14 theSun | MONDAY APRIL 20 2009

business

market summary APRIL 17, 2009

Bursa expected to continue rally INDICES

FBMEMAS
CHANGE
6362.57 +28.23
SFARE prices on Bursa Malaysia recovery from a prolonged de- and raise concerns as to the real COMPOSITE 965.17 +3.89
are expected to continue their cline or bear market, after which situation of the global economy. INDUSTRIAL 2229.71 +4.80
rally this week on the back of the market will continue to fall. The KLCI is expected to test CONSUMER PROD 297.78 -0.48
improved investor sentiment “We have yet to see a big the resistance level of 990, with INDUSTRIAL PROD 72.24 -0.06
locally and globally, dealers said. impact of the stimulus pack- the support level at 950. CONSTRUCTION 187.21 -0.65
TRAD/SERV 128.73 +0.60
They said the focus would ages. With a little more than During the week just ended,
FINANCE 7423.18 +57.75
likely be on selected heavy- two months before finishing the the local bourse experienced quite PROPERTIES 589.48 -0.01
weights and lower liners, par- first half of the year, the coming a rally for whole week. The KLCI hit PLANTATION 4914.32 -10.09
ticularly banking and financial weeks will be crucial in see- a new high everyday. It also hit an MINING 267.49 UNCH
stocks, on the back of positive ing which direction the global intra-day high of 969.93. FBMSHA 6657.43 +23.15
developments in the US banking
and financial sectors.
economy takes,” he said.
He said despite improved
On a Friday-to-Friday basis,
the KLCI closed the week at
FBM2BRD
TECHNOLOGY
4093.94 -15.01
12.40 0.00 Macau gaming
However, an analyst warned
that this could be a “dead cat
corporate data from the banking
sector in the US, there were still
965.17, up by 23.79 points from
last week’s close of 941.38.
TURNOVER
1.012bil
VALUE
RM1.088bil
Q1 revenues
bounce” scenario, a temporary other factors that could hamper – Bernama
reverse decline

Asian carriers shaken

HONGKONG: Macau’s bad luck may
have started to turn, as first-quarter
gaming revenues jumped 8.1% from the
previous quarter after a dismal second
half in 2008, official figures showed.
Revenues in the gaming haven were

by plunge in premium travel

SINGAPORE: Casey Chan used
to fly business class every other
month to oversee his company’s
electronics factory in China until
late last year, when orders from
Western buyers suddenly started
drying up.
His employer, a Singapore-
based multinational firm that
makes components for items like
DVD players and digital cameras,
is unlikely to put him back on a
plush airline seat, with fine wines
on demand, anytime soon.
“My company is keeping a very
tight control on cost now,” said the
Singaporean chief engineer, who
has not flown to China since Janu-
ary and now spends most of his
time in the head office here with
little work to do.
Business-class travel cutbacks
by Chan and thousands of other
executives as a result of the global
financial crisis have dealt a major
blow to airlines, with those in the
Asia-Pacific region particularly
hard hit, industry experts said.
Carriers like Singapore Airlines
(SIA) are seen as the most vulner-
able because they have poured
extensive resources into busi-
ness- and first-class travel, known
as premium traffic.
This is where Asia-Pacific carri-
ers earn the bulk of their revenues
and the dramatic fall in demand is
devastating their bottom lines.
“It will be very difficult for
any Asia Pacific carriers to make
money in 2009,” said Derek
Sadubin, chief operating officer
with the Sydney-based Centre for
Asia Pacific Aviation.
Premium traffic demand is
down by 15-30% on average
depending on the route, he said.
The situation is far worse than
last year’s turbulence when fuel
prices soared to record levels, the
aftermath of the September 2001
terror attacks in the United States,
or the SARS outbreak in 2003,
Sadubin added.
As a result, carriers have
resorted to “taking extraordinary
measures to preserve cash”
including grounding planes and
asking cabin crew to take unpaid
leaves.
“After 9/11 and after SARS, the
industry came back quite quickly
because the economic cycle was
stronger, but now we have a deep
global recession that has impacted
corporate travel, which collapsed
subsequently,” he said.
The International Air Transport
Association (IATA) said premium
traffic within the region shrank
26.4% in February from a year ago,
worse than the 23.4% recorded in
January.
IATA last month predicted
the region would emerge as the
world’s worst hit this year, with
collective losses of US$1.7 billion
(RM61.2 billion), higher than the
US$1.1-billion (RM3.96 billion) loss
it forecast previously.
Globally, the industry will likely
lose US$4.7 billion (RM16.92 bil-
lion) compared with the earlier
forecast of US$2.5 billion (RM9
billion), said IATA.
Giovanni Bisignani, IATA’s
director-general, said last month
that “2009 is shaping out to be
the toughest year that (the) airline
industry has ever faced”.
He noted that the three biggest
Asian economies – Japan, China
and India – are all badly affected
by the global downturn.
Jim Eckes, managing director
with the Hongkong-based consul-
tancy Indoswiss Aviation, sees the
next three years as very tough for
the premium carriers.
“Asian airlines have a reputa-
tion for quality premium service
so naturally they are going to be
affected more by the fall in high-
yield traffic,” said Eckes.
SIA’s operating statistics show
the carrier flew 23% fewer passen-
gers in March from a year ago.
It has reduced the frequency of
its all-business-class direct flights
to New York and Los Angeles from
daily to five times a week.
The carrier’s main rivals in the
region have also announced cost-
cutting measures
Australia’s Qantas announced
new job cuts of up to 1,750 and
slashed its full-year profit forecast
to US$73 million (RM262.8 mil-
lion) to US$146 million (RM525.6
million), from the US$363 million
(RM1.306 billion) it had predicted
in November.
Hongkong’s Cathay Pacific,
which lost more than US$1 bil-
lion (RM3.6 billion) last year, is
also looking at ways to cut costs,
including reducing some routes.
One non-Asian carrier hit by
the fall in premium traffic is Swiss
International Air Lines (SWISS),
which will be pulling the plug on its
Singapore-Bangkok-Zurich service
on April 26.
“Singapore and Zurich are two
of the most important financial
centres in the world so obviously
most of our premium travellers
are from the financial sector,”
said Markus Schmid, the carrier’s
regional head. – AFP
26.02 billion patacas (RM11.73 billion)
in the first three months of this year, up
from 24.08 billion (RM10.86 billion) in the
Asian fourth quarter of 2008, Macau’s Gaming
Inspection and Coordination Bureau said
airlines on its website.
have a The upturn follows three straight
reputation quarter-on-quarter drops in revenue
for quality in the former Portuguese colony, as
tighter visa restrictions on visitors from
premium mainland China hit operators.
service so But the figure was still down 12.8%
naturally compared to the record first quarter of
2008, according to the statistics released
they are on Friday.
going The crucial market for VIP baccarat
to be was 16.83 billion patacas (RM7.58 bil-
affected lion) in the first three months of the
year, down 19.1% from the first quarter
more by of 2008, but up 7.8% from the fourth
the fall in quarter.
high-yield Macau has become a gleaming
temple to gambling, with enormous
traffic.” casino complexes cropping up over the
– Jim Eckes past few years, helping the city easily
overtake Las Vegas in terms of gaming
revenue.
But the tougher visa restrictions and
the crisis in the global credit markets
has meant many projects have stalled
in recent months as they struggle to find
new financing.
The visa restrictions were beefed
up on Chinese worries about corrupt
mainland officials laundering their cash
in Macau, as well as the rise of problem
gambling.
There is also concern about the
outflow of cash, much of it to United
States-based firms that have been
the major investors in Macau since its
gaming sector was liberalised in 2002.
– AFP

Hobbled US giants face China

carmakers in Shanghai
SHANGHAI: Troubled US auto
giants will square off against
Chinese newcomers in Shanghai
this week as they try to pull ahead
in what has suddenly become the
world's number one car market.
Despite seeking government
life support at home, Ford Motor
Company and General Motors Corp
had banner months in China, which
has overtaken the United States to
be the world’s largest auto market
for three months running.
But Chinese manufacturers
such as Geely and Chery also had
strong months and, sensing blood
in the water, they see a chance to
break out as global names.
“The economic slowdown offers
real opportunities for Chinese do-
mestic carmakers,” said Klaus Paur,
automotive director for research
firm TNS China, ahead of today’s
start of the Shanghai international
auto show.
Government incentives, such as
tax rebates on smaller engine cars,
helped drive China’s auto sales to
a monthly record of 1.08 million
units in March.
Vehicle sales in the first quarter
rose almost 6% from a year earlier
to 2.64 million units, according to
official figures.
Despite strong first quarter
sales, 45% of prospective car buy-
ers in China postponed purchases
due to concerns over the economy,
and a quarter have cut their budget,
according to a TNS survey of more
1,000 mainland consumers.
These factors favour Chinese
carmakers, who typically make
cheaper vehicles than their foreign
competitors, according to Paur.
“They can benefit from the
cautious consumer behaviour and
position themselves as attractive
alternatives to foreign brands,” he
said.
Nevertheless, GM said it set a
monthly sales record in China last
month and has announced plans to
double its annual sales here to two
million units within five years.
“We’re pretty well-placed to
do a lot of growth at the moment
without having to spend a lot of
money,” Kevin Wale, head of GM
China Group told the Wall Street
Journal last week.
Ford is also aggressively push-
ing forward in China, promoting
cars such as its four-door Fiesta,
which benefit most from Beijing’s
small engine rebates. – AFP