The Star Online: Business
The Star Online: Business |
- CIMB Research: Tenaga remains Trading Buy, TP RM7.98
- Fitch Ratings cuts 2012 growth forecasts for China, India
- Wall Street up as Spain moves toward reforms
| CIMB Research: Tenaga remains Trading Buy, TP RM7.98 Posted: 27 Sep 2012 06:47 PM PDT KUALA LUMPUR: CIMB Equities Research is maintaining Tenaga Nasional as a Trading Buy but not an outperform due to election uncertainty. "Our earnings estimates remain unchanged, as does our target price (RM7.98), still based on 1.3 times price-to-book value (P/BV) or 35% below to Tenaga's long-run average," it said. CIMB Research said energy reforms, lower coal prices and strong electricity demand would catalyse the stock. "We learnt from Tenaga on the sidelines of the 4th national energy forum that Petronas did not attend a meeting with the economic council on Sept 24. The research house said it came to understand the meeting was set up to discuss the implementation of a stabilisation fund that would enable Tenaga to be compensated for its cost of generation while keeping end-user electricity tariffs affordable. "We gather that the stabilisation fund was agreed to in principle and it was discussed that Petronas should bear the full cost of the stabilisation fund (RM5bil). "Prior to the meeting, we understood that the fund would be capitalised by government agencies via a bond issue. This appears to have been put on the backburner," said CIMB Research. |
| Fitch Ratings cuts 2012 growth forecasts for China, India Posted: 27 Sep 2012 06:40 PM PDT KUALA LUMPUR: Fitch Ratings has cut its 2012 growth forecasts for China to 7.8% from 8% and India to 6% from 6.5%. "Both regional giants face a deteriorating global growth outlook with diminished willingness or capacity to respond with domestic policy loosening, compared with 2009," it said on Friday. Below is the statement issued by the international ratings agency. Slower exports are weighing on China's growth, but Fitch views the slowdown as also reflecting the authorities' efforts to squeeze consumer and house-price inflation out of the system after the strong credit-led stimulus of 2009-2010. Fitch expects slowing construction activity to knock about 0.8 percentage points (pp) off China's growth in 2012. The agency expects only marginal policy loosening unless the labour market deteriorates sharply. Fitch does not expect a "hard landing" in China given the authorities' scope for fiscal and monetary policy flexibility if they choose to use it. The resilience of the labour market seen in current data suggests growth of 7.5%-8% may be in line with the economy's potential rate. The weak corporate profitability poses downside risk for China's economy. This could eventually incline firms to shed labour which would in turn affect consumption, currently a resilient part of the outlook. Real estate and construction have been a source of downside risk given the authorities' restrictive policies in the sector following its rapid growth in 2009-2011. However, the residential real estate market has shown some signs of turning the corner in summer 2012, which leans against a negative outcome. A significant deterioration in financial stability and in the ability of the banks to transmit monetary loosening is another but more remote risk to the outlook. India's economic outlook remains challenging. Investment rose just 0.7% yoy in Q212, with higher-frequency indicators pointing to another weak outturn in Q3. Ongoing concerns over government economic and investment policy may be weighing on business confidence. The authorities' ability to respond with looser policy is constrained by India's high inflation, fiscal deficit and public debt. Fitch projects India's general government deficit at 8.5% of GDP in fiscal 2012, leaving little room for fiscal easing. A number of quarters of weak investment, in turn, may be starting to affect the economy's supply capacity, pointing to a weaker growth outlook. The authorities have announced a range of reforms in September 2012 including liberalisation of FDI in multi-brand retail which may help to restore confidence and lift investment, although the volatile political environment points to implementation risk. The growth outlook is holding up better elsewhere in emerging Asia in part because of the growing importance of domestic demand in many regional economies. The 0.3pp reduction in Korea's forecast for 2012 to 2.5% is modest and underpins the open, trade-driven economy's resilience, a key factor behind Fitch's upgrade of the Korean sovereign to 'AA-' in September. Growth in Malaysia and Thailand will benefit in the short run from public-sector-led investment. Indonesia's growth forecast is unchanged at 6%, reflecting the increasing importance of domestic demand as a driver of that country's growth, notwithstanding the importance of commodity exports. Fitch has cut its forecast for growth in the major advanced economies by 0.2pp in 2012 (to 1%) and 0.3pp in 2013 (to 1.4%). The agency has revised down its expectations in the euro area to a 0.5% contraction in 2012 and just 0.3% growth in 2013, while the US forecast remains unchanged at +2.2%/+2.3%. |
| Wall Street up as Spain moves toward reforms Posted: 27 Sep 2012 06:33 PM PDT NEW YORK: The S&P 500 snapped a five-day string of declines in a broad-based rally on Thursday, as Spain's plans for economic reform eased some worries about one of the euro zone's most troubled countries. The benchmark S&P 500 rose 1 percent, its biggest percentage gain since the Federal Reserve announced its plan for a third round of stimulus on September 13. Spain announced a detailed timetable for economic reforms for the fiscally troubled nation and a tough 2013 budget based mostly on spending cuts. "Any information that gives some understanding about what's going to happen is good for the market. It's small news, but more certainty is good," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois. The EU's Economic and Monetary Affairs Commissioner, Olli Rehn, said Spain's detailed timetable for economic reforms goes beyond what the European Commission has asked of Spain. Rehn said it is an ambitious step forward. Gold stocks ranked among the day's bigger gainers in the wake of Spain's news; the PHLX gold/silver index <.XAU> jumped 3 percent. Adding to the rally was a last-minute push by investors to reposition portfolios ahead of the quarter's end, with the S&P 500 on track for a gain of 6.2 percent in the third quarter. Friday will be the quarter's last trading day. "What we've seen is broadly a consolidation, but also an attempt by fund managers to position properly for the rest of the year, to be in the best sectors," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston. The Dow Jones industrial average shot up 72.46 points, or 0.54 percent, to 13,485.97 at the close. The Standard & Poor's 500 Index rose 13.83 points, or 0.96 percent, to finish at 1,447.15. The Nasdaq Composite Index gained 42.90 points, or 1.39 percent, to close at 3,136.60. Volume was below average at roughly 5.74 billion shares traded on the New York Stock Exchange, the Nasdaq and the Amex, compared with the year-to-date average daily closing volume of 6.53 billion. Advancers outnumbered decliners on the NYSE by a ratio of slightly more than 3 to 1,and on the Nasdaq, about three stocks rose for every one that fell. While the Nasdaq led Thursday's gains, it also led the market's declines earlier this week - its volatility possibly reflecting investors' nervousness about the U.S. economic outlook, analysts said. Apple, up 2.4 percent at $681.32, gave the biggest lift to the Nasdaq. The semiconductor index gained 2.3 percent, bolstering the Nasdaq 100. Intel Corp was up 1.9 percent at $23.09. After the bell, U.S.-listed shares of Research In Motion surged 15 percent to $8.21 after the Canadian maker of the BlackBerry reported a smaller-than-expected quarterly loss. On the deal-making front, Tempur-Pedic International Inc agreed to buy rival mattress maker Sealy Corp for about $242 million and assume about $750 million in debt. Tempur-Pedic shares jumped 14.4 percent to $30.64, while Sealy's stock rose 2.3 percent to $2.19. In the earnings realm, Discover Financial Services reported third-quarter earnings that beat expectations - and its shares climbed 7.3 percent to $39.71. Stocks were rising before Spain's announcement on hopes that China would take steps to spur its slowing economy. China has severely underestimated this year's global economic slowdown, and further cuts to Chinese interest rates or bank reserve requirements will hinge on any new deterioration in the external environment, a central bank adviser said on Thursday. U.S. economic data was mixed. A report showed initial jobless claims dropped by 23,000 to 359,000, sharply exceeding the decline of 4,000 that had been expected. But the final read on second-quarter gross domestic product showed growth of just 1.3 percent, weaker than an expected 1.7 percent. And August durable goods orders tumbled 13.2 percent, much more than the expected drop of 5 percent. - Reuters |
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