Thursday, February 11, 2010

Stocks to watch: Ho Hup, Green Packet, MAS, Petra Perdana

KUALA LUMPUR: Stocks on Bursa Malaysia are expected to start off on a firmer note on Friday, Feb 12 after a pledge by European leaders to help debt-stricken Greece encouraged investors back in to equity markets. Wall Street gained as much as 1.4 percent, also supported by a dip in weekly jobless claim, with the Nasdaq leading the gains.

The Dow Jones industrial average rose 105.81 points, or 1.05 percent, to 10,144.19. The Standard & Poor's 500 Index gained 10.34 points, or 0.97 percent, to 1,078.47. The Nasdaq Composite Index added 29.54 points, or 1.38 percent, at 2,177.41.

Stocks to watch on Friday are Ho Hup CONSTRUCTION [] Company Bhd, GREEN PACKET BHD [], MALAYSIAN AIRLINE SYSTEM BHD [] and PETRA PERDANA BHD []. However, trading is expected to be light in view of the holidays ahead next week.

Meanwhile, the fight for control of Ho Hup has resumed following a week-long lull.

Ho Hup's second-largest shareholder, Datuk Low Tuck Choy who holds 23.11 million shares representing a 22.66% stake in the company, has called for another EGM to remove the present board of directors after the first one was called off owing to a technicality.

The first EGM, which was scheduled for Feb 4, was cancelled after the company's largest shareholder, Extreme System Sdn Bhd, obtained a restraining order from the High Court here.

Green Packet Bhd posted net loss of RM94.54 million in its fourth quarter ended Dec 31, 2009, compared with RM37.22 million in losses a year ago as it made additional provisions for impairment of long term investments, investments in associates and inventories of about RM26 million.

MAS's share price and the entitlement to the rights shares, which fell sharply on Thursday, should stabilise today. Analysts said the heavy trading in the entitlement to the rights shares was "churned" by traders and viewed the selling as overdone.

MAS chief financial officer Mohd Azha Abdul Jalil tells the Edge FinancialDaily that MAS's rights issue has the support of Khazanah Nasional and Penerbangan Malaysia Berhad who have undertaken to subscribe for their entitlements which amounts to 69.33% of the rights issue.

"Further, Khazanah has undertaken to apply for excess rights amounting to 1.96% of the rights issue. The remaining open portion of the rights issue has been underwritten by Maybank Investment Bank Bhd, CIMB Investment Bank Bhd and RHB Investment Bank Bhd which has provided MAS with a high degree of certainty in this equity fund raising exercise," he said.

In Petra Perdana Bhd, its new board of directors has yet to decide on whether to retain or dispose of its remaining 29.59% stake in PETRA ENERGY BHD [], said its executive director Shamsul Saad.

EON CAPITAL BHD [] (EONCap), in a strong capital position, is in no hurry to find a merger partner or be taken over, said EON Bank Bhd group CEO Michael Lor.

Market Commentary (After Market Close): Dollar's Downward Drift Broadly Lifts Stocks

Participants continue to take their cues from the dollar, which surrendered a strong gain against a basket of foreign currencies to give both stocks and commodities a broad-based lift.

Stocks actually started the session on weak footing as the Dollar Index made its way from a moderate loss to a healthy gain. The move led many to dismiss a relatively pleasing weekly jobless claims report, which featured larger-than-expected decline in initial jobless claims to 440,000 and a continuing claims tally of 4.54 million -- a one-year low.

Participants also shrugged off China's softer-than-expected January consumer inflation reading, which helped Hong Kong's Hang Seng spike 1.9% (Japan's Nikkei was closed). The news wasn't cheered as much in mainland China, where the Shanghai Composite tacked on an unimpressive 0.1%.

Leaders from the European Union finally stepped forward to officially announce that financial assistance will be made available to Greece. No specific plan was provided, though, so many continue to speculate how much money will be involved and whether aid will extend to other countries that currently face fiscal challenges. Unlike earlier this week, the notion of such support failed to bolster the euro, which in turn gave the greenback room to run.

The Dollar Index was up as much as 0.6% this session. That put it back in touch with its weekly high, which was set Monday. However, the greenback eventually gave up its gain and finished flat.

The reversal represented an impetus for stocks to make a broad push higher. Natural resource plays made the best gains as both the materials sector and the energy sector advanced 1.6%, more than any other major sector. More impressive was that they outperformed the broader market for the entire session, even in the face of a firmer dollar during the early going.

Large-cap tech also exhibited considerable strength this session. That helped the Nasdaq book a better gain than either of its counterparts.

Financials had outperformed in the previous session, but lagged this time around. The sector mustered a mere 0.2% gain amid a pair of daunting headlines. The first was a feature from Financial Times that Gordon Brown, of the United Kingdom, indicated that leading economies are close to agreeing on a global bank tax. News that Senators Warner and Corker continue to work to put financial regulation back on track followed. Still, diversified bank stocks were able to trim collective losses of more than 1% to a more moderate 0.4% into the close.

Commodities also had a strong session, such that the CRB Commodity Index closed with a 1.3% gain at its weekly high. Precious metals were especially strong as they closed 2.3% higher, collectively.

Participants showed little taste for Treasuries this session. Part of that was owed to strength among stocks, while some stemmed from disappointing demand at a $16 billion auction of 30-year Bonds. The auction attracted a bid-to-cover ratio of 2.36 and an indirect bid of 28.5%. Its yield came in at 4.72%, which is above the 4.69% that had been expected by analysts.

Tuesday, February 9, 2010

US Market Commentary (After Market Close): Participants Positive on Greece Bailout Speculation

Stocks pushed higher in broad-based fashion as participants took their cues this session from the dollar, which was weakened despite conflicting reports about whether Germany will lead a bailout for Greece.

Concern for the fiscal health of Greece had sent many global participants to seek safety in the U.S. dollar during recent sessions, such that the dollar hit a multimonth high against competing currencies last week. However, speculation today that Greece could receive help from Germany gave the euro strength, which dropped the Dollar Index for a near 0.7% loss this session.

There hasn't been any official statement regarding whether Germany will support Greece or if any plan would offer support to other troubled European countries, like Portugal and Spain. Notably, any such plan would likely weigh on Germany's fiscal health, but the market still treated the notion of any such effort as a positive.

Given the greenback's weakness this session, natural resource plays made the strongest moves. As such, materials stocks advanced a collective 2.5%. An upgrade of Monsanto (MON 75.72, +1.51) from analysts at Bank of America's Merrill Lynch helped shares of the seed company show leadership.

Morgan Stanley's upgrade of Caterpillar (CAT 53.53, +2.75) helped shares of the industrial outfit log their best session in nearly one month. The stock was a primary leader in the Dow, which had been up more than 200 points at its session high.

Fellow Dow component Coca-Cola (KO 54.01, +1.36) also provided leadership to blue-chips, even though it missed Wall Street's consensus earnings estimate for the latest quarter.

Energy stocks were broadly strong as all 39 of the components in the S&P 500 Energy Sector advanced this session. Their collective 2.0% gain came with help from the broader market and a 2.6% rise in oil prices to $73.75 per barrel.

This session's broad-based advanced helped financial stocks recoup some of their losses from the prior session. It had been whipsawed from an early gain of more than 1% to a modest loss before it settled with a 1.1% gain. Bank of America (BAC 14.47, -0.01) and Citigroup (C 3.18, +0.03) saw mixed interest amid news that Standard & Poor's lowered its outlook on the pair to Negative from Stable.

A weak session for Treasuries sent the benchmark 10-year Note down 19 ticks. A 2.83 bid-to-cover ratio and an indirect bidder take of 51.2% in this afternoon's $40 billion auction of 3-year Treasuries failed to offer support. The benchmark Note will be back in focus tomorrow, when a widely-watched auction of 10-year Treasury Notes will take place at 1:00 PM ET. An auction of 30-year Bonds will follow on Thursday at 1:00 PM ET.
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