Asian markets mostly up at midday

KUALA LUMPUR: Asian markets were mostly up at midday Tuesday on improved consumer sentiments on the back of expectations of better than estimated third quarter earnings across the board.

Bloomberg also said in a report on Tuesday that Asian stocks rose lifting the MSCI Asia Pacific Index from a two-week low as the dollar advanced against the yen and Taiwan said it may allow Chinese investors to buy stakes in its flat-panel and computer-chip industries.

At home, the benchmark KLCI was 0.09% higher at 1,207.03 while Singapore’s Straits Times Index added 1.58% to 2,670.70. Tokyo’s Nikkei 225 advanced 0.71% to 10,080.20, Hong Kong’s Hang Seng Index gained 2.25% to 21,051.87, Shanghai’s A share index dropped 0.88% to 2,739.22 and Seoul’s Kospi Index was 0.86% higher at 1,690.02. At Bursa Malaysia, 309 counters were up, 198 were down while 230 others were traded unchanged. There were 306.92 million shares done with a total value of RM317.68 million.

Gainers included BAT, which rose 38 sen to RM44.98, HaiO climbed 20 sen to RM5.62, PetDag advanced 12 sen to RM8.55, Tanjong added 10 sen to RM15 and Pos Malaysia was 10 sen higher at RM2.21. Among plantation stocks, KL Kepong was up 4 sen to RM13.82 while BKawan added 2 sen to RM9.22. Crude palm oil was up RM12 to RM2,115 per tonne.

Nymex crude oil in electronic trade added 1 cents to US$66.85 per barrel. The ringgit was quoted at 3.487 to the US dollar.

MAS rethink on A380?

S&P says it understands that MAS has broached the idea of swapping the A380 for smaller wide-body aircraft to avoid up to US$300 million in penalty if it were to cancel the order

Malaysia Airlines (MAS) (3786) may be considering replacing its order for six Airbus A380 superjumbos with smaller wide-body aircraft such as the A330 or A350, according to a Standard & Poor's (S&P) report.

"We understand that MAS has broached the idea of swapping the A380 for smaller wide-body aircraft such as the A330 and Airbus' upcoming A350 to avoid a massive penalty of up to US$300 million (RM1 billion) if it were to cancel the A380 orders," S&P Asia Equity Research analyst Shukor Yusof said in a report.

According to a source familiar with the situation, MAS is looking to buy as many as 18 A330s, with the option to buy another seven. "MAS recently sent its technical staff to Toulouse (France), where Airbus is headquartered, to evaluate the smaller wide-body aircraft," the source told Business Times. When contacted yesterday, MAS chief executive officer and managing director Datuk Tengku Azmil Zahruddin dismissed the S&P report as unfounded.

"The fact is, we have said that we are planning to replace our wide-body aircraft. Currently, we are evaluating various options to ensure that the aircraft complement our fleet replacement strategy. "At the same time, we need to match the new aircraft to our network growth plans, especially for key markets such as South Asia, China, Australia and the Middle East. For these key areas, we want to offer our customers increased frequencies for added convenience and better connectivity," Tengku Azmil said through e-mail.

"In the meantime, we continue to evaluate our options on the wide-body aircraft," he said. In his report, Shukor said that MAS was having second thoughts on the operational viability of the A380, the first of which is scheduled for delivery in 2011, due to the current economic recession and a decline in air traffic.

Recent reports on launch customer Singapore Airlines' inability to fully maximise the yields on its A380 were also said to have given MAS cold feet in proceeding with the purchase. MAS ordered the A380s in late 2003 through Penerbangan Malaysia Bhd, a leasing company owned by the Ministry of Finance.

MAS currently operates 14 A330-200/300s with an average age of 13 years."If the swap were to take place, MAS would likely phase out its entire fleet of Boeing wide-body aircraft comprising seventeen 777-200s and thirteen 747-400s," said Shukor. MAS already has an order for 35 narrow-body 737-800s, with another 20 on option, delivery of which will start in the fourth quarter of next year. However, these planes are more for regional flights.

"A re-fleeting of its aircraft would be a major step for MAS considering that the 777s and 747s have been the workhorses for MAS and many other successful airlines. MAS will have to carefully consider whether the A330s or A350s can serve the airline as well as the Boeings did," Shukor told Business Times over the telephone from Singapore. He said that while cancelling the A380 orders was an option, it appeared to be the best in the long run, even if costly for MAS.

Forbes: KL will play key role in recovery

Malaysia will be an integral part of an Asian-led global economic recovery, editor-in-chief of influential financial publication Forbes Magazine Steve Forbes said yesterday.

"It is critically situated, it has strategic plans for high technology, as well as for traditional commodities. Therefore, it is well poised to move ahead in the years ahead," Forbes said.

Forbes is in town with a group of other global captains of industries for the Forbes Global CEO conference, which started yesterday.

"In terms of recovery, Asia will be leading it. US and Europe will be lagging the Asian region," he said.

Minister of International Trade and Industry Datuk Mustapa Mohamed, who was at yesterday's briefing, said the government was looking at liberalising other components of the services sector to attract more investments and improve some of its processes in order to encourage more business activities.

"We are looking at it now. More to come in coming months ... The government will also ensure red tape is reduced to encourage more businesses," said Mustapa.

He added that the country's economic recovery was on track.

"At this point in time, we believe it is going to be a quite a steady path, as to when that path is going to begin, we have said it many times before, it's going to be the fourth quarter of 2009," Mustapa said.

Elaborating on the global financial crisis, Forbes said US policymakers must adopt a policy for a strong and stable US dollar, as it is a key component to ensure a speedier recovery of its economy.

"The reason for the crisis is financial, the basic cause is our central bank or US Federal Reserve Board printing too much money, keeping interest rates artificially low, that created the bubble in the housing and other parts of the US economy," Forbes said.

He said the world was now on the path of recovery but the US still has not adopted the policy for a strong and stable dollar. He pointed out that this will hurt the recovery in the US because it is going to hurt investments. "Nonetheless, in the coming months, I believe the Federal Reserve will reverse course and that the US will be able to get back on a path of good recovery sometime in 2010," he said.

The Forbes Global CEO Conference will end tomorrow. It features speakers like Wal-Mart Stores chairman S. Robson Walton, former BMW AG chairman Dr Helmut Panke, Christie's International chief executive officer Edward Dolman, Bank Negara Malaysia governor Tan Sri Zeti Akhtar Aziz, YTL Corp managing director Tan Sri Francis Yeoh and AirAsia group chief executive officer Datuk Seri Tony Fernandes.

TA cuts major Malaysia stocks to sell

TA Securities has downgraded major Malaysian stocks to "sell" because of higher probability for more significant profit-taking correction ahead.

The downgraded stocks include CIMB, Gamuda, IOI Corp, Sime Darby, Tenaga and TM . The research firm also has a “maintain sell or take profit" call on Kencana Petroleum, SapuraCrest and Kurnia Asia for further correction from recent gains.

TA has recommended "buy on dip" in its daily note for lower liner construction-related stocks such as Sino Huaan, Kinsteel , MRCB, UEM Land, Zelan, and LCL Corp.

Malaysia's Lotus F1 team to drive for profits

Shareholders keen on monetising the Lotus brand

PETALING JAYA: The establishment of the much-publicised 1Malaysia F1 Team Sdn Bhd (1MF1T) is an attractive business proposition and is expected to turn profitable in the first year of operations. The main revenue drivers include sponsorship, sale of merchandise and share of profits with FOM (Formula One Management, the F1 commercial rights holders).

“We will make money in the first year as we have always done with our other ventures,” said Datuk Kamarudin Meranun, who together with long-time business partner and team principal Datuk Seri Tony Fernandes, will own 60% in 1MF1T via Tune Group. The remaining stake will be held by Naza Group chief executive officer SM Nasarudin SM Nasimudin in his personal capacity.

Datuk Kamarudin Meranun (left) and Datuk Seri Tony Fernandes will own 60% in 1Malaysia F1 Team via Tune Group

“It must give good returns even though there are risks ...,” said Nasarudin.

Fernandes pointed out that there was one F1 brand that managed to sell £150mil worth of T-shirts. “We are monetising the Lotus brand. It is one of the greatest racing brands and nothing invokes the same emotion except Ferrari,” he said, adding that other potential revenue sources included technology spin-offs, entertainment, and research and development.

“We are also looking at possible sponsors. Interestingly, a lot of people and corporations have approached us wanting to be part of this team,” he said. One of the firms that have been approached is, not surprisingly, Petroliam Nasional Bhd (Petronas). On the likelihood of the national oil company getting involved in 1MF1T, he replied: “Why not?”

On its part, Petronas would have to evaluate the investment rationale in making such a decision. It currently sponsors the F1 via the BMW Sauber team but the sponsorship will expire this season and it has yet to commit itself to a new team. Other large corporations that would be approached for sponsorship, according to Fernandes, include Malaysia Airlines and Genting Bhd.

He also said that talks were ongoing with a third group, Litespeed UK, to take up a 10% stake in IMF1T. “We are still talking and have not fully worked out the final shareholding structure ...,” he said. In the event the British company steps in, then the shareholding structure will be 55:35:10 among Tune Group, Nasarudin and Litespeed respectively.

Is 1MF1T open to new shareholders? “Of course we are, but the investor has to be one that contributes to the brand and relevant expertise. This is the best time to be in the F1 business as the overall cost has come down,” said Nasarudin. The privately funded 1MF1T will have a start-up capital of RM168mil with an estimated baseline annual budget of RM308mil. The Government will not hold any equity in the project, either directly or indirectly, through any of the government-linked companies.

Beijing sells 1st yuan bonds in Hong Kong

BEIJING (AP) - Beijing sold government bonds denominated in the mainland's yuan for the first time Monday in Hong Kong, adding to gradual moves to expand the international use of its tightly controlled currency.Bonds from the 6 billion yuan ($875 million) issue were on sale to the public at Hong Kong banks. There was no immediate word on how well they were selling and how many were allocated to institutional investors.

Hong Kong is Chinese territory but has its own currency and regulatory system and often is used by Chinese companies to deal with foreign investors. Beijing is gradually expanding the use abroad of the yuan, which does not trade on global markets. Beijing signed a currency swap deal with Argentina in March and has promised to lend yuan to the central banks of South Korea, Malaysia, Indonesia and Belarus in the event of a financial emergency.

Monday's sale should increase the private sector use of the yuan, according to finance analysts. A few mainland institutions, including state-owned China Construction Bank Ltd. and Bank of China Ltd., have issued yuan-denominated bonds in Hong Kong. Hong Kong leaders want to develop the territory as a center for non-mainland trading of the yuan. They hope the business will boost finance industries that have been battered by the global economic crisis.

Premier Wen Jiabao, the mainland's top economic official, has promised to strengthen trade and finance links with Hong Kong. Two banks - London-based HSBC Holdings and Hong Kong-based Bank of East Asia - said in May they had become the first non-mainland companies approved to sell yuan bonds.

Monday September 28, 2009 Strong recovery likely in 2010

SINGAPORE: Malaysia and Thailand are likely to post negative gross domestic product (GDP) growth this year but should see a strong recovery in 2010 as commodity prices and demand revive, according to an article by Standard & Poor’s Asia-Pacific chief economist, Dr Subir Gokarn.

Titled In The Asean Region It’s A Case Of Slow But Steady Improvement, the article discusses the economic outlook for Thailand, Vietnam, Indonesia, the Philippines and Malaysia and can be found on RatingsDirect.com.

Dr Subir Gokarn ... ‘The second quarter of 2009 marked the beginning of the recovery.

Standard & Poor’s said in a statement it expected Vietnam to outperform the region, “leading the pack” with close to 5% growth in 2009 and more than 6.5% growth in 2010. Gokarn, who was quoted in the statement, said: “Despite the bad news and uncertainties in the United States and Europe, timely policy actions and fundamental strengths in the regional economy have helped Asean countries weather the meltdown better and counter the double-digit plunge in exports.

“The second quarter of 2009 marked the beginning of the recovery, when quarter-on-quarter GDP growth jumped across the board. A shift in demand drivers from export to domestic demand was the primary reason for this bounce back,” he said.

Monday September 28, 2009 Haier bullish about Malaysian market

KUALA LUMPUR: Haier Group, China’s largest home appliance company, sees great potential to grow its business in Malaysia, says Asia Pacific president Dr Philip Carmichael. “For a business like ours, opportunities are seen in markets with a growing population and new housing developments.

“This is apparent in Malaysia, where there is an increasing number of families and there are always new homes coming up,” he told StarBiz during a visit to Malaysia last week. Haier has been present in Malaysia since 1998 and currently has five offices and employs some 70 staff. “We are one of the top three most recognised brands in China. In Malaysia, we are not so well known yet. But we are trying to create more confidence among customers in our brand,” said Carmichael.

Dr Philip Carmichael ... ‘Haier is one of the top three most recognisable brands in China.’

One way to achieve that objective was to offer better warranties for its products, he said. “We recently decided to extend the warranty for our flat panel TVs to three years and Malaysia was the first market where we decided to do this.

“We chose Malaysia because we have a strong local team. So far, feedback (on our extended warranty scheme) has been positive,” he said. The group has a production plant in Thailand, which caters to the demand of its Asean markets. During the first quarter of this year, the group expanded its plant to include an air-conditioning facility, said Carmichael.

“Where others are cutting down their base of operations, we continue to invest. We added the (air-conditioning) facility to support our businesses in Asean and to highlight our commitment to this region,” he said. According to reports, the group’s turnover increased by 8% to 122 billion yuan (US$17.8bil) in 2008.

Its biggest market was China, which accounted for 70% of its total turnover, while the balance 30% was from its businesses in North America, Europe and Asia Pacific, said Carmichael. He said it was too early to forecast the impact of the current economic downturn on its topline for 2009. “Everyone has been affected. However, we have taken some proactive actions to counter the impact of the global economic recession and so far, we are heading in the right direction.”

In May, Haier acquired a 20% stake in New Zealand-based appliance company Fisher & Paykel. The alliance confers the companies exclusive distribution rights for each other’s products in their respective home markets. “This partnership will allow us to enhance our respective businesses in terms of marketing and research and development (R&D). It would help introduce Fisher & Paykel’s products to the China market and fast track our business in the Oceania region,” said Carmichael.

According to him, Fisher & Paykel has a 55% and 20% share of the home appliance market in New Zealand and Australia respectively. “We believe this cooperation will help us come out of this crisis stronger than when we went in,” said Carmichael. In China, Haier is capitalising on the central government’s subsidy scheme to spur domestic consumption. The scheme entitles each rural household to a 13% government rebate on one home appliance item.

With 6,000 stores in 2,000 locations in China, Haier was looking to tap the rural market, said Carmichael. “About 65% of the population in China is in the countryside. With our outlets situated in various locations, the people in rural areas need not travel to the city just to purchase home appliances.” He said Haier had also begun to manufacture products suitable for the rural population. For example, the company designed the world’s first “rodent-proof refrigerator”, with a cooler compressor and extra cladding on the wiring.

“The compressors on the back of the refrigerators are warm and a common nesting ground for rats, which are abundant in the countryside. “All these innovations to our products will help create more confidence in our brand, which in turn gives us confidence to survive the economic crisis,” he added. Haier produces a full line of home appliances, ranging from entry level, mid-range to high-end products. It spends about 6% of its annual revenue on research and development each year. Currently, it is the second largest white goods manufacturer in the world.

Market Watch

Last Updated: Monday ,September 28 2009 12:30 pm
	Bursa Malaysia Summary

	Composite: 1207.14 (-10.25) -0.84% Industrial: 2646.99 (-20.1) -0.75%		Volume: 2586048 lots Gainers: 154 Losers: 538 Unchanged: 214

	Top Volume
	GPACKET-OR	121068	0.255	0.010	4.08%
	KNM	100745	0.775	-0.010	-1.27%
	JADI	93039	0.210	0.005	2.44%
	SUNWAY-WR	80445	0.130	0.015	13.04%
	ASIAEP-OR	64103	0.095	-0.005	-5.00%
	LFECORP	63462	0.455	0.045	10.98%
	TA	60988	1.380	0.020	1.47%
	OILCORP	57952	0.165	-0.010	-5.71%
	HLSCORP	55372	0.440	0.000	0.00%
	HEVEA	42714	0.390	0.020	5.41%
	HUBLINE	42387	0.315	-0.010	-3.08%
	TALAM	42045	0.085	0.000	0.00%
	NOTION	41762	0.430	0.000	0.00%
	CSCENIC	41043	0.485	0.045	10.23%
	AZRB	40238	0.965	0.070	7.82%
	EDEN	40012	0.495	0.005	1.02%
	UEMLAND	35949	1.570	-0.040	-2.48%
	HSL	33317	1.120	0.125	12.56%
	SYF	33070	0.300	0.045	17.65%
	AIRASIA	32135	1.380	-0.010	-0.72%
	GENM	31883	2.790	0.000	0.00%
	PJI	31761	0.080	0.000	0.00%

Trading to stay choppy

KUALA LUMPUR: The FTSE Bursa Malaysia KL Composite Index (FBM KLCI) started the week lower on a lower note, taking cue from the losses on Wall Street last week. At 10.10am, the benchmark index fell 6.22 points to 1,211.17. Turnover was 110 million shares valued at RM100.2mil. There were 101 gainers, 247 losers and 159 stocks unchanged.

Among the 30 stocks in the FBM KLCI, CIMB fell 8 sen to RM11.08, Genting Bhd shed 10 sen to RM7.03 while Sime Darby was 4 sen lower at RM8.54. Nestle (M) Bhd was the top gainer, adding 34 sen to RM35.30 while Jadi Imaging was the most active with 6.5 million shares done, adding 1 sen to 21.5 sen.

HwangDBS Vickers Research said investors would like take time to warm up before gradually turning more active in the stock market ahead given last week’s holiday and shortened trading week. It added that there have been few material developments over the past one week or so for investors to response to. “Given this scenario, we reckon that our Malaysian bourse may show a slight downdraft today. “Just like on Wall Street, its major equity indices slipped between 0.4% and 0.8% at the closing bell on Friday on profit-taking pressures amid disappointing economic data,” HwangDBS said.

“Beyond the short-term lull, we still expect the benchmark FBM KLCI to trend up, possibly testing its resistance mark of 1,230 points again. On the downside, its immediate support level is seen at 1,190,” it added. Kenanga Research said while the primary trend remained up, technically the KLCI looked to be “in need of some consolidation after running up” since the temporary low in August.

Its short term cautiousness was based on the short term moving averages namely the 30 days and 50 days were flattening out indicating perhaps some possible loss in upside momentum. It added that the daily RSI was also rolling over, lending strength to a possible corrective pullback and consolidation and development of a negative divergence. Kenanga said the upside resistance could be expected at the 1,225 to 1,250 levels with 1,200 to 1,190 acting as the immediate support.

“Do look out for possible quarter-end window dressing activities to lend support to the index in the near term offering top-slicing opportunities,” it said, adding that it preferred the mid to lower liners which were trading at undemanding valuations.