Review of the Performance
For the quarter under review, the Group recorded a revenue of RM10.27 million, 26% below the revenue of the corresponding quarter of the preceding year as there was no contribution from the aquaculture operating unit which was undergoing upgrading and maintenance of its site during the current quarter. The other operating units have also registered a decline in revenue due to the weak prevailing operating environment.
As there was no revenue from the aquaculture operating unit, the Group’s profit before tax was lower by 25% when compared to the corresponding quarter of the preceding year. The corresponding reduction in the cost of procuring recycled products and the cost savings measures undertaken by the Group was effective in enabling certain operating units to register a higher profit despite lower turnover.
Prospects
On the backdrop of improving general economic climate, the Group’s prospects for the current financial year 2010 is expected to be satisfactory.
**********************************************************************************
The details of investments in quoted securities as at the end of the current financial quarter are set out below :-
Total investments at cost RM 17,036 m
Total investments at carrying value RM 15,836 m
Total investments at market value RM 15,516 m
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Tuesday, September 29, 2009
Friday, September 25, 2009
Sept 23 ~ Crude Oil Supplies 335.6 m , Inventories 9.1% above 5yr average
Oil Set for Biggest Weekly Drop Since July on Recovery Concern
By Ben Sharples
Sept. 25 (Bloomberg) -- Oil in New York is poised for its biggest weekly drop since July after U.S. sales of existing homes unexpectedly slumped, bolstering skepticism about the pace of recovery in the biggest energy consuming nation.
Oil has dropped 9 percent this week as an Energy Information Administration report showed a gain in U.S. fuel stockpiles, boosting speculation of a supply glut. Prices are also under pressure from a stronger dollar, which reduces the appeal of commodities as an inflation hedge.
“The home sales data in the U.S. was a trigger that contributed to a tumble in the oil price,” said David Moore, a commodity strategist with Commonwealth Bank of Australia. “The oil data from the EIA is relatively bearish, and on top of that the U.S. dollar recovered a little bit of ground.”
Crude oil for November delivery traded at $65.87 a barrel, down 2 cents, on the New York Mercantile Exchange at 9:56 a.m. in Sydney. Futures, which dropped 4.5 percent yesterday, are headed for the biggest decline since the week ended July 10. Prices have advanced 48 percent since the start of the year.
U.S. equities fell for a second day yesterday as sales of existing homes slumped and the Federal Reserve said it will cut the size of two programs meant to bolster credit markets. The Standard & Poor’s 500 Index lost 1 percent in New York and the Dow Jones Industrial Average slipped 0.4 percent.
The dollar gained 0.1 percent to $1.4649 per euro at 9:57 in Sydney, from $1.4666 yesterday.
Supplies Increase
“We expect a hesitant recovery in the U.S. and in that context we’re going to get bits of data that disappoint, and that’s what we saw last night,” Moore said.
Supplies of crude oil rose 2.86 million barrels, to 335.6 million, the biggest increase since the week ended July 24, according to the Energy Department report released Sept. 23. Analysts had expected a 1.4 million-barrel decrease. The gain left stockpiles 9.1 percent above the five-year average.
U.S. gasoline stockpiles surged 5.41 million barrels last week, more than 10 times the gain forecast by analysts in a Bloomberg News survey, according to the report. Demand for the fuel slipped 2.3 percent to 8.79 million barrels a day, the lowest since January.
Inventories of distillate fuel, a category that includes heating oil and diesel, rose 2.96 million barrels, almost double analyst estimates.
“There has been a lot of talk about green shoots, but we are still shedding jobs and oil demand is still going to drop by 2 million barrels this year,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “There comes a point when you have to pay attention to the fundamentals.”
Brent crude for November settlement rose 1 cent to $64.83 a barrel on the London-based ICE Futures Europe exchange at 10:06 a.m. Sydney time. Yesterday, the contract dropped $3.17, or 4.7 percent, to $64.82.
.
By Ben Sharples
Sept. 25 (Bloomberg) -- Oil in New York is poised for its biggest weekly drop since July after U.S. sales of existing homes unexpectedly slumped, bolstering skepticism about the pace of recovery in the biggest energy consuming nation.
Oil has dropped 9 percent this week as an Energy Information Administration report showed a gain in U.S. fuel stockpiles, boosting speculation of a supply glut. Prices are also under pressure from a stronger dollar, which reduces the appeal of commodities as an inflation hedge.
“The home sales data in the U.S. was a trigger that contributed to a tumble in the oil price,” said David Moore, a commodity strategist with Commonwealth Bank of Australia. “The oil data from the EIA is relatively bearish, and on top of that the U.S. dollar recovered a little bit of ground.”
Crude oil for November delivery traded at $65.87 a barrel, down 2 cents, on the New York Mercantile Exchange at 9:56 a.m. in Sydney. Futures, which dropped 4.5 percent yesterday, are headed for the biggest decline since the week ended July 10. Prices have advanced 48 percent since the start of the year.
U.S. equities fell for a second day yesterday as sales of existing homes slumped and the Federal Reserve said it will cut the size of two programs meant to bolster credit markets. The Standard & Poor’s 500 Index lost 1 percent in New York and the Dow Jones Industrial Average slipped 0.4 percent.
The dollar gained 0.1 percent to $1.4649 per euro at 9:57 in Sydney, from $1.4666 yesterday.
Supplies Increase
“We expect a hesitant recovery in the U.S. and in that context we’re going to get bits of data that disappoint, and that’s what we saw last night,” Moore said.
Supplies of crude oil rose 2.86 million barrels, to 335.6 million, the biggest increase since the week ended July 24, according to the Energy Department report released Sept. 23. Analysts had expected a 1.4 million-barrel decrease. The gain left stockpiles 9.1 percent above the five-year average.
U.S. gasoline stockpiles surged 5.41 million barrels last week, more than 10 times the gain forecast by analysts in a Bloomberg News survey, according to the report. Demand for the fuel slipped 2.3 percent to 8.79 million barrels a day, the lowest since January.
Inventories of distillate fuel, a category that includes heating oil and diesel, rose 2.96 million barrels, almost double analyst estimates.
“There has been a lot of talk about green shoots, but we are still shedding jobs and oil demand is still going to drop by 2 million barrels this year,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “There comes a point when you have to pay attention to the fundamentals.”
Brent crude for November settlement rose 1 cent to $64.83 a barrel on the London-based ICE Futures Europe exchange at 10:06 a.m. Sydney time. Yesterday, the contract dropped $3.17, or 4.7 percent, to $64.82.
.
Zeti: Domestic demand shows signs of economic recovery
Central bank governor sees better external demand in third quarter
KUALA LUMPUR:
The country’s domestic demand is showing clear signs of recovery from the fiscal stimulus and an accommodative monetary policy, says Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz. “We have seen the worst,” she told reporters after delivering a keynote address at the 5th Banking and Financial Law School 2009 conference yesterday.
Zeti expects an improvement in external demand in the third quarter and an expansion in gross domestic product (GDP) in the next three months. “We expect growth to be modest at the initial stage and improve more significantly next year,” she said, adding that there would be a revision in the country’s growth forecast in Budget 2010, to be tabled in parliament next month.
The Government expects the economy to shrink as much as 5% in 2009. The country’s economic contraction eased to 3.9% in the second quarter from a 6.2% decline in the first quarter.
Zeti said interest rates were also “appropriate” as government stimulus and improving overseas demand had helped boost economic recovery. The current interest rate level was supporting the demand for access to financing, she added. Bank Negara has cut its key rate from 3.5% in mid-November to 2% to spur growth.
RAM Holdings Bhd chief economist Dr Yeah Kim Leng said the economic recovery momentum had been rising since the first quarter. “The pace of recovery should be sustainable based on the economic indicators we have seen so far, with steady improvements in industrial production index and exports, especially in the second quarter,” he said. Yeah expects the country’s export level to turn positive in December and GDP to achieve positive growth in the fourth quarter. RAM’s GDP forecast is a contraction of 3.3% this year.
AmResearch Sdn Bhd senior economist Manokaran Mottain believes the country’s economy is currently in a recovery phase, backed by an upturn in global trade. “We are maintaining our GDP growth forecast of minus 3% this year, with a growth of 1% to 2% in the fourth quarter. Our GDP growth forecast in 2010 is 3% to 4%. “The Government’s stimulus package would be disbursed and help boost the economy into 2010,” he said.
On interest rates, he expects a review only upon a firmer recovery in the domestic economy.
“If economic growth is modest, then a revision in interest rates will only happen in the second half of 2010. It may even be flat for the whole year,” he said.
Yeah foresees interest rates remaining at 2% for the rest of the year, as any increase may derail economic recovery.
The central bank has kept interest rates unchanged for a fourth straight meeting last month.
On whether the country was experiencing a W-shaped recovery, Zeti said there was no credit crunch as financial institutions remained strong and continued to provide financing for domestic businesses. Only over-leveraged countries needed to reduce their indebtness, she said, adding: “Only if they restructure their financial system would they be able to see any sign of increase in consumption activity. “There could be a second round of impact on their financial system given the economic slowdown but, in Malaysia’s case, we never had that situation to begin with and our banks are financially very solid.”
.
BNM Reserves ~ 15 Sep 09 : RM 329.9 b
The international reserves of Bank Negara Malaysia amounted to RM329.9 billion (equivalent to USD93.5 billion) as at 15 September 2009.
The reserves position is sufficient to finance 9.4 months of retained imports and is 3.8 times the short-term external debt.
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The reserves position is sufficient to finance 9.4 months of retained imports and is 3.8 times the short-term external debt.
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Friday, September 18, 2009
UPDATE ON LEADER'S 100MW COAL-FIRED POWER PROJECT
UPDATE ON LEADER'S 100MW COAL-FIRED POWER PROJECT IN CAMBODIA
- SIGNING OF THE POWER PURCHASE AGREEMENT AND IMPLEMENTATION AGREEMENT
We refer to our announcement dated 11 June 2009
on the signing of a Joint Venture and Shareholders Agreement
with Cambodia International Investment Development Group Co. Ltd ("CIIDG")
to build, own and operate the 100 MW coal-fired power plant project in Sihanoukville, Cambodia ("the Power Project") via Cambodia Energy Ltd ("CEL"),
a joint venture company between Leader Universal Holdings Berhad ("LEADER") and CIIDG,
with a percentage shareholding of 80% and 20% respectively.
LEADER is pleased to announce that the Company had on 17 September 2009 signed the following agreements in relation to the Power Project.
Announcement Details :
Power Purchase Agreement (“PPA”):
PPA was entered with the Electricite du Cambodge ("EDC"), a wholly state-owned limited liability enterprise incorporated by Royal Decree of the Kingdom of Cambodia. Under the PPA, EDC undertakes to purchase from LEADER on a minimum take basis of eighty-six percent of dependable capacity per annum and other terms and conditions as set out in the PPA.
Salient terms of PPA inter alia are as follows:
(a) Duration and validity of the PPA shall commence on the date of the PPA and shall continue for a period of thirty (30) years from the Commercial Operation Date of the Power Project, unless earlier terminated in accordance with the PPA and the Implementation Agreement.
(b) The Power Project shall consists of two(2) units of 50MW coal-fired electric power generating facility and a double circuit 230 kV transmission line;
(c) The base tariff for the electricity payments shall be USD 0.07212 per kilowatt hours with indexation. Any fluctuation in the fuel price shall be a pass-through and the base tariff shall be adjusted accordingly; and
(d) LEADER may novate the PPA to a project company to undertake and to perform all of the obligations of LEADER.
Implementation Agreement (“IA”)
IA was entered on even date with The Royal Government of Cambodia (“RGC”) represented by The Minister, Ministry of Industry, Mines and Energy (“MIME”), and The Minister of Economy and Finance ("MEF") for the implementation of the Power Project.
The salient terms inter alia of the IA are as follows:
(a) Duration of the IA shall commence with effect from the date of the IA and shall continue for the duration of the PPA unless it is terminated earlier pursuant to the provisions of the IA;
(b) MIME has granted LEADER the exclusive rights to design, finance, insure, construct and maintain and manage the Power Project on Build-Own-Operate ("BOO") basis;
(c) LEADER shall sell to EDC all the electricity generated from the Power Project pursuant to the PPA;
(d) RGC shall grant incentives according to the Investment and Taxation and other laws and related sub-decrees of the Kingdom of Cambodia for the purpose of development and operation of the Power Project; and
(e) LEADER may novate all its rights and obligations under the IA to a project company incorporated in Cambodia within 6 months from the date of the IA.
Pursuant to the provisions in the PPA and IA, LEADER will novate all its rights and obligations, subject to terms and conditions of the PPA and IA, to CEL to implement the Power Project.
Government Guarantee of Payment
MEF acting on behalf of RGC had provided a Government Guarantee of Payment dated 31 March 2008 ("RGC Guarantee") to Power Synergy Corporation Co. Ltd. ("PSC"), the original developer of the 200MW size power project ("200MW Power Project"), before the split into 2 power projects of 100MW size each, to guarantee the repayment of any sums due under the PPA.
The RGC Guarantee has been assigned by PSC with the consent of MEF acting on behalf of RGC to and in favour of LEADER in respect of the Power Project.
The salient terms inter alia of the RGC Guarantee are as follows :
(a) The RGC guarantee shall continue to be binding and shall be applicable to LEADER and its permitted successors and assigns for the duration of the PPA and IA;
(b) RGC agrees to provide
.....(i) guarantee on power purchase in the event of non-payment by EDC and
.....(ii) guarantee on the payment on the termination in accordance to the relevant conditions described in the PPA and IA;
(c) LEADER is entitled to assign or grant security over its rights under the RGC Guarantee to the project lenders.
These new PPA and IA shall supersede the PPA dated 27 March 2008 signed between EDC and PSC and the IA dated 27 March 2008 signed between RGC represented by The Minister of MIME and MEF and PSC respectively which were announced on 27 March 2008.
.
- SIGNING OF THE POWER PURCHASE AGREEMENT AND IMPLEMENTATION AGREEMENT
We refer to our announcement dated 11 June 2009
on the signing of a Joint Venture and Shareholders Agreement
with Cambodia International Investment Development Group Co. Ltd ("CIIDG")
to build, own and operate the 100 MW coal-fired power plant project in Sihanoukville, Cambodia ("the Power Project") via Cambodia Energy Ltd ("CEL"),
a joint venture company between Leader Universal Holdings Berhad ("LEADER") and CIIDG,
with a percentage shareholding of 80% and 20% respectively.
LEADER is pleased to announce that the Company had on 17 September 2009 signed the following agreements in relation to the Power Project.
Announcement Details :
Power Purchase Agreement (“PPA”):
PPA was entered with the Electricite du Cambodge ("EDC"), a wholly state-owned limited liability enterprise incorporated by Royal Decree of the Kingdom of Cambodia. Under the PPA, EDC undertakes to purchase from LEADER on a minimum take basis of eighty-six percent of dependable capacity per annum and other terms and conditions as set out in the PPA.
Salient terms of PPA inter alia are as follows:
(a) Duration and validity of the PPA shall commence on the date of the PPA and shall continue for a period of thirty (30) years from the Commercial Operation Date of the Power Project, unless earlier terminated in accordance with the PPA and the Implementation Agreement.
(b) The Power Project shall consists of two(2) units of 50MW coal-fired electric power generating facility and a double circuit 230 kV transmission line;
(c) The base tariff for the electricity payments shall be USD 0.07212 per kilowatt hours with indexation. Any fluctuation in the fuel price shall be a pass-through and the base tariff shall be adjusted accordingly; and
(d) LEADER may novate the PPA to a project company to undertake and to perform all of the obligations of LEADER.
Implementation Agreement (“IA”)
IA was entered on even date with The Royal Government of Cambodia (“RGC”) represented by The Minister, Ministry of Industry, Mines and Energy (“MIME”), and The Minister of Economy and Finance ("MEF") for the implementation of the Power Project.
The salient terms inter alia of the IA are as follows:
(a) Duration of the IA shall commence with effect from the date of the IA and shall continue for the duration of the PPA unless it is terminated earlier pursuant to the provisions of the IA;
(b) MIME has granted LEADER the exclusive rights to design, finance, insure, construct and maintain and manage the Power Project on Build-Own-Operate ("BOO") basis;
(c) LEADER shall sell to EDC all the electricity generated from the Power Project pursuant to the PPA;
(d) RGC shall grant incentives according to the Investment and Taxation and other laws and related sub-decrees of the Kingdom of Cambodia for the purpose of development and operation of the Power Project; and
(e) LEADER may novate all its rights and obligations under the IA to a project company incorporated in Cambodia within 6 months from the date of the IA.
Pursuant to the provisions in the PPA and IA, LEADER will novate all its rights and obligations, subject to terms and conditions of the PPA and IA, to CEL to implement the Power Project.
Government Guarantee of Payment
MEF acting on behalf of RGC had provided a Government Guarantee of Payment dated 31 March 2008 ("RGC Guarantee") to Power Synergy Corporation Co. Ltd. ("PSC"), the original developer of the 200MW size power project ("200MW Power Project"), before the split into 2 power projects of 100MW size each, to guarantee the repayment of any sums due under the PPA.
The RGC Guarantee has been assigned by PSC with the consent of MEF acting on behalf of RGC to and in favour of LEADER in respect of the Power Project.
The salient terms inter alia of the RGC Guarantee are as follows :
(a) The RGC guarantee shall continue to be binding and shall be applicable to LEADER and its permitted successors and assigns for the duration of the PPA and IA;
(b) RGC agrees to provide
.....(i) guarantee on power purchase in the event of non-payment by EDC and
.....(ii) guarantee on the payment on the termination in accordance to the relevant conditions described in the PPA and IA;
(c) LEADER is entitled to assign or grant security over its rights under the RGC Guarantee to the project lenders.
These new PPA and IA shall supersede the PPA dated 27 March 2008 signed between EDC and PSC and the IA dated 27 March 2008 signed between RGC represented by The Minister of MIME and MEF and PSC respectively which were announced on 27 March 2008.
.
Thursday, September 17, 2009
Auto Sales ~ August 09 : 48,538
KUALA LUMPUR, Sept 17
Sales of passenger cars and commercial vehicles in August rose 2.8 per cent, year-on-year, to 48,538 units, but compared to July this year, it was down by 3,390 units or 6.5 per cent.
MAA said the month-on-month decline was due to lower sales reported by Proton.
It said sales of passenger vehicles in August rose to 44,099 units from 42,864 units in the corresponding month, last year, while that of commercial vehicles rose to 4,439 units from 4,363 units.
For the eight months period to August this year, total industry volume fell to 351,550 units from 379,184 units in the same period last year.It said sales of passenger vehicles in the eight months period fell to 319,424 units from 345,917 units in the corresponding period last year.Sales of commercial vehicles dropped to 32,126 units from 33,267 units previously.
MAA said production of vehicles in August fell to 44,476 units from 46,316 units in the corresponding month last year.The association also said production of passenger vehicles in August fell to 40,865 units from 42,309 units in the corresponding month last year while that of commercial vehicles dropped to 3,611 units from 4,007 units.It said production of passenger vehicles in the eight months period fell to 293,175 units from 329,557 units recorded in the corresponding period last year, while that of commercial vehicles dropped to 28,216 units from 31,512 units.
MAA said sales volume for September is expected to be maintained as it will be a shorter working month due to the Hari Rara festive holidays.
-BERNAMA
.
Sales of passenger cars and commercial vehicles in August rose 2.8 per cent, year-on-year, to 48,538 units, but compared to July this year, it was down by 3,390 units or 6.5 per cent.
MAA said the month-on-month decline was due to lower sales reported by Proton.
It said sales of passenger vehicles in August rose to 44,099 units from 42,864 units in the corresponding month, last year, while that of commercial vehicles rose to 4,439 units from 4,363 units.
For the eight months period to August this year, total industry volume fell to 351,550 units from 379,184 units in the same period last year.It said sales of passenger vehicles in the eight months period fell to 319,424 units from 345,917 units in the corresponding period last year.Sales of commercial vehicles dropped to 32,126 units from 33,267 units previously.
MAA said production of vehicles in August fell to 44,476 units from 46,316 units in the corresponding month last year.The association also said production of passenger vehicles in August fell to 40,865 units from 42,309 units in the corresponding month last year while that of commercial vehicles dropped to 3,611 units from 4,007 units.It said production of passenger vehicles in the eight months period fell to 293,175 units from 329,557 units recorded in the corresponding period last year, while that of commercial vehicles dropped to 28,216 units from 31,512 units.
MAA said sales volume for September is expected to be maintained as it will be a shorter working month due to the Hari Rara festive holidays.
-BERNAMA
.
Saturday, September 12, 2009
CSC Steel ~ FS 09 Q2 : review of performance
17 Aug 2009
Review of performance
The Group achieved revenue and profit before tax for the current quarter of RM161.6 million and RM12.5 million respectively. This represents a significant reduction of RM274.1 million or 62.9% lower in revenue than that of its corresponding quarter.
As a result of the revenue contraction, profit before tax of RM55.0 million in the corresponding quarter was reduced by RM42.4 million or 77.2% to RM12.5 million.
The significant drop in revenue is due to both sale volume contraction and lower selling prices of our steel products due to the world economic downturn arising from the world financial crisis. As a result the Group registered a significantly lower profit before tax for the quarter under review.
Variation of results against preceding quarter
The Group’s revenue has decreased by 6.7%, from RM173.2 million in the preceding quarter to
RM161.6 million in this quarter. The decrease in revenue is generally due to lower selling prices of our steel products.
Despite the decrease in revenue, Group’s profit before tax increase by 68.1% from RM7.5 million in the preceding quarter to RM12.5 million this quarter due to lower raw material cost and recovery of doubtful debts of RM2.4 million.
Current year prospects
Steel market sentiment has improved and steel prices have staged an unexpected strong rebound since May 2009. This is largely due to steel mills having reduced their production volume effectively to sustain and increase steel prices.
In addition, strong steel demand in China has also helped in stabilizing the global steel market.
The Ministry of International Trade and Industry (MITI) has just issued a new steel policy which aims to enhance the competitiveness of local industry and encourage the manufacture of more competitive products for international market. With improved market sentiment and increasing steel prices, the timing for the implementation of this new policy seems to be going smoothly as there were little opposing voices heard so far. However, industry players need more time to observe and adapt to the new policy.
Barring any unforeseen circumstances, the current steel market is expected to continue its optimistic movement for the rest of the year.
Review of performance
The Group achieved revenue and profit before tax for the current quarter of RM161.6 million and RM12.5 million respectively. This represents a significant reduction of RM274.1 million or 62.9% lower in revenue than that of its corresponding quarter.
As a result of the revenue contraction, profit before tax of RM55.0 million in the corresponding quarter was reduced by RM42.4 million or 77.2% to RM12.5 million.
The significant drop in revenue is due to both sale volume contraction and lower selling prices of our steel products due to the world economic downturn arising from the world financial crisis. As a result the Group registered a significantly lower profit before tax for the quarter under review.
Variation of results against preceding quarter
The Group’s revenue has decreased by 6.7%, from RM173.2 million in the preceding quarter to
RM161.6 million in this quarter. The decrease in revenue is generally due to lower selling prices of our steel products.
Despite the decrease in revenue, Group’s profit before tax increase by 68.1% from RM7.5 million in the preceding quarter to RM12.5 million this quarter due to lower raw material cost and recovery of doubtful debts of RM2.4 million.
Current year prospects
Steel market sentiment has improved and steel prices have staged an unexpected strong rebound since May 2009. This is largely due to steel mills having reduced their production volume effectively to sustain and increase steel prices.
In addition, strong steel demand in China has also helped in stabilizing the global steel market.
The Ministry of International Trade and Industry (MITI) has just issued a new steel policy which aims to enhance the competitiveness of local industry and encourage the manufacture of more competitive products for international market. With improved market sentiment and increasing steel prices, the timing for the implementation of this new policy seems to be going smoothly as there were little opposing voices heard so far. However, industry players need more time to observe and adapt to the new policy.
Barring any unforeseen circumstances, the current steel market is expected to continue its optimistic movement for the rest of the year.
Copper prices drop again; precious metals gain
Friday, September 11, 2009
Copper prices drop again; precious metals gain
Copper prices were lower again Friday as inventories continued to rise in warehouses monitored in London, Shanghai, and New York and as buying by China dropped 20 percent in August from July, according to the customs office in Beijing.
London Metal Exchange inventories were up 0.2 percent on the day while Shanghai-monitored stockpiles were up 12 percent during the week.
December copper was down 3 cents to $2.85 per pound in New York trade,
while three-month copper dropped $44 to $6,250 per tonne in London.
Elsewhere on the LMI, most other base metals saw prices drop, but tin was higher on the session.
Meanwhile, precious metals prices rose in New York as gold exceeded $1,013 per troy ounce in morning trade as the US dollar continued to weaken, making gold look like a better investment.
December gold ended the floor trade session up $9.60 to $1,006.40 per troy ounce, while December silver added 3 cents to $16.70 per troy ounce and October platinum gained $31 to $1,323 per troy ounce.
December palladium followed platinum higher in morning trade, adding $2.55 to $296 per troy ounce by just before 10:30 a.m. in New York.
Copper prices drop again; precious metals gain
Copper prices were lower again Friday as inventories continued to rise in warehouses monitored in London, Shanghai, and New York and as buying by China dropped 20 percent in August from July, according to the customs office in Beijing.
London Metal Exchange inventories were up 0.2 percent on the day while Shanghai-monitored stockpiles were up 12 percent during the week.
December copper was down 3 cents to $2.85 per pound in New York trade,
while three-month copper dropped $44 to $6,250 per tonne in London.
Elsewhere on the LMI, most other base metals saw prices drop, but tin was higher on the session.
Meanwhile, precious metals prices rose in New York as gold exceeded $1,013 per troy ounce in morning trade as the US dollar continued to weaken, making gold look like a better investment.
December gold ended the floor trade session up $9.60 to $1,006.40 per troy ounce, while December silver added 3 cents to $16.70 per troy ounce and October platinum gained $31 to $1,323 per troy ounce.
December palladium followed platinum higher in morning trade, adding $2.55 to $296 per troy ounce by just before 10:30 a.m. in New York.
Downstream timber firms urged to tap improving demand
KUALA LUMPUR: Companies involved in downstream timber activities are encouraged to explore the opportunities of exporting to emerging markets like India, the Gulf countries and Pakistan while banks have to be more supportive.
Malaysian Timber Council (MTC) chief executive officer Cheah Kam Huan said although the activities worldwide had slowed down due to the recession, certain countries were showing signs of growth and the demand for wooden products had improved. “We are making inroads into countries like Dubai, United Arab Emirates and Oman as there are lots of construction activities going on,” he told StarBizWeek recently. “There are some companies exploring opportunities in these countries currently and MTC will continue to promote downstream as well as upstream products to the emerging markets through the participation of fairs and trade shows.”
However, he pointed out that the United States and European markets would remain the main export markets for Malaysia’s downstream timber products.
Cheah also urged companies to invest in new technology to produce better quality and new products.
According to MTC, Malaysia’s export of timber products in 2008 amounted to RM22.7bil, an increase of 0.1% over the previous year. Downstream activities contributed about 40% of total exports. Downstream products include mouldings, wooden frames, builders’ carpentry and joinery (BCJ) and wooden furniture. BCJ comprises flooring, windows and doors products.
The timber sector contributes about 4.5% to the nation’s gross domestic product annually. The peninsula produces more than 5 million cu m of logs annually, including rubber wood.
Cheah said downstream activities had made a lot of progress over the last 10 years but had been recently affected by the economic crisis globally. He said the industry would not view the current environment as encouraging as improvement in demand for timber products had been very slow, especially in the West. “Manufacturers affected by the export market will have to take a cautious approach to tide over this period,” he said, adding that the export figures for downstream activities this year would hardly match last year’s level.
He said the timber industry’s performance very much depended on the economic situation in the United States and Europe. “The picking up of the property and construction sectors in the West will boost the demand for timber products directly.” He pointed out that the Government’s target was to increase the contribution of downstream activities to 60% of total timber products export from 40% currently.
Financial support was key to the success of both downstream and upstream activities, Cheah said. “Banks have been reluctant to lend to all sectors, including the timber industry, since end of last year, thus the industry is facing problems in expansion,” he added.
Malaysian Timber Council (MTC) chief executive officer Cheah Kam Huan said although the activities worldwide had slowed down due to the recession, certain countries were showing signs of growth and the demand for wooden products had improved. “We are making inroads into countries like Dubai, United Arab Emirates and Oman as there are lots of construction activities going on,” he told StarBizWeek recently. “There are some companies exploring opportunities in these countries currently and MTC will continue to promote downstream as well as upstream products to the emerging markets through the participation of fairs and trade shows.”
However, he pointed out that the United States and European markets would remain the main export markets for Malaysia’s downstream timber products.
Cheah also urged companies to invest in new technology to produce better quality and new products.
According to MTC, Malaysia’s export of timber products in 2008 amounted to RM22.7bil, an increase of 0.1% over the previous year. Downstream activities contributed about 40% of total exports. Downstream products include mouldings, wooden frames, builders’ carpentry and joinery (BCJ) and wooden furniture. BCJ comprises flooring, windows and doors products.
The timber sector contributes about 4.5% to the nation’s gross domestic product annually. The peninsula produces more than 5 million cu m of logs annually, including rubber wood.
Cheah said downstream activities had made a lot of progress over the last 10 years but had been recently affected by the economic crisis globally. He said the industry would not view the current environment as encouraging as improvement in demand for timber products had been very slow, especially in the West. “Manufacturers affected by the export market will have to take a cautious approach to tide over this period,” he said, adding that the export figures for downstream activities this year would hardly match last year’s level.
He said the timber industry’s performance very much depended on the economic situation in the United States and Europe. “The picking up of the property and construction sectors in the West will boost the demand for timber products directly.” He pointed out that the Government’s target was to increase the contribution of downstream activities to 60% of total timber products export from 40% currently.
Financial support was key to the success of both downstream and upstream activities, Cheah said. “Banks have been reluctant to lend to all sectors, including the timber industry, since end of last year, thus the industry is facing problems in expansion,” he added.
Thumbs-up for ‘Najibnomics’
KUALA LUMPUR: Prime Minister Datuk Seri Najib Tun Razak has covered good ground since taking office on April 3 with a number of positive policies and actions.
They include liberalising the New Economic Policy, ensuring greater transparency, speeding up the award of government infrastructure pro-jects and improving ties with Singa-pore to draw more foreign direct investments into Iskandar Malaysia, a development region in Johor twice the size of Singapore.
Aimed at stimulating the local economy, attracting foreign investments and foreign talent, reducing bureaucracy, tackling crime and corruption, effecting greater accountability and promoting national unity (through the 1Malaysia concept), Najib’s policies have been impressive.
CLSA Asia-Pacific Markets, an independent brokerage and investment group headquartered in Hong Kong, described Najib’s positive economic and social reforms as “Najibnomics”, given his economics background.
With his background on industrial economics from the University of Nottingham, CLSA said Najib had been quick to effect various fiscal, government and structural reforms.
In its special strategy report on Malaysia, CLSA said: “Although he has until March 2013 to call for the next general election, we believe he has little choice but to work quickly as the clock is fast ticking.
“Najib not only has to implement new policies to reform the government and turn around the economy simultaneously, he has to deliver some decent results to ensure that the ruling Barisan Nasional coalition performs better than in the last general election in March 2008.”
On the economic front, CLSA said it expected the Malaysian economy to recover in 2010 while consumer sentiment was also improving.
In view of Malaysia’s high savings rate at 43.3% of the GDP which would support private consumption while the impact of weak imports from Western countries would not be too severe, it pointed to an economic recovery next year.
Malaysia’s 2009 GDP has been forecast to decline by 4 to 5% this year compared to a growth of 4.5% last year.
CLSA’s expectations are in line with that of Bank Negara Malaysia, which indicated that the country’s growth outlook for the second half of 2009 was expected to improve after the economy contracted at a slower rate of 3.9% in the second quarter of 2009 following a 6.2% contraction in the first quarter of the year.
The central bank said there were increasing signs that conditions in the global economy were stabilising as the pace of the decline in economic activity was moderating in advanced countries.
CLSA said that its recent contacts with Malaysian companies revealed that most were cautiously optimistic and were coping fairly well with the economic downturn.
“There has not been any high-profile debt default while non-performing loans in the banking system remain benign. Companies have merely been hit by shrinking revenues, thinning margins and higher receivables, while corporate governance issues have been sporadic.
“Most companies believe that the worst is over. Having said that, they do think the way forward will remain challenging as unemployment continues to creep up,” CLSA said.
The investment group also conducted a survey among 300 respondents, two-thirds of them from Kuala Lum-pur, and ascertained that Malay-sians were coping well with the downturn, with only 22% of them saying that their employment had been affected.
In terms of household income, 44% said they experienced a decline in income while 10% experienced an increase.
About 70% said they had changed their spending patterns, reducing expenditure on food, clothing as well as leisure.
Essentials like mortgages, utilities, transport, children’s education, healthcare and communications have been largely unaffected by the downturn.
CLSA said these simple surveys and feedback from companies and consumers seemed to tie in with the findings of the Malaysian Institute of Economic Research. — Bernama
.
They include liberalising the New Economic Policy, ensuring greater transparency, speeding up the award of government infrastructure pro-jects and improving ties with Singa-pore to draw more foreign direct investments into Iskandar Malaysia, a development region in Johor twice the size of Singapore.
Aimed at stimulating the local economy, attracting foreign investments and foreign talent, reducing bureaucracy, tackling crime and corruption, effecting greater accountability and promoting national unity (through the 1Malaysia concept), Najib’s policies have been impressive.
CLSA Asia-Pacific Markets, an independent brokerage and investment group headquartered in Hong Kong, described Najib’s positive economic and social reforms as “Najibnomics”, given his economics background.
With his background on industrial economics from the University of Nottingham, CLSA said Najib had been quick to effect various fiscal, government and structural reforms.
In its special strategy report on Malaysia, CLSA said: “Although he has until March 2013 to call for the next general election, we believe he has little choice but to work quickly as the clock is fast ticking.
“Najib not only has to implement new policies to reform the government and turn around the economy simultaneously, he has to deliver some decent results to ensure that the ruling Barisan Nasional coalition performs better than in the last general election in March 2008.”
On the economic front, CLSA said it expected the Malaysian economy to recover in 2010 while consumer sentiment was also improving.
In view of Malaysia’s high savings rate at 43.3% of the GDP which would support private consumption while the impact of weak imports from Western countries would not be too severe, it pointed to an economic recovery next year.
Malaysia’s 2009 GDP has been forecast to decline by 4 to 5% this year compared to a growth of 4.5% last year.
CLSA’s expectations are in line with that of Bank Negara Malaysia, which indicated that the country’s growth outlook for the second half of 2009 was expected to improve after the economy contracted at a slower rate of 3.9% in the second quarter of 2009 following a 6.2% contraction in the first quarter of the year.
The central bank said there were increasing signs that conditions in the global economy were stabilising as the pace of the decline in economic activity was moderating in advanced countries.
CLSA said that its recent contacts with Malaysian companies revealed that most were cautiously optimistic and were coping fairly well with the economic downturn.
“There has not been any high-profile debt default while non-performing loans in the banking system remain benign. Companies have merely been hit by shrinking revenues, thinning margins and higher receivables, while corporate governance issues have been sporadic.
“Most companies believe that the worst is over. Having said that, they do think the way forward will remain challenging as unemployment continues to creep up,” CLSA said.
The investment group also conducted a survey among 300 respondents, two-thirds of them from Kuala Lum-pur, and ascertained that Malay-sians were coping well with the downturn, with only 22% of them saying that their employment had been affected.
In terms of household income, 44% said they experienced a decline in income while 10% experienced an increase.
About 70% said they had changed their spending patterns, reducing expenditure on food, clothing as well as leisure.
Essentials like mortgages, utilities, transport, children’s education, healthcare and communications have been largely unaffected by the downturn.
CLSA said these simple surveys and feedback from companies and consumers seemed to tie in with the findings of the Malaysian Institute of Economic Research. — Bernama
.
Friday, September 11, 2009
.bmp)
Inventory gains hurt copper prices
Copper prices fell Thursday after inventories watched by the London Metal Exchange were up to 317,575 tonnes during the session, bringing gains in just less than two months to 24 percent, while stockpiles monitored by the Shanghai Futures Exchange were also higher.
Shanghai inventories have gained in each of the past six weeks.
Prices for the metal used in construction and manufacturing were hurt by concerns that demand in China will decline, especially considering the gains in Shanghai warehouses.
December copper was 5 cents lower to $2.88 per pound in New York trade, while three-month copper was last reported at $165 lower to $6,250 per tonne in London, a decline of 2.6 percent.
Other base metals prices were also lower on the session.
Most precious metals were also lower, although December silver added 20 cents to $16.67 per troy ounce in New York trade.
December gold was down 30 cents to $996.80 per troy ounce in New York, while October platinum dropped $1.70 to $1,290.60 per troy ounce.
.
Shanghai inventories have gained in each of the past six weeks.
Prices for the metal used in construction and manufacturing were hurt by concerns that demand in China will decline, especially considering the gains in Shanghai warehouses.
December copper was 5 cents lower to $2.88 per pound in New York trade, while three-month copper was last reported at $165 lower to $6,250 per tonne in London, a decline of 2.6 percent.
Other base metals prices were also lower on the session.
Most precious metals were also lower, although December silver added 20 cents to $16.67 per troy ounce in New York trade.
December gold was down 30 cents to $996.80 per troy ounce in New York, while October platinum dropped $1.70 to $1,290.60 per troy ounce.
.
Perodua to See Better Sales In Third Quarter
KUALA LUMPUR, Sept 10 (Bernama) -- The coming festive season is likely to see increased sales in the third quarter of this year for Perodua Sales Sdn Bhd, the sales and distribution arm of Perusahaan Otomobil Kedua Sdn Bhd.
Perodua sold 77,000 cars in the first six months of this year, and expects better sales in the second half of 2009.
It is also understood that the upcoming launch of its multi-purpose vehicle (MPV) will also propel further the company's vehicle sales.
"The MPV will be launched in November and bookings will start in October," said Perodua Sales Director Ahmad Suhaimi Mohd Anuar here Thursday.
He was speaking to reporters after presenting the grand prize of a 1,100cc Perodua ViVA to university student Azizi Abdul Aziz who emerged winner in the "Jelajah 11 Era Bersama Perodua" competition organised jointly by Perodua and Airtime Management & Programming Sdn Bhd.
Perodua ViVA is the second most saleable car in Malaysia, after Perodua Myvi, with 68,000 units sold in 2008.
Since its launch in 2007, Perodua sold 157,000 units of the ViVA.
-- BERNAMA
Perodua sold 77,000 cars in the first six months of this year, and expects better sales in the second half of 2009.
It is also understood that the upcoming launch of its multi-purpose vehicle (MPV) will also propel further the company's vehicle sales.
"The MPV will be launched in November and bookings will start in October," said Perodua Sales Director Ahmad Suhaimi Mohd Anuar here Thursday.
He was speaking to reporters after presenting the grand prize of a 1,100cc Perodua ViVA to university student Azizi Abdul Aziz who emerged winner in the "Jelajah 11 Era Bersama Perodua" competition organised jointly by Perodua and Airtime Management & Programming Sdn Bhd.
Perodua ViVA is the second most saleable car in Malaysia, after Perodua Myvi, with 68,000 units sold in 2008.
Since its launch in 2007, Perodua sold 157,000 units of the ViVA.
-- BERNAMA
Proton in talks with VW again
This time the discussions are likely to centre on collaboration in platforms and engines
KUALA LUMPUR: Proton Holdings Bhd is in talks with Volkswagen (VW) that could lead to a strategic partnership and the assembly of vehicles at the national carmaker’s plant in Tanjung Malim. The partnership was not expected to see the German auto giant taking an equity stake in Proton but a collaboration in platforms and engines was likely being negotiated, said market sources. The talks between Proton and VW come at a time when DRB-HICOM Bhd is also engaged in discussions with the German company to assemble cars in Pekan. (See B2)
“For the long term of the company, it (Proton) needs a partner because the size of Malaysia’s market might not be enough to sustain an independent producer,’’ said UOB KayHian research head Vincent Khoo.
News that Proton is again in talks with VW is somewhat surprising as both parties have come to, and walked away, from the negotiating table numerous times. A couple of years ago, Proton came close to inking a deal with VW which would have seen the German company taking a stake in the national carmaker. A last-minute pitch by the Proton management to build on the company’s own “green shoots” then persuaded the Government from sealing an agreement with VW.
Proton found commercial success following the launch of the Persona but did not escape the global recession caused by the US financial crisis. Its finances have improved with the launch of the Exora and for its first quarter ended June 30, it reported a net profit of RM54.6mil. The company’s shares closed three sen lower at RM3.71 yesterday.
Now, however, the timing is different.
Proton has maintained it needs a strategic partner but would agree to one on its own terms.
It is also understood that the Government would like Proton to have a strategic partner before the review of the National Automotive Policy is completed.
VW’s interest in Malaysia, too, has grown over the past couple of years after equity stake talks with Proton ended. It has established its own sales and service business in Malaysia, and as of Sept 7, has seen the number of cars sold reach a total of 2,261 units after 2½ years of operations.
VW is reported to be looking at Malaysia as its sourcing hub for auto components in the region to fulfil its worldwide production and has intimated plans to expand its presence in the country through the local assembly of some of its cars. Volkswagen Group Malaysia Sdn Bhd managing director Andreas Prinz on Wednesday was quoted by Bernama as saying the group was also thinking of making Malaysia its hub for parts distribution in South-East Asia.
“They will not be looking only at Malaysia’s market but use Malaysia as a sourcing hub for worldwide production,’’ he said. VW is also interested in assembling cars in Malaysia and Prinz said the company was in discussion with a number of parties. “Currently, in the automotive industry, everybody is talking to everybody, but we are focusing on CKD,” he said.
Malaysia remains an important market in the region as it is the largest passenger car market in South-East Asia, which is said to be an attractive element for VW.
.
KUALA LUMPUR: Proton Holdings Bhd is in talks with Volkswagen (VW) that could lead to a strategic partnership and the assembly of vehicles at the national carmaker’s plant in Tanjung Malim. The partnership was not expected to see the German auto giant taking an equity stake in Proton but a collaboration in platforms and engines was likely being negotiated, said market sources. The talks between Proton and VW come at a time when DRB-HICOM Bhd is also engaged in discussions with the German company to assemble cars in Pekan. (See B2)
“For the long term of the company, it (Proton) needs a partner because the size of Malaysia’s market might not be enough to sustain an independent producer,’’ said UOB KayHian research head Vincent Khoo.
News that Proton is again in talks with VW is somewhat surprising as both parties have come to, and walked away, from the negotiating table numerous times. A couple of years ago, Proton came close to inking a deal with VW which would have seen the German company taking a stake in the national carmaker. A last-minute pitch by the Proton management to build on the company’s own “green shoots” then persuaded the Government from sealing an agreement with VW.
Proton found commercial success following the launch of the Persona but did not escape the global recession caused by the US financial crisis. Its finances have improved with the launch of the Exora and for its first quarter ended June 30, it reported a net profit of RM54.6mil. The company’s shares closed three sen lower at RM3.71 yesterday.
Now, however, the timing is different.
Proton has maintained it needs a strategic partner but would agree to one on its own terms.
It is also understood that the Government would like Proton to have a strategic partner before the review of the National Automotive Policy is completed.
VW’s interest in Malaysia, too, has grown over the past couple of years after equity stake talks with Proton ended. It has established its own sales and service business in Malaysia, and as of Sept 7, has seen the number of cars sold reach a total of 2,261 units after 2½ years of operations.
VW is reported to be looking at Malaysia as its sourcing hub for auto components in the region to fulfil its worldwide production and has intimated plans to expand its presence in the country through the local assembly of some of its cars. Volkswagen Group Malaysia Sdn Bhd managing director Andreas Prinz on Wednesday was quoted by Bernama as saying the group was also thinking of making Malaysia its hub for parts distribution in South-East Asia.
“They will not be looking only at Malaysia’s market but use Malaysia as a sourcing hub for worldwide production,’’ he said. VW is also interested in assembling cars in Malaysia and Prinz said the company was in discussion with a number of parties. “Currently, in the automotive industry, everybody is talking to everybody, but we are focusing on CKD,” he said.
Malaysia remains an important market in the region as it is the largest passenger car market in South-East Asia, which is said to be an attractive element for VW.
.
Analabs ~ Messrs Howarth replacing KPMG as Auditors
Notice by way of an Addendum to the Notice of 11th AGM dated 10 September 2009
THAT Messrs Horwath be and is hereby appointed Auditors of the Company
in place of the retiring Auditors, Messrs KPMG
to hold office until the conclusion of the next Annual General Meeting of the Company
AND THAT authority be and is hereby given for the Directors to determine their remuneration.
Company Secretaries
10 Sep 2009
THAT Messrs Horwath be and is hereby appointed Auditors of the Company
in place of the retiring Auditors, Messrs KPMG
to hold office until the conclusion of the next Annual General Meeting of the Company
AND THAT authority be and is hereby given for the Directors to determine their remuneration.
Company Secretaries
10 Sep 2009
US Treasury Secretary: Confidence has returned to markets
WASHINGTON: Citing emerging financial sector stability, Treasury Secretary Timothy Geithner said Thursday that a number of government rescue efforts in place since the Wall Street crisis are no longer needed and that banks will repay US$50 billion in rescue funds over the next 18 months.
Geithner, testifying before a congressional watchdog panel, said the nation still has a ways to go before "true recovery takes hold."
But he said improved conditions in the banking industry have prompted Treasury to begin winding down emergency support programs implemented after the collapse of Lehman Brothers last year.
"The financial system is showing very important signs of repair," Geithner said.
"I would not want anyone to be left with the impression that we're not still facing really substantial enormous challenges throughout the US financial system."
The cautious but upbeat tone reflects a growing push by the administration to present the government financial rescue efforts as a success amid lingering public apprehension about the economy.
Geithner was testifying before the Congressional Oversight Panel that monitors Treasury's $700 billion financial bailout that President George W. Bush and President Barack Obama used to shore up not only banks but the auto industry as well.
Banks have already paid back $70 billion of the $250 billion that the government injected over the past year to boost their liquidity.
Geithner noted that only $11 billion of that infusion has occurred since he became Treasury secretary earlier this year.
He said dividends on those infusions and the repurchase by banks of warrants held by the government has also generated $12 billion for the government.
Overall, he said, the government realized a 17 percent return from 23 banks that have paid back the government in full.
Geithner said a major Treasury program that had been used to guarantee up to $3 trillion in money market mutual fund assets would be closed down on schedule on Sept. 18.
The program had no direct cost to taxpayers and actually earned more than $1 billion in fees paid by the mutual fund industry.
That program was established at the height of the financial crisis a year ago after a large money market fund called the Reserve Primary Fund "broke the buck" - meaning the value of its underlying assets fell below $1 for each investor dollar put in.
Geithner said a series of emergency program initiated by the Federal Deposit Insurance Corp. and the Federal Reserve have also begun to phase out.
Still, unemployment stands at 9.7 percent and administration officials say it could rise to 10 percent in the coming months.
Foreclosure rates are surging and the mortgage market remains tight. Geithner acknowledged that the economy would still face "more than the usual ups and downs."
"The classic mistake people make is they declare victory too soon," he said.
The government's bailouts have not been popular with the public and Geithner's testimony emphasized the positive returns from the various measures
Still, one protester sitting behind Geithner held up a pink sign asking: "Where did the $ go?"
Elizabeth Warren, the oversight panel's chairwoman, said: "Taxpayers still want to know how their money has been used and what difference their enormous investment has made."
When Warren pointed out that bank failures are reducing the number of financial institutions, Geithner replied: "Fewer every day, but that's sort of the necessary process of repair and restructuring that we're going through."
The panel has been critical of government steps, arguing that in the past it has not received full value for repaid infusions of money into financial institutions.
More recently, the panel contended that a significant portion of the government assistance to the auto industry will likely not be repaid.
Geithner pointed out that the number of large financial institutions has grown smaller since the economic crisis.
But Warren cautioned that some of the remaining firms were larger than before. "Are we more at risk on the question of concentration than we were a year ago?" she asked.
"I don't think so," Geithner replied.
"But it depends largely on what Congress ultimately decides in terms of financial reforms."
The administration has called for a series of regulatory changes, including requiring large, intertwined institutions to have access to more money to cover their risks.
- AP
.
Geithner, testifying before a congressional watchdog panel, said the nation still has a ways to go before "true recovery takes hold."
But he said improved conditions in the banking industry have prompted Treasury to begin winding down emergency support programs implemented after the collapse of Lehman Brothers last year.
"The financial system is showing very important signs of repair," Geithner said.
"I would not want anyone to be left with the impression that we're not still facing really substantial enormous challenges throughout the US financial system."
The cautious but upbeat tone reflects a growing push by the administration to present the government financial rescue efforts as a success amid lingering public apprehension about the economy.
Geithner was testifying before the Congressional Oversight Panel that monitors Treasury's $700 billion financial bailout that President George W. Bush and President Barack Obama used to shore up not only banks but the auto industry as well.
Banks have already paid back $70 billion of the $250 billion that the government injected over the past year to boost their liquidity.
Geithner noted that only $11 billion of that infusion has occurred since he became Treasury secretary earlier this year.
He said dividends on those infusions and the repurchase by banks of warrants held by the government has also generated $12 billion for the government.
Overall, he said, the government realized a 17 percent return from 23 banks that have paid back the government in full.
Geithner said a major Treasury program that had been used to guarantee up to $3 trillion in money market mutual fund assets would be closed down on schedule on Sept. 18.
The program had no direct cost to taxpayers and actually earned more than $1 billion in fees paid by the mutual fund industry.
That program was established at the height of the financial crisis a year ago after a large money market fund called the Reserve Primary Fund "broke the buck" - meaning the value of its underlying assets fell below $1 for each investor dollar put in.
Geithner said a series of emergency program initiated by the Federal Deposit Insurance Corp. and the Federal Reserve have also begun to phase out.
Still, unemployment stands at 9.7 percent and administration officials say it could rise to 10 percent in the coming months.
Foreclosure rates are surging and the mortgage market remains tight. Geithner acknowledged that the economy would still face "more than the usual ups and downs."
"The classic mistake people make is they declare victory too soon," he said.
The government's bailouts have not been popular with the public and Geithner's testimony emphasized the positive returns from the various measures
Still, one protester sitting behind Geithner held up a pink sign asking: "Where did the $ go?"
Elizabeth Warren, the oversight panel's chairwoman, said: "Taxpayers still want to know how their money has been used and what difference their enormous investment has made."
When Warren pointed out that bank failures are reducing the number of financial institutions, Geithner replied: "Fewer every day, but that's sort of the necessary process of repair and restructuring that we're going through."
The panel has been critical of government steps, arguing that in the past it has not received full value for repaid infusions of money into financial institutions.
More recently, the panel contended that a significant portion of the government assistance to the auto industry will likely not be repaid.
Geithner pointed out that the number of large financial institutions has grown smaller since the economic crisis.
But Warren cautioned that some of the remaining firms were larger than before. "Are we more at risk on the question of concentration than we were a year ago?" she asked.
"I don't think so," Geithner replied.
"But it depends largely on what Congress ultimately decides in terms of financial reforms."
The administration has called for a series of regulatory changes, including requiring large, intertwined institutions to have access to more money to cover their risks.
- AP
.
Thursday, September 10, 2009
Bank of China’s Zhu Sees ‘Bubbles’ in Asset Markets
Sept. 10 (Bloomberg) -- Bank of China Ltd., which led the nation’s $1.1 trillion lending spree in the first half, said ample liquidity has caused “bubbles” in stocks, commodities and real estate.
“The potential risk is that a lot of liquidity goes to the asset market,” Vice President Zhu Min said in an interview in Dalian today. “So you see asset bubbles in commodities, stocks and real estate, not only in China, but everywhere.”
China’s record credit expansion, which helped the country’s economy expand 7.9 percent in the second quarter, has raised concerns that bank loans have been diverted and used to buy stocks and real estate, fueling unsustainable gains in equity and property markets.
The Shanghai Stock Exchange Composite Index has gained 61 percent this year, compared with a 20 percent increase in the MSCI World Index of 1,659 companies. House prices China’s 70 biggest cities rose at the fastest pace in 11 months on record lending and climbing confidence, according to a National Bureau of Statistics report today.
Bank of China advanced 1 trillion yuan of new loans in the first six months, more than any other Chinese lender and the gross domestic product of New Zealand. The Beijing-based bank, the nation’s third-largest, said last month it plans to slow credit growth in the rest of the year and improve loan quality.
Higher Capital Requirements
China Construction Bank Corp., the nation’s second-largest, said last month it will cut new lending by 70 percent in the second half from six months earlier to avoid a surge in bad debt. Chairman Guo Shuqing said excess cash in the banking system has led to asset bubbles.
An estimated 1.16 trillion yuan ($170 billion) of loans were invested in stocks in the first five months of this year, China Business news reported June 29, citing Wei Jianing, a deputy director at the Development and Research Center under the State Council.
The China Banking Regulatory Commission said on Sept. 3 it will implement stricter capital requirements for banks. Lenders were also required to raise reserves to 150 percent of their non-performing loans by the end of this year, up from 134.8 percent at the end of June.
The Shanghai Composite Index fell into so-called bear market last month on concern slowing lending growth and tighter capital requirements would derail a recovery in the world’s third-biggest economy. The gauge has bounced back this month, rising 9 percent.
New loans in July were less than a quarter of June’s level. August new-lending figures are scheduled to be released on Sept. 11 and may show a 10 percent decline to 320 billion yuan, according to the median estimate of nine analysts surveyed by Bloomberg.
Loans surged in the first six months of this year after the central bank scrapped quotas limiting lending in November to support the government’s 4 trillion yuan stimulus package and key industries including petrochemicals, steel and automakers.
Zhang Xiaoqiang, vice chairman of National Development and Reform Commission, China’s top economic planning agency, said he sees “little bubbles” in the nation’s new energy sector and is looking into measure to curb excesses at an early stage to allow for healthy development for the industry.
.
“The potential risk is that a lot of liquidity goes to the asset market,” Vice President Zhu Min said in an interview in Dalian today. “So you see asset bubbles in commodities, stocks and real estate, not only in China, but everywhere.”
China’s record credit expansion, which helped the country’s economy expand 7.9 percent in the second quarter, has raised concerns that bank loans have been diverted and used to buy stocks and real estate, fueling unsustainable gains in equity and property markets.
The Shanghai Stock Exchange Composite Index has gained 61 percent this year, compared with a 20 percent increase in the MSCI World Index of 1,659 companies. House prices China’s 70 biggest cities rose at the fastest pace in 11 months on record lending and climbing confidence, according to a National Bureau of Statistics report today.
Bank of China advanced 1 trillion yuan of new loans in the first six months, more than any other Chinese lender and the gross domestic product of New Zealand. The Beijing-based bank, the nation’s third-largest, said last month it plans to slow credit growth in the rest of the year and improve loan quality.
Higher Capital Requirements
China Construction Bank Corp., the nation’s second-largest, said last month it will cut new lending by 70 percent in the second half from six months earlier to avoid a surge in bad debt. Chairman Guo Shuqing said excess cash in the banking system has led to asset bubbles.
An estimated 1.16 trillion yuan ($170 billion) of loans were invested in stocks in the first five months of this year, China Business news reported June 29, citing Wei Jianing, a deputy director at the Development and Research Center under the State Council.
The China Banking Regulatory Commission said on Sept. 3 it will implement stricter capital requirements for banks. Lenders were also required to raise reserves to 150 percent of their non-performing loans by the end of this year, up from 134.8 percent at the end of June.
The Shanghai Composite Index fell into so-called bear market last month on concern slowing lending growth and tighter capital requirements would derail a recovery in the world’s third-biggest economy. The gauge has bounced back this month, rising 9 percent.
New loans in July were less than a quarter of June’s level. August new-lending figures are scheduled to be released on Sept. 11 and may show a 10 percent decline to 320 billion yuan, according to the median estimate of nine analysts surveyed by Bloomberg.
Loans surged in the first six months of this year after the central bank scrapped quotas limiting lending in November to support the government’s 4 trillion yuan stimulus package and key industries including petrochemicals, steel and automakers.
Zhang Xiaoqiang, vice chairman of National Development and Reform Commission, China’s top economic planning agency, said he sees “little bubbles” in the nation’s new energy sector and is looking into measure to curb excesses at an early stage to allow for healthy development for the industry.
.
Malaysia IPI : July ~ 104.8 points
July IPI down 8.4% on-yr, up 7.1% on-mo
1.PERFORMANCE OF INDUSTRIAL PRODUCTION INDEX
Index July 2009
Industrial Production Index : 104.8
Mining index : 99.6
Manufacturing Index : 106.2
Electricity Index : 118.7
The Industrial Production Index (IPI) in July 2009 decreased 8.4% as compared with July 2008, follows a 9.5% (revised) year-on-year decline in June 2009. The drop in July 2009 was due to the decreases in the two indices: Manufacturing (12.0%) and Mining (1.9%). However, the index of Electricity posted an increase of 3.1%.
Month-on-month, the IPI increased 7.1%. The cumulative index for the period of January-July 2009 declined 12.0% as against the same period in 2008.
2. PERFORMANCE OF MANUFACTURING SECTOR
The Manufacturing output in July 2009 dropped 12.0% as against July 2008.
Output for June 2009 went down by 13.0% (revised) as compared with the same month of 2008.
As compared with the preceding month, the output for July 2009 increased 6.2%.
The growth for the first seven months of 2009 was lower by 16.1% as compared with the same period of last year.
The contraction of the Manufacturing output was due to decreases in the groups, Electrical and Electronics Products (26.2%); Wood Products, Furniture, Paper products, Printing (16.9%); and
Non-metallic Mineral Products, Basic Metal and Fabricated Metal Products (11.7%).
3. PERFORMANCE OF MINING SECTOR
The output for the Mining sector fell 1.9% in July 2009 as compared with the same month of 2008.
This was due to the decreases in crude oil index (5.5%).
However, the natural gas index increased to 8.2%.
As compared with the preceding month, the Mining output increased to 10.0%.
For the first seven months of 2009, the Mining sector recorded a decline of 3.9% as compared with the same period a year ago.
4. PERFORMANCE OF ELECTRICITY SECTOR
The Electricity output increased 3.1% in July 2009 as compared with the same month a year earlier.
As compared with the preceding month, the Electricity output posted an increase of 3.5%.
A decrease of 3.7% was registered in the period of January-July 2009 as compared with the corresponding period of 2008.
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1.PERFORMANCE OF INDUSTRIAL PRODUCTION INDEX
Index July 2009
Industrial Production Index : 104.8
Mining index : 99.6
Manufacturing Index : 106.2
Electricity Index : 118.7
The Industrial Production Index (IPI) in July 2009 decreased 8.4% as compared with July 2008, follows a 9.5% (revised) year-on-year decline in June 2009. The drop in July 2009 was due to the decreases in the two indices: Manufacturing (12.0%) and Mining (1.9%). However, the index of Electricity posted an increase of 3.1%.
Month-on-month, the IPI increased 7.1%. The cumulative index for the period of January-July 2009 declined 12.0% as against the same period in 2008.
2. PERFORMANCE OF MANUFACTURING SECTOR
The Manufacturing output in July 2009 dropped 12.0% as against July 2008.
Output for June 2009 went down by 13.0% (revised) as compared with the same month of 2008.
As compared with the preceding month, the output for July 2009 increased 6.2%.
The growth for the first seven months of 2009 was lower by 16.1% as compared with the same period of last year.
The contraction of the Manufacturing output was due to decreases in the groups, Electrical and Electronics Products (26.2%); Wood Products, Furniture, Paper products, Printing (16.9%); and
Non-metallic Mineral Products, Basic Metal and Fabricated Metal Products (11.7%).
3. PERFORMANCE OF MINING SECTOR
The output for the Mining sector fell 1.9% in July 2009 as compared with the same month of 2008.
This was due to the decreases in crude oil index (5.5%).
However, the natural gas index increased to 8.2%.
As compared with the preceding month, the Mining output increased to 10.0%.
For the first seven months of 2009, the Mining sector recorded a decline of 3.9% as compared with the same period a year ago.
4. PERFORMANCE OF ELECTRICITY SECTOR
The Electricity output increased 3.1% in July 2009 as compared with the same month a year earlier.
As compared with the preceding month, the Electricity output posted an increase of 3.5%.
A decrease of 3.7% was registered in the period of January-July 2009 as compared with the corresponding period of 2008.
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Gold Prices Fall, Retreating From $1,000
Sept. 9 (Bloomberg) -- Gold fell from more than $1,000 an ounce as some investors sold the metal after the price climbed to an 18-month high yesterday. Silver also slipped.
Bullion futures reached $1,009.70 an ounce yesterday, the most since March 2008, as the dollar dropped 0.9 percent against a basket of six major currencies. Today, the dollar sank as much as 0.8 percent against the euro, falling to a 2009 low, and gold futures touched $1,005 before erasing gains. Gold tends to rise when the U.S. currency weakens.
“An expected period of profit-taking pushed gold back from its high,” Mark O’Byrne, a director at broker GoldCore Ltd. in Dublin, said in a note. “A very good indicator of gold’s sustainability has been visible today as it has constantly tested the $1,000 an ounce level. Investors are buying because they are worried regarding property and stock markets.”
Gold futures for December delivery fell $2.70, or 0.3 percent, to $997.10 an ounce on the New York Mercantile Exchange’s Comex division. The metal reached a record $1,033.90 on March 17, 2008.
“It seems inevitable that the near-infinite supply of paper and electronic money will fall in value versus the finite currency that is gold,” O’Byrne said in the note. “Increasing concerns regarding the sustainability of the global recovery and about the outlook for inflation should see gold continue to rise.”
Spot Price Eases
In London, bullion for immediate delivery slipped $1.63, or 0.2 percent, to $993.78 an ounce at 6:56 p.m. local time. London spot prices reached an all-time high of $1,032.70 an ounce on March 17, 2008.
Gold may resume its September rally, which boosted the price 4.9 percent through yesterday, should the dollar continue to decline, analysts said. Before today, the dollar sank 1.1 percent this month against the six-currency basket.
“The dollar remains the key factor determining gold’s direction,” Pradeep Unni, a Richcomm Global Services analyst in Dubai, said in a report. “If the dollar continues to be pressured by investors selling it to buy riskier assets, bullion could extend gains. If gold can keep above $1,000 this week, it may pave the way for a test of the record.”
The dollar may “rebound on any positive economic news,” Miguel Perez-Santalla, a Heraeus Precious Metals Management sales vice president in New York, said in a note.
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Bullion futures reached $1,009.70 an ounce yesterday, the most since March 2008, as the dollar dropped 0.9 percent against a basket of six major currencies. Today, the dollar sank as much as 0.8 percent against the euro, falling to a 2009 low, and gold futures touched $1,005 before erasing gains. Gold tends to rise when the U.S. currency weakens.
“An expected period of profit-taking pushed gold back from its high,” Mark O’Byrne, a director at broker GoldCore Ltd. in Dublin, said in a note. “A very good indicator of gold’s sustainability has been visible today as it has constantly tested the $1,000 an ounce level. Investors are buying because they are worried regarding property and stock markets.”
Gold futures for December delivery fell $2.70, or 0.3 percent, to $997.10 an ounce on the New York Mercantile Exchange’s Comex division. The metal reached a record $1,033.90 on March 17, 2008.
“It seems inevitable that the near-infinite supply of paper and electronic money will fall in value versus the finite currency that is gold,” O’Byrne said in the note. “Increasing concerns regarding the sustainability of the global recovery and about the outlook for inflation should see gold continue to rise.”
Spot Price Eases
In London, bullion for immediate delivery slipped $1.63, or 0.2 percent, to $993.78 an ounce at 6:56 p.m. local time. London spot prices reached an all-time high of $1,032.70 an ounce on March 17, 2008.
Gold may resume its September rally, which boosted the price 4.9 percent through yesterday, should the dollar continue to decline, analysts said. Before today, the dollar sank 1.1 percent this month against the six-currency basket.
“The dollar remains the key factor determining gold’s direction,” Pradeep Unni, a Richcomm Global Services analyst in Dubai, said in a report. “If the dollar continues to be pressured by investors selling it to buy riskier assets, bullion could extend gains. If gold can keep above $1,000 this week, it may pave the way for a test of the record.”
The dollar may “rebound on any positive economic news,” Miguel Perez-Santalla, a Heraeus Precious Metals Management sales vice president in New York, said in a note.
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Japan Core Machinary Order : July~Yen 664.7 b
Sep 9, 8:23 PM EDT
Japan July core machinery orders down 9.3 percent
TOKYO (AP) -- Japan's core machinery orders, a closely watched indicator of corporate capital spending, fell back in July after a rise in the previous month, the government said Thursday.
Core private sector machinery orders in July plunged 9.3 percent from a month earlier to 664.7 billion yen ($7.3 billion), according to the Cabinet Office report. The figure excludes often-volatile orders from shipbuilders and electric power companies.
Declines in orders at steelmakers and transport equipment companies contributed to the fall.
The result marked a major downturn from a 9.7 percent jump recorded in June - the first increase in four months - and was a bigger decline than the 3.6 percent fall forecast in a Kyodo news agency market survey.
In the April-June quarter, core machinery orders fell 4.9 percent from the previous quarter. The government expects the figure to tumble 8.6 percent in the July-September period.
© 2009 The Associated Press.
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Japan July core machinery orders down 9.3 percent
TOKYO (AP) -- Japan's core machinery orders, a closely watched indicator of corporate capital spending, fell back in July after a rise in the previous month, the government said Thursday.
Core private sector machinery orders in July plunged 9.3 percent from a month earlier to 664.7 billion yen ($7.3 billion), according to the Cabinet Office report. The figure excludes often-volatile orders from shipbuilders and electric power companies.
Declines in orders at steelmakers and transport equipment companies contributed to the fall.
The result marked a major downturn from a 9.7 percent jump recorded in June - the first increase in four months - and was a bigger decline than the 3.6 percent fall forecast in a Kyodo news agency market survey.
In the April-June quarter, core machinery orders fell 4.9 percent from the previous quarter. The government expects the figure to tumble 8.6 percent in the July-September period.
© 2009 The Associated Press.
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OPEC : Press Release ~ No cut in Oil Production
The Conference reviewed current oil market conditions and future prospects and observed that, whilst there are signs that economic recovery is underway, there remains great concern about the magnitude and pace of this recovery, especially in the major industrialized nations of the OECD. There has been some easing of the overhang in crude oil stocks but market fundamentals remain weak, refinery utilization rates are low and product inventories have risen considerably.
Accordingly, since the market remains over-supplied and given the downside risks associated with the extremely fragile recovery, the Conference once again agreed to leave current production levels unchanged for the time being. In doing so, the Conference reiterated its determination to ensure sound supply fundamentals and an adequate level of spare capacity for the benefit of the world at large.
Similarly, the Conference recorded the readiness of Member Countries to rapidly respond to any developments which might jeopardize oil market stability and their interests. Therefore, in addition to continuing to maintain constant watch over supply/demand fundamentals, the Conference agreed to reassess the market situation at its 155th (Extraordinary) Meeting, to be held in Luanda, Angola, on 22nd December 2009.
Accordingly, since the market remains over-supplied and given the downside risks associated with the extremely fragile recovery, the Conference once again agreed to leave current production levels unchanged for the time being. In doing so, the Conference reiterated its determination to ensure sound supply fundamentals and an adequate level of spare capacity for the benefit of the world at large.
Similarly, the Conference recorded the readiness of Member Countries to rapidly respond to any developments which might jeopardize oil market stability and their interests. Therefore, in addition to continuing to maintain constant watch over supply/demand fundamentals, the Conference agreed to reassess the market situation at its 155th (Extraordinary) Meeting, to be held in Luanda, Angola, on 22nd December 2009.
Wednesday, September 9, 2009
Boeing said Wed World air travel to recover by 2011
HONG KONG: International air travel, battered by the economic downturn, is starting to stabilize and should recover over the next two years as an economic turnaround takes hold, a top executive at aviation giant Boeing Corp. said Wednesday.
Passenger travel will somewhat better in the second half of 2009 than in the first half but will still slump between 6 percent and 8 percent for the year, said Randy Tinseth, a Boeing vice president for marketing. At the same, there were signs that drop in demand was slowing, with global airlines beginning restore capacity and China and Latin American markets picking up, he said.
"We're already starting to see some improvements in traffic and traffic growth, but we've got a long ways to go," Tinseth told reporters at an Asian aerospace and aviation show in Hong Kong. "We see 2010 as a year of economic recovery and 2011 as a year of air travel recovery," he added.
Over the long haul, Asia will overtake North America as the world's largest air travel market, growing from a 32 percent share to 41 percent, he said. - AP
Passenger travel will somewhat better in the second half of 2009 than in the first half but will still slump between 6 percent and 8 percent for the year, said Randy Tinseth, a Boeing vice president for marketing. At the same, there were signs that drop in demand was slowing, with global airlines beginning restore capacity and China and Latin American markets picking up, he said.
"We're already starting to see some improvements in traffic and traffic growth, but we've got a long ways to go," Tinseth told reporters at an Asian aerospace and aviation show in Hong Kong. "We see 2010 as a year of economic recovery and 2011 as a year of air travel recovery," he added.
Over the long haul, Asia will overtake North America as the world's largest air travel market, growing from a 32 percent share to 41 percent, he said. - AP
AmResearch Bullish on Tan Chong
AmResearch turns bullish on Tan Chong
Written by The Edge Financial Daily
Wednesday, 09 September 2009 11:30
AMResearch has upgraded Tan Chong Motor Bhd to a buy at RM2.01 from a hold yesterday, due to improved industry earnings forecasts and the automotive maker’s strategic positioning.The research house pegged Tan Chong’s fair value at RM2.70, up from RM1.72 previously, based on upward revisions to earnings forecasts and valuation multiples — to nine times earnings from eight times).
“We have revised up our forecasts by 10%-39% over FY09-11F to factor in contribution from new models and stronger-than-expected volume during 1H09,” AmResearch said.“We expect Tan Chong to register a 23% earnings growth in FY10, to be driven by margin expansion as a result of the introduction of higher end D-segment models, which typically entails high margins but low volumes.”
AmResearch noted that its projections stood 7%-13% above consensus, which it said underestimated the “immense earnings potential from a strategic expansion in Tan Chong’s business model from FY10 onwards”.The research house said its investment recommendation on Tan Chong was based on several factors including the recovery of the domestic auto sector, strategic expansion in model mix leading to market share increase, an upward earnings revision cycle, the unlocking of asset value and the company’s present depressed valuation.
“We have turned bullish on Tan Chong on prospects of an improvement in the broader auto industry,” AmResearch said in a note yesterday. “We think total industry volume (TIV) bottomed out in mid-2009.”AmResearch said that Tan Chong has brought forward the introduction of its completely knocked down (CKD) models to 2010, although launches of new marques would be limited to higher-end models. These new marques include the Teana, a luxury sedan, and an undisclosed crossover model.
“With a typical lifespan of five years before a full model change, we think the launch of the Teana is rather nicely timed as initial euphoria over existing D-segment competitors would have toned down, meaning consumers in this segment are ready for a new model in the market,” it added. Moreover, the research outfit said it believed that Tan Chong’s market share would see a “quantum leap” based on the introduction of new models, which would see launches in A- and B-segment models of cars.
AmResearch also commented positively on the fact that Tan Chong has registered a 0.5% growth in sales of Nissan cars compared to an industry year-to-date (YTD) contraction of 10%. An expected revaluation of Tan Chong’s land in Segambut was also expected to result in gains of RM188 million after the automotive manufacturer adopts new accounting policy FRS 39.The gain in its asset value would increase Tan Chong’s borrowing capacity as its books would increase by 11% to RM1.8 billion, the research house said.Tan Chong rose six sen to close at RM2.02 yesterday.
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Written by The Edge Financial Daily
Wednesday, 09 September 2009 11:30
AMResearch has upgraded Tan Chong Motor Bhd to a buy at RM2.01 from a hold yesterday, due to improved industry earnings forecasts and the automotive maker’s strategic positioning.The research house pegged Tan Chong’s fair value at RM2.70, up from RM1.72 previously, based on upward revisions to earnings forecasts and valuation multiples — to nine times earnings from eight times).
“We have revised up our forecasts by 10%-39% over FY09-11F to factor in contribution from new models and stronger-than-expected volume during 1H09,” AmResearch said.“We expect Tan Chong to register a 23% earnings growth in FY10, to be driven by margin expansion as a result of the introduction of higher end D-segment models, which typically entails high margins but low volumes.”
AmResearch noted that its projections stood 7%-13% above consensus, which it said underestimated the “immense earnings potential from a strategic expansion in Tan Chong’s business model from FY10 onwards”.The research house said its investment recommendation on Tan Chong was based on several factors including the recovery of the domestic auto sector, strategic expansion in model mix leading to market share increase, an upward earnings revision cycle, the unlocking of asset value and the company’s present depressed valuation.
“We have turned bullish on Tan Chong on prospects of an improvement in the broader auto industry,” AmResearch said in a note yesterday. “We think total industry volume (TIV) bottomed out in mid-2009.”AmResearch said that Tan Chong has brought forward the introduction of its completely knocked down (CKD) models to 2010, although launches of new marques would be limited to higher-end models. These new marques include the Teana, a luxury sedan, and an undisclosed crossover model.
“With a typical lifespan of five years before a full model change, we think the launch of the Teana is rather nicely timed as initial euphoria over existing D-segment competitors would have toned down, meaning consumers in this segment are ready for a new model in the market,” it added. Moreover, the research outfit said it believed that Tan Chong’s market share would see a “quantum leap” based on the introduction of new models, which would see launches in A- and B-segment models of cars.
AmResearch also commented positively on the fact that Tan Chong has registered a 0.5% growth in sales of Nissan cars compared to an industry year-to-date (YTD) contraction of 10%. An expected revaluation of Tan Chong’s land in Segambut was also expected to result in gains of RM188 million after the automotive manufacturer adopts new accounting policy FRS 39.The gain in its asset value would increase Tan Chong’s borrowing capacity as its books would increase by 11% to RM1.8 billion, the research house said.Tan Chong rose six sen to close at RM2.02 yesterday.
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Palm Oil reserves ~ Aug 09 : 1.43 m tons
September 9, 2009 7:05 UTC+8
Malaysia August palm oil stocks up 7.3%
Malaysian palm oil stocks in August climbed 7.3 per cent to a six-month high as exports returned to normal after sharply rising on festival demand a month earlier, a Reuters poll showed today. Reserves in the world’s No. 2 palm oil producer rose to 1.43 million tonnes in August, the highest since February and just above the 1.4 million requirement needed for the refinery industry to function as output also registered a slight growth.
A poll of five planters showed output rose 2.7 per cent to 1.53 million tonnes, the highest so far in 2009, as estates rushed to extract palm oil before the month-long Muslim dawn-to-dusk fasting observance of Ramadan that began end-August. “Initially the talk was about lower stocks but plantations have been working round the clock to get their Indonesian workers to harvest the palm oil before they take leave for Ramadan,” said one poll contributor.
“El Nino is a factor but there have been some good rains from end-August onwards, so production should slowly pick up.” Rains weakened in key oil palm growing regions in Malaysia thanks to El Nino weather condition in August, although recovery may be on the cards from September onwards, the head of country’s meteorology department said last week. But other poll respondents said dry weather in the past few months could still worsen yields down the line as fewer oil-rich palm flowers developed and tree stress was ongoing in top palm oil producing region of Sabah on Borneo Island as a result.
Shipments slowed down 8 per cent in August from a sharp jump a month earlier as Middle Eastern and Pakistani buyers finished buying for Ramadan where elaborate meals are cooked for the breaking of fast, traders said. “The price-sensitive Chinese and Indian buyers were waiting for the market to ease in August after the heavy purchases by the Muslim countries, so there was a bit of a slowdown,” said another respondent to the poll. “We should see normal festival demand till October on account of Chinese and Indian holidays but really, July’s 1.45 million tonnes was exceptional,” he said.
The poll pegged palm oil shipments in August at 1.33 million tonnes.
Stocks, as a result, normalised and climbed higher on the pullback in exports, although higher crude palm oil imports from rival and top producer Indonesia gave an additional boost as purchases there were much cheaper, many contributors said. “The idea is to buy Indonesia and sell from Malaysia at a higher price. It was a bit overdone but it puts the stocks at a comfortable level,” said a plantation official. Malaysia likely imported 80,000 tonnes from Indonesia last month, the poll showed.
Industry regulator Malaysian Palm Oil Board (MPOB) will issue August palm oil stocks, production and exports on Thursday. — Reuters
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Malaysia August palm oil stocks up 7.3%
Malaysian palm oil stocks in August climbed 7.3 per cent to a six-month high as exports returned to normal after sharply rising on festival demand a month earlier, a Reuters poll showed today. Reserves in the world’s No. 2 palm oil producer rose to 1.43 million tonnes in August, the highest since February and just above the 1.4 million requirement needed for the refinery industry to function as output also registered a slight growth.
A poll of five planters showed output rose 2.7 per cent to 1.53 million tonnes, the highest so far in 2009, as estates rushed to extract palm oil before the month-long Muslim dawn-to-dusk fasting observance of Ramadan that began end-August. “Initially the talk was about lower stocks but plantations have been working round the clock to get their Indonesian workers to harvest the palm oil before they take leave for Ramadan,” said one poll contributor.
“El Nino is a factor but there have been some good rains from end-August onwards, so production should slowly pick up.” Rains weakened in key oil palm growing regions in Malaysia thanks to El Nino weather condition in August, although recovery may be on the cards from September onwards, the head of country’s meteorology department said last week. But other poll respondents said dry weather in the past few months could still worsen yields down the line as fewer oil-rich palm flowers developed and tree stress was ongoing in top palm oil producing region of Sabah on Borneo Island as a result.
Shipments slowed down 8 per cent in August from a sharp jump a month earlier as Middle Eastern and Pakistani buyers finished buying for Ramadan where elaborate meals are cooked for the breaking of fast, traders said. “The price-sensitive Chinese and Indian buyers were waiting for the market to ease in August after the heavy purchases by the Muslim countries, so there was a bit of a slowdown,” said another respondent to the poll. “We should see normal festival demand till October on account of Chinese and Indian holidays but really, July’s 1.45 million tonnes was exceptional,” he said.
The poll pegged palm oil shipments in August at 1.33 million tonnes.
Stocks, as a result, normalised and climbed higher on the pullback in exports, although higher crude palm oil imports from rival and top producer Indonesia gave an additional boost as purchases there were much cheaper, many contributors said. “The idea is to buy Indonesia and sell from Malaysia at a higher price. It was a bit overdone but it puts the stocks at a comfortable level,” said a plantation official. Malaysia likely imported 80,000 tonnes from Indonesia last month, the poll showed.
Industry regulator Malaysian Palm Oil Board (MPOB) will issue August palm oil stocks, production and exports on Thursday. — Reuters
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Aviation Industry may be bottoming out
Wednesday September 9, 2009
Industry recession may be bottoming out, say aviation players
HONG KONG/BRUSSELS: Airlines and their suppliers are reporting tentative signs that a severe industry recession is bottoming out. Airbus, the world’s largest producer of passenger jets, said airline traffic had possibly seen “the trough of the recession” and could start to rebound from next year. “In 2009, we believe total traffic is down 2%. In 2010 we may experience a 4.6% growth rate,” Laurent Rouaud, senior vice president of market and product strategy, said at the Asian Aerospace exhibition in Hong Kong.
In Europe, Air France-KLM said passenger traffic fell 2.9% in August but its planes were on average 84.8% full, a rise of 1.1 percentage points from the same holiday peak month a year ago. The figures came as industry data for July showed airline passenger and freight traffic dropped much less sharply year-on-year than in the first half of 2009. Industry body ACI Europe said after a survey of 106 airports, passenger traffic at European airports fell 4.3% compared with July 2008, versus an average 9.6% drop during the preceding six months of this year.
Freight traffic – a widely watched indicator of economic health – fell 13.4% compared with July 2008, an improvement on the average 22.4% decrease during the preceding six months.
“That would fit with our picture,” said economist Cristoph Weil at Commerzbank.
“We believe we will see a strong recovery in Q3 and Q4 in the euro area.”
Air France-KLM said its cargo business had in August confirmed signs of stabilisation seen in recent months.
Ireland’s Aer Lingus said on Monday passenger numbers had risen 7.7% year-on-year in August. Economists say the global economy looks to be pulling out of recession, with the OECD predicting a renewal of growth for the United States and euro zone in the third quarter.
But, like the airline industry, the broader economy remains on life support and G20 finance ministers agreed on Sept 5 to keep stimulus measures in place. ACI Europe’s numbers were helped slightly by weak comparative figures in July 2008, when the economic downturn first started to bite and passenger data entered negative territory for the first time in six years.
But weak comparatives account for only about a fifth of the improvement in freight volumes, ACI archive figures show. Still, Airbus and Boeing are headed for their worst annual order tally in at least 15 years as struggling airlines cancel or defer almost as many planes as they buy.
The world’s airlines are expected to post total 2009 losses of US$9bil, with first-half net losses reaching at least US$6bil, according to the International Air Transport Association.
Air France-KLM last week announced 1,500 voluntary redundancies, adding to thousands of airline job cuts worldwide.
Rouaud however said Airbus was on track to deliver 480 aircraft in 2009 and aircraft financing has been “so far, so good.” Deliveries lag orders by several years but airlines only have to pay for aircraft when they are delivered. The EADS subsidiary is projecting 2009 plane deliveries at least as high as last year’s record 483 aircraft, but has said it will extend recent production cuts if conditions worsen.
Even if airlines start to fly out of recession, they will be haunted by big questions on costs, especially fuel, Rouaud said. At US$67.90 a barrel, benchmark North Sea Brent crude futures prices have risen 38% since the end of March. — Reuters
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Industry recession may be bottoming out, say aviation players
HONG KONG/BRUSSELS: Airlines and their suppliers are reporting tentative signs that a severe industry recession is bottoming out. Airbus, the world’s largest producer of passenger jets, said airline traffic had possibly seen “the trough of the recession” and could start to rebound from next year. “In 2009, we believe total traffic is down 2%. In 2010 we may experience a 4.6% growth rate,” Laurent Rouaud, senior vice president of market and product strategy, said at the Asian Aerospace exhibition in Hong Kong.
In Europe, Air France-KLM said passenger traffic fell 2.9% in August but its planes were on average 84.8% full, a rise of 1.1 percentage points from the same holiday peak month a year ago. The figures came as industry data for July showed airline passenger and freight traffic dropped much less sharply year-on-year than in the first half of 2009. Industry body ACI Europe said after a survey of 106 airports, passenger traffic at European airports fell 4.3% compared with July 2008, versus an average 9.6% drop during the preceding six months of this year.
Freight traffic – a widely watched indicator of economic health – fell 13.4% compared with July 2008, an improvement on the average 22.4% decrease during the preceding six months.
“That would fit with our picture,” said economist Cristoph Weil at Commerzbank.
“We believe we will see a strong recovery in Q3 and Q4 in the euro area.”
Air France-KLM said its cargo business had in August confirmed signs of stabilisation seen in recent months.
Ireland’s Aer Lingus said on Monday passenger numbers had risen 7.7% year-on-year in August. Economists say the global economy looks to be pulling out of recession, with the OECD predicting a renewal of growth for the United States and euro zone in the third quarter.
But, like the airline industry, the broader economy remains on life support and G20 finance ministers agreed on Sept 5 to keep stimulus measures in place. ACI Europe’s numbers were helped slightly by weak comparative figures in July 2008, when the economic downturn first started to bite and passenger data entered negative territory for the first time in six years.
But weak comparatives account for only about a fifth of the improvement in freight volumes, ACI archive figures show. Still, Airbus and Boeing are headed for their worst annual order tally in at least 15 years as struggling airlines cancel or defer almost as many planes as they buy.
The world’s airlines are expected to post total 2009 losses of US$9bil, with first-half net losses reaching at least US$6bil, according to the International Air Transport Association.
Air France-KLM last week announced 1,500 voluntary redundancies, adding to thousands of airline job cuts worldwide.
Rouaud however said Airbus was on track to deliver 480 aircraft in 2009 and aircraft financing has been “so far, so good.” Deliveries lag orders by several years but airlines only have to pay for aircraft when they are delivered. The EADS subsidiary is projecting 2009 plane deliveries at least as high as last year’s record 483 aircraft, but has said it will extend recent production cuts if conditions worsen.
Even if airlines start to fly out of recession, they will be haunted by big questions on costs, especially fuel, Rouaud said. At US$67.90 a barrel, benchmark North Sea Brent crude futures prices have risen 38% since the end of March. — Reuters
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Bakun Dam may begin to supply power in 2010
Wednesday September 9, 2009
Bakun dam may begin to supply power in 2010
First commissioning seen August next year with 300MW electricity.
The Bakun dam project in Sarawak has been steeped in controversy since the day it was first awarded to Tan Sri Ting Pek Khiing’s company Ekran Bhd, which was badly affected by the 1997 Asian financial crisis. The baton was then passed to the Finance Ministry (MOF) while the transmission cable portion was to be handled by Sime Darby Bhd, which pulled out after finding the escalating costs untenable.
A consortium, comprising Tenaga Nasional Bhd (TNB), Sarawak Energy Bhd (SEB) and MOF, then stepped in and over the last few months, the job momentum has been building up, potentially leading to tenders being called early next year and financing to be arranged middle of next year.
It now looks like the role of hydropower will be more prominent, post-2010. By end-2011, the Bakun dam will be South-East Asia’s largest power project, capable of generating 2,400MW electricity for supply to Peninsular Malaysia, Sabah and Sarawak, Brunei and Kalimantan
Analysts said the electricity from the 2,400-megawatt (MW) Bakun dam would be ready for use much earlier as “the first commissioning was expected in August 2010,” with the first generator producing 300MW of electricity. After that, the second and subsequent turbines would be able to commence operations at two-month intervals. By end-2011, the Bakun dam will be South-East Asia’s largest power project, capable of generating 2,400MW electricity for supply to Peninsular Malaysia, Sabah and Sarawak, Brunei and Kalimantan.
However, the Bakun hydropower project, which is expected to be completed by 2011, will still require the laying of undersea cables to transmit electricity to the peninsula. The cable project, for which the first line is to be completed in 2015, involves the construction of a 1,000km high-voltage direct-current transmission line and a 680km undersea cable. The submarine cable, when completed, will be the longest in the world.
An industry player expects the Government to open the tender process in the first quarter of next year and, subsequently, award the tender in the second half or end of the same year.
While he was not sure which company would be bidding for the projects, he expects five global submarine cable suppliers – ABB Ltd, Sumitomo Corp, Prysmian Cables & Systems, Siemens group and Nexant Inc – to do so. “Siemens may not be a submarine cable provider but it has expressed interest. I am not sure if these companies will form a consortium to bid for the project or on a stand-alone basis,” he added.
Industry players also pointed out that the construction of the undersea cable could present a geopolitical situation as it would “cross Indonesian waters”.
A “bilateral agreement” would be achieved by the time work on the sub-sea cables commenced, one of the players said.
Although the eight turbines would be ready by 2012 (while the first undersea line would be ready only three years later), not all eight will be utilised, given that Sarawak currently consumes less than 1,500MW. “There will be excess capacity if all the turbines were to be utilised and Sarawak will not be able to transmit the electricity produced to the peninsula as the sub-sea cable would not be ready yet,” an industry player said, adding that the authorities were in the midst of building transmission towers in Sarawak.
An analyst said the cost of Bakun dam alone, excluding the undersea cable, was estimated at RM6bil. “Assuming Bakun supplies 1,700MW, it would generate some RM1.6bil in revenue per year. This is based on it selling the power at 11 sen per unit at its gates to the transmission company,” he added. The generation cost for hydropower is cheaper basically because water from the river basins is free compared with the higher cost in procuring coal or gas to fire up a power plant. “The downside is that the cost of building a hydro dam is much more expensive than that for a normal coal or gas power plant.
“In Peninsular Malaysia, where demand for electricity is higher, it would be good if there could be more hydro dams. “Unfortunately, this is constrained by the number of rivers that are large enough to support a dam. Sarawak has a better potential,” the analyst said. “The electricity cost could be lower by one-third to half of the current tariff if it is produced and consumed in Sarawak,” an industry player said, adding that in the long run, hydropower costs were more stable.
In contrast, gas and coal prices may not be cheap in the future. “Ultimately, we’ll have to pay the market prices for gas, which is heavily subsidised by Petronas. It (the electricity cost) may be 50% higher.” The Bakun dam was first mooted more than three decades ago but was shelved just two years after it got off the ground in 1995. Sarawak Hidro Sdn Bhd, a wholly-owned unit of the MOF, was made project manager when the project was revived in 2000. The job to supply and install the turbines was awarded to Alstom Malaysia and IMPSA (M) Sdn Bhd in 2003. Sime Darby, meanwhile, received the Government’s approval in principle to become a major shareholder in Sarawak Hidro and the company to be set up to lay the transmission link to the peninsula, with a 60% stake in each entity. However, last June, Sime Darby decided not to proceed with this equity stake acquisition.
Earlier this year, the Federal Government approved the proposal for TNB and SEB to jointly take over the operation of the Bakun dam project from Sarawak Hidro. The takeover will be done through a leasing agreement and the joint partners will develop the transmission system from Sarawak to Peninsular Malaysia.
Analysts point out that transmitting hydropower from Sarawak does not mean that TNB will stop building more plants.“While the electricity for Sarawak helps, TNB would still need alternative sources as a diversification strategy. “There are some old power plants while (the power purchase) agreements with some of the first-generation independent power producers are set to expire in mid-2010,” an analyst said.
The demand for power is also expected to increase in tandem with the growth in gross domestic product. It is estimated that by 2014, the reserve margin may drop to 20% while new and secure sources of power should be obtained. As a long-term option, TNB is also looking at nuclear power.
The plan is for 10,000MW to be transmitted in stages to Peninsular Malaysia. Under the head of agreements signed last year between TNB and SEB, the latter would supply 3,000MW to TNB from 2017 to 2020 and 5,000MW from 2021 to 2030, based on a schedule to be mutually agreed by both parties. SEB estimated there could be 50 possible sites in Sarawak that could provide about 20,000MW of hydropower. It has indicated that the speed of its planting programme would depend on demand and whether there is a firm off-taker.
“Rio Tinto Alcan is still in negotiations with SEB while supply to Press Metal Bhd is supposed to start this month or next,” an analyst said. Rio Tinto Alcan is undertaking an RM8bil aluminium smelter that is expected to require 900MW while Press Metal’s aluminium smelter would require about 90MW although demand could rise to 600MW by 2011.
*
Bakun dam may begin to supply power in 2010
First commissioning seen August next year with 300MW electricity.
The Bakun dam project in Sarawak has been steeped in controversy since the day it was first awarded to Tan Sri Ting Pek Khiing’s company Ekran Bhd, which was badly affected by the 1997 Asian financial crisis. The baton was then passed to the Finance Ministry (MOF) while the transmission cable portion was to be handled by Sime Darby Bhd, which pulled out after finding the escalating costs untenable.
A consortium, comprising Tenaga Nasional Bhd (TNB), Sarawak Energy Bhd (SEB) and MOF, then stepped in and over the last few months, the job momentum has been building up, potentially leading to tenders being called early next year and financing to be arranged middle of next year.
It now looks like the role of hydropower will be more prominent, post-2010. By end-2011, the Bakun dam will be South-East Asia’s largest power project, capable of generating 2,400MW electricity for supply to Peninsular Malaysia, Sabah and Sarawak, Brunei and Kalimantan
Analysts said the electricity from the 2,400-megawatt (MW) Bakun dam would be ready for use much earlier as “the first commissioning was expected in August 2010,” with the first generator producing 300MW of electricity. After that, the second and subsequent turbines would be able to commence operations at two-month intervals. By end-2011, the Bakun dam will be South-East Asia’s largest power project, capable of generating 2,400MW electricity for supply to Peninsular Malaysia, Sabah and Sarawak, Brunei and Kalimantan.
However, the Bakun hydropower project, which is expected to be completed by 2011, will still require the laying of undersea cables to transmit electricity to the peninsula. The cable project, for which the first line is to be completed in 2015, involves the construction of a 1,000km high-voltage direct-current transmission line and a 680km undersea cable. The submarine cable, when completed, will be the longest in the world.
An industry player expects the Government to open the tender process in the first quarter of next year and, subsequently, award the tender in the second half or end of the same year.
While he was not sure which company would be bidding for the projects, he expects five global submarine cable suppliers – ABB Ltd, Sumitomo Corp, Prysmian Cables & Systems, Siemens group and Nexant Inc – to do so. “Siemens may not be a submarine cable provider but it has expressed interest. I am not sure if these companies will form a consortium to bid for the project or on a stand-alone basis,” he added.
Industry players also pointed out that the construction of the undersea cable could present a geopolitical situation as it would “cross Indonesian waters”.
A “bilateral agreement” would be achieved by the time work on the sub-sea cables commenced, one of the players said.
Although the eight turbines would be ready by 2012 (while the first undersea line would be ready only three years later), not all eight will be utilised, given that Sarawak currently consumes less than 1,500MW. “There will be excess capacity if all the turbines were to be utilised and Sarawak will not be able to transmit the electricity produced to the peninsula as the sub-sea cable would not be ready yet,” an industry player said, adding that the authorities were in the midst of building transmission towers in Sarawak.
An analyst said the cost of Bakun dam alone, excluding the undersea cable, was estimated at RM6bil. “Assuming Bakun supplies 1,700MW, it would generate some RM1.6bil in revenue per year. This is based on it selling the power at 11 sen per unit at its gates to the transmission company,” he added. The generation cost for hydropower is cheaper basically because water from the river basins is free compared with the higher cost in procuring coal or gas to fire up a power plant. “The downside is that the cost of building a hydro dam is much more expensive than that for a normal coal or gas power plant.
“In Peninsular Malaysia, where demand for electricity is higher, it would be good if there could be more hydro dams. “Unfortunately, this is constrained by the number of rivers that are large enough to support a dam. Sarawak has a better potential,” the analyst said. “The electricity cost could be lower by one-third to half of the current tariff if it is produced and consumed in Sarawak,” an industry player said, adding that in the long run, hydropower costs were more stable.
In contrast, gas and coal prices may not be cheap in the future. “Ultimately, we’ll have to pay the market prices for gas, which is heavily subsidised by Petronas. It (the electricity cost) may be 50% higher.” The Bakun dam was first mooted more than three decades ago but was shelved just two years after it got off the ground in 1995. Sarawak Hidro Sdn Bhd, a wholly-owned unit of the MOF, was made project manager when the project was revived in 2000. The job to supply and install the turbines was awarded to Alstom Malaysia and IMPSA (M) Sdn Bhd in 2003. Sime Darby, meanwhile, received the Government’s approval in principle to become a major shareholder in Sarawak Hidro and the company to be set up to lay the transmission link to the peninsula, with a 60% stake in each entity. However, last June, Sime Darby decided not to proceed with this equity stake acquisition.
Earlier this year, the Federal Government approved the proposal for TNB and SEB to jointly take over the operation of the Bakun dam project from Sarawak Hidro. The takeover will be done through a leasing agreement and the joint partners will develop the transmission system from Sarawak to Peninsular Malaysia.
Analysts point out that transmitting hydropower from Sarawak does not mean that TNB will stop building more plants.“While the electricity for Sarawak helps, TNB would still need alternative sources as a diversification strategy. “There are some old power plants while (the power purchase) agreements with some of the first-generation independent power producers are set to expire in mid-2010,” an analyst said.
The demand for power is also expected to increase in tandem with the growth in gross domestic product. It is estimated that by 2014, the reserve margin may drop to 20% while new and secure sources of power should be obtained. As a long-term option, TNB is also looking at nuclear power.
The plan is for 10,000MW to be transmitted in stages to Peninsular Malaysia. Under the head of agreements signed last year between TNB and SEB, the latter would supply 3,000MW to TNB from 2017 to 2020 and 5,000MW from 2021 to 2030, based on a schedule to be mutually agreed by both parties. SEB estimated there could be 50 possible sites in Sarawak that could provide about 20,000MW of hydropower. It has indicated that the speed of its planting programme would depend on demand and whether there is a firm off-taker.
“Rio Tinto Alcan is still in negotiations with SEB while supply to Press Metal Bhd is supposed to start this month or next,” an analyst said. Rio Tinto Alcan is undertaking an RM8bil aluminium smelter that is expected to require 900MW while Press Metal’s aluminium smelter would require about 90MW although demand could rise to 600MW by 2011.
*
Tuesday, September 8, 2009
MBMR ~ I plan to Buy below RM 2.30, Strong Buy if below RM 2.00
ringgityen said...
According to my source from Posco MKPC, the order for this month for myvi is more than 9k while viva is close to 7k.
September 8, 2009 7:55 PM
Since UMW refuse to come down below RM 5.50, I shift my attention to MBMR ... I will enter if below RM 2.00 ... I might consider to hold some at below RM 2.30 as starter.
So far, my calculation still show ANALABS is my best bet, the only problem is I am out of CASH, and the margin that I am going to take (waiting approval) might not allow me to buy Analabs, due to my very HIGH exposure on this stock already.
My "very close" relative just bought the MYVI few days ago, they love it, and I love it too. Definitely worth the RM 51,000. The bank rate is very low ...3.65% p.a.
Oil price may stay below US 70 until end of the year, meaning cheaper to drive a car then ride a bus or taxi.
MBMR balance sheet appear very solid.
I like the balance sheet movement ... inventories, cash, debt ... all are favourable.
Current asset minus Total Liabilities stand at RM 1 per share.
I still could not fully forecast their moving forward EPS ... my best guess is around 25 sen.
I could not see any downside so far.
Business prospect 'stabilising' and moving to 'improving' by next year.
According to my source from Posco MKPC, the order for this month for myvi is more than 9k while viva is close to 7k.
September 8, 2009 7:55 PM
Since UMW refuse to come down below RM 5.50, I shift my attention to MBMR ... I will enter if below RM 2.00 ... I might consider to hold some at below RM 2.30 as starter.
So far, my calculation still show ANALABS is my best bet, the only problem is I am out of CASH, and the margin that I am going to take (waiting approval) might not allow me to buy Analabs, due to my very HIGH exposure on this stock already.
My "very close" relative just bought the MYVI few days ago, they love it, and I love it too. Definitely worth the RM 51,000. The bank rate is very low ...3.65% p.a.
Oil price may stay below US 70 until end of the year, meaning cheaper to drive a car then ride a bus or taxi.
MBMR balance sheet appear very solid.
I like the balance sheet movement ... inventories, cash, debt ... all are favourable.
Current asset minus Total Liabilities stand at RM 1 per share.
I still could not fully forecast their moving forward EPS ... my best guess is around 25 sen.
I could not see any downside so far.
Business prospect 'stabilising' and moving to 'improving' by next year.
Oil Price ~ 08 Sep 09 : US 68
Published: Tuesday September 8, 2009 MYT 2:54:17 PM
Oil near US$68 in Asia Tuesday
Oil prices hovered near US$68 a barrel Tuesday in Asia for a fifth day as the U.S. summer driving season wound down and OPEC planned to meet Wednesday.
Benchmark crude for October delivery was up 35 cents at $68.37 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.
Trading was closed Monday in the U.S. for the Labor Day holiday, so the contract last settled on Friday at $68.02 after rising 6 cents. Labor Day is traditionally seen in the U.S. as the end of summer, and demand usually falls in the autumn before rebounding in the winter as heating oil consumption picks up.
"The seasonal demand is really coming to an end right now," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore. "It looks as if the bearish pressures are going to win out."
Leaders of the Organization of Petroleum Exporting Countries have signaled they plan to keep output levels unchanged at the group's meeting Wednesday in Vienna. That could send oil prices lower as traders eye OPEC members producing more and more over official quotas.
"Compliance levels have been dropping every month because many of the members have been cheating," Kornafel said. "So if they don't cut quotas, more oil will be entering the market."
In other Nymex trading, gasoline for October delivery fell 0.63 cent to $1.77 a gallon, and heating oil rose 0.98 cent to $1.73 a gallon. Natural gas dropped 6.8 cents to $2.66 per 1,000 cubic feet.
In London, Brent crude was up 46 cents to $66.99.
- AP
*
Oil near US$68 in Asia Tuesday
Oil prices hovered near US$68 a barrel Tuesday in Asia for a fifth day as the U.S. summer driving season wound down and OPEC planned to meet Wednesday.
Benchmark crude for October delivery was up 35 cents at $68.37 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.
Trading was closed Monday in the U.S. for the Labor Day holiday, so the contract last settled on Friday at $68.02 after rising 6 cents. Labor Day is traditionally seen in the U.S. as the end of summer, and demand usually falls in the autumn before rebounding in the winter as heating oil consumption picks up.
"The seasonal demand is really coming to an end right now," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore. "It looks as if the bearish pressures are going to win out."
Leaders of the Organization of Petroleum Exporting Countries have signaled they plan to keep output levels unchanged at the group's meeting Wednesday in Vienna. That could send oil prices lower as traders eye OPEC members producing more and more over official quotas.
"Compliance levels have been dropping every month because many of the members have been cheating," Kornafel said. "So if they don't cut quotas, more oil will be entering the market."
In other Nymex trading, gasoline for October delivery fell 0.63 cent to $1.77 a gallon, and heating oil rose 0.98 cent to $1.73 a gallon. Natural gas dropped 6.8 cents to $2.66 per 1,000 cubic feet.
In London, Brent crude was up 46 cents to $66.99.
- AP
*
Perodua on track to achieve 2009 sales target
Tuesday July 21, 2009
Perodua on track to achieve 2009 sales target
By EUGENE MAHALINGAM
RAWANG: Perusahaan Otomobil Kedua Sdn Bhd (Perodua) is on track to sell 158,000 vehicles this year despite the current economic downturn, says managing director Syed Hafiz Syed Abu Bakar.
For the first-half year, Perodua sold 77,000 units (or 49%) of its 2009 sales target.
“We expect better sales in the second half of the year, especially with the festive season like Hari Raya when sales usually pick up,” he said at the Perodua Kancil phase-out and Viva 660 BX (Basic) line-off ceremony yesterday.
“In November, we will also launch our multi-purpose vehicle (MPV) and we will start accepting bookings from October.” Syed Hafiz said the impact of the Government’s stimulus package would be more visible in the second half.
He said the low interest rates and strong financial system in Malaysia would make for a conducive environment for buying cars.
“Things are getting better for the local automotive industry,” he said.
Perodua yesterday rolled out its final Kancil, after 15 years of production. Since its launch in August 1994, 722,223 units have been produced and 708,000 units sold in Malaysia.
Syed Hafiz said the phasing out of the Kancil was a long time coming, in light of the technological advancements that were made since the car was introduced. Initially, an average of 4,000 units were sold monthly. In October 2002, the company registered its highest sales with 7,700 units.
Its best seller now is the Perodua Myvi, which accounts for about 53% of total sales, followed by Viva with 42%. Lately, Kancil averaged monthly sales between 500 and 800 units.
“The compact wonder had a very good run but all good things must come to an end,” Syed Hafiz said.
Perodua also launched its Viva 660 BX (Basic) yesterday, which will be its new entry-level vehicle and the “replacement car” for Kancil. The new Viva is available in three colours and costs RM25,300 (on-the-road, with insurance) and only available in manual transmission. Syed Hafiz said he was optimistic about the response for the new Viva.
On the Perodua MPV, he hinted that it would be priced between RM56,000 and RM67,000, available in both manual and automatic transmission and powered by a 1.5-litre engine.
The MPV would be targeted at both first-time buyers and “individuals with families,” he said, adding: “It is a car when you want it and an MPV when you need it.”
*
Perodua on track to achieve 2009 sales target
By EUGENE MAHALINGAM
RAWANG: Perusahaan Otomobil Kedua Sdn Bhd (Perodua) is on track to sell 158,000 vehicles this year despite the current economic downturn, says managing director Syed Hafiz Syed Abu Bakar.
For the first-half year, Perodua sold 77,000 units (or 49%) of its 2009 sales target.
“We expect better sales in the second half of the year, especially with the festive season like Hari Raya when sales usually pick up,” he said at the Perodua Kancil phase-out and Viva 660 BX (Basic) line-off ceremony yesterday.
“In November, we will also launch our multi-purpose vehicle (MPV) and we will start accepting bookings from October.” Syed Hafiz said the impact of the Government’s stimulus package would be more visible in the second half.
He said the low interest rates and strong financial system in Malaysia would make for a conducive environment for buying cars.
“Things are getting better for the local automotive industry,” he said.
Perodua yesterday rolled out its final Kancil, after 15 years of production. Since its launch in August 1994, 722,223 units have been produced and 708,000 units sold in Malaysia.
Syed Hafiz said the phasing out of the Kancil was a long time coming, in light of the technological advancements that were made since the car was introduced. Initially, an average of 4,000 units were sold monthly. In October 2002, the company registered its highest sales with 7,700 units.
Its best seller now is the Perodua Myvi, which accounts for about 53% of total sales, followed by Viva with 42%. Lately, Kancil averaged monthly sales between 500 and 800 units.
“The compact wonder had a very good run but all good things must come to an end,” Syed Hafiz said.
Perodua also launched its Viva 660 BX (Basic) yesterday, which will be its new entry-level vehicle and the “replacement car” for Kancil. The new Viva is available in three colours and costs RM25,300 (on-the-road, with insurance) and only available in manual transmission. Syed Hafiz said he was optimistic about the response for the new Viva.
On the Perodua MPV, he hinted that it would be priced between RM56,000 and RM67,000, available in both manual and automatic transmission and powered by a 1.5-litre engine.
The MPV would be targeted at both first-time buyers and “individuals with families,” he said, adding: “It is a car when you want it and an MPV when you need it.”
*
Proposed Acquisition of COVERIGHT is deemed completed
PROPOSED ACQUISITION
ANALABS RESOURCES BERHAD ("ANALABS" OR THE "COMPANY")
- PROPOSED ACQUISITION OF 100% EQUITY INTEREST IN COVERIGHT SURFACES MALAYSIA SDN BHD
FOR A CASH CONSIDERATION OF RM40.0 MILLION ("PROPOSED ACQUISITION")
We refer to the announcement dated 22 July 2009 wherein Analabs had on even date entered into a conditional share purchase agreement ("SPA") with Surfaces Holding B.V. (the "Vendor") for the acquisition of 100% equity interest in Coveright Surfaces Malaysia Sdn Bhd from the Vendor for a cash consideration of RM40.0 million.
On behalf of Analabs, OSK Investment Bank Berhad wishes to announce that the SPA has become unconditional.
Accordingly, the Proposed Acquisition is deemed to be completed.
This announcement is dated 7 September 2009.
*
ANALABS RESOURCES BERHAD ("ANALABS" OR THE "COMPANY")
- PROPOSED ACQUISITION OF 100% EQUITY INTEREST IN COVERIGHT SURFACES MALAYSIA SDN BHD
FOR A CASH CONSIDERATION OF RM40.0 MILLION ("PROPOSED ACQUISITION")
We refer to the announcement dated 22 July 2009 wherein Analabs had on even date entered into a conditional share purchase agreement ("SPA") with Surfaces Holding B.V. (the "Vendor") for the acquisition of 100% equity interest in Coveright Surfaces Malaysia Sdn Bhd from the Vendor for a cash consideration of RM40.0 million.
On behalf of Analabs, OSK Investment Bank Berhad wishes to announce that the SPA has become unconditional.
Accordingly, the Proposed Acquisition is deemed to be completed.
This announcement is dated 7 September 2009.
*
Japan Trade ~ July : surplus $13.6 b
Published: Tuesday September 8, 2009 MYT 8:15:00 AM
Japan's said Tuesday current account surplus down 19.4%
Japan's finance ministry says the country's current account surplus in July fell 19.4 percent from a year earlier.
The current accounts surplus is Japan's broadest measure of trade with the rest of the world.
The ministry said Tuesday that the surplus in July came at 1.27 trillion yen ($13.6 billion).
Exports in July tumbled 37.6 percent to 4.55 trillion yen, marking the 10th consecutive year-on-year decline.
Imports plunged 41.2 percent to 4.11 trillion yen in the month.
- AP
*
Japan's said Tuesday current account surplus down 19.4%
Japan's finance ministry says the country's current account surplus in July fell 19.4 percent from a year earlier.
The current accounts surplus is Japan's broadest measure of trade with the rest of the world.
The ministry said Tuesday that the surplus in July came at 1.27 trillion yen ($13.6 billion).
Exports in July tumbled 37.6 percent to 4.55 trillion yen, marking the 10th consecutive year-on-year decline.
Imports plunged 41.2 percent to 4.11 trillion yen in the month.
- AP
*
July Export Value Highest in first 7 months
Tuesday September 8, 2009
July export value highest in first seven months this year
By LEE KIAN SEONG
Malaysia’s exports in July fell 22.8% to RM48.87bil while imports declined 16% to RM41.06bil compared with the same month last year.
The total trade registered a decline of 19.9% to RM89.92bil from RM112.2bil in July 2008.
A trade surplus of RM7.81bil was recorded in July, compared with RM14.41bil last year.
Month-on-month, exports were up RM3.79bil or 8.4% in July versus June.
“This was the highest monthly export value recorded in the first seven months this year,” the International Trade and Industry Ministry said in a statement yesterday.
Compared to June, imports were 14.2% higher in July. Imports decreased 16% in July from a year earlier “mainly due to the decline in imports of intermediate goods,” the ministry said.
Imports of intermediate, capital and consumption goods accounted for 68.7%, 14.8% and 7.2% of total imports respectively in July.
The ministry said the total trade in the first seven months was valued at RM531.68bil, down 23.9% against the previous corresponding period.
Manufactured exports in July increased 11% compared with June.
“This was mainly due to higher exports of electrical and electronic (E&E) products, chemicals and chemical products, iron and steel products as well as optical and scientific equipment,” the ministry said.
It said E&E products formed the bulk of exports in July, accounting for 42.2% or RM20.63bil of the total, followed by palm oil (7.3%) and chemicals and chemical products (6.1%).
“Singapore, China, the US, Japan and Hong Kong, which accounted for 52.3% of total exports, were the top five export destinations for Malaysia,” it said.
Exports to Asean rose 6% to RM12.86bil versus June, and accounted for 26.3% of total exports in July.
RAM Holding Bhd chief economist Dr Yeah Kim Leng said the trade figures were within market expectations and the month-on-month growth showed improving demand in the market.
“This is the trend experienced by other countries in the region as well,” he told StarBiz, adding that the pace of contraction was expected to ease further.
He said the market was expected to improve going forward given the rise in the developed economy and the improving confidence level in the market.
*
July export value highest in first seven months this year
By LEE KIAN SEONG
Malaysia’s exports in July fell 22.8% to RM48.87bil while imports declined 16% to RM41.06bil compared with the same month last year.
The total trade registered a decline of 19.9% to RM89.92bil from RM112.2bil in July 2008.
A trade surplus of RM7.81bil was recorded in July, compared with RM14.41bil last year.
Month-on-month, exports were up RM3.79bil or 8.4% in July versus June.
“This was the highest monthly export value recorded in the first seven months this year,” the International Trade and Industry Ministry said in a statement yesterday.
Compared to June, imports were 14.2% higher in July. Imports decreased 16% in July from a year earlier “mainly due to the decline in imports of intermediate goods,” the ministry said.
Imports of intermediate, capital and consumption goods accounted for 68.7%, 14.8% and 7.2% of total imports respectively in July.
The ministry said the total trade in the first seven months was valued at RM531.68bil, down 23.9% against the previous corresponding period.
Manufactured exports in July increased 11% compared with June.
“This was mainly due to higher exports of electrical and electronic (E&E) products, chemicals and chemical products, iron and steel products as well as optical and scientific equipment,” the ministry said.
It said E&E products formed the bulk of exports in July, accounting for 42.2% or RM20.63bil of the total, followed by palm oil (7.3%) and chemicals and chemical products (6.1%).
“Singapore, China, the US, Japan and Hong Kong, which accounted for 52.3% of total exports, were the top five export destinations for Malaysia,” it said.
Exports to Asean rose 6% to RM12.86bil versus June, and accounted for 26.3% of total exports in July.
RAM Holding Bhd chief economist Dr Yeah Kim Leng said the trade figures were within market expectations and the month-on-month growth showed improving demand in the market.
“This is the trend experienced by other countries in the region as well,” he told StarBiz, adding that the pace of contraction was expected to ease further.
He said the market was expected to improve going forward given the rise in the developed economy and the improving confidence level in the market.
*
Monday, September 7, 2009
TENAGA : Clarification on Cable Bond Fund
CLARIFICATION IN RELATION TO ARTICLE
CLARIFICATION IN RELATION TO THE ARTICLE ENTITLED "RM10B BONDS TO FUND CABLE
PROJECT - FIRST ISSUANCE TO COMMENCE EARLY NEXT YEAR" DATED 4 SEPTEMBER 2009
PUBLISHED BY STAR BIZ
We wish to clarify that Tenaga Nasional Berhad ("TNB") and Sarawak Energy Berhad ("SEB") (collectively referred to as the Consortium) are currently exploring various options with regards to the proposed financing for the implementation of the undersea cable from Sarawak to Peninsular Malaysia.
The abovesaid bond issuance as quoted in Star Biz article on 4 September 2009, is only one of the options being explored by the Consortium.
The Consortium has yet to finalise and decide on the preferred option and details.
The Consortium will make the necessary announcement to Bursa once the decision
on the preferred option has been made.
This announcement is dated 7 September 2009.
*
CLARIFICATION IN RELATION TO THE ARTICLE ENTITLED "RM10B BONDS TO FUND CABLE
PROJECT - FIRST ISSUANCE TO COMMENCE EARLY NEXT YEAR" DATED 4 SEPTEMBER 2009
PUBLISHED BY STAR BIZ
We wish to clarify that Tenaga Nasional Berhad ("TNB") and Sarawak Energy Berhad ("SEB") (collectively referred to as the Consortium) are currently exploring various options with regards to the proposed financing for the implementation of the undersea cable from Sarawak to Peninsular Malaysia.
The abovesaid bond issuance as quoted in Star Biz article on 4 September 2009, is only one of the options being explored by the Consortium.
The Consortium has yet to finalise and decide on the preferred option and details.
The Consortium will make the necessary announcement to Bursa once the decision
on the preferred option has been made.
This announcement is dated 7 September 2009.
*
BNM Reserves ~ 28 Aug 09 : RM 329.1 b
International Reserves of BNM as at 28 August 2009The international reserves of Bank Negara Malaysia amounted to RM329.1 billion (equivalent to USD93.3 billion) as at 28 August 2009.
The reserves position is sufficient to finance 9.3 months of retained imports and is 3.8 times the short-term external debt.
*
The reserves position is sufficient to finance 9.3 months of retained imports and is 3.8 times the short-term external debt.
*
Palm Oil Posts Biggest Weekly Drop in Seven Months on Soybeans
September 5, 2009 9:02 UTC+8
Palm Oil Posts Biggest Weekly Drop in Seven Months on Soybeans
Palm oil posted the biggest weekly decline in seven months on concern a record U.S. soybean harvest will push soybean oil prices lower, encouraging substitution.
The U.S., the world’s largest soybean grower and exporter, may harvest as much as 3.372 billion bushels in the marketing year that began Sept. 1, Informa Economics Inc. said yesterday. That compares with a government estimate of 3.199 billion bushels and FCStone Group Inc.’s forecast of 3.266 billion.
“Palm oil prices have been dragged down” by reports of the record harvest, Ivy Ng, an analyst at CIMB Securities in Kuala Lumpur, said by phone. “There’s been some short-term news flow that’s not favoring a further uptrend in prices.”
November-delivery palm oil dropped 1 percent to 2,197 ringgit ($623) a metric ton on the Malaysia Derivatives Exchange, completing a decline of 7.3 percent this week, the biggest since the week ended Feb. 20.
Palm oil and soybean oil, the world’s two most-consumed edible oils, are used in food and bio-fuel production.
Soybean oil for December delivery gained 0.2 percent to 34.72 cents a pound in after-hours electronic trading on the Chicago Board of Trade at 6:09 p.m. Singapore time. The futures, down 5.4 percent this week, were headed for the biggest tumble since the week ended July 10.
Inventory Outlook
Palm oil exports from Malaysia, the world’s second-biggest producer, fell 7.9 percent to 1.298 million tons in August from a month earlier, according to data tracked by Societe Generale de Surveillance and released Sept. 1.
Intertek, another independent surveyor, said Sept. 1 it tracked shipments of 1.33 million tons of palm oil from Malaysia, down 4.9 percent from a month earlier.
Falling exports may lift stockpiles, analysts say. Official August data will be released by the Malaysian Palm Oil Board next week.
Palm oil stockpiles in Malaysia, the world’s second-biggest producer, dropped in July for the first time in three months to 1.33 million tons on an export surge, the board’s data showed.
“Any correction in crude palm oil prices from here is likely to be limited,” supported by “a likely month-on-month pick-up in August 2009 crude palm oil inventory levels for Malaysia,” according to a report by JPMorgan Securitites (Malaysia) led by Simone Yeoh, a plantation analyst in Kuala Lumpur.
She forecasts inventory rising to more than 1.4 million tons, which will still be 20 percent below the same month last year. She maintained her average forecast of 2,450 ringgit in the second half of this year.
Palm Oil Posts Biggest Weekly Drop in Seven Months on Soybeans
Palm oil posted the biggest weekly decline in seven months on concern a record U.S. soybean harvest will push soybean oil prices lower, encouraging substitution.
The U.S., the world’s largest soybean grower and exporter, may harvest as much as 3.372 billion bushels in the marketing year that began Sept. 1, Informa Economics Inc. said yesterday. That compares with a government estimate of 3.199 billion bushels and FCStone Group Inc.’s forecast of 3.266 billion.
“Palm oil prices have been dragged down” by reports of the record harvest, Ivy Ng, an analyst at CIMB Securities in Kuala Lumpur, said by phone. “There’s been some short-term news flow that’s not favoring a further uptrend in prices.”
November-delivery palm oil dropped 1 percent to 2,197 ringgit ($623) a metric ton on the Malaysia Derivatives Exchange, completing a decline of 7.3 percent this week, the biggest since the week ended Feb. 20.
Palm oil and soybean oil, the world’s two most-consumed edible oils, are used in food and bio-fuel production.
Soybean oil for December delivery gained 0.2 percent to 34.72 cents a pound in after-hours electronic trading on the Chicago Board of Trade at 6:09 p.m. Singapore time. The futures, down 5.4 percent this week, were headed for the biggest tumble since the week ended July 10.
Inventory Outlook
Palm oil exports from Malaysia, the world’s second-biggest producer, fell 7.9 percent to 1.298 million tons in August from a month earlier, according to data tracked by Societe Generale de Surveillance and released Sept. 1.
Intertek, another independent surveyor, said Sept. 1 it tracked shipments of 1.33 million tons of palm oil from Malaysia, down 4.9 percent from a month earlier.
Falling exports may lift stockpiles, analysts say. Official August data will be released by the Malaysian Palm Oil Board next week.
Palm oil stockpiles in Malaysia, the world’s second-biggest producer, dropped in July for the first time in three months to 1.33 million tons on an export surge, the board’s data showed.
“Any correction in crude palm oil prices from here is likely to be limited,” supported by “a likely month-on-month pick-up in August 2009 crude palm oil inventory levels for Malaysia,” according to a report by JPMorgan Securitites (Malaysia) led by Simone Yeoh, a plantation analyst in Kuala Lumpur.
She forecasts inventory rising to more than 1.4 million tons, which will still be 20 percent below the same month last year. She maintained her average forecast of 2,450 ringgit in the second half of this year.
Baltic Dry Index ~ wikipedia
Baltic Dry Index
From Wikipedia, the free encyclopedia
The Baltic Dry Index (BDI) is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the Index tracks worldwide international shipping prices of various dry bulk cargoes.
The index provides "an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Handymax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain.
Content :
1 Historical origin
2 How it works
3 Why economists and stock markets read it
4 Impact of 2008 financial crisis
5 References
6 External links
Historical origin
The BDI traces its roots to the Virginia and Baltick Coffeehouse in London's financial district in 1744.
How it works
Every working day, the Baltic canvasses brokers around the world and asks how much it would cost to book various cargoes of raw materials on various routes (e.g. 100,000 tons of iron ore from San Francisco to Hong Kong, or 1,000,000 metric tons of rice from Bangkok to Tokyo). [2]
The index is made up of an average of the Baltic Supramax, Panamax, and Capesize indices. These indices are based on professional assessments made by a panel of international shipbroking companies.
The BDI factors in the four different sizes of oceangoing dry bulk transport vessels
The BDI is based on US dollars, so may also be influenced by changes in the value of the US dollar.
The index can be accessed on a subscription basis directly from the Baltic Exchange as well as from major financial information and news services such as Thomson Reuters and Bloomberg L.P..
Why economists and stock markets read it
Most directly, the index measures the demand for shipping capacity versus the supply of dry bulk carriers. The demand for shipping varies with the amount of cargo that is being traded or moved in various markets (supply and demand).
The supply of cargo ships is generally both tight and inelastic — it takes two years to build a new ship, and ships are too expensive to take out of circulation the way airlines park unneeded jets in the Arizona desert. So marginal increases in demand can push the index higher quickly, and marginal demand decreases can cause the index to fall rapidly. e.g. "if you have 100 ships competing for 99 cargoes, rates go down, whereas if you've 99 ships competing for 100 cargoes, rates go up. in other words, small fleet changes and logistical matters can crash rates..."[6] The index indirectly measures global supply and demand for the commodities shipped aboard dry bulk carriers, such as building materials, coal, crude oil, metallic ores, and grains.
Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, such as concrete, electricity, steel, and food, the index is also seen as an efficient economic indicator of future economic growth and production. The BDI is termed a leading economic indicator because it predicts future economic activity.[7]
Because it provides "an assessment of the price of moving the major raw materials by sea," according to The Baltic, "... it provides both a rare window into the highly opaque and diffuse shipping market and an accurate barometer of the volume of global trade -- devoid of political and other agenda concerns."[2]
Another index, the HARPEX, focuses on containers freight. It provides an insight on the transport of a much wider base of commercial goods than commodities alone.
Other leading economic indicators — which serve as the foundation of important political and economic decisions - are often massaged to serve narrow interests, and subjected to adjustments or revisions. Payroll or employment numbers are often estimates; consumer confidence appears to measure nothing more than sentiment, often with no link to actual consumer behavior; gross national product figures are consistently revised, and so forth. Unlike stock and bond markets, the BDI "is totally devoid of speculative content," says Howard Simons, an economist and columnist at TheStreet.com. "People don't book freighters unless they have cargo to move."[2]
Impact of 2008 financial crisis
On 20 May 2008 the index reached its record high level since its introduction in 1985, reaching 11,793 points. Half a year later, on 5 December 2008, the index had dropped by 94%, to 663 points, the lowest since 1986.[8], though by 4 February 2009 it had recovered a little lost ground, back to 1,316.[9] These low rates move dangerously close to the combined operating costs of vessels, fuel, and crews.
By the end of 2008, shipping times had been already increased by reduced speeds to save fuel consumption, but lack of credit meant the reduction of letters of credit, historically required to load cargoes for departure at ports. Debt load of future ship construction was also a problem for shipping companies, with several major bankruptcies and implications for shipyards. This, combined with the collapsing price of raw commodities created a perfect storm for the world's marine commerce.
*
From Wikipedia, the free encyclopedia
The Baltic Dry Index (BDI) is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the Index tracks worldwide international shipping prices of various dry bulk cargoes.
The index provides "an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a timecharter and voyage basis, the index covers Handymax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain.
Content :
1 Historical origin
2 How it works
3 Why economists and stock markets read it
4 Impact of 2008 financial crisis
5 References
6 External links
Historical origin
The BDI traces its roots to the Virginia and Baltick Coffeehouse in London's financial district in 1744.
How it works
Every working day, the Baltic canvasses brokers around the world and asks how much it would cost to book various cargoes of raw materials on various routes (e.g. 100,000 tons of iron ore from San Francisco to Hong Kong, or 1,000,000 metric tons of rice from Bangkok to Tokyo). [2]
The index is made up of an average of the Baltic Supramax, Panamax, and Capesize indices. These indices are based on professional assessments made by a panel of international shipbroking companies.
The BDI factors in the four different sizes of oceangoing dry bulk transport vessels
The BDI is based on US dollars, so may also be influenced by changes in the value of the US dollar.
The index can be accessed on a subscription basis directly from the Baltic Exchange as well as from major financial information and news services such as Thomson Reuters and Bloomberg L.P..
Why economists and stock markets read it
Most directly, the index measures the demand for shipping capacity versus the supply of dry bulk carriers. The demand for shipping varies with the amount of cargo that is being traded or moved in various markets (supply and demand).
The supply of cargo ships is generally both tight and inelastic — it takes two years to build a new ship, and ships are too expensive to take out of circulation the way airlines park unneeded jets in the Arizona desert. So marginal increases in demand can push the index higher quickly, and marginal demand decreases can cause the index to fall rapidly. e.g. "if you have 100 ships competing for 99 cargoes, rates go down, whereas if you've 99 ships competing for 100 cargoes, rates go up. in other words, small fleet changes and logistical matters can crash rates..."[6] The index indirectly measures global supply and demand for the commodities shipped aboard dry bulk carriers, such as building materials, coal, crude oil, metallic ores, and grains.
Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, such as concrete, electricity, steel, and food, the index is also seen as an efficient economic indicator of future economic growth and production. The BDI is termed a leading economic indicator because it predicts future economic activity.[7]
Because it provides "an assessment of the price of moving the major raw materials by sea," according to The Baltic, "... it provides both a rare window into the highly opaque and diffuse shipping market and an accurate barometer of the volume of global trade -- devoid of political and other agenda concerns."[2]
Another index, the HARPEX, focuses on containers freight. It provides an insight on the transport of a much wider base of commercial goods than commodities alone.
Other leading economic indicators — which serve as the foundation of important political and economic decisions - are often massaged to serve narrow interests, and subjected to adjustments or revisions. Payroll or employment numbers are often estimates; consumer confidence appears to measure nothing more than sentiment, often with no link to actual consumer behavior; gross national product figures are consistently revised, and so forth. Unlike stock and bond markets, the BDI "is totally devoid of speculative content," says Howard Simons, an economist and columnist at TheStreet.com. "People don't book freighters unless they have cargo to move."[2]
Impact of 2008 financial crisis
On 20 May 2008 the index reached its record high level since its introduction in 1985, reaching 11,793 points. Half a year later, on 5 December 2008, the index had dropped by 94%, to 663 points, the lowest since 1986.[8], though by 4 February 2009 it had recovered a little lost ground, back to 1,316.[9] These low rates move dangerously close to the combined operating costs of vessels, fuel, and crews.
By the end of 2008, shipping times had been already increased by reduced speeds to save fuel consumption, but lack of credit meant the reduction of letters of credit, historically required to load cargoes for departure at ports. Debt load of future ship construction was also a problem for shipping companies, with several major bankruptcies and implications for shipyards. This, combined with the collapsing price of raw commodities created a perfect storm for the world's marine commerce.
*
Copper gains after data, lead hits 13-mnth high
3 September 2009
Copper gains after data, lead hits 13-mnth high
* Lead hits 13-month high on China smelter shut-downs
* European equities weak after U.S. macro data
* U.S. payrolls eyed by investors
Copper staged a late rally on Thursday, as investors digested demand prospects following a flood of economic data in the United States, while lead hit a 13-month high on Chinese smelter closure worries.
Volatile copper for three-months delivery on the London Metal Exchange closed at $6,255 a tonne from a close of $6,175 on Wednesday, when the metal hit a near two-week low of $6,025.
Lead ended at $2,280 a tonne from $2,111, having earlier soared to $2,290, its highest point since late July 2008.
Before the ISM numbers, data showed new applications for jobless benefits in the United States fell last week, while activity in the services sector was at its strongest in nearly a year in August.
Investors also took comfort from Shanghai equities, which jumped 4.6 percent after a top securities regulator pledged late on Wednesday to keep the market stable.
The pledge means China, the world's biggest copper consumer, is better poised to continue driving copper prices. Record copper imports by China have been key in driving copper above $6,000 a tonne from around $3,000 at the start of the year.
Copper has also been driven by speculative buying and signs of economic recovery. Although there is a risk of a price correction in September, analysts are cautiously bullish in the longer term. LEAD SMELTER SHUT-DOWNS
Analysts said worries were growing about lead supplies from China, where smelters were shut down last week following lead poisoning incidents."The prevention of heavy metal pollution should be put in a more urgent and more important position," Environment Minister Zhou Shengxian told a national pollution prevention meeting, Communist Party mouthpiece the People's Daily said.
Zinc closed at $1,893 from $1,828, while analysts said that the lead developments in China could also impact the metal, mainly used to galvanize steel.
Aluminium closed at $1,852 a tonne against $1,846. Latest LME data showed aluminium stocks fell 3,000 tonnes, but remained near a record 4.6 million tonnes.
Alcoa, the largest U.S. aluminium maker, said Chinese aluminium consumption would rise 8 percent in the second half from a year ago and cut its forecast drop in global demand for all 2009 to 5.5 percent from earlier forecasts of 7 percent.
Nickel ended at $18,200 from $18,100. Tin was at $14,450 from $13,950, having earlier hit $14,500, the highest in more than a week.
Metal Prices at 1610 GMT Metal Last Change Percent Move End 2008 Ytd Percent
*
Copper gains after data, lead hits 13-mnth high
* Lead hits 13-month high on China smelter shut-downs
* European equities weak after U.S. macro data
* U.S. payrolls eyed by investors
Copper staged a late rally on Thursday, as investors digested demand prospects following a flood of economic data in the United States, while lead hit a 13-month high on Chinese smelter closure worries.
Volatile copper for three-months delivery on the London Metal Exchange closed at $6,255 a tonne from a close of $6,175 on Wednesday, when the metal hit a near two-week low of $6,025.
Lead ended at $2,280 a tonne from $2,111, having earlier soared to $2,290, its highest point since late July 2008.
Before the ISM numbers, data showed new applications for jobless benefits in the United States fell last week, while activity in the services sector was at its strongest in nearly a year in August.
Investors also took comfort from Shanghai equities, which jumped 4.6 percent after a top securities regulator pledged late on Wednesday to keep the market stable.
The pledge means China, the world's biggest copper consumer, is better poised to continue driving copper prices. Record copper imports by China have been key in driving copper above $6,000 a tonne from around $3,000 at the start of the year.
Copper has also been driven by speculative buying and signs of economic recovery. Although there is a risk of a price correction in September, analysts are cautiously bullish in the longer term. LEAD SMELTER SHUT-DOWNS
Analysts said worries were growing about lead supplies from China, where smelters were shut down last week following lead poisoning incidents."The prevention of heavy metal pollution should be put in a more urgent and more important position," Environment Minister Zhou Shengxian told a national pollution prevention meeting, Communist Party mouthpiece the People's Daily said.
Zinc closed at $1,893 from $1,828, while analysts said that the lead developments in China could also impact the metal, mainly used to galvanize steel.
Aluminium closed at $1,852 a tonne against $1,846. Latest LME data showed aluminium stocks fell 3,000 tonnes, but remained near a record 4.6 million tonnes.
Alcoa, the largest U.S. aluminium maker, said Chinese aluminium consumption would rise 8 percent in the second half from a year ago and cut its forecast drop in global demand for all 2009 to 5.5 percent from earlier forecasts of 7 percent.
Nickel ended at $18,200 from $18,100. Tin was at $14,450 from $13,950, having earlier hit $14,500, the highest in more than a week.
Metal Prices at 1610 GMT Metal Last Change Percent Move End 2008 Ytd Percent
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