Friday, February 26, 2010

PUTRAJAYA, Feb 26 – Production and operations costs of most of the industries in Malaysia can be adduced as “artificial cost” as a big chunk of the cost element is the subsidy borne by the government, according to experts.

Actually, manufacturers should feel “embarrassed” when announcing that they have made a profit when the reality is that a major portion of their costs had been absorbed by the government. They should be ashamed if they lose money even with the government subsidies.

Take gas, for instance. A good number of industries are now switching to gas to power their manufacturing processes due to the lower price of gas (compared with diesel) while both fuels are subsidised by the government. The only difference is the amount of total subsidy.

The subsidised gas price for the power sector is RM10.70 for per Million British Thermal Unit (MMbtu), heavy consumers RM15.35 per MMbtu and Gas Malaysia Sdn Bhd RM11.05 per MMbtu. Unsubsidised price or current market price for gas for the energy sector is RM41.16 per MMbtu, heavy consumers RM56.20 per MMbtu and Gas Malaysia RM42.35 per MMbtu.

Subsidised diesel price for public transport and fishermen is RM38.65 per MMbtu or RM1.43 a litre and pump price RM45.95 per MMbtu or RM1.70 a litre. Market price for diesel is RM55 per MMbtu.

Looking at the figures, the industrial sector can surely differentiate the subsidised gas price they have been enjoying all these while.

Government subsidy target groups like fishermen will surely “shake their heads” upon seeing the very low subsidy they are receiving, compared with the industrial sector.

The government is estimated to bear over RM20 million in financial burden this year for gas subsidy alone and this “hidden cost” will continue to surge in years to come if gas prices are subsidised continuously.

Unfortunately, cumulative subsidy at around RM7 billion initially five years ago was enjoyed only by certain segments of the indutrial sector but not the people from all strata of society.

The bulk of the industries may pretend to be unaware that they have been actually inefficient in gas and diesel consumption. They seem to take the easy way out by switching to gas to take advantage of the cheaper energy, thanks to government subsidy.

Buying gas at market prices should jolt them up to boost energy efficiency and maximise their resources to minimise costs and improve competitive edge.

Under the Gas Sales Agreement, the gas supplied by Petronas, the national oil corporation, is based on medium fuel oil (MFO) price.

It is public knowledge that global oil price in the world market was on the upward trend throughout last year, resulting the same trend for MFO. MFO was sold around US$72 per barrel in December last year as compared with US$37 per barrel in March last year.

The higher the MFO price, the higher is the subsidy apportioned by the government for gas-powered industries.

Hence, the government is further burdened to increase the subsidy amount following spiralling demand from certain industries.

Petronas is said to be facing “supply hitches” following abrupt rise in demand for gas to the extent of exceeding its supply capacity.

Tenaga Nasional Bhd is also facing problems getting gas supply from Petronas, compelling the power utility giant to convert some of its electricity generation plants to be coal-powered.

Maybe it is time for the government to set prices of MFO, gas, diesel and coal based on market prices in order for local industries to have more choices for their fuel supply.

With that, reliance on gas will not be that high and hence, there will not be much difference in fuel price. This will pave the way for industries to opt for other sources of fuel if the demand for gas cannot be met.

A wide range of fuel will ease the “pressure” on the burgeoning demand for gas whose reserves are fast depleting. In conclusion, a prudent policy and pre-emptive measures adopted by the government and Petronas will help sustain the nation’s gas reserves for the future generation. – Bernama

Thursday, February 25, 2010



GENTING Plantations Bhd has reported a pre-tax profit of RM301.9 million for its financial year ended Dec 31, 2009, down 37 per cent from the previous year's record level of RM482.88 million.

Revenue declined 27 per cent to RM755.6 million while earnings per share was 37 per cent lower at 31.1 sen, the company said in a statement Wednesday.

The weaker results in 2009 were mainly due to a six per cent year-on-year decline in the production of fresh fruit bunches (FFB) and softer prices of palm products amid a downturn in the global economy, it said.

The average crude palm oil (CPO) and palm kernel prices achieved in 2009 were RM2,236/mt and RM1,063/mt respectively compared with RM2,822/mt and RM1,595/mt in 2008, said Genting Plantations.


Contribution from the Property Division was also lower in 2009, down 45 per cent from the previous year to RM6.8 million due to the unfavourable economic conditions, the company said.

Expenditure incurred for the Biotechnology Division increased slightly in 2009 compared to 2008, but this was mitigated by the lower deficit recorded for the Plantation-Indonesia Division.

"Barring any unforeseen circumstances, the performance of the group for the coming financial year is expected to be satisfactory," Genting Plantations said.

The board of directors recommended a final dividend of 5.25 sen per ordinary share of 50 sen each, less 25 per cent tax, for the 2009 financial year.

This is higher than the final dividend of 5.0 sen per ordinary share, less 25 per cent tax, recommended for the previous year. - BERNAMA

Wednesday, February 24, 2010

KOTA KINABALU: The Sabah Fisheries and Fishermen's Development Corporation (Ko-Nelayan) recorded a gross profit of RM4.8 million, said Deputy Chief Minister Datuk Yahya Hussin.

He said the state government agency's commercial projects generated a profit of RM3.184 million last year, which was an increase of 22.47 per cent compared with RM2.6 million made the year before.

Petroleum oil sales made the largest contribution to Ko-Nelayan's income with RM5.7 million.

In his speech at Ko-Nelayan's dinner here Monday night, Yahya, who is also State Minister of Agriculture and Food Industries, said the marketing unit contributed RM78,000.00, downstream activities RM97,000.00 and its complex RM665,000.00.

He called on the corporation to continue to increase their efforts to raise their income and profits in the future.

Yahya later also launched the Weston Eco-Acqua Tourism website,
www.Weston Wetland Park.Com, and presented excellence service awards during the event. - Bernama

Monday, February 22, 2010


BERLIN, Feb 21 – Germany’s finance ministry has sketched out a plan in which countries using the euro currency will provide aid worth between 20 billion and 25 billion euros ($27-$33.7 billion) for Greece, a magazine reported on Saturday.

Citing “initial considerations” by the ministry, German weekly Der Spiegel said the share of financial aid for Greece would be calculated according to the proportion of capital each country holds in the European Central Bank.

A spokesman for the German finance ministry said he would not comment on the report, which stated that the financial assistance should take the form of loans and guarantees.

The report said all euro countries would shoulder the burden and that Germany’s share in the package would amount to 4-5 billion euros, and be handled by state-owned bank KfW.

According to the German planning, the aid should be tied to strict conditions, the magazine said, adding that loan tranches should only be paid out once these are met.

Spokesmen for both the Greek finance ministry and the European Commission declined to comment on the report.

Chancellor Angela Merkel’s government has so far resolutely deflected appeals to promise Greece aid despite fears that failure to help Athens could threaten the euro.

Germany in public argues that leniency would take pressure off Athens and other euro zone debtors to cut their budget deficits. Behind the scenes, lawmakers acknowledge that Berlin has prepared measures if a rescue becomes inevitable.

Merkel’s position has been complicated by the fact the country is embroiled in a highly charged debate on the sustainability of Germany’s welfare state.

This has helped to galvanise public opposition to Berlin funding a bailout just as her centre-right coalition braces for a big test of its popularity in May, when voters go to the polls in Germany’s most populous state, North Rhine-Westphalia.

TRANSPARENCY

Speaking to Der Spiegel, Greek Prime Minister George Papandreou told Germany he was not seeking aid, and criticised the Commission for failing to ensure member states adhered to the EU’s Stability and Growth Pact that limits budget deficits.

“The union could in the past have more rigorously policed whether the stability pact was being observed – with us too,” he said. “In future we should allow the European statistics office direct access to individual member states’ data.”

“We suggested that, but not all countries wanted to have so much transparency,” Papandreou said.

Greece’s deficit swelled to 12.7 per cent of gross domestic product in 2009, way above the EU’s cap of 3 per cent, and Athens needs to sell some 53 billion euros of debt this year, including at least 20 billion euros in April and May.

In case demand should falter, German lawmakers have been quietly thinking about how Greece could be helped.

A senior financial official in the ruling coalition told Reuters last week Germany was considering using the KfW to buy Greek government bonds. A separate proposal saw the KfW issuing guarantees to German banks that bought the Greek bonds.

Separately, Der Spiegel said that an internal report by Germany’s financial market watchdog BaFin concluded that German banks could be seriously threatened if Greece or other countries including Spain, Portugal and Italy become insolvent. – Reuters



McDonald's Malaysia plans to train about 30 franchisees in the next three years and is inviting more people to join in.

The company's franchise programme would involve an investment of nearly RM4 million for the opening of a new restaurant, said senior director Chan Chee Chin after the opening of McDonald's Drive-In at Wakaf Che Yeh in Kota Baru today.

"We encourage more Malaysians to join us through the franchise system and those interested can contact us on the website," he said.

McDonald's Malaysia has 194 restaurants nationwide and three of them in Kelantan. Of the total, 21 are run by 10 franchisees.


Chan said a new operator would undergo a six-month training before opening the restaurant. -- Bernama

Saturday, February 20, 2010

WASHINGTON: General Electric's overall work force fell by about 6 percent worldwide in 2009 as it struggled to deal with the effects of the deep recession and financial crisis, according to a company regulatory filing Friday.

GE's annual report shows the industrial and financial heavyweight reduced its overall employee head count by about 19,000 jobs to 304,000 workers.

It's the second year in a row that jobs have fallen at one of the world's largest companies after several years of job growth earlier in the decade.

Excluding 16,000 jobs that came on the company's rolls last year when it took a majority stake in a Central American bank, GE's work force fell by 35,000.

That was much larger than the 4,000 drop in jobs in 2008, the year that GE first began to feel the effects of the global downturn.

Worst hit was the conglomerate's GE Capital lending unit, which saw profits crumble last year as credit dried up and its losses on loans gone bad soared in areas like commercial real estate and credit cards.

GE Capital shed 25 percent of its work force to finish 2009 at about 55,000 employees, part of a company plan to significantly shrink the size of the division.

GE spokeswoman Anne Eisele said layoffs accounted for less than half of the change. Many jobs were left vacant after retirements or voluntary separations.

She also noted job losses were smaller than at other industrial and financial companies. Last year was one of the worst in GE's 117-year history.

It struggled mightily to stabilize GE Capital and keep profits up at its industrial units that make jet engines, power plant turbines and dishwashers.

The company also hit some painful milestones. It lost its top credit rating, slashed its dividend by 68 percent to conserve cash and watched its stock tumble 80 percent before recovering somewhat.

For all of 2009, GE's profit fell by 37 percent to $11 billion.

Still, the company said it expects that earnings will begin to grow again in 2011.

Orders inched up toward the end of 2009, which GE sees as a good sign for its industrial units. GE will also start the process of shedding its stake in the sagging NBC Universal entertainment division if a deal with cable operator Comcast closes later this year as planned.

And GE expects to have $25 billion in cash on hand by the end of 2010. - AP

WASHINGTON (AP): Regulators shut four banks from California to Florida on Friday, boosting to 20 the number of U.S. bank failures this year following the 140 closures last year in the worst financial climate in decades.

The Federal Deposit Insurance Corp. took over La Jolla Bank, FSB, in La Jolla, California. The bank had 10 branches and about $3.6 billion in assets and $2.8 billion in deposits.

Also seized was George Washington Savings Bank in Orland Park, Illinois. It had four branches and about $412.8 million in assets and $397 million in deposits.

The FDIC said OneWest Bank in Pasadena, California, agreed to assume all deposits and essentially all assets of La Jolla Bank. The takeover is expected to cost the deposit insurance fund an estimated $882.3 million.

The FDIC and OneWest will share losses on about $3.3 billion of the failed bank's loans and other assets.

Meanwhile, FirstMerit Bank, National Association of Akron, Ohio, agreed to take over deposits at George Washington Savings Bank. FirstMerit is also taking over essentially all the assets. For George Washington, the FDIC predicts the takeover will cost the insurance fund $141.4 million.

The loss-sharing agreement for George Washington covers $324.2 million in assets.

The other seized banks were smaller and located in Florida and Texas. They were Marco Community Bank, with a single office on Marco Island, a wealthy barrier island near Naples on Florida's Gulf Coast, and La Coste National Bank of La Coste, Texas. Marco Community Bank had about $119.6 million in assets and $117.1 million in deposits. Mutual of Omaha Bank, a division of the big insurance company Mutual of Omaha, agreed to assume the assets and deposits of Marco Community Bank.

The failure of Marco Community Bank will cost the deposit insurance fund an estimated $38.1 million.

In addition, the FDIC and Mutual of Omaha Bank, which is based in Omaha, Neb., agreed to share losses on $104.8 million of the failed bank's loans and other assets.

Florida is among the states with the highest concentration of bank failures and where the meltdown in the real estate market brought an avalanche of soured mortgage loans. Last year saw the failure of 14 banks in the state. Also high on the list are California, Georgia and Illinois.

La Coste National Bank had a single branch and $53.9 million in assets. Deposits totaled $49.3 million.

Community National Bank of Hondo, Texas, agreed to buy the deposits and assets of La Coste National Bank - whose failure is expected to cost the insurance fund $3.7 million.

As the economy has weakened, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have accelerated and sapped billions of dollars out of the federal deposit insurance fund. It fell into the red last year.

The 140 bank failures last year were the highest annual tally since 1992, at the height of the savings and loan crisis. They cost the insurance fund more than $30 billion. There were 25 bank failures in 2008 and just three in 2007.

The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years.

The agency mandated banks prepay about $45 billion in premiums last year, for 2010 through 2012, to replenish the insurance fund.

Depositors' money - insured up to $250,000 per account - is not at risk, with the FDIC backed by the government. Besides the fund, the FDIC has about $21 billion in cash available in reserve to cover losses at failed banks.

Banks have been especially hurt by failed real estate loans, both residential and commercial. Banks that had lent to seemingly solid businesses are suffering losses as buildings sit vacant. As development projects collapse, builders are defaulting on their loans.

Smaller banks are more vulnerable to the losses than their bigger Wall Street counterparts, because commercial real estate makes up a larger portion of their portfolio.

If the economic recovery falters, defaults on the high-risk loans could spike. Many regional banks hold large concentrations of these loans. Banks face as much as $300 billion in losses on loans made for commercial property and development, according to a report issued last week by the Congressional Oversight Panel, which monitors the government's efforts to stabilize the financial system.

The report said the defaults could crimp lending and cause the eviction of families from rental properties. Bank failures also could contribute to job losses and hurt the economic recovery.

President Barack Obama recently promoted a $30 billion plan to provide money to community banks if they boost lending to small businesses. The program, which must be approved by Congress, would use money repaid by banks to the $700 billion federal bailout fund.

Hundreds of banks, including major Wall Street institutions, received taxpayer support through that politically unpopular rescue program, enacted by Congress in October 2008 at the height of the financial crisis.

Friday, February 19, 2010

SHARIDAN M.ALI

Quiet trading due Chinese New Year holiday

KUALA LUMPUR: Asian markets were mixed in morning trade despite positive development in the US market.

The US stocks were driven higher on Wednesday due to stronger-than-expected corporate results and upbeat economic data.

Industrial production in the US rose more than anticipated in January with 0.9% increase in production at factories, mines and utilities.

Wall Street extending its rebound where key U.S. equity indices were up between 0.4% and 0.5% in overnight trading.

FBM KLCI gained 0.87 points or 0.07% to 1,259.94 at 10 a.m with 171 gainers and 165 losers meanwhile 159 counters remained unchanged.

Heavyweight Tenaga gained 14 sen to RM7.99 while Tanjong gained 20 sen to RM17.96. Other top gainers were Sunrise that increased by 18 sen to RM2.28 and KLK gained 14 sen to RM16.70.

HWANGDBS Vickers Research said stocks would likely to show an upward bias too given the positive external backdrop.

“Nonetheless, trading activity (which stood at just 545 million shares yesterday) is expected to remain thin as some investors are still away due to the Chinese New Year festival.

“FBM KLCI will probably strive to protect its recent gains by staying above the resistance-turned support level of 1,255 ahead.

Immediate upside, however, is seen to be relatively limited at the moment,” it said in its note today.

Upward regional bourses include Jakarta Composite Index that added 22.84 points to 2,581.34 while Japan’s Nikkei 225 gained 15.09 points or 0.15% to 10,321.92.

Other regional bourses namely Singapore Straits Times Index lost 9.77 points to 2,784.29 and Seoul’s Kospi Index was down by 0.22 points to 1,627.21. Nymex crude oil futures lost 0.26 cents to US$77.07 per barrel while rinngit stood at 3.4 to the US dollar

SHARIDAN M.ALI


Global economy environment still not strong

KUALA LUMPUR: Asian market continues to post mixed performance at midday as Wall Street’s modest upside does little to uplift lingering caution on the global economic environment.

Among the global economic news are UK jobless claims unexpectedly jumped in January to the highest level since 1997 and the US posted a budget deficit for 16th straight month in January, reflected the economy’s recovery has yet to bolster government revenue.

The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) added 2.26 points to 1,261.33 at midday with total volume of 288.83 million shares valued at RM422.2mil.

There were 199 gainers, 277 losers and 237 counters traded unchanged on the Bursa Malaysia.

Heavyweights, Tenaga gained 14 sen to RM7.99 while Maybank add 4 sen to RM6.93. Among the top gainers are KLK and Tanjong- both added 20 sen to RM16.76 and RM17.96 respectively.

Other than Japan’s Nikkei 225 that added 10.82 points or 0.10% to 10,317.65 majority of regional bourses seemed to post subdued midday performance.

Seoul’s Kopsi Index shed 3.11 points to settle at 1,624.32, Straits Times Index in Singapore lost 9.83 points or 0.35% to 2,784.23 followed by Jakarta Composite Index that was down by 13.91 points or 0.54% to 2,567.43.

Nymex crude oil futures shed 42 sen to US$76.91 per barrel.

Thursday, February 18, 2010

SINGAPORE: Singapore's exports jumped in January for a third straight month as global demand for the city-state's electronics and petrochemicals surged.

Exports excluding oil rose 21 percent from a year earlier to 12.1 billion Singapore dollars (US$8.6 billion), according to Trade and Industry Ministry figures released Wednesday.

January's trade figures suggest Singapore's economy will grow sharply in the first quarter compared with a year earlier when the country was mired in a deep recession.

The government expects the economy to grow up to 5 percent this year after shrinking 2.1 percent last year.

Electronics - which account for 39 percent of non-oil exports - continued to grow, rising 23 percent from a year earlier after climbing 25 percent in December.

Increased demand for petrochemicals, primary chemicals and specialized machinery helped offset a dip in pharmaceutical exports, the ministry said.

Pharmaceuticals - which make up 10 percent of non-oil exports - fell 30 percent while petrochemicals surged 97 percent.

In seasonally adjusted terms, exports fell 8.9 percent from December.

A 31-percent drop in sales to Europe, Singapore's biggest non-oil export market, was offset by a surge of 76 percent to China and 16 percent to the U.S. - AP

LOS ANGELES: Simon Property Group Inc., the largest U.S. shopping mall owner, made a US$10 billion hostile bid Tuesday to acquire ailing rival General Growth Properties.

The acquisition would allow General Growth, the No. 2 owner of shopping centers, to emerge from bankruptcy protection.

General Growth filed for bankruptcy last year after buckling under the weight of billions in debt it racked up during a massive expansion effort fueled by cheap credit.

The move is Simon's second attempt at a major acquisition in three months.

In December, Simon offered $700 million in cash and stock to buy more than 60 outlet shopping centers from another competitor, Prime Outlets Acquisition Co.

The deal is pending.

Simon is using its comfortable cash cushion and credit lines to take advantage of falling commercial property values, which are off 40 percent from their peak in 2007.

And General Growth has some prized centers, including the Glendale Galleria in Southern California and the South Street Seaport in Manhattan.

Simon has been able to weather the economic downturn despite rising retail vacancy rates in the double-digits in some cities.

The Indianapolis-based company popularized the so-called lifestyle center mall design that turned malls into neighborhood-like communities.

Simon owns more than 380 properties, including the Houston Galleria and the Fashion Valley Mall in San Diego.

Many national retail companies have stores in regional malls like those that Simon and General Growth own.

If Simon or another large mall operator were to acquire General Growth's centers, that could give it more muscle to negotiate for higher rental rates with retailers.

Under the terms of the offer, General Growth's unsecured creditors would get $7 billion, which would pay them in full.

Shareholders would receive $3 billion, or $6 a share in cash and $3 a share in other assets.

The offer, however, might be amended so shareholders could receive Simon stock instead of cash.

"Simon's offer provides the best possible outcome for all General Growth stakeholders," said David Simon, chairman and CEO, in a statement.

Simon disclosed its offer after General Growth's board failed to respond to a formal offer it made last week.

In a letter to General Growth's board dated Feb. 8, Simon spelled out its offer and argued shareholders stand to gain more from a takeover than if General Growth emerged from bankruptcy as a standalone company, or accepted a rival bid.

"We are convinced that a transaction with Simon is superior to any proposal you may be considering," Simon wrote in the letter, stressing the proposal was not open-ended.

A spokesman for Chicago-based General Growth had no immediate comment.

Though the official committee for General Growth's unsecured creditors has backed the deal, stockholders appeared to be looking for a sweeter offer from Simon or another competitor.

Shares in General Growth shot up nearly 28 percent, or $2.62, to $12.02.

Simon shares rose $2.82 to $74.82 in afternoon trading.

Alexander Goldfarb, an analyst with Sandler O'Neill & Partners, said he expects other offers to drive the bidding higher.

"General Growth has a number of options," Goldfarb said. "This is not the only one."

Any offer, should it be accepted, would be a steal compared to what General Growth was worth in 2007.

Back then, with shares trading above $60, General Growth had a market value of about $15 billion. At Tuesday's closing price, the entire company was valued at about $3.8 billion.

But any new owner would have to deal with General Growth's massive debts.

The company racked up $27 billion in debt by the time it sought shelter from creditors last April, making it the largest real estate bankruptcy case in U.S. history.

In December, a bankruptcy court approved its plan to restructure $10.25 billion in debt.

A plan for restructuring another $1.7 billion in debt is up for approval when some conditions are satisfied.

At the time, General Growth said it was considering "all indications of interest in the company."

That fueled speculation the mall operator was fielding offers.

Many real estate investment trusts are also flush with money, having raised $34.5 billion of new capital last year.

Some traders are speculating Brookfield Asset Management could be among those interested in buying General Growth.

The company has been looking to expand its slate of retail properties and acquired a stake in General Growth last year.

Brookfield hasn't provided details but said the stake was "significant." Published reports have suggested the Brookfield spent as much as $1 billion - something the company hasn't confirmed or denied.

In 2006, Brookfield made a bid for shopping center owner Mills Corp. but was foiled by Simon.

Brookfield spokesman Denis Couture declined to comment Tuesday. - AP

AMSTERDAM: ING Groep NV, one of Europe's largest banking and insurance groups, reported a hefty loss for the fourth quarter on Wednesday, reflecting a mixed operating performance and a big charge related to an earlier bailout.

ING's net loss was euro712 million ($980 million), far less than the euro3.71 billion the company lost in the same period a year ago at the height of the financial crisis.

This quarter's figures included a one-time payment to the Dutch state of euro930 million.

That was demanded by the EU Commission's competition authority after it ruled a bailout package given to ING by the Netherlands was too generous.

At the company's operations, it made a euro132 million profit at its banking division, mostly due to a highly profitable retail division, but its corporate and real estate divisions continued to lose money.

In addition, provisions against bad loans rose by euro686 million.

A year ago the banking division lost euro1.84 billion.

"The bank showed a strong commercial performance, supported by improved interest margins, higher results from financial markets and cost reduction," said Chief Executive Jan Hommen in a statement.

The company has cut 7.9 percent of staff over the past year and now employs 107,173 people.

Under pressure from the EU, ING is planning to split its banking and insurance arms by 2012.

ING lost euro47 million from its insurance activities, compared with a euro2.5 billion loss a year ago.

And it made euro273 million on investments, compared with a loss of euro217 million a year ago. - AP

DUBAI: Global commodities remain a good investment opportunity for 2010 on the back of strong growth in 2009, where commodity investors saw returns rise in line with significant price increases for key commodities, according to J.P. Morgan Asset Management.

"Commodities offered strong returns in 2009. Commodity investors can expect to see further opportunities for growth in 2010 as demand continues to outstrip supply," said its vice-president for business development in the Middle East and North Africa, Simon Littmoden.

He said the huge growth in demand for commodities to build new railways, expressways and structures could be seen in emerging economies.

"Commodities will continue to benefit from urbanisation, with the latest figures indicating that 180,000 people around the world, move from a rural to an urban area every single day," he told a gathering of financial advisors here.

According to the global asset management company, last year saw the price of copper, zinc, base metals and aluminium rise by 140 per cent, 112 per cent, 104 per cent, and 44 per cent respectively, as a result of growing global demand for commodities coupled with ongoing supply shortages.

It said this year, demand for commodities would continue to increase as emerging economies like China, India, Brazil and Russia buy up key building materials to meet massive infrastructure plans, fuelled by urban migration. - Bernama

KUALA LUMPUR: HSBC Amanah has been named Best International Islamic Bank and Best Sukuk House by Euromoney magazine in its Islamic Finance Awards 2010.

HSBC Amanah Global Chief Executive Officer Mukhtar Hussain said that over the last 12 months, the bank had cemented its status as the premier cross-border provider of Shariah-compliant financial services.

"With the global reach of the HSBC Group as its disposal, there is no other bank that can match HSBC Amanah's cross-border capabilities in either the Shariah-compliant retail or wholesale sectors.

"We are delighted to receive this award from Euromoney in recognition of that fact," he said in a statement on Wednesday.

The Euromoney awards are considered to be the most high profile accolades in the Islamic finance calendar and annually recognise outstanding performance, quality, service and innovation in the sector.

In 2009, HSBC Amanah grew its operations in Saudi Arabia, United Arab Emirates and Malaysia while expanding in the key growth territories of Indonesia, Qatar and Bahrain. - Bernama

IOI Corp, a Malaysian plantation company, rose the most in more than three months in Kuala Lumpur trading after Standard Chartered Bank recommended investors should buy plantation stocks to take advantage of resurgent crude palm oil prices.

The stock rose 1.9 per cent to close at RM5.32 in Kuala Lumpur trading.

Palm oil prices have enjoyed their longest rally in more than a year, closing February 12 at RM2,579 (US$754) a metric ton. -- Bloomberg

Wednesday, February 17, 2010

BARCELONA, Spain: Apple Inc. rocked the wireless business by combining the functions of a phone and an iPod. Now, more than two years later, Microsoft Corp. has its comeback: phone software that works a lot like its own Zune media player.

The software, which was unveiled Monday at the Mobile World Congress, is a dramatic change from previous generations of the software that used to be called Windows Mobile.

But Microsoft is, for now, sticking to its model of making the software and selling it to phone manufacturers, rather than making its own phones.

Microsoft's mobile system powered 13.1 percent of smart phones sold in the U.S. last year, according to research firm In-Stat.

That made it No. 3 after Research In Motion Ltd.'s BlackBerry and the iPhone.

But Microsoft has been losing market share while Apple and Google Inc.'s Android gained.

All the while, the market is becoming increasingly important. People are spending more and more time on their phones, and the devices steer people to potentially lucrative Web services and ads.

Phones with the new software will be on the market by the holidays, Microsoft said.

All four major U.S. carriers will offer phones, just as they sell current Windows phones.

The new ones won't be called "Zune phones," as had been speculated. The software will be called "Windows Phone 7 series."

Forrester Research analyst Charles Golvin said the new software looked promising, but that it was also Microsoft's "final chance to get it right."

He notes that those who have current Windows phones don't seem excited about the brand - many of them believe their phones are made by Apple or Nokia Corp., according to his firm's research.

Andy Lees, senior vice president of Microsoft's mobile communications business, said Windows Mobile suffered from the company's chaotic approach to the market.

The software maker gave phone hardware makers and wireless carriers so much freedom to alter the system and install it on so many different devices that none worked the same way.

As a result, while other phone vendors such as Apple linked their hardware and software tightly to ensure a better experience, Windows Mobile might not have looked like it quite fit on a certain handset.

With the new software, "We really wanted to lead and take much more complete accountability than we had in earlier versions of the Windows phone for the end user experience," CEO Steve Ballmer said at the Barcelona launch event.

Microsoft is imposing a set of required features for Windows phones.

Manufacturers must include permanent buttons on the phone for "home," "search" and "back"; a high-resolution screen with the same touch-sensing technology as the iPhone; and a camera with at least 5 megapixels of resolution and a flash.

Hardware QWERTY keyboards will be optional. A test device from Asus, which Microsoft used to demonstrate the new phone software for The Associated Press in Redmond, Wash., also had a front camera and a speaker.

The iPhone's success has spurred lots of look-alike phones with screenfuls of tiny square icons representing each program.

Just as it did with the Zune, Microsoft has tried to avoid an icon-intensive copy of that setup. Instead, it relies more on clickable words and images pulled from the content itself.

For example, if you put a weather program on the device's home page, it shows a constantly updated snapshot of conditions where you are, rather than a static icon that you have to click in order to see the weather.

The idea of pulling information from different Web sites, like Facebook, and presenting them on the phone's "home" screen isn't unique to Microsoft: Motorola Inc. and HTC Corp. have created such software for their own phones.

Windows Phone 7 Series borrows the clean look of the Zune software, departing from the more "computer screen" look of earlier Microsoft efforts.

These were also reliant on the user pulling out a stylus for more precise maneuvering, while the software is designed to be used with the fingers.

It's not clear how older third-party application designed for the stylus will work on the new phones.

Most of the built-in applications complement or connect with existing Microsoft programs or services, such as the Bing search engine.

The games "hub" connects to an Xbox Live account and lets players pick up where they left off with multiplayer games.

They will even be able to play games against PC users.

Microsoft also turns to the Zune programming for the phones' entertainment hub, much in the way the iPhone's music library is called iPod.

And when users plug the phone into a PC, the Zune software pops up to manage music, movies and podcasts.

About 18 months ago, Microsoft stopped most improvements to its existing smart-phone operating software and started from scratch on Windows Phone 7 Series.

Microsoft "is resolved at a company level to be successful in mobile," Lees said.

He indicated Microsoft is willing to spend hundreds of millions of dollars on marketing to ensure it's successful. - AP

JEDDAH, Saudi Arabia: A top Saudi energy official expressed serious concern Monday that world oil demand could peak in the next decade and said his country was preparing for that eventuality by diversifying its economic base.

Mohammed al-Sabban, lead climate talks negotiator, said the country with the world's largest proven reserves of conventional crude is working to become the top exporter of energy, including alternative forms such as solar power.

Saudi Arabia was among the most vocal opponents of proposals during the climate change talks in Copenhagen.

And al-Sabban criticized what he described as efforts by developed nations to adopt policies biased against oil producers through the imposition of taxes on refined petroleum products while offering huge subsidies for coal - a key industry for the United States.

Al-Sabban said the potential that world oil demand had peaked, or would peak soon, was an "alarm that we need to take more seriously" as Saudi charts a course for greater economic diversification.

"We cannot stay put and say 'well, this is something that will happen anyway," al-Sabban said at the Jeddah Economic Forum.

The "world cannot wait for us before we are forced to adapt to the reality of lower and lower oil revenues," he added later.

Some experts have argued that demand for oil, the chief export for Saudi Arabia and the vast majority of other Gulf Arab nations, has already peaked.

Others say consumption will plateau soon, particularly in developed nations that are pushing for greater reliance on renewable energy sources.

With oil demand only now starting to pick up after it was pummeled by the global recession, some analysts say consumers may have learned to live permanently with a lower level of consumption.

The Organization of the Petroleum Exporting Countries, as well as other international energy organizations, is forecasting a slight rise in oil demand this year, based mainly on increased consumption in Asia after last year's sharp hit.

Either peak oil scenario presents grave challenges for the Gulf region and OPEC, whose countries rely on oil sales for as much as 90 percent of their budgets.

Al-Sabban, who also serves as the chief economic adviser to Saudi Oil Minister Ali Naimi, said an oil demand peak would be "very serious" for the country.

Saudi has about 264 billion barrels of crude reserves and currently produces about 8 million barrels per day out of its overall output capacity of around 12 million barrels per day.

The kingdom, widely seen as the de facto leader of the 12-member OPEC, has embraced an ambitious expenditure program aimed not only at further developing its oil base but also expanding and diversifying its economic base.

Its expansionary policies came even as other nations were tightening purse strings in response to the world's worst financial crisis in over six decades.

The outlays included billions of dollars for a new research university that opened last year, as well as major ventures such as the construction of new economic cities and other infrastructure.

Oil's pre-recession price boom also helped pad Saudi Arabia's foreign reserves, now in excess of $400 billion, and have helped the government weather the worst of the global crisis.

International ratings agency Moody's, in a reflection of the country's macroeconomic position, on Monday upgraded Saudi Arabia's foreign and local currency government ratings to Aa3 from A1 citing "the continued solid state of government finances which have largely withstood oil price volatility and the global economic crisis."

Al-Sabban said that along with investing in education and economic diversification, Saudi must ensure that it become the top energy exporter, including in solar power, to keep moving forward.

The country recently launched its first solar-powered desalination plant and al-Sabban said oil giant Saudi Aramco was working on a pilot project to inject carbon emissions back into wells to help boost output.

The carbon sequestration project, which he said would be operational by 2012, was a sign of Saudi Arabia's commitment to environmentally sound energy development.

The push for cleaner technology is pivotal for the oil rich kingdom. - AP

SYDNEY: Westpac Banking Corp., one of Australia's largest banks, said Tuesday its first quarter earnings grew by a third, as impairment charges dropped and the economy continued to bounce back from the global financial meltdown.

Unaudited cash profit was about 1.6 billion Australian dollars (US$1.4 billion) for the three months ended Dec. 31, the Sydney-based bank said in a statement. That's up from AU$1.2 billion in the same period a year ago.

CEO Gail Kelly said the boost in earnings was a result of reduced impairments and good momentum across all businesses.

"Although we remain cautious on the economic outlook, we believe that the worst of the crisis is now behind us and this is reflected in the significant fall in impairment charges," Kelly said in a statement.

"Consumer asset quality remains strong although we expect a small increase in delinquencies throughout the year."

The strong result follows rival Commonwealth Bank of Australia Ltd.'s announcement last week that it had posted a 54 percent rise in half-year cash profit to AU$2.9 billion on lower bad debts. - AP

SINGAPORE: Oil prices hovered above $74 a barrel Tuesday in Asia as investors looked for signs of improving global crude demand amid light holiday trading.

Benchmark crude for March delivery was up 9 cents at $74.22 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.

With markets closed Monday in the U.S. for the Presidents Day holiday, the contract last settled on Friday, falling $1.15 to $74.13.

Trading volume was light in Asia as markets in China, Hong Kong, Taiwan, South Korea, Singapore, and Malaysia were closed for the Lunar New Year holiday.

Oil has traded between $69 a barrel and $84 for the last few months as investors struggle to gauge global crude demand.

On Monday, Japan said its economy grew an annualized 4.6 percent in the fourth quarter while China raised reserve requirements for banks last week in a bid to slow economic growth and avoid asset bubbles.

"There are some signs of improvement in OECD countries as a whole with strong Japanese growth data," Barclays Capital said in a report.

"Worries about softening in China's commodity demand are overblown."

In other Nymex trading in March contracts, heating oil was steady at $1.9203 a gallon, and gasoline fell 0.47 cent to $1.9248 a gallon.

Natural gas rose 4.6 cents to $5.51 per 1,000 cubic feet.

In London, Brent crude was up 35 cents at $72.86 on the ICE futures exchange. - AP

Thursday, February 11, 2010


LONDON, Feb 10 — The Bank of England (BoE) may have to pump more money into Britain’s fragile economy, Governor Mervyn King said today after the central bank forecast inflation would stand well below target in two years.

Presenting the BoE’s quarterly Inflation Report, King said recovery from the worst recession since World War Two would be slow with output below pre-crisis levels for some time to come.

And that gloomy outlook excluded the likelihood of fiscal policy being tightened hard after an election expected on May 6.

The pound fell and government bonds rallied as investors bet it would be a long time before the BoE started raising interest rates from their record low of 0.5 per cent — and could even boost its 200 billion pound asset-purchase scheme.

“It is far too soon to conclude that no more purchases will be needed,” BoE Governor Mervyn King told a news conference.

“So the Committee will keep its options open, and further purchases will be made if they prove necessary to keep inflation on track to meet the target in the medium term.”

The BoE has halted its asset purchase scheme — quantitative easing — after almost a year of buying mostly gilts with newly-created money to revive an economy which only emerged from an 18-month recession at the end of 2009.

In a sign that conditions are improving, the National Institute of Economic and Social Research said on Wednesday that growth picked up in the three months to January to 0.4 percent from just 0.1 percent in the final quarter of 2009.

Few analysts had expected the BoE to expand its QE scheme further this year but King’s comments make clear the Monetary Policy Committee has not decided one way or the other.

The Inflation Report cited a range of views among the MPC about the risks to inflation — suggesting the decision to keep policy on hold this month may not have been unanimous.

“There may well have been a split vote on the Committee — some members voting for further QE,” said George Buckley, an economist at Deutsche Bank.

Minutes of this month’s meeting are published on Feb 17.

The central bank’s forecasts show that inflation, which it is charged with keeping at 2 per cent, would stand at around only 1.2 per cent in two years — the usual policy horizon — if interest rates start going up later this year.

Inflation is seen below 2 per cent even if rates stay put.

“The door to further policy action is still wide open,” said Jonathan Loynes, economist at Capital Economics.

The economy, meanwhile, recovers only very slowly, with output not returning to pre-crisis levels until around mid-2011, according to the forecasts. GDP growth is seen at a rate of around 3.5 per cent in two years’ time.

The BoE emphasised a high degree of uncertainty over the outlook, picking out the future of government spending and taxes after the election as one key risk.

The opposition Conservatives are favourites to win and have promised a budget within 50 days of taking office that would tighten policy quicker than the ruling Labour Party’s plans.

Markets have been getting jittery about the prospect of a hung parliament where no party has an overall majority or the mandate to force through fiscal consolidation measures.

King said a consensus on the need to cut the deficit meant such an outcome would not be an issue for the MPC and dismissed the idea Britain may lose its top credit rating or could face a Greek-style debt crisis, as suggested by the Conservatives.

He also gave short shrift to speculation he was in collusion with any political party about plans to keep interest rates low — something the Conservatives have also mooted.

“Much remains in the air, depending on what the fiscal stance will be after the forthcoming election,” said Rob Carnell of ING.

“A tighter fiscal stance than implied by the pre-budget report might well see the Bank of England keeping rates on hold for far longer than markets currently expect, which should keep sterling under even more downward pressure.” — Reuters

 

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