PM: MRT to generate RM3b to RM4b yearly in gross national income

KUALA LUMPUR: The implementation of the mass rapid transit (MRT) project in the Klang Valley is expected to generate a Gross National Income (GNI) of between RM3 billion and RM4 billion beginning next yearuntil 2020, said Prime Minister Datuk Seri Najib Tun Razak.

He said between RM8 billion and RM12 billion was expected to be generated in terms of spinoffs from the CONSTRUCTION [] of the MRT project.

"RM21 billion in GNI incremental impact is anticipated to be generated in 2020 from the value appreciation of the project and increase in productivity rate," Najib told a press conference at the Royal Malaysian Air Force base in Subang on Saturday, Dec 18 before his departure to Kuala Terengganu for a one-day official visit.

The Prime Minister said the Cabinet had approved the implementation of the MRT project at its weekly meeting on Friday.

The MRT, the largest infrastructure project in Malaysia, is an economic entry point project identified for the Greater Kuala Lumpur/Klang Valley'' National Key Economic Area under the Economic Transformation Programme.

Najib also said the MRT project would generate 130,000 jobs during the duration of its construction which was expected to commence July next year and be complete in five to six years.

Once operational, the MRT will first ply the Sungai Buloh to Kajang route via the Kuala Lumpur city centre.

"The travel distance is about 60km and 35 MRT stations will be built along that route. Integrated stations would be built in locations where the MRT overlaps KTM Commuter, Kelana Jaya and Ampang Light Rail Transit (LRT) routes," he explained.

The Sungai Buloh-Kajang MRT will provide efficient train service to 1.2 million people, he said, adding that it would serve densely populated Kota Damansara, Mutiara Damansara, Bandar Utama, Taman Tun Dr Ismail, Bukit Damansara, Cheras, Bandar Tun Hussein Onn and Balakong.

Najib also said more than 400,000 commuters would benefit from the Sungai Buloh-Kajang MRT service daily.

The routes and locations for the MRT have yet to be finalised and value management studies would be conducted taking into account the optimum utilisation rate and maximum real estate realisation value.

As such, he said the actual project cost can only be determined once the value management studies are completed.

"The entire cost of building the project is being fine-tuned. Initial estimates made in 2009 placed the figure at about RM36 billion but this was subject to changes," Najib said.

The Prime Minister said the final cost of the project would depend on factors such as the awarding of contracts through open tender, the escalating cost of raw materials and others.

He said the government decided on kicking off the project with the Sungai Buloh-Kajang route as this corridor did not have adequate rail transport service.

Indepth studies were also carried out on this route which was proposed by Syarikat Prasarana Negara Bhd in 2008 and by MMC-Gamuda Joint Venture Sdn Bhd recently.

The Sungai Buloh-Kajang MRT will built under phase one of the MRT network in the Klang Valley.

Future routes to be developed gradually over several stages have been proposed and is being studied under the Urban Public Transportation Masterplan,

he said.

Asked if any new entry points projects would be unveiled, Najib said several projects would be announced in January. - Bernama

Najib: MMC-Gamuda only allowed to tender for tunneling of MRT project

PETALING JAYA:'' MMC-Gamuda Joint Venture Sdn Bhd, which has been appointed the project delivery partner (PDP) for the Mass Rail Transit (MRT) project, will not be allowed to tender any of the work packages except for tunneling works.

"The government felt the exception should be made as the PDP is the only local CONSTRUCTION [] company that has experience in major tunneling works such as in the SMART Tunnel project in Kuala Lumpur and the Kaohsiung MRT project in'' Taiwan," said Prime Minister Datuk Seri Najib Tun Razak here on Saturday, Dec 18.

He was speaking to reporters at the RMAF base in Subang before his depature to Kuala Terengganu for a one-day official visit.

Nevertheless, Najib said the PDP would still have to compete for the work package with other companies and the award would be given on the basis of merit.

The Prime Minister also said the Cabinet has decided that Syarikat Prasarana Negara Bhd, a fully-owned subsidiary of the Ministry of Finance Incorporated, would be the infrastructure owner of the project while the Land Public Transport Commission would be the supervising authority for the project.

On the appointment of MMC-Gamuda Joint Venture as the project delivery partner, Najib said it was based on the financial standing of the two public listed companies which make up the joint venture and their strong track records and experience in the field of construction and in undertaking huge and complex rail and tunneling projects.

"The PDP will assume the role of a project manager but with the added responsibility of having to deliver the project within an agreed time and cost.

"Any cost over run and delays in project completion, which are basic common risks in projects, will be borne by the PDP," he added.

Najib said the PDP was not a turnkey contractor and the project would be divided into work packages which would be awarded individually through open tender.

"The government will make the final decision on the awarding of contracts," he added. - Bernama

#Stocks to watch:* Kulim, KPJ, Gamuda, water stocks

KUALA LUMPUR: Stocks could see some upside in the coming week, starting Monday, Dec 20, with mild window dressing activities on selected key stocks and at least enable it to stay comfortably above the key 1,500 level.

Exporters which benefit from the stronger US dollar could see trading interest while impact of the weaker ringgit could weigh down corporations with high exposure to US dollar denominated loans.

Reuters, in its outlook for the week ahead, expects investors will be taking advantage of the some of the last remaining trading days of the year to place their bets on what will be the winners of 2011.

Even as investors reposition themselves, the broad market is likely to drift until year-end with next week shortened by the Christmas holiday.

Indeed, Wall Street's fear gauge, the CBOE Volatility index, or VIX, on Friday, Dec 17 fell to its lowest level since April, according to the Reuters report.

Meanwhile, CIMB Equities Research said it expected 2011 is likely to turn out to be a good trading year for the market.

'Although risks remain relatively high, returns should be high and quick too. We expect continued volatility but with an upward bias as liquidity fuels the market.

'Our preferred sectors are those in the cyclical space including banking, CONSTRUCTION [], property, oil & gas and auto which stand to benefit from renewed investor confidence and higher risk appetite. GLCs (government-linked companies) should also gain prominence as investors speculate on those that will gain from pre-election government largesse,' CIMB Equities Research said.

Stocks to watch on Monday include Kulim (Malaysia) Bhd and KPJ HEALTHCARE BHD [], GAMUDA BHD [] and water related companies in Selangor.

KENCANA PETROLEUM BHD [] could see trading interest after The Edge weekly in its latest edition said Kencana and Petrofac JV have emerged as the front runners to bag the exploration of the Berantai oil and gas field at PM309, off the coast of Peninsular Malaysia.

Johor Corporation and Johor Ventures Sdn Bhd are seeking the removal of Tan Sri Muhammad Ali Hashim as a director of Kulim (Malaysia) Bhd and KPJ Healthcare Bhd with immediate effect. They own 16.61% of Kulim and 42.86% of KPJ.

Muhammad Ali resigned as JCorp's chief executive officer in July. JCorp has been in the news after three bids to acquire Kulim's subsidiary QSR BRANDS BHD [] were rejected.

Gamuda Bhd could see trading interest after its net profit rose 19.6% to RM88.53 million for the first quarter ended Oct 31, 2010 from RM74.02 million a year ago, underpinned by higher contributions from the construction and property divisions.

A news report says the federal government is considering bondholders proposals to take over the bonds issued by the water operators in Selangor. Another proposal could be to offer loans the operators.

Minister of Energy, Green TECHNOLOGY [] and Water Datuk Seri Peter Chin was quoted saying the government would have to look into the viability of these bonds. This would be seen as necessary to avert an adverse impact on the overall bond market.

Malaysian Rating Corp had downgraded about RM7 billion of bonds issued by seven water-related companies in September due to concerns about regulatory and operational uncertainty.

Shares of Supermax Corp Bhd and Top Glove Corp Bhd were among the top 10 losers on Friday as investors worried about the outlook for the glove makers after the disappointing financial results from Top Glove recently. Top Glove closed down 13 sen to RM4.99 while Supermax fell 12 sen to RM4.21.

Meanwhile, RAM Rating Services Bhd placed the BBB3/P3 ratings of RGB International Bhd's RM97 million debt notes on Rating Watch, with a negative outlook.

The rating agency said on Friday, Dec 17 the debt notes involved its commercial papers/medium-term notes programme (2007/2014) (CP/MTN).

RGB International, formerly Dreamgate Corp Bhd, is involved in the sales and marketing, provision of technical support, as well as maintenance and management services for gaming and amusement equipment.

'The Rating Watch reflects our concerns about the Group's business prospects in the Philippines, which are expected to have negative implications on RGB International's credit profile,' it said.

RAM Ratings said for the first nine months of FYE Dec 31, 2010 (FY Dec 2010), the Philippines contributed about 40% to the group's technical support and management services (TSM) division's revenue.

Wall St hovers at highs; profit-taking eyed

NEW YORK: The S&P clung to a two-year high on Friday, Dec 17 as investors predicted a pause as volumes are expected to dry up in the days ahead, and after a 5 percent gain already so far in December.

The last two weeks of the year are traditionally quiet, and therefore market moves are less meaningful to the overall trend, which took the S&P 500 to a two-year high early this week.

Some indicators imply investors have grown complacent. The CBOE Volatility index <.VIX>, a measure of expected volatility on Wall Street, fell to its lowest level since April, dropping 7.4 percent to 16.11.

"The bullish camp is -- I'm sure -- very pleased at the day-after-day, slow steady increase they are engineering," said Larry McMillan, president of options research firm McMillan Analysis in a research note. "But below the surface, tensions are building, and they will likely explode to the downside in a sharp, but perhaps only short-lived, correction."

Some indicators are pointing to an overbought market such as high levels of bullishness, often seen as a contrarian indicator, as well as a high call to put ratio, indicating investors may be complacent about hedging a fall in prices.

Some of the year's biggest winners have endured selling of late and were down again Friday. Apple Inc fell 0.2 percent to $320.61, while Salesforce fell 0.7 percent to $136.50.

This was offset on the Nasdaq by gains in both Oracle Corp and Research in Motion a day after they posted strong quarterly results. Oracle gained 3.9 percent to $31.46 while U.S.-listed shares of RIM were up 1.6 percent to $60.20. [ID:nN16257524] and [ID:nN1794135]

The Dow Jones industrial average <.DJI> dropped 7.34 points, or 0.06 percent, to 11,491.91. The Standard & Poor's 500 Index <.SPX> gained 1.03 points, or 0.08 percent, to 1,243.90. The Nasdaq Composite Index <.IXIC> rose 5.66 points, or 0.21 percent, to 2,642.97.

While traders and investors were already nervous after the S&P 500 rallied over 5 percent so far this month, old concerns over European debt also resurfaced, with Moody's downgrade of Ireland's ratings hitting European bank shares in U.S. trade.

U.S.-listed shares of Banco Santander fell 2 percent to $10.52 while Royal Bank of Scotland dropped 5.5 percent to $11.90. However, the impact on U.S. shares not directly linked to the Irish situation were limited.

"There are more shoes to drop in Europe, but precedent has been set to help these countries. That's why equity markets aren't reacting significantly negatively to the news," said Michael Gault, a senior portfolio strategist at the New York-based Weiser Capital Markets, which has about $150 million in assets under management.

"Unless that support won't be there, I think investors will in general be able to shake off the news and find positives, like the tech results," he added.

Regional banks traded higher after Canada's Bank of Montreal agreed to buy Marshall & Ilsley Corp for $4.1 billion, sending the stock up 18 percent to $6.85. [ID:nN1744360]

Peer regional bank KeyCorp climbed 4.1 percent to $8.42 while Regions Financial added 1.8 percent to $6.24. [ID:nN1744360]

The KBW Regional Banks index <.KRX> rose 0.3 percent and has risen more than 11 percent this year, with most of that coming in December alone despite continued debt woes from European banks.

Mergers and acquisitions are up for the first full year since 2007 and may mark the start of a new, multiyear M&A cycle, according to Thomson Reuters data. [ID:nLDE6BE0QQ] and [ID:nN16241182]

About 8.9 billion shares were traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, over the year's daily average of 8.5 billion.

Volume was increased by traders adjusting or exercising derivative positions on four different types of expiring equity futures and options contracts, also know as "quadruple witching." - Reuters

GLOBAL MARKETS-Euro dips on Ireland, U.S. Treasuries rally

NEW YORK: The euro fell against the dollar for a second straight week and global stocks edged lower on Friday, Dec 17, weighed by renewed concerns over euro zone debt after a multi-notch downgrade of Ireland's credit rating.

Investors shifted into safe-haven bonds and sold the euro after Moody's slashed Ireland's rating by five notches, warning further downgrades could follow.

U.S. Treasury securities rallied, causing yields to decline, as the market got a boost from the Federal Reserve on Friday with its latest purchase of long-dated bonds.

Moody's move on Ireland followed Fitch's three-notch downgrade last week. Earlier this week, Moody's placed Spain and Greece on a review for possible downgrades.

"While the Moody's downgrade of Ireland isn't any surprise, the sheer magnitude of five notches warrants a mention. We haven't seen anything like this since the Asian crisis," said Win Thin, senior currency strategist at Brown Brothers Harriman in New York.

"We foresee ongoing downgrades for peripheral -- and perhaps even some core -- euro zone countries over the course of 2011 as the debt ratios are going to get much worse before they get better," Thin added.

World markets gained little comfort from a European Union summit, at which leaders agreed to create a permanent financial safety net from 2013 but provided no new measures to deal with the immediate crisis.

"Everyone should be troubled with the situation in Europe, and we don't think this the last of the news," said Matt King, chief investment officer at Bell Investment Advisors in Oakland, California, which oversees $400 million in assets.

European banks were under severe selling pressure over Ireland's debt situation. At the close in New York, U.S.-listed shares of Allied Irish Bank were down 4.6 percent to $1.22 while Barclays dropped 2.1 percent to $16.24.

U.S. stock markets closed near multi-year highs on Friday, as the S&P edged higher, but more meaningful gains may be hard to come by in the next two weeks, which are traditionally quiet.

U.S. benchmark indexes closed mixed. The Dow Jones industrial average <.DJI> fell 7.34 points, or 0.06 percent, to 11,491.91, while the Standard & Poor's 500 Index <.SPX> rose 1.04 points, or 0.08 percent, to 1,243.91. Gains in the TECHNOLOGY [] sector lifted the Nasdaq Composite Index <.IXIC> 5.66 points, or 0.21 percent, to 2,642.97.

The FTSEurofirst 300 <.FTEU3> index of top European shares closed down 0.44 percent at 1126.28, dragged by banks <.FTNMX8350>, which dropped 1.49 percent. As one example, shares of Royal Bank of Scotland dipped 5.73 percent.

The MSCI's all-country world stock index <.MIWD00000PUS> slipped 0.02 percent, while the Thomson Reuters global stock index <.TRXFLDGLPU> fell 0.15 percent.

EURO PRESSURES MARKETS

The euro sank against the dollar, hitting a two-week low after a drop below $1.32 triggered automatic sell orders.

After a blip of positive news from better-than-expected data on German business morale, the euro slid as low as $1.3133 on trading platform EBS , and was last down 0.43 percent at $1.3179. A break below $1.3104, its 200-day moving average that is deemed a near-term support level, could lead to a further decline, traders said.

Bolstered by the weak euro, the dollar <.DXY> rose against a basket of major currencies by 0.26 percent at 80.392. Against the Japanese yen, however, the dollar softened 0.1 percent to 83.96.

With the dollar on stronger ground, gold and oil prices slipped. At U.S. market close, crude oil 38 cents, or 0.43 percent, to $88.08 per barrel, while spot gold prices climbed $6.15, or 0.45 percent, to $1375.40.

As investors sought security in the tumultuous market, U.S. Treasury securities rallied. The benchmark 10-year U.S. Treasury note was up 25/32 points in price, yielding 3.3356 percent. The 30-year note jumped 53/32 to yield 4.4376 percent.

Over the last two weeks, Treasuries have been selling on concerns of ballooning deficits, stemming from the extension of the Bush-tax cut plan. Late Thursday, the U.S. House of Representatives passed the deal between U.S. President Barack Obama and Republican leaders to extend expiring tax cuts. The measure now goes to Obama to sign into law. - Reuters

U.S. closes six banks; 2010 failures now 157

WASHINGTON: U.S. authorities closed six more banks on Friday, Dec 17, bringing the number of closures so far this year to 157 as the aftermath of the 2007-2009 financial crisis continued to take a toll.

Smaller financial institutions, in particular, continue to feel the impact of the struggling housing market, weak economy and high unemployment. The bulk of this year's closures have been smaller institutions, each with less than $1 billion in assets. Large banks have recovered more quickly from the financial crisis.

The Federal Deposit Insurance Corp (FDIC) has said it expects bank closures to peak this year after 140 closures in 2009.

The FDIC announced the following closures on Friday:

* Appalachian Community Bank of McCaysville, Georgia; had assets of $68.2 million. Peoples Bank of East Tennessee of Madisonville, Tennessee, to assume the deposits

* Chestatee State Bank of Dawsonville, Georgia; had assets of $244.4 million. Bank of the Ozarks of Little Rock, Arkansas, to assume the deposits.

* Bank of Miami, National Association of Coral Gables, Florida; had assets of $448.2 million. 1st United Bank of Boca Raton, Florida to assume the deposits.

* United Americas Bank, National Association, of Atlanta, Georgia; had assets of $193.8 million. State Bank and Trust Company of Macon, Georgia to assume the deposits.

* Community National Bank of Lino Lakes, Minnesota; had assets of $31.6 million. Farmers & merchants Bank of Manchester, Iowa to assume deposits.

* First Southern Bank of Batesville; had assets of $191.8 million. Southern Bank of Poplar Bluff, Missouri to assume deposits.

DOLLAR LOSSES WANING

FDIC Chairman Sheila Bair has said that while the number of failures already exceeds the 2009 tally of 140, the total assets of this year's failures will probably be lower.

On Nov. 23 the FDIC released its latest quarterly report on the state of the banking industry. It showed that the industry overall continues to recover from the financial crisis but that large banks are doing better than smaller institutions.

The net income for the banking industry was $14.5 billion for the third quarter, which compares to $21.4 billion in the second quarter and $2 billion in the third quarter of 2009, according to the FDIC.

The banking industry has been setting aside less money to guard against losses, helping to boost earnings in recent quarters.

Bair cautioned against banks reducing these reserves too quickly given the state of the economy.

Despite the improving revenues numbers for the industry as a whole, community banks continue to be hit hard by the weak economy and the amount of bad loans on their books, particularly in the commercial real estate sector.

For instance, the number of banks on the agency's "problem list" grew to 860 from 829, to reach the highest number since March of 1993 when there were 928 institutions on the list. Most of these institutions will not fail but the list provides an indication of how many banks are struggling. - Reuters

Bank of America says cuts off WikiLeaks

WASHINGTON: Bank of America was quoted as saying late on Friday, Dec 17 that it was joining other financial institutions in declining to process payments to WikiLeaks, which has angered U.S. authorities with the mass release of U.S. diplomatic cables.

"Bank of America joins in the actions previously announced by MasterCard, PayPal, Visa Europe and others and will not process transactions of any type that we have reason to believe are intended for WikiLeaks," the bank said in a statement, quoted by McClatchy Newspapers.

No one at Bank of America was immediately available to comment.

WikiLeaks has said it will release documents early next year that will point to "unethical practices" at a major U.S. bank, widely thought to be Bank of America.

Several companies have ended services to WikiLeaks after the website teamed up with major newspapers to publish thousands of secret U.S. diplomatic cables that have caused tension between Washington and some of its allies.

"This decision is based upon our reasonable belief that WikiLeaks may be engaged in activities that are, among other things, inconsistent with our internal policies for processing payments," the Bank of America statement added.

WikiLeaks later issued a message on Twitter urging its supporters to leave the bank.

"We ask that all people who love freedom close out their accounts at Bank of America," it said on the social networking medium.

"Does your business do business with Bank of America? Our advice is to place your funds somewhere safer," WikiLeaks said in a subsequent tweet.

In a backlash against organisations that have cut off WikiLeaks, cyber activists have been targeting companies seen as foes of the website.

WikiLeaks founder Julian Assange was released on bail this week from a jail in Britain, where he is fighting extradition to Sweden over alleged sexual offenses.

Assange, a 39-year-old Australian, said on Friday that he was the target of an aggressive U.S. investigation and feared extradition to the United States was "increasingly likely".

U.S. Attorney General Eric Holder has said his government was considering using the U.S. Espionage Act, under which it is illegal to obtain national defense information for the purpose of harming the United States, as well as other laws to prosecute the release of sensitive government information by WikiLeaks. - Reuters

RAM Ratings puts RGB Intl on negative Rating Watch

KUALA LUMPUR: RAM Rating Services Bhd has placed the BBB3/P3 ratings of RGB International Bhd's RM97 million debt notes on Rating Watch, with a negative outlook.

The rating agency said on Friday, Dec 17 the debt notes involved its commercial papers/medium-term notes programme (2007/2014) (CP/MTN).

RGB International, formerly Dreamgate Corp Bhd,'' is involved in the sales and marketing, provision of technical support, as well as maintenance and management services for gaming and amusement equipment.

'The Rating Watch reflects our concerns about the Group's business prospects in the Philippines, which are expected to have negative implications on RGB International's credit profile,' it said.

RAM Ratings said for the first nine months of FYE Dec 31, 2010 (FY Dec 2010), the Philippines contributed about 40% to the group's technical support and management services (TSM) division's revenue.

'We understand that RGB International experienced setbacks in the opening of 5 of its new TSM concessions in the Philippines (initially scheduled for opening by end-2010) as licences granted for these VIP Clubs (slot clubs) are currently being reviewed by the new board of Philippine Amusement and Gaming Corporation (PAGCOR),' it said.

Casino operations in the Philippines are governed and mostly operated by the government-owned PAGCOR.

On top of this, RGB International has been asked to remove its slot machines from three of its TSM concessions in Manila due to underperformance.

Kevin Lim, RAM Ratings' Head of Consumer and Industrial Ratings said the delayed opening of its new TSM concessions in the Philippines will further set back the redeployment of RGB International's slot machines affected by the change in Cambodia's gambling regulations in 2008/09.

'The mobilisation exercise had initially been expected to be completed by end-2009; this is now likely to be held up until 2011. Compounding matters further, the Group now has to redeploy another 200 slot machines affected by its three TSM concessions in the Philippines.

'Looking ahead, RAM Ratings does not discount future changes in rulings that could disrupt the Group's business in the Philippines,' he said.

All these developments will further depress RGB International's financial performance; it is likely to record poorer-than-expected cashflow-protection metrics in FY Dec 2011, with a larger-than-anticipated pre-tax loss.

RAM Ratings said it remained concerned about the Group's tight liquidity position, with only about RM24.33 million of cash balances against RM133.61 million of short-term borrowings as at end-September 2010.

RAM Ratings said it was currently reassessing RGB International's credit profile based on the recent developments, and will take the appropriate rating action in due course.

Gamuda 1Q net profit up 19.6% to RM88.53m

KUAL A LUMPUR: GAMUDA BHD []'s net profit rose 19.6% to RM88.53 million for the first quarter ended Oct 31, 2010 from RM74.02 million a year ago, underpinned by higher contributions from the CONSTRUCTION [] and property divisions.

It said on Friday, Dec 17'' revenue rose marginally by 1.6% to RM634.20 million from RM623.96 million a year ago. Earnings per share rose to 4.35 sen from 3.67 sen, while net asset per share was RM1.75.

Gamuda declared a first interim dividend of three sen per share less 25% income tax and three sen per share single-tier (exempt from tax).

On its prospects, Gamuda with the existing construction projects progressing on schedule and the strong performance of the property division, the group expected to perform better in the next few quarters of the current financial year.

'The group is also expected to benefit from the roll-out of projects earmarked in the government's Economic Transformation Programme such as the Klang Valley MRT project,' it said.

It also said work on the Yenso Park and sewage treatment plant in Gamuda City, Vietnam remained on track.

Work on the sewage treatment plant was at an advanced stage and was expected to be substantially completed in the current financial year.

On the property division, it said the group's property developments in Malaysia achieved stronger sales on the back of a buoyant economy, improved consumer sentiments as well as an attractive mortgage environment.

'Unbilled sales reached RM760 million as a result of good sales performance. The property division's financial performance is expected to be better in the next few quarters of the current financial year,' it said.

Gamuda said strong buying activity was evident, particularly in matured locations and well-regarded developments such as Bandar Botanic, which attracted significant demand for its semi-detached houses and bungalow homes, Horizon Hills and Jade Homes.

It added that its flagship development, Gamuda City in Hanoi, was gearing up for its maiden launch with several thousands of interested purchasers having registered their interest in this development.

The group's second development, Celadon City in Ho Chi Minh City, was also ready for its maiden launch in the first half of 2011. These two developments in Vietnam are expected to be the key drivers of revenue and earnings growth for the overall property division.

Irish debt downgraded after EU sets rescue fund

DUBLIN/BRUSSELS: Ratings agency Moody's gave a resounding thumbs-down on Friday, Dec 17 to Europe's efforts to resolve a rolling debt crisis, slashing Ireland's credit rating by five notches despite this month's EU/IMF bailout.

The rare steep downgrade came during a European Union summit intended to restore market confidence by creating a permanent financial safety net for the euro zone from 2013 and by vowing to do whatever it takes to preserve the single currency.

Moody's cut Ireland's rating to Baa1 with a negative outlook from Aa2 and warned further downgrades could follow if Dublin was unable to stabilise its debt situation, caused by a banking crash after a decade-long property bubble burst.

"While a downgrade had been anticipated, the severity of the downgrade is surprising," Dublin-based Glas Securities said.

News of the latest blow to confidence broke as the 27 leaders held a second day of talks on how to stop contagion spreading from Greece and Ireland to other high-deficit euro zone countries such as Portugal and Spain.

"The recent events have demonstrated that financial distress in one member state can rapidly threaten macrofinancial stability of the EU as a whole through various contagion channels," a draft final summit statement seen by Reuters said.

At their first session on Thursday, the leaders spurned calls for immediate practical steps such as increasing the size of a temporary bailout fund or allowing it to be used more flexibly to buy bonds or open credit lines before troubled countries are shut out of the credit markets.

Barclay's Capital analyst economist Fabio Fois called it "another missed opportunity to calm the markets".

German Chancellor Angela Merkel, who led opposition to those options, sought to reassure citizens and markets on Friday, declaring: "We are doing everything to make the euro secure."

Merkel said the existing EU rescue fund was sufficient, and she was impressed by reforms announced by Spain and Portugal.

On the sidelines of the summit, non-euro member Britain won support from France, Germany and other countries for a drive to freeze the common EU budget in real terms over the next decade to take account of national spending cuts.

Diplomats said Prime Minister David Cameron presented a letter to EU leaders calling for a lean budget in the bloc's next seven-year spending plan after 2013, rising only in line with inflation. Poland, set to become the biggest beneficiary of the 126.5 billion euro annual budget, voiced anger at the move.

''

LAST RESORT

The European Central Bank took action to bolster its firepower to fight the debt crisis by announcing on Thursday it would almost double its subscribed capital.

But analysts said this was chiefly to cover the risk of writedowns on the 72 billion euros ($95.83 billion) in euro zone sovereign bonds it has bought so far, not to step up such purchases to support governments in trouble.

ECB President Jean-Claude Trichet told reporters the central bank's governing council thought it was appropriate to make "additional provisioning" -- a veiled reference to potential losses on euro zone sovereign bonds.

At Germany's insistence, the 27 leaders said the long-term crisis-resolution mechanism, to be added to the EU's governing treaty, would only be activated "if indispensable to safeguard the stability of the euro as a whole", making it a last resort.

The premium investors charge to hold Greek, Irish, Portuguese or Spanish bonds rather than benchmark 10-year German Bunds crept up in thin pre-Christmas trading, and the cost of insuring their debt against default also rose.

"European leaders failed to address the issue of debt sustainability and possible insolvency problems prior to 2013," said Carsten Brzeski, senior economist at ING Belgium.

"Debt restructuring, a common euro zone bond or an increase of the EFSF? None of these issues have been addressed. But they have to be," he said.

A French delegation source said the leaders had touched on a proposal by two veteran finance ministers for common euro zone bonds, strongly opposed by Merkel, but there was no consensus to take it forward.

The record seventh summit this year approved a two-sentence amendment to the EU treaty at Germany's behest to permit the creation of a European Stability Mechanism to handle financial crises from June 2013.

The ESM, to replace the temporary fund created in May, will be empowered to grant loans on strict conditions to member states in distress, with private sector bondholders sharing the cost of any writedowns after 2013 on a case-by-case basis.

The aim is for all 27 member states to ratify the change by end 2012. European Council President Herman Van Rompuy, chairing the summit, said no country would need to put it to a referendum, removing one potential risk. Decisions will be taken by unanimity, ensuring that EU paymaster Germany retains a veto.

Many analysts expect Greece and Ireland to have to default on their debts before then, but ECB executive board member Lorenzo Bini Smaghi dismissed such talk in a Financial Times article, saying the cure could do more harm than the disease.

The EU, together with the IMF, set up a 750 billion euro ($1 trillion) EFSF loan pool to help highly indebted euro zone states unable to finance themselves in volatile markets.

There has been a relative lull in financial market pressure in the past two weeks as investors and traders close their books ahead of the end of the year, but analysts expect turbulence to resume in 2011 as Spain and Portugal face refinancing crunches and the rating agencies clearly see no diminution of risk.

On Thursday, Moody's highlighted investor fears about the first country to receive an EU/IMF rescue by saying it was putting Greece under review for a downgrade, due to uncertainty over its ability to cut debt.

Earlier this week, Moody's put Spain's debt on review for a possible downgrade and Standard & Poor's said it may cut Belgium's debt rating next year. - Reuters

FBM KLCI ends week in positive territory

KUALA LUMPUR: The FBM KLCI close in positive territory on Friday, Dec 17 lifted by gains including at AMMB, Gamuda, MISC and Genting Malaysia but the 1,500 level proved to be formidable obstacle again for the FBM KLCI in absence of strong follow-through buying support.

At Bursa Malaysia, the 30-stock FBM KLCI was up 0.16% or 2.36 points to 1,499.88. Gainers beat losers by 413 to 315, while 303 counters traded unchanged. Volume was 1.14 billion shares valued at RM1.81 billion.

Regional markets were mixed as investor sentiment remained cautious on the back of lingering uncertainties given the conflicting news flow.

On the one hand the US economy showed new signs the recovery was gaining traction with data on Thursday that new claims for jobless aid fell last week and factory activity in the Mid-Atlantic region grew at its quickest pace in more than five and a half years this month, according to Reuters.

A'' US$858 billion tax cut package brokered between President Barack Obama and Republicans cleared a key test vote in the US House of Representatives on Thursday, after hours of delays, it said.

On the same day, Moody's put the credit rating of Greece, another country that needs EU/IMF bailout, on review for a possible downgrade, citing uncertainty over the country's ability to cut debt to sustainable levels.

On Friday, Moody's Investors Service downgraded Ireland's foreign- and local-currency government bond ratings by five notches to Baa1 from Aa2. The outlook on the Baa1 rating is negative.

Grappling with varying scenarios, some of the Asian markets advanced as investors went bargain hunting and did pick up some of the stocks that had been battered recently.

Hong Kong's Hang Seng Index rose 0.20% to 22,714.85, Taiwan's Taiex added 0.41% to 8,817.90, South Korea's Kospi was up 0.85% to 2,026.30 and Singapore's Straits Times Index rose 0.17% to 3,153.01.

Meanwhile, the Shanghai Composite Index shed 0.15% to 2,893.74 and Japan's Nikkei 225 slipped 0.07% to 10,303.83.

At Bursa Malaysia, MTD Capital, which received the nod to raise toll rates at the South Luzon Expressway, jumped 39 sen to an historic high of RM8.90, UAC added 36 sen to RM3.70, Hap Seng gained 27 sen to RM6.05, Metrod rose 20 sen to RM3.75, PPB was up 16 sen to RM17.14 while Sunway City and Tanjung Offshore gained 13 sen each to RM4.50 and RM1.60.

AMMB added 11 sen to RM6.75, Gamuda rose 10 sen to RM3.83, MISC gained eight sen to RM8.25 and Genting Malaysia was up three sen to RM3.37.

Sozo Global, which made its debut on the Main Market , was the most actively traded counter with 42.93 million shares done. The counter closed unchanged at 80 sen.

Other actives included Olympia, KUB, MAA Holdings, Petronas Chemicals, Timecom and SAAG.

Decliners included DiGi, Panasonic, Batu Kawan, KLK, Top Glove, BAT, Supermax and Far East Corp.

#Flash* Johor Corp, Johor Ventures seek removal of Muhammad Ali as Kulim director

KUALA LUMPUR: Johor Corporation and Johor Ventures Sdn Bhd, which owned 16.61% of Kulim (Malaysia) Bhd plan to requisition for an EGM to remove Muhammad Ali Hashim as a director of Kulim with immediate effect.

Kulim said on Friday, Dec 17 it had received a notice from Johor Corp and Johor Ventures, who own 51.73 million shares and 162,625 shares respectively, notifying of their intention to seek Muhammad Ali's removal at an EGM.

They had requisitioned for the EGM to be held at Persada Johor International Convention Centre, Jalan Abdullah Ibrahim, Johor Bahru, on Monday, 17 January 2011 at 9am.

Maybank launches Syariah bank in Indonesia, eyes top Islamic bank spot in Asean

KUALA LUMPUR: MALAYAN BANKING BHD [] has set its sights of being the number one Islamic bank in Asean by 2015 in terms of reach by leveraging on its presence in Indonesia, said its president and CEO Datuk Seri Abdul Wahid Omar.

The Islamic banking leadership target coincided with the official renaming of Bank Maybank Indocorp (BMI) on Friday, Dec 17 as Maybank Syariah Indonesia (MSI) following its conversion to a full fledged Islamic bank in October this year.

BMI, which had been operating in Indonesia since 1994, had received the central bank of Indonesia's approval on Sept 23 to convert its operations into an Islamic bank.

It had been operating mainly in wholesale banking offering corporate banking, trade finance and treasury services to a wide range of corporate client. In addition the bank offered niche retail banking services through its office in Jakarta.

Maybank chairman Tan Sri Megat Zaharuddin Megat Mohd Nor and Wahid officiated at the launch of the new bank in Jakarta.

Wahid said that the move to convert BMI into a syariah bank was in line with Maybank group's strategic objectives to expand its Islamic banking operations regionally.

Maybank's Islamic banking subsidiary in Malaysia -- Maybank Islamic Berhad'' ' was not only the largest Islamic bank by assets in the country but also in the Asia Pacific region. It is also ranked 17th in the world.

'Our aspiration is to become the number one Islamic bank in Asean by 2015 in terms of reach and this cannot be achieved without a presence in Indonesia, the largest market in Asean,' he said.

'Given its large Muslim population, Indonesia is a critical market that we must be present in if we are to achieve our aspiration in Islamic banking leadership.'

Given the relatively untapped Islamic banking sector in Indonesia, he said there would be strong demand for such services in the republic not only in the consumer market but also in the corporate and investment banking sector.

Wahid said the Syariah banking industry in Indonesia constitutes merely 3% of the total banking industry, with about 11 institutions holding full fledged Syariah banking licenses.

'We believe we can expedite the growth of the industry by bringing to market our range of Islamic based products and services,' he said.

As for the conversion of BMI into a syariah bank, he said it was also an obvious choice as the Maybank already had a full fledged commercial bank through Bank Internasional Indonesia (BII) which had a network of over 300 branches throughout Indonesia, he said.

He said that through the premier retail focus, MSI would introduce products and services for high net-worth individuals such as Islamic credit cards, bancassurance, and investment product as well as open up more Islamic branches.

Meanwhile, the Syariah corporate segment will focus on financing to the growth sectors such as natural resources sectors, infrastructure, automotive and housing, and at the same time serve as referrals for initial public offering, sukuk underwriting and advisory services.

Wahid said MSI would also draw on the expertise of the group's global wholesale banking sector, particularly its investment banking arm, Maybank Investment Bank, to tap the growing opportunities present in the Indonesian capital markets.

'As Malaysia's regional financial services leader, we have the capability to draw on our Group resources and expertise to bring financial solutions that best meet our client needs anywhere, whether in the conventional or Islamic banking segments.

'Indonesia represents a key market for us and it is important for us to be able to offer our clients here access to a complete array of banking services that can meet their needs in the most competitive terms possible ' this is line with our mission to humanise financial services across Asia,' he said.

Apart from Malaysia and now Indonesia, Maybank also offers its Islamic banking services to its global offices in Singapore, Brunei, Bahrain and London.

Some investors still wary of glove makers

KUALA LUMPUR: Shares of Supermax Corp Bhd and Top Glove Corp Bhd were among the top 10 losers in late afternoon trade on Friday, Dec 17 as investors worried about the outlook for the glove makers after the disappointing financial results from Top Glove recently.

At 3.46pm, Supermax was down 14 sen to RM4.19 with 1.15 million shares done while Top Glove fell 13 sen to RM4.99 with 8.28 million units transacted.

The 30-stock FBM KLCI was up 2.31 points to 1,499.83. Turnover was 821.5 million shares valued at RM1.14 billion. There were 346 gainers, 322 losers and 302 stocks unchanged.

Top Glove's earnings fell 44% to RM36.05 million for the first quarter ended Nov 30 from RM65.21 million a year ago as it was impacted by the high latex prices and a weak US dollar.

The decline in the earnings saw RHB Research cutting its FY11-13 net profit forecasts for Top Glove by 15.1%-28.6% as it reduced FY11-13 EBITDA margins by 2.2 percentage points and 4.3 percentage points respectively.

'Our fair value has been lowered to RM4.10 (from RM5.40) based on unchanged target CY11 PER of 12.5x. Underperform call on the stock remains unchanged,' RHB Research said.

S&P upgrades Axiata Group, earnings underpinned by XL Axiata

KUALA LUMPUR: Standard & Poor's Ratings Services has had raised its long-term corporate credit rating on Axiata Group Bhd to 'BBB+' from 'BBB'. The outlook is stable.

'We also raised our ASEAN scale rating on Axiata to 'axA+' from 'axA'. At the same time, we raised our issue rating on the US$300 million senior unsecured notes issued by Axiata SPV 1 (Labuan) Ltd to 'BBB' from 'BBB-'. These notes are unconditionally and irrevocably guaranteed by Axiata,' said the international ratings agency on Friday, Dec 17.

S&P said it raised the rating on Axiata to reflect the improvement in the company's cash flow protection measures and financial metrics.

The solid performances of its core subsidiaries, particularly PT XL Axiata Tbk. (XL; BB/Stable/--), in 2010 underpin the improvement.

For the 12 months to September 2010, Axiata's ratio of adjusted gross debt to EBITDA was 1.7 times, better than our expectation of 2.2 times to 2.5 times at the beginning of 2010.'' S&P said it now anticipated this ratio at 1.7 times to 1.9 times for full-year 2010.

'Axiata's strong overall earning performance is largely attributable to XL," said Standard & Poor's credit analyst Allan Redimerio.

"We attribute XL's strong performance to the initiatives taken by the company in 2009, and the stable competitive environment in Indonesia over the past 12 months."

The performance of Axiata's subsidiaries in Sri Lanka (Dialog Axiata PLC) and Bangladesh (Robi Axiata Ltd) continues to strengthen primarily due to improving economic conditions and favorable industry factors.

In addition, cash flows and margins remained stable at Axiata's Malaysian subsidiary Celcom Axiata Bhd.

S&P said its issuer rating on Axiata is one notch above the company's stand-alone credit profile, which we assess at 'bbb'.

In its opinion, there was a 'moderate" likelihood that the Malaysian government'' (foreign currency A-/Stable/A-2; local currency A+/Stable/A-1; ASEAN scale axAAA/axA-1+) primarily through its investment holding arm, Khazanah Nasional Bhd, would provide timely and sufficient extraordinary support to Axiata in the event of financial distress.

S&P said its issue rating on the senior secured notes is one notch lower than the rating on Axiata to reflect structural subordination because the company operates through an operating subsidiary/holding company structure.

Axiata's liquidity position is adequate, in our view. As at Sept 30, 2010, Axiata had a cash balance of RM5.90 billion. This was sufficient to cover debts maturing over the next 12 months of about RM1.05 billion and expected capital expenditure of approximately RM3.5 billion in 2011.

The stable outlook reflected its expectations that Axiata would maintain its operating performance and cash flows.

Moody's lowers Ireland's foreign, local-currency govt bond ratings, outlook negative

KUALA LUMPUR: Moody's Investors Service has downgraded Ireland's foreign- and local-currency government bond ratings by five notches to Baa1 from Aa2. The outlook on the Baa1 rating is negative.

It said on Friday., Dec 17 the negative outlook on the ratings of the government of Ireland was based on its forward looking view 'on the risk that the Irish government's financial strength could decline further if economic growth were to be weaker than currently projected or the costs of stabilising the banking system turn out to be higher than currently forecast'.

Moody's said the rating action concluded the review for possible downgrade that Moody's had initiated on 5 October 2010.

The rating action was in line with the guidance that Moody's gave on Nov 22, in which it indicated the most likely outcome of the rating review would be a multi-notch downgrade that would leave Ireland's rating within the investment-grade category.

'The key drivers for today's rating action are the crystallization of bank related contingent liabilities; the increased uncertainty regarding the country's economic outlook; and the decline in the Irish government's financial strength,' it said.

Moody's also downgraded Ireland's short-term issuer rating to Prime-2 (commensurate with a Baa1 debt rating) from Prime-1. Ireland falls under the Eurozone's Aaa regional ceilings for bonds and bank deposits, which are unaffected by the Irish government's downgrade.

The ratings agency noted the economy's competitiveness and its business-friendly tax environment were credit-positive.

The labour market's flexibility was reflected by the considerable wage adjustment that occurred in the course of the crisis. Moreover, recent economic information, in particular healthy export data was factored into its conclusion.

In a related rating action, Moody's downgraded by five notches to Baa1 from Aa2 the rating of Ireland's National Asset Management Agency (NAMA), whose debt is fully and unconditionally guaranteed by the government of Ireland.

The rating was also placed on review for possible downgrade on Oct 5. The outlook on the NAMA rating is negative, in line with the government bond ratings.

Sozo Global plans RM15m factory for halal products

KUALA LUMPUR: China-based Sozo Global Ltd, which made its debut on the Main Market on Friday, Dec 17, plans to invest RM15 million to set up a halal-food processing factory in Malaysia.

Its chief executive officer and co-founder Shen Hengbao said Sozo ' which manufactures ready-to-serve food -- would hire a team to survey the locations for the Malaysian plant. CONSTRUCTION [] could start by mid-2011 and production a year later.

'We are doing a feasible study on the possible location as it should have easy access to our raw materials and export facilities. We are happy that we have the help of Khazanah Nasional Bhd to help us survey the locations and get the proper halal approvals,' he said after the listing ceremony.

The processing plant would produce canned food and ready-to-serve products for the Malaysia market and also Southeast Asia, the Middle East, Europe and the US.

Out of the RM15 million, RM5 million would come from IPO and RM10 million from internal funds.

Shen said the indicative land size for the plant is 8,000 sq metres and its production capacity would be 20,000 tonnes per year.

Khazanah indirectly holds 10.43% stake in Sozo, via its special-purpose fund Agro Treasures, while 57.09% is held by Hengbao Foodstuffs, which is also the promoter of Sozo Global.

'Since we ventured into ready-to-serve food industry five years ago, we have progressed to be one of the leading foodstuff enterprises, as well as the largest manufacturer of cooked duck meat products for export in Shandong province,' he said.

Sozo's initial public offering (IPO) was oversubscribed 3.3 times, and involves a public issuance of 55.4 million new shares at 80 sen each.

Of the total, 24.5 million shares were for the Malaysian public and 30.9 million were placed out to selected investors. Concurrent with the IPO, another 19.1 million shares were offered for sale.

The listing exercise raised RM44.3 million, of which RM15 million was allocated for a third production plan in Shandong, RM5 million for a modern duck breeding farm and RM5 million to set up a processing facility.

Shares of Sozo opened at 79.5 sen, which was a discount of 0.5 sen from its offer price of 80 sen, when it made its debut on the Main Market. There were 1.77 million shares done.

RHB Research said it derived a fair value of 95 sen a share after applying a FY11 target of 4.0 times PER, which is a 10% discount to the weighted average FY11 target PER of the three listed China based companies on Bursa Malaysia.

'We believe it is more relevant to benchmark Sozo against its China listed peers in the KLSE than the Malaysian peers given the large discount usually applied to China listings in Malaysia, irrespective of its business model,' it said.

OSK Research said it expects the group to register revenue and net profit CAGR of 15% and 15.2% respectively in the next two years, and value Sozo's price to earning at six times multiple.

'We value Sozo at RM1.22 based on six times FY10 earnings per share. We believe the stock's price downside is limited given that 66.5% of the company's shares are under a one-year moratorium,' it said.

China shares end lower, tightening worries linger

SHANGHAI: China's key stock index ended down 0.2 percent, near a one-week low in thin volume on Friday, Dec 17, as investors stayed clear of making big bets during the year-end.

China posted robust economic data for November but inflation jumped to a 28-month high, clearing the way for the authorities to unleash a raft of new tightening measures.

In anticipation of such steps, cautious investors fled large cap issues they consider more vulnerable in a policy tightening environment.

Analysts, mostly bullish on the outlook for the Shanghai market in the medium term, expect strong corporate earnings and reasonable valuations to keep in check lingering worries of monetary tightening measures.

The Shanghai Composite Index finished at 2,893.7 points, and posted a rise of 1.9 percent for the week. ($1 = 6.66 yuan).

In Tokyo, Japan's Nikkei average stayed flat on Friday after gaining around 0.9 percent on the week, as losses in trading companies offset gains in banks spurred by foreign buying and hikes in the real estate sector boosted by the Bank of Japan buying scheme.

After rallying about 12 percent since early November, Tokyo shares ran out of steam and stayed flat most of this week, as investors consolidated postions around new levels and sought incentives to break out of a tight 190-point band.

Volume was solid, with around 2.1 billion shares changing hands on the Tokyo Stock Exchange's first section, keeping above the two billion share mark for the seventh straight session, indicating that as the year-end nears and sentiment remains positive more retail players are stepping into the market.

"Foreign funds not only from Europe but also Asian and American ones are unloading their European positions, and with emerging markets already overbought they are investing in undervalued Japanese stocks," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities. The banking sector, which is down some 3.9 percent in year to date, extended gains in heavy trade with Japan's biggest bank by assets Mitsubishi UFJ Financial Group gaining 1.2 percent and Mizuho Financial Group adding 2 percent.

The sector is considered undervalued as its price-to-book ratio stands at around 0.7, underperforming the average PBR of 1.2 for the Nikkei 225 components. If the PBR is below 1 the shares are considered underweight.

The Nikkei was almost unchanged on Friday. shedding 0.07 percent or 7.46 points to 10,303.83, not far below a seven-month closing high of 10,316.77 hit on Tuesday. The broader Topix index was also almost unchanged, losing 0.1 percent to close at 903.14.

Foreigners keep adding banking shares to their portfolios as the Nikkei is set to post significant gains next year, and without a revival in large market-cap banking shares such a recovery will not be possible, traders said.

"We forecast that the earnings recovery among Japanese exporters will continue, aided by the strength of Asian economies and the improving U.S. economy," Barclays Capital said in its "Japan Top Picks 2011" report released on Friday. "We believe this, combined with the expectation for depreciation of the yen against the dollar, will enable the Nikkei average to test 12,000 at the end of 2011," the report said.

Banks are also considered attractive due to their high dividend yield, now at around 3 percent for the sector, compared with the Nikkei's average of 1.6 percent, according to Thomson Reuters data. The MSCI index for Japanese equities shows that Tokyo stocks are still underperforming on the year, having shed around 0.9 percent, while the same gauge for Asian stocks excluding Japan indicates an 11.8 percent jump.

Many analysts say that because Japanese stocks have been underperforming overseas markets, the Nikkei will likely gain further towards the year-end and may target as high as 10,500. "A trigger for such a move could be a decisive break above the 85 yen per dollar line, that could boost exporter shares," added Tokai Tokyo Securities' Kuramochi.

Real estate-related shares climbed after the Bank of Japan's first purchase on Thursday of real estate investment trusts, part of its asset-buying scheme launched in October that aims to push down risk premium and corporate borrowing costs.

Mitsubishi Estate gained 1 percent. The real estate sector, which has gained 1.7 percent in the year to date, rose 0.7 percent and was one of the best-performing sectors in the market.

Investors have been piling into the J-REIT market with the Tokyo Stock Exchange's REIT index having surged over 16 percent since the BOJ unveiled the asset buying plan in October.

Gains in banking and property shares were offset by major trading houses, which were among the biggest percentage losers on the Nikkei. Japan's second-largest trader Mitsui & Co Ltd shed 2.2 percent and the sector's No.5 Marubeni lost 2.4 percent. - Reuters

MTD Cap advances to fresh highs on toll approval

KUALA LUMPUR: Shares of MTD CAPITAL BHD [], Malaysia's second largest highway operators and owners, saw its shares advance to fresh highs of RM8.83 in late afternoon trade on Friday, Dec 17.

At 3.30pm, it was up 32 sen to RM8.83 with 174,900 shares done.

The FBM KLCI was up 1.26 points to 1,498.78. Turnover was 781.84 million shares valued at RM1.08 billion. There were 343 gainers, 316 losers and 296 stocks unchanged.

On Thursday, MTD Capital said it had obtained the approval from the Philippines Toll Regulatory Board to raise the toll rate on the South Luzon Expressway effective from Jan 1, 2011.

The Edge FinancialDaily had on Dec 1 reported that MTD Capital could rake in at least RM150 million in annual toll revenue if the higher toll rates were implemented in January, 2011.

Santos sells 15% of Gladstone LNG for A$665m

MELBOURNE:'' Santos Ltd says it has sold a 15% stake in Gladstone liquefied natural gas (GLNG) and flagged a A$500 million capital raising.

The gas giant has also signed an off-take agreement with state-run Korea Gas Corp (KOGAS) for 3.5 million tonnes a year, it told the Australian Stock Exchange on Friday, Dec 17.

Under the terms of the new agreements, Santos will sell an aggregate 15% of GLNG to French company Total and KOGAS.

The sale price is a little higher than a 15% stake in GLNG Santos offloaded to Total in September for A$650 million, which was below market expectations.

Santos said it intended to hold a A$500 million equity raising by issuing 39.8 million shares at a placement price of A$12.55 a share.

The fully underwritten institutional placement would be used to complete the funding of its 30% stake in GLNG, Santos said.

KOGAS has expressed its support for the GLNG project, which uses coal steam gas, buying a 7.5% stake from Petroliam Nasional Bhd and also a 7.5% stake from Santos.

Following the deals, Santos will remain the largest partner, with a 30% stake followed by Petronas with 27.5%, Total with 27.5% and KOGAS with 15%.

Santos had previously held 60% of GLNG.'' - Bernama

KLCI struggles to cross 1,500

KUALA LUMPUR: The FBM KLCI stayed in positive territory at the mid-day break on Friday, Dec 17 but struggled to breach the psychologically-crucial 1,500 level, as Asian markets were mixed on the back of tepid investor sentiment.

Several Asian markets advanced as the US economy showed new signs the recovery was gaining traction with data on Thursday that new claims for jobless aid fell last week and factory activity in the Mid-Atlantic region grew at its quickest pace in more than five and a half years this month.

However, key markets including Japan, Hong Kong and China remained in the red as investors have tended to stay on the sidelines or take profit ahead of the year-end holidays.

The FBM KLCI was up 0.11% or 1.64 points to 1,499.16 at the mid-day break, lifted by gains including at Axiata, Gamuda, AMMB, Genting Malaysia and MMC Corp.

Gainers led losers by 361 to 247, while 266 counters traded unchanged. Volume was 583.29 million shares valued at RM743.05 million.

The ringgit strengthened 0.08% to 3.1340 versus the US dollar, crude palm oil for the third month delivery rose RM4 to RM3,587, crude oil added 47 cents per barrel to US$88.17 and gold jumped US$5.07 to US$1,375.35.

At the regional markets, Japan's Nikkei 225 slipped 0.17% to 10,293.45, Hong Kong's Hang Seng Index shed 0.11% to 22,644.21, the Shanghai Composite Index fell 0.34% to 2,888.34 while Taiwan's Taiex gained 0.65% to 8,839.17, South Korea's Kospi was up 0.60% to 2,021.39 and Singapore's Straits Times Index added 0.09% to 3,150.65.

Metrod was the top gainer this morning and was 25 sen to RM3.80; Hap Seng rose 19 sen to RM5.97, Tanjung Offshore gained 13 sen to RM1.60, MTD and KKB Engineering rose 12 sen each to RM8.63 and RM1.99, Unisem gained 11 sen to RM2.16, Gamuda was up 10 sen to RM3.83 and SapuraCrest rose nine sen to RM3.04.

AMMB added seven sen to RM6.71, Genting Malaysia rose five sen to RM3.39 while Axiata and MMC Corporation added three sen each to RM4.64 and RM2.83.

Glove makers extended their losses this morning, with Supermax down 14 sen to RM4.19, Top Glove down 13 sen to RM4.99, Kossan fell five sen to RM3.18, Latexx lost two sen to RM2.52 while Hartalega and Rubberex lost one sen each to RM4.95 and 83 sen.

Other decliners included Glenealy, BAT, Tahps and Digi.

Sozo Global, which made its debut on the Main Market today, was the most actively traded counter with 36.3 million shares done. The stock advanced 1.5 sen to 81.5 sen.

Scomi Marine, which proposed to dispose four of its marine logistics companies to its 80.54%-owned subsidiary PT Rig Tenders Indonesia Tbk for RM538.3 million, gained 4.5 sen to 58.5 sen.

MAA Holdings rose 7.5 sen to 70 sen after it received Bank Negara's approval to enter into talks to dispose its stake in its insurance business.

US semicon equipment industry Nov book-to-bill lowest since June '09

KUALA LUMPUR: The North America-based manufacturers of semiconductor equipment posted US$1.51 billion in orders in November 2010 (three-month average basis) and a book-to-bill ratio of 0.96.

The book-to-bill ratio of 0.96, means that US$96 worth of orders were received for every US$100 of product billed for the month, was the lowest since June 2009's ratio of 0.80.

The three-month average of worldwide bookings in November 2010 was US$1.51 billion. The bookings figure is 5.3% lower than the final October 2010 level of US$1.59 billion, and is 90.6% above the US$791.8 million in orders posted in November 2009.

The three-month average of worldwide billings in November 2010 was US$1.57 billion. The billings figure is down 3.4% from the final October 2010 level of US$1.62 billion, and is 110.7% above the November 2009 billings level of US$744.2 million.

The president and CEO of SEMI Stanley T. Myers said following a historic growth period and 18 months of sequential growth, and in accordance with seasonal trends, sales of semiconductor equipment eased in November.

"This tracks the bookings trend which peaked in July,' he said.

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers.

FBM KLCI rebounds but stays shy of 1,500-point mark

KUALA LUMPUR: Key regional markets remained mixed in early trade on Friday, Dec 17, while FBM KLCI clawed back into positive territory at mid-morning, lifted by gains at key blue chips including Genting, Maybank, Tenaga and Gamuda.

Several Asian markets advanced as the US economy showed new signs the recovery was gaining traction with data on Thursday that new claims for jobless aid fell last week and factory activity in the Mid-Atlantic region grew at its quickest pace in more than five and a half years this month, according to Reuters.

A'' US$858 billion tax cut package brokered between President Barack Obama and Republicans cleared a key test vote in the US House of Representatives on Thursday, after hours of delays, it said.

On Bursa Malaysia, the FBM KLCI rose 1.56 points to 1,499.08. Gainers led losers by 249 to 132, while 199 counters traded unchanged. Volume was 217.62 million shares valued at RM218.99 million.

At the regional markets, the South Korean Kospi added 0.61% to 2,021.59, Taiwan's Taiex rose 0.52% to 8,827/49, Singapore's Straits Times Index was up 0.25% to 3,155.56 while the Hong Kong Hang Seng Index was little changed at 22,662.86.

Meanwhile, the Shanghai Composite Index fell 0.235 to 2,891.57 and Japan's Nikkei 225 shed 0.10% to 10,300.86.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note Dec 17 said that despite the marginally firmer US markets last night, the FBM KLCI could be in a range trading mode, with initial nibbling activities that may fizzle out in the later part of the day on pre-weekend profit-taking.

He said the FBM KLCI created a new all-time peak at 1,531.99 on Nov 10, and a temporary correction low had been formed at 1,474.02 on Nov 29.

'The FBM KLCI remains trapped between the low of 1,474 and the high of 1,531 for now, with some further downside potential as we broke below the interim 1,504-support level,' he said.

Among the major gainers in early trade, Genting was up six sen to RM10.62, Genting Malaysia rose five sen to RM3.39, Maybank, Tenaga and Gamuda added two sen each to RM8.53, RM8.29 and RM3.75 respectively, while MMC Corp gained four sen to RM2.84.

MTD Capital jumped 10 sen to RM8.61 on getting the nod to raise toll rates on the South Luzon Expressway in the Philippines, while MAA Holdings' shares advanced eight sen to 70.5 sen on getting Bank Negara's approval to proceed with talks to dispose its stake in its insurance unit.

Sozo Global made a lackluster debut on the Main Market of Bursa Malaysia and was down 1.5 sen to 78.5 sen with 15.75 million shares done.

Among the actively traded stocks at mid-morning were MAA Holdings, KUB, Pentamaster, SAAG and Scomi Marine, which advanced three sen to 57 sen after its proposed to dispose four of its marine logistics companies to its 80.54%-owned subsidiary PT Rig Tenders Indonesia Tbk for RM538.3 million.

Decliners included AMMB, Berjaya Sports Toto, Boustead, Mentiga, Quality Concrete and Turiya.

AmResearch reaffirms Buy on AirAsia, unch FV RM3.10

KUALA LUMPUR: AmResearch has re-affirmed its BUY rating on AIRASIA BHD [] with an unchanged fair value of RM3.10 a share.

'Our valuation continues to peg AirAsia at 11x FY11F EPS of 28 sen a share,' it said on Friday, Dec 17.

AirAsia announced last night that it had entered into an agreement with thre local individuals to set up a low cost carrier (LCC) in the Philippines, under the JV named AirAsia Inc.

'AirAsia is the cheapest LCC trading at a 25% discount to peers' average of 12 times and a 35% discount to historical average of 14 times. We see a potentially strong basis for a share price re-rating on the stock over the next 12 months,' AmResearch said.

Sozo opens at 79.5 sen amid cautious market

KUALA LUMPUR: Shares of Sozo Global Ltd opened at 79.5 sen on Friday, Dec 17, which was a discount of 0.5 sen from its offer price of 80 sen, when it made its debut on the Main Market.

Sozo, a China-based company, manufactures ready-to-serve food, saw 2.34 million shares done.

The FBM KLCI opened down 0.25 of a point to 1,497.27. Turnover was 14.06 million shares valued at RM8.93 million. Gainers led decliners 65 to 19 while 91 stocks were unchanged.

However, analysts viewed there was more upside for the company with RHB Research Institute according a fair value of 95 sen.

RHB Research said it derived a fair value of 95 sen a share after applying a FY11 target of 4.0 times PER, which is a 10% discount to the weighted average FY11 target PER of the three listed China based companies on Bursa Malaysia.

'We believe it is more relevant to benchmark Sozo against its China listed peers in the KLSE than the Malaysian peers given the large discount usually applied to China listings in Malaysia, irrespective of its business model,' it said.

Scomi Marine to dispose of 4 companies to PT. Rig Tenders Indonesia for RM538.3m

KUALA LUMPUR: SCOMI MARINE BHD []'s unit has proposed to dispose of four marine logistics companies to its subsidiary PT. Rig Tenders Indonesia Tbk (PTRT) for 323.1 billion rupiah (RM538.3 million) in a group-related corporate exercise.

Under the corporate exercise announced on Friday, Dec 17, Scomi Marine's unit Scomi Marine Services Pte Ltd would dispose of four companies to PTRT. PTRT is a 80.54%-owned subsidiary of Scomi Marine Services.

The four companies which it was disposing of its entire equity interest were CH Logistics Pte Ltd, CH Ship Management Pte Ltd, Grundtvig Marine Pte Ltd and Goldship Private Ltd to PTRT. The marine logistics companies own and operate 51 vessels, comprising 27 tugs and 24 flat top barges.

Under the exercise, PTRT proposes to undertake a renounceable rights issue to partly fund the Disposal Consideration whereby Scomi Marine Services will undertake to renounce all of its entitlement to Portside Offshore Inc. and PT Revessel Indonesia.

'The business environment for the marine logistics and offshore support vessel businesses in Indonesia is increasingly challenging in light of changes to local regulations relating to ownership, intensifying competition and pressures on charter rates.

'In addition, significant capital expenditure outlay is expected to be incurred to replace vessels and to invest in new business opportunities,' said Scomi Marine.

Scomi Marine said a strategic investor is essential in growing the businesses, both from a financial and operational perspective.

Scomi Marine said given the specialised nature of the businesses and the unique ownership criteria required, the Board feels that Portside and PT Revessel Indonesia would be in a better position to expand the business activities of the enlarged PTRT.

It added that it would continue to participate in the businesses' upside potential through its equity interest in PTRT upon completion of the proposals.

MAAH surges in active trade on stake sale plan

KUALA LUMPUR: Shares of MAA HOLDINGS BHD [] (MAAH) surged in active trade on Friday, Dec 17 following the central bank's approval for it to go ahead with talks to dispose of its stake in its insurance unit.

At 9.42am, MAAH was up nine sen to 71.5 sen with 7.31 million shares done.

The FBM KLCI rose 1.14 points to 1,498.66. Turnover was 162.46 million shares done valued at RM144.95 million. There were 226 gainers, 111 losers and 162 stocks unchanged.

MAAH said on Thursday it had received Bank Negara's approval for it to hold early talks with Zurich Insurance Company over possible sale of stake in its unit Malaysian Assurance Alliance Bhd (MAA).

Market gains on FedEx outlook, tech strength

NEW YORK: Stocks, bucking a trend of late-day selloffs, ended higher on Thursday, Dec 16 as economic bellwether FedEx offered a bullish profit outlook that augured well for broad growth.

Stocks that performed well in 2010 were among Thursday's biggest gainers as investors sought to boost returns by the year's end. Advancing stocks outnumbered decliners by more than two to one on both the New York Stock Exchange and Nasdaq.

Package shipper FedEx Corp (FDX.N) raised its full-year outlook, though its quarterly profit and revenue missed expectations. Shares rose 2 percent to $94.22 while larger rival United Parcel Services (UPS.N) gained 2.1 percent to $73.76 and the Dow Jones Transportation Average .DJT gained 1.3 percent.

"The fact that FedEx missed its earnings is overshadowed by its very strong outlook, which is a good indicator that we're looking for good economic times ahead," said Kimberly Foss, president at the Sacramento, California-based Empyrion Wealth Management, which has more than $200 million in assets under management.

Visa Inc (V.N) and MasterCard Inc (MA.N) tumbled on heavy volume after the Federal Reserve issued a proposal that would force banks and card networks to slash the fees they charge retailers on debit cards. Visa sank 13 percent to $67.19 while MasterCard slumped 10 percent to $223.49.

The Dow Jones industrial average .DJI was up 41.78 points, or 0.36 percent, at 11,499.25. The Standard & Poor's 500 Index .SPX was up 7.64 points, or 0.62 percent, at 1,242.87. The Nasdaq Composite Index .IXIC was up 20.09 points, or 0.77 percent, at 2,637.31.

Stocks gained momentum after a slow start to the day, with big gainers for the year boosting the Nasdaq.

Intuit Inc (INTU.O), known for its tax-filing software, gained 3 percent to $49.35 after rising about 60 percent for the year.

Some shares raised hopes consumers will be less frugal over the holiday shopping season. Amazon.com Inc (AMZN.O) rose 1.4 percent to $178.10 and its stock was up 32 percent for the year.

After the closing bell, Oracle Corp (ORCL.O) reported a surge in new software sales in its second quarter, lifting its shares 3.2 percent to $31.24.

Starbucks Corp (SBUX.O) rose 2.3 percent to $32.59 after Goldman Sachs gave the coffee chain a "conviction buy" rating with a $44 price target.

Economic data added to the positive mood. Factory activity in the U.S. mid-Atlantic region unexpectedly rose in December, while jobless claims dipped for a second week. November housing starts rose, but permits for future home CONSTRUCTION [] dropped to a 1-1/2 year low.

U.S.-listed shares of Research in Motion (RIM.TO)(RIMM.O) rose 1.8 percent to $60.28 after it reported its third-quarter results after the close.

"While we expect the market to continue growing, the slower growth we expect is going to be good for those companies that execute well, but challenging for the ones that have been struggling," said Alan Gayle, senior investment strategist at RidgeWorth Investments in Richmond, Virginia.- Reuters

#Flash* Obama $858 bln tax bill clears test vote in House

WASHINGTON: An $858 billion tax cut package brokered between President Barack Obama and Republicans cleared a key test vote in the U.S. House of Representatives on Thursday, Dec 16 after hours of delays.

By a vote of 214-to-201, the measure won the majority needed to clear a procedural hurdle needed for passage. The legislation would extend for two years the Bush-era tax cuts that are due to expire on Jan. 1.

The Senate overwhelmingly approved the bill on Wednesday. A vote on a Democratic bid to alter the measure by boosting the estate tax, and a vote on final passage, are expected within hours. - Reuters

China faces exchange rate dilemma - c.bank chief

SHANGHAI: China faces a dilemma in managing its currency, since appreciation would benefit importers but anger exporters, central bank chief Zhou Xiaochuan said in comments reported on Friday, Dec 17.

As with all policy decisions, including whether to raise interest rates, the trick for the People's Bank of China was to try to strike a balance between competing interests, he was cited as saying by the Shanghai Securities News, an official newspaper.

"Most central banks face a dilemma in their monetary policy, hoping to use limited tools to satisfy all of the demands from groups with different interests," Zhou was quoted as saying.

"Take the exchange rate. When the exchange rate rises, exporters will perhaps complain. Importers might say it is good. They will be able to sell things for a bit less and so expand their market. There will always be a trade-off," he said.

Zhou gave no indication of what the balance might be on currency policy, though recent history points to a gradual rise in the yuan against the dollar as a middle course.

Since ending a de facto peg in June, the central bank has let the yuan climb just 2.4 percent against the dollar. Investors expect the pace to be even slower next year, with offshore forwards pricing in just 2.2 percent appreciation over the next 12 months.

The central bank is believed to be a relatively strong roponent of yuan appreciation in Chinese policy making circles, while the Commerce Ministry is seen as a major opponent because of its focus on supporting exporters. - Reuters

OSK Research upgrades MMC to Buy, TP RM3.41

KUALA LUMPUR: OSK Research said MMC Corp Bhd's share price rallied after its downgrade in September but subsequently gave back all its gains as its proposal to take over UEM did not materialise.

It said on Friday, Dec 17 that during its visit to the company's Electrified Double Track Rail Project last month, it learnt of the importance of its role in infrastructure development in Malaysia and the possibility of it securing more such projects such as the KL MRT in the coming months.

'Being a good election play and with its share price having retraced to below the level at which we downgraded the stock, we upgrade MMC back to a Buy, with a slightly higher target price of RM3.14,' it said.

HDBSVR: KLCI may cross 1,500

KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) said the benchmark FBM KLCI may bounce up from its immediate support level of 1,495 and cross the psychological mark of 1,500 ahead on Friday, Dec 17.

It said Wall Street was up overnight as major US equity indices rose between 0.4% and 0.8% at the closing bell on Thursday, lifted by an unexpected drop in jobless claims and an increase in housing starts last month.

'Riding on an anticipated market rebound are counters such as: (a) MTD Capital after getting an approval to raise toll rates for its expressway in Philippines; and (b) Hexagon after securing a contract worth RM24 million involving the supply, delivery and installation of signage to an African-based energy company,' it said.

HDBSVR said in addition, China-based gourmet convenient food specialist Sozo Global will be listed today while CONSTRUCTION [] heavyweight Gamuda will release its latest quarterly financial results Friday evening.

Loh & Loh JV seals RM828.3m contract for hydro project

KUALA LUMPUR: TENAGA NASIONAL BHD [] has signed three agreement for the Hulu Terengganu hydroelectric project, of which the main civil works will be undertaken by'' Loh & Loh CONSTRUCTION [] Sdn Bhd and Sinohydro Corp Ltd JV.

Tenaga said on Thursday, Dec 16, the JV would be responsible for the main civil works including building two dams, a water transfer tunnel and an underground power house for RM828.3 million.

The power giant said the second agreement was with the consortium of Alstom Projects India Ltd and Alstom Hydro Malaysia Sdn Bhd for an accepted contract price of 27.5 million euros and RM127.6 million.

The contract involves the design, manufacture, erection, testing and commissioning of two generating plant, each with a generating capacity of 125MW.

The third agreement was with SNC-Lavalin Inc, SNC-Lavalin Power (Malaysia) Sdn Bhd, KTA Tenaga Sdn Bhd and G & P Professionals Sdn Bhd.

This JV will provide detailed engineering design for the main civil works, engineering design review for the electrical and mechanical works, project management and site supervision. The accepted contract price is C$17.3 million and RM35.9 million.

To recap, the'' entire project will involve building two dams and the installation of two hydro turbines and generators in an underground power station with a total installed capacity of 250MW.

The project will be at the upper reaches of Sg. Terengganu upstream of Kenyir Lake. The project is expected to be completed and the station operational by October 2015.

Bursa Malaysia serves court order on Golden Plus to appoint PWC special auditor

KUALA LUMPUR: Bursa Malaysia Securities Bhd has served a court order on GOLDEN PLUS HOLDINGS BHD [] (GPlus), directing it to appoint a special auditor to review the group's affairs from January 2006 to May 2010.

Bursa Securities said on Thursday, Dec 16 it had served a sealed court order granted by the High Court of Kuala Lumpur directing GPlus to appoint PriceWaterhouseCoopers Advisory Services Sdn Bhd (PWC) as the special auditor.

'The special auditor will undertake to review the affairs of GPlus and its subsidiary companies (GPlus Group) for the period from January 2006 to May 2010,' it said.

The tasks ahead for PWC would be to review movements of cash, assets and liabilities and significant/unusual/abnormal transactions (if any) of the GPlus Group, including intercompany transactions, relationships between parties involved in the intercompany transactions and in the event of any contravention of the Listing Requirements, to render suggestions on the potential avenue of recovery that may be available.

Bursa Securities said PWC would also have to ascertain the nature and extent of China Idea Development Ltd's involvement in the business of the GPlud Group in China.

The order which was obtained on Nov 29, 2010 required GPlus to comply with the directive within three days of service of the sealed court order.

'The directors of GPlus may be in contempt of the court order and liable to committal proceedings if GPlus fails to comply with the court order,' Bursa Securities said.

FBM KLCI remains below 1,500 at close

KUALA LUMPUR: The FBM KLCI closed below the psychologically-crucial 1,500-level on Thursday, Dec 16, weighed down by key blue chips including CIMB, Genting, Axiata, Tenaga and Maybank as profit taking set in following the tepid investor sentiment at regional markets.

Glove makers fell, led by Top Glove after several research houses lowered their target price for stock on account of its disappointing first quarter results.

The FBM KLCI fell 0.77% or 11.58 points to 1,497.52 at the close, the most it had fallen since Dec 10. Losers led gainers by 473 to 256, while 296 counters traded unchanged. Volume was 1.28 billion shares valued at RM1.82 billion.

Hong Kong's Hang Seng slumped 1.33% to 22,668.78, the Shanghai Composite Index fell 0.46% to 2,898.14, the South Korean Kospi down 0.41% to 2,009.24 while Japan's Nikkei 225 and the Singapore Straits Times Index edged up 0.01% each to 10,311.29 and 3,147.67, and Taiwan's Taiex added 0.29% to 8,782.20.

At Bursa Malaysia, BAT was the top loser, down 98 sen to RM45, KLK 30 sen to RM21.06 and Bursa 24 sen to RM7.71.

Batu Kawan, Petronas Dagangan and Genting fell 20 sen each to RM16.80, RM11.80, RM10.56 respectively. CIMB declined 18 sen, Tenaga 12 sen to RM8.27, Axiata seven sen to RM4.61 and Maybank'' four sen to RM8.51.

Among glove makers, Top Glove fell 33 sen to RM5.12, Kossan lost 13 sen to RM3.23, Supermax down eight sen to RM4.33, Latexx fell five sen to RM2.54 and Careplus shed 1.5 sen to 38.5 sen.

Gainers today included MTD Capital that rose 51 sen to a record high of RM8.51; other gainers included Hap Seng, Far East Corp, Guan Chong, KFCH, Petronas Gas, Petra Energy and Kencana.

The actives included KNM shares and warrants, SAAG, KUB, Karambunai, Olympia, Compugates, Petronas Chemicals and Kencana.

AirAsia in Philippines JV for low-cost airline ops

KUALA LUMPUR: AIRASIA BHD [] is stepping its presence in the Philippines, this time via the setting of a joint venture with several Filipino parties to establish a low cost airline there.

AirAsia said on Thursday, Dec 16, the company to be incorporated for the joint venture is named AirAsia Inc.

Its unit AA International Ltd had on Thursday sealed a shareholders agreement with Antonio O. Cojuangco Jr., Michael R Romero and Marianne B. Hontiveros to set up the JV based on the successful AirAsia business model.

AirAsia said the JV will leverage on AirAsia's strength to forge into markets in China (with Macau and Hong Kong), Taiwan, Korea, Japan as well as Singapore.

'These sectors will enhance AirAsia's ASEAN regional expansion by providing AirAsia with additional routes and destinations and linking the destinations with AirAsia's already comprehensive route network.

'The feasibility study forecasts that the JV will be operationally feasible and financially viable, and is expected to contribute positively to AirAsia's financials both directly and indirectly in the future,' it said.

MAA Holdings plans early talks with Zurich over Malaysian Assurance Alliance stake sale

KUALA LUMPUR: MAA HOLDINGS BHD [] (MAAH) has received Bank Negara Malaysia's approval for it to hold early talks with Zurich Insurance Company over possible sale of stake in its unit Malaysian Assurance Alliance Bhd (MAA).

MAAH said on Thursday, Dec 16 it had entered into an agreement with Zurih, following which the parties 'will evaluate and negotiate a possible transaction involving the acquisition of an interest' in the insurer.

'The agreement is not subject to approval of the shareholders of MAAH. BNM has no objection in principle for both parties to commence preliminary negotiation,' it said.

In a separate statement, MAAH said it had called off discussions with AmG Insurance Bhd over the proposed disposal of Malaysian Assurance Alliance of its general insurance business to AmG for an indicative disposal consideration of up to RM180 million.

'The company wishes to announce that MAAH/Malaysian Assurance Alliance MAA and AmG have mutually agreed to discontinue discussions on the proposed disposal,' said MAAH.

MTD Capital surges to record high of RM8.50

KUALA LUMPUR: Shares of MTD CAPITAL BHD [] rose to a fresh all-time high of RM8.50 on Thursday, Dec 16 as it stands to gain RM150m annually from a proposed Philippine toll hike in South Luzon Expressway.

At 3.52pm, it was up 50 sen to RM8.50 with 205,400 shares done. The year low was RM2.75 on Jan 21.

However, the FBM KLCI was down 10 points to 1,499.10. Turnover was 966.70 million shares valued at RM1.19 billion. Losers beat gainers 487 to 218 while 258 stocks were unchanged.

The Edge FinancialDaily reported on Dec 1 that MTD Capital, Malaysia's second largest highway operator and owner, could rake in at least some RM150 million in annual toll revenue from the South Luzon Expressway (SLEX) in the Philippines next year if higher toll rates there are implemented in January 2011.

The Philippines' business paper BusinessWorld, quoting Julius G Corpuz, an official with the Philippines Toll Regulatory Board (TRB), reported that the implementation of higher toll rates could happen in the first week of January next year.

China regulator tells banks to lend as normal

BEIJING: Chinese banks should ensure that the normal demand for loans is satisfied this month, the banking regulator said on Thursday, Dec 16, signalling that the government wants to avoid an over-tightening of credit.

In a statement, the China Banking Regulatory Commission said it was responding to media reports that it was strictly controlling the issuance of loans in December after banks nearly exhausted their full-year lending target.

"The commission has recently urged banks to strengthen management of credit risks, while ensuring that the normal demand for loans by individuals and enterprises can be satisfied," the CBRC said in a text message sent to reporters.

Bank loans were especially important for on-going projects to ensure that they have an uninterrupted cash flow, it said.

The commission added that it had already achieved results in controlling the pace of lending this year.

Chinese banks had nearly hit the government's full-year lending target of 7.5 trillion yuan by the end of November, prompting questions about whether the regulator would try to slow their issuance of loans in the final month of the year.

Control of credit issuance is one of the most important monetary policy tools in China and many in the market had thought that Beijing might crack down harder on lending as a way of tamping down on inflationary pressures.

Chinese consumer price inflation rose 5.1 percent in the year to November, a 28-month high, and the government has vowed to give greater prominence to the stabilisation of prices in its policy efforts. - Reuters

Chongqing Rural falls on HK debut, hit by sector worries

HONG KONG: Shares of Chongqing Rural Commercial Bank Co Ltd fizzled on their trading debut on Thursday, Dec 16 after a $1.5 billion IPO, reflecting investor caution over the health of smaller Chinese lenders.

The debut marks the beginning of an expected steady stream of similar listings by rural and commercial banks in Shanghai and Hong Kong, as they look to the markets to bolster their balance sheets and raise capital for expansion.

The regional banks offer investors a window to the untapped potential of China's inland areas. But their close links to debt-laden local governments also make them a riskier bet compared with larger national banks that Beijing considers too big to fail.

"Investors in Hong Kong are generally still keen on investing in Chinese banks, but it really depends on government policy and how much lending will be controlled, which is not clear now," said Harris Fraser fund manager Andy Lan, who manages about HK$100 million. The fund does not hold shares in Chongqing Rural.

By 0400 GMT, shares of China's first rural lender to go public were down 2.5 percent at HK$5.12 from its offer price of HK$5.25, after rising to as much as HK$5.49 in early trade. The benchmark Hang Seng Index was down 0.3 percent.

Chongqing Rural's IPO provided investors, keen to buy into China's banking sector, with a new proposition following the listings of all the nation's major lenders in recent years.

Chongqing Rural's IPO is the world's third-largest bank public offering this year after Agricultural Bank of China's $22 billion offering and China Everbright's $3.2 billion, according to Thomson Reuters data.

Hong Kong has been a hotbed for IPOs this year, with about $50 billion raised through IPOs. The bourse accounts for about a fifth of global IPOs this year.

Chongqing Rural's shares began trading to a round of applause from a crowd gathered for the debut at the Hong Kong stock exchange. The ceremony was attended by executives dressed in suits and ties, in contrast to their more rural roots in China's interior.

Linus Yip, chief strategist at First Shanghai Securities, said the bank should be valued comparably with top Chinese lender AgBank , which also focuses on rural areas and went public this year in a then-record $22.1 billion IPO.

AgBank's Hong Kong-listed shares have risen more than 40 percent from their IPO price since their debut in July.

"It is an interesting issue to many investment funds as they look for absolute returns," Yip said. "The theme itself is promising because of the strong growth prospects in rural areas."

Chongqing Rural, which has attracted investors such as the life insurance unit of Taiwan's Fubon Financial Holding Co Ltd and Abu Dhabi-backed Nexus Capital Investing, priced its offering to sell about 2 billion shares in the middle of an indicative range. [ID:nTOE6B802E]

Morgan Stanley and Nomura Holdings Inc were joint global coordinators and joint bookrunners for the IPO.

''

MORE COMING, BUT SLOWLY

Like its larger national peers, an extraordinary one-off clean-up of its books helped prepare Chongqing Rural for its offering, having cleaned up its non-performing loan portfolio from more than 12 percent in 2007 to below 3 percent in June this year.

More similar offerings are likely to follow, but are likely to come at a measured pace as China's banking regulator seeks to control the volume of new listings, said a banker who worked on the Chongqing Rural deal.

"We don't expect a wave of rural banks going public next year, maybe a few symbolic ones," said the banker, who declined to be named as she was not authorised to speak to the media.

Chongqing Rural's net profit this year is expected to rise at least 51 percent to 2.85 billion yuan ($428 million), and it boasts a healthy net income margin of about 3 percent, ahead of the major domestic banks. However, it has a non-performing loan (NPL) ratio of about 3 percent, far higher than the bigger names. (US$1=HK$7.75) - Reuters

Top Glove slips after weak 1Q results

KUALA LUMPUR: Shares of Top Glove Bhd fell on Thursday, Dec 16 after it reported a set of disappointing financial results while the fair value for the stock was lowered.

At 3pm, Top Glove had fallen 17 sen to RM5.28. The FBM KLCI lost 11.31 points to 1,497.8.

AmResearch trimmed the fair value to RM4.70 from RM5.40 on the weak results.

'We maintain our HOLD rating on Top Glove, but have trimmed our fair value to RM4.70/share from RM5.40/share previously. Our target PE of 13x CY11F earnings is unchanged, but we have cut our FY11F and FY12F earnings forecasts by -25% and -24%, respectively, to reflect the weaker-than-expected 1QFY11 performance, which missed both our expectations and street estimates.