Wednesday March 11, 2009.

DAILY MARKET REPORT.

Tuesday Markets Closing Prices.


KLCI 855.25 down 2,97.
DJIA 6,926.49 up 379.44 or 5.8%.
Crude Oil US$45.71.
May FCPO RM1,995.
Ringgit 3.6900.


NEWS.

Government unveils RM60 billion stimulus package over 2 years in 2009 and 2010. The package will have four thrusts:-

- Reducing unemployment and increasing employment opportunities (RM2 billion).
163,000 training and job placementin public and private sectors with 50,000 for vacant posts and 13,000 contract officers in various government agencies.
- Easing the burden of the rakyat, in particular vulnerable groups (RM10 billion).
- Assisting the private sector in facing the crisis (RM29 billion) and
- Building capacity for the future (RM19 billion).

The RM60 billion stimulus will come from the folloowing sources:-
RM15 billion -Fiscal injection. RM10b this year and RM5b next year.
RM25 billion - Guaranteed funds. RM5 billion working capital for SME with paid up capital below RM20 million. RM5 billion for industry restructuring guarantee fund scheme. RM15 billion for financial guarantee institution with initial paid up of RM1 billion to assist companies accessing the bond market.
RM10 billion - Equity investments for Khazanah Nasional.
RM7 billion - Private finance initiatives (PFI) and off budget projects.
RM3 billion - Tax incentives.

According to the Government :-
- Exports will decline in line with deteriorating world demand. In January 2009 exports declined 27.8%.
- Commodity exports, in particular, crude oil and gas as well as palm oil have experienced a sharp declines in prices.
Our FDI inflows are expected to be half that in 2008, declining to RM26 billion compared wuth RM51 billion.
- Bursa Malaysia has declined due to global meltdown in financial markets.

The government will issue syariah compliant RM5 billion, 5% saving bond.

A total RM1 billion was spent on 6,267 projects from the fir to fst stimulus package of RM7 billion. By June this year, another RM5.2 billion worth of contracts would be awarded and implemented.

As a results, the governments has revised downward the GDP forecast for 2009 to between -1% to 1%.

ANALYSIS - The government did a good job in addressing the need of SME by providing the guaranteed funds. The further liberalization of the equity and capital markets goes against the world trend after the debacle in the U.S. The RM5,000 trade in rebates for national cars of 10 years old or more, the amount is too small to make a real impact. As compared with the first stimulus package, speed on the implementation is still the essence here.

WORLD NEWS.

IMF warns of global "Great Recession".

Global growth could dip below zero - IMF.

The U.S. had revised downward the global demand for oil to 84.7 million barrels per day.

Japan set for double digit contraction in Q1 2009.

Deflation grips China as economy struggles.

Asian stocks gain, but rise seen fragile.

U.S. stocks recovered on short covering as possible uptick rule on short selling and on Citibank internal memo.


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