Zelan up 9% after US-based fund buys 5% stake

Shares of ZELAN BHD [] rose 9% in late afternoon trade on Wednesday, Aug 4 after US-based fund Grantham, Mayo, Van Otterloo & Co (GMO) emerged as a substantial shareholder with a 5.02% stake.
A company filing with Bursa Malaysia showed the global investment management firm had acquired 28.28 million shares as of Aug 2.

GMO is a private partnership and as at June 30, 2010, it managed more than US$94 billion in client assets, US$32 billion of which was in asset allocation strategies.

Delta Petroleum plans $130M asset sale

Delta Petroleum Corp. -- which earlier this month had a major planned asset sale fall through -- said Monday it has reached a new deal to sell off another package of assets for $130 million to pay down debt.

The Denver oil and gas company (NASDAQ: DPTR) said it has reached agreement with Wapiti Oil & Gas LLC to sell various "non-core assets." The deal is expected to close next month, Delta said.

World may see recession sooner than expected

The global rebound is “fragile” and shocks could push the world toward another recession, according to Government of Singapore Investment Corp., manager of more than US$100 billion ($137 billion) of the nation’s foreign reserves.

Risks to the global recovery have increased due to Europe’s debt turmoil, continued deleveraging in the US and protectionist pressures, Tony Tan, deputy chairman of GIC, said in a speech in Singapore today. The fund is ranked the world’s sixth-largest state investment company by Sovereign Wealth Fund Institute in California.

“The economic recovery, while real, is fragile and there is a risk that negative shocks could push the global economy towards a recession sooner than expected,” Tan said. “The strong rebound in global industrial production is peaking while monetary and fiscal policies, particularly in the larger emerging economies, are being normalised.” Policy makers in most developed economies have refrained from raising interest rates from record lows amid concern the global recovery will falter. The International Monetary Fund this month said financial-market turmoil has increased the risks to the rebound, and Moody’s Investors Service lowered its credit ratings on Portugal and Ireland.

Thailand ups interest rates by 25bps to 1.5%

Thailand's central bank raised interest rates by 25 basis points on Wednesday, July 14, the first increase since the global financial crisis, citing the recovery in the economy and rising inflationary pressure across Asia.

The Bank of Thailand raised its one-day repurchase rate to 1.50% from a record low of 1.25%, as expected, and analysts said another increase in August was likely to curb inflationary pressure in Southeast Asia's second-biggest economy.

Bank Negara ups OPR by 25bps to 2.75%

Bank Negara raised the Overnight Policy Rate (OPR) by 25 basis points to 2.75% at the Monetary Policy Committee (MPC) meeting on Thursday, July 8. The central bank said the MPC considered the new level of the OPR to be appropriate and consistent with the current assessment of the growth and inflation prospects. It also said the stance of monetary policy continues to remain accommodative and supportive of economic growth. Bank Negara said prices were expected to rise at a gradual pace in the coming months, in line with the continued improvement in domestic economic conditions, and taking into account possible adjustments in administered prices.

"Don’t panic!”

“Don’t panic!” was good advice provided by Lance-Corporal Jones to his commanding officer in the 1970s BBC comedy series “Dad’s Army”. Perhaps it should now be directed to central banks and increasingly jittery investors.

The last six months have witnessed a roller coaster as markets and policymakers have alternated between euphoric optimism and crashing pessimism with bewildering speed.

Many seem convinced the world’s major economies are poised on either the brink of liquidity-induced inflation; a renewed descent into recession and deflation; or perhaps both at different times, with near-term disinflation is followed by an upsurge in inflation later.

But what if policymakers and investors are overestimating the likelihood of extreme outcomes? Past experience suggests outcomes are much more likely to fall somewhere in the middle, as the economy “muddles through”; the likelihood of extreme outcomes being realized is actually very small.

Wilmar says key Asian markets have sugar deficits

Wilmar International, buying Australia’s biggest sugar refiner, said key Asian markets suffer from deficits of the sweetener and its purchase will help expansion plans in Indonesia.

Wilmar is willing to spend as much money as Sucrogen, acquired for A$1.75 billion ($2.08 billion) from CSR Ltd., needs for its expansion plans, Chief Executive Officer Kuok Khoon Hong told reporters at a conference in Singapore today. Wilmar plans to build 200,000 hectares (494,210 acres) of plantations in Indonesia’s Papua province within 5 years, Kuok said.

Kuok is taking advantage of Wilmar’s record profit to fund his strategy to diversify earnings at the world’s largest palm oil trader. Sugar demand in Asian markets, including China and India, outstrips annual supply by 30 percent, Wilmar said in a presentation filed today, citing the International Sugar Organization.

Indonesia’s attraction lies in “its deficit in sugar, the large tracts of land available to build sugar plantations,” Kuok said. Prices in the nation are also higher than international rates, he said.

Wilmar rose 1.2% to $5.95 in Singapore trading. Raw sugar has slumped 38% this year on the ICE Futures U.S. in New York. The sweetener reached a 29-year high of 30.4 cents on Feb. 1 after adverse weather reduced production in Brazil and India.

Three-A Resources Berhad (3A)

3A remains focused on its core strength in the Food & Beverage industry through its wholly-owned subsidiary, SSSFI. SSSFI is one of the leading Food & Beverage ingredients manufacturers in the country with products ranging as follows:

• Caramel Colour (Full Range)
• Glucose Syrup; High Maltose Syrup
• Soya Protein Sauce (Hydrolyzed Vegetable Protein; HVP)
• Natural Fermented Vinegar; Distilled Vinegar; Rice Vinegar
• Caramel Powder; HVP Powder; Soya Sauce Powder
• Maltodextrin

Buy (Target Price RM2.20)

China Growth Concern

Stocks and U.S. index futures fell, with the MSCI World Index dropping to a three-week low, on concern that growth in China, the engine of the world’s economic recovery, will slow.

Investor sentiment worsened after the Conference Board said its China leading economic index rose 0.3 percent in April, less than the 1.7 percent gain reported June 15.

Winners and losers from a firmer yuan

China's signal that it will let its yuan currency appreciate is a boost to consumer firms, airlines and insurers, but may dampen the outlook for exporters and commodity producers.The immediate winners from a yuan revaluation would be firms that buy raw materials and other inputs overseas, such as airlines purchasing jet fuel and automakers sourcing parts.Chinese exporters are likely to be the hardest hit. A relatively mild yuan appreciation against the dollar of about 5 percent would cause losses at these companies, according to a Reuters poll conducted at China's top trade fair in April.

China Airlines - Win

China's three top carriers, Air China, China Eastern Airlines and China Southern Airlines, which borrow in foreign currencies to pay for their aircraft but generate revenue in yuan, could benefit the most. Airlines also use dollars to buy fuel.

Automakers - Win

Foreign automakers which sell cars in the world's largest vehicle market, such as BMW, Volkswagen, General Motors, PSA Peugeot Citroen, the Renault-Nissan alliance and Fiat SpA, should also gain.BMW would benefit the most if the yuan continues to rise against the euro — an outcome that's far from certain — as its auto manufacturing joint venture with Brilliance China imports about half its parts, mainly from Germany. BMW shares rose more than 3% in early Monday trade.

Consumers, techs - Win

US firms such as General Electric and Proctor & Gamble are likely to make currency exchange gains when their China profits are converted into US dollars.PC maker Lenovo, which earned 47% of its sales in China in 2009, also reports earnings in US dollars. Lenovo shares were up more than 5% on Monday.

Foreign heavy machinery makers - Win

The world's largest maker of earth-moving equipment, Caterpillar Inc, could be a major winner. The US machinery giant sells billions of dollars worth of machinery and products to China each year. Its group president said on Saturday that Beijing's move would help lift US exports.

Luxury firms - Win

A firmer yuan would likely boost other Asian currencies as a strong yuan is seen by investors as a pledge of confidence for Asia's growth. That should help luxury goods makers, whose imported products will be cheaper across the region, just as more Asians benefit from increased wealth.At the top of the list are those luxury goods companies for whom Asia is a key market, such as Tiffany & Co, Bulgari SpA, Hermes International SCA and LVMH Moet Hennessy Louis Vuitton.

Chinese financials - Win

Chinese insurance companies such as China Life and Ping An Insurance should benefit as a yuan revaluation is expected to boost China's domestic A-share stocks, which account for a large chunk of their investment portfolios.

Foreign retailers - Lose

Big retailers that source from Asia, such as Hennes & Mauritz and Target and Wal-Mart Stores Inc, would see a firmer yuan push up their production costs.It could also hit Walt Disney Co, which has signed a memorandum of understanding to build an amusement park in Shanghai, as it would have to spend more in US dollars to fund investments.

Commodity firms - Lose

China's commodity producers could be hardest hit over the longer-term.Companies such as Aluminum Corp of China, Zijin Mining and PetroChina face dollar-linked prices for their output, but their costs are in yuan.If the yuan does strengthen, these firms would find their revenues falling while their costs remain steady. — Reuters