Asian markets lower on poorer Wall Street performance

PETALING JAYA: The benchmark index halted a two-day winning streak by opening lower Wednesday.

At 10am, the Kuala Lumpur Composite Index (KLCI) was down 5.2 points, or 0.6%, at 913 points. Losers led gainers 40 to 191, while 115 counters were unchanged.

Some 58.6 million shares changed hands, worth over RM99.4mil.

Regional bourses were also trading weaker Wednesday in line with the poorer performance on Wall Street Tuesday.

Nikkei 225 dropped 2.8%, Kospi fell 1.5%, Hang Seng Index declined 1.1% while Singapore Straits Times Index was down by 2%.

Sentiment turned cautious as several US companies missed earnings estimate in their financial results released, and a similar trend is expected in Asia and the rest of the world.

The Dow Jones Industrial Average fell 2.5% while crude oil for November delivery settled at US$70.89 per barrel.

The KLCI was dragged by selling in blue chips including IOI Corp Bhd, MISC Bhd and Public Bank, which dropped 10 sen each to RM3.10, RM8.50 and RM8.80 respectively. Sime Darby was also down by 5 sen to RM6.30 in anticipation of weaker crude palm oil prices.

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Asian markets rally, KLCI up nearly 19pts

KUALA LUMPUR: Asian markets rallied in early trade on Tuesday, as investors rushed back into equities, spurred by massive gains on Wall Street following the massive rescue plan for the European and US financial institutions.

At 9.30am, the KL Composite Index was up 18.58 points or 1.95% to 969.34. Turnover was 136.7 million shares valued at RM222.4mil. There were 327 gainers, 38 losers while 86 counters were unchanged.

Japan’s Nikkei 225 led the rally, surging 13.08% or 1,082 points to 9,359.08, Singapore’s Straits Times Index jumped 6.29% to 2,206.98 while Shanghai’s A Share Index opened 3.32% higher at 2,250.23.

Light crude oil rose US$1.86 to US$83.05 while the ringgit strengthened to RM3.484 against the US dollar.

Stocks on Wall Streets rallied last night as investors reacted positively to the US Government’s plan to buy stakes in banks and Federal Reserve’s US$700bil rescue plan for the troubled financial system.

Most of the European equity bourses also rebounded after the countries leaders promised to inject funds into the financial market, as the British Government pledged to pump US$63bil into the Royal Bank of Scotland, HBOS and Lloyds TSB.

“Following these positive vibes, investors in the regional bourses in Asia, including Malaysia may be cheered up and motivated to pick up their investment appetite again, especially on blue chips stocks which have been severely battered in the past one week,” said HwangDBS Vickers Research.

DiGi, Shell and Public Bank foreign rose 40 sen each to RM22.80, RM10.10 and RM8.80 respectively while Tanjong and PPB added 30 sen each to RM12.70 and RM8.20. BCHB and LPI gained 25 sen each to RM7.65 and RM9.55.

KNM was the most active with 16.3 million shares done, rising two sen to 98.5 sen. IOI Corp rose 12 sen to RM3.62 while AMMB gained five sen to RM2.57.

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Oil rebounds in Asia Monday on Europe bank rescue plan

SINGAPORE: Oil prices rebounded from a 13-month low to rise above US$80 a barrel Monday in Asia on expectations that a pledge by European countries to keep banks from collapsing may stabilize a tumultuous global financial system.

Light, sweet crude for November delivery was up US$2.76 to US$80.46 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.

The contract fell Friday $8.89 to $77.70, the lowest price since Sept. 10, 2007.

"The turnaround in oil today is due primarily to the European bank rescue plan,'' said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore.

"It's a shot in the arm, though it's too early to know if this will restore confidence to the credit markets.''

At an emergency summit of leaders of the 15 euro-zone countries in Paris on Sunday, European governments agreed to guarantee new bank debt until the end of 2009, allowed governments to help banks by buying preferred shares, and vowed to rescue important failing banks through emergency recapitalization.

Individual governments will announce how they will implement the measures.

The plan follows Britain's US$88 billion plan to partly nationalize major banks and promise to guarantee a further US$438 billion of loans to shore up the banking sector.

U.S. lawmakers Sunday urged quick action by President George W. Bush on measures to make direct purchases of bank stock to help unlock lending.

Treasury Secretary Henry Paulson has indicated the administration will use part of the recent US$700 billion bailout Bush signed Oct. 3 to have the government take ownership stakes in banks.

The administration has not indicated when it would announce its next steps.

"These rescue plans will not prevent a global economic slowdown, but they may ease the pain,'' Shum said.

"I expect further downward volatility in the oil market, though talk of US$50 or US$60 is extreme.''

Oil prices have fallen about 45 percent since soaring to a record $147.27 on July 11.

Investors are watching for signs that the Organization of Petroleum Exporting Countries may cut production at an extraordinary meeting in Vienna next month.

Iranian Oil Minister Gholam Hossein Nozari on Saturday called for stability in the oil market, saying the biggest challenge now was a decline in oil demand because of a global economic recession.

"There won't likely be any overt cuts, but there could be an informal tweaking of production that could provide support for prices,'' Shum said.

"It's politically unacceptable for OPEC to make cuts in the middle of a global deceleration.''

In other Nymex trading, heating oil futures rose 6.02 cents to US$2.27 a gallon, while gasoline prices gained 5.60 cents to US$1.86 a gallon. Natural gas for November delivery rose 1.5 cents to US$6.55 per 1,000 cubic feet (28 cubic meters).

In London, November Brent crude rose US$2.18 to US$76.27 a barrel on the ICE Futures exchange.

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Asian markets fall on US economy worries

KUALA LUMPUR: Asian markets started the new week on a weak note on Monday, with the local bourse also slightly lower in cautious trade as investors worried about the deteriorating fundamentals of the world’s largest economy despite the Congress approval for the US$700bil bailout.

At 9.30am, the KL Composite Index was down 3.19 points to 1,013.51. Turnover was 28.99 million shares valued at RM55.28mil. There were 54 gainers, 112 losers and 80 counters unchanged.

Asian markets fell with Shanghai’s A Share Index opening, after a week-long break, to down 2.36% or nearly 60 points to 2,351.912.

Japan’s Nikkei 225 fell 3.5% to 10,554.95, Singapore’s Straits Times Index 2.4% lower to 2,242.09 while South Korea’s Kospi declined 3.54% to 1,369.45. Light crude oil fell US$2 to US$91.88 per barrel.

HwangDBS Vickers Research said despite showing resilience of late, we expect Malaysian stocks to drift downward ahead. It said the KLCI would probably back off from 1,020, which was the immediate resistance hurdle, although the KLCI might remain above the 1,000 threshold for the time being.

“This comes as investors’ focus in the US has shifted from the huge bailout package (which was finally passed by the lawmakers on Friday) to assessing the deteriorating fundamentals of the world’s largest economy. Reflecting the low confidence, major equity indices on Wall Street were down between 1.4% and 1.5% at the closing bell last Friday,” it said.

Plantation stocks fell, with Kulim down 30 sen to RM5.30, KL Kepong sliding 25 sen to RM8.80 and Tradewinds Plantations 11 sen to RM1.68 while United Plantations declined 10 sen to RM11.10 and Asiatic eight sen to RM4.40.

Puncak gave up part of its gains, down 14 sen to RM3.24 while Bursa, EON Cap and Tanjong fell 10 sen each to RM6.35, RM4 and RM13.40 respectively.

IOI Corp was the most active, down six sen to RM4.40. AirAsia rose three sen to RM1,.26 on news report that it could be privatised.

Kim Loong-WA rose 11 sen to 88 sen, Hai-O eight sen to RM3.54 while Hwa Tai added five sen to 50 sen.

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Rejection of US bailout proposal hits world stock markets

PETALING JAYA: For those who predicted that the era of American dominance in the economic and political spheres was waning with the rise of China and India, the stream of bad news from Wall Street and its negative impact on major markets must surely come as a reality check.

It has put to rest ideas about decoupling — that emerging markets won’t be affected by a downturn in the United States. The ideas were bandied about by analysts and economists until the first half of the year when it became obvious a combination of US financial woes and high oil prices had begun to negatively impact investors’ confidence.

This has been made worse by the rejection by US lawmakers of a US$700bil bailout package for the country’s ailing financial services industry on Monday. The news caused the Dow Jones Industrial Average to plunge to a 21-year low of 10,365.45, losing 777.98 points or 6.98%, and wiping out US$1.2 trillion in value.

Standard & Poor’s North America Equity Research chief technical strategist Mark Arbeter said in a report that the market was close in time to “a major market bottom” although the level at which it would bottom out was still debatable.

Meanwhile, Citigroup Inc analyst Yiping Huang said the fading hopes for a speedy rescue plan would accelerate the downward spiral of the financial markets, not only in the United States but also in other countries as well.

“Rejection of the bailout plan in the US could set into new motion the vicious cycle between deleveraging and falling asset prices,” he said, adding that there was a possibility the Federal Reserve might shift its focus to an interest rate cut with the European Central Bank and the Bank of England following suit.

Asian bourses, which were closed when the measure failed to pass after a four-hour debate in the US House of Representatives, began yesterday’s trading firmly lower and were largely down except for Hong Kong’s Hang Seng Index, which was up 135.53 points, or 0.76%, at 18,016.21.

Tokyo’s Nikkei 225 closed down 483.75 points, or 4.12%, to 11,259.86, Singapore’s Straits Times Index lost 2.43 points, or 0.10%, to 2,358.91 and Seoul’s Kospi Index fell 8.30 points, or 0.57%, to 1,448.06.

Singapore’s CapitaLand Ltd saw its share price drop 18% to S$2.66 in intraday trade on fears the continuing crisis in the United States might affect housing demand. It was the biggest one-day drop since Jan 9, 1998 for the South-East Asia’s largest property developer. City Developments Ltd, the island state’s number two developer, fell 15% to S$7.33, according to Bloomberg.

Manufacturers of big-ticket consumer items also felt the impact from the US with Japanese vehicle makers’ share prices tumbling. Toyota Motor Corp fell 4.6% to 4,380 yen while Honda Motor Co and Nissan Motor Co lost 3.7% and 4% respectively to 3,090 yen and 697 yen.

European bourses, which were down on Monday, pared their losses yesterday following speculation the US government’s bailout plan might be revived. Dexia SA, a Brussels-based firm that is the largest lender to local governments, saw its share price rise 15% in intraday trade as the Belgian and French governments put together a 6.4 billion euros rescue plan to help the company cope with the financial turmoil.

This followed a string of bailouts in Europe with Britain’s Bradford & Bingley Plc nationalised, Germany’s Hypo Real Estate Holding AG given a 35 billion euros loan guarantee to fend off bankruptcy and a 11.2 billion euros lifeline thrown to Fortis by the governments of Belgium, Luxembourg and The Netherlands.

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