Renewed selling of blue chips drags down KLCI

PETALING JAYA: Stocks on Bursa Malaysia tumbled yesterday, dragged down by renewed sell-off on blue-chip firms like KNM Group Bhd and IOI Corp Bhd amid worries that falling commodity prices and weaker global growth outlook will hurt earnings.

The KL Composite Index dropped 16.18 points, or 1.7%, to 949.88 points yesterday, which also reflected declines in other regional markets. In Hong Kong, the benchmark Hang Seng index was down 5% and stocks in Singapore fell 3.2%.

Almost all major markets in Asia were lower with shares in South Korea down 2%, while Australian stocks lost 0.8%. In Indonesia, the Jakarta Composite Index retreated 2.2%.

Shares in Japan reversed early losses to end up 1%, rising on the back of a massive 14% jump on Tuesday.

“Investors are pricing in a much slower earnings growth next year,’’ said a fund manager at a local asset management firm.

“Concerns over global recession weigh heavily on the market and this will limit stocks’ upside potential in the near term,” he added.

Shares in KNM, one of the country’s biggest oil and gas fabricators, plunged 21.5 sen, or 24%, yesterday to 69 sen with 154 million shares transacted.

Yesterday’s market volume was 572 million shares.

Analysts said the huge sell-down on KNM was partly due to worries the company was facing a tougher operating environment owing to falling crude oil prices.

Filings with Bursa Malaysia showed the group’s major shareholders, including foreign funds, had aggressively trimmed down their holdings in KNM in recent weeks.

Crude oil in New York yesterday fell to below US$77 per barrel on concerns demand would falter as the financial crisis crippled global economic growth. The crude oil price had plummeted 47% from its peak of US$147 per barrel three months ago.

KNM told Bursa Malaysia yesterday it had accepted Malayan Banking Bhd’s (Maybank) offer of a three-year term loan worth 150 million euros to settle the bridging loan granted by Maybank for the acquisition of German-based Borsig GmbH.

The takeover was completed on June 6.

Meanwhile, IOI Corp’s share price hit a new two-year low yesterday, down 16 sen, or 4.5%, at RM3.36. It was the second most heavily-traded stock after KNM with 23.39 million shares changing hands.

Shares in IOI Corp, along with big palm oil producers like Sime Darby Bhd and Kuala Lumpur Kepong Bhd, have been under pressure in the past months on declining crude plam oil (CPO) prices.

On Bursa Derivatives, the benchmark third-month contract for CPO fell RM107 to RM1,743 per tonne €“ its lowest since mid-November 2006. Palm oil prices have fallen 43% year-to-date.

Another big loser was Public Bank Bhd, which saw its share price fall 15 sen, or 1.7%, to RM8.90.

Public Bank, currently the biggest bank in terms of market value, said on Tuesday its third-quarter net profit rose 13%, but added that the operating environment would be “more challenging” in the coming months as the local economy was expected to soften in the last quarter and in 2009.

The market will also keep an eye on Tenaga Nasional Bhd today, which is expected to release its results for the financial year ended Aug 31 after the stock market closes.

URL: http://biz.thestar.com.my/news/story.asp?f...14&sec=business

A new interface starting today!

Less than one hour, the shares exchanged on KNM reach 433,238.

KNM shares changed hand touch 1 million: 1,028,364

Seems like KNM has recovered from early losses.

KNM slides 34% in mid-morning

KUALA LUMPUR: KNM Group share price tumbled 34% in mid-morning trade on Thursday in heavy volume, extending its massive losses from yesterday.

At 11am, the share price was down 21 sen to 48 sen. It was the most active with 173 million shares done or nearly half of the total trading volume of 367 million shares done on Bursa Malaysia.

The KL Composite Index was also battered, sliding down 33 points to 916.8, in line with the weak Asian markets.

On Wednesday, KNM closed fell 21.5 sen to close at 69 sen in heavy trade.

However, Aseambankers Equity Research said yesterday’s unusual heavy trades were overdone, as KNM reassured that business fundamentals remained intact.

“We believe the heavy sell down was due to its high foreign shareholding of 36% (as at September) unfounded ‘persistent fears’, such as a withdrawal of KNM’s 150mil euro bridging loan (BL) facility, potential write-offs for Borsig’s impairment, KNM’s high receivables, cancellation of outstanding orders, and margin calls on its major shareholder,” it said.

The research house said Malayan Banking, the local bank funding KNM’s Borsig deal, was not pulling back its commitment for the 150mil euro bridging loan.

It added Maybank had also approved the conversion of the bridging loan to a three-year term loan (which KNM agreed upon), and is in the midst of processing KNM’s application to convert the loans from Euro to ringgit-based financing, which could lower funding costs by 1-1.5% to 7-7.5%.

“This development is nothing new and is consistent with our views. Furthermore, KNM’s balance sheet remains healthy post-Borsig deal, as its net debt stood at a low and manageable 0.37 times as at June,” it added.

Aseambankers Research said the likelihood of KNM failing the impairment test on Borsig was remote and close to nil.

It said as such there should not be a write-down on Borsig’s assets, impacting KNM’s P&L.

On the other hand, the rising asset values at Borsig could lower KNM’s acquisition goodwill below the original RM1.6bil, it added.

“Also, despite the global economic slowdown and softening crude oil prices, we are reassured by various industry players that the risk of order cancellation is low, as key customers are, after all, cash-rich,” it added.

URL: http://biz.thestar.com.my/news/story.asp?f...02&sec=business

What a roller coaster trip today for KNM.

That's a good news for you.

I also agreed that it's unlikely to happen again unless speculation.

Seems like it might be a green day for KLCI today.

European market is great so far ...

How is DJIA futures? Look green?

Selling of KNM shares due to high foreign shareholding

PETALING JAYA: KNM Group Bhd shares went through a roller-coaster ride yesterday, dipping to a low of 39 sen or down 43% but finished the day at 68.5 sen, down 0.72%.

Some 342 million KNM shares changed hands, while the total volume transacted was 897 million shares.

“The heavy selling on KNM over the past few days was largely related to concerns on its high foreign shareholding (36% as at end-September) and margins calls, ” Aseambankers analyst T.J. Liaw said.

The oil and gas fabricator has lost about 70% in market capitalisation from its peak in May, where market cap was about RM8bil.

Analysts explained that foreign funds have over the past month or so been trimming down their stakes in the company amid the instability of global financial markets.

Foreign and institutional funds have owned this stock for years and have enjoyed huge returns from this fast growing company.

Even as they sold their shares well into penny-stock range, analysts suspect the funds were selling at a profit as KNM’s market capitalisation has grown well over 100 times since its listing.

Analysts believed the selldown in KNM will continue.

Still, many maintain that KNM’s fundamentals remained intact. KNM has an order book of RM4.7bil which is expected to last it until the first quarter of 2010.

At least three local brokerages said they were maintaining their “buy’ calls on the stock yesterday although they lowered their target price to an average of RM1.33 per share.

They have cited weaker growth prospects for the oil and gas industry, owing to softer crude oil prices and the overall weak broader market.

Recent market talk has cast KNM, one of the country’s biggest oil and gas fabricators, in a bad light, with some saying that the company would write down its intangible assets totalling RM1.6bil, face cancellation of outstanding orders and suffer as a result of margin calls by its major shareholder.

A Merrill Lynch report issued yesterday quoted KNM group managing director Lee Swee Eng as saying that he had about 130 million shares or 3% that were pledged to CIMB but he had not received any margin calls.

Lee owns about 25% of KNM.

In the event that he did (receive margin calls), he would be ready to top up, the report said, adding that KNM had indicated that it had not seen any cancellation in its present order book.

“Visibility of profit remains strong,” Merrill Lynch said.

URL: http://biz.thestar.com.my/news/story.asp?f...01&sec=business

But KNM is the most active counter with the highest volume.

It's already rebounced. Above 900 level.

Greeny day for US:

DJIA: 9,265.43 +413.21 +4.67%
NASDAQ: 1,770.03 +58.74 +3.43%
S&P 500: 985.40 +44.85 +4.77%

DJIA closed in RED:

9,033.66 -231.77 -2.50%

DJIA futures looks bad:

8,900.00 -135.00

Have no confidence on Genting.

DJIA starts in red:

8,807.54 -226.12 -2.44%

I'm here. I saw a lot of bloods in the trading panel.