and GM's brands accounted for more than one in four purchases of new cars and trucks.

The results reflected a 47 percent snap back in global production from the depressed levels of a year earlier, when GM began operating under bankruptcy.

Revenue rose to $33.2 billion from $31.5 billion in the first quarter.

Analysts expect the company to use the results to build the case for a record stock offering and allow the U.S. government to reduce its 61 percent ownership stake.

The government is considering selling that stake in several pieces over two or three years, but the exit could go faster or slower, a source told Reuters.

A successful GM IPO would provide the Obama administration with evidence the unprecedented and unpopular intervention in the U.S. auto industry has been a financial success.

Europe, where GM is still struggling to restructure its Opel unit, remained a notable weak link for the automaker, with an operating loss of $160 million.

North America had an operating profit of $1.6 billion. International operations, including GM's China joint ventures with SAIC and Wuling, had an operating profit of $672 million.

Despite GM's recovery over the past year, analysts say it still faces a challenge in winning back consumers because of the lingering stigma from its bailout and the "Government Motors" label from critics.

GM lost about $88 billion between 2005 and 2009 when it was driven into bankruptcy by plunging sales and tight credit.

GM's U.S. market share was just over 19 percent in the quarter that ended in June, down from almost 21 percent a year earlier when it was still selling the now-scrapped Saturn, Saab, Pontiac and Hummer brands.

GM's results show it is trailing its more successful and smaller rival, Ford Motor Co, which posted a second-quarter profit of $2.6 billion, but ahead of Chrysler, which lost $172 million.

Sources told Reuters on Wednesday the largest U.S. automaker had secured a $5 billion credit facility, marking its return to the capital markets a year after it emerged from a government-funded landmark bankruptcy.

GM Chief Financial Officer Chris Liddell declined to comment when asked about the credit facility. He said the arrangement was "one of the building blocks" GM needed to restore its balance sheet. - Reuters

Thursday, August 12, 2010

#Today's Diary* What to expect on Aug 13, 2010

Opening ceremony of Malaysia Airlines - MITM Travel Fair 2010 officiated by Minister of Tourism Malaysia at Dewan Matahari 1, Level 5, Cititel Mid Valley, KL.

PROTON HOLDINGS BHD [] and Sirim Bhd to host TV3 reality show Idea - Malaysia Inventors Challenge at Sri Pentas Theatrette, No 3 Persiaran Bandar Utama, PJ, Selangor at 9.30am.

Pos Malaysia collaborates with MAA Assurance to introduce PA product called Pos Raya Insurance at Dewan Sri Pos, Level 3, Pos Malaysia HQ at 10am.

JTI 2Q earnings up 12% to RM33.56m

KUALA LUMPUR: JT INTERNATIONAL BHD [] posted RM33.56 million in net profit for the second quarter ended June 30, up 12% from RM29.97 million a year ago, riding on the higher cigarette prices.

JTI said on Thursday, Aug 12 that revenue rose 3.3% to RM298.51 million from RM288.89 million. Earnings per share were 12.83 sen. It declared an interim dividend of 15 sen a share.

'The increase in revenue and profit before tax were attributed to higher sales volume and cigarette prices,' it said.

For the first half, its net profit rose 13.2% to RM71.32 million from RM62.96 million. Revenue was 5.4% higher at RM611.68 million.

JTI said in the 1H, the three largest players recorded a contraction of 1.1% in volume compared to the previous year's double-digit decline.

'While this moderate rate of decline could be due to the recovery in the Malaysian economy, the legitimate cigarette industry continues to face negative pressure on volume due to the increasing growth of illicit cigarettes. In 2009, as much as one out of three packets consumed in Malaysia is illicit,' it said.

According to Goldman Sachs Research's Global Tobacco Report, the Malaysian market boasted the largest illicit cigarette incidence in the world in 2009.

JTI said it was concerned that illicit cigarettes may continue its growing dominance of the market and urged the government to take the necessary steps to curb the rise of illicit cigarettes, including the adoption of a moderate taxation policy.

Share prices close lower on continued selling

KUALA LUMPUR: Share prices on Bursa Malaysia closed lower on Thursday, Aug 12 on continued selling, as investors were worried over the sustainability of the global economic recovery, dealers said.

At 5pm, the FTSE Bursa Malaysia KUALA LUMPUR COMPOSITE INDEX [] (FBM KLCI) slipped 3.58 points or 0.27% to 1,349.33 after opening 4.19 points lower at 1,348.72.

The key index stayed in negative territory throughout the day due to persistent selling in selected blue chips.

"Stocks in the local market fell further today, as investors continued to unload shares after heavy overnight losses on Wall Street," a dealer said.

At close, the Finance Index plunged 36.40 points to 12,169.44, the PLANTATION [] Index dwindled 30.24 points to 6,466.52 and the INDUSTRIAL INDEX []
lost 12.63 points to 2,648.26.

The FBM Emas Index declined 20.44 points to 9,140.03, the FBM70 [] dropped 34.83 points to 9,133.32 while the FBM ACE Index rose 17.49 points to 3,822.33.

Losers led gainers by 383 to 298 while 261 counters were unchanged, 431 untraded and 33 others suspended.

Total volume however increased to 798.188 million shares worth RM1.088 billion from 769.872 million shares worth RM1.169 billion yesterday. -- Bernama

HwangDBS Investment Mgmt declares income distributions for 5 funds

KUALA LUMPUR: HwangDBS Investment Management Bhd (HwangDBS IM) has declared income distributions for five funds from the bond and income as well as equity categories.

It said on Thursday, Aug 12 the income distributions were for the HwangDBS Select Bond Fund (SBoF), HwangDBS Fixed Maturity Income Fund I (FMIF I), AIIMAN Income Plus Fund (AIP), HwangDBS Structured Income Fund III (StrIF III) and HwangDBS Select Opportunity Fund (SOF).

HwangDBS IM announced a final gross income distribution of 0.5 sen for Select Bond Fund's financial year ended July 31, 2010. This is'' its 11th income distribution since the fund was launched on July 28, 2003.

To date, it had recorded total growth of 41.95% on its net asset value per unit. All unit holders registered as at July 19, 2010 are eligible for the income allotment.

Since its inception, for Select Bond Fund has outperformed its benchmark, the Maybank 12-Month Fixed Deposit Rate, by a total of 26.49% and had distributed a total of 12.25 sen.

HwangDBS IM also declared an interim gross income distribution of 4.0 sen'' for Fixed Maturity Income Fund I's financial period ending 31 July 2010 and all unit holders registered as at July 19, 2010 were eligible to receive the income allotment.

It also announced an interim gross distribution of 2.1390 sen or for the AIIMAN Income Plus Fund for the financial period ended July 31, 2010. This is the fund's second income distribution and has registered a total growth of 48.17% on its NAV/Unit'' since inception. All unit holders registered at 28 June 2010 were eligible to receive the income allotment.

HwangDBS IM declared an interim gross income distribution of 1.2603 sen for the Structured Income Fund III's financial period ended July 31, 2010 where all the unit holders registered as at July 18, 2010 were eligible to receive the income allotment.

It also announced the final gross income distribution of 5.0 sen for the Select Opportunity Fund's financial year ended July 31, 2010. This is the fund's ninth income distribution since its launch on 7 September 2001. To date it has registered a total growth of 253.39% on its NAV/Unit. All SOF unit holders registered as at 19 July 2010 are eligible to receive the income allotment.

Prudential 1H net profit up 34 pct

HONG KONG: Britain's largest insurer Prudential Plc reported a better-than-expected 34 percent rise in first-half operating profit, helped by improving investment returns amid a broader market recovery.

Prudential'' reported an operating profit of 1.68 billion pounds for the first six months of the year, based on European Embedded Value (EEV) accounting standards, higher than a consensus forecast of 1.54 billion pounds, and better than the 1.25 billion pounds recorded a year earlier.

The company reported a 40 percent rise in net profit of 968 million pounds based on International Financial Reporting Standards, beating a consensus forecast of 724 million pounds, and better than 688 million pounds it posted a year earlier.

The firm raised its half-year dividend by 5 percent to 6.61 pence per share. - Reuters

FBM KLCI stays in the red at mid-day break

KUALA LUMPUR: Asian markets remained in the red on Thursday, Aug 12, with the FBM KLCI at its lowest level since July 23 and Japan's Nikkei 225 falling more than 2% in early trade to on worries of a slowdown in the global economy.

Japan's industrial output fell 1.1% in June for the first decline in four months, revised data showed on Thursday, suggesting production may be cooling off as exports slow, according to Reuters.

The figure compared with an initial reading of a 1.5% fall, and followed a 0.1% increase in May, it said.

At the regional markets, the Nikkei was down 1.84% to 9,121.43, Hong Kong's Hang Seng Index fell 1.56% to 20,962.60, the South Korean Kospi lost 1.22% to 1,736.71, Taiwan's Taiex down 1.10% to 7,808.55, Singapore's Straits Times Index shed 0.97% to 2,920.78 while the Shanghai Composite Index shed 0.75% to 2,587.93.

On Bursa Malaysia, the FBM KLCI fell 7.85 points to 1,345.06, dragged by losses including at DiGi, Petronas Dagangan, PPB and Petronas Gas.

Losers beat gainers by 443 to 134, while 218 counters traded unchanged. Volume was 351 million shares valued at RM505.8 million.

Crude palm oil for the third month delivery rose RM4 per tonne to RM2,260; gold added US$1.45 per ounce to US$1,199.55 (RM3,826.57) while crude oil slipped 46 cents per barrel to US$77.56.

RHB Research Institute said Wednesday's decline to below the 10-day SMA of 1,361 indicated a decisive breakdown of the short-term technical picture.

Although the FBM KLCI managed to close at above the 1,350, off the day low of 1,349.50 Wednesday, the technical readings remained weak overall, it said.

"Closing with a bearish candle below the SMA suggests a negative short-term performance is likely on Thursday. Plus the poorer daily turnover, and the overnight Wall Street's plunge, the risk is high for the index to lose the critical 1,350 level in the immediate term.

"If this occurs, it will mean a confirmation of a bearish breakdown from the recent uptrend. That will lead the index towards the 40-day SMA of 1,336, followed by the psychological support of 1,300," it said.

Among the major losers on Bursa Malaysia, BAT fell 60 sen to RM43.50, DiGi fell 50 sen to RM23.86, Nestle lost 48 sen to RM38.52 while Petronas Dagangan and F&N lost 36 sen each to RM10.04 and RM13.54.

PPB fell 28 sen to RM17.28, Tasek down 27 sen to RM6.70, Hong Leong Financial Group lost 17 sen to RM8.36, Cocoaland down 15 sen to RM2.40 while Petronas Gas shed 14 sen to RM10.10.

Among the top gainers, Pharmaniaga and Jerneh added 20 sen to RM5.64 and RM3.39, Cycle & Carriage up 10 sen to RM5.90, AIC rose 9.5 sen to 70.5 sen, Mieco up eight sen to 70 sen, HPI rose seven sen to RM1.72 while AIRB added six sen to RM1.37.

Talam was the most actively traded stock with 32.3 million shares done. The counter shed half a sen to 10.5 sen. Other actives included Samudra, Timecom, Mieco, AirAsia, SAAG and Axiata.

Sands China delays new Cotai opening

MACAU: Sands China, the Macau unit of Las Vegas Sands, said a worker shortage will delay the opening of its new Cotai Strip mega-resort to the fourth quarter of 2011, as it ramps up recruiting efforts for the project in an area billed as Asia's version of the Las Vegas Strip.

Analysts have long expressed concern that Macau government restrictions on non-resident workers on CONSTRUCTION [] projects could result in cost overruns or project delays for Sands China's latest project, the first two phases of which will cost $2.35 billion to develop.

In an interview with Reuters on Thursday, Sands China's acting chief executive, Michael Leven, dismissed the possibility of cost overruns from the project, known as sites five and six.

"That will affect the ramp-up of the product and will affect the short-term income situation," Leven said. "But the cost of the product will be the same."

"Most of the analysts predicted very little income coming from (sites) 'five and six' in the first three or four months anyway," he added.

When finished, Sands China's new project on Cotai would compete with mega casino projects by Galaxy Entertainment, Melco Crown Entertainment and Wynn Macau, which are all vying for a share of revenues in Macau, the world's largest and fastest-growing gambling market.

Philip Tulk, an RBS analyst, agreed that a delay for the project would not be very significant to Sands China, the world's second-most valuable casino operator after its parent, even though it could affect the firm's credibility, he told Reuters before the interview.

But Tulk recently downgraded the stock to a "hold" from a "buy," given his concerns about the project's timing and its potential performance.

Phase one of the half-completed project had previously been due to open in June 2011, but was postponed to the third quarter of 2011. This follows a nearly two-year hiatus as the debt-laden company looked to conserve cash during the financial crisis.


Sands China, which aims to open the Cotai project with 570 tables, has 1,293 workers at its project, Leven said.

"We're about half the amount we needed for this particular time," he said, adding that the firm would need 10,700 workers at its peak. "We expect over the next six weeks to get closer to our goals."

Leven, who is also Las Vegas Sands's chief operating officer, had been appointed acting chief executive officer (CEO) in late July, after Sands China terminated the contract of its former CEO, Steve Jacobs, without disclosing a reason..

Leven said the firm is seeking a permanent replacement by the end of the year, adding that it is hunting externally for someone with Asian experience, particularly in China, among other traits.

"I think there was an incompatibility of style between Mr. Jacobs' personal style and the management of the company, the 71 percent shareholder of the company (Sands China)," Leven said, when asked about the reason for Jacobs' departure.

"I would think that informing the 71 percent shareholder of major activities that are going on in the business is not a relinquishment of independence."

Leven said that Sands China, which had been bringing in more VIP customers through direct relationships, is "anxious to get more junket play than we've been getting," but that would not involve increasing the commission cap paid to junkets -- the middlemen who bring wealthy clients to Macau's gambling halls.

By September, the firm could decide on the name of its Cotai project, whose casinos would have Polynesian and Himalayan themes, Leven said. - Reuters

HK stocks fall on global econ worries; Shanghai down

HONG KONG/SHANGHAI: Hong Kong shares fell on Thursday, Aug 12 as mounting doubts about global economic growth gave investors a reason to book profits after a recent rally took the benchmark index to a 3-1/2-month high.

China's key stock index, the Shanghai Composite, pared some of its earlier losses and was down 0.8 percent, outperforming
other regional markets.

Stocks found some support after regulators in China hiked insurance companies' maximum investment ratio in shares and funds
to a combined 25 percent of total assets, but weak overseas markets limited gains.

The China Insurance Regulatory Commission (CIRC) raised domestic insurers total investment ratio in funds and shares to a
maximum of 25 percent, while allowing them to invest up to 15 percent in overseas capital markets.

The Shanghai Composite is up 12 percent from its July low as expectatons of policy easing, attractive valuations and moderating but still robust economic growth in China prompted a move back in Chinese shares.

"The market is confident that tightening measures have peaked but expectations for policy loosening still need a while to develop," said Wang Aochao, analyst at UOB Kay Hian in Shanghai.

Wang said he expects the index will likely rebound to 2,700-2,800 in the near term but said A-shares did not have a great catalyst to jump higher.

Property issues were broadly higher, extending Wednesday's gains. Gemdale was up 0.9 percent while Poly Real Estate, another
major developer, rose 1.7 percent.

Heavily weighted banking shares fell, dragging the broader market lower. Shares of ICBC were down 1.2 perent while Bank of
Communications fell 1 percent.

The Hong Kong market fell, tracking other Asian bourses, as concerns about a slowing global recovery fueled a sell-off in risky assets.

Asian stocks, high yielding currencies and commodity prices slid following news of a surprisingly large U.S. trade deficit and a dowgrade of Britain's growth forecast by the Bank of England.

Hong Kong's benchmark Hang Seng Index fell 1.4 percent to 20,987.1, slipping further from a 3-1/2-month high hit on Monday.
A 15 percent rally since the May low had taken the index into overbought territory earlier this week, with the relative strength index over 75. The index has fallen 4 percent since, bringing the RSI to a more neutral level of 50.

Economic worries have served as an excuse for the continued correction in local markets, said Marco Mak, analyst at Tai Fook

The Hang Seng's slide took it below key support levels - the 200-day moving average at 21,044 and a 50 percent retracement of
the November 2009 to May 2010 slide. The next short-term support for the index is around the June high of 20,938.
Shares of Cathay Pacific fell 3.6 percent.

Cathay shares are the top performers on the Hang Seng index this year mostly due to a near-30 percent surge since late May on
the back of a strong rebound in international air travel.

Angang Steel fell 5.4 percent, leading a 1.8 percent drop on the China Enterprise Index. - Reuters

Gadang to launch RM110m property projects

KUALA LUMPUR: GADANG HOLDINGS BHD [] plans to launch RM110 million worth of property projects over the next year in Kuala Lumpur and Johor.

A company official said on Thursday, Aug 12 Gadang was also looking to expand its PLANTATION []s in Sabah via joint ventures with the landowners.'' Currently, it has plantations in Ranau, Sabah.

On the proposed joint venture with Long An Province People's Committee, Vietnam to undertake a waterworks project with 300,000 cubic metres daily capacity'' there, he said it was still at a feasibility stage.

Its subsidiary Green Water Investment had signed an MoU with Long An People's Committee in November 2008 for the proposed project.
The delay was due to the change in the local government there, the official said.

Asian markets extend losses

KUALA LUMPUR: The FBM KLCI fell to its lowest level since July 23 at mid-morning on Thursday, Aug 12, in line with the overall negative sentiment at key regional markets weighed down by worries of sustained global economic stagnation.

At the regional markets, Japan's Nikkei 225 fell 2.02% to 9,105.20, the South Korean Kospi lost 1.18% to 1,737.49, Taiwan's Taiex fell 1.15% to 7,804.19, the Singapore Straits Times Index down 0.83% to 2,924.42, the Shanghai Composite Index down 0.80% to 2,587.16 while Hong Kong's Hang Seng Index opened 1.4% lower at 20,981.81.

At Bursa Malaysia, the FBM KLCI fell 9.36 points to 1,343.55 at 10am, below its July 23 close of 1,345.68.

Losers thumped gainers by 313 to 76, while 153 counters traded unchanged. Volume was 162.95 million shares valued at RM210.64 million.

OSK Investment Research said Wednesday's retracement was still considered healthy as the market could still possibly be able to create another uptrend, adding that the immediate technical outlook of the FBM KLCI remains bullish.

"There is tough resistance at the 1,395 point-level, while initial support is still seen at the 1,350 point-level, followed by the 1,332 point-level and 1,326 point-level.

"The 1,350 point-level represents the previous peak of the 2009-2010 rally. A dip back below this level might cause some panic selling in the market," it said in a note Aug 12.

Among the major losers, Netle fell 90 sen to RM38.10, BAT amd DiGi down 58 sen each to RM43.52 and RM23.78, Petronas Dagangan fell 38 sen to RM10.20 and PPB lost 32 sen to RM17.24.

Tasek fell 27 sen to RM6.70, Petronas Gas down 24 sen to RM10, Hong Leong Bank lost 18 sen to RM8.68, while Hong Leong Financial Group and YTL fell 13 sen each to RM8.40 and RM7.23 respectively.

Pharmaniaga was the top gainer at mid-morning, and was up 22 sen to RM5.66. Cycle & Carriage added 10 sen to RM5.90; Plenitude, HPI Resources and AIC added five sen each to RM3.50, RM1.70 and 66 sen respectively, while Mieco was up 4.5 sen to 66.5 sen.

Talam was the most actively traded stock with 20.8 million shares done. The counter was unchanged at 11 sen. Other actives included Samudra, SAAG, Mieco, Multi Sports, TML Life and Berjaya Corp.

OSK Research maintains overweight on rubber glove industry

KUALA LUMPUR: OSK Research is maintaining its overweight recommendation oon the rubber gloves industry although it is now less positive compared with the previous years since some of the prevailing concerns ' of which it had been aware since last year ' have finally reared their ugly heads.

The research house had on Thursday, Aug 12 recommended that investors continue to stick to the bigger rubber glove manufacturers like Top Glove (BUY, TP: RM7.57), Supermax (BUY, TP: RM9.11) and Kossan (BUY, TP: RM5.65) as it believes these companies have the financial muscle to withstand any unexpected future setbacks.

OSK Research said recent developments have cast a cloud over the rubber glove sector, and were met with mixed views on the industry's outlook.

While funds that are still positive on the sector are busy 'shopping'' given that the share prices of most rubber gloves companies have dropped by 10%-20%, those who are neutral are still sitting on their existing shareholdings, which have been bought at a much lower cost.

Meanwhile, some funds are shying away from the sector out of fears stoked by rising concerns on its near term prospects.

'We believe that recent concerns which have crept into investors' radars in a big way did not emerge out of the blue and have probably been made known to them in early 2010.

'These investors, we believe, would have prepared themselves for such negative news when they decided to invest in or hold on to their shares in rubber glove companies. Hence, we do not think the recent negative developments in the sector would have caught investors off-guard,' it said.

Mieco extends gains

KUALA LUMPUR: MIECO CHIPBOARD BHD [] shares extended their gains on Thursday, Aug 12 after BANDAR RAYA DEVELOPMENTS BHD [] (BRDB) had confirmed on Tuesday that it was in talks with a Chinese party for a potential collaboration with Mieco.

Mieco is BRDB's 56.76%-owned subsidiary.

At 9.50am, Mieco was up 5 sen to 67 sen with 5 million shares done.

BRDB said the collaboration could possibly involve equity participation in Mieco. The property developer said the discussion was preliminary and exploratory in nature at this stage.

HDBSVR maintains Buy on IJM, ups TP to RM6.20

KUALA LUMPUR: Hwang DBS Vickers Research is maintaining its Buy call on IJM Corp and raised the target price to RM6.20 with 24% upside.

It said on Thursday, Aug 12 that IJM has zero legacy jobs in its orderbook currently. 1Q FY11 (Apr-June) results due-end August will be the last quarter of more benign margins.

Hwang DBS Vickers Research said a more pronounced uptick in CONSTRUCTION [] margins will be seen from 2QFY11 onwards, driven by more meaningful contributions from RM545m Grand Hyatt (18% completed), RM640m Besraya, RM247m Mukah access roads and RM350m Penang approach roads.

'We expect robust property sales of RM300m-RM400m in 1QFY11 following RM1.2bn record sales in FY10.

'The strength was seen across its mass-market projects in Klang Valley, Penang and Sabah. For IJM PLANTATION []s, we are expecting a 55% on-quarter jump in 1Q FY11 earnings (excluding exceptional items), given RM100 rise in CPO average selling price, expected lower tax rate, and absence of impairment loss,' it said.

Kenanga Research maintains Hold on BAT

KUALA LUMPUR: Kenanga Investment Research has recommended a Hold on BRITISH AMERICAN TOBACCO (M) [] Bhd with a fair value of RM40.10.

It said on Thursday, Aug 12 that news reports said that with effect from Sept 1, cigarette makers will have to pay half-a-sen for every stick sold as cess to the National and Tobacco Board (LKTN).

The new cess, which is an extra tax, is in addition to the Customs duty and comes with enforcement of the LKTN Act in April 2010.

The additional cost impact of 10 sen per pack from the new cess will have to be borne by cigarette manufacturers.

'Although the increment may be minimal, but nevertheless it will translate a decrease of 7% to our FY2011's full year net profit of RM721.6m (RM780.2m without cess) assuming no pass-through to consumers in a price increase.

'The impact on FY2010's bottomline is only 2% decrease to RM766.8m (RM780.2m without cess) as the new tax is only effective for the remaining four months of this year,' it said.

Kenanga Research believed the bottom line impact is moot given that any duty and/or excise hikes are usually passed on to end consumers, leaving tobacco manufacturers' bottomline intact.

CIMB Research maintains Overweight on construction

KUALA LUMPUR: CIMB Equities Research is maintaining its Overweight recommendation on the CONSTRUCTION [] sector with Gamuda and WCT as the top picks.

The research house said on Thursday, Aug 12 that after releasing its construction sector piece on July 19, it went on a roadshow in Malaysia and Singapore where it met 55 fund managers (FM) and buy-side analysts from 28 investment management firms in Malaysia and 13 FMs and analysts from nine firms across the causeway.

CIMB Research said it highlighted that the key theme for the construction sector over the 10th Malaysia Plan (10MP) period will be public transportation. The sector could see a big boost if the mass rapid transit (MRT) proposal goes through.

'Gamuda would be the biggest beneficiary. We maintain our view that the MRT proposal has a high chance of being approved, possibly as early as this month. We also gave investors an update of existing mega jobs for which progress has been encouraging since the beginning of the year. This should allay concerns over execution of the projects, which is one of investors' main reservations,' it said.

CIMB Research said most of the investors shared its view that the construction sector is still in play, especially after the recent announcement of the 10MP which laid out several high-impact projects.

FBM KLCI falls below 1,350-level

KUALA LUMPUR: The FBM KLCI extended its losses on Thursday, Aug 12, in line with the fall at most regional markets after US stocks erased the year's gains in the broadest sell-off in a month-and-a-half on Wednesday as investors took money off the table and sought refuge in safer assets.

At 9.05am, the FBM KLCI fell 6.08 points to 1,346.83, dragged by losses including at Genting and CIMB, which fell six sen each to RM7.72 and RM7.24 respectively.

Other early decliners included Hong Leong Financial Group that lost 32 sen to RM8.21, Chin Teck down 12 sen to RM8.20, Boustead down 11 sen to RM4.14 while Batu Kawan, Panasonic and BAT fell 10 sen each to RM11.70, RM19.30 and RM44, respectively.

Glove makers also fell, with Supermax losing eight sen to RM5.91 while Top Glove lost seven sen to RM6.13.

Maybank MoneyTree YES 2 Challenge winners feted

SUBANG JAYA: The winners of the Maybank MoneyTree Young Entrepreneur Startup Challenge 2 (YES 2) were presented their respective awards in recognition of their achievements last Friday, Aug 6.

More than 200 guests witnessed winners in the various categories receive their awards at a dinner here, as well as presentations to the corporations that had played a significant role in developing the youths and children participating in the financial literary programmes.

In a statement Aug 7, MoneyTree Malaysia chairman Datuk Nik Kamaruddin Ismail said the young aspiring entrepreneurs would set the example for the next generation of youths to follow.

"These youths have proven their courage and determination, when they decided to take the road less traveled.

"I commend their efforts for proving that youth entrepreneurship is really not about age, but it is about mileage," he said.

MoneyTree Malaysia is a subsidiary of MoneyTree Asia Pacific Ltd, which holds the exclusive rights to a first of its kind financial training programme that educates children and youths aged nine years to 19 years

In the YES 2 competition, six teams pitched for start-up capital to launch their business ideas into the market by soliciting funds from private investors.

The grand prize winner of the YES 2 competition was the team "Cup Chatter" from UNITEN, which won RM20,000 in cash.

Among the other recipients, Kaberi Dutta took the "MoneyTree MoneyWise Award ' Social Entrepreneurship, 2010" and Wong Jun Wei walked away with the "MoneyTree MoneyWise Award ' Academic, 2010".

Meanwhile, Tenby Schools and elc International School was given the "MoneyTree Institution Award 2010- Financial Literacy"; Taylors College the "MoneyTree Institution of Higher Learning Award ' Promotion of Entrepreneurship, 2010"; Malaysian Today the "MoneyTree Youth Entrepreneurship ' Media Advocate Award, 2010" while Maybank was given the "MoneyTree ' Financial Literacy ' Corporate Advocate Award 2010.

The New Straits Times was given the "MoneyTree Financial Literacy ' Media Advocate Award ' Teens Category, 2010", while theSun took the "MoneyTree Media Award ' Overall Support of Youth Development, 2010" award.

#Stocks to watch:* Plantations, glove makers, IOI Corp, Yee Lee

KUALA LUMPUR: The sharp overnight fall on Wall Street on Wednesday, Aug 11, will send jitters to the key regional markets when they open for trading Thursday as sustained global economic stagnation looms.

On Wall Street, US stocks erased the year's gains in the broadest sell-off in a month-and-a-half on Wednesday as investors took money off the table and sought refuge in safer assets.

According to Reuters, all three major indexes posted their worst percentage drop since July 16 following the Federal Reserve's bleaker assessment of the economy on Tuesday.

The Dow Jones industrial average was down 265.42 points, or 2.49%, at 10,378.83. The Standard & Poor's 500 Index was down 31.59 points, or 2.82%, at 1,089.47. The Nasdaq Composite Index was down 68.54 points, or 3.01%, at 2,208.63.

The Nasdaq was down 2.7% for the year, while the S&P 500 was down 2.3% and the Dow was down 0.5%.

Stocks to watch on Bursa Malaysia include PLANTATION []s, glove makers, IOI Corp Bhd and Yee Lee Corp Bhd.

Shares of most plantation companies fell on Wednesday, weighed down by a cautious outlook on the sector as crude palm oil (CPO) prices are expected to weaken in the fourth quarter of this year as production hits its peak. Investors would have to watch out for the earnings due later this month and also the companies' forecasts for the remaining quarters.

Share prices of Malaysian listed glove makers have been on a steady downward trend after climbing to all-time highs in the middle of last month.

This week, the selling pressure accelerated after a research house, HwangDBS Vickers, downgraded the sector on Monday, although other research houses immediately came to defend their bullish calls. More details in Thursday's edition of The Edge FinancialDaily.

In IOI Corp, the Employees Provident Fund Board (EPF) disposed of 33.72 million shares in the past seven trading days since July 27 until Aug 5. The shares represented a 0.5% stake in the plantations heavyweight.

After the latest disposals, the EPF's shareholding in IOI Corp was reduced to 12.77% or 814.32 million shares. IOI Corp shares were trading between RM5.10 and RM5.13 during the seven trading days.

YEE LEE CORPORATION BHD []'s unit was appointed by Red Bull Asia FZE to distribute and market Red Bull Energy Drink and Red Bull Sugarfree within Malaysia.

Under the agreement, it will be the distributor with non-exclusive rights to distribute and market Red Bull Energy Drink and Red Bull Sugarfree within Malaysia in its respective borders.

Meanwhile, LIMAHSOON BHD [] has been given six months to complete its proposed restructuring of its RM81.1 million debt'' after it sought the assistance of the Corporate Debt Restructuring Committee (CDRC).

Limahsoon had submitted an application to CDRC on July 26 for assistance to mediate between the company and its financial creditors. The CDRC had given the company six months from Aug 11 to complete the proposed debt revamp.

Bursa Malaysia Securities Bhd has extended the deadline for Ho Hup CONSTRUCTION [] Co. Bhd by another three months to Nov 4 to submit its regularisation plan.

However, the further extension of time granted to Ho Hup was without prejudice to Bursa Securities' right to proceed to suspend the trading of the securities of Ho Hup and to commence de-listing procedures.