Thursday, January 3, 2008
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
Wednesday, January 2, 2008
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.
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.
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
Tuesday, January 1, 2008
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
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.
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.
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