Maybank Proposes Dividend Reinvestment Plan

Maybank is proposing to undertake a recurrent and optional dividend reinvestment plan that allows shareholders of Maybank to reinvest their dividend into new ordinary shares of RM1.00 each in Maybank.

In a filing to Bursa Malaysia, the company said the proposed dividend reinvestment plan is part of its efforts to enhance and maximise shareholders' value via the subscription of new Maybank shares where the issue price of a new Maybank share shall be at a discount of not more than 10 per cent to five-day volume weighted average market price.

It said the proposed plan will provide the shareholders with greater flexibility in meeting their investment objectives, as they would have the choice of receiving cash or reinvesting in the company through subscription of additional Maybank shares without having to incur material transaction or other related costs.

The company will also benefit from the participation by shareholders in the proposed dividend reinvestment plan to the extent that if the shareholders elect to reinvest the electable portion into new Maybank shares, the cash which would otherwise be payable by way of dividend will be retained to fund the continuing growth and expansion of Maybank and its subsidiaries.

The retention of cash and the issue of Maybank shares under the proposed plan will not only enlarge the company's share capital base and strengthen its capital position, but will also add liquidity of Maybank shares on the Main Market of Bursa Malaysia.

The proposed dividend reinvestment plan is expected to be put in place by the second quarter of 2010.

RBS: Buy ringgit against won, yen

The bank recommends entering a three-month forward contract to sell the won at 339.36 per ringgit and the yen at 26.74 per ringgit

SINGAPORE: Investors should buy the ringgit against South Korea's won and Japan's yen as Malaysia's central bank may increase its policy rate as many as two more times in 2010, the Royal Bank of Scotland Group plc said.

Bank Negara Malaysia will continue reining in monetary stimulus after last week's rate increase, while government pressure will mean that the Korean and the Japanese central banks won't increase borrowing costs anytime soon, RBS, the fourth-largest currency trader, wrote in a research note published on Tuesday.

Malaysia's central bank will next review its policy on May 13.

"Bank Negara could do a few more rate hikes," RBS strategist Chia Woon Khien said in an interview in Singapore yesterday. "The question is whether they want to go straight to neutral level or stay a little dovish along the way."

Malaysia's central bank raised its benchmark overnight rate by 25 basis points to 2.25 per cent on March 4. The RBS report said there is "scope for at least one, if not two more, 25-basis point hikes" in the coming year. Prime Minister Datuk Seri Najib Razak said last week that Southeast Asia's third-largest economy may expand 6 per cent this year, twice the pace of the official forecast, on a rebound in exports.

The ringgit has risen 2.6 per cent this year against the dollar, the best performer among Asia's most active currencies excluding the yen. It climbed 0.6 per cent to 3.3230 at 12.10pm in Kuala Lumpur, the strongest level since August 2008.

The bank recommended entering a three-month forward contract to sell the won at 339.36 per ringgit, targeting the spot rate to reach 355 when the bet expires on June 9. RBS also suggested a similar forward bet at 26.74 yen per ringgit, predicting the spot rate at 28 upon the contract's maturity.

Will Malaysia rate rise set off SE Asia hikes?

Analysts say Malaysia’s regional neighbours will focus on domestic factors to determine when to raise interest rates

Central banks in Southeast Asia are set to stick to their current monetary policy course rather than change tack after Malaysia last week surprised markets by raising interest rates.

The Malaysian central bank increased its rate to 2.25 per cent from a record low of 2 per cent, arguing the move would help avoid the risk of economic imbalances later on.

Analysts say Malaysia’s regional neighbours will focus on domestic factors to determine when to raise interest rates for the first time following the global economic crisis.

Thailand’s central bank left its policy rate unchanged on Wednesday, saying Malaysia was one factor among many for policymakers to consider. The Philippines central bank meets on Thursday and is expected to leave rates steady as well.

Malaysia last week became the first central bank in Asia outside Australia to increase rates as part of efforts to unwind crisis measures.

ANALYST VIEWS

(The comments were made before Thailand’s rate decision)

DAVID COHEN, ECONOMIST, ACTION ECONOMICS IN SINGAPORE:

“I don’t think that they will be prompted to tighten in meetings this week in Thailand, or Philippines. It’s certainly got their attention, the fact that people in the market are talking about it. Maybe it helped to test the waters for these folks and I think it’s consistent with the mainstream expectation that sometime in mid-year, they will tighten rates.

They can start using the same rationale as Malaysia’s central bank governor - the normalisation after an extended period of accommodative rates.”

PRAKRITI SOFAT, REGIONAL ECONOMIST, BARCLAYS IN SINGAPORE “No, I think each country has its own set of factors that are driving what they will do. Indonesia may begin its tightening cycle in late Q2, we see 100 basis points for the year but risks are biased to later and lesser. But based on BNM (Malaysia) they won’t be changing their rate outlook.”

FREDERIC NEUMANN, REGIONAL ECONOMIST, HSBC IN HONG KONG: “For the Philippines, I doubt it (Malaysia’s action) has had any major impact, in part because economic data has been far softer in Philippines compared to Thailand and Malaysia.

For that reason, no imminent move by the BSP (Philippines) and the BSP might even hold through the second quarter. There is some tinkering at the edges to remove the emergency measures put in place, but that has to be distinguished from outright rate hike as seen in Malaysia.”

NUCHJARIN PANARODE, ECONOMIST, CAPITAL NOMURA IN THAILAND: “Our house has already expected other central banks in the region to start raising rates in the second quarter as rates are too low, not because of Malaysia’s rate rise. But that may increase the likelihood of rate hikes elsewhere.”

VISHNU VARATHAN, ECONOMIST, FORECAST PTE IN SINGAPORE:
“On the radar now is India. If you’re talking of countries that probably need to normalise, we have a whole list of them.

But given the mix of inflation data as well as growth pick up , conditions are appropriate and most pressing in India. China is also not too far off.”

USARA WILAIPICH, ECONOMIST, STANDARD CHARTERED IN THAILAND: “The impact is limited given implementation by central banks in any country will more depend on specific local factors, mainly on speed of economic recovery, inflation pressures, and any evidence of asset price bubbles.”

Khazanah said placing out 7.7pc of MAHB

MALAYSIA'S state fund Khazanah Nasional Bhd is placing out 7.7 per cent of Malaysia Airports Holdings Bhd (MAHB), sources familiar with the matter said yesterday.

This follows a similar exercise in September last year when it sold a 5 per cent stake in the airport operator as part of its programme to reduce its holdings in government-linked firms.

The new placement of 85 million shares, via a bookbuilding process, is aimed at raising as much as RM400 million, according to a term sheet obtained by Reuters yesterday.

Prior to the current placement, Khazanah had a 67.7 per cent stake in MAHB.

CIMB and JPMorgan are joint bookrunners in the placement exercise, the term sheet showed.

The state fund in December sold 2 per cent of key power utility Tenaga Nasional in a bid to woo foreign funds back into Malaysia's stock market.

MAHB shares closed at RM4.90 yesterday.

KL bourse set to test 1,308-point level

It is critical that the benchmark index (FBM KLCI) surpasses the 1,308 level, as it will reflect confidence in the market and economy, says a research head

The Malaysian stock market is expected to continue on the uptrend this week, helped by growing confidence in the domestic economy and in the case of banking stocks, by last week's decision by Bank Negara Malaysia to raise interest rates slightly.

Analysts said the benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index may breach the year's high of 1,308 level.

"I think the market is set for a strong rebound and it will test the 1,308-mark," said Jupiter Securities head of research Pong Teng Siew.

He added that

"The GDP (gross domestic product) figures announced recently signal that Malaysia's growth is strong," he said.

The benchmark index reached the high of this year at 1,308.36 on January 21.

Analysts also believe that banking stocks are likely to continue to rise, backed by the recent interest rate increase which will translate into higher interest margins for banks.

The market ended sharply higher last Friday with the FBM KLCI rising 15.69 points, or over 1 per cent, to 1,299.78, its highest level in seven weeks. Banking stocks were the best performers.

Public Bank Bhd aims to match dividend payout

Public Bank Bhd (1295) aims to keep paying half of its net profit as dividend this year despite concerns that stricter global rules may require banks to keep more shareholders money in future.

"Our cash payout ratio last year was about 57 per cent. We are looking to try and maintain that level, at around 50 per cent," chief operating officer Leong Kwok Nyem told reporters after its annual shareholders' meeting in Kuala Lumpur yesterday.

He added that the dividend plan is subject to Bank Negara Malaysia's approval and any new developments in the Basel 3 framework, which is still under discussions globally.

The new global rules may require banks to hold more shareholders fund.

Still, the total dividend payout may be lower this year in terms of percentage, as it also gave out treasury shares in the past two years.
The country's third largest lender last year paid a gross cash dividend of 55 sen per share, and a share dividend that equals to 22.2 sen based on its share price at the end of the year. This brought the total dividend payout to 79.3 per cent of its net profit in 2009.

The bank, which distributed 146 million treasury shares in the past two years, is left with 29 million treasury shares. It could return this to shareholders this year to boost dividend, but the number is quite small, Leong said.

"We will look at the appropriate level of dividends for the current year," he said.

Leong said the bank has no plans to raise new capital this year, saying that it is premature to prepare for stricter capital rules under Basel 3, which is still in the early stages of discussion.

Banks are only required to provide feedback to the Basel committee by April this year and there will be further rounds of consultation by the committee before the next draft of the proposal is expected by the year-end. The new rules will not come into effect until end-2012.

Hong Leong Bank: Buy, target price RM9.50

The target price was derived with the assumptions of a 16 per cent sustainable return on equity, 4 per cent long-term growth, and 9.4 per cent cost of equity.

"Our view on Hong Leong Bank is independent of whether it successfully acquires EON Capital Bhd," HwangDBS wrote in a report yesterday after Hong Leong announced its results for the second quarter ended on December 31 2009.

The stockbroker believes that the growth potential could speed up at Bank of Chengdu in China, which is a 20 per cent associate of Hong Leong.

Hong Leong recently entered into a joint venture (49 per cent stake) with the Chinese bank to operate a licensed finance company in China.
"The venture could add to contribution from its Chinese operations. Its maiden venture in Vietnam has also commenced operations and is expected to contribute positively in two to three years," HwangDBS noted.

Genting Posts Pre-Tax Profit Of RM2.528 Billion

Genting Bhd Thursday announced that pre-tax profit for its financial year ended Dec 31, 2009, increased to RM2.528 billion from RM1.735 billion in the previous year.

Revenue, however, fell to RM8.894 billion from RM9.082 billion, mainly due to a decrease in revenue from the plantation division, the company said in a statement.

Total revenue from Genting Malaysia Bhd's Resorts World Genting was affected by the weaker luck factor in the premium players business although the overall business volume was higher, it said.

Although revenue from the UK casinos declined as a result of lower business volume and lower win percentage arising from poor luck factor and further exacerbated by the weakening of the pound against the ringgit, there was an improvement in profit, due largely to stringent cost control and significantly lower operating overheads, the company said.

Meanwhile, Genting Malaysia announced its pre-tax profit for the year ended Dec 31, 2009, increased to RM1.764 billion from RM1.127 billion in the previous year and revenue rose to RM4.992 billion from RM4.887 billion.

Palm oil rises on talk of India, China demand

CPO FUTURES

PALM oil gained yesterday on speculation that demand for the edible oil may remain strong in India and China, the world’s biggest users.

May-delivery palm oil futures advanced 0.2 per cent to RM2,635 a metric ton on the Malaysia Derivatives Exchange.

“Demand growth should remain strong given the projected gross domestic product growth of around 8-10 per cent for China and India,” CIMB Group Sdn Bhd said in a report yesterday.

Palm oil also gained as soybeans, crushed to make soybean oil, advanced for a second day.

May-delivery soybeans traded in Chicago advanced 0.2 per cent to US$9.71 a bushel at 6.49 pm in Singapore. May-delivery soybean oil was unchanged at 39.3 cents a pound at 6.46 pm.

In China, September-delivery palm oil rose 1.2 per cent to settle at 7,016 yuan (US$1,028) a ton on the Dalian Commodity Exchange, extending Monday’s 2.3 per cent jump. Soybeans rose 1.4 per cent to 3,874 yuan, after climbing 1.1 per cent on Monday.

Indonesia, the second-largest palm oil producer, may keep the export tax for March unchanged at 3 per cent, Sahat Sinaga, second deputy chairman of the nation’s palm oil board, said.

Palm oil, the cheapest cooking oil, is also used as an alternative fuel additive and tends to track crude oil prices. It surged 52 per cent last year as crude oil jumped 78 per cent.

Crude oil in New York for March delivery climbed to more than US$80 a barrel for a third day in Asian trading and was last at US$79.62 a barrel at 6.52 pm Singapore time.


RUBBER

MALAYSIAN rubber prices ended higher yesterday amid a quiet market despite weaker prices on the Tokyo Commodity Exchange.

The higher prices were due to concern over a tight supply condition, dealers said.

Many tappers have stopped tapping due to wintering, which is characterised by reduced yield owing to dry weather.

A dealer said the market was quiet due to lack of participants as more traders were still on the Lunar New year holiday mood.

At noon, the Malaysian Rubber Board's physical price for SMR 20 rose 4.5 sen to 1,046.5 sen per kg while latex in bulk edged up 5 sen to 734 sen per kg.

The unofficial sellers' closing price for tyre-grade SMR 20 decreased 1 sen to 1,045.5 sen per kg and latex in bulk added 0.5 sen to 734 sen per kg.


TIN

THE tin price on the Kuala Lumpur Tin Market (KLTM) rose by US$33 to close at US$16,933 per tonne yesterday amid expectations of strong demand from China, following the week-long Lunar New Year break and an improving economic outlook, dealers said.

The dealer said the KLTM also gained support in tandem with the overnight uptrend in the tin price on the London Metal Exchange (LME), which ended US$175 higher at US$17,175 per tonne.

"The tin markets received strong interest in anticipation of a better economic performance this year," added the dealer.

On the KLTM, overall turnover was flat at 50 tonnes.

Bids accounted for 50 tonnes compared with offers of 40 tonnes with European, Japanese and local traders continuing to dominate trade.

The price differential between the KLTM and the LME declined to a premium of US$95 per tonne from US$235 per tonne on Monday. - Agencies

Zeti: Malaysia clearly on track to economic recovery

MALAYSIA is on the path to economic recovery, Bank Negara Malaysia's (BNM) governor says, ahead of unveiling economic data for the fourth quarter of 2009 tomorrow.

"We are already clearly on the path to recovery. The indicators are that the economic performance is better than expected," Tan Sri Zeti Akhtar Aziz said.

Fourth-quarter data tomorrow will show if Malaysia managed to emerge from its first recession in a decade.

Zeti also reiterated that any adjustment in interest rates would be to achieve a "normalisation" and not a tightening of policy. "Monetary policy will continue to be supportive of the economic recovery process," she said.

Policymakers' next meeting is on March 4. BNM has kept the Overnight Policy Rate low at 2 per cent for seven straight meetings.

Economists expect Malaysia to return to positive growth in the final quarter, after three straight quarters of negative growth.

AmResearch's senior economist Manokaran Mottain recently upgraded his fourth-quarter economic growth to 3.5 per cent from 1.5 per cent.

"We are no longer in extraordinary circumstances. We have come out of that kind of environment," Zeti said after launching Thomson Reuters' new Islamic finance product in Kuala Lumpur yesterday.

The product, known as the Islamic Finance Gateway, is a global platform and directory comprising details and links to Islamic finance professionals, rating agencies, industry standards bodies, index providers and scholars, among other things.

It is available on its flagship Thomson Reuters 3000 Xtra desktop.

"The timely access to a broad range of key information on Islamic finance - including on the product terms, structures and Syariah rulings - will contribute to enhanced transparency in the Islamic financial markets," Zeti said of the product.

PPB may not be able to announce Q4 results on time

PLANTATION and property group PPB Group Bhd's (4065) fourth quarter results announcement will be delayed, as it waits for 18.4 per cent owned Singapore-based Wilmar International Ltd to announce its results.

On February 12, Wilmar told the Singapore Exchange it will announce its full-year results on March 1. No reason was given for the delay.

According to Bursa Malaysia Bhd's listing requirements, PPB is required to furnish its quarterly report for the fourth quarter ended December 31 2009 to the regulator by February 25.

The group however, told Bursa Malaysia yesterday, it will not be able to meet the timeline, due to Wilmar's material contribution to PPB's financial results.
PPB targets to release its fourth quarterly report to Bursa Malaysia on March 2, the day after Wilmar's announcement to the Singapore Exchange.

Should the group fail to announce its results by March 8, trading of its shares will be suspended.

IOI Corp Outlook Remains Encouraging

KUALA LUMPUR, Feb 11 (Bernama) -- IOI Corporation Bhd's outlook is expected to remain encouraging on the back of better crude palm oil prices, which averaged RM2,526 in the beginning of 2010, said Kenanga Research.

It said it expected a slight drop of 0.9 per cent in revenue and a drop of 0.5 per cent in net profit for the company in the current financial year.

In a research note released Thursday, Kenanga Research also forecast a trimming of 2.1 per cent in revenue for the 2011 financial year and a decline of 3.5 per cent in net profit as a result of coverage changes.

IOI Corp's pre-tax profit for the second quarter ended Dec 31, 2009 rose to RM598.241 million from RM333.495 million in the same quarter of 2008.

IOI in an announcement to Bursa Malaysia had said the increase was due to higher profit contribution from the property and manufacturing segments and unrealised translation gain on US dollar-denominated borrowings.

Its revenue, however, declined to RM3.06 billion from RM3.727 billion previously.

Meanwhile, MIDF Equity Beat said CPO prices will remain firm this year and next year, with average prices to be at RM2,450 per metric tonne and RM2,650 per metric tonne respectively.

"We expect CPO prices to remain firm in the first quarter of 2010 but may be coming under pressure as the South American soybean harvest begin in the second quarter," it added.

Meanwhile, ECM Libra Investment Research said it expected softer yields and hence profits in the third quarter of this year due to the seasonal production down cycle.

It said this will be despite the stronger CPO prices so far.

"Malaysian Palm Oil Board statistics just for January have indicated that production declined some 11 per cent and this should be reflected in the group's (IOI) numbers," it said.

"We will continue to see stagnant growth into 2010 as the group has minimal major maturities coming on-stream," it said.

Export Of Palm Oil Products Reached RM49.6 Billion Last Year

BANGI, Feb 11 (Bernama) -- The income from the export of palm oil products last year reached RM49.6 billion following an increase in the production of the commodity.

The Deputy Minister of Plantation Industries and Commodities Datuk Hamzah Zainudin said the increase in production also contributed to the total export of palm oil products of 15.87 million tonnes.

"The strategic approach being implemented by the government in the area of research and development, has succeeded in yielding a new innovation which has had an impact on enhancing the prestige of the palm oil industry," he added.

He said this in his closing speech at a ceremony to present certificates to 47 participants of a Plantation Machine Operators Course (KOML) for the September 2009 session here Thursday.

His speech was read by the Director General of the Malaysian Palm Oil Board (MPOB), Datuk Dr Mohd Basri Wahid.

It was reported earlier that the export of palm oil products is expected to exceed RM100 billion in 2020 following initiatives to effectively enhance production.

In 2008, the export of palm oil products was worth RM65.2 billion.

Hamzah said the encouraging achievement of the country's oil palm industry is also attributed to the progress in research and quality control undertaken by the MPOB.

He said to date, MPOB's research has resulted in more than 440 technology encompassing the upstream sector and production of downstream products which have been accepted and endorsed by the industry.

He also stated that the area under palm oil cultivation has also increased by 4.5 per cent.

This he added, enabled the total area under oil palm cultivation, to reach 4.69 million hectares last year.

Commenting on the KOML, Hamzah said the involvement of local youths in the plantation sector would reduce the dependance on foreign labour which is estimated to reach 300,000.

"The dependence on foreign workers in the plantation sector does not benefit the country as there is an outflow of money overseas and also causes social problems," he explained.

Hamzah said the KOML is being implemented to produce local workers skilled in the operation of agricultural machinery to fullfil the needs of the oil palm industry and this is very important.

He also highlighted that the plantation sector and the cultivation of oil palm had moved to modern, efficient methods, including the use of agricultural machinery.

Maybank Expects OPR To Rise 50 To 70 Basis Points

Maybank expects the overnight policy rate (OPR) to increase between 50 and 70 basis points this year in line with signs of an improving economy, its president and chief executive officer, Datuk Seri Abdul Wahid Omar said.

He said the bank also expected gross domestic product (GDP) to grow 4.5 per cent this year and inflation to be at 2.3 per cent.

Abdul Wahid said this at a press conference here Tuesday after announcing Maybank's interim results for the half-year financial period ended Dec 31, 2009.

Last month, it was reported that Bank Negara Malaysia had decided to leave the OPR unchanged at a record low of two per cent for the seventh consecutive time amid uncertainty over the prospects of advanced economies.

In a statement issued after the first Monetary Policy Committee (MPC) meeting for this year on Jan 21, the central bank had said the growth in advanced economies would continue to depend on policy stimulus measures and the sustainability of private sector demand amid ongoing financial system resolution and reforms.

It had also said that the growth momentum in regional economies was expected to strengthen further this year, while domestic economic indicators had suggested a favourable economic expansion in the fourth quarter of 2009.

"Positive developments in manufacturing production, financing activity, external trade and labour market conditions reaffirms the assessment that the economic recovery is gaining strength," Bank Negara had said.

Maybank's H1 Pre-Tax Profit Up 38.8 Per Cent To RM2.55 Billion

Malayan Banking Bhd's (Maybank) pre-tax profit for the first half year ended Dec 31, 2009 rose 38.8 per cent to RM2.556 billion from RM1.842 billion in the previous corresponding period.

Its revenue increased by 35.5 per cent to RM6.408 billion from RM4.729 billion in the same period last year, while net profit rose by 43.5 per cent to RM1.875 billion from RM1.306 previously.

Maybank president and chief executive officer, Datuk Seri Abdul Wahid Omar, said the robust performance was achieved on the back of a significantly improved results across all business sectors.

He said this when announcing Maybank group's interim results for the half year ended Dec 31, 2009 here Tuesday.

Investors seen locking in profits ahead of festival

Malaysian investors are likely to remain cautious in the week running up to the Lunar New Year, after Asian equity markets fell late last week following overnight losses on Wall Street.

Analysts expect investors to continue locking in their profits this week, while volumes will ease due to the cautious sentiment.

Kenanga Investment Bank Bhd research head Yeonzon Yeow said that small/mid-cap stocks were likely to outperform the rest of the stock market, after the substantial sell-down in big-caps.

Analysts also expect global market volatility to continue as investors appear uncertain whether world growth can support the equities market, given the release of bearish economic data last week.

On the home front, stocks that will continue to draw interest this week include Scomi Marine Bhd and KNM Group Bhd. The two companies made major announcements last week.

Scomi Marine said late last Friday that it was selling its entire 29.07 per cent stake in the Singapore-listed CH Offshore Ltd for close to RM350 million.Giving away 8,888 Free Cards! Get your Tune-In Card now!


The disposal will result in net gain of RM63.6 million after accounting for estimated expenses of RM3.4 million.

The stock, which will resume trading today, last traded at 47.5 sen on Thursday.

Meanwhile, KNM gained 6.5 sen to 81.5 sen on Friday, after its founder and other investors said they planned to take the company private.

The Malaysian stock market benchmark was on an uptrend at the start of last week, but began a downward slide on Thursday as weakness on Wall Street weighed on sentiment.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) fell 17.13 points to end at 1,247.9 points on Friday, in line with weak Asian equity markets that took their cue from Wall Street, which fell after news of a rise in US unemployment benefits.

Markets were also affected by concern over the European sovereign debt problems.

However, a late rally on Wall Street last Friday saw US stocks ending slightly higher after a volatile week.

The Dow Jones Industrial Average erased its intra-day losses by ending 10.05 points higher at 10,012.23. The Standard & Poor's 500 Index was 0.29 per cent up at 1,066.19, while the Nasdaq Composite Index was 0.74 per cent higher at 2,141.12.

While the FBM KLCI may slide to 1,220 points, analysts expect the index to find its support level at 1,200 points.

FDI set for moderate recovery this year

INVESTMENTS in Malaysia's manufacturing sector halved last year, bitten by the global recession, but foreign direct investment (FDI) is expected to recover moderately this year.

This is because the economies of its foreign investors are set to improve. The International Monetary Fund, for instance, has raised its global economic growth forecast to 3.9 per cent for this year from 3.1 per cent.

The government approved manufacturing investments worth RM32.6 billion last year, down from RM62.8 billion in 2008.

Out of the 766 projects approved by the Malaysian Industrial Development Authority (Mida), foreign investments made up 67.8 per cent, or RM22.1 billion.

"Foreign investments in projects with investments of RM1 billion and above accounted for 37.3 per cent of the total (investments approved), indicating FDI inflows into the country were mainly for quality investments," International Trade and Industry Minister Datuk Seri Mustapa Mohamed said at the investment agency's annual media conference in Putrajaya yesterday.

FDI was mainly in industries manufacturing chemicals and chemical products, non-metallic mineral products, and electronics and electrical products.

In 2008, before the global economic crisis, the country attracted RM46.1 billion of investments

"(The year) 2009 has been tough for all of us. But we also see a better balance between foreign and domestic investments," Mustapa said.

Domestic investments amounted to RM10.5 billion, or a third of the total approved. They were mainly in industries making basic metal products, chemicals and chemical products, are among countries with RHD markets.

BYD's gas-powered cars, F0 and F3, are China's top sellers.

The Chinese manufacturer of batteries and cars aims to become the market leader in new energy vehicles (EV).

Its EV model, F3DM, operates as a plug-in hybrid vehicle, while the soon-to-be-launched e6 will be the first pure-electric vehicle.

The e6 will be launched in China in the first quarter, and in the US by year-end.

Berjaya Group holds 51 per cent of Changan Berjaya Auto Sdn Bhd, a joint venture with China's ChangAn Auto Co Ltd, to distribute Changan Era cars here.

The group also owns distribution rights for brands such as Mazda, Skoda and Mercedes-Benz.

Berjaya Group also plans to assemble Mazda 3 cars in Malaysia soon.

Lee, others in RM3.6b bid for KNM business

KNM Group Bhd (7164) says its founder and other investors have offered to buy all of its business, valuing the process equipment maker at RM3.6 billion.

The group has received a proposal from BlueFire Capital Group Ltd, which is controlled by Lee Swee Eng, to buy all of its business and undertakings for 90 sen per share.

Lee is the group managing director and major shareholder, with 23.4 per cent of KNM as at May 18 last year.

The offer is 20 per cent more than KNM's share price of 75 sen at yesterday's close.

KNM told Bursa Malaysia that BlueFire was working with GS Capital Partners VI Fund LP and Mettiz Capital Ltd and the international adviser was Goldman Sachs (Singapore) Pte Ltd.
GS Capital is a US$20.3 billion (RM69 billion) global investment fund set up by Goldman in 2007.

KNM's board has granted BlueFire a limited exclusivity period up to March 22 to complete due diligence.

KNM said it will engage its legal and financial advisers to assist the company and its board to evaluate and negotiate the definitive terms of any transaction. KNM's current order book stands at RM2.2 billion. It is bidding for contracts valued at RM14 billion.

KNM Group stock jumps on buyout bid

KNM Group Bhd, a Malaysian oil and gas services provider, rose the most in almost seven months after a Goldman Sachs Group Inc. private equity fund joined the founder of KNM in a takeover bid that values the Malaysian oil and gas services provider at about $1 billion.

The stock surged 10 per cent to 82.5 sen at 9:05 a.m. local time in Kuala Lumpur, set for the steepest gain since July 15.

Founder and Managing Director Lee Swee Eng offers to buy out company at 0.90 ringgit per share, valuing the process equipment maker at RM3.6 billion.

Lee now owns 23.64 per cent of KNM.

“We believe the valuation is fair and a premium relative to the sectors FY10F PE of 8.8 times, as it reflects control premium of the M&A in Malaysia,” said HwangDBS Research in a note on Friday. - Bloomberg, Reuters

Interest Rates Stable In December 2009, Says Bank Negara

The daily weighted average overnight interbank rate moved within a narrow range of 1.99 to 2.00 per cent during the Dec 1, 2009, to Jan 27, 2010, period.

Interbank rates of other maturities were also relatively stable, said Bank Negara Malaysia in its Monetary and Financial Developments for December 2009 report released Thursday.

The central bank said the average fixed deposit rates of commercial banks were unchanged between December and January.

As at Jan 15, the average quoted fixed deposit rates for tenures between one and 12 months were within the range of 2.00 and 2.50 per cent, Bank Negara said.

In terms of the commercial banks' lending rates, the average base lending rate (BLR) was unchanged at 5.51 per cent as at Jan 15 while the average lending rate (ALR) trended lower to 4.83 per cent as at end-December compared with 4.91 per cent in November and 4.85 per cent in October, it said.

Bank Negara said the ringgit depreciated by 1.0 per cent against the US dollar from Dec 1 to Jan 27 but it appreciated against the euro by 6.0 per cent, the Japanese yen by 1.9 per cent and the pound sterling by 1.8 per cent.

The euro depreciated against most currencies due to concerns over sovereign-credit issues in Greece, the central bank said.

Against regional currencies, the ringgit appreciated against the Singapore dollar by 0.5 per cent but it depreciated against other regional currencies by between 1.0 and 1.8 per cent.

Dow plunges for second straight day

NEW YORK: The Dow blue chip index plunged more than 200 points for a second straight day on Friday amid concerns over US President Barack Obama’s bank revamp plans and doubts on Federal Reserve chief Ben Bernanke’s renomination.

The Dow Jones Industrial Average slumped 216.90 points (2.09 per cent) to 10,172.98, posting its third straight session of triple digit losses and its biggest weekly drop since February 2009.

The Nasdaq composite tumbled 60.14 points (2.67 per cent) to 2,205.29 and the Standard & Poor’s 500 index dropped 24.72 points (2.21 per cent) to 1,091.76.

Investors sold ahead of the weekend as the financial sector vociferously opposed Obama’s plans unveiled Thursday to limit the size and scope of US banks and finance firms in a new offensive against Wall Street excesses.

The measures would effectively force financial firms to choose between lucrative proprietary activities — trading in stocks and sometimes risky financial instruments for their own benefit — and traditional activities, like making loans and collecting deposits.

Analysts said the stock selloff over the last two days underscored market concerns.

“The president might be on the right warpath to soothe the American public, yet the market is telling him to be careful about using regulatory weapons of mass destruction,” said Patrick O’Hare of Briefing.com.

“What we see in front of us is a market that doesn’t like the idea of excessive regulation since excessive regulation curtails earnings potential,” he said.

Also Friday, doubts grew over Bernanke’s renomination as key Democrats voiced opposition, prompting a renewed expression of support from the White House.

“If he is not reappointed I think the markets would have a fit. Already we have seen that in the markets...what has happened in the last couple of hours is related to the events around Bernanke,” said Nariman Behravesh, chief economist at IHS Global Insight.

Two members of Obama’s party announced they would vote against Bernanke, underscoring a shift in the political landscape after the loss of a seat in Massachusetts that ended the Senate supermajority for the party.

Obama believes the Senate will confirm Bernanke, a White House spokesman told reporters traveling with the president en route to Ohio.

Beijing’s moves to clamp down on lending to cool an overheating Chinese economy also dragged down the market amid concerns over possible easing of the the global economic recovery from recession.
“Frankly, we see China tightening as the biggest factor at work this week. Its actions are highlighting for market participants that the easy money that fueled the 2009 rebound is going to be less easy to get in 2010,” O’Hare said.

“Naturally, this has to take some wind out of risk trades.” -- AFP

OSK-UOB: FBM KLCI may rise by 15pc this year

OSK-UOB Unit Trust Management says While it believes that the market is set to become more volatile, the benchmark index is still on the uptrend

OSK-UOB Unit Trust Management Bhd said the stock market's benchmark index could still rise by another 15 per cent this year, enhanced by government spending under its stimulus plan.

"The rise in KLCI has been relatively gradual. While we believe that market is set to become more volatile, KLCI is still on the uptrend," said OSK-UOB Unit Trust Management chief executive officer Ho Seng Yee.

The FBM KLCI rose 45 per cent in 2009 as investors bet the economy would recover this year.

"Oil and gas sector should continue to see more robust activities as crude oil prices remain buoyant. Bank Negara Malaysia has kept interest rates low and this has resulted in resilient consumer spending.

"We expect domestic spending to continue contributing to our economy," he told reporters after the launch of the OSK-UOB Asia Consumer Fund in Kuala Lumpur yesterday.

Yesterday, the KLCI traded 1.74 points higher to close at 1,308.36.

The OSK-UOB Asia Consumer Fund is offered at 50 sen per unit and the minimum take-up rate is RM1,000. The offer closes on February 7 2010.

"The fund is structured to achieve capital appreciation from investments in China and Hong Kong stocks whose businesses benefit from or are related to growth in consumer spending in Asia," Ho said.

Bank Negara Allows EONCap To Commence Merger Talks With Hong Leong Bank

EON Capital Bhd, the holding company of EON Bank Group, has received Bank Negara Malaysia (BNM) approval to start merger talks with Hong Leong Bank Bhd (HLBB).

"BNM has, vide its letter dated Jan 19, 2010, no objection for EON Capital to commence negotiations with HLBB for the potential divestment of the assets and liabilities of EON Capital and EON Bank including EON Capital's equity interest in EON Bank for the purpose of merging the licensed entities under EON Capital Group with Hong Leong Bank Group."

"The approval to commence negotiations with HLBB is valid until June 30, 2010," EON Capital said in a filing to Bursa Malaysia on Wednesday.

Yesterday, the company told Bursa Malaysia that it had, for itself and on behalf of its subsidiaries, submitted an application to BNM for approval for EON Capital and/or any of its subsidiaries to commence negotiations with potential third parties and their related corporations in Malaysia licensed under the Banking and Financial Institutions Act 1989 (BAFIA) and/or the Islamic Banking Act 1983.

According to the earlier statement, the approval sought relates to two options.

First, EON Capital directly and/or through any one of its subsidiaries undertaking a sale of EON Capital's assets and liabilities, including the equity interests in, and/or the assets and liabilities of, EON Bank, EONCap Islamic Bank Bhd and/or MIMB Investment Bank Bhd.

Second, EON Capital directly and/or through any of its subsidiaries acquiring at least five per cent of the interest in shares in, or merging with, or undertaking an acquisition, of the assets and liabilities of an existing entity in Malaysia licensed under BAFIA and/or the Islamic Banking Act.

The United Nations Conference on Trade and Development (UNCTAD) says the global flows in Foreign Direct Investment (FDI) dropped by about 40 per cent

The United Nations Conference on Trade and Development (UNCTAD) says the global flows in Foreign Direct Investment (FDI) dropped by about 40 per cent to US$1 trillion in 2009 from US$1.7 trillion in 2008.

UNCTAD indicated this in the "Monitor", its new quarterly publication and the second issue released Tuesday.

The organisation also reported that FDI flows remained relatively stable during the third quarter of 2009 but at a low level. No pick-up in FDI was detected in the fourth quarter.

"The overall decline in FDI for the year was widespread across all major groups of economies.

"After experiencing a severe reduction in 2008, FDI flows to developed countries continued to plummet,dropping by a further 41 per cent in 2009," UNCTAD said.

According to the UNCTAD,flows to developing and transition economies which rose in 2008,declined by 39 per cent in 2009 as the global financial and economic crisis continued to unfold.

It added that in terms of the mode of entry of FDIs, cross-border mergers and acquisitions were the most affected, as it decreased by 66 per cent in 2009 compared to the previous year.

Ringgit among fastest-rising currencies vs US dollar

PETALING JAYA: Having made steady headway since the start of the year, the ringgit was, for a change, among the fastest-rising currencies against the weak US dollar.

The local currency had risen 2.5% over the past two weeks, and was at 3.3395 as at 5pm yesterday. Earlier this week, the ringgit hit 3.3365 against the greenback – its strongest since August 2008.

The Korean won appreciated 3.6% year-to-date and was the biggest mover among all major currencies followed by the Australian dollar’s 3.26% advance during the same period.



“I think this will be a bearish year for the US dollar and for the ringgit, we see room for further appreciation,” OSK Investment Bank head of treasury Yeo Chin Tiong told StarBizWeek yesterday.

OSK Investment forecast that the ringgit would rise to 3.20 against the US dollar by the end of 2010. The local currency inched up 1% last year, lagging behind sharp advances made by almost all other regional currencies.

Signs that international investors still favour assets in emerging markets, which are recovering faster from the global economic slump last year than countries in the West, would keep demand high for Asian currencies.

Emerging market funds took in US$$2.5bil in net inflows in the week ended Jan 13, according to data released yesterday by US-based fund tracker EPFR Global.

“The inflows are going to lift Asian currencies, especially now that the market is looking at a delay in Fed hikes,” Hong Leong Bank manager of economic and fixed-income research Choong Yin Pheng was quoted by Bloomberg as saying yesterday.

“The ringgit has done well for a laggard.”

Analysts said the prospects of rising ringgit could further boost returns on investment for foreign investors.

Year-to-date, the benchmark FTSE Bursa Malaysia KL Composite Index had gained 2% to close at 1,298 points yesterday. If measured in US dollar terms, the return was higher at 5%.

Earlier this week, Standard Chartered Bank predicted the ringgit will reach 3.15 against the US dollar by the year-end.

Asian Markets End Higher On Recovery Hopes

The markets across Asia, excluding Hong Kong, ended in positive territory on increasing optimism about global economic recovery taking positive cues from Wall Street where the Dow ended at a 15-month high in the previous session. Profit taking at late trading however limited the gains as traders exercised caution ahead of earnings in the U.S.

In Japan, the benchmark Nikkei 225 Index rose 172.65 points, or 1.6%, to 10,908, while the broader Topix index of all First Section issues rose 14.99 points, or 1.6%, to 959.

On the economic front, data released by the Cabinet Office revealed that core machinery orders declined by a seasonally adjusted 11.3% month-over-month in November, following a 4.5% drop in the previous month. The data surprised economists who expected a bounce back in November with a marginal 0.2% gain. On an annual basis, core machinery orders plunged 20.5% during November, following a 21% contraction in the previous month. Economists expected the orders to decline 10.1% for the month, on annual basis.

In a separate report, the Bank of Japan revealed that an index measuring the prices of domestic corporate goods in the country rose 0.1% in December compared to the previous month. The index came in line with economists expectations, after having risen 0.1% in November. On annual basis, the domestic corporate goods index or CGPI declined 3.9% during December, in line with expectations, following 4.9% decline in the previous month.

Foreign institutional investors evinced fresh buying interest in blue-chip technology stocks in the Japanese market on optimism about better market performance from Japanese markets in the new year. As many as 189 stocks in the 225-stock benchmark Nikkei index ended in positive territory.

Among the major technology stocks, Sharp Corp. gained 3.15%, Sony Corp. rose 2.57%, and Panasonic Corp. surged up 6.10%.

Machinery stocks also ended higher. Okuma Corp. soared 13.64%, Chiyoda surged up 7.22%, Hitachi Construction Machinery advanced 1.64%, Sumitomo Heavy Industries gained 3.73% and Komatsu Limited gained 1.47%.

Trading companies also ended in positive territory. Mitsubishi Corp. climbed 4.35%, Mitsui & Co. rose 4.28%, Sumitomo Corp. gained 3.91% and Toyota Tsusho Corp. advanced 0.99%.

Among airline stocks, Japan Airlines surged up 28.57% as traders evinced buying interest for speculative purpose over this beleaguered airline company ahead of impending fear of delisting. As much as one-third of the total 3.2 billion listed shares, about 1.04 billion shares of JAL were traded in a single trading session. The other airline company, All Nippon Airways rose 1.74%.

Banks also ended in positive territory. Sumitomo Mitsui Financial climbed 3.32%, Resona Holdings rose 1.60%, Mizuho Financial surged up 5.68% and Mitsubishi UFJ Financial rose 2.09%.

In Australia, the benchmark S&P/ASX Index added 29.90 points, or 0.61% to close at 4,898, while the All-Ordinaries Index ended at 4,929, representing a gain of 29.30 points, or 0.60%.

On the economic front, data released by the Australian Bureau of Statistics revealed that the unemployment rate in the country declined by 0.1% in seasonally adjusted terms to 5.5% in December, fueling speculation that the Central Bank might continue to hike interest rates in its next meeting, if not earlier. According to the report, total employment in the country rose by 35,200 during December, following a rise of 31,200 in employment in the preceding month. Of the total 35,200 new jobs during December, 7,300 jobs were for full-time employment, while 27,900 jobs were created in part-time employment category.

Banking stocks advanced on positive economic data related to unemployment rate. ANZ Bank added 0.45%, Commonwealth Bank of Australia advanced 1.39%, National Australia Bank gained 0.86% and Westpac Banking rose 1.12%. Investment banker Macquarie Group was the major gainer in the session, having risen 3.70%.

Mining stocks also advanced on higher commodity prices in the international market. Rio Tinto reported a sharp increase in global iron-ore production for the fourth quarter. Also sales surged up in the quarter beating expectations. Following the news, the stock price of Rio Tinto climbed 2.63%. Among other mining and metal stocks, BHP Billiton advanced 1.53%, Fortescue Metals rose 3.33%, Gindalbie Metals added 1.25%, Iluka Resources surged up 4.57%, Minara Resources gained 1.23% and Murchison Metals increased 1.57%.

Mixed trading was witnessed among gold stocks. While Lihir Gold remained unchanged from previous close, Newcrest Mining ended in negative territory with a loss of 0.98%.

Oil stocks ended mixed. Woodside Petroleum slipped 0.33% and Santos shed 0.36%. However, Oil Search added 0.50% and Origin Energy edged up 0.23%.

Retail stocks also ended mixed. David Jones remained unchanged from previous close. JB Hi-Fi Ltd rose 1.82% and Woolworths Ltd advanced 0.79%. However, Harvey Norman fell 1.53% and Wesfarmers slipped 0.26%.

In Hong Kong, the Hang Seng Index ended in negative territory with a marginal loss of 31.65 points, or 0.15%, at 21,717, led by profit taking in late trading session, especially among the property stocks. The market, which had declined in the previous session dragged down on Chinese banks, opened in positive territory taking cues from other Asian markets and rose to as high as 21,989 in morning session. However, profit taking by traders, especially in property related stocks ahead of key data in the US and earnings from Intel, erased the early gains. Property stocks and banks ended in the negative territory.

In South Korea, the KOSPI Index ended in positive territory with a gain of 14.36 points, or 0.86%, at 1,686, taking cues from other markets in the region as well as positive closing on Wall Street in the previous session. Overcoming the anxiety over derailing of global recovery over China's tightening of monetary policy, the stocks advanced higher as foreign institutional investors evinced fresh buying interest in technology stocks and shipping stocks on optimism about sustaining recovery momentum in global economy.

The Indian market extended gains for the second successive day on Thursday, taking cues from positive trading in other Asian markets as well as the positive closing on Wall Street in the previous session. Mid and small cap companies led the gains on increasing confidence about the economy despite an uptick in the monthly inflation data released during the day. The benchmark Sensex finished at 17,585, with a gain of 75.07 points, or 0.43%, and the Nifty gained 0.50%, or 25.95 points to close at 5,260.

Among other major markets open for trading in the region, Taiwan's Weighted Index rose 93.42 points, or 1.14% to close at 8,299, Straits Times Index in Singapore added 21.14 points, or 0.73%, to close at 2,910, Indonesia's Jakarta Composite Index advanced 12.31 points, or 0.47% to close at 2,645, and China's Shanghai Composite Index jumped 42.89 points, or 1.35%, to close at 3,216.

Asian Markets Slump On China's Decision, Concerns About Recovery

The markets across Asia, excluding India, ended in negative territory on Wednesday, reacting to the decision of the Chinese central bank to tighten the monetary policy by hiking the reserve requirements by 0.5% in an effort to cool off the growth momentum and rein in inflation. Concerns that global economic recovery might be derailed as well as softer commodity prices impacted market sentiment as traders preferred to lock in gains from recent rally and moved to the sidelines.

In Japan, the benchmark Nikkei 225 Index lost 144.11 points, or 1.32% to 10,735, while the broader Topix index of all First Section issues was down 10.11 points, or 1.06% to 944.

On the economic front, data released by Japan Machine Tool Builders' Association revealed that machine tool orders recovered strongly in December after steep falls in the past several months. According to the report, total orders for Japan-made machine tools surged up 62.8% year-on-year in December, following a 8.4% drop in the previous month.

Light sweet crude oil futures for February delivery ended at $80.09 a barrel in electronic trading, down $0.70 per barrel from previous close at $80.79 a barrel in New York on Tuesday.

Most of the stocks across the sectors ended in negative territory as traders availed the opportunity to unload shares related to China and also booked profits amid concerns that the stock market is getting overheated following recent gains.

Airlines were the major losers with the beleaguered Japan Airlines losing as much as 81.0.8% on huge volumes on concerns about looming insolvency filing and subsequent delisting from the market. The other airline company, All Nippon Airways, shed 2.37%.

Among machinery stocks, Daikin Industries lost 2.43%, Hitachi Construction Machinery slipped 2.34%, Komatsu Limited fell 2.86%, Kubota Corp. shed 2.67% and Japan Steel Works declined 2.44%.

Trading companies also ended in negative territory. Mitsubishi Corp. slumped 3.55%, Mitsui & Co. shed 3.71%, Toyota Tsusho Corp. declined 2.61%, Sumitomo Corp. fell 1.73% and Marubeni Corp. lost 1.83%.

Automotive stocks also slipped on profit taking. Toyota Motor Corp. lost 1.46%, Suzuki Motor slipped 1.11%, Nissan Motor fell 2.79%, and Honda Motor edged down 0.30%.

Bank stocks ended in negative territory. Sumitomo Mitsui Financial shed 2.43%, Mitsubishi UFJ Financial lost 1.84%, Resona Holdings fell 1.18% and Mizuho Financial slipped 0.56%.

In Australia, the benchmark S&P/ASX Index shed 31.40 points, or 0.64% to close at 4,868, while the All-Ordinaries Index ended at 4,900, representing a loss of 31.50 points, or 0.64%.

On the economic front, a report released by the Department of Education, Employment and Workplace Relations revealed that the country's monthly leading indicator of employment index rose to minus 0.716 in January from minus 0.743 reported in December. The rise in January was the seventh successive increase, after having declined for 18 consecutive months, confirming the prediction that employment is likely to grow more quickly than its long-term trend rate of 1.8%.

Light sweet crude oil futures for February delivery ended at $80.09 a barrel in electronic trading, down $0.70 per barrel from previous close at $80.79 a barrel in New York on Tuesday.

Mining and metal stocks ended in negative territory following drop in base metal prices in the international market. BHP Billiton declined 0.65%, Rio Tinto fell 1.60%, Fortescue Metals lost 1.92%, Gindalbie Metals slumped 5.14%, Iluka Resources declined 5.91%, Macarthur Coal slipped 0.94%, Murchison Metals shed 5.94% and Oz Minerals dropped 2.02%.

Oil stocks also ended weaker. Woodside Petroleum edged down 0.10%, Santos slumped 2.94%, Oil Search slipped 0.33% and Origin Energy shed 0.97%.

Gold stocks also ended lower after bullion prices declined sharply in the bullion market. Lihir Gold lost 2.34% and Newcrest Mining shed 1.18%.

Worley Parsons was the major loser in the market. The engineering and maintenance group company has lowered the profit guidance for full year 2010 citing weaker conditions in the U.S as the primary reason. The stocks slumped 11.45% following the downward revision.

Banking stocks also ended in negative territory. Commonwealth Bank of Australia declined 0.99%, National Bank of Australia slipped 0.48% and Westpac Banking shed 0.32%. However, ANZ Bank bucked the trend and ended in positive territory with a gain of 0.18%.

In Hong Kong, the Hang Seng Index ended sharply losing 578.04 points, or 2.59%, and closed at 21,749, reacting to the surprise tightening of the monetary policy in mainland China. The Chinese central bank raised the reserve requirement by 50 basis points, effective January 18, primarily with the intention of cooling off the growth and reigning inflation. Fears that this measure might derail the global recovery process triggered selling led by major Chinese banks. Bank of China lost 3.62%, China Construction Bank fell 3.89% and ICBC declined 3.58%. Of the 42 components in the index, as many as 38 stocks ended in negative territory.

In South Korea, the KOSPI Index ended in negative territory with a loss of 27.23 points, or 1.60% at 1,671, taking cues from other markets in the region which also ended lower on concerns China's move to tighten monetary policy might derail global economic growth. Foreign institutional investors and traders unloaded stocks and moved to sidelines awaiting further direction. Weak closing on Wall Street in the previous session also impacted market sentiment.

The Indian market reversed its early loss and ended moderately higher on Wednesday, shrugging off weak global cues and fears about a surprise monetary tightening in China. The People Bank of China on Tuesday raised banks' reserve requirements by 50 basis points effective January 18, sparking concerns that the move may dampen a nascent economic recovery. The Reserve Bank of India is set to review its monetary policy on Jan 29. There is an expectation that the central bank may follow suit to rein in inflationary expectations. The benchmark Sensex opened gap-down and fell to a low of 17,277 before finishing higher at 17,510, up 87 points or 0.50%, and the Nifty rose 24 points or 0.45% to 5,234.

Among other major markets open for trading in the region, Taiwan's Weighted Index lost 112.81 points, or 1.36% to close at 8,197, Straits Times Index in Singapore fell 27.73 points, or 0.95%, to close at 2,888, Indonesia's Jakarta Composite Index shed 26.68 points, or 1.00% to close at 2,633, and China's Shanghai Composite Index slumped 101.31 points, or 3.09%, to close at 3,173.

US Market:Sentiment May Remain Subdued Due to Uncertainty

The major U.S. index futures little changed on Wednesday, reflecting the indecision of traders. Traders are likely to remain cautious as they look ahead to some key economic reports that can improve the visibility on the economic environment. A private sector employment report released earlier in the day showed a decline in the rate of job losses, which was more or less in line with expectations of economists. The resurgence in the value of the dollar is keeping a lid on commodity prices. Particularly oil is expected to show some volatility amid the release of the EIA’s weekly inventory report. The results of the ISM’s services survey and the minutes of the December FOMC meeting could also influence trading in today’s session.

U.S. stocks ended on a mixed note on Tuesday following a decent run up in the previous session, as traders preferred to stay on sidelines amid caution ahead of a slew of first-tier economic reports to be released over the course of the rest of the week. Additionally, a sharp drop in the pending home sales index also weighed on sentiment. Volume of trading was light, with merely 2.49 billion shares exchanging hands.

The Dow Industrials opened slightly higher, but it immediately dipped below the unchanged line and languished in negative territory for the rest of the session. The 30-stock index closed down 11.94 points or 0.11% at 10,572. After showing a lack of direction for much of the session, moving back and forth across the unchanged line, the S&P 500 Index and the Nasdaq Composite ended higher for the day. While the S&P 500 Index advanced 3.53 points or 0.31% to 1,137, the Nasdaq Composite Index gained merely 0.29 points or 0.01% to 2,309.

Sixteen of the thirty Dow components closed the session lower, with Alcoa (AA), DuPont (DD), IBM (IBM), Pfizer (PFE), Wal-Mart Stores (WMT), Johnson & Johnson (JNJ) and Coca-Cola (KO) leading the slide. On the other hand, Kraft Foods (KFT) rallied close to 5% and JP Morgan Chase advanced about 2%. Bank of America (BAC) and Boeing (BA) both rose over 3%.

Among the sector indexes, the Dow Jones Utilities Average fell 1.03%. However, the NYSE Arca Airline Index surged up 5.21% and the Dow Jones Transportation Average gained 1.01%. The Philadelphia Oil Service Index ended up 2.06% compared to a more modest 1.03% advance by the NYSE Arca Gold Bugs Index. The Philadelphia Housing Sector Index rose 1.12%, while the KBW Bank Index rallied 2.24%.

On the economic front, the National Association of Realtors reported that the pending home sales index for November, a leading indicator for existing home sales, declined 16% month-over-month. Economists had expected a more modest decline of 2%. The decline is apparently the pay back phenomena from the first time homebuyers’ credit, which motivated homebuyers to bring forward their purchases to meet the earlier expiry deadline of November 30th. The stimulus measure has since then been extended.

After showing decent gains in the past three months, the Northeast, Midwest and South showed sharp declines. On a year-over-year basis, the index rose 19.3%, although much of the increase was due to easier comparisons. Meanwhile, factory goods orders rose a better than expected 1.1% in November.

Asian Markets End In Positive Territory

The markets across Asia ended in positive territory but well off the highs in the second trading session on Tuesday, encouraged by the sharp gains on Wall Street in the previous session. Higher commodity prices also lifted market sentiment with resource stocks leading the gains.

In Japan, the benchmark Nikkei-225 Index added 27.04 points, or 0.3%, to 10,682, while the broader Topix index of all First Section issues was added 3.82 points, or 0.4%, to 920.

On the economic front, the Bank of Japan revealed that the monetary base in the country rose 5.2% year-over-year during December, following an year-over-year rise of 3.8% in the month of November. The central bank further noted that banknotes in circulation were down an annual 0.3%, while coins in circulation fell 0.7% on year. The current account balance was up 53.6%, including a 47.4% annual increase in reserve balances.

In a separate statement, the the Japan Automobile Dealers Association said auto sales increased for the fifth consecutive month in December. Domestic sales of new cars, trucks and buses increased 36.5% year-on-year in December. Automobile sales totaled 250,474 units in December, larger than 183,549 recorded in December 2008. However, for the calendar year 2009, automobile sales declined 9.1% to 2.92 million vehicles

Commodity related stocks led the gains on higher commodity prices in the international market. Impex, the oil exploration company, rose 1.82%. Nippon Oil Corp. surged up 7.39% and Nippon Mining Holdings soared 7.25%. Showa Shell climbed 1.84%.

Among trading companies, Mitsubishi Corp. advanced 2.50%, Mitsui & Co. climbed 2.85%, Itochu Corp. rose 2.45%, Marubeni Corp. gained 2.66%, Sumitomo Corp. added 1.24% and Toyota Tsusho Corp. edged up 0.43%.

Banks also ended in positive territory after Sumitomo Mitsui Financial announced that it would raise only 800 million yen to replenish the capital, lower than earlier expection of capital raising in excess of 1 trillion yen. The shares of Sumitomo Mitsui Financial advanced 1.45%. Among other large banks, Mizuho Financial rose 1.23% and Mitsubishi UFJ Financial added 0.22%, on relatively large volumes. However, Resona Holdings bucked the trend and ended in negative territory with a loss of 0.21%.

Automotive stocks ended in negative territory, offsetting the early gains in the market partly, following strengthening of the local currency against the US dollar. Toyota Motor Corp. declined 2.19%, Suzuki Motor fell 1.78%, Honda Motor slipped 0.79%, Hino Motors shed 0.93% and Mitsubishi Motor declined 1.53%.

In Australia, the benchmark S&P/ASX Index advanced 48.00 points, or 0.98% to close at 4,924, while the All-Ordinaries Index ended at 4,839, representing a gain of 49.70 points, or 1.02%.

On the economic front, survey results released by Australia's Housing Industry Association revealed a modest increase in new home sales for the month of November, reversing the unexpected slump in October. The results revealed that new homes sales rose 0.3% during November from October.

Mining and metal stocks led the gains on higher commodity prices. BHP Billiton added 0.46%, Fortescue Metals gained 2.45%, Gindalbie Metals surged up 6.48%, Iluka Resources rose 3.62%, Macarthur Coal climbed 3.00%, Oz Minerals soared 5.00% and Rio Tinto advanced 1.91%.

Oil stocks also ended in positive territory after crude oil prices surpassed the $81 a barrel mark in the international market. Woodside Petroleum advanced 0.93%, Santos gained 1.47%, Oil Search added 0.33% and Origin Energy climbed 2.80%.

Gold stocks also gained on higher bullion prices. Lihir Gold gained 1.52% and Newcrest Mining rose 2.00%%.

Banking stocks also advanced on increasing optimism about global recovery. ANZ Bank added 0.48%, Commonwealth Bank of Australia gained 1.51%, National Australia Bank rose 1.28% and Westpac Banking Corp. advanced 0.83%. Investment banker Macquarie Group climbed 1.93%.

Retail stocks were the laggards in the market having ended mixed after Harvey Norman was downgraded by JP Morgan. David Jones fell 1.32%, Harvey Norman slumped 2.94%, JB Hi-Fi fell 2.19% and Woolworths slipped 0.60%. However, Wesfarmers bucked the trend and ended in positive territory with a gain of 1.31%.

In Hong Kong, the Hang Seng Index ended sharply higher with a gain of 456.30 points, or 2.09%, at 22,280, primarily led by resource related stocks on higher commodity prices in the international market. Positive closing on Wall Street in the previous session on increasing optimism about economic recovery also lifted market sentiment with risk appetite returning to the market. As many as 37 of the 42 components in the index ended in positive territory. Aluminum Company of China or CHALCO surged up 9.08%, while CNOOC climbed 5.72% and PetroChina soared 5.92%.

In South Korea, the KOSPI Index ended in negative territory with a marginal loss of 5.52 points, or 0.33%, at 1,69, as traders preferred to lock in gains following recent gains and move to sidelines awaiting further data. Automotive stocks were the major draggers in the market on strengthening local currency, Korean Won, as a stronger local currency reduces the export sales realizations in local currency on conversion. Liquidity concerns related to Kumho Asiana Group also impacted market sentiment.

A return in risk appetite amid improving corporate earnings outlook along with a rally in the U.S and the European markets overnight lifted the Indian market notably higher on Tuesday. Metal stocks outperformed tracking gains among their global peers on the back of higher commodity prices, followed by high-beta realty and telecom stocks, but profit taking in the auto sector limited large gains in the frontline indexes. The benchmark Sensex finished at 17,686, up 128 points or 0.73% and the Nifty rose by 46 points or 0.87% to 5,278.

Among other major markets open for trading in the region, Indonesia's Jakarta Composite Index advanced 29.86 points, or 1.16% to close at 2,605, Taiwan's Weighted Index edged up 3.55 points, or 0.04% to close at 8,211, Straits Times Index in Singapore gained 25.73 points, or 0.89%, to close at 2,920, and China's Shanghai Composite Index rose 38.42 points, or 1.18%, to close at 3,283.

US Market: Traders Look Ahead to Manufacturing Data Amid Cautious Optimism

The major U.S. index futures are pointing to a higher opening on Monday, as signs of a global economic recovery has generated optimism concerning demand for commodities. Manufacturing activity in Europe and Asia has rebounded nicely, adding to recent evidence that growth is solidifying. Additionally, oil is advancing, as cooler than usual winter weather has improved demand outlook for the black gold. That said, traders may exercise caution ahead of several key economic reports to be released over the course of the week.

U.S. stocks gave back some ground in the holiday-shortened week ended December 31st, as uncertainty intensified, given the fluid state of the economy and the run up for most of the past year that created uneasiness among traders.

Amid uncertainty last Monday, the major averages closed modestly higher, with the upside aided by the early momentum built on the back of news suggesting strong holiday sales and positive economic data from Asia. However, the 6-day winning stint led to some profit taking on Tuesday, as stock retreated modestly.

Stocks continued to show a lack of direction on Wednesday despite the release of upbeat manufacturing data from the Chicago region. After showing choppiness, the major averages closed slightly higher.

Although an unexpected decline in weekly jobless claims helped the major averages open little changed on Thursday, selling pressure emerged thereafter, causing the averages to decline steadily throughout most of the session. In late trading, the selling pressure intensified, sending the major averages down by about 1% each.


For the week, the Dow Industrials ended down 0.88%, the S&P 500 Index lost 1.01% and the Nasdaq Composite slid 0.72%.

Among the sector indexes, the Dow Jones Transportation Average, the NYSE Arca Airline Index and the Philadelphia Housing Sector Index lost over 2% each, while the NYSE Arca Gold Bugs Index receded close to 2%. The NYSE Arca Securities Broker/Dealer Index, the KBW Bank Index and the Philadelphia Oil Service Index all moved down over 1%.