LCL Corp, a Malaysian interior design company, fell to a record low after CIMB Investment Bank Bhd cut its target price for the stock on concern Dubai’s debt crisis will force its clients to delay payment.


The stock slid 9 per cent to 30.5 sen at 10:20 am local time in Kuala Lumpur, set for its lowest ever close. CIMB reduced its target price for LCL to 34 sen from 54 sen. -- Bloomberg

Shares in building contractors with ongoing projects in Dubai were lower after returning from an extended weekend, led by a 7.5 per cent fall in interior fit-out firm LCL Corp to RM0.31, after hitting its lowest level this year at RM0.29.


The company is working on the Atlantis The Palm Hotel, Dubai Metro System, Dubai Mall and Dubai Marina Hotel.

IJM Corp, which is nearing the end of its construction of Fortune Tower in Jumeirah Lake in Dubai, was down 1.1 per cent at RM4.45, and Gamuda lost 1.1 per cent to RM2.72.

WCT, which lost a US$1.3 billion contract to build a horse-racing track in Dubai earlier this year, was down 4.8 per cent at RM2.40.
“In our view, there is minimal risk in terms of (Malaysian) contractors’ exposure to the Middle East,” HwangDBS said in a research note. -- Reuters

The Naza group, through Naza Kia Sdn Bhd, will launch four Kia models next year as it seeks to double sales volume to 26,000 units, its chief said.

Two of the models will be replacements of the Sportage and Sorento multi-purpose vehicles, Naza group joint executive chairman SM Nasarudin SM Nasimuddin said yesterday after the launch of the Kia Forte in Kuala Lumpur.

The other two will be the all-new Kia Soul and a Forte coupe model.


"Next year will be an active year when we will go on to launch various new models in different segments," he said.

Nasarudin expects 23 per cent of the group's sales next year to come from the Forte, which Naza's senior officials said represents the new design DNA of present and future Kia cars.
"We are optimistic of achieving 6,000-unit sales of the Forte in 2010, taking 11 per cent of the non-national B and C segments."

Nasarudin added that the Forte, locally assembled at Naza's manufacturing plant in Gurun, Kedah, could be exported to Brunei, Thailand and Indonesia.

However, the group will need to discuss the matter with its principal Kia Motors Corp in addition to considering the supply constraints in the local market.

The B segment refers to sedans such as the Toyota Vios and Honda City, while the C segment includes the Honda Civic, Nissan Sylphy and Mitsubishi Lancer.

Nasarudin said the group has seen much success with the C segment in particular, having sold close to 34,000 units of the Spectra since 2001.

"The C segment is among the strongest segments in the automotive industry, and we believe the Forte will position itself as a major player in this segment," he added.

The Forte comes in three trims with two engine options: 1.6-litre EX, 1.6-litre SX and flagship 2.0 Forte. The 1.6-litre EX sells at RM75,800; 1.6-litre SX, RM81,800; and 2.0 Forte, RM93,800.

Features include auto-darkening rear view mirror, climate control air-conditioner and increased audio connectivity with USB and iPod.

The 2.0 Forte has an MDPS (motor driven power steering) system, six airbags and a premium leather package.

UBS economist Paul Donovan has forecast the Malaysian economy to grow by 6 per cent next year, probably the most bullish view yet, to be driven by solid consumer spending and a gradual global recovery.


Malaysia's economy is likely to see one of the sharpest rebounds in the region and grow faster than Indonesia and Singapore next year, because there are less negative forces that could drag down the economy, the London-based economist said in a media briefing in Kuala Lumpur yesterday.

Malaysia does not face political upheavals like in Thailand, nor does it have a financial sector to fix like in Singapore. It also does not share South Korea's credit card problem.

Still, this bullish view on the economy does not necessary mean Malaysian shares will surge, because stock markets in general have rallied ahead of the growth expectations, Donovan said.

Investors worldwide have already priced in a sharp global recovery next year, but the rebound is more likely to resemble a "swoosh" akin to the famous Nike trademark, he said.
"There is probably a limited upside for Malaysian shares next year, at less than 10 per cent (from the current level), unless the earnings recovery seen this year can sustain into next year," head of Malaysia equities at UBS, Leong Fee Yee, added.

"Public spending will be less next year and the private sector will have to pick up the slack. But it is still uncertain how much could the private sector contributes," Leong said.

Malaysian shares have risen 45 per cent this year, trailing the 82 per cent surge in Indonesia, 59 per cent gain in Singapore and 55 per cent jump in Thailand.

The Malaysian government is projecting a 3 per cent growth in the economy next year, after shrinking an estimated 3 per cent this year.

The world has just reached its turning point in the third quarter and is about to embark on a recovery, Donovan said. But the recovery will be slower than many investors or stock analysts have expected, he said.

The global economy is set to grow 3.6 per cent next year, while the US would expand by 2.6 per cent and the Europe at 2.4 per cent. Asia will probably grow 7.5 per cent next year, according to UBS forecast.

He said economic recovery in the US and Europe is constrained by two key hurdles: the restricted bank lending is limiting consumer spending; while small companies, faced with a double credit crunch from both banks and the stalled inter-company credit, are cutting their stockpiles.

"The market has underestimated the importance of small companies. This was why corporate earnings have greatly beaten forecast in the third quarter, but the gross domestic product growth was slower than market expectation in the quarter," Donovan said.

Rupert Murdoch has spent months complaining that Google is ruining the newspaper business, and now he wants to do something about it.

But, his proposal is a gamble, and one that could hurt News Corp instead of helping it.


Murdoch is considering removing News Corp's news from Google's Web search results, and is talking to Microsoft Corp (MSFT.O) about listing the stories with its Bing search engine instead. Microsoft would pay for the privilege, sources have told Reuters, but it was not clear how much.

If Murdoch pulled this off, he will likely be followed by other newspaper publishers looking for ways to make money when all the old ones are waning in the digital age.

Newspaper owners resent Google because the Internet company makes money from the advertisements that it displays next to news search results.

News Corp's proposal is a way to get a cut of the action. Risks include destroying ad revenue most news websites depend on if traffic goes down because Google users can't find the stories. It's also not clear how regulators would feel about such a move.

"You're immediately cutting off audience," said Jeff Jarvis, media blogger and author of the book "What Would Google Do?"

Google brings as much as 14 percent of incoming traffic to News Corp's U.S. news websites, including the New York Post and Fox News, Bernstein analyst Jeffrey Lindsay estimated.

If News Corp blocked access to Google, he wrote in a note to investors, it would hurt only News Corp.

Many people find their news on Google, which has 65 percent of the U.S. search market according to comScore. Newspaper publishers whose websites depend on advertising sales want lots of visitors, and need Google to supply them.

Google provides news organizations about 100,000 clicks a minute, said company spokesman Gabriel Stricker. "Each of those visits offers a business opportunity for the publishers to show ads, win loyal readers and sell subscriptions," he said.

Making Microsoft's Bing search engine the only way to look for news would slice away visitors and lower the amount of money news websites could charge advertisers.

There is little chance people will abandon Google, which has become such a giant that its name is also a verb.

"Consumers do not expect search engines to be exclusive," Forrester analyst Shar VanBoskirk wrote. "If they can't find something through search, it may as well not exist."

Microsoft declined to comment, but in theory would like partnering with News Corp to increase Bing's share of the lucrative search advertising market at Google's expense. Microsoft had a 10 percent share of the U.S. search market in September, according to comScore.

Some shareholders worry Microsoft might pay more money to News Corp and publishers than the privilege is worth.

"I don't want Microsoft to throw a lot of money towards News Corp, and I don't know why News Corp would do this to themselves," said Kim Caughey, senior analyst at investment fund Fort Pitt Capital Group, which holds Microsoft shares.

There could also well be U.S. government scrutiny over an exclusive deal between News Corp and Microsoft, or any sort of joint action by news publishers, at the expense of other Internet companies or consumers.

News Corp declined to comment, and sources close to the discussions emphasized talks so far are ideas, nothing more. Nine of the largest U.S. newspaper publishers also refused to comment.

Other U.S. publishers, if they joined in, would feel more pain because they are far smaller than News Corp and depend on ad sales more than anything else, analysts said.

"It's nothing short of suicidal," Jarvis said.

Risking suicide might not seem so crazy to publishers. Many people say they face creeping death as readers drop print subscriptions and ad revenue falls.

As many deal with looming piles of debt, they must consider some radical moves after laying off thousands of workers.

"They cannot survive at the scale they are accustomed to online unless they can find a new economic model," said Tom Rosenstiel, head of the Project for Excellence in Journalism.

"If it works, Google might say, 'wait a second, it's very important for us to maintain our market share of search'," he said. "Google has an interest in the news industry surviving."

Betting on that is risky.

"The only way such a strategy would hurt Google in our view is if all of the major newspapers and the major news sources including the AP and Reuters were to agree to a watertight cartel," Lindsay wrote in his Bernstein note.

Jarvis agreed. "It would be a mosquito bite on the elephant's butt," he said.

Also, consumers could complain about media companies choking off access to news, something that would spark ire from Congress to the White House, analysts said.

It could carry the whiff of collusion among news outlets to fix prices, something publishers fear being accused of.

"None of this sounds to me to be pro-competitive or efficient," said David Balto of the Center for American Progress, a former Federal Trade Commission policy director.

One possible outcome of News Corp threatening to drop Google could be detente: a common way for publishers to get paid for news that search engines from Google to Yahoo make available to readers, said Outsell analyst Ken Doctor.

"I don't think the endgame for anybody here is to expect that Google's going to get turned off... although you never know," he said. - independent

Billionaire T. Ananda Krishnan, together with Khazanah Nasional Bhd, are reported to have invested in an Australian Internet TV company called Fetch TV.

According to The Australian newspaper, the investment could be via Astro All Asia Networks.

Astro had not replied to queries, while Khazanah declined to comment.

The report, quoting unnamed sources, said Ananda was keen to tap opportunities in Australia presented by the country’s ambitious national broadband network, which aimed to wire up Australian homes and businesses with high-speed fibre optic connections.

Called an “open access network”, the plan is to allow third-party service providers to ride on the network to reach customers, not too different from Malaysia’s high-speed broadband project.

Fetch TV is a start-up company run by former employees of telecommunication companies in Australia. It is expected to be launched in Australia early next year and plans to shortly start testing low-cost pay-TV as well as on-demand TV and movie services.

Ananda, who controls Astro, should be able to help Fetch TV with securing its content for its TV service, often seen as the most important success factor in a new TV service.

However, no details have surfaced yet as to how much the investment was worth but indications are that Ananda (possibily through Astro or his private vehicle Usaha Tegas Sdn Bhd) and Khazanah have emerged as the major shareholders of Fetch TV.

“It would not be difficult to replicate the Malaysian (Astro) model in Australia but remember it is a small and competitive market, with a population similar to that of Malaysia,” an analyst said.

The Australian explained that the Fetch TV business model relied on signing up a number of second and third-tier telcos and Internet service providers (ISPs).

The telcos and ISPs would then package Fetch TV’s Internet-enabled set-top box and video content to its broadband customers.

That would enable smaller ISPs to compete directly with the Tbox (an IPTV service) unveiled by Telstra, Australia’s incumbent telco, last week.

Telstra intends to launch its Tbox next year to its 2.3 million broadband customers. It is understood the nation’s third-largest ISP, iiNet, is inking a deal with Fetch TV, although the company would not confirm the deal.

“It is believed that Fetch TV’s digital TV set-top box will receive digital free-to-air channels; include access to more than a dozen pay-TV channels; act as a personal video recorder; offer photo storage and other media centre services; include a pay-per-view movie and TV show download service; and allow people to view other Internet content,” the paper reported. Ananda, who pursued his tertiary education at the University of Melbourne, had invested in a troubled newspaper company in Britain, Johnston Press, in 2008.

Khazanah is the second-largest shareholder in Astro with a 21.4% stake. The largest shareholder is Ananda, with a 42.35% stake.

Last week, Ananda – together with Saudi Telecom Co Ltd – had just offered for sale 2.25 billion shares, or 30% stake, in Maxis Bhd in an initial public offering that raised RM11.2bil.

WHAT is the real value of gold? Gold has industrial uses, especially in the electronics industry where it is used for electrical wiring due to its high conductivity. However, close to two-thirds of its demand is for jewellery, particularly in India and China.


Increasingly, it is being used again as a store of wealth as investors lose confidence in paper money, hedge against inflation or worry about economic and political turmoils. Other than buying physical gold, investors can invest in gold exchange traded funds (ETFs). SPDR Gold Trust, the largest gold ETF with a market capitalisation of over US$41bil, holds over 1,100 tonnes of gold.

Money could as well be in the form of sea shells and indeed Pacific islanders used sea shells as money. Before paper money, what constituted money came in many forms – sea shells, salt, leather, copper, silver and gold. Money was used as a store of wealth which could be used to purchase goods and services without resorting to barter trade. It was in the world’s oldest civilisation, Mesopotamia (in modern Iraq), where metal coins were introduced around 2500 BC. Gold is valuable only because it is perceived so in the collective psyche of the human race, hence its value is subjective and relative to other alternatives. To be valuable, something has to be rare and desired.

In all of history, only 161,000 tonnes of gold have been mined, barely enough to fill two Olympic-size swimming pools, according to a January 2009 National Geographic article. To be valuable and used as money, it has to be something durable. That would exclude fair maidens as their perceived value in the eyes of lustful men may diminish with age. Still, without the demand of gold from the fairer sex, its value would be much lower.

In Einstein’s theory of special relativity, time is relative to speed but if we apply the theory of relativity to the perception of value, the relative value of goods and services is determined by comparing the desirability of one versus another just as we compare the relative attractiveness of bonds, real estate, gold and stocks.

Even within the same asset class like stocks, we apply the relative yardstick – should we buy DiGi or Maxis? The relative attractiveness is determined by supply and demand, interest rates, growth and dividends for stocks, personal preferences and many other factors. The fact that the prices of stocks, bonds and commodities quoted on exchanges are so volatile is a reflection of not only genuine supply and demand but also human psychological factors which cause irrational exuberance or pessimism.

The Chinese introduced paper money during the Tang Dynasty (618-907) and with that they also invented hyperinflation when a large amount of paper money was introduced.


How does printing money cause inflation? In a simple hypothetical world where US$100,000 of paper money can only buy you a bar of gold or a house, doubling the paper money to US$200,000 does not create new wealth but merely causes the value of the bar of gold and the house to rise from US$100,000 to US$200,000, an inflation of 100%.

Wealth transfer

Printing of money merely results in a wealth transfer from the saver (who can buy less with paper money) to the government (as it can use the freshly created money) and borrowers (decline in the real value pf debt). Gold is perceived as an inflation hedge and a store of value. (See chart) Its price spiked in the late 1970s when the US and world inflation surged. The price is surging again due to diminishing confidence in paper money.

World governments are all undertaking fiscal stimulus to counter the economic slowdown. These large budget deficits eventually have to be financed by higher taxes but with unemployment in the United States at over 10%, politicians with an eye on getting re-elected may be tempted to print money to finance the budget deficits and bailouts.

Hence it is not surprising that with the United States, British and Japanese governments printing money, investors are flocking to buy gold or commodities which are a better store of value as their supply does not grow as fast as printed paper money.

The printing of money by the US government also puts other currencies at risk as over 60% of foreign reserves are held in US dollars. As the gold standard has been abolished, paper money cannot be converted to gold. No wonder the Indian government has decided to sell some of their US dollar reserves for gold. Perhaps the currencies of larger countries like Australia are relatively safer as they are sitting on large yet-to-be-mined gold reserves even as their US dollar reserves lose value.

So, should the fair price of gold be relative to paper money? Though the value of gold may be subjective in the minds of investors, the reality is that the amount of gold in the world is finite, but there is no limit to the quantity of paper currency which can be issued.

Therefore it is not surprising that the value of gold is at a record high as more money is being printed. All this is premised on the assumption that we will continue to treasure gold, which is likely to be the case as we have done so for millennia.

Choong Khuat Hock is head of research at Kumpulan Sentiasa Cemerlang Sdn Bhd

NEW YORK: Gold prices finished higher for a sixth straight day Friday, rising even as the dollar strengthened.

The December contract added $4.90 to settle at US$1,146.80 an ounce on the New York Mercantile Exchange.

For the week, prices gained 2.7 percent.

Gold has been on a record-setting climb since early September as investors looked for an alternative investment to a falling dollar.

Gold is considered a good hedge against a weak greenback because of its stable store of value.

The dollar, however, has shown some strength in recent days.

On Friday, the ICE Futures US dollar index, a widely used measure of the dollar against other currencies, rose for a second day in a row, gaining 0.4 percent in afternoon trading.

As investors grow more cautious over the sustainability of the economy's recovery, they have begun to shift money out of risker assets like stocks and commodities and back into safe-haven investments like the dollar and Treasurys.

Gold is also considered a safe-haven asset, so prices have held up amid the dollar's strength.

"When the dollar rebounds, I don't think it's a safe assumption that everyone will run from gold," said Jason Toussaint, managing director of investment at the World Gold Council.

There are investors who are holding gold "for preservation purposes," he said.

Some analysts have expressed concern that gold could see a sharp correction after such a rapid ascent.

But the consensus seems to be that gold prices have more room to run.

"We still expect to see attempts at higher levels," said Jon Nadler, senior analyst at Kitco Metals Inc. in a research note Friday.

Other metals were little changed.

December silver dipped 1.5 cents to $18.44 an ounce, while December platinum slid $2 to $1,438.70 an ounce.

Palladium also fell.

March copper futures rose 2.8 cents to $3.134 a pound.

Elsewhere on the Nymex, oil prices fell. Light, sweet crude for December delivery lost 74 cents to settle at $76.72 a barrel on the last trading day for the contract.

The January contract fell 58 cents to settle at $77.47 a barrel.

Heating oil fell 2.08 cents to settle at $1.9756 a gallon, while gasoline for December delivery added 1.11 cents to $1.9806 a gallon.

On the Chicago Board of Trade, March wheat futures slipped 3.25 cents to $5.8075 a bushel, while March corn fell 3.75 cents to $4.07 a bushel.

January soybeans rose 7 cents to $10.46 a bushel.

Among other soft commodities, December coffee futures fell 0.45 cent to $1.346 a pound, while January sugar gave up 0.30 cent to 21.90 cents a pound. - AP