Sharp rebound in regional bourses buoys Bursa

PETALING JAYA: Stock prices on Bursa Malaysia bounced back from an early drop to close higher for the first time in four days, buoyed by a sharp rebound in other regional bourses yesterday.

Analysts, however, remained cautious about the bourse's near-term direction, given the worsening outlook for the US economy and jitters over subprime loans-related shocks.

"The local market is expected to be volatile in the next three months because more negative news is expected to flow from the US," HLG Securities chief executive officer David Lim told a press conference yesterday.

The KL Composite Index (KLCI) fell by as much as 1.5% yesterday but clawed back from its earlier losses to close 7.05 points higher at 1,460.71.

Shares in plantations group Kuala Lumpur Kepong Bhd led gainers among the KLCI component stocks, lifted by a sharp rebound in crude palm oil (CPO) futures on the Malaysia Derivatives Exchange.

The benchmark third month CPO futures contract surged RM97 to close at RM3,360 per tonne yesterday. The contract hit a record RM3,414 per tonne on Monday.

Conglomerate Sime Darby Bhd, which derives a substantial portion of its income from the plantation business, ended at RM12.20, down 20 sen, but was off the day's low of RM11.80.

Lim said it would be too early to say whether the local market had hit bottom, and sees immediate support for the KLCI at 1,380 points.

But with the benchmark having fallen more than 4% since Monday, investors appeared to be in the mood for bargain hunting.

Quality construction stocks were among yesterday's major gainers. Shares in WCT Engineering Bhd gained 30 sen to RM9.30, Gamuda Bhd was up 20 sen at RM5.45 and IJM Corp Bhd was higher by 20 sen to RM8.70.

Rising stocks led decliners 468 to 324 yesterday, while 276 counters were unchanged. Total turnover was 1.19 billion shares worth RM2.44bil.

Elsewhere in Asia, stock markets in Japan, Hong Kong, Singapore, Thailand and Indonesia rose by at least 2% yesterday.

But despite the strong rebound, these markets remain down for the year.

"Led by sharp declines in the US equity market since the start of the year, global stock markets are showing signs of cracking," a local investment bank said in its technical reading update yesterday.

Among Asian bourses, only markets in Malaysia and Shenzhen, China have registered positive returns year-to-date.

URL: http://biz.thestar.com.my/news/story.asp?f...31&sec=business

DJIA starts the day with:

12,159.94 +0.73 +0.01%

DJIA closed the day with:

12,099.30 -59.91 -0.49%

Asia stages late rebound

PETALING JAYA: The fiscal stimulus plan was boosted by support from US President George W. Bush announced by the White House press secretary yesterday.

Bloomberg reported that an economic package, already under consideration for weeks, would require congressional approval.

The package would also be Bush's first major effort to confront the broad economic slowdown beyond the steps taken to combat home foreclosures last year.

Among Asia's major indices, the Nikkei 225 gained 77.84 points, the Hang Seng put on 86.89 points, Shanghai and Shenzhen composite indices were up 28.89 and 16.92 points respectively and Taiwan's TAIEX and Korea's KOSPI ended higher by 83.02 and 11.17 points respectively.

In Asean, however, the markets moderated but did not bounce back into positive territory.

The Straits Times Index was down 35.63 points, Bangkok dropped 1.58 points while the KL Composite Index fell another 38.15 points.

With most economists and analysts in the US and elsewhere predicting a US recession within the first half of the year, a sharp fall in the US Dow Jones Industrial Average (DJIA) was triggered by negative economic data as well as news of subprime-related losses by major US-based banks.

The DJIA fell more that 200 points on Tuesday after the US' largest bank by assets, Citigroup Inc, reported a record net loss of US$9.83bil for the fourth quarter due to a write-off of US$18bil for mortgage defaults.

It also announced a 41% cut in dividends.

Citigroup said it would borrow US$14.5bil from outside investors to replenish capital, US$12.5bil of which would come from private investors, including the governments of Saudi Arabia and Singapore.

Data released Tuesday from the Commerce Department also showed retail sales falling 0.4% in December, capping the weakest year since 2002.

On Wednesday, the US market continued its fall with technology and energy sectors leading the DJIA lower by 34.95 points.

Intel Corp announced that first-quarter sales would be as much as 6.9% lower than analysts' expectations and a US$1.06 drop in oil prices to US$90.84 a barrel led counters ExxonMobil Corp slipping US$2.49 to US$86.53 and Chevron Corp down US$2.02 to US$86.25 in New York.

The slump continued Thursday, with the Fed announcing that manufacturing in the Philadelphia region hit a six-year low.

The Commerce Department said builders broke ground on fewest houses since 1991, making last year's decline in homebuilding the worst in almost three decades.

At the same time, another major financial institution in the US showed distress.

The largest broker in the US, Merrill Lynch & Co, posted a loss that was almost double that of analysts' estimates after writing down US$11.5bil in subprime mortgages and bonds.

Merrill's fourth-quarter net loss of US$9.83bil, or US$12.01 per share, which is much bigger than US$4.82 per share loss estimated by analysts, according to Bloomberg.

In light of this recent volatility and market decline, if the US experiences recession this first half, how can Asia defend itself?

Singapore-based bank DBS, in its strategy report for 2008, said Asia could defend itself "by doing precisely what it has done in the past three years - by going on the offence and growing on its own."

According to the report dated Dec 14, five to 10 years ago this would have been impossible as Asian markets were too small, but the regional economy "is nearly 50% bigger than it was five years ago and twice as big as 10 years ago."

"Today's bigger size means that Asia, with its faster growth, generates almost as many dollars of fresh demand each year as the US," it said.

According to DBS, in 2007 for every US$100 that US demand grew by, Asia's domestic demand would grow by US$90.

Standard Chartered Bank regional head of economic research, South-East Asia, Tai Hui, in a briefing to clients on Monday took a different tack.

A US economic slowdown would have a strong impact on "open economies" in the region, such as Hong Kong, Singapore and Malaysia, but that domestic demand was expected to provide some offsets, he said.

Standard Chartered has forecast 2008 GDP growth for Malaysia at 4.2% from above 6% last year.

Despite the weaker growth, Asia was expected to remain an "outperformer", he said.

URL: http://biz.thestar.com.my/news/story.asp?f...29&sec=business

Wall Street's worries hurt Asian markets

STOCK markets across Asia reacted badly to news of massive losses by and the recapitalisation of US banks, poor consumer sales and a weaker-than-expected manufacturing sector in the US.

So when the Dow Jones Industrial Average tanked, so did markets in much of Asia and Europe. And the Malaysian stock market, which was counted among the better performing markets in Asia so far this year, was dragged down by the mess emanating from the US.

These events show us one thing. The US economy is still the engine of the global economic locomotive, regardless of how strong economic growth worldwide has been, even with the two dynamic economies of China and India.

To think that problems in the world's biggest economy would not filter through to fast growing and export-dependent economies is a little foolhardy, especially since much of the build-up of their trade surpluses had been at the expense of the US.

Talk of further rate cuts and a stimulus package by the US government, although welcomed, did little to lift the gloom descending on the US equities market and economy. But such measures will help, perhaps a little later on.

As fears of a recession in the US grows and gather speed, its effects on Asia will be scrutinised in great detail, especially at a time when economies in the region are booming.

China and India have been the star economies of Asia, pushing demand for all kinds of goods and services from across the world as these two giants push ahead in their rapid development. But will the economic growth of China and India provide a buffer for Malaysia and the smaller Asian economies that have so far relied on exports to the US and these two countries? The previous recession in the US, which was a result of the tech bust in 2000, did little to derail economic growth in China and India but had a more telling impact on more open, trade-reliant economies such as Malaysia.

And although China and India economies are gathering a great deal of momentum and now account for a greater percentage of world economic growth, the slowdown and now increasingly plausible scenario of a recession in the US would have its ripple effects on this part of the world.

Signs of a US slowdown have filtered through to Malaysia in some ways. Export growth, especially in manufactured goods and semiconductors, have been sluggish. The weakening US economy has also taken a toll on Singapore, which re-exports a big chunk of Malaysian products to the US.

On the plus side, the Malaysian economy has also changed over the past few years. Domestic demand is playing a far greater role than ever before and high crude palm oil price - if it holds on to its historical highs - would be major plusses for the economy. Also, higher Government spending and the planned economic corridors should offer some support to the Malaysian economy to weather the US economic slowdown.

It is still a little early to guess how the unravelling of the subprime crisis in the US will play out in Asia. There are hopes that it would be short and swift, and that growth would resume sooner than later.

Regardless of such hopes, investors and the public have to realise that the markets will certainly feel a degree of pain. Bull and bear markets take turns and there is no escaping either. The only question is how painful it will be.

URL: http://biz.thestar.com.my/news/story.asp?f...18&sec=business

Bush Pushes $150B Economic Aid Package

Bush Promotes Economic Package Worth Up to $150 Billion, but May Clash With Democrats

http://biz.yahoo.com/ap/080119/economy_stimulus.html

US Recession Fears Sink Global Markets

Asian, European Markets Plunge on Pessimism Over US Stimulus Plan; Nikkei Sheds 3.9 Percent

http://biz.yahoo.com/ap/080121/world_markets.html

DJIA or DJIA future?

Bush economic stimulus package is too late!

Oil price is hiking I guess.

Some of the European stocks are in GREEN now - FTSE100 and CAC40.

FTSE 100 is sliding down now: 5,538.40 -39.80 -0.71%

This news appears breaking news in Yahoo! Finance.

Any changes to Futures after the breaking news?

Stock Futures Gyrate After Fed Move

Stock Futures Fluctuate Violently After Fed Cuts Interest Rates

URL: http://biz.yahoo.com/ap/080122/wall_street.html

No need to tell also; outsiders already preceive that US is already in big deep shit. It just a matter of time to see it that it really happens.

DJIA starts the day with:

12,080.77 -18.53 -0.15%

It's still cruising downward: 11,664.49 -434.81 -3.58%

Luckily tomorrow is holiday, I got time to play around. LOL

This post has been edited by David83: Jan 22 2008, 10:38 PM

Stocks Plunge on Recession Fears

Stocks Dive on Worries of U.S. Recession; Wall Street Unassuaged by Fed's Interest Rate Cut

URL: http://biz.yahoo.com/ap/080122/wall_street.html

FTSE100 and CAC40 are in GREEN now.