RAM Ratings: 2010 GDP performance sets strong momentum for a robust 2011

By RAM Rating Services on the FY2010 economy

KUALA LUMPUR: Malaysia's economy performed slightly better than market consensus growing at 7.2% in 2010, albeit slightly lower than RAM's projected growth forecast of 7.4% as per our mid-year review last August, said RAM Rating Services on Friday, Feb 18.

Given the marked improvement in economic growth in the first half of the year, domestic demand was clearly the chief momentum driver for the recovery.

As such, it is no surprise that private consumption and overall investment activities recorded robust year-on-year growth rates of 6.6% and 9.4%, respectively.

Exports improved vastly in 2010, chalking up a 9.8% growth after the significant 10.1% contraction amid the global financial crisis.

Domestic demand to lead growth in 2011

Moving forward, the country is anticipated to register a robust GDP growth of 5.6% in 2011, with domestic demand once again acting as the back-bone for momentum.

Both consumption and investment activities are envisaged to remain resilient, underpinned by stable employment and more robust investment activities arising from the implementation of the much-awaited first phase of projects under the Economic Transformation Programme (ETP).

The strategic reform initiatives underlined in the New Economic Model towards achieving the nation's high-income aspirations will also be integral to stimulating further growth in domestic demand.

Moreover, the proposed measures for a more competitive economic environment will help industry players become more dynamic and responsive to the demands of the global marketplace.

Against this backdrop, overall consumption is expected to maintain a healthy growth of 8.0% this year (2010: 5.3%).

Encouraging labour patterns have undoubtedly played a part in sustaining a resilient level of consumer spending while contributing to the strong expansion of the services sector.

The trends in consumer credit and purchases of durable goods underline consumers' robust and sustained consumption behaviour.'' The positive wealth effects from lofty commodity prices also lending additional support.

Meanwhile, the pace of investments, which has historically been rather volatile, is anticipated to be boosted by the earmarked ETP projects. It is therefore envisaged to keep trending upwards, with a projected growth of 10.7% in 2011 (2010: 9.4%).

Notably, private investment activities should advance 15.1% this year, spurred by more upbeat business sentiment.

External demand to moderate amid phasing out of low-base effects and industrialised economies' moderate growth

Malaysia's export performance surged in 2010, fuelled by the substantial low-base effects at play and also the genuine improvement in external economic conditions.

Although these initial factors were instrumental in the rebound, they are not expected to continue through 2011 and 2012.

While the performance of crisis-hit economies has indeed been revitalised (especially in the latter half of 2010), their persistently high unemployment levels have cast doubts on whether the recovery is sustainable.

This is exacerbated by the limited scope of further fiscal injection and skepticism over the continued use of accommodative monetary policies.

Our projections for external demand components are based on the expectation that the growth performance of industrialised economies will remain status quo, with some upside potential.

Given that growth rates are hovering around 3% for the United States and 2% for the Euro region, exports to these markets are likely to be maintained. Nonetheless, much of domestic export growth will be driven by Asian demand.

The Euro zone, in particular, will continue facing a trade-off in terms of growth (and employment) as it strives to address macroeconomic imbalances within its various economies. All said, the European Union is expected to lean towards policy initiatives that favour economic stability for the region as a whole.

Elsewhere, exports to South-East Asia and the Newly Industrialised Economies will still be healthy, on the back of steady economic growth in the coming year that will contribute to stable external demand. In this scenario, we expect exports to increase 7.2% in 2011, with a corresponding 8.2% rise in imports.

Export-driven sectors to chart slower growth; domestic-oriented sectors to gain from ETP spillovers

The manufacturing sector is expected to maintain a healthy expansion of 6.1% this year. As export growth moderates against maturing global inventory cycles, this sector's performance will become more in line with its historical trend as base effects wear off in 2011.

Domestic-driven sectors will out-perform the export-oriented ones, benefiting in particular from the implementation of ETP projects (i.e. CONSTRUCTION []) while also enjoying positive spillovers from the more conducive economic environment (especially the services sector).

We envision yet another year of domestic-driven growth and capacity-building, in line with the Government's target for Malaysia to become a high-income nation by 2020.

Notably, the construction sector is expected to receive the most direct benefits from the rollout of the ETP projects, amid the implementation of larger-scale jobs in the coming year.

However, the build-up of residential and commercial property is expected to moderate somewhat in 2011, as credit tightening will help alleviate upward price pressures while increased commercial activity will absorb the perceived overhang in office space.

We anticipate the construction sector to perform slightly better in 2011 registering growth of 5.3%.

The services sector, meanwhile, is expected to record another year of strong growth in 2011 (+6.8%), attributable to the continued uptrend in consumer and business spending as economic prospects improve.

Domestic consumer-based services such as wholesale and retail, restaurants and hotels, and real estate are expected to benefit the most from this sector's sustained progress.

The further liberalisation of the services sector should also bode well for maintaining this resilient level of growth into the medium term.

Revived mining sector, but agriculture to face headwinds

Mining output was only lifted marginally last year, after having emerged from 2 consecutive years of decline.

We anticipate this sector to keep improving in the year ahead, with 1.0% growth. Oil and gas activities are expected to accelerate in light of strengthening global demand and the development of new marginal oilfields.

The quarrying sub-sector is also envisaged to heighten its contributions to sector growth towards the end of the year.

On a separate note, output from the agriculture sector is expected to rise 2.7% in 2011, on the back of more robust demand for raw materials and resource-based manufactures.

The prices of commodities and resources have been going up since the later part of 2010; we expect pricing pressures to persist in 1H 2011 due to heightened global liquidity and supply constraints.

Still key risks and challenges remain

The resilience of our recovery momentum will remain a chief concern vis-a-vis Malaysia's economic performance in 2011, along with the effective implementation of policies and projects related to the New Economic Model.

Monetary and financial considerations will also be critical to the sustainability of growth in the short term. In particular, strong inflationary pressures driven by high commodity prices, bringing about further fiscal consolidation in the coming year, and greater domestic demand will inevitably exert upward pressure on prices - supporting our forecast of 3% for inflation.

At the same time, capital is expected to continue flowing to emerging economies as positive interest-rate differentials remain and macroeconomic prospects stay more favourable in the East.

With such dynamics in play, risks prevail in both the magnitude and volatility of these financial flows.

One consideration in particular relates to volumes of capital flows becoming erratic due to changing investor sentiments and herding behaviour, which may derail stable growth. Another point of note is where these large capital inflows are headed within the beneficiary economy.

There is a need for liquidity to be channelled to productive use, as opposed to non-productive assets - to prevent asset price bubbles that may threaten overall economic resilience. Under the circumstances, we expect the overnight policy rate to reach 3.25%-3.50% this year.

''

#Stocks to watch:* AMMB, Tasek, Mudajaya, Hap Seng

KUALA LUMPUR:'' Investors will have to brace for the flurry of corporate results flowing from Monday, Feb 21 including those from the Genting group, SIME DARBY BHD [], AIRASIA BHD [], MALAYSIAN AIRLINE SYSTEM BHD [] (MAS), MALAYAN BANKING BHD [] and CIMB Group Holdings Bhd.

Other companies due to announce their results include KUALA LUMPUR KEPONG BHD [], IJM Corp Bhd and GAMUDA BHD [].

Most importantly, investors want to know what is the outlook for the companies, especially those with international operations, in the face of volatile external environment and record high oil prices.

On Friday, Bank Negara announced the Malaysian economy grew at a slower pace of 4.8% in the fourth quarter of 2010 compared with 5.3% in the third quarter due to the weaker growth in external demand which impacted the manufacturing sector.

It said 4Q growth was still underpinned by higher private and public sector spending, but the central bank expects the pace of growth to be affected by moderating external demand. Manufacturing grew at a slower pace due to slower external demand while the agriculture sector registered a decline, mainly due to the decrease in palm oil output.

'The pace of growth of the Malaysian economy will be affected by the environment of moderating external demand. Growth will, nevertheless, be supported by continued firm expansion in domestic demand.

'Private consumption spending will continue to benefit from the favourable labour market conditions, firm commodity prices and access to financing. The roll-out of CONSTRUCTION [] and infrastructure activities and the implementation of the economic transformation programme by the government are likely to provide significant support to the growth momentum in private investment,' it said.

MIDF Research head Zulkifli Hamzah said the Malaysian market was still reeling from a selldown by foreign investors. Preliminary data from Bursa shows that foreign investors were still net sellers this week.

'Last week, they sold in terms of gross value, RM4.3 billion of Malaysia equity. This week, we estimate a gross outflow of about RM2 billion,' he told theedgemalaysia.com.

'We do not expect the GDP numbers to have a crushing impact on the market when it opens on Monday. Investors are likely to be more apprehensive over the slew of corporate results due to be unveiled next week,' said Zulkifli.

Stocks to watch with fresh corporate developments include AMMB HOLDINGS BHD [], Tasek Corp Bhd, MUDAJAYA GROUP BHD [] and HAP SENG CONSOLIDATED BHD [].

AMMB's net profit for the third quarter ended Dec 31, 2010 rose 21.2% to RM325.31 million from RM268.47 million a year ago.'' The higher net profit was mainly due impairment writeback on financial investment and doubtful sundry receivables of RM38.3 million and RM2.3 million respectively as compared to impairment loss of RM19.2 million and RM4.0 million for previous corresponding quarter.

Revenue rose to RM1.82 billion from RM1.71 billion in 2009. Earnings per share was 10.83 sen while net assets per share was RM3.31.

For the nine months ended Dec 31, AMMB's net profit rose 34% to RM1.03 billion from RM766.87 million, on the back of revenue RM5.3 billion, up from RM4.87 billion a year earlier.

Tasek's earnings in the fourth'' quarter surged 325% to RM69.1 million from RM16.25 million. The much improved group results apart from the RM43.6 million gain from disposal of PLANTATION [] and other

property, was mainly in line with the increase in group's total revenue compounded by better local cement sales margin.

Tasek said revenue rose 15% to RM133.67 million from RM116.08 million. Earnings per share were 43.3 sen compared with 8.77 sen. It proposed a bumper dividend, comprising of preference dividend of 6%, ordinary dividend 30% and special dividend 50%.

Mudajaya's net profit for the fourth quarter ended Dec 31, 2010 rose 39% to RM57.09 million from RM41.05 million a year earlier, driven by the increased level of activities. Revenue rose to RM230.29 million from RM211.76 million a year ago. Earnings per share were 13.96 sen while net assets per share rose to RM1.75 from RM1.

Mudajaya proposed a final dividend of 3.0 sen per ordinary share of 20 sen each under the single tier system for FY10.

For the 12 months in 2010, Mudajaya's net profit surged 75% to RM208.45 million from RM119.18 million a year ago, on the back of revenue RM869.43 million.

Hap Seng Consolidated's net profit for the fourth quarter ended Dec 31, 2010 surged to RM103.13 million from RM7.69 million a year earlier, driven by improvement in revenue in all divisions except for fertilisers trading which was affected by lower average selling prices.

Revenue rose 19.3% to RM810.88 million from RM679.6 million. Earnings per share were 18.30 sen while net assets per share was RM4.59. For the financial year ended Dec 31, 2010, Hap Seng's net profit rose 222% to RM323.16 million from RM100.24 million a year ago.

Hap Seng proposed to pay out as final dividend about 50% of its net profit tax and minority interest totalalling RM123.98 million or 22 sen per share.

RAMUNIA HOLDINGS BHD [] is eyeing some RM300 million worth of fabrication jobs this year as projects up for grabs start pouring into the market again, underpinned by the surge in crude oil prices.

Chief executive officer Nor Badli Munawir Mohamad said on Friday that while Ramunia's existing order book was negligible, he expected it to grow this year after Petroliam Nasional Bhd ''committed to opening more marginal oilfields and issue more oil and gas contracts this year.

Analysis: U.S. investors fear volatility but remain steadfast

NEW YORK: Investors are worried the U.S. stock market has rallied for six months without significant correction but they're not ready to call it quits, according to a Reuters report on Friday, Feb 18.

The CBOE Volatility Index VIX, Wall Street's so-called "fear gauge", was on track to end the week about 5 percent higher even as the S&P 500 index rose to twice its value from just two years ago. The index is usually inversely correlated to the S&P and a rise in the VIX typically means a drop in the stock market.

"There is definitely high anxiety because everyday it looks like the market is at the top and it's going to have to correct," said James Dailey, portfolio manger of TEAM Asset Strategy Funds in Harrisburg, Pennsylvania.

"Are we due for a pullback? Yes. When? that's the big question. Money just keeps flowing into equities."

The VIX's overall level of 16.51 is still historically low but substantially higher than recent volatility. That suggests investors see more share gyrations in the weeks ahead.

According to Steve Place, founder of options analytics firm investingwithoptions.com, realized volatility on the SPDR S&P 500 exchange-traded fund has fallen back to levels of "support" last seen in April 2010 and Dec 2009.

The 20-day historical volatility level on the ETF, also known as "Spiders", is at 9.89, suggesting a calm market even as stocks stand at levels analysts consider overbought. During the mini-flash crash in May, the level shot up to 32.

"For me, to call a bottom in volatility would essentially be me calling a top in equities, which is not something I am willing to do at this point." said Place.

"Domestic equities are where the capital has been going into and we don't know when that will stop."

Money poured into risk assets like stocks in the last quarter of 2010 after the U.S. Federal Reserve pledged to keep interest rates low and pump another $600 million into the U.S. economy by purchasing more Treasury debt. Hopes the Fed's action would inject life into a sluggish U.S. recovery helped spark a 20 percent gain in the last six months.

BIGGER CORRECTION?

Supporting the optimism in the market, BofA Merrill Lynch Global Research recently raised its 2011 earnings-per-share estimates on the S&P 500. Both Credit Suisse and UBS AG boosted its year-end projection for the S&P. Credit Suisse is looking for 1,450, while UBS expects 1,425.

"When the market grinds higher and the longer that persists, the fall tends to be more abrupt and volatile," Dialey said.

"The 3-5 percent correction that the market had anticipated might now turn into a 5-10 percent one."

In signs that the momentum might be dwindling in the market, trading volume has been light recently, struggling to match the year's average of about 7.9 billion shares on the New York Stock Exchange, NYSE Amex and Nasdaq. - Reuters

Market up for third week as late-comers jump in

NEW YORK: Late arrivals to the speediest rally in stocks since the Great Depression pushed stocks higher for a third week on Friday, Feb 18, despite growing signals of an overheating market.

More than $8 billion flowed into U.S. equity funds for the week ended February 16, according to Thomson Reuters Lipper data. Analysts said investors appear reluctant to sell despite slack volume and a narrowing spread between winners and losers.

"We've had one of the most impressive rallies in recent memory, but the fact is any dip is met with substantial buying power," said Ryan Detrick, chief technical strategist at Schaeffer's Investment Research in Cincinnati.

About 7.2 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, far below last year's estimated daily average of 8.47 billion. But some point to a lack of sellers as the reason relatively few shares are changing hands.

"Volume hasn't been normal for a bull market," Detrick said. "The retail crowd has missed a good chunk of this rally."

For most of 2010, retail investors put net cash into mutual funds that invest in fixed-income securities. But with more signs the U.S. economic recovery is strengthening and U.S. equity indexes rising, investors have found renewed appetite for stocks.

Investors poured a net $8.72 billion into U.S. equity funds for the week ended Wednesday, up from $2.04 billion in the prior week, according to Lipper data.

On Friday the Dow Jones industrial average .DJI gained 73.11 points, or 0.59 percent, to 12,391.25. The Standard & Poor's 500 Index .SPX added 2.58 points, or 0.19 percent, to 1,343.01. The Nasdaq Composite Index .IXIC edged up 2.37 points, or 0.08 percent, to 2,833.95.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of more than 4 to 3. On the Nasdaq, 1,345 advancers outweighed 1,283 falling stocks.

For the week, the Dow and the S&P 500 gained 1 percent, and the Nasdaq added 0.9 percent.

Caterpillar Inc (CAT.N) helped lift the Dow industrials, rising 2.4 percent to $105.86 after the equipment maker said machinery sales through dealers accelerated in the three months through January.

With some technical measures pointing to signs of an overbought market, some investors have been braced for a pullback. But the market has for weeks defied those expectations.

"We have a pretty long list of warning signals, but a warning signal is not a sell signal," said John Kosar, director of research at Asbury Research LLC in Chicago.

"Our bias has been positive since the beginning of December despite all these red lights blinking all over the place."

Individual names were on the move on response to the latest batch of earnings reports.

Brocade Communications Systems Inc (BRCD.O) topped estimates and forecast second-quarter profit above Wall Street's expectations, pushing its shares up 6 percent to $6.38.

Intuit Inc (INTU.O), the maker of TurboTax and QuickBooks accounting software, reported late Thursday a profit that beat Wall Street expectations and raised its quarterly earnings forecast, sending its shares up 7.3 percent to $54.11.

U.S. markets will be closed on Monday for the Presidents Day holiday. _ Reuters

Mudajaya 4Q net profit up 39% to RM57m, proposes 3c final dividend

KUALA LUMPUR: MUDAJAYA GROUP BHD []'s net profit for the fourth quarter ended Dec 31, 2010 rose 39% to RM57.09 million from RM41.05 million a year earlier, driven by the increased level of activities.

The CONSTRUCTION [] company said on Friday, Feb 18 that revenue rose to RM230.29 million from RM211.76 million a year ago. Earnings per share were 13.96 sen while net assets per share rose to RM1.75 from RM1.

Mudajaya proposed a final dividend of 3.0 sen per ordinary share of 20 sen each under the single tier system for FY10.

For the 12 months in 2010, Mudajaya's net profit surged 75% to RM208.45 million from RM119.18 million a year ago, on the back of revenue RM869.43 million.

On its prospects for the current financial year, Mudajaya said it was expected to improve as compared to the previous year.

Hap Seng 4Q net profit surges to RM103m, proposes 50% dividend payout totaling RM123.9m

KUALA LUMPUR: HAP SENG CONSOLIDATED BHD []'s net profit for the fourth quarter ended Dec 31, 2010 surged to RM103.13 million from RM7.69 million a year ago, driven by improvement in revenue in all divisions except for fertilisers trading which was affected by lower average selling prices.

It said on Friday, Feb 18 that revenue rose 19.3% to RM810.88 million from RM679.6 million. Earnings per share were 18.30 sen while net assets per share was RM4.59.

For the financial year ended Dec 31, 2010, Hap Seng's net profit rose 222% to RM323.16 million from RM100.24 million a year ago. Its revenue rose to RM2.79 billion from RM2.46 billion.

Hap Seng proposed to pay out as final dividend about 50% of its net profit tax and minority interest totalling RM123.98 million or 22 sen per share.

On its prospects, Hap Seng said it was expected to be influenced by the movements in commodity prices, seasonal yield trend, changes in cropping pattern and the fertiliser prices as well as the competitive trading conditions which are anticipated to continue in the various market sectors in which the group operates.

AMMB 3Q earnings up 21.2pct to RM325.31m from RM268.47m a year ago

KUALA LUMPUR: AMMB HOLDINGS BHD [] net profit for the third quarter ended Dec 31, 2010 rose 21.2% to RM325.31 million from RM268.47 million a year ago.

The higher net profit was mainly due impairment writeback on financial investment and doubtful sundry receivables of RM38.3 million and RM2.3 million respectively as compared to impairment loss of RM19.2 million and RM4.0 million for previous corresponding quarter.

AMMB said on Friday, Feb 18 that in addition, higher income was reported for the Islamic banking business, transfer from profit equalisation reserve and other operating income by RM27.4 million, RM6.6 million and RM4.9 million.

Revenue rose to RM1.82 billion from RM1.71 billion in 2009. Earnings per share was 10.83 sen while net assets per share was RM3.31.

For the nine months ended Dec 31, AMMB's net profit rose 34% to RM1.03 billion from RM766.87 million, on the back of revenue RM5.3 billion, up from RM4.87 billion a year earlier.

AMMB group chief executive officer and managing director Cheah Tek Kuang said the group posted a record nine-months performance by staying focused on its strategies of profitable and sustainable growth, and income diversification.

'We remain on course to achieving faster non-interest income growth, with higher contributions from foreign exchange, derivatives, and assurance businesses,' he said.

Commenting on the one-notch rating upgrade of AmBank (M) Bhd (AmBank) and AmInvestment Bank Bhd (AmInvestment) ratings by Standard and Poor's (S&P) in December last year, Cheah said it reflected AmBank Group's improved financial performance and asset quality, preserved capitalisation, and strong domestic franchise in investment banking.

'With our robust nine-month results, we are on track to deliver the fourth consecutive year of record performance, and in line with our aspirations for full FY2011.

'This is a testimony to the quality and strength of AMMB's management team and its people,' he said.

Highlights of AMMB's nine-month performance:

Retail Banking: Profit after tax (PAT) increased 12.7% to RM 450.1 million attributed to lower impairments. Income growth was driven by staying focused on profitable segments and pricing for risk despite the industry continues to experience uneconomic pricing in selected segments such as mortgage.

Business Banking: PAT improved 18.2% to RM 148.8 million backed by good income growth from lending to stable sectors, trade and transactional businesses and strong customer focus.

Corporate and Institutional Banking: PAT grew 23.0% to RM 153.5 million with higher contributions from international business and lower allowances.

Investment Banking: PAT down 13.1% at RM 90.5 million amidst a subdued debt market, and a higher income reported during 9MFY10 partly due to a one-time gain on disposal of a bond holding.

Markets: PAT rose 70.7% to RM 151.2 million. Foreign exchange (FX) and derivatives business delivered greater income contribution, with the division continuing to expand its product offerings.

Life Assurance: PAT transferred to the group's shareholders surged above 100% to RM 51.6 million. Higher income was supported by larger fund assets from an enhanced agency network, better product bundling and higher cross-selling activities.

General Insurance: PAT increased 22.9% to RM 46.2 million as gross written premium grew from enhanced up- and cross-selling initiatives, and an established distribution network.

Bank prop up FBM KLCI, ends week on strong note

KUALA LUMPUR: The FBM KLCI ended the week on a firm note, registering gains for the fourth day on Friday, Feb 18 ahead of the announcement of the country's gross domestic product data on Friday, Feb 18.

In a statement released after market close, Bank Negara said the country's economy grew 4.8% in the fourth quarter of 2010, underpinned by higher private and public sector spending.

'The slower growth in the global economy, however, had led to weaker growth in external demand,' it said. For the year as a whole, the Malaysian economy grew 7.2% (2009:-1.7%),' it said.

MIDF Research head Zulkifli Hamzah said the fourth quarter 2010 GDP growth of 4.8% was slightly above the research house's estimate, and confirmed its hypothesis that the 5%-level was a bit too fast for the economy.

Malaysia therefore joins Taiwan as the two countries in East Asia showing a deceleration in economic growth, he said.

'The market this week was still reeling from a selldown by foreign investors. Preliminary data from Bursa shows that foreign investors were still net sellers this week. Last week, they sold in terms of gross value, RM4.3 billion of Malaysia equity. This week, we estimate a gross outflow of about RM2 billion.

The FBM KLCI advanced 0.60% or nine points to 1,517.56, lifted by gains at banking and blue chip stocks.

Gainers led losers by 472 to 333, while 328 counters traded unchanged. Volume was 1.5 billion shares valued at RM1.98 billion.

Among the major gainers today, Maybank and RHB Capital rose nine sen each to RM8.59 and RM8.21, CIMB seven sen to RM8.24, HLFG five sen to RM8.79 and Public Bank four sen to RM13.10.

Genting, Petronas Dagangan and KLK added 22 sen each to RM10.34, RM12.92 and RM22.02, PPB Group up 36 sen to RM16.68, Tenaga 11 sen to RM6.26, Petronas Chemicals eight sen to RM6.23 while Axiata rose six sen to RM5.14.

Other gainers included Kulim, Hap Seng, Tradewinds, KFCH and Malayan Flour Mills.

Tasek jumped 60 sen to RM7.90 after its fourth quarter earnings for the period ended Dec 31, 2010 surged 325% to RM69.1 million and it also proposed bumper dividends, comprising of preference dividend of 6%, ordinary dividend 30% and special dividend 50%.

Decliners included Kluang, Southern Steel, Inno Bio, YTL Corp, Allianz and Shell, while the actives included Dialog, Karambunai, Tanco, Axiata, Iris Corp and Mulpha.

Meanwhile, regional markets also mostly ended higher, with Hong Kong s posting their biggest weekly returns in three months, as another session of healthy turnover suggested investors were growing in confidence, according to Reuters.

However, China's main stock index fell as investors sold off large-cap shares on worries over further monetary tightening ahead of the weekend, it said.

At the regional markets, Hong Kong's Hang Seng Index rose 1.26% to 23,595.24, Taiwan's Taiex jumped 1.84% to 8,843.84, South Korea's Kospi 1.82% to 2,013.14, Singapore's Straits Times Index up 0.13% to 3,086.92, Japan's Nikkei 225 edged up 0.06% to 10,842.80 while the Shanghai Composite Index fell 0.93% to 2,899.79.

#Flash* Malaysian GDP grew 4.8pct in 4Q; expanded 7.2pct in 2010

KUALA LUMPUR: Malaysian economy grew 4.8% in the fourth quarter of 2010, underpinned by higher private and public sector spending.

'The slower growth in the global economy, however, had led to weaker growth in external demand,' Bank Negara said on Friday, Feb 18.

'On the supply side, all economic sectors, with the exception of the primary sectors, continued to expand further during the quarter. For the year as a whole, the Malaysian economy registered a growth of 7.2% (2009:-1.7%),' it said.

On the outlook, the central bank said the global economic recovery is expected to remain uneven across the different regions.

Bank Negara said while short-term prospects for the advanced economies have improved recently, uncertainties remain over weak fiscal positions, high unemployment and constrained lending conditions.

However, the growth outlook for Asia remains favourable, supported by robust domestic demand.'' But the regional economies are confronted with the challenges of rising inflationary pressures, particularly from high commodity and fuel prices, and the large and volatile capital flows.

'The pace of growth of the Malaysian economy will be affected by the environment of moderating external demand.'' Growth will, nevertheless, be supported by continued firm expansion in domestic demand.

'Private consumption spending will continue to benefit from the favourable labour market conditions, firm commodity prices and access to financing. The roll-out of CONSTRUCTION [] and infrastructure activities and the implementation of the economic transformation programme by the Government are likely to provide significant support to the growth momentum in private investment,' it said.

Tasek rises after earnings surge, bumper dividends

KUALA LUMPUR: Shares of cement manufacturer Tasek Corp Bhd climbed in afternoon trade on Friday, Feb 18 after its fourth quarter earnings for the period ended Dec 31, 2010 surged 325% to RM69.1 million and it also proposed bumper dividends.

At 2.32pm, it was up 32 sen to RM7.62 with 1,000 shares done.

The FBM KLCI rose 9.3 points to 1,5117.86. Turnover was 788.51 million shares valued at RM880.13 million. There were 374 gainers, 310 losers and 325 stocks unchanged

Tasek Corp said the much improved group results apart from the RM43.6 million gain from disposal of PLANTATION [] and other property, was mainly in line with the increase in group's total revenue compounded by better local cement sales margin. In addition, higher interest income also contributed to the better performance during the reporting quarter.

Revenue rose 15% to RM133.67 million from RM116.08 million. Earnings per share were 43.3 sen compared with 8.77 sen.

It proposed a bumper dividend, comprising of preference dividend of 6%, ordinary dividend 30% and special dividend 50%.

MRT system to spark more JVs, M&As for land

KUALA LUMPUR: The Mass Rapid Transit (MRT) project is expect to spark more joint ventures and mergers and acquisitions (M&As) by property developers to secure strategic land banks near rail lines, says HwangDBS Vickers Research associate director Yee Mei Hui.

Yee said on Friday, Feb 18 companies without land bank near proposed MRT stations were likely to start hunting for land plots to benefit from expected gains from having property projects near the massive public transport infrastructure.

"For those without land bank, they'll need to act quite fast,' she said at a press briefing on property plays related to the MRT project.

Yee, who covers the property and gaming sectors, also said three mixed developments near MRT stops would set the tone for future property plays along the MRT system.

The three projects are KL Eco-City near the Mid Valley area, Capers in Sentul East and Damansara City in Damansara Heights.

Tasek Corp 4Q earnings surge 325pct to RM69.1m, proposes bumper dividends

KUALA LUMPUR: Tasek Corp Bhd posted a strong set of earnings in the fourth quarter ended Dec 31, 2010 with net profit surging 325% to RM69.1 million from RM16.25 million a year ago and it also announced bumper dividends for its shareholders.

It said on Friday, Feb 18 the much improved group results apart from the RM43.6 million gain from disposal of PLANTATION [] and other property, was mainly in line with the increase in group's total revenue compounded by better local cement sales margin. In addition, higher interest income also contributed to the better performance during the reporting quarter.

Tasek said revenue rose 15% to RM133.67 million from RM116.08 million. Earnings per share were 43.3 sen compared with 8.77 sen.

It proposed a bumper dividend, comprising of preference dividend of 6%, ordinary dividend 30% and special dividend 50%

'The proposed final dividend, if approved by shareholders at the forthcoming AGM, will be payable on June 17, 2011 to holders of ordinary shares and 6% cumulative participating preference shares whose names appear in the record of depositors as at the close of business on May 20, 2011,' it said.

For FY ended Dec 31, 2010, the net profit jumped 97.2% to RM132.41 million from RM67.12 million, revenue was RM546.76 million compared with RM520.78 million. It had cash and cash equivalents of RM436.90 million as at Dec 31, 2010.

As for the prospects, it said demand for cement and concrete products was expected to remain competitive. However, as enhancement to the group's overall competitiveness, the group would continue to intensify its efforts in optimising performance and efficiency

Ramunia eyes RM300m fabrication contracts this year as oil price surges

KUALA LUMPUR: RAMUNIA HOLDINGS BHD [] is eyeing some RM300 million worth of fabrication jobs this year as projects up for grabs start pouring into the market again, underpinned by the surge in crude oil prices.

Chief executive officer Nor Badli Munawir Mohamad said on Friday, Feb 18 that while Ramunia's existing order book was negligible, he expected it to grow this year after Petroliam Nasional Bhd'' committed to opening more marginal oilfields and issue more oil and gas contracts this year.

"It will come. As we know, for this year alone, Petronas and all the other PSC (production sharing contracts) will be giving out over 200,000 tonnes of steelwork. And the existing capacity of fabricators is a lot less now at about 160,000 to 180,000 tonnes. There is a shortage of fabricators, so we will get our fair share (of contracts)," he said at the AGM.

Nor Badli said the key growth driver of its revenue in 2011 would be from its core business which was fabrication.

He expected the division to contribute some 70% to group revenue this year while the remaining 30% would come from its other business such as hook-up and commissioning as well as crane manufacturing.

More optimism in the market as KLCI stretches gains to 4 days

KUALA LUMPUR: The FBM KLCI extended its gains at the mid-day break on Friday, Feb 18 ahead of the 4Q GDP data to be revealed later, in line with most key regional markets that advanced this morning, with Taiwan's Taiex surging more than 2%.

Asian stocks are set to finish their best week in two months as investors scooped up bargains amid signs that heavy selling of the past few weeks was drawing to a close, according to Reuters.

The region's shares and bonds sold off heavily last month as investors fled to the relative safety of developed U.S. and Japanese markets because of inflation concerns, but there were signs that the sell-off may be drawing to a close, it said.

At 12.30pm, the FBM KLCI rose 0.59% or 8.83 points to 1,517.39, lifted by gains including at banking stocks and key blue chips like Genting, Axiata and Petronas Chemicals.

Gainers led losers by 344 to 311, while 317 counters traded unchanged. Volume was 771.62 million shares valued at RM848.67 million.

The ringgit strengthened 0.23% to 3.0380 versus the US dollar; crude palm oil for the third month delivery fell RM6 per tonne to RM3,715, cruded slipped five cents per barrel to US$86.31 while gold gained US$1.08 per troy ounce to US$1,385.18.

Taiwan's Taiex +2.02% 8,859.10 South Korea's Kospi
+1.13% 1,999.66 Hang Seng Index +1.08% 23,552.71 Singapore Straits Times Index +0.85% 3,109.14 Shanghai Composite Index -0.89% 2,900.91 Nikkei 225 +0.06 10.843.35 ''

Among the major gainers this morning, Genting rose 24 sen to RM10.36, Axiata eight sen to RM5.16, Petronas Chemicals 11 sen to RM6.26 and DiGi 40 sen to RM26.30.

Banking stocks advanced, with CIMB up five sen to RM8.22 while Maybank, Public Bank, AMMB and RHB Capital added four sen each to RM8.54, RM13.10, RM6.36 and RM8.16 respectivley.

Among PLANTATION []s, Kulim was up RM1 to RM16, United Plantations 40 sen to RM16.90, Batu Kawan 10 sen to RM16.74 and KLK six sen to RM21.86.

Other gainers included Malayan Flour Mills, MTD Capital and F&N.

Decliners included Widetech, Genome, Scientex, Wah Seong and Kluang.

Proton and Delloyd fell six sen each to RM4.15 and RM3.45. UOB Kay Hian downgraded its recommendation on Proton from a "hold" to "sell" on expectation of a loss for its third quarter ended Dec 31, 2010 due to weaker domestic sales and further investments in Lotus which could dilute its earnings in the short term.

The actives this morning included Dialog, Tanco, Karambunai, Jotech, Iris Corp, Mulpha and SAAG.

Proton slips on UOB Kay Hian downgrade

KUALA LUMPUR: PROTON HOLDINGS BHD [] share price retreated on Friday, Feb 18 after UOB Kay Hian has downgraded its recommendation on the stock from a "hold" to "sell" on expectation of a loss for its third quarter ended Dec 31, 2010 due to weaker domestic sales and further investments in Lotus which could dilute its earnings in the short term.

At 10.55am, Proton fell five sen to RM4.16 with 112,200 shares traded.

UOB Kay Hian yesterday said it expects Proton to possibly register a modest loss in 3QFY11, underpinned by seasonally weak domestic sales and poor momentum at its overseas operations, reflecting weaker exports to China and aggressive investments by its subsidiary Group Lotus.

'If so, this would be Proton's first quarterly loss since 4Q09 when the company recorded a net loss of RM341.5 million, after making a RM360 million provision for the writedown of property, plant and equipment,' it said in a report issued on Feb 17.

China steel prices seen rising in near term

SHANGHAI: Steel prices in the Chinese domestic market will continue rising in the near term thanks to recovering demand and rising raw materials costs, the China Iron & Steel Association (CISA) said on Friday, according to Reuters. CISA said it expected a gradual pick-up in demand at home and abroad, with costs of raw materials such as iron ore, coke and scrap likely to keep surging, pushing steel prices upwards, it said.

"This year is the opener of the 12th five-year plan, so steel demand will remain strong as economic growth is expected to remain healthy," CISA said in its monthly report, according to Reuters.

Major steel-consuming sectors such as CONSTRUCTION [], machinery, transportation, home appliances and shipbuilding would continue to grow, lifting steel demand, it added, noting that infrastructure projects would also contribute to rising demand.

The Ministry of Industry and Information TECHNOLOGY [] forecast earlier this week that China's crude steel output would hit a record 660 million tonnes this year, with downstream demand providing a boost. [ID:TOE71F046]

However, CISA also warned that non-steel mill steel product inventories had risen sharply, and domestic steel production was also on the rise. CISA data showed that China produced 1.7033 million tonnes of crude steel on a daily basis in January, up 2.5 percent from December. Non-steel mill inventories of five major steel products in 26 big cities rose 11.2 percent to 14.72 million tonnes in January from the previous month, especially for rebar and wire rod used in the construction sector. - Reuters

FBM KLCI extends gains amidst cautious trade

KUALA LUMPUR: The FBM KLCI extended its gains for the fourth day in early trade on Friday, Feb 18, albeit in cautious trade ahead of the fourth quarter gross domestic product data announcement later this evening.

Asian markets mostly traded higher, with the Taiwan and South Korean stocks advancing on the back of the slightly firmer overnight close at Wall Street.

Wall Street closed higher driven by encouraging manufacturing report that outweighed the disappointing release from the labor market report.

The Federal Reserve Bank of Philadelphia said index in the manufacturing activity of the mid-Atlantic region showed strong performance or nearly doubled between January to February time frame.

This overshadowed the first time claim for unemployment benefit that rose by 25,000 higher week-on-week.

The FBM KLCI rose 3.69 points to 1,512.25 at mid-morning, lifted by gains including at KLK and Genting.

Gainers led losers by 248 to 211, while 234 counters traded unchanged. Volume was 290.33 million shares valued at RM240.47 million.

At the regional markets, Taiwan's Taiex jumped 1.63% to 8,825.48, South Korea's Kospi rose 1.02% to 1,997.45, Singapore's Straits Times Index added 0.63% to 3,102.19, Japan's Nikkei 225 edged up 0.02% to 10,839.19, Hong Kong's Hang Seng Index opened 0.3% higher at 23,363.50 while the Shanghai Composite Index dipped 0.47% to 0.47% to 2,913.31.

BIMB Securities Research said the US unemployment rate may stay at the 9% level for an extended period of time as a result.

In the meantime, CPI in US rose to paltry 0.4% year-on-year last month despite continuous pressure from the rising in gas and other raw material items.

'This supports our conviction that US may revise upward its interest rate level only in the 2H11.

'All in, we expect the market to trade in tight range with mild upside bias today,' it said.

On Bursa Malaysia, PLANTATION [] stocks advanced at mid-morning with United Plantations up 50 sen to RM17, Kulim 38 sen to RM15.38 and KLK 22 sen to RM22.02.

Malayan Flour Mills rose 25 sen to RM5.20. The company's 4Q net profit rose 47.3% to RM28.46 million and it has proposed 20 sen dividend per share.

Other gainers included MTD Capital that rose 20 sen to RM11.20, Coastal Contracts 19 sen to RM2.61, Cycle & Carriage 13 sen to RM5.09 and Genting 12 sen to RM10.24.

Decliners in early trade included IOI Corp that fell seven sen to RM5.51, Perstima and KESM down six sen each to RM4.80 and RM2.25, while Mamee, Wah Seong, Litrak and Encorp lost five sen each to RM3.76, RM2.26, RM3.55 and 95 sen respectively.

Tanco was the most actively traded counter with 13.9 million shares done. The stock was unchanged at 31.5 sen.

Other actives included Jotech, Asiapac, Karambunai, Mulpha, Iris Corp and Olympia.

OSK Research: Accumulate CIMB, Maybank on weakness

KUALA LUMPUR: OSK Research said the share prices of CIMB Group Holdings Bhd, and to a lesser extent MALAYAN BANKING BHD [], have underperformed the KL Finance index due to concerns that their Indonesian units, CIMB Niaga and PT Bank Internasional Indonesia Tbk, may be hit by renewed concerns of inflationary pressure and aggressive interest rate hikes in Indonesia that may dampen loans growth and asset quality.

With the current monetary tightening cycle seen to be gradual and on the back of historically low interest rates amid a stable economic growth outlook, CIMB Niaga and BII's asset quality and loans growth should remain largely intact.

'And any correction in their share prices sparked by further rate hikes in Indonesia that may dampen sentiment on CIMB and Maybank will provide an excellent opportunity to accumulate on weakness. Maintain BUY CIMB (TP: RM9.77) and Maybank (TP: RM10.07),' it said.

OSK Research maintains Take Profit call on Unisem

KUALA LUMPUR: OSK Research expects Unisem's 4QFY10 results, due to be released next Thursday, Feb 24'' to mirror the performance of MPI, with earnings growth likely to be on a declining trend.

The research house said on Friday, Feb 18 that during the company's previous analyst briefing on its 3QFY10 results, Unisem's management had guided for a 10% on-quarter drop in 4QFY10 revenue, mainly due to inventory adjustments.

'We maintain our Take Profit call on potential earnings disappointments for 4QFY10 and 1QFY11, and the foreseeable far slower earnings for FY11 as sentiment dampeners,' it said.

OSK Research mainains Neutral on Wah Seong

KUALA LUMPUR: OSK Research said despite the 54% drop in FY10 net profit, Wah Seong Corp's FY10 results were above expectations with 4Q profit jumping 98% q-o-q.

It said on Friday, Feb 18 that overall, the group delivered a better set of 4QFY10 numbers, mainly contributed by enhanced performance across all its division, especially its O&G unit, in which the gas compressor and pipe coating businesses improved.

OSK Research said nevertheless, 2010 remained a 'washout' year for Wah Seong although 'we see a brighter 2011, contributed by its Gorgon pipe coating business, better gas compressor business and consistent performance from its non-oil and gas divisions. Maintain Neutral,' it said.

Vitrox Corp advances after 4Q earnings surge

KUALA LUMPUR: Shares of VITROX CORPORATION BHD [] advanced in early trade on Friday, Feb 18 after its net profit for the fourth quarter (4Q) ended Dec 31, 2010 surged six-fold to RM8.16 million from RM1.15 million a year earlier, underpinned by higher sales.

At 9.05am, it was up nine sen to RM1.61 with 112,500 shares done. The FBM KLCI rose 0.72 of a point to 1,509.28. Turnover was 47.34 million shares valued at RM27.55 million. There were 108 gainers, 54 losers and 115 stocks unchanged.

Vitrox announced on Thursday its revenue surged 284% to RM23.23 million from RM6.05 million, due to higher sales from its machine vision system, automated board inspection and electronics communication system.

Earnings per share were 5.36 sen while net assets per share rose to 49.96 sen from 32.27 sen.

For the financial year ended Dec 31, Vitrox's net profit surged to RM31.6 million from RM1.94 million on the back of revenue of RM87.44 million.

MBM Resources climb on stronger earnings

KUALA LUMPUR: Shares of MBM Resources rose to RM3.34 in early trade on Friday, Feb 18 after its net profit for the fourth quarter (4Q) ended Dec 31, 2010 rose 36.2% to RM28.2 million from RM20.7 million a year ago.

At 9.13am, it was up 12 sen to RM3.34 with 70,400 shares done.

The FBM KLCI rose 1.68 points to 1,510.24. Turnover was 89.10 million shares valued at RM54.33 million. Advancers beat gainers 157 to 74 while 136 stocks were unchanged.

MBM's earnings were underpinned by the overall strong total industry volume in the automotive sector.

Revenue for the quarter rose to RM389.88 million from RM292.46 million in 2009. Earnings per share were 11.64 sen, while net assets per share was RM4.19.

It declared a special second tax-exempt interim dividend of five sen per share totaling RM12.13 million, and a special tax-exempt dividend of three sen per share totaling RM7.28 million.

For the financial year ended Dec 31, MBM's net profit surged to RM141.24 million from RM66.53 million a year earlier, on the back of revenue of RM1.55 billion.

#Stocks to watch:* Favelle Favco, Daibochi, SBC, MBM Resources

KUALA LUMPUR: Blue chips on Bursa Malaysia may trade range-bound on Friday, Feb 18 ahead of the fourth quarter GDP data announcement after market close'' but most importantly, investors are keen to know the outlook for the economy and the inflationary trends.

On Thursday, Prime Minister Datuk Seri Najib Tun Razak said conservatively, GDP grew more than 6% in 2010.

On Wall Street, US investors piled on a dizzying two-year advance in stocks on Thursday, using a brief slip on negative economic news as an opportunity to buy into market leaders.

Reuters reported the TECHNOLOGY [] sector showed strength, with Nvidia Corp up 9.8% to US$25.68 a day after posting a bullish revenue forecast on accelerating sales of its processors. An index of semiconductors' shares gained 1.4% and is now up 21.3% since early December, around the time when the most recent leg of the run-up started.

The Dow Jones industrial average gained 29.97 points, or 0.24%, to 12,318.14. The Standard & Poor's 500 Index rose 4.11 points, or 0.31%, to 1,340.43. The Nasdaq Composite Index added 6.02 points, or 0.21%, to 2,831.58.

Stocks to watch on Bursa Malaysia include FAVELLE FAVCO BHD [], Daibochi Plastic and Packaging Industry Bhd, SBC Corp Bhd, Wah Seong'' Corp Bhd and MBM RESOURCES BHD [].

Favelle Favco secured RM123.20 million in contracts to supply eight cranes which would be delivered to eight buyers from early this year to 2012.

The crane builder said it expected the contracts to contribute positively to the earnings and net assets for the financial year ending Dec 31, 2011 and beyond.

Daibochi saw its earnings fall 31% to RM4.15 million from the RM6.05 million a year ago due to the sharp increases in polyester prices in 2010 for the packaging segment.

Revenue rose 38.2% to RM75.46 million from RM54.58 million, while earnings per share were 5.5 sen compared with 8.04 sen.

Daibochi declared a fourth interim dividend of 3.50 sen, tax exempt, to be paid on March 30.

SBC Corp Bhd posted net profit of RM6.81 million in the third quarter ended Dec 31, 2010 when compared with RM2.02 million a year following higher revenue from its CONSTRUCTION [] projects.

Revenue climbed 95% to RM54.80 million from RM28.03 million while earnings per share were 8.26 sen versus 2.45 sen a year ago.

For the nine-month period, its revenue rose 16.6% to RM89.03 million from RM76.34 million in the previous corresponding period. Its earnings increased by 66% to RM10.47 million from RM6.31 million.

MBM Resources' net profit for the fourth quarter (4Q) ended Dec 31, 2010 rose 36.2% to RM28.2 million from RM20.7 million a year ago, driven by the overall strong total industry (TIV) volume in the automotive sector.

Revenue for the quarter rose to RM389.88 million from RM292.46 million in 2009. Earnings per share was 11.64 sen, while net assets per share was RM4.19.'' It declared a special second tax-exempt interim dividend of five sen per share totaling RM12.13 million, and a special tax-exempt dividend of three sen per share totaling RM7.28 million.

For the financial year ended Dec 31, MBM's net profit surged to RM141.24 million from RM66.53 million a year earlier, on the back of revenue RM1.55 billion.

Wah Seong's earnings fell 28.9% to RM24.76 million in the fourth quarter ended Dec 31, 2010 from RM34.84 million a year ago due to the lower number of projects and unfavourable effect of foreign exchange fluctuations.

Revenue fell 12.7% to RM397.23 million from RM455.07 million while earnings per share were 3.2 sen compared with 4.5 sen. It proposed dividend of 2.5 sen per share.

For the financial year ended Dec 31, 2010, the net profit fell 53.8% to RM55.98 million from RM121.32 million in FY09. Revenue fell 21.9% to RM1.523 billion from RM1.950 billion.

In The Edge FInancialDaily, ZELAN BHD [] has raised eyebrows with the negative revenue of RM39.2 million that it recorded for its third quarter ended Dec 31, 2010.

It also reports UOB Kay Hian has downgraded its recommendation on PROTON HOLDINGS BHD [] from a "hold" to "sell" on expectation of a loss for its third quarter ended Dec 31, 2010 due to weaker domestic sales and further investments in Lotus which could dilute its earnings in the short term.

''

Recent leaders juice up Wall St

NEW YORK: U.S. investors piled on a dizzying two-year advance in stocks on Thursday, Feb 17, using a brief slip on negative economic news as an opportunity to buy into market leaders.

The TECHNOLOGY [] sector showed strength, with Nvidia Corp up 9.8 percent to $25.68 a day after posting a bullish revenue forecast on accelerating sales of its processors.

An index of semiconductors' shares gained 1.4 percent and is now up 21.3 percent since early December, around the time when the most recent leg of the run-up started.

The S&P energy sector gained 0.8 percent. U.S. crude futures jumped 1.7 percent as unrest in the Middle East kept focus on supply, boosting shares of energy companies.

Futures had dipped early in the session after data showed both a rise in consumer prices and new claims for unemployment benefits, but the dip didn't last long after the open.

"People have been focusing on the positives like the outlook for corporations and a good earnings season," said Brian Lazorishak, a money manager at Chase Investment Counsel in Charlottesville, Virginia.

Stocks continued to ignore Iran's intention to send two navy vessels through the Suez Canal to the Mediterranean in a move Israel has called a "provocation".

"Geopolitical issues have been pushed aside, maybe prematurely," Lazorishak said.

The S&P 500 has doubled its value in less than two years, the quickest 100 percent gain since the Great Depression. However, volume has been light in the most recent leg of the rally, with just 6.7 billion shares changing hands Thursday on the New York Stock Exchange, NYSE Amex and Nasdaq combined -- the second-lowest so far in 2011.

The Dow Jones industrial average gained 29.97 points, or 0.24 percent, to 12,318.14. The Standard & Poor's 500 Index rose 4.11 points, or 0.31 percent, to 1,340.43. The Nasdaq Composite Index added 6.02 points, or 0.21 percent, to 2,831.58.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 5 to 3, while on the Nasdaq, about three stocks rose for every two that fell.

The S&P 500 faces little technical resistance before the 1,361 area that marks the 76.4 percent retracement of its slide from the 2007 highs to the low hit on March 6, 2009.

A Fibonacci projection of the latest leg of the rally also draws a target near 1,361, suggesting the S&P could face strong resistance at that level.

Dr Pepper Snapple Group Inc posted quarterly profit that beat estimates and gave an upbeat forecast and its shares jumped 5.7 percent to $36.20.

Its competitor Coca Cola Co was the top gainer in the Dow industrials, up 1.8 percent to $64.55. Coke also announced an increase in its dividend.

Data showed U.S. core consumer prices rose at the quickest pace in 15 months in January but economists said the turnaround in prices was unlikely to derail the Federal Reserve's plan to continue pumping money into the economy.

That excess liquidity has been one of the main drivers of the stocks rally in recent months.

A separate report showed factory activity in the U.S. Mid-Atlantic region rose in February to its highest since January 2004, with an employment subindex reaching its highest point since April 1973. - Reuters

GLOBAL MARKETS-Swiss franc, oil rise on Mideast worries

NEW YORK: The safe-haven Swiss franc and U.S. government bonds rallied on Thursday, Feb 17, while crude oil prices rose as unrest in the Middle East and tensions between Israel and Iran escalated.

U.S. stocks, however, shrugged off concerns about the Middle East as investors bought on early dips. World equities measured by the MSCI All-Country World Index, hit more than 2-1/2 year highs.

Bahrain police stormed a square in Manama, killing at least three people as protests in the Middle East and North Africa gathered pace. Clashes were also reported in Libya, while at least 40 were wounded in Yemen in demonstrations against the president's 32-year rule.

Iranian state TV said on Thursday two Iranian warships are due to pass through the strategic Suez Canal in a move that Israel has called a "provocation."

"All in all, the pace of change sweeping the region is truly mind-boggling," said Edward Meir, senior commodity analyst at brokers MF Global.

The U.S. dollar fell 1 percent to 0.9496 Swiss franc, while the euro dropped 0.7 percent to 1.2921 franc.

"If events in the Middle East do escalate we will see safe haven flows which will help the Swiss franc," said Kenneth Broux, market economist at Lloyds.

Benchmark ten-year U.S. Treasury notes last traded up 18/32 in price to yield 3.58 percent, down from 3.62 percent late on Wednesday.

Unrest spreading across the oil-rich Middle East and North Africa stoked fears of a disruption of oil flows.

U.S. crude futures ended higher for a second straight day, after trading as high as $86.50. Brent crude for April delivery earlier climbed above $104 a barrel, before retreating.

Gold, also a safe-haven, rose for a fourth day, its longest winning streak since September. Spot gold hit a five-week high at $1,384.65 an ounce.

STOCKS STILL IN DEMAND

The Dow Jones industrial average ended up 29.97 points, or 0.24 percent, at 12,318.14. The Standard & Poor's 500 Index was up 4.11 points, or 0.31 percent, at 1,340.43. The Nasdaq Composite Index was up 6.02 points, or 0.21 percent, at 2,831.58.

Wall Street stocks earlier came under pressure after the United States reported the fastest rise in core consumer prices in more than a year in January. But bargain hunters quickly rushed in and pushed the index back near multi-year highs.

The core Consumer Price Index, which excludes volatile food and energy costs, increased 0.2 percent last month after a 0.1 percent rise in December, the Labor Department said. It was the largest increase since October 2009.

"We've run up incredibly over the last six months, and many many onlookers are looking for a pullback, and it just refuses to come," said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Connecticut.

European shares closed at a new 29-month high for the fourth straight day. The MSCI All-Country World Index hit its highest level since the end of July 2008 and last traded up 0.61 percent at 347.03.

The euro edged higher versus the dollar as solid demand at a Spanish debt auction offset broader euro zone banking and sovereign debt concerns. It last traded up 0.3 percent at $1.3606. - Reuters

Sunway unit gets RM37.4m job to upgrade Ipoh airport

KUALA LUMPUR: SUNWAY HOLDINGS BHD []'s wholly-owned subsidiary Sunway CONSTRUCTION [] Sdn Bhd has secured a contract worth RM37.36 million from the Ministry of Transport for the proposed upgrading of the Sultan Abdul Aziz Shah Airport in Ipoh.

Sunway said on Thursday, Feb 17 that the project was expected to commence in March, with a construction period of 72 weeks.

The company said the project was expected to contribute positively to its earnings for the financial year ending Dec 31, 2011 onwards.

"The proposed project is subject to normal construction risk of materials price fluctuation.

"However, with the past experience and expertise of Sunway Construction in construction projects in Malaysia, this risk could be mitigated at this juncture," it said.

Vitrox 4Q net profit jumps six-fold to RM8.16m

KUALA LUMPUR: VITROX CORPORATION BHD []'s net profit for the fourth quarter (4Q) ended Dec 31, 2010 surged six-fold to RM8.16 million from RM1.15 million a year earlier, driven by higher sales recorded.

Its revenue surged 284% to RM23.23 million from RM6.05 million, due to higher sales from its machine vision system, automated board inspection and electronics communication system.

Earnings per share was 5.36 sen while net assets per share rose to 49.96 sen from 32.27 sen. For the financial year ended Dec 31, Vitrox's net profit surged to RM31.6 million from RM1.94 million on the back of revenue RM87.44 million.

Commenting on its prospects for the current financial year, Vitrox said that for the past quarters there was a strong demand for its product from the leading test and inspection equipment manufacturers and major electronics manufacturing service providers.

"The group has been able to consistently deliver commendable set of results in spite of tough business conditions, growing both the topline and bottomline by healthy margins and chalking up new milestones.

"In FY2011, the group will continue to stay focused in research and development on selected core and high value proposition products while stepping up efforts in marketing activities in order to remain in the forefront of the technologies and in preparation for the market demands," it said.

MBM Resources 4Q net profit up 36.2% to RM28.2m

KUALA LUMPUR: MBM RESOURCES BHD []'s net profit for the fourth quarter (4Q) ended Dec 31, 2010 rose 36.2% to RM28.2 million from RM20.7 million a year ago, driven by the overall strong total industry (TIV) volume in the automotive sector.

Revenue for the quarter rose to RM389.88 million from RM292.46 million in 2009. Earnings per share was 11.64 sen, while net assets per share was RM4.19.

The company declared a special second tax-exempt interim dividend of five sen per share totaling RM12.13 million, and a special tax-exempt dividend of three sen per share totaling RM7.28 million.

For the financial year ended Dec 31, MBM's net profit surged to RM141.24 million from RM66.53 million a year earlier, on the back of revenue RM1.55 billion.

Reviewing its performance, MBM said it benefited from the strong TIV performance during the year, adding that its further expansion in dealerships and investments in new branch network enabled it to make solid gains in market share.

This resulted in revenue growth for all operating subsidiaries, it said.

"The ringgit's strength and improved operating efficiency at the manufacturing division helped boost overall margins. Associate contributions from Perodua and Hino were substantially higher.

"Volume sales and market shares strengthened further, with Perodua and Hino commanding the No 1 position by registration for passenger and commercial vehicle segments respectively," it said.

SBC Corp 3Q net profit up 237pct to RM6.8m

KUALA LUMPUR: SBC Corp Bhd posted net profit of RM6.81 million in the third quarter ended Dec 31, 2010 when compared with RM2.02 million a year following higher revenue from its CONSTRUCTION [] projects.

It said on Thursday, Feb 17 revenue climbed 95% to RM54.80 million from RM28.03 million while earnings per share were 8.26 sen versus 2.45 sen a year ago.

For the nine-month period, its revenue rose 16.6% to RM89.03 million from RM76.34 million in the previous corresponding period. Its earnings increased by 66% to RM10.47 million from RM6.31 million.

'The higher revenue was due to the stage works for The Peak Vista I & II at Kota Kinabalu and the flyovers work at A.Kiara East, Kuala Lumpur,' it said.

'The current (3Q) quarter registered a revenue of RM54.80 million against RM20.58 million for the preceding quarter with an increase of RM34.22 million in revenue. The main contributor to the increase was The Peak Vista I & II, Kota Kinabalu of which the The Peak Vista I is looking forward to complete the whole phase and the commencement of The Peak Vista II,' it said.

Daibochi 4Q earnings slip 31pct to RM4.5m

KUALA LUMPUR: Daibochi Plastic and Packaging Industry Bhd saw its earnings fall 31% to RM4.15 million from the RM6.05 million a year ago due to the sharp increases in polyester prices in 2010 for the packaging segment.

It said on Thursday, Feb 17 revenue rose 38.2% to RM75.46 million from RM54.58 million, while earnings per share were 5.5 sen compared with 8.04 sen.

Daibochi declared a fourth interim dividend of 3.50 sen, tax exempt, to be paid on March 30.

It said the higher revenue was 'due to increased sales from both the packaging and property development segments'.

'Although there was an increase in contribution from the property sector of RM2.271 million, the Group's profit before tax reduced by 20.5% to RM5.467 million as compared to RM6.878 million previously. This is due largely to the sharp increases in polyester prices that prevailed in 2010 for the packaging segment,' it said.

For the 12-months ended Dec 31, revenue rose 20.7% to RM267.75 million from RM221.788 million in FY09. Its earnings declined to RM18.18 million from RM22.76 million.

'Although there was an increase in contribution from the property sector of RM2.74 million, the group's profit before tax reduced by 12.2% to RM23.82 million compared to RM27.14 million previously. The reduction in the profit was due largely to the lower margins as a result of higher raw material prices that prevailed in 2010. In addition, the profit was also affected by foreign exchange loss and research and development expenses,' it said.

Favelle Favco secures RM123.2m contracts to supply eight cranes

KUALA LUMPUR: FAVELLE FAVCO BHD [] has secured RM123.20 million in contracts to supply eight cranes.

The company said on Thursday, Feb 17 the cranes would be delivered to eight buyers from early this year to 2012.

'The contracts are expected to contribute positively to the earnings and net assets of Favelle Favco for the financial year ending Dec 31, 2011 and beyond,' it said.

Among the companies which had ordered the cranes were Bumi Armada Bhd, West Contractors A/S, Global Tender Barges Drilling Services Sdn Bhd and National Petroleum CONSTRUCTION [] Co.

KLCI closes higher amid cautious sentiment

KUALA LUMPUR: The FBM KLCI extended its positive run for the third consecutive trading day on Thursday, Feb 17 and edged up at the close, lifted by gains at banking stocks and select blue chips.

Regional markets were mixed as Asian shares eked out modest gains for the second consecutive day on Thursday after the Federal Reserve offered a cautiously optimistic view of the U.S. economy, while oil prices edged higher on growing tensions in the Middle East, according to Reuters.

Stocks in most of Asia ex-Japan also edged higher with buying across the materials, consumers and the energy sectors, though benchmark indexes fell in Singapore and South Korea , where the government unveiled cash support for troubled saving banks, it said.

The FBM KLCI edged up 0.15% or 2.26 points to close at 1,508.56.

Market breadth, however, was negative with losers beating gainers by 536 to 292, while 282 counters traded unchanged. Volume was 1.74 billion shares valued at RM1.76 billion.

At the regional markets, Hong Kong's Hang Seng Index rose 0.63% to 23,301.84, Jaoan's Nikkei 225 added 0.26% to 10,836.64 and the Shanghai Composite Index gained 0.10% to 2,926.96, while South Korea's Kospi fell 0.60% to 1,977.22, Singapore's Straits Times lost 0.38% to 3,082.83 and Taiwan's Taiex shed 0.33% to 8,683.88.

Among the major gainers, RHB Capital added 11 sen to RM8.12, Hong Leong Bank 10 sen to RM9.50, AMMB eight sen to RM6.32, CIMB seven sen to RM8.17, Public Bank six sen to RM13.06 and Maybank three sen to RM8.50.

Axiata added nine sen to RM5.08, Petronas Chemicals five sen to RM6.15 and Petronas Dagangan up 20 sen to RM12.70, and Kulim 62 sen to RM15, Cycle & Carriage 18 sen to RM4.92.

Glove makers also advanced, with Top Glove added 15 sen to RM5.17, Supermax 14 sen to RM4.38 and Hartalega up 12 sen to RM6.02.

Decliners included BAT, Pharmaniaga, MAHB, Nestle, Dutch Lady, Perstima and IOI Corporation, while the actives included SAAG, Tanco, Scomi, Iris, Olympia and Karambunai.

China: Net USD35.5b hot money sneaked into China last year

BEIJING: The amount of hot money entering China in recent years is more an ant hill than a mountain, the foreign exchange regulator said on Thursday, Feb 17, countering the popular view that it faces a torrent of speculative inflows.

A net $35.5 billion of hot money sneaked into China last year, accounting for 7.6 percent of the country's increase in official currency reserves, the State Administration of Foreign Exchange said.

In China's first-ever public report to estimate the volume of speculative cash entering the country, SAFE said that hot money was not nearly as big a problem as worried officials often suggest.

Illicit cash inflows were more like "ants moving home", coming in bits and pieces via multiple deals and transactions, the regulator said.

It added the capital flows in and out of China were generally in line with the country's real level of economic activity.

"We have not found evidence of any large-scale capital inflows coordinated by any established financial institution," the agency said.

"The argument that cross-border capital flows are driving domestic stock market performance lacks evidence in the data," it concluded.

Nevertheless, it warned that all global liquidity was building up because of loose monetary policies in developed economies and that all countries would need to step up their defences against capital inflows.

Net hot money inflows in 2010 accounted for just 0.6 percent of China's GDP, it said.

Over the last decade, net hot money inflows averaged about $28.9 billion a year, contributing roughly 9 percent to China's foreign exchange reserve growth during that time, SAFE said in its 45-page report.

China registered about $400 billion in net capital outflows from 1994 to 2002. With the economy booming, property prices taking off and expectations for yuan appreciation mounting, the tide shifted from 2003 to 2010, with China seeing about $300 billion in net inflows, SAFE said.

In order to make capital flows more balanced, SAFE reiterated a long-standing pledge to broaden capital outflow channels. It also said that it would design financial, legal and administrative measures in order to make it more difficult to bring speculative capital into the country.

SAFE said it would take "extraordinary" emergency measures in sectors with excessive capital inflows. - Reuters

MARC affirms rating on Kapar Energy Ventures RM3.4b debt notes

KUALA LUMPUR: Malaysian Rating Corporation Bhd (MARC) has affirmed its rating on Kapar Energy Ventures Sdn Bhd's (KEV) RM3.402 billion Bai' Bithaman Ajil Islamic Debt Securities (BaIDS) debt notes AA+ ID with a stable outlook.

'The rating has been affirmed despite KEV's weak liquidity and second consecutive year of losses on MARC's expectation of ongoing support from TENAGA NASIONAL BHD [] (TNB), KEV's ultimate holding company,' it said on Thursday, Feb 17.

The ratings agency said TNB recently confirmed it would provide financial support to KEV to enable it to meet its obligations to facilitate the preparation of KEV's financial statements on a 'going concern' basis.

MARC said its decision not to equalise the senior unsecured debt ratings of TNB and KEV following the TNB's recent rating upgrade to AAA/Stable takes into account KEV's very much weaker fundamentals relative to TNB and MARC's view that KEV is not a core operating subsidiary of TNB.

The stable outlook on the senior debt rating reflects MARC's view that, in the short term, there is very limited up or downside potential for the rating.

KEV was set up to acquire and operate the Sultan Salahuddin Abdul Aziz Shah power plant, the largest multi-fuel thermal power station in Malaysia with a 2,420-megawatt (MW) nominal capacity. It'' operates four generating facilities running on coal, natural gas or oil.

Glove makers advance, Hartalega leads in late afternoon trade

KUALA LUMPUR: Glove makers advanced in late afternoon on Thursday, Feb 17 on mild buying interest in line with interest perking up in blue chips amid a cautious broader market.

At 3.33pm, the FBM KLCI was up 5.01 points to 1,511.31. Turnover was 1.19 billion shares valued at RM1.09 billion. There were 286 gainers, 491 losers and 264 stocks unchanged.

Hartalega rose 15 sen to RM6.05, Supermax added 15 sen to RM4.39 and the world's largest glove maker, Top Glove added 12 sen to RM5.14.

CIMB Equities Research has a Buy call on Supermax at RM4.24. In a report issued on Thursday after the analyst briefing, it trimmed its FY11-12 EPS by 1.7%-3.8% after lowering FY11 capacity by 8.7% to 19.85 billion pieces of gloves, in line with management's guidance.

'This reduces our target price RM6.80 to RM6.37, still based on a CY12 P/E of 11.6x or a 20% discount to Top Glove's target P/E of 14.5x,' it said.

CIMB Research said despite the lower capacity in FY11, it retained its BUY rating as it believed the earnings momentum would continue in FY11-12, underpinned by a three-year EPS CAGR of 7.7%.

'Potential re-rating catalysts include 1) the restart of its Sungai Buloh plant, 2) expanding nitrile production, and 3) increasing distribution income. Supermax now offers dividend yields of 2.6%-2.8%,' it said.

MRCB plans high-rise project along Jln Kia Peng with RM300m GDV

KUALA LUMPUR: MALAYSIAN RESOURCES CORP []oration Bhd (MRCB) is set to develop a luxurious high-rise project with an estimated gross development value (GDV) of RM300 million along Jalan Kia Peng, Kuala Lumpur.

The planned project will be alongside established, luxurious service residences, within the general neighbourhood of the Kuala Lumpur City Centre, according to a Bernama report on Thursday, Feb 17.

MRCB acquired the 0.40-hectare (one acre) tract of land for the project on Jan 7, this year.

MRCB chief executive officer (CEO) Datuk Mohamed Razeek Hussain said although the status is leasehold, the prime location and scarcity of land at this posh area as well as its proximity to numerous world-class facilities and amenities, makes the new development ideal for luxury residences.

"With the location and the injection of our concept, the residential development is expected to become yet another preferred residential address with an excellent choice of designs for those intending to set up residence in the area," he added. ' Bernama

Wah Seong 4Q earnings dn 28.9pct to RM24.76m on-yr on fewer projects

KUALA LUMPUR: Wah Seong Corp Bhd's earnings fell 28.9% to RM24.76 million in the fourth quarter ended Dec 31, 2010 from RM34.84 million a year ago due to the lower number of projects and unfavourable effect of foreign exchange fluctuations.

It said on Thursday, Feb 17 revenue fell 12.7% to RM397.23 million from RM455.07 million while earnings per share were 3.2 sen compared with 4.5 sen. It proposed dividend of 2.5 sen per share.

For the financial year ended Dec 31, 2010, the net profit fell 53.8% to RM55.98 million from RM121.32 million in FY09. Revenue fell 21.9% to RM1.523 billion from RM1.950 billion.

Wah Seong said the decline was due to lower revenue generated in the main divisions as a result of lower number of projects awarded in the market during 2009 and the unfavourable effect of foreign exchange fluctuations.

At the pre-tax level, it said it improved from RM18.9 million in the third quarter to RM35.26 million in the fourth quarter due to increasing activities in the main divisions of the group.

It said following the increase in bidding activities in the market, the group managed to secure new projects in the current quarter.

'The increasing trend in the oil majors' capital investment activities is expected to have a positive impact on the group's future performance. The group expects overall performance to remain positive for the financial year ending Dec 31, 2011,' it said.

PM: GDP growth exceeded 6pct in 2010

KUALA LUMPUR: Prime Minister Datuk Seri Najib Tun Razak has hinted that the country's gross domestic product (GDP) growth for 2010 may have exceeded 6%.

However, he said the official GDP figures would be announced on Friday, Feb 18.

"Tomorrow' the announcement will be made tomorrow," he told reporters after officiating a programme to enhance Dewan Negara's activities at Parliament House here on Thursday.

Asked if Malaysia was capable of recording double-digit growth in future, Najib, who is also Finance Minister, said:

"No, we cannot. Because you must remember that the Malaysian economy is much bigger than it was 20 years ago.

"As we approach to become a matured economy, we cannot get double-digit (growth) but we can get reasonably high. And, I think 6% is considered a very creditable performance.

"We have to be realistic. No developed nation can achieve double-digit." - Bernama

FBM KLCI advances at midday, but broader market stays weak

KUALA LUMPUR: The FBM KLCI extended its gains at the mid-day break on Thursday, Feb 17 as banks and key blue chips although the broader market was weaker in line with the generally tepid investor sentiment at key regional markets.

At 12.30pm, the FBM KLCI gained 0.42% or 6.30 points to 1,512.60. Losers led gainers by 411 to 280, while 274 counters traded unchanged. Volume was 868.45 million shares valued at RM705.58 million.

The ringgit strengthened 0.13% to 3.0435 versus the US dollar; crude palm oil futures for the third month delivery fell RM19 per tonne to RM3,726, crude oil added nine cents per barrel to US$85.08 while gold jumped US$3.42 per troy ounce to US$1,377.84.

Hong Kong and Shanghai markets dipped as China revealed that while foreign direct investments into the Republic rose 23.4% year-on-year to US$10 billion in January, the figure was lower than the US$14 billion it drew in December last year.

Singapore's government revised its inflation forecast to 3-4% from earlier 2-3% and warned that price growth would accelerate to 5%-6% in the months ahead before moderating in the latter part of the year, according to Reuters.

Alongside its price forecasts, the government also cut its initial 2010 and fourth-quarter growth estimates. Fourth quarter seasonally-adjusted annualised growth was revised to 3.9% from 6.9%, while full year growth was marked down to 14.5% from 14.7%, it said.

The revisions were expected after weaker-than-forecast December manufacturing data, said Reuters.

''

Shanghai Composite Index -0.35% 2,913.76 Hang Seng Index -0.10% 23,133.23 Singapore's Straits Times Index -0.33% 3,084.64 South Korea's Kospi -0.59% 1,977.43 Nikkei 225 +0.41% 10,852.23 Taiwan's Taiex +0.14% 8,724.87 ''

Among the major gainers, Axiata added 10 sen to RM5.09, Petronas Dagangan 22 sen to RM12.72, Petronas Chemicals nine sen to RM6.19, Genting Malaysia seven sen to RM3.40 and Genting six sen to RM10.24.

Among banks AMMB added nine sen to RM6.33, CIMB eight sen to RM8.18, while Public Bank and Maybank rose four sen each to RM13.04 and RM8.51.

Other gainers included Kulim, Cycle & Carriage, Hartalega, Malaysia Smelting Corp, Kluang, Batu Kawan and Top Glove.

Decliners this morning included BAT, Nestle, MAHB, HPI, Uzma and Ho Hup, while the actives included Scomi, SAAG, Olympia, Iris Corp and Sozo Global.

CIMB Equities Research remains underweight on regional telcos

KUALA LUMPUR: CIMB Equities Research remains UNDERWEIGHT on the regional telco sector given regulatory uncertainties in Thailand and to a lesser extent Malaysia, and stiff competition in Singapore.

'We are most optimistic on Malaysia which offers growth (via Axiata) and high dividends but will temper our view towards the end of the year when spectrum auction looms. Reflecting the maturity of this sector, dividend yields are soaring,' it said on Thursday, Feb 17.

CIMB Research said it preferred telcos that offer growth or capital management initiatives.

It said its top picks were Axiata and XL Axiata which offered growth, and Telekom Malaysia which should make a generous payout.

Axiata and XL could also surprise on the upside in terms of margins. Key sells are SingTel as it faces multiple headwinds, due to its heavy gearing and StarHub which faces rising competition in fixed broadband and pay TV.

IOI Corp slips to RM5.63 after disappointing 1H earnings

KUALA LUMPUR: Shares of PLANTATION [] heavyweight IOI Corp fell in late morning on Thursday, Feb 17 after its earnings for the first half ended Dec 31, 2010 came in below analysts' expectations.

At 10.49am, IOI Corp was down eight sen to RM5.63.

The FBM KLCI rose 4.92 points to 1,511.22. Turnover was 542.56 million shares valued at RM360.25 million. There were 273 gainers, 282 losers and 280 stocks unchanged.

OSK Research'' said IOI Corp's annualised 1HFY11 core net profit of RM920.5 million was 11.3% below its recently raised forecast of RM2074.7 million and 16.5% below consensus expectation.

'If we knock off the RM61 million one-off gain from the disposal of investment property, the core number would have been worse,' it said on Thursday, Feb 17.

'We are maintaining our Sell call on IOI Corp with our target price remaining at the recently downgraded RM4.41. Based on our CPO price assumption of RM3,200 for CY11, IOI is trading in excess of 19x earnings. Its stretched valuation has resulted in sub-par stock price performance and we believe this will continue to be the case in the foreseeable future until the company gets more aggressive with its new planting,' it added.

FBM KLCI extends gains at mid-morning

KUALA LUMPUR: The FBM KLCI extended its gains at mid-morning on Thursday, Feb 16, lifted by gains at key blue chips including banking stocks after the firmer overnight close at Wall Street.

Regional markets were mixed, with investors remaining cautious as they weighed further economic data emerging in the region.

Singapore on Thursday revised downwards fourth quarter GDP growth estimates and warned that inflation will be higher than earlier forecast, according to Reuters.

Meanwhile, China drew US$10 billion in foreign direct investment (FDI) in January, 23.4% more than in the same period of 2010, said Reuters.

The FBM KLCI rose 3.44 points to 1,509.74.

Gainers led losers by 251 to 189, while 258 counters traded unchanged. Volume was 391.36 million shares valued at RM227.38 millon.

At the regional markets, Japan's Nikkei 225 rose 0.38% to 10,849.57 and Hong Kong's Hang Seng Index opened 0.1% higher at 23,178.09.

South Korea's Kospi fell 0.56% to 1,977.88, Singapore's Straits Times Index lost 0.43% to 3,081.50, Taiwan's Taiex was down 0.19% to 8,696.68 while the Shanghai Composite Index shed 0.03% to 2,923.10.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to clients on Feb 17 said he anticipates the index to remain volatile in the short term and bearish in the medium term.

As a result, very short-term trading was the key to the markets, he said.

'We suggest clients liquidate on rallies and remain more in cash (or in price defensive counters). Heavy foreign selling in the Asia-Pacific region and in Malaysia could be the next obvious major investment move on any significant regional rebound.

'Due to the higher US markets last night, we may see the FBM KLCI in a rebound posture today,' he said.

Meanwhile, BIMB Securities Research said the encouraging corporate earnings results, M&A activity and more importantly due to favourable economic reports lifted Wall Street yesterday.

Added to that, the Federal Reserves reported that factories in US produced more goods last month although the overall IPI fell, it said.

'These goods news were however weighed down by the rising wholesale prices in the country no thanks to the jump in gas prices and other related goods. Above all, the weakening of JPY against the USD will be a boon for stock market performance today.

'Expect the local market to trade in positive momentum as a result. JPY closed at 83.61 Yen per Dollar yesterday against the 52-week high of 80.40 Yen per Dollar, suggesting that Japan export market may recover soon,' it said in a note Feb 17.

On Bursa Malaysia, CIMB added eight sen to RM8.18, Public Bank and Maybank up two sen each to RM13.02 and RM8.49, Axiata nine sen to RM5.08 and Genting gained eight sen to RM10.26.

MTD Capital was up 20 sen to RM11.20, Hartalega 18 sen to RM6.08, Cycle & Carriage 14 sen to RM4.92, Scientex 12 sen to RM2.53, Mamee 11 sen to RM3.80 while Mudajaya, MMHE, KLK and Kulim added 10 sen each to RM5.01, RM6.54, RM21.96 and RM14.48.

Losers included SHL, HPI, C.I.Holdings, IOI Corp, Lafarge Malayan Cement and Uzma.

Actives'' included Scomi, Petra, Focus Point, Nextnation'' and Ho Wah Genting.

OSK Research maintains Sell on IOI Corp, TP at RM4.41

KUALA LUMPUR: OSK Research'' said IOI Corp's annualised 1HFY11 core net profit of RM920.5 million was 11.3% below its recently raised forecast of RM2074.7 million and 16.5% below consensus expectation.

'If we knock off the RM61 million one-off gain from the disposal of investment property, the core number would have been worse,' it said on Thursday, Feb 17.

'We are maintaining our Sell call on IOI Corp with our target price remaining at the recently downgraded RM4.41. Based on our CPO price assumption of RM3,200 for CY11, IOI is trading in excess of 19x earnings. Its stretched valuation has resulted in sub-par stock price performance and we believe this will continue to be the case in the foreseeable future until the company gets more aggressive with its new planting,' it added.

OSK Research said among PLANTATION [] stocks in its coverage, IOI has the lowest ratio of young mature to total mature trees and the lowest percentage of trees not yet at peak maturity, which means it has the slowest production growth rate.

OSK Research maintains Neutral view towards near-term market

KUALA LUMPUR: OSK Research said it is maintaining its Neutral view towards the near-term market.

It said the FBM KLCI gapped down by nearly 9.0 points at the opening on Wednesday, Feb 16 but also made an attempt to bounce back. The index finally eked out a 0.97-point gain and also closed slightly above the much talked about 1,505-level.

OSK Research said on Thursday, that based on Wednesday's market action, it believes no one can tell for sure if it was a decisive return back above the 1,505-level. Anyhow, whether the previous major recent-low of 1,505 has been convincingly violated or not is no longer much of concern to it.

'Our focus is now on the lower high which has been created at below the uptrend line. This is because having created a lower high, there is a possibility that the index may start creating a downtrend channel and eventually retrace to the next key low of 1,474.

'We maintain our Neutral view towards the near-term market. In the meantime, while it does look like the index might be creating a downtrend or a downtrend channel, it is still too early to confirm this statement,' said the research house.

OSK Research said from the current level, there is immediate support at the 1,500-level, followed by the 1,474-level. Although the index closed slightly above the 1,505-level, it still viewed this level as the immediate resistance.

'We would still want to see if the index can return back above the 1,505-level on strong upward momentum while next resistance is seen at the 1,524-1,536'' area,' it said.

RHB Research maintains Outperform on Amway, fair value at RM10.23

KUALA LUMPUR: RHB Research Institute said '' Amway's FY12/10 net profit of RM78.3 million (+7.9% on-year) was below expectations, accounting for 94% and 95% of its and consensus forecasts respectively.

The research house said on Thursday, Feb 17 the main variance to its forecasts was the higher-than-expected selling and distribution expenses during the year, which was 14% higher than its estimates.

Amway declared a fourth interim single tier dividend of 9.0 sen for the quarter, bringing its full-year FY10 dividends to 66 sen, 3 sen higher than the research house's projected 63 sen, and 37.5% higher than FY09's 48 sen. This translates to net payout of 130% for FY10 (FY09: 109%) and a yield of 7.6%.

'We are maintaining our FY11-12 forecasts, pending Amway's analysts' briefing this 22 Feb. We also introduce our FY13 forecasts. Our fair value is maintained at RM10.23 based on unchanged WACC of 8.9%. Maintain Outperform,' said RHB Research.

Zelan falls after posting negative revenue, weak outook warning

KUALA LUMPUR: Shares of ZELAN BHD [] fell in early trade on Thursday, Feb 17 after it recorded negative revenue from its continuing operations in Indonesia totalling RM39.2 million in the third quarter ended Dec 31, 2010 and warned of more losses in the current fourth quarter.

At 9.10am, it was down 3.5 sen to 54.5 sen with 2.71 million shares done.

The FBM KLCI rose 0.79 of a point to 1,507.09. Turnover was 107.8 million shares valued at RM47.02 million. Advancers beat decliners three to one, with 152 gainers, 51 losers and 149 stocks unchanged.

On Wednesday, Zelan said the negative revenue was due to a reversal made on the revenue recognised earlier as a result of additional foreseeable losses for the Indonesian project.

Net losses for the 3Q ended Dec 31, 2010 were RM41.29 million compared with RM60.38 million. Loss per share was 7.33 sen versus 10.72 sen.

Zelan said there was minimal revenue recognised from other existing projects during the 3Q and warned it was expected to continue to make losses in the final quarter as its revenue was expected to come only from its existing secured order book.

Kulim, DiGi advance in early trade, but broader market hesitant

KUALA LUMPUR: Blue chips advanced in early trade on Thursday, Feb 17 with gains'' in Kulim, DiGi and MMHE while the broader market was mixed, which reflected investors' hestiation after the recent sharp falls.

At 9.25am, the FBM KLCI was up 1.33 points to 1,507.63. Turnover was 207.80 million shares valued at RM94.72 million. There were 166 gainers, 133 losers and 194 stocks unchanged.

Kulim advanced, adding 24 sen to RM14.62, DiGi 22 sen to RM26.20 while MMHE added 10 sen to RM6.54.

MTD rose 20 sen to RM11.20, which was already 20 sen above the revised takeover offer of RM11.

Glove maker Hartalega rose 10 sen to RM6 and CONSTRUCTION [] outfit Mudajaya added nine sen to RM5.

Singapore raises inflation outlook, cuts 2010 GDP estimate

SINGAPORE: Singapore on Thursday, Feb 17'' revised downwards fourth quarter GDP growth estimates and warned that inflation will be higher than earlier forecast.

"For 2011, the inflation forecast has been revised from 2.0 to 3.0 percent to 3.0 to 4.0 percent. In particular, inflation is expected to rise further to 5.0 to 6.0 permcent in the first few months of this year," the Ministry of Trade and Industry said in a statement.

The ministry also said the city-state's gross domestic product rose by 3.9 percent on an seasonally adjusted annualised basis from the third quarter and by 12 percent from a year ago, less than earlier forecast.

This meant Singapore's economy grew by 14.5 percent last year.

The growth rate for the fourth quarter was below the 12.5 percent annual and 6.9 percent quarter-on-quarter advance estimates reported in January, and was expected by analysts after December manufacturing came in below the earlier forecast.

Trade agency International Enterprises Singapore said in a separate statement that non-oil domestic exports are likely to grow by 8-10 percent this year, up from an earlier forecast of 6-8 percent, citing improved global economic outlook. - Reuters

#Stocks to watch:* Dialog, IOI Corp, Amway, Green Packet

KUALA LUMPUR:Stocks on Bursa Malaysia may edge up on Thursday, Feb 17, hopefully encouraged by overnight gains on Wall Street where the market overcame concerns about tensions between Israel and Iran, and indexes slowly climbed back to close near the session's high.

According to Reuters, the S&P 500 rose on Wednesday to twice its value from just two years ago, a bounce whose vigor has not been seen since the Great Depression. Stocks were boosted by Dell earnings and deal announcements fueling hope for more gains, but light volume makes the recent move more tenuous.

The Dow Jones industrial average gained 61.53 points, or 0.50 percent, to 12,288.17. The Standard & Poor's 500 Index rose 8.31 points, or 0.63 percent, to 1,336.32. The Nasdaq Composite Index added 21.21 points, or 0.76 percent, to 2,825.56.

At Bursa Malaysia, stocks which could see trading interest after the recent corporate results include DIALOG GROUP BHD [], IOI Corp Bhd, Amway (Malaysia) Holdings Bhd'' and GREEN PACKET BHD [].

Dialog's earnings rose 25.7% to RM35.99 million in the second quarter ended Dec 31, 2010 from RM28.63 million a year ago, due mainly to higher contribution from its engineering and CONSTRUCTION [] and plant maintenance activities in Malaysia and Singapore.

Revenue slipped 2.5% to RM268.53 million from RM275.57 million in 2009. Earnings per share were 1.84 sen while net assets per share were 26.3 sen.

For the six months, earnings rose 24.3% to RM69.09 million from RM55.56 million. Revenue declined 8.9% to RM532.33 million from RM584.42 million.

Reviewing its performance for the quarter, Dialog said its specialist products and services for international operation also performed better in the current financial quarter.

Meanwhile, IOI Corp's net profit rose 12.8% to RM520.24 million in the second quarter ended Dec 31, 2010 from RM461.21 million a year ago, due mainly to higher profit contribution from the PLANTATION [] and property segment.

Revenue was RM3.97 billion compared to RM3.06 billion in 2009, while earnings per share was 8.15 sen. Net assets per share was RM1.73. IOI Corp declared an interim single tier tax-exempt dividend of 80% or 8.0 sen per ordinary share of 10 sen each in respect of the financial year ending June 30, 2011.

In the 2Q ended Dec 31, 2010, total fair value losses on derivative contracts recognised were about RM73 million.

For the six months ended Dec 31, IOI Corp net profit rose to RM1.02 billion from RM939.59 million, on the back of revenue RM7.49 billion. IOI Corp's plantation segment reported a 14% increase in operating profit to RM363.7 million for 2QFY2011 as compared to RM319.9 million a year ago.

CIMB Equities Research said IOI Corp's 1H earnings at 40% of its full-year forecast and 42% of consensus projections, the core net profit was broadly in line as it expected better 2H earnings.

'We retain our FY11-13 core EPS forecasts and our target price of RM5.71, based on an unchanged forward P/E of 16 times.

'The stock remains an UNDERPERFORM in view of its rich valuations and declining FFB yields. On top of that, we believe that CPO price is close to its peak. This is a potential de-rating catalyst, along with weaker production,' it said.

CIMB Research said for exposure to the Malaysian plantation sector, it preferred Sime Darby.

Meanwhile, Amway's net profit rose 12.5% to RM18.32 million in the fourth quarter ended Dec 31, 2010 from RM16.28 million a year ago, year mainly due to the increase in sales revenue.

Revenue rose to RM184.1 million from RM171.89 million mainly due to an increase in the distributors' productivity after implementing the sales and marketing programme, effort index adjustment and the distributor price increase implemented in first half of the year.

Earnings per share were 11.14 sen while net asset per share was RM1.28. It declared a fourth interim single tier dividend of 9.0 sen net per share.

For the financial year ended Dec 31, 2010, it posted net profit RM78.32 million on the back of revenue RM719.41 million.

Green Packet Bhd posted net loss of RM77.68 million in the fourth quarter ended Dec 31, 2010, which was lower compared with the RM100.71 million a year ago.

Revenue rose 58% to RM116.25 million from RM73.54 million, loss per share was 11.8 sen compared with 15.3 sen. However, the loss from continuing operations were RM100.11 million compared with RM103.82 million a year ago.

For FY10, it managed to reduce its net loss to RM134.97 million from RM182.64 million in FY09, while revenue increased 80.8% to RM393.97 million from RM217.81 million. Loss from continuing operations increased to RM209.67 million from RM187.41 million in FY09.

Green Packet's total group accumulated losses increased to RM274.67 million as at Dec 31, 2010 from RM196.53 million as at Sept 30, 2010.

Penang property developer Tambun Indah Land Bhd intends to strengthen its footprint in Penang Island with a mixed development project of RM180 million in gross development value (GDV).

Tambun Indah had proposed to acquire three companies for RM11.6 million, which would increase the group's GDV by RM245 million to RM1.4 billion to last till 2016.

'The group expects contributions of RM38.7 million in pre-tax profits over development period from FY2011 to FY2014,' it said.

Airports operator Malaysia Airports Holding Bhd's net profit fell 29% to RM100.04 million for the fourth quarter ended Dec 31, 2010 from RM140.97 million a year ago.

MAHB said the decline was mainly due to the adoption of FRS 139 resulting in the higher share of losses in an associate company.

However, the concession payable by the associate company was recognised at fair value and subsequently at amortised cost. Gains and losses arising from the changes in the fair value were recognised in the income statement.

Its 4Q revenue rose to RM494.37 million from RM476.84 million a year ago, while earnings per share were 9.15 sen. Net assets per share was RM2.99.

PETRONAS DAGANGAN BHD [] net profit for the third quarter ended Dec 31, 2010 rose 26.1% to RM236.16 million from RM187.25 million a year earlier, driven by higher product average selling prices and sales volume.

The company said on Wednesday, Feb 16 that the higher net profit was also due to lower operating costs.

Revenue for the quarter rose to RM5.93 billion from RM5.34 billion. Earnings per share were 23.8 sen, while net assets per share was RM4.60.

Loss-making ZELAN BHD [] recorded negative revenue from its continuing operations in Indonesia totaling RM39.2 million in the third quarter ended Dec 31, 2010 and warned of more losses in the current fourth quarter.

Explaining the negative revenue, Zelan said this was due to a reversal made on the revenue recognised earlier as a result of additional foreseeable losses for the Indonesian project.

It said net losses for the 3Q were RM41.29 million compared with RM60.38 million. Loss per share was 7.33 sen versus 10.72 sen.

Zelan said there was minimal revenue recognised from other existing projects during the 3Q and warned it was expected to continue to make losses in the final quarter as its revenue was expected to come only from its existing secured order book.

'The group recorded a loss after tax from continuing operations of RM40.5 million as compared to RM64.4 million losses in the preceding year's quarter,' it said.

It cautioned there was a possibility that liquidated ascertained damages of a maximum of about RM125 million may be imposed and the performance bond issued by the group to the owner of the project of RM132 million may be drawn down.

'It may also result in delays in the collection of the outstanding progress billings previously certified by the owner of the project of approximately RM181 million, potentially pending ascertainment of costs to completion by the independent consultants,' it said.