Recession fears grip Asian markets

KUALA LUMPUR: Recession fears ripped apart Asian markets on Friday, Sept 23 as the FBM KLCI fell more than 1.9% in early trade and sank below the 1,360-level before paring down some of its losses at mid-morning.

Asian stocks, in particular in South Korea and Taiwan, fell sharply with foreign investors taking flight as concerns about global economic stagnation deepened on debt problems in Europe and an increasingly grim US and Chinese economic outlook, according to Reuters.

The FBM KLCI fell 1.37% or 19.08 points to 1,368.73 at 10am. The index had earlier fallen to a low of 1,358.47.

Market breadth continued to be negative with losers beating gainers by 541 to 50, while 125 counters traded unchanged.

Volume was 267.66 million shares valued at RM356.75 million.

At the regional markets, South Korea's Kospi tumbled 4.84% to 1,713.49, Taiwan's Taiex lost 3.80% to 7,027.77, Hong Kong's Hang Seng Index fell 2.35% to 17,491.89, Singapore's Straits Times Index was down 1.90% to 2,668.96 and the Shanghai Composite Index shed 1.29% to 2,411.58.

BIMB Securities Research in a note Sept 23 said that after the US Federal Reserve failed to rally the markets with their 'twist', global equity markets were all now doing the 'limbo rock ' how low can you go'?

At this juncture, with the fear button activated the global markets are playing catch down, it said.

It said Wall Street yesterday sparked into a selling spree pre-empting that Europe would experience what US did in 2008, adding that as result, Wall Street plunged by almost 400 points to below the 11,000 level.

Earlier, Asian and European stocks also a wave of selling as most saw declines of 2-4%, it said.

'For today, we would expect a spate of unloading ahead of the weekend for the regional markets.

'For Malaysia, we expect the selling to continue with the immediate support for the FBM KLCI at 1,380,' said BIMB Research.

Among the decliners at mid-morning, KLK and Dutch Lady fell 78 sen each to RM20.42 and RM18.10, Batu Kawan 44 sen to RM15, Panasonic 40 sen to RM18.40, Petronas Dagangan 38 sen to RM16.02, Hong Leong Bank 36 sen to RM9.62, BAT 30 sen to RM43.54, Tradewinds 29 sen to RM8.02 and United Malacca 25 sen to RM6.40.

The actives included Dialog, AirAsia, Trinity, Key West, Petronas Chemicals, MRCB, Compugates and Timecom.

CIMB Research has Technical Sell on Genting Plantations

KUALA LUMPUR: CIMB Equities Research has a Technical Sell on Genting PLANTATION []s at RM7.16, at which it is trading at a FY12 price-to-earnings of 13.3 times and price-to-book value of 1.8 times.

It said on Friday, Sept 23 that Genting Plantations's share price has been consolidating in a sideways manner for the past few weeks.

'Yet, we think the longer term trend continues to favour the bears. Looking at the chart, it appears that near term gains are likely capped at RM7.40 to RM7.60,' it said.

CIMB Research said the technical landscape remains subdued. MACD signal line is still hovering in the negative territory while RSI has hooked downward.

'Unless prices swing back above the RM7.60 level, we would rather stick with the bear's camp. On the downside, once the RM6.91 level is violated, prices should de-rate towards RM6.61 and RM6.40 next,' it said.

CIMB Research has Technical Sell on Genting

KUALA LUMPUR: CIMB Equities Research has a Technical Sell on GENTING BHD [] at RM8.80, at which it is trading at a FY12 price-to-earnings of 10.4 times and price-to-book value of 1.9 times.

It said on Friday, Sept 23 that Genting's share price broke below its triangle support early this week and this has drawn investors into selling mode on Thursday.

'As the candles deviate further away from its key moving averages, we think the near term trend is firmly down. The following support levels are RM8.50 and RM8.20,' it said.

CIMB Research said the MACD histogram bars have turned negative while RSI has also hooked downward. Beware of the next downleg as it could be sharp.

'Any rebound is an opportunity to take profit. The gap at RM9.23-RM9.28 would likely keep the bulls at bay for now. Put a buy stop at RM9.39, just in case,' it said.

CIMB Research has Technical Sell on Hong Leong Bank

KUALA LUMPUR: CIMB Equities Research has a Technical Sell on Hong Leong Bank at RM9.98 at which it is trading at a FY12 price-to-earnings of 10.2 times and price-to-book value of 2.1 times.

It said on Friday, Sept 23 that the recent correction does not look complete. Prices violated its 200-day SMA on Thursday and this could induce greater selling pressure in days to come.

The next downleg should push prices closer towards RM9.50 and RM8.80.

'MACD is heading south while RSI is below the 30pts mark. The deteriorating technical landscape shows that the bears are still strong here.

'Our strategy here is to unload on strength, preferably near the 200-day SMA (now at RM10.62). Only a swing above RM10.96 would prompt us to reevaluate our call,' it said.

KLCI continues to get hammered, falls 1.64%

KUALA LUMPUR: The FBM KLCI fell 1.64% or 22.76 points to 1.365.05 at 9.05am on Friday, Sept 23 in line with the steep overnight fall at Wall Street as well as the panic-selling across Asia.

A grim economic outlook from the US Federal Reserve on Wednesday triggered falls in world stocks and commodities overnight.

US stocks plunged 3.5% on Thursday, extending a selloff to four days, as policymakers' failure to arrest global economic stagnation sent markets spiraling downward, according to Reuters.

Among the major early losers on Bursa Malaysia were KLK, Tradewinds, JT International, UMW, Star, Genting, Batu Kawan, MSM, AirAsia and Petronas Chemicals.

Losers beat gainers by 259 to 27, while 74 counters traded unchanged.

Mudajaya dips in early trade

KUALA LUMPUR: MUDAJAYA GROUP BHD [] shares declined in early trade on Friday, Sept 23 in line with the overall weaker market sentiment but also on the back of the resignation of its managing director Ng Ying Loong.

At 9.25am, Mudajaya lost nine sen to RM2.01 with 407,500 shares done.

CIMB Research in a note Sept 23 said Ng's resignation caught the research house by surprise, but added that although it may trigger concerns due to its sudden nature, there was no reason to view it negatively.

There research house said that while it was disappointed that there had been no warning, Ng's departure was for personal reasons and there was no hint of conflicts at the management level or issues with the strategic direction of the group.

Management remains optimistic that the changes at the helm do not affect its ability to clinch projects under the 10MP and ETP, it said.

'We make no changes to our forecasts or Buy call but raise our RNAV discount from 20% to 30% in view of the short-term concerns that this change in leadership is likely to stir.

'Our target price goes down from RM5.50 to RM4.81. The main potential re-rating catalyst is contract wins,' it said.

Seoul shares open down 3.6 pct hit by recession fears

SEOUL: Seoul shares opened sharply lower on Friday as concerns about global economic stagnation deepened on debt problems in Europe and an increasingly grim U.S. and Chinese economic outlook.

Falls were led by crude oil refiners and shipbuilders, with SK Innovation , the country's top refiner, down 6.3 percent and Hyundai Heavy Industries , the world's top shipyard, tumbling 7.1 percent.

The Korea Composite Stock Price Index was down 3.43 percent at 1,738.86 points as of 0003 GMT. ' Reuters

HDBSVR sees muted spillover effects on Asian equities

KUALA LUMPUR: Hwang DBS Vickers Research said while main US equity indices on Wall Street plunged between 3.2% and 3.5% overnight on Thursday, Sept 22, there could be muted spillover effects on Asian equities on Friday.

It said this followed the sell-down suffered on Thursday, which saw bellwethers in Indonesia (-8.9%), China shares listed in Hong Kong (-6.3%) and Hong Kong (-4.8%) the hardest hit.

At Bursa Malaysia, it expects to see less selling pressures on Friday. The benchmark FBM KLCI, which tumbled 31.2 points or 2.2% on Thursday, may gyrate sideways with a marginal negative bias, as it will likely struggle to cross past the psychological threshold of 1,400 ahead.

One counter that will be hoping to attract buying interest is WCT, which has entered into a concession agreement for the privatisation of the CONSTRUCTION [], development and financing of an integrated complex at KLIA2 with a project cost valued at RM530 million.

CIMB Research retains Outperform on WCT

KUALA LUMPUR: CIMB Equities Research said the 25 years plus 10 years concession agreement between WCT BHD [] and MAHB for the KLIA2 integrated complex was a big milestone for WCT.

It said on Friday, Sept 23 this was WCT's first concession in Malaysia and would give it both CONSTRUCTION [] and recurring income.

'A positive surprise is the estimated RM100 million to RM200 million upside to the RM530.3 million construction cost,' it said.

CIMB Research said it made no changes to its FY11-13 EPS forecasts or RM4.44 RNAV, which already factored in WCT's 70% share of the integrated complex's NPV(13% WACC).

'We retain our OUTPERFORM call and RM3.99 target price, which is pegged to an unchanged 10% RNAV discount. This announcement and other project awards including a potential sizeable contract from the Middle East could catalyse the stock. The group's end-11 target of RM2 billion new contracts remains intact,' it said.

CIMB Research maintains Sell on Berjaya Land

KUALA LUMPUR: CIMB Equities Research said it was floored by BERJAYA LAND BHD []'s 1QFY4/12 core net loss of RM3.9 million as it had forecast RM46.7 million core net profit for the full year.

It said on Friday, Sept 23 the variance stemmed mainly from higher tax expenses, weaker-than-expected property earnings and lower contribution from the hotel and recreation business.

'Factoring in a scaled-back sales schedule and lower EBITDA margin assumption for its property projects, we now slash our FY12-14 EPS forecasts by 35%-46%,' it said.

CIMB Research said it also imputed a higher tax rate on FY12-14 earnings. In view of its volatile earnings and the macro headwinds, it widen its sum-of-parts discount from 10% to 40%, which reduces its target price from RM1.11 to 93 sen.

'B-Land remains a SELL, with potential downside catalysts being these poor results, execution risk for its overseas projects and continuous losses for its club division,' it said.