KLCI opens below 1,000 level

KUALA LUMPUR: Blue chips fell sharply in early trade on Tuesday, sending the KL Composite Index below the key 1,000 level as sentiment was battered by weak regional markets and the tumble on Wall Street.

At 9.05am, the KLCI was down 23.86 points or 2.34% to 995.86. Turnover was 22.31 million shares valued at RM31.27mil. There were only nine gainers, 195 losers and 34 counters unchanged.

Major Asian markets which were opened for trading also fell sharply after the US Congress rejected the US$700bil bailout plan.

US markets plunged as the House rejected, by a vote of 228 to 205, the US$700bil measure to authorise the biggest government intervention in the markets since the Great Depression.

The Dow Jones Industrial Average fell 778 points, or 6.98% to 10,365, the biggest point drop ever. The Standard & Poor's 500 Index fell 8.4%, the most since Oct 26, 1987.

Japan’s Nikkei 225 fell 4.78% or 561.07 points to 11,182.54, South Korea’s Kospi skidded 3.69% 1,402.65 while Singapore’s Straits Times Index fell 4.64% to 2,251.71.

Light crude oil fell 29 cents US$96.09 per barrel.

At Bursa Malaysia, Nestle fell RM1 to RM26, KL Kepong 45 sen to RM9.35 while down 40 sen each were Tanjong, BCHB and MISC foreign to RM13, RM7.35 and RM7.75 respectively. Genting and DiGi lost 30 sen each to RM5.05 and RM22.10 while Bursa Malaysia slipped 25 sen to RM6.15.

IOI Corp fell 24 sen to RM4.12 and Gamuda 13 sen to RM2.04.

Meanwhile, TH Group bucked the weak market, rising 12 sen to 69.5 sen after Tung Hup Holdings Sdn Bhd, which holds 53.26% of TH Group, proposed a capital repayment of 75 sen per TH Group share under its move to take it private.

CNI rose five sen to 33 sen while MAA added 2.5 sen to 62 sen while QSR edged up one sen to RM2.33.

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Deal reached on financial markets bailout

WASHINGTON: Congressional leaders and the Bush administration have reached a tentative deal on a bailout of imperiled financial markets that would cost taxpayers hundreds of billions of dollars.

The House could vote on it Sunday and the Senate on Monday. House Speaker Nancy Pelosi announced the accord just after midnight Saturday and said it still has to be put on paper.

Treasury Secretary Henry Paulson talked of finalising the deal but added: “I think we’re there.”

The plan would spend up to US$700bil, most of it on buying deeply devalued mortgages from the housing market’s collapse and other bad loans held by tottering banks and other investors.

The aim is to prevent credit from drying up and causing a meltdown of the US economy

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KL, Asia stocks extend gains on proposed US bailout

KUALA LUMPUR: The Malaysian and Asian markets extended gains Monday after the U.S. government proposed a US$700 billion plan to solve the world financial crisis by rescuing banks from billions of dollars in risky mortgage debt.

The benchmark Kuala Lumpur Composite Index stood at 1029.16 up 3.46 points or 0.34% at 11.56 am (0356gmt).

The losers at 236 led the gainers at 226. There were 198 counters unchanged and 2,509,618 lots were traded.

In Japan, the Nikkei 225 index was 1.7 percent higher at 12,123.54 points by midday, while Hong Kong's Hang Seng index added 1.1 percent.

The Shanghai Index has gained 132.39 points to 2,207.48 by midday Monday.

It had surged 9.5 percent on Friday - its biggest one-day percentage gain ever.

Several major banks have jumped by the 10 percent daily limit, including ICBC, Bank of China and Construction Bank of China.

The advances came after an another extraordinary rally on Wall Street on Friday.

Australia's S&P/ASX 200 jumped 4 percent, buoyed by new rules banning all short selling following similar actions by regulators in the U.S. and Britain.

Asian markets had rallied Friday on news Washington was likely to announce a bailout plan, calming investors worried that losses from bad bets on mortgages could bring about the collapse of more companies, straining an already weakened financial system and global economy.

On Sunday the Bush administration continued to lobby lawmakers for authority to use US$700 billion to buy up a mountain of bad debt at the heart of the crisis.

While the proposed bailout lifted sentiment for the time being, there were still a number of uncertainties about the plan and the general health of financial firms that could further unsettle markets in the coming days, an analyst said.

"This should stem the bleeding, but the patient is still very fragile,'' said Thomas Lam, a senior economist at the United Overseas Bank in Singapore.

"The list of uncertainties is pretty long.'' In mainland China, the stocks gained on strong buying of financial shares after the government announced several moves to support the market, including plans to buy shares in major state-owned banks.

The Dow Jones industrials soared about 370 points, or 3.35 percent, to 11,388.44, giving them a gain of about 780 over two days.

In Japan, banking giant Mitsubishi UFJ Financial Group Inc. climbed more than 5 percent, while leading Australian firm Macquarie Group Ltd. surged 8.5 percent.

Industrial & Commercial Bank of China Ltd, or ICBC, the country's biggest lender, was 2.5 percent higher in Hong Kong trading.

Light, sweet crude was exchanging hands at US$104.40 a barrel in Asian trading on the New York Mercantile Exchange, down about 15 cents.

The contract soared US$6.67 on Friday.

In currencies, the dollar fell to 106.51 yen, while the euro rose to US$1.4519.

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Markets fall on US financial worries

KUALA LUMPUR: Asian markets fell in the morning session on Monday as investors worried about the US financial health, especially after Lehman Brothers filed for bankruptcy.

At Bursa Malaysia, declining stocks beat advancers nearly six to one as political concerns further weighed down sentiment.

At 12.30pm, the KLCI had fallen 15.86 points or 1.52% to 1,028.17. Turnover was 126.92mil shares valued at RM250.13mil. There were 66 gainers, 385 losers while 149 counters were unchanged.

Asian markets fell, with Taiwan’s Weighted Index down 250.12 points or 3.96% to 6,060.56, Singapore’s Straits Times Index 2.91% lower at 2,495.84 and Thailand’s SET 1.25% lower at 646.13.

Light crude oil fell US$2.12 to US$99.06 while crude palm oil (CPO) futures fell RM71 to RM2,309.

At Bursa Malaysia, selling on Tenaga continued after the government said last Thursday it had put off the power purchase agreement talks with independent power producers. Tenaga fell 40 sen to RM6.80.

Plantation-linked counters fell, with Kulim down 50 sen to RM5.40, KL Kepong 30 sen lower at RM10.10, Kim Loong-WA 29 sen to 71 sen while Chin Tek lost 20 sen to RM6.15 and Glenealy 18 sen to RM3.72. BLD Plantations declined 16 sen to RM3.72.

Heavyweight plantation stock IOI Corp lost 10 sen to RM4.28 and it was the most active with 6.99 million shares. Sime Darby eased 15 sen to RM5.95.

Perwaja continued its descent, down 11 sen to RM1.56 and Kinsteel 4.5 sen lower at 68 sen.

M3Nergy rose 19 sen to RM1.15 in active trade while MISC added 10 sen to RM8.40 and Sindora eight sen to RM2.04.

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Markets fall on US financial worries

KUALA LUMPUR: Asian markets fell in the morning session on Monday as investors worried about the US financial health, especially after Lehman Brothers filed for bankruptcy.

At Bursa Malaysia, declining stocks beat advancers nearly six to one as political concerns further weighed down sentiment.

At 12.30pm, the KLCI had fallen 15.86 points or 1.52% to 1,028.17. Turnover was 126.92mil shares valued at RM250.13mil. There were 66 gainers, 385 losers while 149 counters were unchanged.

Asian markets fell, with Taiwan’s Weighted Index down 250.12 points or 3.96% to 6,060.56, Singapore’s Straits Times Index 2.91% lower at 2,495.84 and Thailand’s SET 1.25% lower at 646.13.

Light crude oil fell US$2.12 to US$99.06 while crude palm oil (CPO) futures fell RM71 to RM2,309.

At Bursa Malaysia, selling on Tenaga continued after the government said last Thursday it had put off the power purchase agreement talks with independent power producers. Tenaga fell 40 sen to RM6.80.

Plantation-linked counters fell, with Kulim down 50 sen to RM5.40, KL Kepong 30 sen lower at RM10.10, Kim Loong-WA 29 sen to 71 sen while Chin Tek lost 20 sen to RM6.15 and Glenealy 18 sen to RM3.72. BLD Plantations declined 16 sen to RM3.72.

Heavyweight plantation stock IOI Corp lost 10 sen to RM4.28 and it was the most active with 6.99 million shares. Sime Darby eased 15 sen to RM5.95.

Perwaja continued its descent, down 11 sen to RM1.56 and Kinsteel 4.5 sen lower at 68 sen.

M3Nergy rose 19 sen to RM1.15 in active trade while MISC added 10 sen to RM8.40 and Sindora eight sen to RM2.04.

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Pollution and global warming very serious in the next 10 years

SINGAPORE: A global policy framework for renewable energy is needed in the world today and sustainable initiatives that focus on carbon tax should be developed.

This is necessary as over the next 10 years pollution and global warming are going to be very rapid.

“If nothing is done, they will kill our world,’’ Suzlon Energy chairman and managing director Tulsi Tanti said at the Forbes Global CEO Conference yesterday.

A carbon tax is an environmental tax on emission of carbon dioxide and other greenhouse gases.

But to develop renewable energy there is also an issue of supply and demand and, for now, nuclear and solar energy has failed to become a fast enough alternative.

Renewable energy is an alternative in view of the higher cost of oil and fossil fuels. The development of resources, innovation and technology are, therefore, vital for adoption of renewable energy.

Tanti said Malaysia should develop alternative sources of wind and solar energy.

“There is some potential but the Government has to do wind mapping before it can be implemented,’’ he said.

Solar and wind can make up to 20% of alternative energy sources in the world and the investment of wind turbines is US$1mil per kilowatt hour.

“No doubt the pace of growth in renewable energy has accelerated the past three years but it would take 15 years go put in these systems before we can see any shift,’’ SMR CEO Geoffrey P. Cowley said.

Imposing a feed-in-tariff to accelerate alternative energy was also not viable as consumers would not pay more for green energy, said Khosla Ventures operating partner Ford Tamer.

Suzlon may be one of the leaders in wind power but its turbines have cracked and the company faces some technical issues. To this Tanti said the issue was being handled and should to be seen as a failure.

“It is a normal phase of research and development. The company has set aside US$30mil to rectify the problem which involves 400 machines. Suzlon is also investing US$1bil over the next five years in technology investment to further improve cost and product enhancement,” Tanti added.

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More broadband proposals surface

PETALING JAYA: Last year cable manufacturer Optical Communication Engineering Sdn Bhd (OCE) submitted a concept paper to the Government, suggesting a larger part of the existing infrastructure be used to roll out high-speed broadband (HSBB) in Peninsular Malaysia at a price tag of RM3bil.

OCE believed that a large part of the existing fibre infrastructure could be put to better use and help the country save billions of ringgit.

The price quoted was based on estimates that nearly half the equipment needed would be supplied by the company’s plant. The RM3bil did not include last-mile connectivity.

While OCE was in the midst of talks, the Government went ahead to announce that Telekom Malaysia Bhd (TM) would undertake the HSBB. This was done in September 2007 and it was via direct selection with no tender bid called.

OCE chief executive officer Robin Wong, when contacted, confirmed that such a paper was submitted.

“We are still waiting for a response from the relevant authorities. Our concept is about rolling out 3,000 points in the peninsula, each point able to link 1,000 to 8,000 customers,” he told StarBiz.

Today, Wong is still interested in participating in the building of a HSBB network.

He is not alone. Of late, many more proposals have sprung up despite TM being scheduled to sign the agreement (after two postponements) with the Government on Sept 16.

Two other hopeful parties are High Speed Broadband Sdn Bhd (HSBT), with a privately funded proposal to link 2.5 million lines at RM18bil, and Dr Mohamed Awang Lah, the CEO of Jaring, with his own proposal to wire up five million premises at RM5bil.

HBST was given a chance, which it bypassed, but now wants another shot.

TM’s proposal is to roll out HSBB to 1.3 million premises at RM11.3bil (from RM15.2bil earlier) and the Government will fork out RM2.4bil for the project.

“With a number of parties interested in playing a role and contributing to the social and economic development of the nation, the Government should perhaps give due consideration, open and objective hearing to their proposals.

“Why shut them out and painstakingly try to craft or pull out answers as if from the magician’s hat in support of the incumbent?” asked an industry expert.

Another expert suggested that it was about time the “Government reviews the whole process that was originally planned by the Malaysian Communications & Multimedia Commission (MCMC) – the open bidding process.

“The MCMC’s process of bidding by consultants in early 2007 was intercepted by TM’s own appointed consultant and that is why MCMC had to abort the exercise.

“The exercise was to come up with a plan for national broadband implementation for tendering out to licencees to submit their proposals. With abundant alternative offerings, perhaps it is a good time to revert to such process.”

All these parties believe there is room for a second network, which should be based on a open-access concept, versus TM’s HSBB privately-owned network, which observers say will offer limited access to other players.

“In a big country there can be multiple backbones, but we are a small country. There should be a common backbone which offers fair and equitable access to all players. The owners of the backbone should not compete at the service level,” Mohamed said.

Since StarBiz carried his story on Thursday on the RM5bil proposal, he said several service providers had voiced their interest.

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US stocks plummet

NEW YORK: Dejected investors sent stocks plunging Thursday, hurtling the Dow Jones industrials down more than 340 points after retailers and the government added to a mountain of bad economic news and devastated hopes for a late-year recovery.

The market was already nervous as it waited for the government to release its August employment report on Friday.

So news from the major U.S. retailers that shoppers curtailed their spending last month due to higher gas and food prices came as a heavy blow.

Wal-Mart Stores Inc., the world's largest retailer, beat expectations because of its big discounts, but many teen retailers and luxury chains did poorly, a sign that consumers are spending mostly on essentials and putting discretionary buying on hold.

Meanwhile, the Labor Department said new applications for unemployment insurance rose by 15,000 last week from the previous week.

That broadly missed expectations for a fourth-straight week of declines, heightening worries that the average American - already feeling the effects of the weak housing market - will have even less means to spend.

Furthermore, if the job market keeps deteriorating, it is tough for Wall Street to see a rebound in sight for the economy's biggest culprit: the tumbling housing market.

"You have to have a paycheck to pay that mortgage,'' said Craig Peckham, market strategist at Jefferies & Co.

The numbers released Thursday were a sign that despite some upbeat reports over the past month, the economy remains deeply troubled.

Investors are not expecting any promising news in the August jobs report, particularly after the ADP National

Employment Report said that private sector employment decreased in August by 33,000.

Economists are predicting the government will report the eighth straight monthly payrolls drop, and a rise in the unemployment rate.

The market was so disheartened that it showed little reaction when the Institute for Supply Management said the service sector grew unexpectedly in August for the first time in three months as new orders increased and inflation moderated.

The August reading of 50.6 was higher than the 50.0 expected, and the reading of 49.2 in July; but the sector's edging above the threshold between contraction and expansion was hardly a sign of a robust economy.

An economic recovery appears to be far off to investors - and with the Dow down more than 15 percent for the year so far, they don't appear to be holding out for a significant upturn in stocks, either.

"We're seeing nothing but sellers,'' said Ted Oberhaus, director of equity trading at Lord, Abbett & Co.

"In a bear market, you sort of really don't need an excuse to sell.''

The Dow fell 344.65, or 2.99 percent, to 11,188.23.

It was the worst drop for the blue-chip index since June 26, when it fell more than 358 points, or 3.03 percent.

Broader indexes also tumbled.

The Standard & Poor's 500 index fell 38.15, or 2.99 percent, to 1,236.83.

The Nasdaq composite index dropped 74.69, or 3.20 percent, to 2,259.04.

All three indexes moved back into bear market territory, defined as a 20 percent drop from a recent peak.

The indexes were at highs, including a record 14,198.09 for the Dow.

As investors fled stocks, they turned to the safety of government bonds, sending Treasury prices higher.

The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.63 percent from 3.70 percent late Wednesday.

Not even another drop in oil could console investors.

After the government reported a lower-than-expected drop in U.S. gasoline and crude supplies, light sweet crude fell $1.46 to settle at $107.89 a barrel on the New York Mercantile Exchange.

Crude is about $30 below its July 11 high of $147.27. Gold prices also slid Thursday.

Toll Brothers Inc. CEO Robert Toll said he is seeing signs the housing market is stabilizing, but Ara Hovnanian - CEO of Hovnanian Enterprises Inc. - said he sees no evidence yet of a market bottom.

The stock market appeared to agree with the latter sentiment on Thursday, sending homebuilder stocks sharply lower.

Toll Brothers performed better than its peers, even after posting a third-quarter loss; its shares rose 27 cents to $25.07.

But shares of Hovnanian, which on Wednesday reported a quarterly loss, sank $1.35, or 17.4 percent, to $6.40. Pulte Homes Inc. fell 86 cents, or 5.8 percent, to $12.05, and KB Home fell $1.22, or 5.7 percent, to $20.11.

The financial sector performed poorly on Thursday as well, particular after bond fund manager Bill Gross wrote in a commentary on his firm's Web site that the U.S. Treasury needs to provide funding to mortgage financiers Fannie Mae and Freddie Mac.

Freddie shares fell 30 cents, or 5.6 percent, to $5.08, and Fannie shares fell 65 cents, or 8.9 percent, to $6.67.

The biggest decliners among the 30 Dow components were three financial stocks: Bank of America Corp., which fell $2.36, or 7.2 percent, to $30.60; Citigroup Inc., which fell $1.31, or 6.7 percent, to $28.30; and American International Group Inc., which fell $1.36, or 6 percent, to $21.22.

Wal-Mart's stock ended down only a penny at $59.78, after it said sales of groceries and back-to-school products helped its August same-store sales rise 3 percent, above expectations.

But the discount chain's success was seen as the corollary of a cash-strapped consumer, and other retailers fell.

JCPenney Co. fell $2.07, or 5 percent, to $39.57, while Gap Inc. fell 83 cents, or 4.2 percent, to $19.14.

Wall Street found no solace in tumbling oil prices - if anything, the drop in commodities weakened the market further by sending the stocks of energy and mining companies lower.

The Russell 2000 index of smaller companies fell 23.29, or 3.14 percent, to 718.62.

Declining issues outpaced advancers by about 5 to 1 on the New York Stock Exchange, where volume came to 1.30 billion shares.
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Oil steady in Asia but risks seen in new storms

KUALA LUMPUR: Oil prices hovered around US$111 a barrel Tuesday in Asia as the threat of Hurricane Gustav dissipated but traders predicted further risks with new storms on the radar and concerns over slowing demand.

Crude oil prices tumbled Monday as Gustav weakened more than expected and appeared to have caused little damage in New Orleans and surrounding areas.

There was some disruption to oil supplies as oil companies shut down production and evacuated facilities ahead of the storm.

Altogether, about 2.4 million barrels of refining capacity had been halted, roughly 15 percent of the U.S. total, according to figures from Platts, the energy information arm of McGraw-Hill Cos.

The Gulf Coast is home to nearly half of U.S. refining capacity.

It could be a day or more before oil and natural gas companies can assess the damage to their drilling and refining installations. Louisiana Gov. Bobby Jindal said as much as 20 percent of oil and gas production that was stopped because of Gustav could be restored by this weekend, stressing that it was a rough estimate.

Light, sweet crude for October delivery stood at US$111.10 a barrel in Asian electronic trading on the New York Mercantile Exchange late Tuesday morning in Singapore.

On Monday, when U.S. trading was closed for Labor Day, the contract had plunged US$4.34 to US$111.12 a barrel in electronic trading from Friday's close of US$115.46 a barrel.

While a weaker-than-expected Gustav, which was downgraded to a tropical storm as it crossed central Louisiana, alleviated fears of a fuel shortage, traders turned their attention to other storms brewing in the region.

Hurricane Hanna was predicted to come ashore in Georgia and South Carolina late in the week, and Tropical Storm Ike formed late Monday in the Caribbean.

Ike was still about 1,400 miles (2,250 kilometers) out in the Atlantic Ocean, but was expected to become a hurricane in the next 36 hours as it approached the Bahamas.

"September is the peak of the Atlantic hurricane season. After Gustav, there are two more now on the radar screen. The storms are likely to provide some upside risks to the oil futures market,'' said Victor Shum, energy analyst with consultancy Purvin & Gertz in Singapore.

Shum said the market appear oversold and there may be potential upside when U.S. trading resumes Tuesday.

Any further dips to oil pricing may be curtailed by the Organization of Petroleum Exporting Countries, which has indicated it may take action to defend the US$100 a barrel level when it meets Sept. 9, he said.

"There are conflicting factors. The market continues to be weighed down by worries of a global economic downturn and slowing oil demand in developing markets, but action by OPEC and supply side concerns will put a backstop to any sharp price drop,'' Shum added.

Australia's BHP Billiton Ltd, which has an interest in eight projects in the Gulf, said Monday it had shut down production and evacuated personnel from its operations.

Royal Dutch Shell PLC, BP PLC and Transocean Inc. have also evacuated employees from rigs in the Gulf region.

In other Nymex trading, heating oil futures fell 10.10 cents to $3.0900 a gallon, while gasoline prices lost 10.42 cents to $2.7500 a gallon.

Natural gas for October delivery fell 39.1 cents to $7.552 per 1,000 cubic feet.

In London, October Brent crude was up 34 cents at $109.75 a barrel on the ICE Futures exchange.

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