RAM Ratings downgrades Texchem debt notes, negative outlook

KUALA LUMPUR (Nov 19): RAM Ratings has downgraded the long-term rating of TEXCHEM RESOURCES BHD []'s RM100 million debt notes from A3 to BBB1 with a negative outlook on rising concerns about the outlook for the company's weakening financial performance.

The ratings agency said on Friday the debt notes involved the commercial papers/medium-term notes programme (2005/2012), from A3 to BBB1, with a negative outlook. Concurrently, the short-term rating has been maintained at P2.

RAM Ratings said the downgrading of Texchem's long-term rating was based on its weakened business and financial performance.

It cited that three of the group's five divisions delivered a poorer-than-expected showing in the first 9 months of FYE December 2011 (9M FY Dec 2011).

Texchem's food division sank back into the red after it turned around in FY Dec 2010, while operational issues weighed down on its family-care division.

Meanwhile, Texchem group's polymer-engineering division, which has yet to recover from the previous downturn, is likely to continue facing tough operating conditions.

'Now into its fourth year of net losses, Texchem's eroded shareholders' funds and heftier debt load are undermining the strength of its balance sheet; the group is highly leveraged, with an adjusted gearing ratio of 1.97 times as at end-September 2011," said Kevin Lim, RAM Ratings' Head of Consumer and Industrial Ratings.

"Moving forward, the group's adjusted gearing ratio is expected to deteriorate, mainly due to a heavier debt load. Should its losses persist, its shareholders' funds would also be eroded,' added Lim.

He added Texchem was also viewed to have tight liquidity owing to its large proportion of short-term borrowings against its cash reserves.

"Nonetheless, RAM Ratings understands that Texchem is looking at unlocking value of some of its assets. We believe this will generate significant net cash inflows that will help to considerably strengthen its balance sheet and liquidity position," it said.

In the meantime, the ratings also reflect Texchem's established market position as well as its geographical and business diversity. Its expanding restaurant operations currently boast the largest chain of Japanese restaurants in Malaysia while the Group is also a major local insecticide manufacturer with noteworthy shares of the insecticide markets in several ASEAN countries.

RAM Ratings said elsewhere, Texchem's industrial and polymer-engineering divisions have over three decades of operating track record. We opine its ability to penetrate the supply chain of large multinational corporations under its industrial and polymer-engineering operations is a testament to its competency and reliability.

The negative outlook on the long-term rating has been maintained premised on lingering concerns regarding Texchem's weak business and financial performance amid the current devastating floods in Thailand, the slowdown of the global semiconductor industry, and the mounting economic woes of the United States and European nations.

RAM Ratings said hese may have a greater impact on the group's performance than expected. The ratings could be downgraded further if Texchem's business performance deteriorates or its financial metrics do not improve, or its planned asset sale does not pan out.

On the other hand, the outlook may be revised to stable if the group is able to weather the current setbacks and its asset disposal results in a significantly stronger balance sheet.

#Stocks to watch:* IOI Corp, MEGB, Affin, Benalec, Texchem

KUALA LUMPUR (Nov 19): Sentiment is expected to stay cautious in the week ahead as investors worry about whether the governments in Europe and the US could resolve the growing debt problems.

Reuters said a major question has been whether the European Central Bank will find a way to act as a lender of last resort in the manner of the U.S. Federal Reserve. Speculation has grown the ECB could lend money to the International Monetary Fund to bail out some euro zone members.

The Dow Jones industrial average gained 25.43 points, or 0.22%, to 11,796.16. The S&P 500 dipped 0.48 point, or 0.04%, to 1,215.65. The Nasdaq Composite lost 15.49 points, or 0.60%, to 2,572.50. However, for the week, the Dow fell 2.9%, the S&P dropped 3.8% and the Nasdaq lost 4%.

As for Malaysia, while third quarter GDP expanded at a stronger pace of 5.8% on-year from a revised 4.3% in the second quarter, there were gnawing concerns about the headwinds in the fourth quarter and 2012.

RHB Research Institute said it tweaked its real GDP growth estimate for 2011 upwards to 5% from 4.5%.

'However, we are keeping our 2012 forecast unchanged and expect the economic growth to weaken to 3.6%, given that Eurozone's sovereign debt crisis is still lingering and risk of it worsening remains high, and on the back of a slow US economic growth,' it said.

Stocks to watch on Monday include IOI CORPORATION BHD [], Masterskill Education Group Bhd (MEGB), AFFIN HOLDINGS BHD [], Benalec Holdings Bhd and TEXCHEM RESOURCES BHD [].

IOI's net profit for the first quarter ended Sept 30, 2011 fell 48.2% to RM258.09 million from RM498.13 million a year ago, due mainly to unrealised translation loss on foreign currency denominated borrowings of RM271.7million. The loss was higher than analysts' estimates. The PLANTATION [] company's revenue for the quarter rose 17.9% to RM4.15 billion from RM3.52 billion a year ago.

Meanwhile, MEGB's net profit for the third quarter ended Sept 30, 2011 fell 78.8% to RM5.55 million from RM26.18 million a year ago. It attributed the poorer financial performance mainly to lower student enrolment and higher overheads. MEGB's revenue for the quarter fell to RM61.19 million from RM80.68 million in 2010.

For the nine months ended Sept 30, MEGB's net profit fell 47.2% to RM39.72 million from RM75.29 million in 2010, while its revenue fell 14.5% to RM200.67 million from RM234.83 million.

However, Affin reported an improvement in its earnings, which rose 17.5% to RM135.19 million in the third quarter ended Sept 30, 2011 from RM115.01 million a year ago, boosted by higher write-backs and higher Islamic banking income.

Its revenue increased 13.7% to RM680.12 million from RM597.82 million a year ago while earnings per share were 9.05 sen compared with 7.70 sen. It declared an interim dividend of 12 sen a share.

The Edge weekly reported that Benalec's recent foray into land reclamation works at the oil and gas hub in Johor has raised some eyebrows. But if all goes well, the project will boost the total outstanding gross development value of its projects from about RM1.5 billion to over RM15 billion, said the report.

Another company to watch is Texchem on expectations it may unlocking value of some of its assets.

RAM Rating Services Bhd said the corporate exercise by Texchem would generate significant net cash inflows that will help to considerably strengthen its balance sheet and liquidity position.

However, the ratings agency was also concerned about its financial health. It downgraded the long-term rating of Texchem's RM100 million debt notes from A3 to BBB1 with a negative outlook on rising concerns about the company's weakening financial performance.

RAM Ratings said the downgrading of Texchem's long-term rating was based on its weakened business and financial performance.

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US STOCKS-Market eyes Europe, DC after worst week in 8

NEW YORK (Nov 18):'' The worst week for U.S. stocks in two months ended with traders mostly sitting it out on Friday as they waited for politicians in Europe and the United States to tackle festering debt problems.

The Dow and S&P 500 were little changed and the Nasdaq composite index fell.

Friday's directionless market showed more exhaustion than relief as Europe remained investors' primary worry. Stocks found support after Italian and Spanish bond yields fell thanks to buying by the European Central Bank.

In the United States, doubts grew whether a bipartisan committee could come up with budget cuts and tax increases that Congress can agree on next week.

Financial shares, which have been among the most sensitive to euro zone financial strains, rose on Friday. The S&P financial index was up 0.5 percent. Morgan Stanley shares edged up 0.6 percent to $14.21 but fell more than 13 percent this week.

A major question has been whether the European Central Bank will find a way to act as a lender of last resort in the manner of the U.S. Federal Reserve. Speculation has grown the ECB could lend money to the International Monetary Fund to bail out some euro zone members.

"It's hard to see the ECB changing roles, but on the other hand the powers to be have to be very aware of the consequences if this gets out of control," said John Manley, chief equity strategist at Wells Fargo advantage funds in New York.

"I can't imagine it is allowed to go to a level that it causes serious harm to the marketplace."

The Dow Jones industrial average gained 25.43 points, or 0.22 percent, to 11,796.16. The S&P 500 dipped 0.48 point, or 0.04 percent, to 1,215.65. The Nasdaq Composite lost 15.49 points, or 0.60 percent, to 2,572.50.

For the week, the Dow fell 2.9 percent, the S&P dropped 3.8 percent and the Nasdaq lost 4 percent.

The S&P failed to rise above 1,225 after a drop below it on Thursday triggered massive selling, and it is now strengthening as technical resistance.

Little conviction characterized this week's market action as traders worried changes in governments in Greece and Italy failed to bring bond yields much lower.

Spain's likely new leader, center-rightist Mariano Rajoy, pleaded with financial markets for breathing room to start tackling the country's economic crisis if he wins power in a parliamentary election this weekend.

"If people don't see politicians standing behind change, markets are ready to force change," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.

While investors try to come to grips with how much of an impact the European crisis may have on the U.S. economy, data for the United States showed continued improvement.

A gauge of future U.S. economic activity rose more than expected in October, according to the Conference Board.

About 6.7 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq on Friday, below the current daily average of 8 billion shares.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 13 to 10, while on the Nasdaq decliners beat advancers 1,259 to 1,226. - Reuters

COMMODITIES-Most markets down again; oil snaps 7 weeks of gain

NEW YORK (Nov 18): Most commodities fell again on Friday, with U.S. oil prices finishing their first week lower since early October on worries over Europe and selling by investors taking profit from seven weeks of gains.

Agricultural markets from corn to cocoa and sugar joined oil on the downside as burgeoning crop stockpiles and weak demand outlooks pushed investors to sell.

Only metals markets offered some solace to optimistic investors as gold and copper rebounded from Thursday's beating, although both were sharply down on a weekly basis.

For the coming week, investors braced for more shocking headlines from the euro zone debt crisis and possible surprises from a surfeit of U.S. economic data, including home sales, inflation and job indicators.

A lot of investors "are sitting on the sidelines, scared to death," said Roy Huckabay, grains analyst for The Linn Group in Chicago.

The 19-commodity Reuters-Jefferies CRB index settled Friday's session down 0.7 percent. The index has lost more than 3 percent over the last two days.

Oil closed down after a bout of profit-taking on this week's big moves in the spread between the U.S.-based West Texas Intermediate crude and London's Brent.

The market was initially up on Friday on speculation that the European Central Bank may start lending to the International Monetary Fund to bail out major euro zone economies.

It fell as euro zone worries reemerged later in the session and investors began cashing in their WTI-Brent spread positions. Selling of the expiring December U.S. contract of WTI to buy the pricier new benchmark, January, also pushed the market lower.

"Liquidations on the December contract and profit-taking ahead of the Thanksgiving holiday (next) week pulled down U.S. crude futures," said Phil Flynn, analyst at PFGBest Research in Chicago.

WTI's December contract slid $1.41 to settle at $97.41 a barrel, while the one for January fell $1.26 to settle at $97.67 a barrel. Brent crude dipped 66 cents to settle at $107.56 a barrel.

In metals, the benchmark U.S. copper futures contract, December settled the session up half a percent at $3.4020 per lb. For the week, it was down 2.5 percent. U.S. gold futures for December settled up $4.90 at $1,725.10 an ounce. For the week, the contract was down 3.6 percent, its biggest drop since the first week of October. - Reuters

ANALYSIS-U.S. debt battles to persist no matter what

WASHINGTON (Nov 18): It is make or break time for a special U.S. committee on deficit reduction, but even if it succeeds in striking a last minute deal, it will not be enough to address future financial strains from an aging population.

The panel needs to have a deal in hand by Monday to meet a Nov. 23 deadline for a vote by the 12 "super committee" members. But as negotiations enter the final days after more than two months of intense talks, the six Democrats and six Republicans remain far apart on the central issues of tax increases and spending cuts for healthcare and retirement programs that threaten to overwhelm the federal budget.

While many lawmakers have pushed for a "big deal" of $3 trillion to $4 trillion in spending cuts and tax increases over the next decade, the super committee was asked to find at least $1.2 trillion in deficit reduction over 10 years. Failure to reach agreement will trigger a similar amount of automatic spending cuts split between military and domestic programs.

Even if the panel manages to strike an eleventh hour deal, bitter partisan battles over U.S. deficits, which have topped $1 trillion for each of the past three years, will almost certainly continue through next year's presidential and congressional elections.

"Whatever they do this time: The trigger, or a partial deal, or a $1.2 trillion non-structural deal, and even the $3 trillion to $4 trillion deal, it is not the end of deficit reduction," said Ethan Siegal of The Washington Exchange, which tracks Washington for investors.

The reason is the 78 million baby boomers born between 1946 and 1964. The first wave is already beginning to draw on Medicare health and Social Security retirement benefits, leading program costs spiraling higher.

U.S. Census data for 2009, the most recent available, show about 8.6 million baby boomers, 11 percent of the total, are already receiving Social Security benefits and about 6.6 million were receiving disability benefits.

This should come as no surprise to lawmakers. For years the non-partisan Congressional Budget Office has issued dire warnings about the budget effects of an aging population and rapidly rising healthcare costs.

PUTTING ON A BRAVE FACE

If nothing changes, federal spending on health and retirement programs will grow from roughly 10 percent of the total U.S. economy currently to about 15 percent of GDP 25 years from now, according to the CBO. By comparison, spending for all federal programs averaged just over 18 percent for the past 40 years, the CBO said.

"Putting the federal budget on a sustainable path will require significant changes in spending policies, tax policies, or both," CBO director Douglas Elmendorf told the super committee as it began its work in early September.

In the end, it appears the super committee will do neither.

Putting a brave face on the super committee effort, one Republican congressional aide said that at a minimum the negotiations had helped raise public awareness over the hard choices needed to rein in spending on Medicare and Medicaid health programs for the elderly and poor as well as the Social Security retirement program.

"Things are being talked about in a way they have never been talked about before," said the aide, who is familiar with super committee discussions but asked not to be identified.

Republicans had said they could support some tax increases in return for a major overhaul of Medicare and other benefits. At the same time, they pushed to lower the top income tax rate from 35 percent to 28 percent.

Democrats rebuffed those Medicare proposals saying they would put too great a financial burden on the elderly and poor while giving big tax benefits to the wealthy .

The $1.2 trillion in automatic spending cuts that will start going into effect in January 2013 may be enough to avert any immediate adverse reaction by financial markets.

But with the U.S. debt topping $15 trillion, many experts believe continued failure by Washington to close the gap between spending and revenues will eventually upset financial markets, leading to further downgrade of U.S. debt by credit rating agencies and higher interest rates. - Reuters

Seven banks sued over MF Global collapse

NEW YORK (Nov 18): Seven banks that helped MF Global Holdings Ltd sell bonds were sued by pension funds who said the bonds' offering prospectuses concealed problems that led to the futures brokerage's collapse.

The lawsuit was filed Friday afternoon in Manhattan federal court against units of Bank of America Corp, Citigroup Inc, Deutsche Bank AG, Goldman Sachs Group Inc, Jefferies Group Inc, JPMorgan Chase & Co and Royal Bank of Scotland Group Plc.

Other defendants include several officials associated with MF Global, including former Chief Executive Jon Corzine.

Friday's lawsuit may be one of the earliest efforts for investors to recover money from relatively deep-pocketed defendants that they believe may share in responsibility for MF Global's October 31 bankruptcy.

Bank of America spokeswoman Shirley Norton, Citigroup spokeswoman Danielle Romero-Apsilos and Jefferies spokesman Richard Khaleel declined to comment. The remaining banks did not immediately respond to requests for comment.

According to the complaint, the registration statements and prospectuses for about $900 million of MF Global note offerings this year omitted how the company was using high leverage, investing heavily in risky European sovereign debt, and not properly segregating client assets from its own.

It said the seven banks helped draft the offering documents and sell the notes, collecting $21.2 million of fees, but that their "failure to conduct an adequate due diligence investigation was a substantial factor" in MF Global's collapse, as well as in defaults on the notes.

The lawsuit was brought by the IBEW Local 90 Pension Fund in Connecticut, and the Plumbers' and Pipefitters' Local #562 Pension Fund in Missouri, and seeks class-action status.

It seeks damages for investors between February 3, 2011 and October 31, 2011 in MF Global securities, including its 1.875 percent convertible senior notes maturing in 2016, its 3.375 percent convertible senior notes maturing in 2018, and its 6.25 percent senior notes maturing in 2016.

MF Global is not a defendant because of the bankruptcy.

The case is IBEW Local 90 Pension Fund et al v. Corzine et al, U.S. District Court, Southern District of New York, No. 11-08401. - Reuters

Goldman Sachs names 261 new managing directors

NEW YORK (Nov 18): Goldman Sachs Group Inc promoted 261 employees to managing directors this week, according to an internal memo sent this week, as the bank seeks to retain top talent amid a wave of layoffs across Wall Street.

This year's list represents a 19 percent drop from the 321 employees named managing director in 2010 and the lowest amount since 259 were promoted in 2008.

The decline in promotions correlates with layoffs occurring at Goldman and most of its Wall Street competitors during a tough period for trading and investment banking revenue.

Goldman's overall workforce declined by 1,300 employees from June 30 to Sept. 30 as the bank tries to wring out at least $1 billion in cost savings to protect its bottom line.

During the quarter, Goldman lost $428 million, only the second quarterly loss in its 12 years as as a public company, while revenue declined 60 percent from the year-ago period.

Still, the bank is also working to retain talented young professionals, particularly in growth markets such as Asia and Latin America.

In a presentation on Tuesday, Chief Executive Lloyd Blankfein said nearly 300,000 people applied to work at Goldman Sachs in 2010 and 2011 and the bank hired less than 4 percent of that pool.

"Our commitment to attract talented professionals doesn't end with recruiting," said Blankfein. "We commit significant resources to their continued development."

Managing director is a coveted position among more junior Goldman employees and often takes years to achieve. The position is one level below partner managing directors, the most senior position at the firm and a relic from its days as a private Wall Street partnership.

Blankfein said the average tenure of a managing director is about 12 years, while partners average 15.5 years at the bank.

Goldman declined to comment on the promotion memo, which was sent on Wednesday. - Reuters

Bank Negara's measures to promote responsible financing practices

KUALA LUMPUR (Nov 18): Bank Negara Malaysia has issued guidelines to financial institutions aimed at promoting prudent, responsible and transparent retail financing practices.

The central bank said on Friday the guidelines, which take effect from Jan 1, 2012 complement other measures that promote better protection for financial consumers and a sustainable credit market that contributes towards preserving financial and macro-economic stability.

Below are the main points of the guidelines:

Requirements apply to all new and additional financing offered to individual customers and sole proprietors.

Applicable to the following products:

1. Home financing

2. Vehicle financing

3. Credit and charge card

4. Personal financing, including overdraft facility

5. Financing for the purchase of securities except for share margin financing that are subject to the rules of Bursa Malaysia

Key requirements in guidelines:

1. Suitability and affordability assessment. This is to ensure that a financing product offered to a customer is suitable and affordable given the customer's financial circumstances and needs.

2. Marketing and disclosure. The marketing staff must provide product disclosure sheet to customer and the'' marketing staff must explain key information.

The marketing staff must be properly trained and steps must be taken to ensure remuneration policies promote responsible marketing practices.

3. Recovery. Measures must be taken to ensure that customers with genuine financial difficulties are treated fairly

Affordability Assessments:

1. Financial institutions to assess customers' ability to repay in full throughout the financing tenure,'' without recourse to debt relief or substantial hardship.

2. Appropriate enquiries on income after statutory deductions and debt repayment obligations to enable financial institutions to improve assessment of individual affordability and provide suitable and responsible advice to customers on their capacity to take on additional financing.

3. Financing decisions to give due consideration'' to customers' circumstances such as nature of employment and number of dependents to prevent the customer from becoming over-indebted

4. Credit decisions to also allow sufficient buffers for the customer's daily and essential expenditures

5. For vehicle financing application received after Nov 18, 2011, the maximum tenure is nine years

Product disclosure sheet to provide key information on:

1. Financing amount, tenure and rate

2. Payment obligation: Instalment amount; total repayment amount at the end of tenure; and impact of rate increase by 1% to 2% on instalment amount, total repayment amount and total interest cost

3. Applicable fees and charges

4. Any lock-in period and applicable penalty

5. Implications of default - late payments charges;'' increase in financing rate; legal actions (e.g foreclosure, repossession)

6. Avenues for redress and assistance.

Other requirements to enhance consumer protection:

1. Ensure financing products are not mis-sold via telemarketing. Telemarketing staff must confirm the acceptance of financing products sold over the phone

2. Ensure payment allocation works towards the interests of consumers.'' FSPs to allocate payments made by customers to clear instalments in arrears and insurance premiums before any fees

3. Reduce barriers to early repayment. Early termination fees should reflect the costs incurred by the FSP due to only early termination of the financing contract.

4. Ensure avenue for assistance. FSPs to provide a dedicated contact point for customers facing'' repayment difficulties to seek assistance.

Affin Holdings 3Q earnings up 17.5% to RM135.2m

KUALA LUMPUR (Nov 18): AFFIN HOLDINGS BHD []'s earnings rose 17.5% to RM135.19 million in the third quarter ended Sept 30, 2011 from RM115.01 million a year ago, boosted by higher write-backs and higher Islamic banking income.

The banking group said on Friday that revenue increased 13.7% to RM680.12 million from RM597.82 million a year ago while earnings per share were 9.05 sen compared with 7.70 sen. It declared an interim dividend of 12 sen a share.

Its chairman Gen (R) Tan Sri Mohd Zahidi Zainuddin said: 'We have certainly delivered a strong 3rd quarter results exceeding our expectations and we are on track to register another good year with positive growth. This is testament to the group's strength and diversity of our business model in the financial services sector.'

At the pre-tax level, Affin recorded a 44.9% increase at RM216.23 million when compared with the second quarter's RM177.90 million ended June 30.

'The improved performance was mainly due to higher write-back of allowance for loan impairment of RM49.20 million, higher Islamic banking income of RM2.8 million, lower overhead expenses of RM3.4 million.

'The net interest income and other operating income however, decreased by RM11.90 million and RM9.80 million respectively for the period under review,' it said.

For the nine-month period ended Sept 30, its revenue rose 18% to RM1.95 billion from RM1.65 billion while net interest income was 2.4% higher at RM646 million from RM630.90 million.

Profit before tax increased by 11.2% to RM534.50 million from RM480.80 million while net profit was 3.7% higher at RM375.50 million compared with RM362.10 million.

Masterskill 3Q net profit slumps 78.8% to RM5.55m on lower enrolment

KUALA LUMPUR (Nov 18): Masterskill Education Group Bhd (MEGB) net profit for the third quarter ended Sept 30, 2011 fell 78.8% to RM5.55 million from RM26.18 million a year earlier, due mainly to lower student enrolment and higher overheads.

MEGB said that its revenue for the quarter fell to RM61.19 million from RM80.68 million in 2010.

Earnings per share fell to 1.00 sen from 9.00 sen a year earlier, while net assets per share was RM1.31.

For the nine months ended Sept 30, MEGB's net profit fell to RM39.72 million from RM75.29 million in 2010, on the back of a dip in revenue to RM200.67 million from RM234.83 million.

Reviewing its performance, MEGB said the lower student enrolment was due to the Ministry of Higher Education's decision to align the academic term for local institutions of higher learning with that of universities abroad by moving the intake date to September from June/July.

It also said the changes toward the PTPTN loan scheme effective June 1, 2011 had impacted its revenue especially for the new student intake.

MEGB said another factor that had affected its student enrolment was the increase in the minimum entry requirement for the diploma in nursing programme from three credits to five credits at the SPM level.

The education group also said that its profits were impacted by higher operating overheads due to its growth and on-going expansion plans.

On its prospects, MEGB said it maintained profitability in 3Q with cash in hand of RM178.4 million despite a challenging market environment.

'As a result, we continue to believe that the group is well positioned for growth going forward,' it said.

MEGB said that moving forward, it would continue to pursue growth in the domestic and international markets, adding that it had received approval to conduct franchising.

'Overall, MEGB remains fundamentally strong and well-positioned to pursue growth opportunities and forge ahead with our long-term expansion plans.

'The directors are confident of achieving satisfactory results for the full financial year of 2011 given prevailing market conditions,' it said.

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#Flash* BNM: Maximum loan period for vehicle financing 9 yrs

KUALA LUMPUR (Nov 18): Bank Negara Malaysia (BNM) has issued guidelines to financial institutions that the maximum tenure for vehicle financing applications received from Friday should not exceed nine years.

The central bank said the lending guidelines were to ensure prudent, responsible and transparent retail financing practices.

'The guidelines which will take effect from Jan 1, 2012 complement other measures that promote better protection for financial consumers and a sustainable credit market that contributes towards preserving financial and macro-economic stability,' it said.

BNM said financial institutions must assess a borrower's ability to afford financing facilities based on a prudent debt service ratio as inputs to their credit decisions. The central bank said financial institutions must make appropriate enquiries into a prospective borrower's income after statutory deductions for tax and EPF, and consider all debt obligations, in assessing affordability.

BNM added the guidelines would ensure 'a sharper focus and more consistent approaches across the industry to assessments of individual affordability'.

The central bank said the guidelines were to ensure the increasingly competitive conditions would'' not lead financial institutions to compromise prudent and responsible financing practices.

Media Prima 3Q net profit dips 25.7% to RM53.37m

KUALA LUMPUR (Nov 18): MEDIA PRIMA BHD [] net profit for the third quarter ended Sept 30, 2011 fell 25.74% to RM53.37 million from RM71.87 million a year earlier, due mainly to non-recurring negative goodwill of RM35.77 million in 2010 arising from the acquisition of the equity interest in NSTP.

The company said that its revenue for the quarter rose marginally to RM417.47 million from RM416.75 million in 2010.

Earnings per share fell to 5.08 sen from 7.29 sen, while net assets per share was RM1.285.

The company declared a second interim single-tier dividend of three sen per share for the financial year ended Dec 31, 2011 and a special single-tier dividend of five sen per share.

For the nine months ended Sept 30, Media Prima's net profit fell to RM132.6 million from RM154.09 million, on the back of revenue RM1.19 billion.

Media Prima said excluding the non-recurring negative goodwill in 2010 arising from the acquisition of the equity interest in NSTP, the group's profit after tax and non-controlling interests from continuing operations grew by 31.6% to RM132.7 million compared to RM100.8 million in the same period last year.

Profit after tax and non-controlling Interests decreased by 14% for the period ended Sept 30, 2011 compared to the same period last year if the non-recurring RM53.3 million negative goodwill was included, it said.

Reviewing its performance, Media Prima said it registered minimal growth in revenue compared to second quarter of 2011 which included non-recurring revenues from Sarawak State Election operations.

The global economic slowdown which impacted market's confidence since August 2011 had resulted in the slowing down of advertisement spending, it said.

The Group's results and revenue activities were significantly driven by its core platforms of television network, print media, outdoor media and radio network.

On its prospects, Media Prima said it was committed to maintaining its industry leadership position and its earnings through continued investment in quality and relevant content and branding for its targeted market.

Concurrently, the group will continue to exercise prudent financial and risk management and is optimising its cost management for better leverage on its operating efficiency, it said.

The group, however, said it was cognisant of the challenges faced by the industry at large and by its respective platforms and said it had strategies for each of its division.

'Barring any unforeseen circumstances, the board remains optimistic that the group is on track to achieve its 2011 target,' it said.

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KLCI ends lower for 4th day, below 1,460-level

KUALA LUMPUR (Nov 18): The FBM KLCI fell below the 1,460-point level on Friday, Nov 18 in line with the weaker sentiment at global markets, as contagion fears from the eurozone debt crisis kept investors on the sidelines.

Regional markets remained mired in the red as European shares fell in early trade on Friday, extending a decline from the previous session, on mounting worries that borrowing costs in several euro zone countries are at unsustainable levels, according to Reuters.

The FBM KLCI fell 11.07 points to 1,454.40, weighed by losses including at PPB, MISC and Public Bank.

Losers beat gainers by 588 to 197, while 258 counters traded unchanged. Volume was 1.46 billion shares valued at RM1.19 billion.

At the regional markets, Japan's Nikkei 225 fell 1.23% to 8,374.91, the Shanghai Composite Index lost 1.89% to 2,416.56, Hong Kong's Hang Seng Index was down 1.73% to 18,491.23, Taiwan's Taiex lost 2.08% to 7,233.78, South Korea's Kospi fell 2% to 1,839.17 and Singapore's Straits Times shed 1.72% to 2,730.34.

On Bursa Malaysia, PPB was the too loser and fell 28 sen to RM16.52; MISC lost 24 sen to RM6.54, HLFG 22 sen to RM11.34, UMW 17 sen to RM6.43, Aeon Credit, Gamuda, AirAsia, Lafarge Malayan Cement and MMHE fell 15 sen each to RM5.50, RM3.11, RM3.65, RM6.60 and RM5.85 respectively, while Public Bank fell 14 sen to RM12.54.

Frontken was the most actively traded counter with 56.63 million shares traded. The stock fell one sen to 13 sen.

Other actives included Compugates, DPS Resources, Extol, SYF Resources, Karambunai, Tiger and SAAG.

Among the gainers, Nestle added 50 sen to RM50, BAT up 40 sen to RM46.70, Harvest Court 32 sen to RM1.36, Fima Corp 30 sen to RM6.10, Tradewinds 19 sen to RM9.22, BLD PLANTATION []s 16 sen to RM6.96 while Boxpak and DiGi added 14 sen each to RM1.34 and RM34.96.

#Flash* Malaysia's economy expanded 5.8% in 3Q vs 4.3% in 2Q

KUALA LUMPUR (Nov 18):'' Malaysia's economy expanded at a stronger pace of 5.8% in the third quarter of 2011 versus 4.3% growth in the second quarter, boosted by stronger domestic demand, Bank Negara Malaysia said.

It said on Friday the robust domestic demand was driven by an expansion in both household and business spending as well as higher public sector expenditure.

'Domestic demand expanded by 9.0% (2Q 11: 5.6%), driven by the expansion in private sector spending and higher public sector expenditure,' it said.

BNM also said private consumption increased by 7.3% (2Q 11: 6.4%), in line with favourable income growth while public consumption expanded by 21.7% (2Q 11: 6.6%) following higher expenditure on emoluments and supplies and services, as well as bonus payments during the quarter.

On the supply side, most economic sectors recorded improvements, with the manufacturing sector recording a significantly better performance supported by firm regional demand for resource-based products while the supply chain had normalised after the disruptions arising from the Japan natural disaster.

BNM said the manufacturing sector expanded by 5.1% in 3Q versus 2.1% in 2Q. The CONSTRUCTION [] sector registered a higher growth in construction at 3.0% (0.6%), led by the civil engineering sub-sector.

The agriculture sector expanded 8.2% (6.9%) on account of strong production of both crude palm oil and natural rubber while services rose 7.0% (from 6.8%). However, mining contracted at a slower pace of 6.1% (-9.2%) as output of crude oil was affected by shutdowns of production facilities.

IOI Corp 1Q net profit falls 48% to RM258m, hit by forex loss

KUALA LUMPUR (Nov 18): IOI CORPORATION BHD [] net profit for the first quarter ended Sept 30, 2011 (1QFY12) fell 48.2% to RM258.09 million from RM498.13 million a year ago, due mainly to unrealised translation loss on foreign currency denominated borrowings of RM271.7million.

The company said on Friday, its revenue for the quarter rose 17.9% to RM4.15 billion from RM3.52 billion a year ago. Earnings per share for the quarter fell to 4.02 sen from 7.81 sen while net assets per share was RM1.81.

Reviewing its performance, IOI Corp said segment results of the group however recorded an increase of 22%, with higher PLANTATION [] contribution moderated by lower contributions from both resource-based manufacturing and property segments.

IOI Corp said the plantation segment profit increased by 56% to RM557.1 million from RM356.4 million a year ago, due to higher crude palm oil (CPO) and palm kernel (PK) prices as well as higher fresh fruit bunch (FFB) production.

It said average CPO price realised for 1QFY12 was RM3,149 per tonne as compared to RM2,598 per tonne a year ago whilst FFB production for 1QFY12 was 973,293 tonnes, up about 11% from 879,322 tonnes a year ago.

However, it said the resource-based manufacturing profit decreased 40.6% to RM33.2 million in 1QFY12 from RM46.7 million a year ago.

The lower profit for the segment is due mainly to lower sales from oleochemicals sub segment as well as lower margins from specialty fats and refineries sub segments.

As for the property division, its profit dell 31% to RM116.6 million from RM168.2 million on lower development revenue during the quarter.

On its prospects, IOI Corp said the global economic growth had recently shown signs of slowing down which would make the current financial year a challenging period for business corporations.

'Nevertheless, the group is optimistic that it will perform satisfactorily in the current financial year underpinned by strong plantation segment,' it said.

Thai floods could be costliest in a decade-Allianz

SINGAPORE (Nov 18):'' Insured losses from Thai floods could be in the double-digit billions of dollars and the disaster will lead to a re-assessment of weather risks to industries in Asia, a senior official from global insurer Allianz said .

Calculating the true cost of the floods could take years in terms of working out the lost business to Thailand from investors who might now choose to invest in other countries, said Lutz Fullgraf, Allianz's regional CEO for global corporate and specialty.

He said the losses comprise compensation to building owners in Thailand as well as manufacturers around the world who have suffered disruptions from the closure of Thai factories, and estimated they could turn out to be the world's biggest from flooding in a decade.

"This for Thailand is definitely the costliest event, in terms of the insured values, even if you take into consideration the tsunami of 2004 and last year's riots. The loss here is much bigger," said Fullgraf.

He pointed to an estimate by Thailand's insurance commissioner of more than $30 billion, although it was too early to verify the figure.

"People did not have that (wealth and asset) accumulation expectation for risks in Thailand. Even if it is $20 billion, I think it will top the list of insured flood losses over the past 10 years," he said in an interview in Singapore.

The disaster would lead the insurance industry to re-evaluate weather and other natural disaster risks to Asia's rapidly expanding industrial zones, many of which are in areas vulnerable to earthquakes, storms and flooding, Fullgraf said.

"There definitely will be (a rethink). Either through specialised companies that provide these modelling tools or insurance and re-insurance companies will assess their overall (risk) accumulation in these areas," he said.

Standard & Poor's in a report earlier this month said Thailand's non-life insurers may collect gross premiums of about $4.7 billion this year, which meant the global insurance industry would take years to recoup losses from the floods.

"Clearly if you look at the Asia-Pacific region alone, there will not be very many happy faces in the insurance industry this year," Fullgraf said, adding it was too early to say whether the Thai floods would affect insurance premiums globally.

Allianz, Europe's biggest insurer, said floods in China in May 2010 caused $18 billion in economic losses, topping a list of the world's costliest floods between 2001 and 2010.

Floods in Australia last December ranked number 6 at $5.1 billion.

Flooding in Thailand has claimed 562 lives since late July and swamped about 900 factories in seven industrial estates north of the capital, disrupting supply chains of many international companies, including Toyota Motor Corp, Sony Corp and Lenovo Group Ltd.

The disaster could shave 2.5-3 percentage points off the country's GDP growth, Thailand's deputy prime minister has said.

Globally, PC shipments could be crimped by as much as a fifth in the first three months of 2012, hurt by the shortage of hard disk drives, said TECHNOLOGY [] research firm IDC. Before the floods, Thailand accounted for 40-45 percent of global hard disk production.

"NO SHOCK ABSORBERS"

Fullgraf said the floods were a wake-up call, exposing the frailty of global supply chains for autos, electronics and even household goods like mouthwash.

"A loss like this always has knock-on effects because there are no shock absorbers any more," he said, as more major disruptions are likely from increasingly bad weather.

"The climate is changing and the question is really are we prepared for it, especially in Asia where there are a lot of developments at or close to the sea and low-lying areas. The impact will be significant," he said.

Scientists say a warmer world will trigger more intense rainfall, stronger storms and rising sea levels.

Fullgraf said this means factory managers and board members of large manufacturers need to take a harder look at reducing the risks from wilder weather.

This could be as simple as building on higher ground or building factories with raised manufacturing floors.

"We will certainly pay a little bit more attention than we have in the past to flood risks in Thailand," he said. "It will have some impact on how we approach underwriting in general."

He said Thailand had been, in most cases, regarded as a non-natural catastrophe area, so the scale of the floods and the knock-on impact on global supply chains were a surprise.

Reinsurer Munich Re also said the floods were Thailand's worst natural calamity and part of a global pattern in which weather-related catastrophes have more than tripled in the past 30 years.

Last week, Munich Re said a series of natural disasters in the Asia-Pacific, including the quake and tsunami in Japan and floods and a major cyclone in Australia, had caused $259 billion in economic losses for the first nine months of 2011. That is 80 percent of all losses globally. - Reuters

RAM Ratings reaffirms ratings on New Pantai Expressway's RM740m debt notes

KUALA LUMPUR (Nov 18): RAM Rating Services Bhd has reaffirmed the ratings of the debt notes totaling RM740 million issued by New Pantai Expressway Sdn Bhd (NPESB).

The ratings agency said on Friday it had reaffirmed the respective AA3 and AA3(s) ratings of the company's RM490 million senior Bai' Bithaman Ajil notes (2003/2014) and RM250 million junior Bai' Bithaman Ajil notes (2003/2016) (junior notes).

It said that both the long-term ratings have a stable outlook.

To recap, NPESB holds the concession for the CONSTRUCTION [], maintenance and toll collections of the 19.6-km New Pantai Highway.

RAM Ratings said the rating of the senior notes remains supported by strong debt-coverage levels and the sustainable traffic-volume growth of the highway, backed by established townships.

In the financial year ended March 2011, average daily traffic (ADT) on the highway rose 9.2% on-year to 141,290 vehicles, buoyed by robust traffic flows at all three toll plazas - Pantai Dalam, PJS 2 and PJS 5. The positive momentum extended into 1Q FY March 2012, when ADT went up 8.8% on-year to 153,756 vehicles.

'Moving forward, NPESB is expected to maintain its robust debt-coverage levels, with projected minimum and average senior finance service coverage ratios (FSCRs) of 2.00 times and 2.11 times (with cash balances, post-distribution), respectively, on payment dates,' it said.

RAM Ratings said the enhanced rating of the junior notes reflected the strength of the corporate guarantee from its parent IJM CORPORATION BHD [] under the payment guarantee that unconditionally and irrevocably guarantees the junior notes.

The ratings agency added that as the corporate guarantee is only applicable while the senior notes are still outstanding, the rating of the junior notes will revert to the stand-alone rating upon full redemption of the senior notes on Oct 31, 2014.

RAM Ratings noted that after the full redemption of the senior notes, NPESB's buffer is expected to weaken when servicing the principal repayment on the junior notes, with Junior FSCRs (with cash balances, post-distribution) on payment dates of 1.35 times (fiscal 2016) and 1.27 times (fiscal 2017) due to its lumpy debt repayment of about RM120 million per annum.

'Given NPESB's weaker debt coverage compared to its AA3-rated peers, we highlight that the company's ability to redeem the junior notes will be weakened if it decides to make distributions to its shareholder,' it said.

RAM Ratings said the junior notes' credit metrics of the Junior Notes could improve if the highway's future traffic performance is above expectations.

'Similar to other toll-road concessionaires, however, NPESB is also exposed to regulatory and single-project risks,' it said.

''

Harvest shares, warrants advance, ignore trading curbs

KUALA LUMPUR (Nov 18): HARVEST COURT INDUSTRIES BHD []'s shares and the warrants climbed on Friday despite the trading curbs on the securities which came into effect on Wednesday to check excessive speculation.

At 4.14pm, Harvest was up 31 sen to RM1.35 with 8.89 million shares done while the warrants added 26 sen to Rm1.15 with 8.51 million units transacted.

The performance of the securities bucked the cautious broader market which saw the FBM KLCI falling 4.77 points to 1,460.70.

Turnover was 1.25 billion shares valued at RM930.63 million. There were 166 gainers versus'' 598 losers while 237 stocks were unchanged.

CIMB Bank named Best Internet Bank by Global Finance magazine

KUALA LUMPUR (Nov 18): CIMB Bank has been'' named winner of the Best Internet Bank Award in Malaysia at Global Finance magazine's The World's Best Internet Bank Awards at its Ninth annual awards dinner in New York recently.

In a statement Friday, Nov 18, CIMB head of retail and financial services Peter England said the award was proof that the bank's efforts to provide a safe online platform for its customers to both transact and interact with the bank were recognised.

'CIMB Clicks, our online banking platform, has gained great traction in its uptake and as such, it is important that it consistently exceeds customers' expectations for online banking. This award will spur us on to take it to greater heights,' he said.

Global Finance magazine publisher Joseph D Giarraputo said CIMB Bank's efforts in ensuring that its internet banking platform offered customers the best possible service with the highest level of security was laudable.

'The world is becoming increasingly connected and more and more people are looking for convenience online. CIMB Bank has proved that the online facilities it offers its customers provide them just that, with no compromise to security.

'The bank's win of Global Finance's Best Internet Bank in Malaysia Award speaks volumes for its service levels and its customers' trust in its capabilities,' he said.

233 individual banks from around the world entered submissions to be considered Best Internet Bank in various categories.

The winners of the awards were selected based on the strength of their strategy for attracting and servicing online customers, success in getting clients to use web offerings, growth of online customer base, breadth of products offered, evidence of tangible benefits gained from internet initiatives, and web site design and functionality.

Global Finance is a monthly magazine founded in 1987.

Harvest rebounds after 2-day selldown on trading curbs

KUALA LUMPUR (Nov 18): The shares of HARVEST COURT INDUSTRIES BHD [] staged a mild rebound on Friday after a two-day selldown since Wednesday after trading curbs were placed.

At 2.57pm, the share price was up 15 sen to RM1.19 with 5.60 million units done. The warrants gained six sen to 95 sen with 5.26 million units transacted.

On late Monday, Bursa Malaysia Securities Bhd announced that it had declared the securities of Harvest Court as designated counters with effect from Nov 16, Wednesday, due to excessive speculation.

The imposition of this ruling for the shares and the warrants are in force until further notice.

Sunway REIT sees 3.99% stake done off-mkt at RM1.05 each

KUALA LUMPUR (Nov 18): Sunway Real Estate Investment Trust (REIT) saw a 3.99% stake transacted in several off-market deals on Friday at an average price of RM1.05 a share, which was eight sen below the current market price of RM1.13.

Stock market data showed that the stake represented 107.47 million units.'' Its paid-up is 2.689 billion shares.

At 3.21pm, Sunway REIT shares were down just one sen to RM1.13 with 19,000 units done.

S&P to update bank credit ratings within 3 weeks

(Nov 18): Standard & Poor's plans to update its credit ratings for the world's 30 biggest banks within three weeks and may well mete out a few downgrades in the process, possible surprising the battered global bond markets.

Among the institutions that could be downgraded are Bank of America Corp, Citigroup Inc and Morgan Stanley, said Baylor Lancaster, an analyst at CreditSights Inc.

Spokesmen for the three banks declined to comment.

Some European banks could also be affected. On Nov. 9, S&P downgraded its scores for the health of the banking industries in a number of countries, including Denmark, Sweden, Finland and the Netherlands.

The updates in ratings are part of a major overhaul of S&P's methods for scoring the creditworthiness of some 750 banking groups.

The agency, the subject of intense criticism because its positive ratings for mortgage-backed securities played a major role in inflating the housing bubble, has been working on the changes for more than a year.

The updates are part of a broad push by S&P to improve its products and repair its reputation as its parent, McGraw-Hill Cos Inc, divides itself into two publicly traded companies.

S&P has taken pains to prepare the markets for the changes, but when it actually releases results for individual banks some downgrades could surprise, analysts say.

"One reason there could be surprises is that the new ratings method is very complex and it has been very difficult to simulate results," said Beate Muenstermann, a London-based research analyst for the money management arm of JPMorgan Chase & Co.

One area for potential surprise lies in differences between actions the agency may take on bank holding companies compared with grades for their operating units. Another is variations between long-term and short-term ratings.

S&P posted an advance notice of the coming changes in March 2010 and in January 2011 outlined its initial plans and requested comments.

Earlier this month the agency published its final criteria and said it expects 60 percent of all bank ratings to stay as they are, while 20 percent will go up one notch, 15 percent will fall by one notch and less than 5 percent will drop by two or more notches. One notch is one-third of a letter grade -- for example, the difference between a rating of "A" and a rating of "A-minus."

S&P has not said what proportion of downgrades it expects among only the biggest banks. It has said to expect regional differences in the results for all banks. Western Europe fared worse than Latin America and Asia in the Nov. 9 changes in scores for banking industries by country.

S&P estimated in January that there would be more downgrades, but the agency lowered some ratings while the plan was being completed and also eased some of the criteria.

The agency plans to first announce its results for the 30 biggest banks, possibly as early as late this month, and then begin quickly rolling out its ratings for smaller banks.

The agency has been discussing the often-arcane mechanics of the new methodology with banks and institutional investors and has posted explanations and tutorials on public pages of its website: [http://www.standardandpoors.com/MicrositeHome/en/us/Microsites?mid=1245321770467#]

"S&P has been extremely good at guiding the market through this change in the methodology," said Muenstermann.

How the changes are perceived by regulators could prove to more important to S&P than to the markets. Bond fund managers say the market has probably already priced in the information underlying S&P's research and judgments.

"The rating agencies tend to be laggards compared with prices," said Ryan Brist, a portfolio manager at Western Asset Management.

S&Ps changes may even foretell a coming upturn for banks, he said. "Historically, ratings agencies tend to change their methodologies after large downward price movements in the market."

John Croft, a portfolio manager and director of investment grade research at Eaton Vance, said, "They seem to be fiddling around with their methodologies more than opining about the underlying credit strength of issuers."

Still, Croft gives the agency credit for trying to do better than in the past. Past ratings proved too high on such financial companies as Lehman Brothers, ABN AMRO and Wachovia, which either failed outright or were forced into mergers with stronger rivals.

"They are trying to rectify some of the problems that they have had in the past and to the extent that they do that, it is good," said Croft.

The agency's performance is under scrutiny from regulators, who are designing ways to reduce the power and profits from the ratings business now enjoyed by S&P and its main competitor, Moody's Corp.

S&P made matters worse last week when its computer systems accidentally sent a note to some customers suggesting that the credit rating of the Republic of France had been downgraded in the midst of the European debt crisis.

S&P said later the error stemmed from a computer programming step it had taken last December with the banking industry country scores used in the first step of its new ratings method. ' Reuters

''

DiGi ties up with Google to offer Gmail SMS

KUALA LUMPUR (Nov 18): DIGI.COM BHD [] is partnering Google to provide Gmail short messaging service (SMS) effective from Friday.

DiGi said this latest move expanded the SMS-based Internet applications and services which would enable the telco customers to access their favourite online apps.

'This strategic partnership with Google also positions DiGi as the first mobile operator to offer the Gmail SMS service in Malaysia,' it said.

The head of mobile Internet & ADS for DiGi, Praveen Rajan said a recent Nielsen survey reported Malaysians spent an average weekly of over five hours accessing the Internet via mobile devices.

'The partnership with Google empowers us at DiGi to offer the SMS option to millions of Gmail users in Malaysia to significantly extend their chat community through real-time chat via SMS, regardless of any mobile device type,' he said.

Manwhile, Country Head of Google Malaysia''Sajith Sivanandan said Google's overall mission was to make information accessible and useful to people.

'SMS has long been a common means of mobile communications in Malaysia and many Malaysians still rely on their non-smartphones. Gmail SMS makes instant communication between Gmail and a mobile phone possible via SMS,' he said.

Gmail SMS brings the popular Gmail Service to a non-smartphone easily. With Google's Gmail SMS, people can send free text messages to their friends directly from their Gmail account. Replies and responses to the text message will appear as a reply in Chat.

For DiGi customers, the service is free of charge and requires no subscription; chat messages sent via SMS from their mobile phones are billed at 10 sen per SMS.

This strategic partnership announcement is made on the back of a global agreement between Google and Telenor announced recently.

Telenor's intention is to roll out a global Android Market initiative in stages to stimulate further growth of the Android ecosystem in all 11 international markets, including Malaysia.

OSK Research maintains Buy on TSH Resources, ups FV to RM4.03

KUALA LUMPUR (Nov 18): OSK Research is maintaining its Buy recommendation on TSH RESOURCES BHD [] with a higher revised fair value of RM4.03.

It said TSH's nine-month earnings were slightly above its and consensus estimates as the softer palm oil price was offset by lower costs and a better oil extraction rate (OER).

OSK Research said the fresh fruit bunches (FFB) production growth continued to be stellar on-year on both the Sabah and Indonesia fronts. 'While we expect Sabah production growth to taper off going forward, Indonesia will remain the company's key growth driver in achieving double digit production growth,' it said.

On Thursday, TSH announced that for the nine months ended Sept 30, TSH's net profit jumped 131% to RM94.39 million from RM40.83 million in 2010 while revenue increased by 29.2% to RM855.69 million from RM662.22 million in 2010.

For the third quarter, its net profit surged 89% to RM34.47 million from RM18.24 million a year ago, underpinned the strong performance of its palm and bio-integration segment. Its revenue for the quarter rose 27.5% to RM273.15 million from RM214.26 million in 2010.

OSK Research said TSH's core earnings of RM87.3 million for 9MFY11, accounted for 79.3% and 77.2% of its and consensus' full-year forecasts respectively.

Revenue for the quarter itself surged 29.2% on-year but fell 17.2% sequentially amid weaker palm oil prices. Cost of sales, however, plunged by a substantial 21.6% on-quarter as third party FFB purchases dropped 16.9%, tipping the on-quarter core earnings growth into positive territory.

FFB production rose a marginal 1.2% on-quarter but soared 45.6% on-year, driven by the 60.8% growth experienced in Indonesia.

On a year-to-date basis, FFB production was 48.0% higher as Indonesia and Sabah production rose 71.8% and 18.1% respectively.

'We are tweaking up our FFB production to reflect a full year growth of 36.3% and revising upwards our OER assumption slightly to 21.2% from 21.0% previously.

'The marginal 0.6% on-quarter dip in CPO production despite a 11.5% drop in FFB processed indicates that OER improved on-quarter,' it said.

OSK Research said TSH's unplanted landbank was 66,700 ha.

The termination of the share sale agreement between TSH and Portvest in relation to the acquisition of Mildura Investment on Oct 19 removed some 12,000 ha from TSH's total landbank.

'However, the acquisition of two new Indonesian subsidiaries added another 21,300 to its landbank, bringing the company's total planted and unplanted areas to 23,800 ha and 66,700 ha respectively,' it said.

N. Americon semicon makers post October book-to-bill ratio of 0.74

KUALA LUMPUR (Nov 18): North America-based manufacturers of semiconductor equipment posted US$939.4 million in orders in October 2011 (three-month average basis) and a book-to-bill ratio of 0.74, according to the US-based Semiconductor Equipment Manufacturers Industry association.

A book-to-bill of 0.74 means that US$74 worth of orders were received for every US$100 of product billed for the month.

In its October book-to-bill report published on Nov 17, SEMI said the bookings figure was 1.4% more than the final September 2011 level of US$926.5 million, and was 41.1% below the US$1.59 billion in orders posted in October 2010.

The three-month average of worldwide billings in October 2011 was US$1.27 billion.

The billings figure is 3.6% less than the final September 2011 level of US$1.31 billion, and is 22% less than the October 2010 billings level of US$1.62 billion.

SEMI president and chief executive officer Denny McGuirk said the recent period's billings and bookings reflected the slowing capital investment in the industry that had been evident throughout the year.

'While overall spending has declined, investments in NAND Flash, sub-30nm TECHNOLOGY [], and system LSI are on-going,' said McGuirk.

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

KLCI extends losses, Asian mkts mired in red

KUALA LUMPUR (Nov 18): Growing fears of deepening funding difficulties in Europe that has kept Asian equity markets for four days in a row sent the FBM KLCI lower at the mid-day break on Friday, Nov 18.

The FBM KLCI fell 2.84 points to 1,462.63 at 12.30pm, with losses at select blue chips as investors stayed on the sidelines ahead of the weekend.

Gainers trailed losers by 164 to 471, while 248 counters traded unchanged. Volume was 763.77 million shares valued at RM562.01 million.

The ringgit weakened 0.15% to 3.1630 versus the US dollar; crude palm oil futures for third month delivery rose RM16 per tonne to RM3,228, crude oil fell 27 cents per barrel to US$98.55 while gold added US$2.33 an ounce to US$1,724.10.

At the regional markets, South Korea's Kospi fell 2.02% to 1,838.73, Hong Kong's Hang Seng Index lost 1.81% to 18,476.24, Taiwan's Taiex was down 1.67% to 7,264.65, the Shanghai Composite Index lost 1.35% to 2,429.86, Japan's Nikkei 225 fell 1.25% to 8,373.52 and Singapore's Straits Times Index shed 1.14% to 2,746.69.

On Bursa Malaysia, HLFG was the top loser this morning and fell 20 sen to RM11.36; Kluang, Ibraco, Public Bank, AIC and UMW lost 10 sen each to RM2.50, RM1.27, RM12.58, RM1.16 and RM6.50 respectively, Aeon Credit, MISC and TDM lost nine sen each to RM5.56, RM6.60 and RM3.27 respectively, while Edaran fell 8.5 sen to 31 sen.

Frontken was the most actively traded counter with 44.8 million shares done. The stock fell half a sen to 13.5 sen.

Other actives included Compugates, Extol, DPS Resources, SAAG, Envair and SYF Resources.

Among the gainers, BAT rose 32 sen to RM46.62, Fima Corp 30 sen to RM6.10, Tradewinds and Harvest Court 16 sen each to RM9.19 and RM1.20, Tradewinds PLANTATION []s 14 sen to RM3.74, DiGi 12 sen to RM34.94, Ewein 9.5 sen to RM1.06, Ekovest nine sen to RM2.70 while KrisAssets added eight sen to RM4.38.

U.S. economy gains traction ahead of European storm

WASHINGTON (Nov 18): The U.S. economy is gaining steam as factories churn out more cars and slowing inflation boosts spending power, putting the country on stronger footing to resist an economic storm gathering over Europe. Recent readings of the U.S. economic pulse have steadily topped analysts' expectations.

Many now think the fourth quarter will prove stronger than the third, when the economy expanded at a 2.5 percent annual rate. Forecasting firm Macroeconomic Advisers, for example, sees a growth rate of 3.2 percent over the final three months of the year.

While a widely expected European recession will likely drag on the U.S. economy next year, the United States will be able to lean into that headwind more than was possible just a few months ago.

"There is enough momentum in the near term to withstand some pain from overseas," said Michelle Meyer, an economist with Bank of America Merrill Lynch in New York. U.S. industrial output rose last month by the most since July, helped by higher production of motor vehicles and parts.

A slowdown in inflation has also helped households regain a little spending power, with weekly earnings rising in September and October when accounting for price changes. That has helped retail sales.

New car sales, for example, rose 7 percent last month to their highest level since February. Sales will likely rise another 8 percent in November, according to a forecast by J.D. Power and Associates and LMC Automotive.

"Could the United States withstand a recession in Europe? I think we could," General Motors CEO Dan Akerson told a forum in Detroit on Thursday. "Consumer spending in this country is actually up."

Researchers at the San Francisco Federal Reserve Bank recently said Europe's travails make a U.S. recession likely by mid-2012, although most Wall Street economists are more optimistic and see odds closer to one-in-three.

ANOTHER BAD BREAK

In the latest hopeful sign the United States may be able to hold recession at bay, U.S. companies have cut back on layoffs substantially. New claims for unemployment benefits fell last week to their lowest level since April.

That could be a signal that employers are finally poised to ramp up hiring, which has been the missing piece in the country's sluggish recovery from the 2007-2009 recession. Still, it does seem that the U.S. economy just can't catch a break.

Growth was picking up this time last year and many analysts thought the economy was turning a corner.

Then a wave of civil unrest rippled through the Arab world, pushing oil and gasoline prices sharply higher and stinging American consumers. A March earthquake disaster in Japan disrupted global manufacturing, slowing the U.S. economy further.

"It's like you can't get this thing to get going and stay going," Christopher Waller, the research director at the St. Louis Federal Reserve Bank, told Reuters this week.

Now, Europe's debt crisis looms and could become graver yet if a euro zone nation defaults on its debt or if one of the region's stronger economies has trouble finding financing. Akerson said Europe's crisis could potentially be "much more serious" that the global financial meltdown of 2008.

The United States could also shoot itself in the foot if lawmakers tasked with hashing out an austerity plan by next week disappoint financial markets. "But if none of those things happen, it's starting to look like 2.5, 3, maybe 3.5 percent ... is doable" growth in the current quarter and the first quarter of 2012, said Waller.

Congress could also undercut the economy by allowing a payroll tax cut and extended unemployment benefits to expire, just one of the issues under debate by a special deficit-cutting panel. Moreover, some of the recent strength in consumer spending has come from households cutting back on saving, which may not be sustainable.

Wells Fargo expects a euro zone recession will shave only a tenth of the percentage point or two off U.S. economic growth in the first half of 2012 -- if that recession is short-lived. But if the region's financial crisis deepens, or the recession drags on throughout next year, "that will have a substantially more negative impact on the U.S. economy," said Michael Brown, a Wells Fargo economist in Charlotte, North Carolina. - Reuters

Tiger Synergy: Nujade Garden to fund RM30m condo project

KUALA LUMPUR (Nov 18): Tiger Synergy Bhd's joint venture for the RM30 million condominium projects would be financed by its partner, Nujade Garden Sdn Bhd.

It said on Friday that Nujade Garden 'shall be solely responsible to secure the CONSTRUCTION [] cost through their own internal funds' for the project which would involve 450 units of condominiums.

Tiger Synergy said there would be a total saving of RM7.2 million finance cost to the company.

Asian shares fall on fears over Europe fund tightness

TOKYO (Nov 18): Asian shares fell for a fourth day in a row on Friday as Europe's funding difficulties intensified, with Spanish borrowing costs hitting an unsustainable level and premiums for dollar funds rising further.

In a sign that global funding strains may spread to Asia, benchmark three-month euroyen interest rates futures fell to an eight-month low on Friday on concerns that tightness in dollar money markets may prompt non-Japanese banks to raise yen at a higher rate.

Worries over the European debt crisis prompted investors to shed riskier commodities, extending their slide from Thursday when prices took their steepest tumble since September.

MSCI's broadest index of Asia Pacific shares outside Japan fell 1.7 percent with the materials sector leading the decline, as a slide in commodities prices hit the stock market in resource-dependant Australia.

The index, which fell the past two weeks, was set for its biggest weekly loss in about two months. It was down about 3.6 percent for the week and about 16 percent this year.

Japan's Nikkei stock average fell 1.3 percent and also headed for a third weekly loss. It is down about 18 percent so far in 2011.

"The euro zone debt crisis is turning into a global liquidity crisis, and leading to a vicious cycle of intensifying funding tightness spurring dumping of risk assets," said Kazuto Uchida, an executive officer and general manager of the global markets division at the Bank of Tokyo-Mitsubishi UFJ.

New Italian Prime Minister Mario Monti on Thursday pledged his country would embark on radical fiscal reforms to pull itself out of the debt crisis. But investor jitters remained firmly in place as euro zone governments struggle to raise funds and banks refrain from lending, seizing up market liquidity.

Euro/dollar three-month cross-currency basis swaps , the cost of swapping euros for dollars, widened by around 6 basis points to -136 basis points on Thursday, the most since the 2008 financial crisis.

"Focus right now is on short-term dollar funding, but longer-term funding from six months out to a year is also getting tighter. Major central banks must take a coordinated action to ensure all these funding needs are met," Uchida said.

RISK AVERSION

U.S. stocks fell on Thursday, as fears over euro zone debt woes overtook more encouraging signs for the U.S. economy after data showed a drop in new claims for jobless benefits to a seven-month low last week and a rebound in permits for future home CONSTRUCTION [] in October.

"Despite positive economic data from the U.S., the market is still focused on Europe and its contagion risk," said Hiroichi Nishi, equity general manager at SMBC Nikko Securities.

The U.S. dollar steadied on Friday, hovering near a six-week high of 78.467 hit the day before, while the euro stayed above five-week lows of $1.3421 touched on Thursday, with European banks seen repatriating funds as signs of funding stress grew.

But commodities currencies fell, with the Australian dollar piercing through parity.

Oil prices fell 0.1 percent and copper eased 1.2 percent on Friday while silver slipped more than 2 percent to a one-month low on Friday, following to a 7-percent slump the day before.

Risk aversion dampened sentiment in Asian credit markets, with the spreads on the iTraxx Asia ex-Japan investment grade index widening by 5 basis points on Friday.

"We are seeing risk aversion that is spreading aross asset classes, with concerns about euro zone fiscal debt crisis, weak aution results in Europe, and worries ahead of this week's Spanish election all leading to deteriorating in sentiment," said Dariusz Kowalczyk, senior economist and strategist for Asia ex-Japan at Credit Agricole CIB in Hong Kong.

Investor commitment to a crucial bailout fund, the European Financial Stability Facility (EFSF), is conditional on improved market sentiment which can only be obtained through troubled countries such as Italy and Greece demonstrating progress in their fiscal reforms.

Euro zone policymakers are aiming to boost the firepower of the EFSF and are working to finalise the legal and technical details on Nov. 29 and to have the leveraged EFSF ready for operation before Christmas.

The yield premium of Spanish 10-year government bonds over German Bunds hit its highest level since the launch of the euro above 500 basis points after Spain paid an average yield of 6.975 percent on Thursday to sell its bonds, the highest rate since 1997 and just shy of the 7 percent level seen as unsustainable.

Spain faces a parliamentary election on Sunday, putting the country under pressure to quickly reassure markets. ' Reuters

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KLK expanding downstream ops in Indonesia, plans RM120m plant

KUALA LUMPUR (Nov 18): KUALA LUMPUR KEPONG BHD [] (KLK) is expanding its downstream operations and plans are under way to build an oleochemical plant in Indonesia costing RM120 million.

KLK's oleochemicals director AK Yeow said on Friday the plant will be ready by 2013.

He said at a media briefing here the PLANTATION [] group plans to build another two oil palm mills in Indonesia over the next two years. The site has yet to be identified.

Meanwhile, KLK chief executive officer Tan Sri Lee Oi Han said the group was looking into the possibility to increase its plantation land bank and possible countries included Papua New Guinea and Africa.

On the outlook for crude palm oil, he said it was unlikely to hit RM4,000 per tonne but 'I would like it to be about RM3,500'.

At midday, CPO for third-month delivery was unchanged at RM3,212 per tonne.

KLCI falls for the fourth day as regional markets slide

KUALA LUMPUR (Nov 18): The FBM KLCI extended its losses for the fourth day running on Friday, Nov 18, in line with the slump at key regional markets following the sharp overnight fall at Wall Street.

Asian shares fell for a fourth day in a row and the dollar firmed on Friday as Europe's funding difficulties intensified, with Spanish borrowing costs hitting an unsustainable level and premiums for dollar funds rising further, according to Reuters.

In a sign global funding strains may spread to Asia, benchmark three-month euroyen interest rates futures fell to an eight-month low on Friday on concerns that tightness in dollar money markets may prompt non-Japanese banks to raise yen at a higher rate, it said.

The FBM KLCI fell 1.67 points to 1,463.80 at mid-morning, weighed by losses at select blue chips.

Losers edged gainers by 266 to 135, while 190 counters traded unchanged. Volume was 374.82 million shares valued at RM186.88 million.

At the regional markets, South Korea's Kospi slumped 2.25% to 1,834.50, Hong Kong's Hang Seng Index lost 1.91% to 18,457.43, Taiwan's Taiex fell 1.48% to 7,278.12, Japan's Nikkei 225 lost 1.29% to 8,370.12, Singapore's Straits Times Index was down 1.10% to 2,747.68 while the Shanghai Composite Index shed 0.81% to 2,443.14.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to on Nov 18 clients said that due to US markets' very poor tone last night, there could be another downward day for the local index.

He advised investors to trade with a short-term time frame locally, adding that profit-taking and liquidation would take place ahead of the weekend.

'It is unwise to join the recent penny stock activity (eg Harvest with its suspension, designation and limit-down and SYF with its large cumulative 2 days' price and percentage drop) as these stocks do not have any fundamentals and the companies are loss-making.

'Sell these stocks swiftly if their trends turn down violently,' he said.

Among the decliners at mid-morning, PPB fell 18 sen to RM16.62, HLFG lost 14 sen to RM11.42, Public Bank 10 sen to RM12.58, KYM, Hong Leong Bank and TDM eight sen each to RM1.66, RM10.48 and RM3.28, UMW seven sen to RM6.53 while CBIP and Petronas Chemicals fell six sen each to RM3.90 and RM6.19.

Compugates was the most actively traded counter with 30.8 million shares done. The stock was unchanged at 8 sen.

Other actives included Frontken, Envair, DPS Resources, SAAG, Fastrak, Extol and SYF Resources.

Gainers at mid-morning included BAT, Fima Corp, DiGi, TSH Resources, MAHB, Proton, Harvest Court and GAB.

CIMB Research ups Bumi Armada target price to RM4.61

KUALA LUMPUR (Nov 18): CIMB Equities Research is maintaining a Buy on Bumi Armada and raised its target price from RM4.55 to RM4.61.

It said on Friday the higher target price was after it applied a 40% premium to its 12.6 times CY13 target market price-to-earnings (previously 20% premium over 14.5 times CY12 P/E) to reflect Bumi's increasingly attractive investment proposition. This big cap has also joined the MSCI Malaysia Index.

CIMB Research said after a soft 1H, Bumi Armada is set to impress with a strong 2H performance, thanks to two FPSO contracts awarded by Apache and ONGC.

'Four more FPSO contracts are likely to be secured in FY12-13. A potential marginal field job in FY12 makes the outlook even more exciting,' it said.

TSH Resources advances on solid 3Q earnings

KUALA LUMPUR (Nov 18): TSH RESOURCES BHD [] shares rose on Friday, Nov 18 after the company's third quarter net profit surged 89% to RM34.47 million from RM18.24 million a year ago, underpinned the performance of its palm and bio-integration segment.

At 9.10am, TSH rose 11 sen to RM3.71 with 98,900 shares done.

Its revenue for the quarter rose 27.5% to RM273.15 million from RM214.26 million in 2010. Earnings per share rose to 8.41 sen from 4.45 sen in 2010, while net assets per share was RM2.06.

For the nine months ended Sept 30, TSH's net profit jumped 131% to RM94.39 million from RM40.83 million in 2010 while revenue increased by 29.2% to RM855.69 million from RM662.22 million in 2010.

MIDF Research maintained its Buy rating on the stock and raised its target price by 27% to RM4.50 (from RM3.54 previously) and said the company's 9MFY11 earnings exceeded expectations, accounting for more than 80% of the full year forecasts.

'Owing to higher-than expected earnings in 3QFY11, we have revised upwards our FY11 and FY12 earnings forecast by 10.3% and 26.6% respectively on the back of better margin expectations as more tress coming into maturity.

'In-line with the upward earnings revision, we are revising our target price by 27% to RM4.50. The target price is based on a multiple of 11.6xEPS12, which is one standard deviation below its 5-year historical PER of 14times. We view TSH as currently undervalued as it is trading at only 9.3 times forward PER, which is at the lower bound of its five year average PER band of 7.3 times ' 14.9 times,' it said in a note Nov 18.

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AmResearch maintains Buy on MMHE unch FV7.40

KUALA LUMPUR (Nov 18): AmResearch reiterates its Buy recommendation on Malaysia Marine & Heavy Engineering Holdings (MMHE) with an unchanged fair value of RM7.40 a share.

It said on Friday, the FV of RM7.40 was based on an FY12F PE of 22 times, which is at parity to Kencana Petroleum's peak of 22 times in 2007.

'We maintain MMHE's 9MFY11F net profit of RM236 million as 3QCY11 net profit of RM80 million is in line with our forecast.

'On an annualised basis, the 6MFY Dec 2011 net profit of RM159 million is 1% above our forecast,' it said.

AmResearch estimates that the group's order book rose to RM3.6 billion (from RM2.9 billion in the previous quarter) largely due to'' the recently awarded Tapis contract from ExxonMobil to build and install an integrated offshore platform deck called Tapis R and two inter-platform decks coupled with a RM236 million Telok fabrication job.

AmResearch said it understands that the Tapis contract value of RM1.5bil is 7% higher than the earlier announcement.

The research house remains sanguine about MMHE's re-rating prospects. The stock currently trades at an FY12F PE of 18 times, which is below the 22 times for Dialog Group and Bumi Armada.

OSK Research maintains overweight on rubber glove sector

KUALA LUMPUR (Nov 18): OSK Research is maintaining its Overweight stance on the rubber gloves sector.

It said on Friday that amid expectations of moves to set a floor price, latex has dropped by about RM4.50/kg from its peak price, and has only RM2.50/kg to fall before reaching its low at RM4/kg, which was the price before the H1N1 outbreak (assuming there is no floor price).

'In light of this, we believe that customers will start to stock up on gloves from now on before the wintering of rubber trees sets in come 1H12. We maintain Overweight on the rubber glove sector,' it said.

OSK Research said Thailand's Deputy Agriculture Minister, Pornsak Jarernprasert said that the government plans to intervene in the market to keep the rubber price stable by setting a minimum rubber export price of US$3/kg.

The world's top three rubber producing countries of Thailand, Indonesia and Malaysia are expected to meet this week to discuss the matter.

The research house said assuming the floor price for hard rubber is set at US$3/kg at a US$/ringgit rate of 3.10 and a latex rubber concentration of 60% (with the balance 40% made up of water), the expected floor price would be about RM5.60/kg (US$3/kg x 3.10 x 60%).

'Nevertheless, we believe there is a 50% possibility of the price going either way from the current RM6.60/kg.

'Although we expect some upward bias due to the recent sharp drop in latex price, this would still depend on the outcome of the upcoming officials' meeting as well as the extent of price speculation on this commodity,' it said.

OSK Research said over the longer term, it continues to believe that latex price will fall because fundamentally, the demand for latex has been anaemic.

The factors are that demand growth is no longer as hot as before because rubber glove manufacturers are gradually shifting to a higher portion of nitrile gloves and global demand is currently not as strong as in 2009/2010 when there was a H1N1 pandemic.

Secondly, the automotive sector has suffered a string of setbacks as the global economic recovery is faltering and the severe flooding in Thailand has caused serious disruptions in many auto manufacturers' operations.

All these have resulted in weaker demand for hard rubber, which is used to produce tyres.

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HDBSVR: Selling to see KLCI sliding to 1,445

KUALA LUMPUR (Nov 18): Hwang DBS Vickers Research expects the The bearish external mood will probably force the benchmark FBM KLCI to slide towards the immediate support level of 1,445 ahead.

It said on Friday that overnight on Wall Street, key U.S. equity bellwethers dropped further by between 1.1% and 2.0% due to rising concerns that the global economy could be hit as the Eurozone sovereign debt crisis would likely worsen.

As for Malaysia, HDBSVR said on the local economic front, investors will be watching out for the 3Q11 GDP report card this evening, which would give an insight whether the Malaysian economy is on track to meet the official full-year growth forecast of 5.0%-5.5%. One media poll said consensus is projecting a year-on-year growth rate of 5.0% in the third quarter.

HDBSVR said within the list of listed companies that have announced their latest quarterly results Thursday evening, CB Industrial Product and TSH Resources surprised on the upside but YTL Land and Kossan Rubber came in below expectations.

Fannie, Freddie tentacles embraced many in Washington

WASHINGTON (Nov 17): While presidential hopeful Newt Gingrich was forced to defend his lucrative former role with Freddie Mac this week, the mortgage giant and its larger cousin Fannie Mae had a roster of Washington heavyweights on their payroll for years, many of them Democrats.

The two entities spent over $170 million on political and lobbying operations in a 10-year period leading up to the financial crisis of 2008 when both were seized by the government as they teetered on the brink of failure, according to the Center for Responsive Politics.

Fannie and Freddie hired figures such as Tom Donilon, now President Barack Obama's national security adviser, and Rahm Emanuel, Obama's former White House chief of staff, as part of a campaign aimed at protecting government ties that allowed them to borrow money cheaply from financial markets.

"It was a mob-like operation," said a senior congressional official who over the years dealt with the political and lobbying operations at the firms, the two biggest sources of U.S. mortgage finance. "They had tentacles everywhere."

Fannie Mae and Freddie Mac are congressionally chartered firms that buy loans from lenders and repackage them as guaranteed securities for sale to investors.

In turn, the debt they issue was seen as having implicit government backing. Since nearly going bust, they have received about $169 billion in taxpayer aid and the government has relied on them to help revive the housing market.

Gingrich was just one of a lengthy list of political power brokers with close ties to Congress and Republican and Democratic administrations hired by Fannie and Freddie as either board members, senior executives, lobbyists or consultants.

"They used to be the near-exclusive domain for Democrats," said John Taylor, president and CEO of the National Community Reinvestment Coalition. "But both Fannie and Freddie realized the perilous way of that strategy and eventually they began dealing with either party."

Emanuel and Donilon were hired when they were working in the private sector. Donilon was a top executive at Fannie Mae for five years, essentially running its lobbying operation. He departed in 2005.

Emanuel was named to the board of Freddie Mac by former Democratic President Bill Clinton in 2000, where he served for 13 months, earning more than $320,000.

POWER BROKERS

Fannie also hired other Washington power brokers during this time, including Bill Daley, who is now Obama's current White House chief of staff; Jamie Gorelick, a deputy attorney-general under Clinton; and Robert Zoellick, the current head of the World Bank.

From 1993 until 1997 Zoellick served as Fannie Mae's executive vice-president. Gorelick was vice chairman of Fannie Mae from 1997 to 2003, after she left the Clinton administration.

Kenneth Duberstein, former White House Chief of Staff for Republican President Ronald Reagan, served on the board of Fannie Mae from 1998 until 2007.

Another recognizable Washington name tied to the mortgage giants is a former director at the Office of Management and Budget during the Clinton White House. Franklin Raines, former CEO of Fannie Mae, was implicated in an accounting scandal for massaging earnings at the firm.

Congress and federal regulators played a role in their expansion as the housing market moved toward a peak by relaxing restrictions on the size of loans they could back and the speed at which their mortgage holdings could grow.

Conservative critics in particular accuse them of fueling the housing bubble at the heart of the 2008 financial collapse by securitizing loans made to people who could not afford them.

Gingrich, a Republican former House Speaker, came under fire this week for being paid about $1.6 million to $1.8 million as a consultant to Freddie Mac from 1999 until 2008. A person with an understanding of the arrangement confirmed the figure, which was first reported by Bloomberg on Wednesday.

The two government-controlled firms have been a favorite target of this year's Republican presidential contenders, including Gingrich.

Gingrich even said the top Democrat on the House Financial Services Committee, Barney Frank, should be thrown in jail because Gingrich claimed he had close ties to lobbyists at Freddie Mac.

While both Republicans and Democrats eventually want to see the firms wound down, an overhaul of the mortgage system is expected to take years. The companies, which back about half of the of the U.S. residential mortgage market, currently benefit from an unlimited line of credit with the Treasury. ' Reuters

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CIMB Research has technical buy on TA Enterprise at 61.5 sen

KUALA LUMPUR (Nov 18): CIMB Equities Research has a technical buy on TA Enterprise at 61.5 sen at which it trading at a price to book value of 0.7 times.

It said on Friday that TA Enterprise broke out of its medium term downtrend channel on Thursday.

'Looking at the chart, we think this rally could be extended. If we are right, prices are likely to edge closer towards 65 sen and 67.5 sen soon. The 200-day SMA at 67 sen is also a magnet for prices,' it said.

CIMB Research said the MACD histogram bars have returned to the black while RSI is also rising. This shows that the bulls are beginning to flex their muscles.

'Traders may start to nibble now to ride this breakout run. However, always put a stop at below 59 sen, just in case,' it said.

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CIMB Research has technical buy on TA Global at 33 sen

KUALA LUMPUR (Nov 18): CIMB Equities Research has a technical buy on TA Global ''at 33 sen at which it is trading at a price to book value of 0.8 times.

It said on Friday that similar to TA Enterprise, TA Global also broke out of its medium term downtrend channel on Thursday.

'We expect the next upswing to lift prices towards 35 sen. If this level is also taken out, the following resistance levels are 37 sen and 39.5 sen. The 200-day SMA is also a magnet for prices,' it said.

CIMB Research said the technical landscape is improving. MACD has staged a positive crossover while RSI is also rising towards the upper band of the neutral zone.

'As long as prices stay above the 31.5 sen level, we will continue to stick with the bull's camp. We will review our call if prices break below 31 sen,' it said.

CIMB Research has technical buy on ECM Libra at 82.5 sen

KUALA LUMPUR (Nov 18): CIMB Equities Research has a technical buy on ECM Libra Financial Group at 82.5 sen at which it is trading at a price to book value of 0.7 times.

It said on Friday ECM Libra's share price is trying to push above its downward slopping resistance trend line on Thursday (now at 84.5 sen).

'If it succeeds, there is a good chance that the candles may charge towards 90 sen and 95.5 sen.

'However, only risk takers should look at this stock. This is because selling pressure could pick up if prices fail to push above the 84.5 sen level soon. For investors with lower risk appetite, wait for prices to move above 84.5 sen before going long,' it said.

CIMB Equities Research said the MACD signal line has moved back into the positive territory. RSI too is above the 50pts mark. Put a stop at below 80 sen.

Euro zone, technicals unnerve Wall Street

NEW YORK (Nov 17): Trigger-happy investors dumped U.S. stocks on Thursday, scared by the market's sudden fall through a key technical level brought on by more worries about Europe's debt troubles.

The S&P 500 steadily slipped through the morning until it broke through 1,225, when selling picked up in both the futures and cash markets.

Investors have been increasingly focused on Europe, and markets were cautious early as bond yields in Spain and Italy rose to levels viewed as unsustainable.

Some market sources cited squabbling between Democrats and Republicans on the congressional "supercommitee" formed to find ways to cut the U.S. debt.

But Peter Costa, president at Empire Executions said from the NYSE floor that none of the catalysts market participants were pointing to as triggering the sell-off was new "news."

"It doesn't take much if you're teetering on a support or resistance level," he said. "When you're on the precipice of either one, and something comes out, this computer-generated trading pops into effect and that usually accelerates any reaction you're seeing."

The fall around midday was swift and volume picked up once the 1,225 level was breached. About 2.83 million S&P E-Mini futures contracts traded on Thursday, with nearly 250,000 changing hands in an unusually busy 15-minute period when the market fell more than 1 percent.

The S&P struggled to break above 1,225 in August and September before piercing it on the way to a two-month high in late October. Computer-generated trading usually uses previous clusters of buying and selling as triggers.

The Dow Jones industrial average fell 134.71 points, or 1.13 percent, to 11,770.88. The S&P 500 lost 20.73 points, or 1.68 percent, to 1,216.18. The Nasdaq Composite dropped 51.62 points, or 1.96 percent, to 2,587.99.

About 8.6 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the current daily volume average of just above 8 billion shares.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of more than 4 to 1, while on the Nasdaq, more than five stocks fell for every two that rose.

Declines in materials and energy shares accelerated with losses of more than 3 percent in crude futures and copper prices. The S&P energy index fell 2.1 percent and the S&P materials index declined 2.9 percent.

Tech shares also dragged the market lower, with the S&P TECHNOLOGY [] index down 2.2 percent. The 10 major S&P 500 sectors closed in the red for the day.

The broad sell-off repeated the pattern seen lately in which stocks are treated as an asset class, with little differentiation between winners and losers.

"Pretty much everything's for sale. There's a move toward cash, and (US) bond prices are (up)," said Tom Schrader, managing director of U.S. equity trading at Stifel Nicolaus Capital Markets in Baltimore.

Earlier, Spanish bond yields hit their highest level since 1997 at a 10-year auction, while a French bond auction also drew high yields.

The 7 percent mark for bond yields that both Italian and Spanish benchmarks are close to is viewed as a line in the sand. Both Greece and Portugal were forced to seek bailouts after yields hit similar levels.

Investors have worried that the debt problems in the euro zone could tip the global economy into another recession, even as U.S. data has suggested the economy is picking up.

New U.S. claims for jobless benefits hit a seven-month low last week and permits for future home CONSTRUCTION [] rebounded strongly in October, the latest data to suggest the economy was gaining traction.

While traders on the New York Stock Exchange floor gloomily watched prices fall, hundreds of Occupy Wall Street protesters marched, vowing to interfere with business. But trading was unaffected and about 100 protesters were arrested.

The Occupy Wall Street movement criticizes an economic system members view as favoring the rich and powerful. It has chosen Wall Street as a symbol of corporate greed. ' Reuters

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