Thursday, 12 February 2009.

DAILY MARKETS REPORT.

Wednesday Markets Closing Prices.


KLCI 897.07 down 6.45.
DJIA 7,939.53 up 50.65 or 0.64%.
Crude Oil US$35.98.
April FCPO RM1,955.
Ringgit 3.6020.


LOCAL NEWS.

BNM's Zeti says the interest rates to remain on hold and too low of an interest rates is not constructive. Instead the banks were encouraged to be pre-emptive in dealing with borrowers in difficulty and to do this well before their loans become non-performing.

Analysis - OPR at 2.5% and most banks BLR at 5.95%, in my book are still very very high considering the current and future economic environment. BNM should be more pro-emptive in setting their monetary policy too.

Gas and electricity tariff to be reviewed twice yearly in January and June. Meanwhile, government reduce electricity tariff by 3.7% and gas tariff for industrial usage between 32% and 35%.

Analysis - The tariff downward revision should be more as the price of oil and gas has come down quite substantially. Nevertheless, the twice yearly review hopefully will rectify that.

Independent Power Producers against power pact review.

Analaysis - If the government can take over the water assets of all the state in Malaysia, I believed they should do the same things to all the IPP's assets too.

Stock Recommendation - TNB Bhd RM5.80, SELL and AVOID, as the tough economic condition, heavy foreign loans exposure and slower demand will still tremendously affecting TNB bottomline even though the downward revision of electricity tariff put only a slight dent to their revenue and bottom line.

Malaysia Industrial Production Index for December 2008 down drastically by over 15% year on year and by over 5% as compared to November 2008.

Analysis - A prelude to what is going to happen in the coming months to the Malaysian economy. Urgency in clear policy matters from the government is needed.

MITI's Muhyiddin advised journalists to write more about the economics rather than politics.


WORLD NEWS.

U.S. Senate and Congress reached a compromise on US$789 billion economic stimulus package and ready for final vote today. About 35% of the plan consisted of tax cuts and the remainder would be government spending.

Analysis - The amount is substantially lower than US$829 passed by the Congress and spread over a longer period of over 2 to 3 years. It's still look like it will take some time before the economy reach a bottom and stabilize especially as the banking system is still in disarray.

China exports in January 2009 tumbled 17.5% and imports down sharply by 43.1%.

Analysis - China economy badly needed their US$586 billion stimulus package to works immediately by creating enough domestic demand as the overly dependent exports driven economy is decelarating very fast and heading toward a recession too.


By:-
Kamel Bin Mohd Yusoh.
Kenanga Investment Bank Bhd,
013-6306544 or 03-21634549/50.