Local Spices For the Morning!

Time to spice up our life with some local news.

Spice Girls - Spice up your life


First we have the Puncak Niaga's deal.

• PUNCAK Niaga Holdings Bhd yesterday announced to Bursa Malaysia that it has been appointed to operate and manage the Sungai Sireh water treatment plant operation for 27 years commencing April 1 last year. The operation and maintenance (O&M) agreement was entered with the Selangor state government on March 7 2008, just a day before the national election. Puncak Niaga in its filing also said that it has entered into a novation agreement with the state government and Syarikat Bekalan Air Selangor Sdn Bhd in relation to the assumption of all the state government's rights, benefits, liabilities and obligations under the Sungai Sireh O&M Agreement by Syabas.

How?

And how the morning chatter loves this miracle deal.

• Puncak Niaga (6807.KU) may rise to test MYR3.42 resistance (Monday's peak) vs Tuesday close at MYR2.98 (down 6.2%) on expectation of better earnings prospects, dealer says; follows water utility company saying unit Puncak Niaga (M) secured water concession from Selangor state government to operate, manage and maintain a water treatment plant. The concession, which started April 1, 2007, will expire April 30, 2034. "This 27-year contract basically guarantees Puncak Niaga's earnings in the long-term and increases earnings visibility," says dealer. Adds, announcement may also help alleviate recent fears change in Selangor state government may stall ongoing plans to improve infrastructure and delivery of treated water in Selangor state

And here are some local comments on the market again.

• TA Securities technical analyst Stephen Soo told StarBiz it would be very tough for the KL Composite Index (KLCI) to breach the 1,300-point level over the near term.
  
  “The market has experienced a 'dynamic change' with the possibility of reviews for projects previously awarded, as well as potential for open tenders for pending projects,” he said.
  
  The market would be testing the downside to rebuild its base with the support levels for the KLCI being 1,141 and 1,090 points, which were the significant March and August lows of last year, he said.
  
  Going forward, Soo advises investors to expect market volatility tied to further deterioration in the US economy and financial market.
  
  The US market had not bottomed out yet, which increased the risk of more downside volatility, he said.
  
  “Investors should remain defensive and still stick to oil and gas and commodities-based sectors, as we believe that these will continue to do well this year,” he said.
  
  The construction sector that faced the possibility of review of projects by the new state governments, together with the banking sector which would also be indirectly affected, could see stock re-ratings, he said.
  
  In the medium term, Soo estimates a support level for the KLCI at 1,050 points.
  
  Soo saw yesterday's market rebound as a “relief rebound” in reaction to Monday's sell-down rather than a possible up-trend.
  
  Another chartist at a local bank-backed research outfit concurred, saying the KLCI was experiencing a technical rebound yesterday, but saw the market heading for a long downtrend.
  
  “Though the fall in the market has been drastic following the (unexpected) election result, the index is still trading below the 200-day moving average and the indicators don't point to a quick rebound.”
  
  The analyst feels that external factors will affect Asian markets that are far from being decoupled from the US market.
  
  “With oil prices above US$107 a barrel, and wheat and bread prices rising, the US consumer is facing rising costs together with a weakening economy,” he said, adding that investors were awaiting the outcome of the US Federal Reserve's Federal Open Market Committee meeting on March 18.
  
  The lowering of US' interest rates had not provided much support for its financial markets, he said.
  
  “Since mid-September last year, the market continued to fall after each rate cut,” he said. This meant the problems in the US could be worse than previously thought.
  
  Further uncertainty could be expected when the US holds its presidential elections later this year.
  
  “If the US is experiencing a financial tsunami now, the US market will also see an election tsunami later this year as investors hold back to see if they should continue investing in defence-related stocks or switch to other sectors,” he said