Key interest rate to hold at 3.50% in 2008

BANK Negara Malaysia is expected to maintain the overnight policy rate (OPR) at 3.50 per cent for the whole of 2008, according to Kenanga Research.“This is premise on the fact that Bank Negara would remain vigilant on maintaining balance between growth and price changes,” the research firm of Kenanga Investment Bank Bhd said today.“We reiterate our view that the downside risk to growth from external factors would temper domestic inflationary threat from rising fuel and food prices,” it said in a statement.“This would provide ample room for Bank Negara’s monetary management to leave the OPR unchanged at 3.50 per cent in 2008.”Commenting on the decision by Bank Negara’s Monetary Policy Committee to leave the OPR unchanged yesterday, Kenanga said this was widely expected but it sensed that the central bank was getting wary of the current external development with regard to the extent and impact of the US subprime debt crisis.“Hence, we detect a tinge of cautionary alarm in Bank Negara’s statement, followed by a pacifying assertion on ’the need to closely monitor the interaction between the downside risks to growth and the upward risks to domestic prices’, adding that it does not discount the fact that it may take ’pre-emptive measures... if necessary’,” the research firm said.Kenanga said though the strength of domestic demand is expected to sustain growth going into 2008, greater uncertainties in the global credit markets and weaker demand conditions in major economies have increased the risk of slower global growth.“This we believe could disrupt the potential upside of the domestic economy going into 2008. Hence, we maintained that Malaysia’s growth potential be capped and is projected to edge up to 6.1 per cent in 2008 from an estimated 6.0 per cent last year,” it said.Kenanga said with a fuel price hike being imminent, the government may no longer be able to bear the burden of escalating fuel subsidy, which has reached a record of about RM35 billion.“Hence, we expect that it would leave the government with little choice but to hike fuel prices after the general election which is likely held in th first quarter of 2008,” it said. — Bernama

Crest Builder to sustain earnings in FY08

PETALING JAYA: Crest Builder Holdings Bhd expects to sustain its strong earnings performance in 2008 on the back of RM920 million worth of construction projects in hand and significant contribution from its property development projects, its managing director Yong Soon Chow said.
He said the property projects that were expected to enhance Crest Builder’s financial year 2008 (FY08) earnings included its ongoing Alam Hijau mixed development in Batu Tiga, Shah Alam and its just completed 3 Two Square project in Petaling Jaya, Selangor.
“More property projects are expected to be launched this year, and the company is already receiving annual recurrent revenue from the 3 Two Square project,” he told The Edge Financial Daily.
“Meanwhile, we are bidding for more than RM2 billion worth of construction contracts annually with a historical success rate of 15% to 20%. We are also in talks to obtain some Ninth Malaysia Plan (9MP) projects under the Private Finance Initiative (PFI) scheme.”
He said the first two phases of the five-phase Alam Hijau project have been sold to Syarikat Perumahan Negara (SPN) for RM147 million.
The company plans to build service apartments with a gross development value (GDV) of RM80 million in Alam Hijau’s Phase 3 and commercial development comprising shops and an office tower worth RM120 million in Phase 4. Both phases are pending the authority’s approval and are expected to be launched in the second half of this year.
Phase 5 of Alam Hijau, a commercial development, is still in the early design stages.
Crest Builder is also undertaking a commercial development project, Tierra Crest, in Kelana Jaya and a high-end condominium project in Mont’ Kiara.
Tierra Crest comprises two blocks of 17-storey office buildings on a three-storey podium. “We are in the midst of finalising the layout plans of the buildings,” Yong said, adding that the company expected a 30% gross profit margin from the RM120 million development.
“We plan to keep the building for leasing purposes, but we might consider selling it if the price is good. We might sell one block and keep the other block for rent. Construction works are expected to kick off in first quarter this year,” he said.
”We foresee a big boom in the Kelana Jaya area due to more and more multinational companies moving out from the KL city area and Damansara Heights into Petaling Jaya. “
The Mont’ Kiara project, with a GDV of RM150 million, consists of luxury high-end condominiums with a selling price of at least RM600 per sq ft. Construction will commence by end-2008 with the launch targeted for next year.
Yong said the company’s FY07 earnings came mainly from its flagship project 3 Two Square, which comprises 199 units of offices and 38 shoplots. It has achieved a 92% take-up rate with a profit after tax margin of between 35% and 45% for the project.
“We are optimistic of selling the remaining units by first quarter this year,” said Yong, adding that it was keeping the 3 Two Square’s corporate tower and carpark for leasing purposes.
“To date, 80% of the units have been rented out at an average rental rate of RM3.50 to RM4 per sq ft; this adds RM7 million to RM8 million to us annually. We plan to lease remaining units by this quarter,” he said.
The property development division was Crest Builder’s main income earner in FY07, accounting for some 70% to 80% of operating profits.
As for its construction division, Yong said the RM920 million order book (including RM130 million in-house jobs) and RM600 million unbilled orders, were sufficient to sustain its construction revenue for the next two years.
Crest Builder’s cumulative earnings of RM27.8 million net profit for the first nine months of FY07 have exceeded its FY06 full-year earnings of RM20 million. -www.theedgedaily.com

Ramunia clinches RM2.2 billion project

PETALING JAYA: Ramunia Holdings Bhd’s subsidiaries have secured a US$685 million (RM2.2 billion) project, the company said on Jan 28.
It said that its subsidiaries - Ramunia International Services Ltd and Ramunia Fabricators Sdn Bhd - had received a notification of award for the project involving a submarine pipeline.
“The scope of works for the award includes design, engineering, procurement, fabrication, anticorrosion and weight coating, load out, tie down/sea fastening tow-out/sail out, transportation and installation of submarine pipeline, and modification on existing facilities, testing, pre-commissioning, commissioning,” it said. -www.theedgedaily.com

Malaysia’s 2008 vehicle sales seen up 4.70%

MALAYSIA'S total vehicle sales are expected to rise 4.7 per cent to 510,000 units in 2008 from a year earlier, a trade body said on Tuesday.Passenger car sales are forecast to rise 4.5 per cent this year from 2007, the Malaysian Automotive Association said in its annual review of the market.“The positive sales trend since June 2007 would continue and spill over to 2008 as market conditions and consumer sentiments are favourable,” association president Aishah Ahmad said.She also told reporters that this year’s auto sales would be helped by the introduction of new models, recent pay rises for civil servants and less stringent approvals for car loans.Malaysia is Southeast Asia’s biggest passenger car market, but second to Thailand in terms of overall vehicle sales.Total vehicle sales fell 0.7 per cent to 487,176 units in 2007 from a year earlier, the association said, reflecting a slump in the first half of the year due to a tightening of credit for car finance, a lack of new models and lower used-car prices. - Reuters

Ringgit Hits 10-year high against U.S. Dollar

KUALA LUMPUR, Jan 25 (Bernama) -- After two days of losses this week, the ringgit rebounded to touch a fresh 10-year high at 3.24 against the U.S. dollar as investors are optimistic about regional economic growth.The 75 basis points cut in the U.S. interest rates by the Federal Reserve also contributed to the weakening of the greenback against other currencies.RAM Holdings chief economist Dr Yeah Kim Leng said the large U.S. rate cut has made the greenback less attractive, pointing out that the cut has almost closed the interest rate gap between the U.S. and Malaysia."The ringgit will continue its upward momentum on the back of regional economic growth based on the surpluses and rising reserves of Asian economies including Malaysia," he told Bernama here.Yeah said the ringgit is likely to hit the 3.10 level against the dollar this year, adding that an appreciation of the local unit will offset imported inflation.He said Asian economies such as Malaysia have showed strong momentum and managed to control inflation, adding that currently the country's economy is benefiting from strong domestic demand, underpinned by healthy consumer spending growth.Yeah said the fall in global demand is expected to be offset by rising demand from Asian giants China and India."If the U.S. has a short and mild recession, a five percent target for Malaysia's gross domestic product growth this year is achievable as domestic demand will offset the export weakness," he noted.On whether Bank Negara Malaysia will respond to the Fed's cut, Yeah said the central bank's overnight policy rate (OPR) is unlikely to see any changes for now, pointing out that any changes in the future will depend on the indicators from the U.S."If the U.S. economy experiences a hard landing, the central bank will still have the flexibility to cut rates," he added.Bank Negara has kept its OPR at 3.5 percent since April 2006. The central bank will hold its first monetary policy meeting for the year next Tuesday.Yeah said the next few months' consumer price index (CPI) data is important to see whether Malaysia can control inflation, adding that CPI for January to December 2007 increased by two percent to 105.7 from 103.6 in the same period last year.He noted that the rising commodities prices such as oil and crude palm oil have been the main cause for pushing inflation in most countries, adding that Malaysia's inflation rate has been moderately up over the past few months on escalating global commodity prices, resulting in expensive prices in food and energy.Meanwhile, OSK Investment Bank economist Sia Ket Ee also expected the ringgit to strengthen further against the U.S. dollar as Malaysia has established a steady investment platform and is also politically steady to attract foreign direct investment.He said since last year there has been a gradual inflow of funds into the country and this has increased the central bank's reserves.Sia also expected the central bank to keep its key interest rate unchanged at 3.5 percent until the end of the year, even as inflationary risk awaits with the government's plan to cut fuel subsidies this year.

Asian markets extend losses, Japan worst hit

KUALA LUMPUR: Asian markets extended their losses at midday on Jan 21, registering losses of 0.66% to 2.8% as investors were unconvinced the US government’s US$140 billion stimulus package could prevent the US from heading into a recession.
At 12.30pm, the KLCI was down 9.57 points, or 0.66%, to 1,429.92 points. The FBM Emas lost 71.8 points to 9,717.57 points, while the FBM Second Board lost 115 points to 6,573.95 points.
Turnover was 296.5 million shares valued at RM606 million. Losers overwhelmed gainers six to one. There were 100 advancers, 599 decliners while 216 counters were unchanged.
Among Asian markets, Japan’s Nikkei 225 was the worst hit, falling 2.79% or 387.14 points to 13,474.15 points, Hong Kong’s Hang Seng Index fell 2.57% to 24,554.52 points, while Shanghai’s A Share Index lost 2.32% to 5,310.65. Singapore’s Straits Times Index fell 1.58% to 3,055.16 points.
The ringgit was quoted at RM3.2715 to the US dollar.
Light crude oil for February delivery was trading at US$90.87.
Crude palm oil futures fell RM25 to RM3,300 for February while for April, it lost RM7 to RM3,300.
Aseambankers Equity Research said renewed selling pressure could extend on increasing profit taking activities as indicators were showing exhaustion trends.
“Failing to stay above the 1,420 point level could see the KLCI revisiting the 1,400 point psychological support level,” it said. It added plantations and oil & gas counters could stage technical rebounds, but volatility in the broader market would cap gains.
Among the heavyweights, Tenaga fell 15 sen to RM9.45, Maybank lost 10 sen to RM12 but Telekom rose 10 sen to RM12.40.
IOI Properties was the top loser, down 50 sen to RM12.90 while Kulim-WB lost 35 sen to RM5.75. BCHB, Bursa and Parkson lost 30 sen each to RM10.80, RM14 and RM8 respectively.
Satang Jaya fell 21 sen to 49.5 sen. The Edge weekly reported that the Securities Commission was looking into allegations the company may have overstated its reported earnings.
Resorts was the most active with 7.7 million shares. It fell four sen to RM3.74.
Rexit, which will process Sompo Japan’s insurance business electronically, was the top gainer. It rose 26 sen to RM2.56.
Public Bank which will announce its full year results this evening, rose 20 sen to RM12.60. LPI added 20 sen to RM12.60. Malayan Flour added 10 sen to RM3 and Landmarks gained seven sen to RM3.-www.theedgedaily.com

EPF declares 5.80% dividend for 2007

SECOND Finance Minister Tan Sri Nor Mohamed Yakcop has announced a 5.8 per cent dividend for the Employees Provident Fund (EPF) for 2007, higher than the 5.1 per cent in 2006.He said the higher dividend was aided by the stronger stock market as well as EPF’s efficiency in managing its growing fund.“It is a significant improvement. The stock market was good and EPF was effective and efficient in managing the large and growing fund,” Nor Mohamed told reporters after visiting the EPF headquarters here.“We are able to declare higher and higher dividends over the years. I would consider it to be quite an attractive yield at 5.8 per cent,” he said.EPF is the sixth largest fund in Asia with a total asset allocation of RM312 billion. — Bernama

SunCity to launch RM3.7bil REIT

PETALING JAYA: Sunway City Bhd (SunCity) is on track to list the country’s first integrated resort real estate investment trust (REIT) this year but is still undecided between Malaysia and Singapore.
Property investment managing director Ngeow Voon Yean said the company had appointed RHB Investment Bank and Goldman Sachs global joint coordinators for the REIT’s initial public offering (IPO) exercise.
CIMB and UBS Investment Bank have also joined the panel of joint book runners for the IPO exercise.

Ngeow Voon Yean“We are waiting for our consultants to compile all the necessary details on the IPO structure and the asset valuation before deciding on the venue for the listing,” Ngeow told StarBiz yesterday.
SunCity’s REIT, with assets valued at RM3.7bil, is touted to be the largest in the country and will see the group inject a host of its prime properties into the REIT.
Among the assets to be injected are the Sunway Pyramid Mall and its annexe – totalling 1.7 million sq ft of net lettable space; the 4.8ha Monash University campus, Sunway University College, Sunway Carnival Mall in Penang and Tambun Hypermarket in Ipoh.
Other investment-grade properties to be included are the Sunway Resort Hotel & Spa, Sunway Pyramid Hotel and Menara Sunway.
The investment bankers will kick off the structuring process of SunCity, studying the viability of injecting the company’s investment properties into a REIT and the plan to grow the REIT with the injection of other and future developments.
Ngeow said the floatation would streamline the group’s businesses, allowing the company to focus its attention on property development while divesting long-term yield properties to the REIT. The process is designed to also enhance SunCity’s earnings visibility.
“The outlook for the retail, hospitality and commercial segments is encouraging and SunCity’s assets, backed by its integrated resort development concept, will allow the REIT a diverse yet synergistic earnings base,” Ngeow said.
“By unlocking the value of our assets, SunCity will be in a stronger cash position to expand into the property development business, both locally and abroad. We will also look into developing properties for future injection into the REIT.”
He said SunCity’s track record in investment assets would contribute to the continued growth of the REIT.
The REIT offering is also part of the company’s strategy to maximise shareholders’ value through asset restructuring.
“Setting up the trust will create value for our shareholders through the realignment of assets within the tax efficient REIT structure.”
An analyst with a local brokerage said SunCity provided the best exposure to REIT play, given its reasonably heavy reliance on property investment income and undemanding valuation.
Presently, property investment contributes 40% of the company’s revenue with property development making up the balance.
In a recent research note, Aseambankers said the REIT’s listing would be timely, given the rising capital value of commercial properties in Malaysia.
Moreover, SunCity’s diversification into emerging countries like India, Cambodia and soon, Vietnam and China, will also help it broaden its earnings base and provide new avenues for growth.
SunCity can look forward to a bullish financial year ending June 30, 2008 (FY08), with encouraging sales from the conclusion of en bloc sales of RM171mil for Sunway South Quay condominiums and RM219mil from Sunway Palazzio.
Sales in the first-half of the financial year totalled RM924mil, achieving 68% of its FY08 sales target of RM1.35bil. It also has unbilled sales of RM1.2bil. -www.thestar.com.my

Quest to top US rich list

LAS VEGAS: Sheldon G. Adelson, the casino mogul, has seen his personal net worth plummet by more than US$15 billion (US$1 = RM3.28) in recent months as Wall Street investors have grown more bearish about the casino companies that are pushing aggressively into Asia.
That slide might put a crimp in his stated goal of surpassing Bill Gates and Warren E. Buffett, the only two titans ahead of him on Forbes' most recent list of the country's richest people. But a few miserable months on the financial front are not likely to have much of an impact on him - or the charities and various conservative political causes he supports.
Adelson, 74, still holds US$19 billion worth of stock in the Las Vegas Sands, which operates the Venetian here and also a pair of giant casinos in Macao, the Chinese territory near Hong Kong that has surpassed the Las Vegas Strip as the world's top gambling market.
On Thursday, the Venetian formally opens its new Palazzo tower. At 7,200 rooms, the expanded Venetian is the world's largest hotel.
Few Americans have made as much money in China as Adelson, and he is a major donor to the Republican Party. Yet Adelson may well be the richest American that most people have never heard of. One explanation for his relative anonymity is that he is a newcomer to the highest altitudes of the fabulously wealthy.
The Las Vegas Sands went public in December 2004, and over the next two years his net worth soared by US$17.5 billion. That works out to almost US$1 million an hour, weekends, holidays and nights included. "He got richer faster than anyone else in history," said Peter W. Bernstein, co-author of "All the Money in the World", a book about the people on the Forbes 400 list.
Certainly people in Las Vegas know Adelson, a querulous figure who has existed in a near-constant state of embattlement since building the Venetian in the late 1990s. He filed claims and counterclaims against scores of contractors who worked on that project, and over the years he has started legal fights with the local A.C.L.U., the Culinary Workers, the Las Vegas Convention and Visitors Authority and even the power company, which he thought should pay the cost of removing utility poles from the Venetian site.
"Sheldon is a brilliant businessman, but he can be enormously difficult," said Gary Loveman, chief executive of Harrah's, the Las Vegas-based casino giant. "When he has a strong point of view, he pursues it very stridently. He's very tough," Loveman added. "Some would say unreasonably tough."
Adelson declined to comment on this article, despite repeated requests. But longtime friends and associates said his hard exterior was rooted in his days growing up in a rough-and-tumble section of Boston, where his father drove a cab.
"Rich in our neighbourhood then was having US$3 in your pocket," said Irwin Chafetz, a Sands board member and former business partner who has known Adelson since grade school. Today, Chafetz's childhood friend owns homes in Las Vegas, Malibu, Boston and Tel Aviv, and keeps several jets, including a Boeing 767, a 747 and a 737.
Adelson started a business selling toiletry kits to motels, tried his hand at the mortgage broker business, and in the 1960s he joined Chafetz and another friend from the old neighbourhood, Ted Cutler, in a charter tours start-up.
But it was not until he founded Comdex, the premier computer trade show through much of the 1980s and 1990s, that he hit on an idea that propelled him into the upper reaches of the wealthy.
To this day, Cutler is not sure if his longtime friend even knows how to use a computer ("we always had people working for us who understood them"). But then a passion for technology was not what spurred Adelson, a college dropout then in his mid-40s, to create this yearly festival for technology buffs held every November in Las Vegas.
Rather, friends and former work associates said, he was enthralled by the idea of renting convention space for 25 cents a sq ft and selling it to vendors for US$25 or more. Adelson's timing on Comdex could not have been better - yet he seemed to feel more pressure, not less, according to former colleagues.
"His yelling was legendary," said Peter B. Young, a public relations man who worked with Adelson for the 17 years he ran Comdex. Sometimes Adelson turned his fury on a particular person, Young said, but often it was just "generic yelling" that seemed his boss's preferred way of passing along routine marching orders.
"To work with Sheldon you need to have a coat of Teflon," said Jason Chudnofsky, chief executive of Comdex under Adelson from 1987 to 1995.
It helped that his demanding and exacting boss was helping to make him rich, Chudnofsky said - and that his rants seemed largely about his own larger ambitions.
"Sheldon wanted to be richer than Bill Gates," he said. "He always wanted to be No. 1."
To accommodate their growing trade business, Adelson and his partners - Chafetz, Cutler and Jordan Shapiro, an optometrist from the old neighborhood ("the boys," as they were often called internally) - bought the aging Sands Hotel and Casino from the financier Kirk Kerkorian for US$128 million.
"The Sands had enough land to build a convention centre," Chafetz said. "That's why we got into the casino business." When it was completed, at the start of the 1990s, the Sands Expo and Convention Center stood as the largest privately owned exhibition centre in the country.
In 1995, Adelson sold Comdex to Softbank of Japan for US$862 million - giving him a personal payoff of just over US$500 million. He and his partners were all in their 60s, but where the three other ''boys" chose to semi-retire, Adelson made even bigger bets.
He demolished the Sands in a spectacular implosion (replete with an anticipatory fireworks show), borrowed hundreds of millions of dollars and in its place built the Venetian, which cost US$1.5 billion and opened in 1999.
With the Venetian, Adelson broke the basic rules of casino design by building a facility that was geared toward conventions rather than centred on the casino. Where the old way was to motivate guests to spend time on the casino floor by offering few amenities in the room, the Venetian parted from Las Vegas tradition, installing mini-bars and fax machines in each guest room.
His plans were met with scepticism, if not scorn. But the Venetian is now the Strip's second most profitable casino hotel, behind only the Bellagio, said Robert A. LaFleur, an industry analyst with the Susquehanna Financial Group, and that is with only a third of its revenue coming from its gambling floor.
"He's shown people in Las Vegas that there's a different way to do things," said Mike Sloan, a retired casino executive who now consults for the MGM Mirage and other gambling concerns.
Yet despite the influential role he played in establishing Las Vegas as a top convention destination, he is better known locally for his quarrels and legal battles. To cite but one of a long list of examples: his attempts to bar members of the Culinary Workers from picketing on the sidewalk in front of the Venetian, a case he pursued all the way to the US Supreme Court (he lost). The Venetian is the only major Las Vegas casino that is non-union.
Then there is his long-running feud with Stephen A. Wynn, who built the Mirage and Bellagio, among other large Strip properties. The two tycoons have fought over everything from the noises emitted by the artificial volcano in front of the Mirage to the size of the Venetian's parking garage.
"Sheldon is a man who harbors a lot of animosity toward a lot of people," Wynn said. "And when Sheldon is angry, he gets nasty."
The two are at it once again, this time in Macao - and so far, a stock market correction notwithstanding, Adelson is beating his longtime foe. He already runs two resorts in Macao (one has a casino three times the size of Las Vegas' biggest gambling floor), and his company, the Las Vegas Sands, is in the midst of spending another US$7 billion to US$9 billion building an additional 13 hotels there. The Sands is also spending another US$3.6 billion on a casino hotel in Singapore.
Wynn who is less bullish on Macao's short-term prospects than Adelson, operates a single property in Macao.
"So much of their value is on the come, as they say in the gambling business," said LaFleur, the analyst, explaining the inflated price of Sands stock relative to Wynn Resorts and other competitors.
Adelson has five children from two marriages. He has given tens of millions of dollars to charitable causes, most of them Jewish-related, and has talked about donating billions more to foster medical research.
Last January he gave US$1 million to American Solutions for Winning the Future, former House Speaker Newt Gingrich's political group, and more recently he helped finance Freedom's Watch, a conservative response to MoveOn.org.
Yet Adelson is hardly slowing down to enjoy other aspects of life. He is looking past Asia, already talking about replicating his Macao strategy and creating a mini-Las Vegas somewhere in Europe.
"I work for a guy who's obsessed," said Robert G. Goldstein, one of a troika of top executives who have been with Adelson since 1995. Every time the Sands reaches another milestone, Goldstein said his boss establishes a new, harder-to-reach goal.
"He has more money than he can ever spend but he has to grow it bigger," he said. - NYT

Proton unit Lotus mulls Saudi venture

PROTON Holdings Bhd’s unit Lotus Engineering will conduct a feasibility study on setting up an automotive industry in Saudi Arabia with its partner King Abdul Aziz City for Science and Technology (KACST).Lotus entered into a feasibility study agreement with KACST yesterday, Proton said in a circular to Bursa Malaysia.KACST is a national research facility in Saudi Arabia.The national car company said the agreement would allow both companies to develop a comprehensive plan to set up an Automotive Development Centre and for the transfer of technology from Lotus to KACST.“It also provides a platform for the development of a manufacturing industry for KACST to become an automotive components manufacturer focusing on the strengths of the natural resources of the Kingdom of Saudi Arabia,” the company said.Lotus will also assist KACST to become an automotive assembler and/or a full automotive manufacturer, as shall be determined and assessed later by the parties, Proton said. — Bernama

IOI sells US$600m exchangeable bond

IOI Corp, one of the country’s largest palm oil producers, priced a US$600 million exchangeable bond offering on January 8 this year.The five-year bond settled on January 15, 2008, and is due on January 15, 2013, IOI said in a joint statement with global financial services company Citi.The offering is the largest exchangeable bond offering by a Malaysian company since 2002, they said.The bonds were issued at par and carried a zero per cent coupon which priced to yield 1.25 per cent per annnum. They are listed on the Singapore Exchange Securities Trading Ltd and the Labuan International Financial Exchange.“IOI has taken the lead in seeking innovative financial solutions to meet our expansion plans. With the positive momentum in the palm oil sector, the outcome of this transaction demonstrates the strong investor confidence in the sector and the company,” said IOI group executive chairman Tan Sri Lee Shin Cheng. — Bernama

Petronas to Buy 43% of Star Energy

Petronas International Corporation Ltd. (PICL) announces that valid acceptances had been received in respect to a total of 40,909,984 Star Energy Group shares, representing approximately 43% of the issued share capital of Star Energy and, together with PICL’s existing shareholding of 52,885,455 Star Energy shares, representing approximately 98.5% of the issued share capital of Star Energy.
This above total includes acceptances received in respect to 33,939,913 Star Energy shares (representing approximately 35.8% of the issued share capital of Star Energy) which were subject to an irrevocable commitment procured by PICL or any of its associates.-www.rigzone.com

MRCB, partner get monorail LOI

THE Malaysian Resources Corp Bhd (MRCB)/Penang Port consortium has been issued a Letter of Intent (LOI) for the Penang Monorail project, Syarikat Prasarana Negara Bhd (Prasarana) said yesterday.The Penang Port consortium members comprise Penang Ports Sdn Bhd and Scomi Group subsidiary MTrans Transportation Systems Sdn Bhd.In a statement, Prasarana said Request for Proposals were issued to six proponents who had expressed interest in the project and upon evaluation, the LOI was issued to MRCB/Penang Port consortium as it provided the best viable option for the project."Prasarana has commenced negotiations with the consortium and the final outcome will be announced in due course upon various approvals from relevant authorities," it added.Prasarana clarified that no party has been awarded the monorail project yet. -www.btimes.com.my

AirAsia: We don't speculate on fuel prices

AIRASIA Bhd yesterday clarified that it has never speculated on fuel prices in the past and will not speculate on fuel prices going forward.Responding to reports that AirAsia adopts a fuel hedging strategy that is excessively speculative, chief executive officer Datuk Tony Fernandes said the airline's strategy has always been to hedge fuel requirements whenever an attractively priced structure is available. "Fuel hedging is an important component of our strategy as it provides us with clarity over our cost structure; this will allow us to manage our seat inventory better and aids route development. "We are averse to risks and therefore believe in mitigating those risks by removing variability and uncertainties from our business whenever suitable opportunities arise," he said in a statement. Fernandes said at the time the earlier hedge was taken in July 2007, the company's view was that oil prices of above US$90 (RM293) per barrel will be a result of excessive speculative market action in that commodity.Fuel price volatility intensified in the later part of the second half of last year due to higher fuel consumption projections, supply disruptions, geopolitical risk concerns, and the weakening of the US dollar. Fernandes said AirAsia approaches fuel hedging carefully and has always maintained a conservative stance which resulted in positive contributions from its past fuel hedges. This has benefited the company in reducing the total fuel bill and enable the airline to enhance its ability to offer low fares to its passengers, he said.On the sell-down of its shares, he pointed out that foreign funds have been reducing their exposure in airline stocks over the past two months and that all the prominent low-cost carriers around the world experienced heavy sell-downs. "It would be inappropriate to lay the blame on our fuel hedges as the reason for the decline in the company's share price. We believe that the recent sell-down of AirAsia shares is overdone."-www.btimes.com.my

Next Budget to be unveiled Aug 29

PUTRAJAYA: Budget 2009 will be announced on Aug 29, marking the last time the Budget would tabled at Parliament before the fasting month begins.
"This means Budget day will be back to its original schedule on the fourth Friday of October," said Second Finance Minister Tan Sri Nor Mohamed Yakcop.
"Despite the period between the tabling of the last Budget and the next one looking very short, it's actually workable.
"Budget consultations for the various sectors will start very soon," he told reporters after attending the ministry's monthly gathering here on Monday.
The ministry aimed to reduce its Budget deficit to 3.1% this year from 3.2%. last year, he said. Malaysia was also optimistic of achieving at least a 6% growth in Gross Domestic Product (GDP) this year, although the ministry had yet to receive the figure for the last quarter.
"Growth for the third quarter was on the up-trend at around 6.7%. Given this, we should be able to achieve higher than 6% in the last quarter.
"For this year, our forecast is around 6% to 6.5%. This is despite uncertainties in the US market and the rising crude oil prices," he said.
On the subprime crisis in the United States and other external factors, he said, "We have gone through these problems before."
"Our stock market reflects this by shooting past 1,500 points last Friday. Four years ago, it was hovering around 790 points with a market capitalisation of around RM640bil, and our per capita income was around RM15,819.
"Today, market capitalisation is almost RM1.2 trillion and per capita income has risen to RM22,345. This means that in the last four years, we have created an increased wealth of 86.5% or over RM500bil in our stock market," he said.-www.thestar.com.my

Oil drops to US$92 on US recession fears

SYDNEY: Oil fell on Jan 14, extending the past three sessions' decline, as the growing threat of a US economic downturn outweighed supply worries in Iran and Nigeria.
US light crude for February delivery fell 23 cents to US$92.46 (RM305.12) a barrel by 0106 GMT. US oil settled down US$1.02 at US$92.69 a barrel on Friday, dragged down by fears of a potential US economic recession.
"There was some bullish news out of Iran and Nigeria that could have pushed up oil prices, but Asian markets are focusing on the health of US economy for now," said Gerard Burg, a resource analyst at National Bank of Australia (NAB) in Melbourne.
US recession concerns were stoked by American Express Co's warning on Friday of mounting credit card defaults, and also dragged down Asian stocks on Monday.
Despite oil's slide in the past three sessions, analysts said geopolitical tensions in Iran and Nigeria would continue to lend support to prices.
US President George W Bush accused Iran on Sunday of threatening security around the world by backing militants and urged his Gulf Arab allies to confront the issue.
While Iran has agreed to answer remaining questions about its past nuclear activities within a month during talks with International Atomic Energy Agency, the war of words between the US and Iran has rekindled worries that Iran, the world's fourth-largest crude exporter, could cut oil exports to retaliate against US pressure on its nuclear programme.
In Nigeria, militants fighting for autonomy in the country's oil-producing south detonated a remote-controlled bomb on an oil tanker on Friday, causing a big fire.
It was the second rebel attack on Africa's largest oil industry in a week. Militant attacks since 2006 have knocked out a fifth of the country's oil output capacity.
"Violence in Nigeria is being overlooked for now, but if it persists, that could prop up oil prices," Burg said.
Analysts also said the lack of clear indication from Opec on whether it would raise output at its Feb 1 meeting would also keep prices firm.
Opec said on Sunday that oil prices had been driven to record highs by speculators rather than by any supply shortage, and the producer group was ready to boost output when the market needs more.
In a newspaper interview, Opec secretary-general Abdullah al-Badri also said a slowing global economy would not impact oil demand in the short term and lead to a price collapse. -Reuters

Oil drops to US$92 on US recession fears

SYDNEY: Oil fell on Jan 14, extending the past three sessions' decline, as the growing threat of a US economic downturn outweighed supply worries in Iran and Nigeria.
US light crude for February delivery fell 23 cents to US$92.46 (RM305.12) a barrel by 0106 GMT. US oil settled down US$1.02 at US$92.69 a barrel on Friday, dragged down by fears of a potential US economic recession.
"There was some bullish news out of Iran and Nigeria that could have pushed up oil prices, but Asian markets are focusing on the health of US economy for now," said Gerard Burg, a resource analyst at National Bank of Australia (NAB) in Melbourne.
US recession concerns were stoked by American Express Co's warning on Friday of mounting credit card defaults, and also dragged down Asian stocks on Monday.
Despite oil's slide in the past three sessions, analysts said geopolitical tensions in Iran and Nigeria would continue to lend support to prices.
US President George W Bush accused Iran on Sunday of threatening security around the world by backing militants and urged his Gulf Arab allies to confront the issue.
While Iran has agreed to answer remaining questions about its past nuclear activities within a month during talks with International Atomic Energy Agency, the war of words between the US and Iran has rekindled worries that Iran, the world's fourth-largest crude exporter, could cut oil exports to retaliate against US pressure on its nuclear programme.
In Nigeria, militants fighting for autonomy in the country's oil-producing south detonated a remote-controlled bomb on an oil tanker on Friday, causing a big fire.
It was the second rebel attack on Africa's largest oil industry in a week. Militant attacks since 2006 have knocked out a fifth of the country's oil output capacity.
"Violence in Nigeria is being overlooked for now, but if it persists, that could prop up oil prices," Burg said.
Analysts also said the lack of clear indication from Opec on whether it would raise output at its Feb 1 meeting would also keep prices firm.
Opec said on Sunday that oil prices had been driven to record highs by speculators rather than by any supply shortage, and the producer group was ready to boost output when the market needs more.
In a newspaper interview, Opec secretary-general Abdullah al-Badri also said a slowing global economy would not impact oil demand in the short term and lead to a price collapse. -- Reuters

Malaysia’s Dec palm oil output down 15.4%

MALAYSIA'S crude palm oil output fell 15.4 per cent to 1,396,134 tonnes in December, above the market forecast, from a revised 1,650,004 tonnes a month earlier, official crop agency Malaysian Palm Oil Board said today.The drop in production is less than the 18.2 per cent decline estimated in a Reuters poll.Malaysian crude palm futures surged to a new record by the mid-day close today, ahead of the crop agency’s release of production figures as investors heavily bet that last month’s floods curbed output while snubbing dismal export numbers from a cargo surveyor.The benchmark March contract on the Bursa Malaysia Derivatives Exchange rose as high as RM77, or 2.4 per cent, to RM3,278 ringgit (US$982) per tonne, surpassing a high of RM3,204 reached on Wednesday.“Exports may be softening but the underlying point is that there might not be enough palm oil to even serve that level of demand and the market jumped on that idea,” said an analyst with a local commodity trading firm. “This condition might go on for another month or so.” Exports of Malaysian palm oil products for January 1-10 fell 30.9 per cent to 310,737 tonnes from the 449,543 tonnes shipped between December 1 and 10, cargo surveyor Intertek Testing Services said today.Meanwhile, cargo surveyor Societe Generale de Surveillance said exports of Malaysian palm oil products for January 1-10 fell 17.6 per cent to 356,194 tonnes from 432,315 tonnes shipped between December 1 and 10.Palm oil prices are up more than 7 per cent since the start of the year, fuelled by booming demand across Asia, talk of a cut in Indian import duty cut, and surging global crude and vegetable oil markets.The market expected palm oil output to fall 18.2 per cent to 1.35 million tonnes in December from a month ago due to the monsoon floods, which had inundated key producing areas in central and south Malaysia. Monsoon floods in central Pahang state and southern state of Johor drove more than 34,000 people from their homes and cut off roads in December, local media have reported.Millers in these key palm growing regions have been rejecting fruit bunches that have turned rotten due to over-exposure to wet weather, plantation officials say. - Reuters

MRCB lands monorail job

PETALING JAYA: The Malaysian Resources Corporation Bhd (MRCB)-led consortium, which includes Scomi Engineering Bhd and Penang Port Commission (PPC), is believed to have beaten three other bidders for the Penang monorail job, sources said.
They said MRCB was awarded the project, which analysts estimate would cost RM1.6 billion, for submitting the “most comprehensive” and “lowest priced” bid among the contenders. The consortium submitted its bid on Nov 14 last year.
The other three bidders for the monorail were MMC Bhd, the then Road Builder (M) Holdings Bhd, which has since been taken over by IJM Corporation Bhd, and the Melewar Group.
Analysts said a lot of synergy was provided by MRCB and its consortium partners, with PPC being the owner of the land on which the monorail would start from, Scomi the expertise to build the monorail coaches, and MRCB the builder of the infrastructure.
They said the Penang monorail project will be the platform for MRCB to showcase its capability when bidding for similar rail projects overseas including India. They said MRCB was also negotiating for a US$2 billion (RM6.5 billion) transport and housing development job in Saudi Arabia.
They added that the Penang Monorail project would also enable MRCB to position itself for more infrastructure projects in the various economic corridors in the country.
MRCB’s current order book is about RM2.2 billion. The RM1.6 billion monorail project and the proposed RM1.1 billion Penang Outer Ring Road project, if MRCB is able to secure, would increase its order book to RM4.9 billion.
Observers also expected MRCB, as one of the two local specialists in the installation of power transmission cables, to play a significant role in the installation of land-based transmission lines for the Bakun project.
According to a senior analyst, MRCB was one of the government-linked companies (GLCs) that had turned around “substantially” with a lot of upside expected from its property projects, infrastructure and power transmission businesses.
MRCB is also undertaking the development of the Butterworth transport hub, which is part of the Northern Corridor Economic Region (NCER).
Last December, MRCB and Pelaburan Hartanah Bumiputera Bhd proposed to jointly set up Penang Sentral Sdn Bhd for the Penang Sentral project that would include the development of an Integrated Transportation Hub. It will integrate Penang’s ferry, train, intercity and intra-city bus and taxi services and a monorail station.
CIMB Equities Research has estimated MRCB’s net profit for the financial year ended Dec 31, 2007 to reach RM61.20 million from RM36.8 million in FY06. For FY08, it estimates net profit to surge to RM98.5 million and for FY09, RM126.4 million. -www.theedgedaily.com

Maybank sells RM1.4b worth of non-performing loans

MAYBANK yesterday said it was selling some RM1.4 billion worth of its consumer non-performing loan (NPL) portfolio to Standard Chartered Bank (Hong Kong) Ltd and ORIX Leasing Malaysia Bhd.
Impact of the sale should be reflected in Maybank's results for the year ending June 30 2008.
Maybank entered into a conditional sale and purchase agreement with both parties yesterday. The portfolio comprises 8,375 long-outstanding secured consumer NPLs, mainly secured by residential properties in Malaysia.
The agreement was reached by way of negotiations following a bid process that was early December last year.
Conditions of the agreement include obtaining approval of the sale from the Minister of Finance and the conduct of a validation process by the buyer after which the final purchase price will be determined.
Maybank president and chief executive officer Datuk Amirsham Aziz said sale of the portfolio was part of Maybank's continuous effort to complement its various recovery strategies in asset quality management.
He added that this is the second time the bank had undertaken such an exercise. It has now sold two NPL portfolios divided into three tranches in the past two years.
"The sale of this second tranche is very much in line with our approach to consistently strengthen our asset quality and generate greater value for stakeholders," Amirsham said.-www.btimes.com.my

Healthy correction may set in

Plantations stocks are again the champions of the bulls, leading last Friday's breakout rally fuelled by foreign buying triggered by renewed strength in the ringgit and the rally of crude oil to US$100 (RM328) a barrel. The three key plantation heavyweights Sime Darby, IOI Corp and KLK contributed a total gain of 16.1 points or 82 per cent of last week's surge in the benchmark Kuala Lumpur Composite Index (KLCI) to another record high. For the week, the KLCI added 19.63 points, or 1.4 per cent to close at 1,466.67, a new record closing high, with average daily trading volume improving to 743.1 million shares, compared with 665.9 million shares in the previous week, boosted by renewed buying momentum on blue chips last Friday.
I have highlighted last week four important drivers for the KLCI to move towards 1,570 points target in the early part of first half 2008. One of them was commodity play. So far, the plantation stocks have lived up to that expectation and likely to continue to do so with the strong positive correlation between crude palm oil (CPO) and crude oil prices. The fact that Malaysia is blessed with both CPO and hydrocarbon is positive at a time when exports are expected to slowdown.
The high oil prices have raised hopes of higher demand for vegetable oil as feedstock for biofuel, a direct substitute to hydrocarbons, although its economic viability at current prices is debatable. Nevertheless, the bullish outlook for CPO prices are driven by its own sector dynamics as well with heightening fight for acreage between oilseeds and grain, depleting world vegetable oil stocks and anti-export measures undertaken by governments in various countries.
The strong demand, tension in Nigeria and the latest data from the US that showed crude-oil inventories fell 25.1 million barrels to 289.6 million in the past seven weeks are likely to keep oil prices above US$90/barrel (RM295.20) in the near term. Opec is not likely to assuage the situation by agreeing to pump out more crude oil when it meets on Febuary 1 as it is expecting a possible recession in the US to check rising global demand and keep a tight rein on prices.
Further weakening in the US dollar with an expected interest rate cut is another boon for crude oil prices. With latest US December payrolls of 18,000 missing market expectations of 70,000, unemployment rate of five per cent is at its two-year high and the Institute for Supply Management's manufacturing index dropping to its lowest level since April 2003, chances are bright for a 50 basis points cut to 3.75 per cent in Fed's target interest rate when it meets next on January 29 and 30.
So, continue to lookout for bargains in the plantation and oil & gas sectors. Despite the recent run up in prices of plantation stocks, KL Kepong, United Malacca and Boustead Holdings are still worth considering based on their more than 15 percentage capital gain potential from current levels.
Meanwhile, most of the oil & gas stocks are clear laggards in the recent market run up and it will just be a matter of time before any rotational interests come into play. Although not many local service providers have direct exposure to rising oil prices, the sheer need to increase outputs of crude oil and refined products in the future will lead to greater investments in the sector that will be positive for the whole industry. On that score, it is worthwhile to include Petra Perdana, KNM, Petra Energy, Sapura Crest, Scomi Group, Perisai Petroleum and Pantech in the investment portfolio now.
As a conclusion, profit-taking pressures are expected to emerge later on this week, which could stem from externalities. It could arise from worse than expected US trade deficit and previously owned homes sales data for November that will be released this week.
Technical outlook
Lower liners were closed higher last week but buying was very selective, focusing on steel related stocks following the higher revision of ceiling prices for the metal.
The daily slow stochastics indicator for KLCI levelled at the overbought zone after last Friday's sharp rally, but the weekly indicator extended higher following the previous week's buy signal above the neutral mark. The 14-day and 14-week Relative Strength Index (RSI) indicators also extended upwards and closer to the 70-point mark, which will imply overbought momentum when crossed.
Meanwhile, the daily Moving Average Convergence Divergence (MACD) sustained the previous week's buy signal, reinforced by last Friday's rally, while the weekly MACD indicator scaled upwards following last Friday's strong closing. The +DI and -DI lines continued expanding on the back of the previous week's buy signal, with the ADX line on the 14-day Directional Movement Index (DMI) trend indicator now at a reading of 23, suggesting improving trending momentum.
Conclusion
Most technical indicators for the KLCI remained positive following last Friday's rally, save for the daily slow stochastics which is signalling overbought momentum and hence correction potential. Immediate resistance is revised to 1,470 (IR) following the breakout rally above 1,450 last week, backed by resurgent buying momentum which must sustain to aid further gains towards 1,490 (R1) and beyond going forward. Immediate support is revised higher to 1,450 (IS), the bullish breakout point, with the 1,430 (S1) providing stronger support base.
However, the sharp overnight correction on US stocks last Friday, triggered by the weaker-than-expected jobs growth and unemployment data which raised concerns that the US economy will fall into recession, could delay upward momentum for the local market this week. Nevertheless, our view is that a profit-taking correction will be healthy, especially to neutralise short-term overbought momentum caused by late window-dressing gains last year, and encourage investors to bargain at cheaper levels for rebound going forward. We remain bullish on plantation stocks given the strong CPO prices and steel-related stocks seem ready to resume their medium-term uptrend.-www.btimes.com.my
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Malaysia's Nov exports up 5.7%

MALAYSIAN exports in November rose 5.7 per cent from a year ago, less than half the rate logged in October, as tech demand slowed, official data showed today.But the growth rate beat market forecasts for a 4.8 per cent annual rise. Exports were supported by strong demand for palm oil and crude oil while sales of electronics fell.ASEAN countries and China underpinned demand while sales to the United States and the European Union fell.Exports were 14.2 per cent higher in October than a year ago, which was the quickest pace of expansion since an 18.4 per cent annual growth in November 2006.Imports, about three quarters of which are used to make exports, grew 3.9 per cent in November than a year ago, disappointing economists’s expectations for a 6.8 per cent rise.The trade surplus widened to RM10.4 billion (US$3.17 billion) from RM9.2 billion a year earlier. Economists had forecast a surplus of RM9.1 billion. - Reuters

Palm oil jumps 2.5% to a new high

MALAYSIAN crude palm oil futures climbed to a new high today, rising 2.5 per cent, on the back of record soybean oil and crude oil prices.Traders said prices of palm oil, used in products ranging from cosmetics and confectionaries to biodiesel, could rise further as production takes a hit after monsoon flooding last month.The benchmark March contract on the Bursa Malaysia Derivatives Exchange rose as much as RM77 to RM3,159 (US$955) per tonne, surpassing the previous record of RM3,150 set last week.“It will go up, look at what is happening to crude oil and soybean oil,” said a trader with a domestic brokerage. “We are in the middle of a strong bull run.” Oil prices fell slightly today after leaping to a lifetime high of US$100 the day before amid a new-year rush of investor demand fuelled by expectations of thinning US stockpiles, the falling US dollar and geopolitical risks.Vegetable oils, such as palm and soybean oil, often track crude oil prices because of growing use of edible oils in the making of biofuels, which compete with petroleum.Soyoil notched an all-time high when the August contract touched 52.43 cents, surpassing the previous record of 51 cents a lb set in October 1974. - Reuter

Ringgit hits 10-year high against dollar

THE ringgit touched a 10-year high today, hitting 3.2885/2915 against the US dollar since late 1997, taking advantage of the weaker dollar in the global markets, dealers said.They said the gain was also supported by the uptrend performance of the regional currencies like the Japanese yen, Chinese yuan and Singapore dollar.At the close, the ringgit strengthened to 3.2885/2915 against the greenback, compared with Wednesday’s 3.3095/3125.The rising crude oil prices and gold price had also provided an impetus to the ringgit, a dealer said.Against the Singapore dollar, the ringgit was stronger at 2.2918/2952 compared with yesterday’s closing of 2.2976/3010 but was lower against the yen at 3.0026/0065 from 2.9663/9693.The ringgit was higher against the British pound at 6.5010/5083 from 6.5670/5747 and increased against the euro at 4.8331/8382 from 4.8521/8568 previously. — Bernama

U.S. Stocks Drop, Sending Dow Average to Worst Start Since 1983

Jan. 2 (Bloomberg) - U.S. stocks tumbled, led by banks and computer companies, after the biggest decline in manufacturing in five years sent the Dow Jones Industrial Average to its worst start since 1983.
Intel Corp., the largest semiconductor maker, fell the most in almost a year after Bank of America Corp. lowered its rating and investors speculated companies will spend less on technology. Caterpillar Inc., the largest maker of earthmoving equipment, and International Business Machines Corp., the biggest computer services company, led the Dow Jones Industrial Average to a 1.7 percent plunge.
The Standard & Poor's 500 Index lost 21.20, or 1.4 percent, to 1,447.16, the most to start a year since it fell 2.8 percent on Jan. 2, 2001. The Dow average slipped 220.86 points to 13,043.96. The Nasdaq Composite Index decreased 42.65, or 1.6 percent, to 2,609.63. More than three stocks fell for every one that rose on the New York Stock Exchange.
The decline in the Institute for Supply Management's manufacturing index ``increases the odds we're going to go into a recession, and recessions are associated with bear markets,'' Brian Gendreau, who helps manage $12 billion at ING Investment Management in New York.
The ISM index dropped to 47.7, the lowest since April 2003 and the first reading below 50 since last January. The report, combined with a rise in the price of oil to a record $100 a barrel, spurred concern that a slowdown in spending will halt the five-year economic expansion.
Treasuries Rally
Two-year Treasuries rose the most in more than three weeks after the ISM report, while the dollar fell against the euro and yen, as traders increased bets the Federal Reserve will lower the benchmark interest rate half a percentage point at its next meeting.
Concern that credit-market losses will curb bank lending and spur a recession sent the S&P 500 down 3.8 percent in the fourth quarter, cutting the gauge's 2007 gain to 3.5 percent. Financial shares in the S&P 500 fell 2.5 percent, extending a 21 percent slide in 2007 that was their biggest in 17 years.
Intel lost $1.31 to $25.35, leading semiconductor makers in the S&P 500 to a 3.7 percent retreat, the biggest since July 2006 and the most among 24 industry groups in the index. Profit growth that exceeds analysts' estimates ``will be hard to come by,'' Bank of America analyst Sumit Dhanda wrote in a note to clients today.
Bank of America trimmed its forecast for semiconductor sales growth this year to 7 percent from 11 percent.
Advanced Micro, National Semi
Advanced Micro Devices Inc., National Semiconductor Corp. and LSI Corp. were downgraded to ``sell'' from ``neutral.'' Advanced Micro fell 36 cents to $7.14, National Semiconductor lost $1.23 to $21.41, and LSI decreased 43 cents to $4.88.
Intel, Analog Devices Inc., Semtech Corp., Texas Instruments Inc. and Power Integrations Inc. were downgraded to ``neutral'' from ``buy.'' Texas Instruments fell $1.05 to $32.35 and Analog Devices sank $1.33 to $30.37.
The price-weighted Philadelphia Semiconductor Index fell 2.8 percent to the lowest since July 2006.
National City Corp., Ohio's largest bank, led declines in financial shares, falling 87 cents to $15.59 after cutting its dividend by 49 percent to offset losses in the housing market. Morgan Stanley, the second-biggest U.S. securities firm, fell $2.16 to $50.95. Fannie Mae, the largest provider of money for home loans, decreased $2.52 to $37.46.
`Second Shoe'
``If we get a cyclical drop in the economy then we have to worry about traditional credit losses coming in, which would be a second shoe to drop for the financials,'' said Alan Gayle, senior investment strategist and director of asset allocation at Trusco Capital Management in Richmond, Virginia, which oversees $17 billion of equities.
The Dow average gained 6.4 percent in 2007 and the Nasdaq rose 9.8 percent, its steepest yearly advance since 2003. The S&P 500's 3.5 percent increase extended to five years its streak of annual advances.
Wall Street strategists forecast gains for U.S. stocks in 2008. The S&P 500 may climb 11 percent in 2008, extending the five-year bull market, according to the average forecast from 15 strategists surveyed by Bloomberg.
Analysts are bullish even as economists predict a slowdown in the U.S. Gross domestic product probably grew at an annual rate of 1 percent in the final three months of 2007 and will expand 1.5 percent this quarter, according to the median forecast of economists polled by Bloomberg last month. That compares with 4.9 percent growth in the third quarter of last year.
`Not Good News'
``The manufacturing sector of the economy is indeed contracting and that's certainly not good news and contributes to the view that we're headed towards a recession,'' said Hugh Johnson, who oversees about $725 million as chairman of Johnson Illington Advisors LLC in Albany, New York. ``For the first part of this year when there's not a lot of confidence in earnings, the markets are not going to do well.''
Profits among S&P 500 members are forecast to rise 15.1 percent in 2008, the average estimate of analysts surveyed by Bloomberg, after growth slowed to an estimated 1.4 percent last year. Most of the gain is predicted in the third quarter, when analysts expect earnings to increase by 19.7 percent.
FedEx Corp., the second-biggest U.S. package-delivery company, slipped $3.01 to $86.16, a two-year low. Rising oil prices and slowing customer demand are ``meaningful risks'' this year, JPMorgan Chase & Co. said in lowering the shares to ``neutral'' from ``overweight.''
Crude Rally
Crude oil futures touched $100 a barrel for the first time, extending last year's 57 percent climb reflecting demand growth outpacing the industry's ability to find deposits. Schlumberger Ltd., the world's largest oilfield-services provider, rose $2.21 to $100.58. Energy shares were the only industry group in the S&P 500 to rise as natural gas futures also climbed, reaching a one- month high.
``My big worry is that fears of higher oil prices would continue to impact consumer confidence and it would continue to fall,'' said Barry James, president and portfolio manager at James Investment Research in Xenia, Ohio. The firm manages $2.1 billion.
Shares of department stores and discounters in the S&P 500 lost 2.1 percent. U.S. retail sales rose 2.3 percent last week at stores open at least a year as consumers slowed spending during what may have been the worst holiday shopping season in five years, the International Council of Shopping Centers said.
Retailer Stocks
Bed Bath & Beyond Inc., the largest U.S. home-furnishings retailer, fell $1.03 to $28.36, a five-year low. J.C. Penney Co., the third-largest department store chain, declined $2.34 to $41.65.
Amazon.com Inc. was the biggest gainer in the group, adding $3.61 to $96.25, after Citigroup predicted market share gains and recommended investors buy the shares.
Newmont Mining Corp., the world's second-largest gold producer, rallied the most in the S&P 500 as the falling dollar pushed gold futures to a record $859.20 an ounce in London. Newmont added $3.56, or 7.3 percent, to $52.38. Barrick Gold Corp., the largest producer, rose $3.97, or 9.4 percent, to $46.02.
Interest-rate futures show the odds of a half-point cut on Jan. 30 increased to 26 percent from nothing, with the remainder of the bets counting on a quarter-point cut in the Fed's target for the overnight lending rate between banks.
Minutes of the Fed's Dec. 11 meeting, released today, showed policy makers perceived a need to ``remain exceptionally alert to economic and financial developments and their effects on the outlook.''
The Russell 2000 Index, a benchmark for companies with a median market value of $578 million, dropped 1.6 percent to 753.55. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, fell 1.4 percent to 14,613.63. Based on its decline, the value of stocks decreased by $257.4 billion.

Commodities Surge, Led by Oil at $100, Record Gold

Jan. 2 (Bloomberg) -- Crude oil reached a record $100 a barrel and gold soared to the highest ever, leading a commodity surge as the dollar's slump against major currencies enhanced the appeal of raw materials as hedges against inflation.
Spot gold climbed to $860.10 an ounce, and wheat and soybeans jumped more than 3 percent. The UBS Bloomberg Constant Maturity Commodity Index gained 2.2 percent today to a record after climbing 22 percent in 2007. The dollar fell on speculation the Federal Reserve will cut borrowing costs in an attempt to bolster the U.S. economy.
``The most salient buzzword in 2008 is going to be inflation,'' said Michael Pento, senior market strategist for Delta Global Advisors Inc. in Huntington Beach, California, which manages about $1.4 billion. ``The Fed is lowering interest rates and vastly increasing the money supply. They're further fueling inflationary expectations.''
Crude-oil futures for February delivery rose $3.64, or 3.8 percent, to close at $99.62 a barrel on the New York Mercantile Exchange. The previous intraday record was $99.29 on Nov. 21.
Gold for immediate delivery surged $23.25, or 2.8 percent, to $856.95 an ounce at 4:35 p.m. New York time. Gold futures for February delivery rose $22, or 2.6 percent, to $860 an ounce on the Comex division of the Nymex, a record settlement. The metal earlier reached $864.90, the highest for a most-active contract since Jan. 21, 1980, the day futures reached a record $873.
Nigerian Oil Output
Crude oil rose on concern that violence may further cut output in Nigeria, Africa's biggest producer, and on speculation U.S. petroleum inventories fell for a seventh week.
``What brought us here is still with us,'' said Harry Tchilinguirian, an analyst at BNP Paribas SA in London. ``The dynamic of strong winter demand, declining consumer country inventories, and geopolitical tension against a backdrop of tight spare capacity are all kept in place.''
The price of heating oil also surged to a record, and natural gas soared 4.9 percent. Platinum jumped to the highest ever, while the dollar fell as much as 1 percent against a basket of six major currencies after the measure tumbled 8.3 percent in 2007.
The Fed reduced the overnight lending rate three times since Sept. 18 from 5.25 percent to 4.25 percent on concern a housing slump will lead to a slowdown in the U.S. economy.
The UBS Bloomberg CMCI gauge of 26 raw materials has climbed for the past six years. It was up 28.31 to 1,305.19 today. The Reuters/Jefferies CRB Index gained 2.3 percent to a record 366.86.
Inflation Concerns
The Fed's interest-rate cuts sparked inflation concerns. Some investors buy commodities to hedge against rising consumer prices, and the falling dollar makes raw materials priced in the U.S. currency cheaper for buyers holding other currencies.
``Anything priced in dollars has to move higher to make up for the declining dollar,'' said Ron Goodis, futures trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. ``It looks like lower interest rates as far as the eye can see. People are putting their money where their memory is, and that's in commodities'' after the rally last year, he said.
Rising wealth from Shanghai to Sao Paulo is leading to better diets and straining grain supplies just as record energy prices boost sales of biofuels. Wheat and soybean prices jumped almost 80 percent last year, and corn last month climbed to the highest in 11 years.
Soybeans, Wheat
Soybean futures for March delivery rose 34.5 cents, or 2.8 percent, to $12.4875 a bushel today on the Chicago Board of Trade. The price earlier reached $12.64, the highest since June 1973. U.S. farmers planted the fewest acres in 12 years to sow the most corn since 1944.
Wheat futures for March delivery rose 30 cents, the most allowed by the CBOT, or 3.4 percent, to $9.15 a bushel. The price reached a record $10.095 a bushel on Dec. 17 as global demand eroded worldwide inventories.
The increase in the UBS Bloomberg CMCI last year outpaced a 7.1 percent gain in the Morgan Stanley Capital International World Index, which measures stocks in 23 major markets.
U.S. equities fell today after a decline in manufacturing heightened concern the economy is headed for a recession. The Standard & Poor's 500 Index dropped 1.4 percent.
`Big Bubble'
The rally in energy prices might end should higher fuel costs stifle growth in the U.S. and demand from China ease, Michael Fitzpatrick, vice president of energy risk management at MF Global Ltd. in New York, said in an interview on Bloomberg Radio.
``It's a very, very big bubble,'' Fitzpatrick said. ``The higher energy prices go, it's going to eat into every aspect of the economy and consumers are going to start to pull in and curtail their spending.''
Newmont Mining Corp., the world's second-largest gold producer, rose 7.3 percent in New York Stock Exchange composite trading, the biggest gain in the S&P 500. Barrick Gold Corp., the No. 1 producer, surged 9.3 percent in Toronto.
Energy was the only industry group in the S&P 500 to rise.

Muhibbah gets RM196m job in Syria

CONSTRUCTION group Muhibbah Engineering (M) Bhd clinched a RM196 million contract in Syria, its third job in the Middle East, and the company expects more to come.The latest deal is to upgrade the existing passenger terminal building, road, car parks and parking apron at the Damascus International Airport."This is our third win in the Middle East. The region will be our biggest growth area going forward," Muhibbah group chief financial controller Shirleen Lee told Business Times in a telephone interview.Muhibbah, which also builds ships and cranes, will bid for more jobs in the cash-rich Gulf countries."We are eyeing all types of infrastructure construction works in the cash-rich region. With the oil price surging, the respective governments are investing in infrastructure projects," she said.Muhibbah is due to start work on the Syrian project immediately after signing the agreement with the government in the current quarter.Lee said it will take Muhibbah a year to complete the project, which will be funded by Malaysia's Exim Bank.She also said that the project will contribute positively to the group's earnings in the current financial year ending December 31 2008.-www.btimes.com.my

Ananda borrows US$1.2 billion for Maxis buyout

BLOOMBERG reports: T. Ananda Krishnan, Malaysia’s second-richest man, is borrowing US$1.2 billion to help fund the buyout of Maxis Communications Bhd.This is 20 per cent less than the maximum sought, according to Lim Ghee Keong, the group treasurer of Usaha Tegas Sdn.Binariang GSM Sdn, Krishnan’s special purpose company, decided not to exercise an option to increase the loan to US$1.5 billion after getting enough funds from a US$3.6 billion bond sale last month, Lim said in a phone interview today.

Mycron moving further upmarket

MYCRON Steel Bhd is anticipating revenue to grow at least 10 per cent in its current fiscal year on firm demand and higher prices for its products.The cold rolled steel producer said growth will also come from the increased capacity at its Shah Alam plant by April this year.The RM120 million plant upgrading work, about 90 per cent complete, will increase Mycron's annual production capacity by 45 per cent to 260,000 tonnes from 180,000.Mycron reported a revenue of RM482.3 million for its financial year ended June 30 2007. Net profit was RM21.8 million, with production of cold rolled coils (CRCs) totalling 140,000 tonnes.
Chief executive officer and director Azlan Abdullah said the company was cautiously optimistic about its profit outlook in the current year with the new capacity coming online and having pre-sold all of its future production capacity."We have found a ready market to take up the additional 80,000 tonnes of capacity via our contracts with BlueScope Steel (Malaysia) Sdn Bhd and Sarawak-based PMP Galvanizers Sdn Bhd," Azlan told Business Times in an interview.In August last year, Mycron closed a deal with BlueScope Steel to supply up to 60,000 tonnes of CRCs a year. By its third year, the deal is expected to bring the company annual revenue of some RM100 million."We have also signed an off-take agreement with PMP Galvanizers to buy up to 75,000 tonnes of CRCs per year in the third year after the completion of our plant upgrade and expansion."Azlan estimates net profit growth of RM16.6 million a year from the plant upgrade and expansion, and for this to be reflected in the financial year ending June 30 2009 onwards.Meanwhile, the company has begun planning the second phase of its expansion, which will see capacity increasing to 520,000 tonnes a year."The next expansion will be divided into two sub-phases. The first sub-phase will increase Mycron's capacity to 440,000 tonnes per year within 18 months of the start date of construction, while the second sub-phase, which will see an additional 80,000 tonnes coming on line, will be completed 15 months later," said Azlan."We have requested quotes for the second phase of expansion and hope to complete it before 2010."Malaysia imports 62 per cent of its CRC needs and sources the rest locally."Of the 38 per cent of CRCs produced locally, Mycron supplies 28 per cent," said Azlan.There are four CRC producers in the country, the others being Ornasteel Holdings Bhd, Megasteel Sdn Bhd and Sarawak-based Yung Kong Galvanizing Industries Bhd.Azlan said that to improve margins, Mycron will move further upmarket this year towards producing higher quality cold rolled products used to make car bodies and roofing material."We aim to stay ahead of the competition by specialising in high-end quality CRCs," he added."We also see prospects of growth in the production of galvanised steel for roofs. Previously, about one per cent of our revenue was sold to the galvanising sector, but this figure has grown to nine per cent from the second quarter of last year," he said.Azlan said Mycron has minimal exposure to the construction sector. About 35-40 per cent of its cold rolled products is sold to steel service centres serving the electrical and automotive sectors, 20 per cent is used to make oil drums and 25 per cent is sold to furniture suppliers to make furniture fittings."We also plan to export more of our cold rolled products this year and will participate in international fairs and trade missions organised by the Malaysian External Trade Development Corp and the Ministry of International Trade and Industry."We started exporting to Vietnam and Pakistan last year albeit in small quantities," he added.Mycron has Melewar Industrial Group Bhd as its biggest shareholder, with a 54.5 per cent stake. Its other shareholders include Malaysian Assurance Alliance Bhd, Permodalan Nasional Bhd, the Employees Provident Fund Board and Lembaga Tabung Haji.-www.btimes.com.my

U.S. Stocks Drop

Dec. 31 (Bloomberg) -- U.S. stocks fell, paring their fifth straight annual advance, after signs of slowing economic growth sent shares of energy companies and miners lower.
Exxon Mobil Corp. and Freeport-McMoRan Copper & Gold Inc. led declines in energy and commodity producers, the year's best- performing industries. Amazon.com Inc. and EBay Inc. slipped after holiday Internet sales rose at the slowest pace on record.
The S&P 500 dropped 10.13, or 0.7 percent, to 1,468.36, reducing its yearly gain to 3.5 percent. The Dow Jones Industrial Average lost 101.05, or 0.8 percent, to 13,264.82. The Nasdaq Composite Index declined 22.18, or 0.8 percent, to 2,652.28. Shares in Europe also fell.
Concern that credit market losses will curb bank lending and spur a recession sent the S&P 500 down 3.8 percent in the fourth quarter, leaving it 6.2 percent below its record close on Oct. 9. The retreat was the first for any fourth quarter in seven years.
``I am cautious towards the market,'' John Carey, a Boston- based portfolio manager who helps oversee about $14 billion at Pioneer Investment Management, said in an interview with Bloomberg radio. ``This housing problem and the credit crisis that's related to it are very serious and we are seeing some effects on consumer spending.''
The S&P 500, a benchmark for companies with a median market value of $12.8 billion, has posted gains every year since 2002, advancing 67 percent. The Dow average rose 6.4 percent this year and the Nasdaq Composite Index climbed 9.8 percent, its biggest rally since 2003.
The S&P 500 rose 10 percent in 2007 excluding financials, according to Howard Silverblatt, the firm's senior index analyst.
Quarterly Drop
Some 1.15 billion shares changed hands on the New York Stock Exchange, the most ever on the last day of the year, according to Bloomberg data. Trading was 19 percent less than the three-month average.
Amazon.com, the world's largest Internet retailer, fell $1.81, or 1.9 percent, to $92.64. EBay, the biggest online auctioneer, fell 59 cents, or 1.8 percent, to $33.19.
Exxon, the biggest U.S. energy company, dropped $1.31 to $93.69. Freeport-McMoRan, the world's second-largest copper producer, declined $2.11 to $102.44.
Crude oil for February delivery lost 2 cents to close at $95.98 a barrel in after falling as much as 1.3 percent. Copper and gold futures also declined.
Online spending from Nov. 1 through Dec. 27 increased 19 percent, ComScore Inc. said. Sales growth trailed last year's 26 percent and was the slowest since ComScore began reporting the figures in 2002. A report from Washington-based Mortgage Insurance Companies of America showed the number of insured homeowners more than 60 days late on payments jumped last month.
Record VIX Advance
The Chicago Board Options Exchange Volatility Index, known as the market's ``fear gauge'' because it tends to rise as stocks fall, increased 8.5 percent to 22.50. The so-called VIX climbed 95 percent in 2007, the biggest annual rise in its 18-year history. Higher readings, derived from prices paid for S&P 500 options, indicate traders expect bigger share-price swings.
Delta Petroleum Corp. surged $3.34, or 22 percent, the most in five years, to $18.85. The oil and gas producer that has posted five straight quarterly losses said billionaire Kirk Kerkorian's Tracinda Corp. will buy 35 percent of the company for $684 million. The investment will allow Delta to speed up drilling in the Paradox Basin in Utah and the Piceance basin in Colorado, the company said.
American Express Co. and JPMorgan Chase & Co. led financial companies to a 0.7 percent advance, their first in four days. The sector lost 21 percent of its value this year, the most since falling 24 percent in 1990. American Express, the third-largest credit-card network, rose $1.18, or 2.3 percent, to $52.02. JPMorgan Chase, the third-largest U.S. bank, gained 39 cents, or 0.9 percent, to $43.65.
Homebuilders Rally
Homebuilders in S&P indexes rose 1.3 percent after the pace of houses purchases unexpectedly rose. Existing homes changed hands at an annual rate of 5 million in November, the National Association of Realtors said. Transactions were down 20 percent from November 2006 and the median home price fell 3.3 percent. The sales improvement may be short-lived as stricter lending rules threaten to further depress the industry.
``Some of the better-performing names are flat to down today, and a lot of the downtrodden stocks are having a good day,'' said James W. Gaul, a portfolio manager at Boston Advisors LLC which manages $2.2 billion in Boston. ``I don't know if there is a compelling reason other than it's the last day of the year.''
The best performing stocks and industry groups this year were pushed higher by global demand for commodities and computers, while the worst were dragged down by losses related to the U.S. housing recession.
Year's Best
National-Oilwell Varco Inc., the largest U.S. maker of oilfield equipment, had the biggest rally in the S&P 500, gaining 140 percent. Energy companies climbed 32 percent as a group, the most among 10 industries, as crude oil surged as high as $99.29 a barrel.
Monsanto Co. and Freeport-McMoRan led raw-materials producers to a 20 percent advance. Monsanto, the world's biggest seed producer, rose 113 percent as corn prices surged amid record demand to produce ethanol and animal feed. Freeport McMoRan gained 84 percent.
Technology companies rose 16 percent this year, led by Apple Inc., maker of Macintosh computers and iPod music players, and MEMC Electronic Materials Inc., the world's third-largest manufacturer of silicon wafers. Apple, the fourth-best performer in the S&P 500, rose 133 percent, while MEMC climbed 126 percent.
Financials Plunge
Online bank and broker E*Trade Financial Corp. led the plunge in financial shares after the value of its mortgage- related holdings declined. E*Trade slid 84 percent this year, the worst performance in the S&P 500. Countrywide Financial Corp., the biggest U.S. mortgage lender, fell 79 percent for the index's second-largest decline.
Circuit City Stores Inc. led shares of so-called consumer discretionary companies to a 14 percent drop in 2007. The second- largest U.S. consumer-electronics retailer fell 78 percent after forecasting a loss for the sixth straight quarter. Homebuilders also tumbled as the housing recession continued for a third year. Pulte Homes Inc., the second-biggest U.S. builder, fell 68 percent, while Lennar Corp., the largest, slid 66 percent.
The Russell 2000 underperformed the S&P 500 for the first time since 1998. The small-cap measure slipped 2.8 percent in 2007, its first loss in five years. Russell 2000 housing-related stocks made up nine of the ten biggest drops with year's declines exceeding 80 percent as forecloses reached a record and overdue loan payments climbed.
The Russell 2000 Index, a benchmark for companies with a median market value of $589.6 million, dropped 0.7 percent to 766.03 today. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, fell 0.6 percent to 14,819.58. Based on its decline, the value of stocks decreased by $115 billion.