Oil Is Poised for Worst Month Ever on Concern Demand to Decline

Oct. 31 (Bloomberg) -- Crude oil fell in New York and is poised for its biggest monthly drop since trading began in 1983 on concern that the decline in the U.S. economy will curb fuel demand in the world's largest energy user.

Oil retreated, taking this month's decline to 36 percent, after the U.S. Commerce Department said yesterday that gross domestic product contracted in the third quarter at the biggest annual pace since 2001. U.S. fuel demand in August fell 8.9 percent from a year earlier, the Energy Department said yesterday.

``Sentiment is very fragile at the moment and heavily influenced by concerns about recessions in the major developing economies,'' said David Moore, a commodity strategist with Commonwealth Bank of Australia. ``The story hasn't changed much, people are very concerned about demand being weak.''

Crude oil for December delivery fell as much as $1.51, or 2.3 percent, to $64.45 a barrel. It was at $64.69 a barrel at 9:54 a.m. Singapore time on the New York Mercantile Exchange. Oil's monthly decline may pass February 1986 as the worst month ever, when it dropped 30 percent to $13.26 a barrel.

Prices, which have tumbled 56 percent from a record $147.27 on July 11, are down 32 percent from a year ago. Futures dropped $1.54, or 2.3 percent, yesterday to settle at $65.96 a barrel.

Oil climbed more than $4 a barrel on Oct. 29, the biggest gain in a month, after the U.S. and China, the two biggest energy consumers, cut interest rates to spur economic growth. Prices also rose because the dollar fell the most against the currencies of six major U.S. trading partners since 1998.

Monthly Demand

Monthly data for U.S. August fuel consumption, measured in terms of products supplied by refiners, dropped to 17.4 million barrels a day, the Petroleum Supply Month said. That was down from 19.1 million barrels in August 2007.

U.S. fuel demand during the past four weeks averaged 18.9 million barrels a day, down 7.8 percent from a year ago, an Energy Department report showed Oct. 29. UBS AG cut its oil- price forecast for next year by 43 percent to $60 a barrel from $105 because the global economic slowdown may reduce demand.

OPEC member countries seem to have ignored an agreement reached at a meeting in September to more closely adhere to its production quotas at the time.

The Organization of Petroleum Exporting Countries increased oil supplies 0.5 percent this month because of higher exports from Iraq, according to provisional data from Geneva-based consultants PetroLogistics Ltd.

The group supplied 31.85 million barrels of oil a day in October, up 150,000 barrels a day from September, PetroLogistics founder Conrad Gerber said in a telephone interview yesterday. Higher Iraqi output countered declines from Saudi Arabia, Kuwait and the United Arab Emirates.

OPEC Cut

OPEC agreed on Oct. 24 to reduce their production targets by 1.5 million barrels a day in an attempt to bolster falling oil prices. The OPEC basket price, a weighted average of 11 crude grades produced by the group, was at $58.13 a barrel on Oct. 29, down from a peak of $140.73 a barrel on July 3.

OPEC may curb only 850,000 barrels a day of oil supply by January, PFC Energy said in a report yesterday. PFC expects Saudi Arabia to cut 600,000 barrels a day, the Washington-based oil consultant said. OPEC reduced its target by 1.5 million barrels a day after an emergency meeting Oct. 24.

Brent crude oil for December settlement fell as much as $1.34, or 2.1 percent, to $62.37 a barrel on London's ICE Futures Europe exchange. It was at $62.41 a barrel at 9:36 a.m. Singapore time.

The contract yesterday declined $1.76, or 2.7 percent, to settle at $63.71 a barrel. Futures earlier touched $68.35, the highest since Oct. 22.
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Exxon, Shell Profits Rise After Oil Climbs to Record

Oct. 30 (Bloomberg) -- Exxon Mobil Corp. and Royal Dutch Shell Plc, the world's biggest oil companies, posted gains in third-quarter earnings after crude's surge to a record made up for slumping output. Both fell in stock trading as oil dropped and the U.S. reported its biggest economic decline since 2001.

Exxon Mobil netted $14.8 billion, up 58 percent from a year earlier, according to a statement today by the Irving, Texas- based company. Profit excluding one-time costs and gains was the highest ever for a U.S. corporation. Shell, based in the Hague, said its net income rose 22 percent to $8.45 billion. Both companies exceeded analyst earnings estimates.

Oil futures in New York averaged more than $118 a barrel, up 57 percent from a year earlier. After reaching a high-water mark above $147 a barrel in July, oil tumbled $80 as growth in fuel demand slowed to the lowest rate in 15 years. U.S. gross domestic product contracted at a 0.3 percent pace in the third quarter, the Commerce Department said today, ushering in a recession in the largest oil-consuming nation.

``I think we're going to see obviously the peak here, and then the fourth quarter will be significantly lower unless things turn around fast,'' said Matti Teittinen, an analyst with IHS Herold in Boston.

Exxon Mobil fell $1.80, or 2.4 percent, to $72.85 at 12:35 p.m. in New York Stock Exchange composite trading, sliding along with oil futures. The stock has dropped 22 percent this year, heading for its worst decline since 1981. Shell's Class A shares in London fell 70 pence, or 4.1 percent, to 1,635 pence.

Exceeding Estimates

Exxon Mobil's per-share profit excluding such items as a gain on a pipeline sale was $2.59, 18 cents higher than the average of 13 analyst estimates compiled by Bloomberg. Shell's profit excluding such items as gains from inventories was $8.04 billion, 9.1 percent higher than the average of 7 analyst estimates compiled by Bloomberg.

``The oil majors are coming all above expectations, which means they have resilient qualities,'' said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh. ``They show the benefit of being an integrated company, and they have the flexibility to weather the storm.''

Hurricanes Ike and Gustav, which struck the U.S. Gulf Coast last month, may have contributed to the positive surprises by leading to wider profit margins on refined fuels, said Philip Weiss, an analyst at Argus Research in New York.

``The hurricanes knocked out some operations and that really benefited the spreads for anyone who still had production up and running,'' Weiss said.

Refining Gains

Exxon Mobil's refineries earned $3 billion in the quarter, a 51 percent increase from a year earlier. Shell's profit from refining jumped 40 percent to $2.3 billion as diesel prices in Europe rose 17 percent to a record.

Profits from oil and gas sales surged even as production slid. Exxon Mobil's output fell 8.2 percent, the most since at least 1997, to the equivalent of 3.6 million barrels of oil a day, the lowest since Exxon Corp. bought Mobil Corp. in 1999.

Shell's production fell 6.6 percent and dropped to below 3 million barrels of oil equivalent a day for the first time in more than a decade.

London-based BP Plc said earlier this week that its net income rose 83 percent to $8.05 billion, exceeding analyst estimates. Chevron Corp., Exxon's biggest U.S. rival, is scheduled to report earnings tomorrow.

ConocoPhillips, Marathon

Houston-based ConocoPhillips, the third-largest U.S. oil company, said last week that its profit jumped 41 percent to $5.19 billion.

Marathon Oil Corp., the No. 4 U.S. oil company, said today that its third-quarter profit doubled, partly on a gain in the value of contracts that lock in crude prices paid by its refineries. Marathon said its board approved two deepwater projects in the Gulf of Mexico that will cost $1.6 billion.

Shell said it's delaying a decision on its Athabasca oil- sands project in Alberta because of rising costs.

Exxon Mobil will maintain annual capital budgets of about $25 billion through 2012, regardless of changes in oil prices, Chief Executive Officer Rex Tillerson told reporters Oct. 20 at an industry meeting in Scottsdale, Arizona.

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

SIA cuts capacity to Asian cities from falling demand

Faced with falling passenger numbers, Singapore Airlines (SIA) has embarked on an
aggressive capacity reduction programme which will see cuts in some routes and total pullouts
from others. The airline said that the changes, which are being implemented progressively
throughout the five-month-long Northern Winter schedule beginning Oct 26, will 'better match
capacity with demand'. Services to Penang and Ho Chi Minh will be gradually reduced to 18
and 17 weekly flights respectively, while one service to Seoul will be initially reduced, then
scrapped completely from Feb 2 to March 28 next year, when the winter season ends. But SIA
will continue to operate 17 weekly services to and from the Korean capital during winter.
Osaka will be served once a day from Nov 2 by SQ618 (Singapore-Osaka) and SQ617
(Osaka-Singapore). Flights SQ622 (Singapore-Osaka) and SQ621 (Osaka-Singapore) will be
suspended. Frequencies to Bangalore and Chennai will also be reduced. Meanwhile, the
relatively recent service to Amritsar will be dumped from February next year, with passengers
booked on flights to the northern Indian city being transferred to SIA's New Delhi service. Also,
from February, SIA will link its Cape Town flights to Johannesburg. The Cape Town extension
will operate three flights weekly, while the daily service to Johannesburg will be maintained.
But while cutting intra-Asian flights, SIA has increased services to the Middle East. The
frequency of flights to Istanbul, via Dubai, has been raised to six flights per week from four. SIA
will also be introducing flights to Riyadh. All this comes just two weeks after SIA reported that
it had been hit by its first fall in passenger numbers in three years. The airline's passenger
numbers in raw terms dipped 1.6 per cent to 1.51 million last month from a year ago.
Meanwhile, with capacity (measured in available seat kilometres) rising 6.8 per cent during the
month, the passenger load factor declined 4.1 percentage points to 76.9 per cent last month.
The airline is now watching its US routes closely, including its new all-business class, non-stop
flights to Los Angeles and Newark. The only service which remains largely unscathed is its
'kangaroo-route' from Europe, through Singapore, to Australia. But the demand decline is not
unique to SIA. For the first time since the Sars outbreak in 2003, global airline passenger
traffic shrank last month, falling 2.9 per cent as the slump in demand outstripped capacity cuts.
Asia-Pacific carriers posted a 6.8 per cent drop in demand - the second-biggest after African
carriers. International load factors fell 4.4 percentage points to 74.8 per cent last month, from
79.2 per cent in August, no thanks to the widening economic impact of the global credit crunch.
Instead of celebrating a nearly 50 per cent fall in fuel price, the global aviation industry now
finds itself battling a sharp drop in travel demand caused by the global financial meltdown.
According to the International Air Transport Association, at least 30 airlines have gone belly-up
in the first nine months of this year, and another 20 are on its watchlist. SIA's stock tumbled 50
cents to $10.30 yesterday - its lowest level in almost a decade.

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

Asian Stocks Gain for 3rd Day on Rate Cuts, Commodities Rally

Oct. 30 (Bloomberg) -- Asian stocks rose after China, Taiwan and the U.S. cut interest rates to alleviate a credit freeze and boost growth, spurring a rally in commodity prices.

Posco gained 8.5 percent and Hyundai Heavy Industries Co. jumped 11 percent in Seoul after the U.S. Federal Reserve included emerging markets for the first time in a liquidity-swap agreement. BHP Billiton Ltd. advanced after oil jumped and copper posted its biggest gain in two years. Toyota Motor Corp. added 4 percent as a weaker yen boosted its earnings outlook.

The MSCI Asia Pacific Index added 1.9 percent to 82.23 as of 9:22 a.m. in Tokyo. Today's advance pared the Asian measure's monthly loss to 23 percent. The gauge is still on course to complete the worst month since its creation in December 1987.

Japan's Nikkei 225 Stock Average climbed 3.3 percent to 8,478.81. South Korea's Kospi index gained as much as 7.4 percent, while a surge in index futures triggered a halt in program trading.

U.S. stocks declined yesterday, with the Standard & Poor's 500 Index erasing a 3.1 percent advance in the final 12 minutes on concern lower interest rates won't stem a recession. Futures on the U.S. benchmark index rose 0.7 percent.

Central banks across the globe are trying to curb an economic slowdown as the financial crisis weighs on consumer sentiment and business spending. The Fed and the People's Bank of China yesterday cut benchmark interest rates to stimulate demand, while Taiwan's central bank today lowered its benchmark rate.

Liquidity, Stimulus

The Fed said yesterday it agreed to provide $30 billion to the central banks of South Korea, Singapore, Brazil and Mexico, ``four large systemically important economies,'' in a statement. The arrangements aim ``to mitigate the spread of difficulties in obtaining U.S. dollar funding.''

Japan's Prime Minister Taro Aso will announce economic stimulus measures worth 5 trillion yen ($51 billion) today, the Yomiuri newspaper said. The package will include 2 trillion yen in assistance for households, according to the report.

Copper futures for December delivery surged 12 percent in New York yesterday, the steepest jump in two years, while crude oil for December delivery climbed 7.6 percent to $67.50 a barrel
The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

Fed May Cut Rate to 1%, Signal Steps to Save Economy

Oct. 29 (Bloomberg) -- The Federal Reserve may lower its benchmark interest rate to 1 percent today and signal further reductions to levels unseen since Dwight Eisenhower was president.

Tumbling commodities prices and weaker consumer spending are slowing inflation, which officials described as a ``significant concern'' at their last scheduled meeting in September. Tomorrow, the Commerce Department will probably report that the economy shrank at a 0.5 percent annual rate in the third quarter, the most since the 2001 recession, economists predict.

The Fed ``will be very aggressive,'' said Mark Gertler, a New York University economist and research co-author with Fed Chairman Ben S. Bernanke. ``Inflation risks are off the table'' and ``the issue now is how bad the recession will be.''

He predicted the benchmark rate will be cut by half a point today, matching the median forecast of economists surveyed by Bloomberg News. Bernanke and his team could push borrowing costs to zero by June if the credit crunch intensifies, Gertler said.

The Fed has already cut the benchmark rate from 5.25 percent in the past 13 months and created six lending programs channeling more than $1 trillion into the financial system. Banks are still reluctant to lend to each other and the Standard & Poor's 500 Index is down almost 36 percent this year, even after yesterday's surge.

The FOMC is scheduled to announce its decision on rates at about 2:15 p.m. in Washington.

`Inadequate Growth'

``The predominant concern will be inadequate growth,'' said former Fed Governor Lyle Gramley, now a Washington-based senior economic adviser for Stanford Group Co., a wealth-management firm. ``If the economy shows additional signs of a deepening recession, I think the Fed will decide that the floor is not 1 percent.''

Gramley predicts that policy makers will again cut the main rate by 0.5 percentage point at their next scheduled meeting in December, pushing it toward levels last seen in 1958. ``Zero is a possibility,'' he said.

U.S. stocks swung between gains and losses before the Fed decision. The Standard & Poor's 500 Index fell 0.6 percent at 10:47 a.m. in New York. Borrowing costs eased, with the London interbank offered rate, or Libor, for three-month dollar loans dropping 5 basis points to 3.42 percent.

More evidence of weakness came today as orders for U.S. durable goods excluding transportation equipment fell in September, the government reported. The 1.1 percent drop in bookings of goods meant to last several years was less than forecast and followed a revised 4.1 percent decrease in August that was larger than previously reported.

`Weakening Demand'

European Central Bank President Jean-Claude Trichet said Oct. 27 he may reduce interest rates next week, citing ebbing inflation and ``weakening demand.'' The ECB, Fed and four other central banks trimmed rates by a half point on Oct. 8 in an unprecedented coordinated move.

After the emergency cut, the Fed signaled it may ease again, citing ``weakening of economic activity and a reduction in inflationary pressures.''

Most of the FOMC's statement today will focus on the financial crisis, including tightening credit conditions, said Robert Eisenbeis, a former Atlanta Fed economist.

The statement will also note falling energy prices and express ``less concern, as a result, about inflation,'' said Eisenbeis, chief monetary economist at hedge fund Cumberland Advisors Inc. in Vineland, New Jersey. Beginning today the central bank will probably cut in 0.50 percentage-point increments, stopping at 0.25 percent, he said.

Fed policy makers face increasing evidence the economy is already in a recession. Consumer confidence plunged this month, with the Conference Board's confidence index hitting its lowest level since records began in 1967.

Longest Slump

Payrolls fell last month by 159,000 for the biggest reduction in five years, according to Labor Department figures released on Oct. 3. Retail sales fell 1.2 percent in September, extending their decline to a third consecutive month for the longest slump in at least 16 years.

``Sharply increasing unemployment'' and other data indicate ``the probability has gone up substantially'' that the U.S. economy will begin to shrink, St. Louis Fed President James Bullard said Oct. 14.

The Fed cut the main rate to 1 percent in June 2003, leaving it unchanged for a year in response to concerns about deflation. Bullard and Dallas Fed President Richard Fisher have said the low rate stoked inflationary pressures.

Rising prices have faded as a concern in recent months. Americans expect inflation of 2.8 percent over the next five years, the slowest pace in a year, according to the Reuters/University of Michigan preliminary index of consumer sentiment on Oct. 17.

Global Recession

Crude oil fell to a 17-month low on Oct. 27 amid heightened concern that a global recession will erode consumption. The price of oil has tumbled 56 percent since reaching a record $147.27 on July 11.

With inflation abating, the FOMC may vote with no dissents. Fisher supported the last rate reduction after dissenting as recently as Aug. 5 out of concern about rising prices.

``With the deterioration in economic conditions and the recent associated falloff in energy and many other commodity prices, I anticipate further dissipation of inflationary pressures,'' Atlanta Fed President Dennis Lockhart said Oct. 20.

Cutting rates too far may hurt the money market mutual fund industry by making it difficult for the funds to attract deposits profitably, said Vincent Reinhart, the Fed's chief monetary- policy strategist from 2001 until September 2007.

``As the policy rate goes closer toward zero, rates get compressed and those business models are called into question,'' he said. If that concern is dispelled, the main rate ``could go to 1 percent'' while policy makers say risks are ``tilted toward economic weakness,'' indicating they may further pare rates.

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

KS Energy liftboat sinks on way to fulfil North Sea contract

Lost at sea: a Singapore- owned jack-up liftboat which was contracted to support installation
and maintenance of wind power projects in the North Sea. KS Energy Services yesterday
reported that Titan-1 - which was on a US$43.9 million charter to Siemens Wind Power -
capsized and sank in the Atlantic this week as it was being transported there. Titan-1 - a 50:50
joint venture of KS and Ezra Holdings - was to have executed an 817-day contract for Siemens
for installation, servicing and maintenance of wind turbines, offshore Denmark and the UK. KS,
however, assured that Titan-1, which is said to cost around US$40-50 million to build, is fully
insured by the company's insurance group. It does not expect the accident to have any
material impact on its FY 2008 results. It is meanwhile discussing with Siemens substituting an
identical sister-ship, KS Titan-2, for the charter.
KS had taken delivery of Titan-1 in March-April this year, and of Titan-2 - a separate 50:50
venture of KS and Sinwa - in June-July. A KS spokeswoman told BT that Titan-2 is not under
charter at the moment and will be immediately available to Siemens, although KS has now to
be extra careful regarding its transportation to the North Sea. KS said that this week's accident
happened during the night of Oct 26-27, when the heavylift vessel M/V Ancora aboard which
Titan-1 was loaded, encountered engine problems in the middle of the Atlantic. It was enroute
from Pascagoula in the US to Liverpool. 'As a consequence of the vessel's rolling and tilting
motion, the Titan-1 shifted to portside, capsized and was lost at sea.' 'KS, through its whollyowned
subsidiary Atlantic Oilfield Services, is currently in discussions with Siemens to
substitute the Titan-1 with identical sister-ship Titan-2 for the execution of the contract,' the
spokeswoman said. Titan-2, also in Pascaguola, can reach Siemens in a couple of weeks.

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

Asian Stocks Drop on Growth Concerns, Commodities; NEC Declines

By Patrick Rial and Satoshi Kawano

Oct. 22 (Bloomberg) -- Asian stocks slumped, snapping a two- day rally, as weaker earnings at companies including NEC Electronics Corp. and Singapore Petroleum Co. heightened concern the global economy is headed for a recession.

NEC Electronics plunged the most on record after reversing its profit forecast to a loss, causing parent NEC Corp. to drop 9.4 percent. Mitsubishi UFJ Financial Group Inc., Japan's largest listed bank, slumped 6.1 percent after a newspaper reported earnings probably dropped by half. Posco retreated 3 percent after announcing steel production cuts. Singapore Petroleum plunged after third-quarter profit tumbled 99 percent.

``Whether you are talking about the U.S. or over here, there is no escaping the drop-off we're going to have in profits,'' said Jun Morita, a fund manager at Chiba Bank Ltd. in Tokyo, which has $3.1 billion in tradable securities. ``The market is taking any bad news on earnings as a signal to sell.''

The MSCI Asia Pacific Index declined 2.5 percent to 90.39 as of 11:32 a.m. in Tokyo. The gauge rallied 6.2 percent in the past two days as money market rates dropped around the globe, boosting confidence the financial crisis is abating.

The index has plunged 43 percent this year, set for its worst annual performance since it was created in 1987, as credit market turmoil caused losses and writedowns of more than $660 billion at financial institutions and slowed global growth.

World's Cheapest

The slump has brought shares on the index to 1.2 times book value, making Asian equities cheaper than those in the U.S. and Europe. The S&P traded at 1.8 times book value, while stocks in Europe's Dow Jones Stoxx 600 Index are valued at 1.4 times.

Japan's Nikkei 225 Stock Average declined 2.9 percent to 9,041.07, led by Konica Minolta Holdings Inc., after the yen surged to a four-year high against the euro. Losses by South Korea's Kospi index were limited as Samsung Electronics Co. climbed after scrapping its bid for SanDisk Corp. Equity benchmark indexes throughout the region dropped.

Standard & Poor's 500 Index futures rose 0.5 percent in trading today after Apple Inc. posted a 26 percent gain in profit, beating estimates. U.S. stocks slid yesterday as companies from Texas Instruments Inc. to Freeport-McMoRan Copper & Gold Inc. reported profit and revenue that missed analysts' estimates. The S&P 500 Index lost 3.1 percent.

NEC Electronics, Japan's third-biggest chipmaker, tumbled 19 percent to 1,227 yen, the steepest fall since the stock was listed in July 2003.

Semiconductor Declines

The company yesterday said it will probably have a net loss of 8 billion yen ($79.8 million) this year because demand for semiconductors slumped, reversing an earlier forecast to break even. NEC, which owns 70 percent of the company, declined 9.4 percent to 337 yen.

Powerchip Semiconductor Corp., Taiwan's largest memory-chip maker, lost 3.4 percent to NT$4.61 after reporting a third- quarter loss that was more than double analysts' estimates after prices fell because of oversupply.

Samsung, the world's biggest computer-memory maker, rebounded from a loss to climb 0.4 percent to 521,000 won after saying it scrapped plans to buy SanDisk, citing ongoing turmoil in financial markets and the declining value of the target.

Toshiba Corp., which partners with SanDisk in flash memory production, jumped as much as 3.2 percent to 382 yen on relief the company won't be squeezed out of the market.

Bank Profits

Mitsubishi UFJ fell 6.1 percent to 797 yen. The bank's first-half profit may fall about 50 percent because of higher costs to dispose of bad loans and writedowns on its shareholdings, the Nikkei newspaper said today.

Closest rivals Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. may post earnings that are lower than their estimates, the newspaper said. Mizuho lost 4.7 percent and Sumitomo Mitsui sank 5.7 percent.

``We've only just started to see the impact of the growth slowdown on the real economy,'' said Angus Gluskie, who helps oversee A$450 million at White Funds Management in Sydney. ``The companies that have been reporting now haven't been materially impacted by the slowdown yet.''

Posco, the largest steelmaker in South Korea, tumbled 3 percent to 311,500 won. Nippon Steel Corp., the world's second- biggest producer, lost 5 percent to 323 yen. BlueScope Steel Ltd., Australia's largest steelmaker, slid 5.7 percent to A$4.47.

Posco said today it will slash output of stainless steel by about a third this quarter, reining in production to cope with a slowdown in demand. Shoji Muneoka, chairman of the Japan Iron & Steel Federation and president of Nippon Steel, said yesterday Japanese producers may lower output this quarter on slower demand.

Profit Plunge

Singapore Petroleum, the only refiner traded on the Singapore exchange, tumbled 14 percent to S$2.58, set for its biggest loss in a decade. Third-quarter profit plunged 99 percent from a year earlier as falling crude prices caused the company to write down the value of its inventory.

BHP Billiton Ltd., the world's biggest mining company, declined 4.7 percent to A$27.92 after the London Metal Exchange Index fell 3.3 percent to the lowest level since November 2005.

First-quarter iron ore output rose 15 percent, crude-oil and condensates output surged 43 percent, while production from Escondida -- the world's largest copper mine -- slumped 32 percent in the September quarter, BHP said today.

Sumitomo Metal Mining Co., Japan's biggest nickel maker, tumbled 7.2 percent to 798 yen after Credit Suisse Group cut its rating on the shares to ``neutral'' from ``outperform,'' citing lower forecasts for metals prices.

Stronger Yen

Konica Minolta, the world's second-largest maker of film used in liquid-crystal displays, tumbled 10 percent to 772 yen. The company sees an 850 million yen drop in operating profit for every 1 yen gain against the euro, according to KBC Securities. Olympus Corp., which generates more than a quarter of its sales in Europe, slumped 5.6 percent to 2,275 yen.

The yen strengthened to as much as 130.07 per euro today, the highest since June 2004. The stronger yen reduces the value of sales generated overseas.

Mazda Motor Corp., 33 percent owned by Ford Motor Co., dropped 7.4 percent to 263 yen on speculation Ford may unload its stake in the company to raise cash. Mazda also counts Europe as its second-largest market.

Hyundai Motor Co., South Korea's biggest, lost 3.4 percent to 56,400 won. Isuzu Motors Ltd., Japan's third-biggest maker of commercial vehicles, tumbled 8.1 percent to 193 yen.

Citic Tumbles

Citic Pacific Ltd. fell for a second day, declining 11 percent to HK$5.80, after falling 55 percent yesterday on the news that the unit of China's biggest state-owned investment company may lose as much as $2 billion on currency bets.

Hong Kong lawmakers urged regulators to investigate Citic Pacific's delay in disclosing its currency-hedging loss, the South China Morning Post said.

National Australia Bank Ltd., the nation's largest by assets, rose 3.7 percent to A$25.57. Australia & New Zealand Banking Group Ltd., the third biggest, gained 1.8 percent to A$19.19.

Australian funding costs fell for a third consecutive day as banks' deposits at the central bank dropped and the Reserve Bank of Australia pumped A$2.46 billion ($1.67 billion) into the financial system today.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Satoshi Kawano in Tokyo at Skawano1@bloomberg.net

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

U.S. Stocks Gain, Led by Energy Shares on Halliburton Earnings

By Elizabeth Stanton

Oct. 20 (Bloomberg) -- U.S. stocks rose, adding to the Dow Jones Industrial Average's best weekly gain in five years, after Halliburton Co.'s profit topped estimates and Federal Reserve Chairman Ben S. Bernanke endorsed an economic stimulus package.

Halliburton, the world's second-largest oilfield-services provider, jumped 14 percent, while Exxon Mobil Corp. added 10 percent. NRG Energy Inc. surged 29 percent, the most since emerging from bankruptcy in 2003, on Exelon Corp.'s offer to buy the power producer for $6.2 billion. Energy companies, the industry with the highest estimated earnings growth this year, led the 30 percent drop in the Standard & Poor's 500 Index from Aug. 31 to Oct. 10. The group rallied 11 percent today.

``You've got significant rebound capability on these stocks,'' Wayne Wilbanks, chief investment officer at Wilbanks Smith & Thomas, said of energy shares. ``They took the brunt of the forced hedge-fund selling. There's no other way to explain Halliburton going from $33 to $16 in three weeks.'' Norfolk, Virginia-based Wilbanks manages $1.2 billion.

The S&P 500 rallied 44.85, or 4.8 percent, to 985.40. The Dow surged 413.21, or 4.7 percent, to 9,265.43, with all 30 of its companies increasing. The Nasdaq Composite Index rose 58.74, or 3.4 percent, to 1,770.03. More than five stocks advanced for each that fell on the New York Stock Exchange.

Bernanke, LEI

The Dow average added to last week's 4.8 percent advance, its best since 2003. All 10 industry groups in the S&P 500 rallied at least 2.8 percent today as a retreat in money market rates also boosted stocks. About 1.2 billion shares changed hands on the NYSE, 17 percent less than the three-month daily average.

Benchmark indexes extended gains this morning after the Conference Board's index of leading economic indicators unexpectedly rose in September and Bernanke said lawmakers should consider new measures to improve access to credit for consumers, homebuyers and businesses.

U.S. stocks climbed last week on the government's plan to inject $250 billion into financial companies. The Dow is still down more than 30 percent this year and the S&P 500 is off almost 33 percent as credit losses and asset writedowns stemming from the collapse of the subprime mortgage market top $660 billion at financial firms worldwide.

Europe's Dow Jones Stoxx 600 Index added 3.6 percent, while the MSCI Asia Pacific Index rose 3.8 percent after ING Groep NV received a 10 billion-euro ($13.4 billion) lifeline from the Dutch government and South Korea guaranteed $100 billion of lenders' foreign-currency debts.

Halliburton Earnings

Halliburton jumped $2.54 to $20.80. Excluding an acquisition charge and $693 million in costs related to redemption of convertible bonds, per-share profit was 76 cents, 2 cents higher than the average of 24 analyst estimates compiled by Bloomberg.

``Whenever somebody reports numbers that exceed expectations, that's a positive not only for the individual stock but the broader market,'' said Dean Gulis, who helps manage about $2.5 billion for Loomis Sayles & Co. in Bloomfield Hills, Michigan. ``In a case like Halliburton, it carries over to its sector. You have a good number of attractively valued opportunities out there.''

Exxon gained $6.95 to $74.99. Crude oil for November delivery climbed 3.3 percent to $74.25 a barrel in New York on speculation OPEC will cut production to halt a 50 percent slide in prices from July's record.

Fadel Gheit, an analyst at Oppenheimer & Co., upgraded Exxon, ConocoPhillips and Chevron Corp., to ``outperform'' from ``market perform'' on the prospect of higher earnings and mergers that boost stock valuations.

Hedge-Fund Stocks

Goldman Sachs Group Inc.'s Hedge Fund VIP Basket, a gauge of 49 stocks with the highest ownership among hedge funds, climbed 6.1 percent today, with almost half the gains coming in the final hour of trading. More than a third of the stocks in the index are energy companies.

Investors pulled a record $43 billion from hedge funds in September, and U.S. regulators are investigating whether investors manipulated end-of-day stock prices to avoid being forced by their brokers to sell holdings.

NRG Energy soared $5.67 to $25 after Exelon offered to buy the second-biggest electricity generator in Texas. Exelon, the biggest U.S. operator of nuclear power plans, rose 0.2 percent to $54.59 for the smallest gain among the 31 utilities in the S&P 500.

Utilities Rally

Exelon followed Warren Buffett in bidding for cheapened power assets after the credit freeze dragged down stock prices. Buffett's MidAmerican Energy Holdings Co. agreed Sept. 18 to buy Constellation Energy Group Inc. for $4.7 billion, less than half the company's market value a week earlier.

AES Corp., a power producer with operations in more than two dozen countries, led S&P 500 utilities to an 8.1 percent gain. AES climbed 21 percent to $9.89 for the biggest gain in the S&P 500.

Financial companies in the S&P 500 rose 2.8 percent as a group, the smallest gain among its 10 main industries.

Bank of America Corp., Goldman Sachs Group Inc. and JPMorgan Chase & Co. advanced after a decrease in money market rates signaled central bank efforts to revive bank lending are succeeding. The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars fell by 36 basis points to 4.06 percent today, according to the British Bankers' Association, the biggest drop in nine months.

KeyCorp and National City Corp. led declines in regional banks. Both were scheduled to release third-quarter results before the market opens tomorrow.

Libor Still `Elevated'

Three-month Libor is ``still very elevated,'' said Walter Todd, a money manager at Greenwood Capital Inc. in Greenwood, South Carolina, which oversees $1 billion. ``The cost of credit to companies and individuals is permanently reset higher. We are not going back to the cheap credit days of a year ago.''

Developers Diversified Realty Corp. and General Growth Properties, real-estate companies, fell the most in the S&P 500. GGP, a mall owner, may sell up to $2 billion in preferred shares to shore up capital, the Wall Street Journal reported. The CEO of Developers Diversified, which manages shopping centers, today pledged to reduce its debt load.

Earnings Watch

At least 139 S&P 500 companies will report third-quarter earnings this week, including Apple Inc., Caterpillar Inc. and McDonald's Corp. Wall Street analysts forecast an 11 percent drop in third-quarter earnings in a Bloomberg survey. Energy companies are forecast to show profit growth of 45 percent in the third quarter and 14 percent in the fourth quarter.

American Express Co., the biggest U.S. credit-card company by purchases, rose in trading after the official close of U.S. exchanges after third-quarter profit topped analysts' estimates. Still, profit fell for the fourth straight quarter as more consumers defaulted on loans.

Texas Instruments Inc. slumped in after-hours trading after reporting a 27 percent drop in third-quarter profit and issuing a fourth-quarter forecast that fell short of analyst estimates.

The S&P 500 trades at about 11.9 times estimated earnings over the coming 12 months, compared with a price-to-earnings multiple of 16.6 at the end of last year.

``You don't know if it's cheap,'' said Ralph Shive, chief investment officer at 1st Source Corp. Investment Advisors in South Bend, Indiana, which manages $3 billion. ``It could be, but it's hard to get much confidence about corporate earnings.''

For Related News:

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

Dollar Falls on Concern Credit Crisis Will Hurt Economic Growth

Oct. 17 (Bloomberg) -- The dollar fell against the euro, headed for its first weekly decline this month, before U.S. reports that will probably show a deepening housing slowdown eroded consumer confidence.

The U.S. currency also fell against the British pound and the Swiss franc on prospects the credit crisis will hurt growth in the world's largest economy, prompting traders to add to bets on a Federal Reserve interest-rate reduction.

``The reports may reinforce worries that the U.S. is in a recession and concerns linger over its financial markets,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``The dollar is still a sell.''

The dollar dropped to $1.3501 per euro at 9:35 a.m. in Tokyo from $1.3456 late in New York yesterday and from $1.3408 on Oct. 10. It traded at 101.60 yen from 101.57 yen yesterday and 100.67 a week ago. Against the euro, the yen was at 137.14 from 136.73.

The U.S. currency weakened to 1.1334 versus the Swiss franc from 1.1379 and declined to $1.7348 against the British pound from $1.7304.

The dollar headed for weekly losses against 9 of the 16 most-active currencies as U.S. housing starts declined to an annual rate of 870,000 homes in September, the fewest since January 1991, from 895,000 in August, according to a Bloomberg News survey of economists. The Commerce Department will issue the report at 8:30 a.m. in Washington.

Investors `Worried'

The Reuters/University of Michigan preliminary index of consumer sentiment, due at 10 a.m., likely decreased to 65.0 in October from 70.3 in September, a separate survey showed.

Futures traded on the Chicago Board of Trade show a 46 percent chance the Fed will lower its 1.5 percent target rate for overnight bank loans by a half-percentage point to 1 percent at its Oct. 29 meeting. Traders saw no chance of a cut of that magnitude a week ago. The odds of a quarter-point cut are 54 percent.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

Singapore S shares agri stocks-report by DMG

Lee Shaun Tzen (62323894, shaun-tzen.lee@dmgaps.com.sg)

Global food prices have recently come off since July 2008. Corn prices reached the highest on
27 July 2008 at US$7.15 per bushel. However, since the week of 6 October 2008 corn prices
have crashed below US$4.00 per bushel. Prices for rice have also dropped from US$20.32 per
bushel in September 2008 to US$16.74 per bushel as of last week. Soya bean prices have
fallen US$15.69 per bushel in September 2008 to US$7.95 per bushel on 10 Oct 2008.



Given the softening food commodity prices, we have lowered our earnings forecasts for China
Farm Equipment (CFE) and China Milk on anticipation of lower sales volume. However we have
maintained our earnings for China XLX Fertiliser.



Share prices for CFE, China Milk, China XLX and other S-chips have fallen tremendously, partly
due to the global credit concerns. The P/E ratio for the FSTC index has plunged from a high of
18.4x in January 2008 to 4.3x as of 10 October 2008. The estimate FY09 P/E of the index is
4.0x. We are therefore lowering our P/E valuations for the three agriculture stocks.


Maintain BUY for CFE. We have lowered our price target of S$0.56 to S$0.36 based on 6x
FY08 P/E which is a premium to the FSTC P/E estimate of 4.0x. We believe that demand for
farm equipment will remain relatively strong.
Maintain BUY for China Milk. We have lowered our price target of S$1.00 to S$0.975 based
on 6.5x FY09 P/E. We have given China Milk a premium to the FSTC P/E because we believe
that the company’s core business in producing pedigree bull semen is still a growth area. The
company is currently trading at 3.1x FY09 P/E and 2.8x FY10 P/E which is considerably lower
compared to the FSTC P/E of 4.0x.
Maintain BUY for China XLX. China XLX is currently trading at 3.7x FY08 P/E. We maintain
our earnings forecast for China XLX. However, we have lowered our price target of S$0.99 to
S$0.70 which is pegged to 8.5x FY08 P/E. We have given China XLX a premium because we
believe that the Chinese government will raise the current price cap of RMB1,725/tonne of urea
based fertiliser.
The table below provides a clearer picture of CFE’s, China Milk’s, and China XLX’s debt
situation. China Farm Equipment is in a net cash position, China Milk is in a strong net cash
position, and China XLX is the only company with net gearing of 13% which is relatively low.
The 13% is due to its gearing for the 3rd plant which will cost about RMB930m and will be
operational by 3Q09.




The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

Paulson Lacks Leverage to Compel Banks to Put New Cash to Work

By Robert Schmidt and Rebecca Christie

Oct. 15 (Bloomberg) -- Treasury Secretary Henry Paulson persuaded nine major U.S. banks to accept $125 billion in government investment. Getting them to lend it out may prove a tougher sell.

The equity stakes the government is purchasing in Citigroup Inc., Morgan Stanley and seven other big institutions come with no guarantee that the investments will spur lending and unfreeze credit markets. Nor do they give the government board seats or any other leverage to demand that that the firms actually use the money to help the economy.

``The truth of the matter is, they can't put a gun to their head and say you have to lend this money,'' said Charles Horn, a former official at the Office of the Comptroller of the Currency, part of the Treasury Department, and now a partner at the Mayer Brown law firm in Washington.

Treasury officials acknowledge they can't force banks to get the taxpayer money into the hands of their customers. Instead, officials are betting that the government's investment will create conditions where banks have a greater incentive to earn profits from lending than to hoard money to shore up their balance sheets.

``It's in their economic interest,'' said David Nason, the Treasury's assistant secretary for financial institutions, in an interview with Bloomberg Television. ``When you give them a stronger capital position and you also provide a certain amount of government backstop to their funding sources, it's incumbent upon them to go out and continue to lend.''

Powerful Incentive

Tim Ryan, head of the Securities Industry and Financial Markets Association and a former bank regulator, said the sheer scale of the capital infusion banks are receiving is in itself a powerful incentive to put the funds to work in the economy.

``The bully pulpit doesn't really work with banks, but capital does,'' said Ryan, who directed the U.S. Office of Thrift Supervision in 1990-1992.

The government is providing banks with ``quite a war chest that they were not expecting,'' Ryan said. ``They need to put it to work. The only way you put it to work is to lend.''

The Bush administration's rescue, part of a $700 billion bailout passed by Congress this month, is raising questions about what role the federal government will play as it becomes a leading investor in the financial sector. Already, companies that accept the taxpayer money are required to submit to restrictions on their top executives' pay.

Government Involvement

``Obviously there is a danger'' of increased government involvement in banks' corporate affairs, said Martin Baily, a senior fellow at the Brookings Institution in Washington and former chairman of the Council of Economic Advisers under President Bill Clinton.

Still, Baily said that the equity purchases are set up to minimize government intervention.

Treasury has ``been telling these institutions what to do in the last couple months, so they've exercised a good bit of control,'' Baily added. ``I think they'd like to get out of that business.''

The Bush administration is counting on agencies that already regulate the banks, such as the Federal Reserve, to keep an eye on daily operations. Those agencies can encourage firms to keep credit flowing to businesses and households.

``The regulators can do a lot to give the signals to the bank,'' said finance professor Len Rushfield of Pepperdine University in Los Angeles.

Pressure Has Limits

Even so, subtle government pressure on banks may not make much difference. Unlike with the recent federal takeovers of Fannie Mae, Freddie Mac and insurer American International Group Inc., the U.S. won't take a major share of the banks they invest in. Also, the Treasury has said it won't seek voting rights when it buys stakes.

The Treasury said it would dedicate $250 billion to boost bank capital through preferred stock purchases. Bank regulators estimated yesterday that ``thousands'' of financial companies would participate, although the program will begin with the nine big banks.

``What you'll see most large institutions saying is, `We will certainly listen to the government but our decisions are what's in the best interest of our shareholders,''' said John Coffee, a securities law professor at Columbia University.

Financial companies that accept government investments also are counting on Paulson's pro-market philosophy to keep the government out of their boardrooms. The secretary, announcing the capital injections yesterday, said that he regretted having to make such a move.

Alternative `Unacceptable'

``Government owning a stake in any private U.S. company is objectionable to most Americans -- me included,'' he said. ``Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable.''

Bank executives know that the Treasury and members of Congress are going to monitor the situation, said Scott Talbott, chief lobbyist for the Financial Services Roundtable.

``Policy makers will watch closely to insure that the money is used for credit,'' he said.

The one unknown that makes Wall Street nervous, several industry executives said, is what the next Treasury secretary will do. The U.S. presidential election is less than a month away.

``You'd probably want to have Hank Paulson, more than a lot of other people'' overseeing the bailout, said Edward Fleischman, a Republican Securities and Exchange Commissioner from 1986 to 1992, and now a senior counsel at the Linklaters law firm in New York. ``But you're not going to have any choice who takes his job.''

For Related News:

To contact the reporter on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net. Rebecca Christie in Washington at Rchristie4@bloomberg.net.

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

More bad news to be expected

US Treasury Secretary Hank Paulson expects that "the current strained situation" in the markets " will take more time to play out, and more bad news will come to light.
He has become the main man to watch for US market rescue in recent months.

If one may recalls, a few months back, the world focus was on Frank Bernanke, FED chairman. He is now in the backseat as he has no more bullet to use. The US government is making history and headlines in its efforts to rescue the dire economic situation or at least show the US citizens their efforts in doing so before the presidential elections in Nov.

The question to ask is how much more ammo does the US government have. You cannot give a dying man a miracle jab and he jumps to life. if he does recover, It will be very gradual. Look at the past depressions, it has always been a gradual bottoming out towards the end followed by a gradual rise. Such sharp rally movements yesterday and today are not sustainable. I see as an opportunity to further short the market or get rid of the stock you are holding.

At least Paulson is right in more bad news to be expected.

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

Banks: Provisions hiked to factor in rising NPLs

Slower Singapore economic growth. Given the 0.5% Singapore GDP YoY contraction for 3Q08 (as per the flash numbers released by the Singapore
Ministry of Trade & Industry), expectations are for further economic weakness
going ahead. The Singapore government has also lowered its 2008 GDP
forecast to 3%.
We have lowered our earnings forecasts for the banks:
• 2008 loan expansion forecast in the low teens is expected to be followed by
low single-digit in 2009.
• Fee & commission income is seen to weak as capital market activities slow
down and sales of wealth management products soften.
• Loan loss provisions is seen to increase more significantly in 2009 as some
asset quality deterioration take place.
Further risk of earnings deterioration could arise from provisions coming
even higher than our revised levels. Our sensitivity analysis shows that an
increase of provisions amounting to 10 bps of average interest earning assets
could lead to a further 7.4% fall in DBS 2009 net profit, 5.6% for OCBC and
5.7% for UOB. The higher sensitivity for DBS makes it relatively less attractive
when compared against its two peers.
Our banks’ price targets have also been cut. We now value the banks by
applying a premium over the 2003 low P/B levels. The recent concerns on the
global credit situation has made the market much more focused on the
economic slowdown going ahead into 2009. Hence, the Singapore banks are
more likely to trade at P/B levels closer to the 2003 levels.
Amongst the banks, we continue to favour OCBC. OCBC has been less
aggressive in loan expansion over the past 3.5 years (Dec 04 till Jun 08) than
DBS, and this should lead to a lower rise in NPL ratio going ahead. In addition,
it has a strong capital position, given its recent raising of Tier 1 capital over the
past 3-4 months. OCBC remains a BUY with a target price of S$7.80, based on
1.5x of 2009 book.
We also recommend BUY on UOB (target price of S$18.40, pegged to 1.5x of
2009 book). UOB has also been more conservative in lending over the past few
years, and this should help to protect its balance sheet strength going ahead. In
addition, UOB has historically kept its expense-income ratio relatively low and
this will help to support earnings in such periods of economic weakness. Lastly,
the S$1.32b of capital raised in Sep 08 has strengthened its balance sheet
robustness.

Stock Recommendations
DBS Group Holdings
S$14.86 NEUTRAL (TP: S$15.50)

OCBC
S$6.42 BUY (TP: S$7.80)

UOB
S$15.70 BUY (TP: S$18.40)

analysis by DMG

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

Jardine C & C: falling CPO prices hurting agri-business(report by DMG)

CPO prices slide. The price of crude palm oil (CPO) declined substantially over the past few
months. CPO prices are likely to remain under pressure as the lower oil price has weakened the
position of palm oil as a biofuel. Demand for palm oil is also expected to be lower.
Agribusiness supported by strong ASP for CPO in 1H08. While the declining CPO prices are
likely to affect JC&C’s agribusiness going forward, we believe the impact for FY08 would be
partially offset by the strong CPO prices we saw in 1H08. JC&C’s subsidiary, Astra’s ASP for
CPO was over IDR8,000 per kg during the first six months of the year. Hence, we are expecting
a slight increase YoY in CPO ASP for FY08, compared with FY07. The agribusiness accounted
for 33% of JC&C’s operating profit in FY07.
We continue to like JC&C for its diversified businesses, although the current economic environment is weak. With the slowdown in the global economy, we have lowered our ascribed
PE valuations for the Group’s businesses. We are maintaining our earnings estimate of
US$398.8m for FY08, as we had already factored in the declining CPO price. Based on our
SOTP valuation, we arrive at a lower target price of S$12.28, down from S$19.40 previously. At
the current price of S$9.97, our revised target price presents an upside of 23.2%. Assuming that
JC&C maintains its dividend payout ratio, the potential dividend yield would be an attractive
4.4%. Although the share price is rather volatile lately, we maintain BUY.




The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

Indofood Agri Resources: Lonsum’s scientific breakthrough – DMG report

Patenting the F1 production process. PT PP London Sumatra Indonesia Tbk’s (Lonsum)subsidiary, Sumatra Bioscience (SB), announced yesterday that it has developed a process,reportedly the world’s first, to produce F1 oil palm hybrid seeds, reinforcing our belief in thestrength of their research facility. The European Patent Office has verified SB’s approach to F1oil palm hybrids as the first of its kind and hence, potentially allowing SB to be the first commercial producer of F1 oil palm hybrids.

Yield estimated to triple, boosting competitiveness over rival oils. Based on historic yieldsfrom other F1 hybrid crops in USA, such as corn, oil palm’s conventional yield is estimated tomore than triple, reaching 18.5 tonnes/ha. For illustration, corn’s annual yield in the USAincreased six folds since the 1930s, after using F1 hybrid seeds. Palm oil is currently thecheapest and most productive of all oil crops. The potential increment in yield would boost palmoil’s competitiveness vis-à-vis its rival vegetable oils.

Freeing up precious land. With the ability to generate higher yields, the hybrid seeds will resultin less land required for crop cultivation. This would help alleviate the escalating global foodshortage crisis – the World Bank estimates global demand for food is forecasted to double by2030, with the world’s population expected to grow by an additional three billion by 2050.

More environmentally sustainable. With the rapid growth in palm oil consumption, there havebeen many environmentalists/ organizations lobbying for sustainable palm oil production. Thereis concern that this growth in production has occurred at the expense of irreplaceable tropicalforests in Indonesia and Malaysia. With the reduction in land required for palm oil cultivationmentioned above, this concern can be partly assuaged.

No near term impact on earnings. SB expects to commence commercial production of F1 oilpalm hybrids by 2018. In line with its commercialization plans, SB will invest US$5m in FY09 toexpand its existing R&D facilities.Sensitivity analysis and valuation.

Current CPO spot prices are around RM1,800-1,900/tonne.At this price range, our sensitivity analysis indicates that Indofood Agri’s (IFAR) target pricewould be S$1.48. We are currently using a CPO price assumption of RM2,600/tonne for FY09,obtaining a target price of S$2.65. With IFAR trading at 2.8x FY09 earnings we maintain ourBUY rating.

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

Asian Stocks Fall, Extending Global Rout, on Recession Concern

Oct. 7 (Bloomberg) -- Asian stocks slumped for a fourth day, extending a global rout, as electronics makers and commodity producers slumped on concern the seizure in credit markets will deepen a global recession.
Sharp Corp. was poised to fall after cutting its annual earnings forecast as the Nikkei 225 Stock Average sank below 10,000 for the first time since December 2003. BHP Billiton Ltd., the world's largest mining company, lost 2 percent after metals tumbled. National Australia Bank Ltd. dropped 2.7 percent as Bank of America Corp. halved its dividend after a drop in profit.
``The fear that most major economies are going into recession hasn't abated,'' said Jason Teh, who helps manage the equivalent of $5.7 billion at Investors Mutual Ltd. in Sydney.
The MSCI Asia Pacific Index fell 3.2 percent to 97.25 as of 9:26 a.m. in Tokyo, a fourth-straight decline. All 10 industry groups on the index dropped, with financial companies and raw- materials producers contributing the most to the retreat.
Japan's Nikkei 225 tumbled 5.1 percent to 9,938.98. Mitsui Mining & Smelter Co., the co-owner of Japan's biggest copper smelter, dropped 6.6 percent to 197 yen, after slashing a planned dividend and forecasting a second year of profit declines.
Australia's S&P/ASX 200 Index slipped 2.6 percent. South Korea's Kospi Index slid 2.7 percent.
The Dow Jones Industrial Average closed below 10,000 for the first time since October 2004, falling as much as 800 points at its lowest level. The Standard & Poor's Index retreated 3.9 percent to 1,056.89, extending the worst weekly slump since 2001. S&P futures were little changed today.
A measure of six metals traded on the London Metal Exchange slumped 5.8 percent, the steepest decline since Aug. 16, 2007. Zinc fell 2.9 percent, copper 7.5 percent and nickel 5.6 percent.
To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg; Shani Raja in Sydney at sraja4@bloomberg.net.

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned

Global Stocks, U.S. Index Futures Fall as Credit Crisis Widens

Oct. 6 (Bloomberg) -- Stocks tumbled in Europe and Asia and U.S. index futures dropped as deteriorating credit markets forced new bailouts of Hypo Real Estate Holding AG and Fortis, while governments pledged to protect depositors. The euro slumped to a 13-month low, while Treasuries advanced.

UBS AG dropped 8.6 percent in Zurich and Japan's Mitsubishi UFJ Financial Group Inc. sank by a record 9.9 percent after Germany agreed on a $68 billion plan for Hypo and BNP Paribas SA said it will take control of Fortis in Belgium and Luxembourg. Hypo Real Estate plummeted 54 percent. BHP Billiton Ltd. lost 10 percent after copper and gold prices sank amid concern a $700 billion U.S. bank bailout won't prevent a slowdown in global economic growth.

``It's like a fire,'' said Emmanuel Soupre, a fund manager at Neuflize OBC Asset Management in Paris, which oversees the equivalent of $33 billion. ``It's easier to extinguish five minutes after the start. Now we're about an hour into it. We have to act quickly to assure the continuity of the financial system to avoid an irreversible contamination of the entire economy.''

The MSCI World Index lost 2 percent to 1,116.1 at 8:05 a.m. in London as all 10 industry groups decreased. National markets in China, Germany, France, Japan, South Korea and the U.K. fell more than 4 percent.

Europe's Dow Jones Stoxx 600 Index sank 3.9 percent with all but six stocks declining. The MSCI Asia Pacific Index lost 3.6 percent. Futures on the Standard & Poor's 500 Index slipped 1.9 percent.

`Intervention Needed'

``It will probably be a rough week for global investors as they realize the credit crisis has a long way to play out,'' said Frederic Dickson, who helps oversee $25 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. ``U.S. action was an absolutely essential first step, and global intervention is needed.''

National benchmark indexes sank in all 14 western European markets that were open. France's CAC 40 slumped 4.6 percent, and the U.K.'s FTSE 100 decreased 4.6 percent. Germany's DAX fell 4.5 percent.

In Asia, Japan's Topix index lost 5 percent, and South Korea's Kospi lost 4.4 percent. China's CSI 300 Index fell 4.8 percent, as trading resumed after a one-week holiday.

The MSCI Emerging Markets Index dropped 5.3 percent, bringing this year's retreat to 44 percent. Russia's RTS Index slipped 7.6 percent, and Turkey's ISE National 100 Index sank 6.2 percent.

Treasuries rose for a fourth day, sending two-year notes to their longest winning streak in six weeks. The euro fell to a 13-month low against the dollar and dropped to its weakest versus the yen in more than two years.

Credit Losses

The MSCI World lost 30 percent this year as bailouts of financial companies accelerated and bank credit losses and writedowns approached $600 billion. The index for 23 developed countries is valued at 13.6 times the earnings of its companies, the lowest since at least 1995, according to data compiled by Bloomberg. Europe's Stoxx 600 trades at 11 times earnings, near the lowest since at least 2002, while the S&P 500 is valued at 20.9 times earnings.

UBS lost 8.6 percent to 21.92 francs. The bank's earnings power may be ``challenged for some time,'' and UBS may write down $3.1 billion in the third quarter, Oppenheimer & Co. analyst Meredith Whitney wrote in a note to clients. She cut her third-quarter earnings-per-share estimate to 13 cents from 43 cents.

Mitsubishi UFJ, Japan's largest bank, fell 9.8 percent to 801 yen. Mizuho Financial Group Inc. dropped 8.7 percent to 398,000 yen.

Bailouts

BNP Paribas dropped 5.2 percent to 67.665 euros. France's biggest bank agreed to take control of Fortis in Belgium and Luxembourg for 14.5 billion euros ($19.8 billion) after an earlier government rescue failed to ensure the company's stability.

Hypo Real Estate plunged 4.05 euros to 3.46. The German government and the country's banks and insurers agreed on a 50 billion-euro rescue package for commercial property lender after an earlier bailout faltered.

U.K. Chancellor of the Exchequer Alistair Darling said Britain is ``ready to do whatever it takes'' to help its banks. French President Nicolas Sarkozy, who convened an Oct. 4 meeting with leaders of Europe's four biggest economies, called for a global summit ``as soon as possible'' to implement ``a real and complete reform of the international financial system.''

Protecting Depositors

Germany will guarantee the savings of private account holders, Chancellor Angela Merkel said, in a bid to prevent a rush of withdrawals. Denmark said commercial lenders will provide as much as 35 billion kroner ($6.4 billion) over the next two years to a fund to insure depositors against losses.

The S&P 500 fell 9.4 percent last week, the most since the September 2001 terrorist attacks, as U.S. President George W. Bush signed the rescue package into law to stem a crisis that has claimed Bear Stearns Cos. and Lehman Brothers Holdings Inc.

The legislation enables the government to purchase non- performing assets from institutions and suspend an accounting rule requiring businesses to report losses if asset values fall.

The euro earlier reached $1.3610, the lowest since Sept. 5, 2007. It fell to 141.97 yen, the weakest since May 18, 2006, as investors cut holdings of higher-yielding currencies funded in the Japanese currency.

Falling Dominoes

``The euro zone is the second domino of the globe to be falling over after the U.S.,'' said Alex Sinton, a senior currency dealer at ANZ National Bank Ltd. in Auckland.

Asian money-market rates stayed at the highest in more than nine months. Hong Kong's three-month interbank offered rate rose to 3.85 percent. The Tokyo interbank offered rate for such loans was unchanged at a nine-month high of 0.868 percent.

BHP Billiton, the world's largest mining company, sank 9.9 percent to 1,069 pence. Rio Tinto Group, the third-biggest, slipped 12 percent to 3,006 pence.

Royal Dutch Shell Plc, Europe's biggest oil company, dropped 4.9 percent to 1,548 pence.

Bullion for immediate delivery was down 0.8 percent at $829.35 an ounce. Copper declined 3.5 percent to $5,800 a metric ton on the London Metal Exchange today. Crude oil fell for a fourth day in New York, dropping as much as 2.4 percent to $91.60 a barrel. Power station coal prices at Australia's Newcastle port dropped 6.1 percent last week, a seventh decline.

Commodities Drop

Datong Coal Industry Co., China's second-largest producer of the fuel by capacity, slumped by the 10 percent daily limit to 15.29 yuan in Shanghai. PT Bumi Resources, Indonesia's biggest power-station coal producer, tumbled 15 percent to 2,725 rupiah, extending a six-day, 19 percent slide.

The value of the 19 commodities in the Reuters-Jefferies CRB Index fell $280.6 billion, or 43 percent, from its July 3 peak, a loss larger than their total worth two years ago, data compiled by Bloomberg show.

UBS AG's Hong Kong-based economist Duncan Wooldridge reduced his growth forecast in Asia excluding Japan next year to 6.1 percent from 6.9 percent, saying the region will face ``recession-like conditions.''

Treasuries rose for a fourth day, sending two-year notes to their longest winning streak in six weeks. Two-year note yields fell 5 basis points to 1.53 percent as UBS AG, the largest Swiss bank, said the Federal Reserve will halve its benchmark interest rate to 1 percent by March 31 to combat a recession.

``It's time to start buying,'' said Hiroyuki Bando, chief manager for fixed income, equities and currencies in Tokyo at Mitsubishi UFJ Trust & Banking Corp. ``The economy will become weaker. Interest rates will go lower

The Material provided above is for information only and does not constitute an offer or solicitation to purchase or sell the shares mentioned