KLIA2:Mitsui to open outlet park at KLIA early 2015

SEPANG: Malaysia's new factory outlet park, the Mitsui Outlet Park KLIA, will start operations early next year, said Malaysia Airports Holdings Bhd (MAHB) chairman Tan Sri Dr Wan Abdul Aziz Wan Abdullah.

The park, the largest factory outlet shopping mall in Southeast Asia with 25,000 sq. m. of commercial area, hosts 140 outlets offering luxury products, fashion accessories, sporting and outdoor goods, a Japanese specialty store, entertainment centre as well as an amusement park, he said.

"The project marks another significant development of an exciting, much anticipated commercial project under the KLIA Aeropolis Masterplan," he said in his speech at the outlet's ground breaking here today.

Also present were Tourism and Culture Ministry secretary general Datuk Dr Ong Hong Peng and Mitsui Fudosan executive managing officer Takeshi Suzuki.

MFMA Development Sdn Bhd, a joint venture company between Mitsui Fudosan and Malaysia Airports, will undertake the construction, tenant leasing, promotions, management and operations of the mall.

"With an investment of RM335 million over three phases, we believe the project will translate to positive returns for the country's tourism and economy.

"We are honoured to have a trusted partner with Mitsui Fudosan, Japan's renowned and most reputable real estate and retail property developer," he said.

Meanwhile Malaysia Airports senior general manager Planning Khair Mirza said: "The people haven't had an outlet mall like this in the Klang Valley, this mall will be the ideal place for them," he told reporters.

He said a shuttle bus service from KLIA to the outlet, about six km away, is expected to be provided.

source NST

Shares dip on concerns over Ukraine, Chinese growth

LONDON (Reuters) - Risk appetite faded on financial markets on Tuesday, with shares weaker and bonds firmer as investors weighed up tensions between Russia and Ukraine, downbeat sales reports and signs of slowing growth in China.

But an upbeat performance on Wall Street the previous day kept losses in check, as did expectations that U.S. and British inflation figures later on Tuesday will be soft enough to keep interest rates at record lows for some time.

The focus in Asia was on data showing China's money supply grew at the weakest pace in more than a decade in March, in another sign of softening momentum in the world's second largest economy.
Europe's focus turned to the tense political backdrop in Ukraine, which kept investors on edge.

Ukraine's president threatened military action after pro-Russian separatists occupying government buildings in the east ignored an ultimatum to leave and another group of rebels attacked a police headquarters in the region.

U.S. officials have said they were in talks with European partners on how to punish Moscow for what Kiev and its Western allies call a Russian plot to annex Ukraine.

"If there is any sort of announcement that there are going to be further curbs from the West, we'd expect the market to drop off again," said Stuart McDonald, a sales trader at IG.

At 0740 GMT (3.40 a.m. EDT) the FTSE Eurofirst 300 index was down 0.2 percent at 1317 points, with brewer SABMiller, cosmetics group L'Oreal and foods giant Nestle's setting a negative tone with weak sales reports.

In Asia, China's benchmark Shanghai Composite Index slid 1.4 percent, its biggest fall in almost a month, while the MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.3 percent.
Japan's Nikkei rose 0.8 percent, as bargain-hunters stepped in after the index hit a six-month low on Monday.
EASY DOES IT

The main economic drivers for investors on Tuesday are likely to come from the U.S. and UK inflation reports for March.

Britain's annual inflation is expected to fall to 1.6 percent, the lowest since November 2009 and likely to cool traders' bets that surprisingly strong economic growth will bring forward the timing of the first Bank of England rate hike.

Sterling was among the biggest movers on global currency markets on Tuesday, shedding 0.2 percent against the dollar to trade at a one-week low below $1.67.
The euro remained under pressure, down slightly at a six-day low of $1.38, on weekend comments from European Central Bank President Mario Draghi, who said exchange rate strength could trigger further policy easing.
The dollar stood at 101.81 yen, little changed from late New York trade on Monday, when it pulled away from a three-week trough of 101.32 hit late last week.

"Today's UK and U.S. inflation reports will be friendly - i.e., low!," wrote Kit Juckes, senior currency strategist at SocGen in a note on Tuesday, adding low interest rates should continue to support asset prices and higher-yielding currencies.

U.S. Treasuries yields were little changed from late Monday levels at around 2.64 percent, not far from a six-week low of 2.603 percent hit on Monday.

Gold fell back from its three-week high of $1,330.90 touched on Monday, trading down 1 percent at $1,311 an ounce, while Brent crude futures dropped a third of one percent below $109 a barrel following a surge to a six-week high the previous session.

source

Developers drawn to ‘less prime’ locations

WITH the supply of land-bank getting scarce in the Klang Valley, it's not surprising to see developers expanding their presence in “not-so-prime” locations.
This was evidenced as recently as last week, when SP Setia announced it was acquiring a RM381.2mil plot of land in Rinching, located mid-way between Semenyih and Bangi old town, to be followed soon after by Mah Sing Group Bhd's purchase in Rawang for RM92mil.
“Granted, it is often developers with prime land-bank in Kuala Lumpur and Penang that stand to benefit more from rising property prices,” says an industry observer.
“But property conglomerates such as SP Setia and Mah Sing are well-known brand names with a proven track record. They can probably attract buyers and chalk up sales even if they bought land in Timbuktu,” he adds in jest.
A huge boost to the land acquired by SP Setia and Mah Sing is that they are both well connected. Malaysia Equity Research in a report pointed out that the former's Rinching land is located within 15 minutes from the proposed Bandar Kajang MRT station. “(It is) near the terminal station for the approved MRT Blue Line (Sungai Buloh-Kajang) and 25km south of KLCC (which is 40 minutes via existing highways).”
The report also says SP Setia is planning to replicate the success of its twin flagship Setia Alam and Setia Eco-Park development, including investing in infrastructure to improve connectivity.
An analyst at a local bank-backed brokerage says investing in infrastructure is “part of the package” when developing land that is considered “less prime”.
Similarly, analysts are also positive about the connectivity for Mah Sing's Rawang land. The developer has proposed to develop a mixed township, M Residence@Rawang, that includes beginner homes on 90.3ha.
“M Residence@Rawang is directly accessible from the North-South Highway, being only 10km from the exit point at the Rawang toll via Jalan Batu Arang. The Kuala Lumpur-Kuala Selangor Expressway (formerly known as Latar Highway) was opened in June,” says UOB KayHian in its research report.
“The Rawang KTM Station is also a short drive away, within 12km from the land, according to the management,” it adds.
According to Mah Sing, the M Residence@Rawang township has an estimated gross development value of about RM948mil and preliminary plans include two-storey link homes, townhouses, semi-detached homes, three-storey shops and various facilities and amenities.
“M Residence@Rawang is expected be developed over three to four years and the group is also actively scouting for more well-located mega township land that fit the group's business model of quick turnaround and allow for value enhancement,” the company says.
The first launch is slated for the first half of next year for the mass market, in line with the Government's call for private developers to build more affordable housing.
The move to provide affordable homes has been praised by analysts and industry observers and considered a good way to attract buyers in less prime land within the Klang Valley.
“With absorbitant property prices today, especially in the Klang Valley, it is becoming increasingly difficult for first-time home buyers to even place a downpayment for a house,” says one industry observer.
On the proposed Mah Sing development, UOB KayHian says: “The price tag for a two-storey link house (built-up of about 2,000 sq ft) is indicatively priced from RM390,000 onwards, or RM195 per sq ft. Ground checks indicate that selling prices for a two-storey link house in nearby developments such as The Emerald and Bandar Country Homes range from RM150 per sq ft to RM250 per sq ft.
“We believe the township concept should be able to attract buyers given the decent selling prices.”
Macquarie Research in its recent report says Mah Sing's project could see good demand with the significant rise in property prices in Kuala Lumpur and Klang Valley in the past year.
“As a comparison, Kuala Lumpur Kepong Bhd (KLK) launched its link houses in June this year in Bandar Seri Coalfields with prices ranging from RM328,000 to RM368,000. We understand from KLK that the sales for the launch were very strong with over 90% sales achieved, primarily due to upgrader demand.
“Mah Sing's new land is further up north of KLK's project, but has good connectivity with the KL-Kuala Selangor Expressway and is 20km from Rawang city centre.”

Samsung delays new Android model release after Jobs's death

SEOUL: Samsung Electronics Co said on Monday it had delayed the launch of a new smartphone based on Google's latest version of Android operating system while the world paid tribute following the death of Apple cofounder Steve Jobs.
The delay also comes as intensifying legal battle between Apple and Samsung is set to reach the most crucial moment this week, with the two technology giants set to meet in courtrooms in the United States, the Netherlands, Australia, South Korea and Japan.
Samsung had planned to introduce the new product based on the Ice Cream Sandwich system, which will unite the Android software used in tablets and smartphones, at its Mobile Unpack event in San Diego on Tuesday.
"We decided it was not the right time to announce a new product while the world was expressing tribute to Steve Jobs's passing," a Samsung spokesman said. Samsung has yet to decide on a new date for the release, the spokesman said.
Jobs died on Wednesday following a yearslong battle with pancreatic cancer, and tributes from world leaders, business rivals and fans have poured in since.
Samsung and Apple are suing each other in 10 countries over 20 cases since April, but few of them holding as much significance as the California court ruling on Thursday, since it could affect Samsung's mobile device sales in the United States, one of its biggest markets.
Samsung said it has no plan to delay scheduled hearing dates due to Jobs's death. Less than a day before his death on Wednesday, Samsung widened its patentinfringement cases with the U.S. firm to ban the sale of Apple's new iPhone in France and Italy after a series of setbacks in Australia and Europe.
Apple says Samsung's Galaxy line of mobile phones and tablets "slavishly" copied its iPhone and iPad. Samsung rejects the claims and argue the U.S. firm infringed on its mobile patents.
Samsung is the most credible challenger to Apple. It said on Friday its quarterly profit should top the most bullish market forecasts, with smartphones becoming its main profit engine despite intense competition from bigger rival Apple.
Apple unveiled its latest iPhone last week, leaving investors and fans wishing for more than a soupedup version of last year's device at a time of heightened competition from rival smartphone makers.
But U.S. mobile carrier AT&T said on Friday it has seen "extraordinary demand" for the new iPhone with over 200,000 preorders in the first 12 hours.
Last week, Apple rejected an offer from Samsung to settle a tablet computer dispute in Australia, possibly killing off the commercial viability of the new Galaxy tablet in that market.
Samsung is the biggest maker of mobile phones that are based on Android, which is available for free to handset vendors such as Motorola Mobility and HTC Corp.
Android phones have a greater combined market share than Apple's iPhone, the world's bestselling smartphone.
Shares in Samsung were trading up 2.2 percent by 0025 GMT, versus a 0.8 percent rise in the wider market.

Market Information: Demand For Gas In Asia To Increase

SINGAPORE, Sept 20 (Bernama) -- The demand for liquified natural gas (LNG) is expected to increase in Asia, and Singapore is set to tap the significant market growth, says International Enterprise (IE) Singapore chief executive officer Teo Eng Cheong.

"For the growth of Asia's LNG industry to remain strong, the marketplace needs a dynamic environment. As Asia's top oil hub, Singapore is well positioned to also be the regional hub for LNG.

"Today, Singapore is the gateway to key LNG markets. More than 400 petroleum and petroleum trading companies are already based here," he said in his address at the opening of the World LNG Series: Asia Pacific Summit here today.

Teo said while Singapore may not be a major LNG consumer or supplier, it had seen strong and steady growth in its LNG trading sector in recent years.

Shell was among the first energy majors to establish LNG marketing and trading activities in Singapore while other key players include BP, BG Group and Gazprom.

Teo said more energy companies have also started new LNG trading businesses here.

"Just this year, we witnessed new entrants to the cluster, including Gunvor, Vitol, and PetroChina.

"We are very encouraged by this progress. It showcases the potential of the LNG industry in playing a greater role in contributing to Singapore's economy."

"Many projects that are set to boost the growth of our LNG eco-system are already in the pipeline," he said adding that the construction of Singapore's first LNG terminal is on track to commence commercial operations by mid-2013.

As the government agency responsible for promoting the republic's trade, Teo said IE Singapore will continue to work with interested players to facilitate entry and growth of their operations in Singapore.

Teo said the long-term outlook for gas market was also strong as countries were diversifying their energy sources by seeking alternatives to oil and coal, and are switching to cleaner fuels like petrol gas.

By 2030, he said natural gas demand is projected to increase by 60 per cent to overtake coal in the global energy mix, to become the second most dominant source of energy globally.

He also pointed the global use of nuclear as an energy source has slowed significantly since Japan was hit by a tsunami and earthquake in March.

Most of the future action, he said would be seen in emerging markets.

He said 80 per cent of the growth is expected to be in non-OECD (Organisation for Economic Co-operation and Development) countries by 2035, largely driven by the emerging economies of Asia.

China's demand for natural gas alone is projected to grow more than five times from the current 20 billion cubic metres to 110 billion cubic metres by 2015.

He said while South-East Asia was traditionally a LNG exporting region, with no importers, this was expected to change by 2015.

Teo said 10 LNG import terminals with a total import capacity of some 34 billion cubic metres were possibly coming online in the region.

Several recent trends further underscored Asia's role in the evolution of the global LNG market.

He said Asia's LNG demand surged strongly after the 2008 financial crisis.

It is expected to grow faster than supply in the coming years.

The supply situation is only expected to ease after 2015, when more LNG production projects and supply options come on-stream.

Source: Bernama

KLSE News for 19.09.11: Malaysian shares seen to be volatile this week

A week need to cautions..
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THE absence of positive news is expected to keep shares on Bursa Malaysia volatile this week with a possibility of the benchmark FBM KLCI testing the psychological 1,400 support level.
An analyst said players were likely to remain on the sidelines while awaiting fresh direction.
“Investors are monitoring the situation in Europe carefully before deciding whether to step into the market,” he said.
Affin Investment Bank Head of Retail Research Dr Nazri Khan said the world economy was losing its momentum with the downgrade of two of France's top banks by Moody's leading to a deterioration in market sentiment.
“Nevertheless, although the current situation is dominated by negative catalysts, some investors have gained confidence on news that Germany and France are committed to support Greece to stay in the European Union,” he told Bernama.
There had been speculation that Greece might pull out of the European Union amid worries of default on its debt.
Nazri said although external factors overweighed internal factors, investors would return to the market a week before budget day on Oct 7. “We advise our clients to take defensive stocks like telecommunications and consumer-related stocks,” he said, adding that the market was currently being dominated by defensive buying.
For the week just ended, the FBM KLCI dropped 38.19 points to 1,430.93.
The FBM Emas Index lost 298.10 points to 9,740.33, the FBM Top 100 Index declined 251.64 points to 9,568.82 and FBM ACE Index deceased 28.32 points to 3,749.49.
The Finance Index fell 354.17 points to 13,337.79, Plantation Index slipped 189.6 points to 7,16.24 and the Industrial Index was 64.92 points lower at 2,643.10.
The holiday-shorthened week saw total market volume decreasing to 2.88 billion shares valued at RM4.88bil from 3.5 billion shares valued at RM6.29bil previously.
The Main Market turnover fell to 2.20 billion units worth RM4.77bil from 2.66 billion units worth RM6.124bil.
Warrants decreased to 186.53 million units valued at RM14.139mil from 225.18 million shares valued at RM20.95mil.
Volume on the ACE Market declined to 474.33 million units worth RM78.5mil from 634.159 million units worth RM66.315mil. Bursa Malaysia closed yesterday for Malaysia Day holiday.

Source: Bernama

Five Tips in Bear Market: Five world markets themes in the week ahead

Following are five big themes likely to dominate thinking of investors and traders in the coming week, starting Monday, Sept 19 and the Reuters stories related to them.

1/ FOR A FEW DOLLARS MORE
Global investors will in the coming week have the Fed's two-day meeting to distract them from the euro zone. There is a growing assumption that the U.S. central bank will deliver another version of "Operation Twist" - a program intended to drive down long-term interest rates. Coming on the heels of the Fed's pledge to keep rates low at least until mid-2013, this may offer some support for global stocks, which have barely lifted off lows hit in July on fears of recession and debt problems on both sides of the Atlantic. Equity valuations may be cheap but stocks could cheapen further still given there is no sign of an end to the euro zone debt crisis and a Reuters global poll shows an increase in the perceived risk of recession in developed countries. If the Fed does opt to twist again, G7 government bond curves will flatten.

2/ FISTFULS OF DOLLARS
Euro zone banks were already finding it costly to obtain dollar funds in the money markets. Given lenders typically hoard cash in the run-up to the end of the quarter and of the year to spruce up their books, it can only help that the ECB has reintroduced three-month dollar liquidity operations in coordination with other major central banks. The coming weeks will show whether this is enough to sustainably ease the money market stress that was being flagged by cross currency basis swaps and other prices. Nomura says that while FRA/OIS spreads are showing funding problems are far more focused in the European banking system than was the case in 2008, a steeper dollar FRA/OIS curve suggests there is an increased risk of future stress in the U.S. financial system. It is therefore little wonder that concern about Europe's sovereign debt crisis is evident at the highest levels in the United States.
3/ FEELING LUCKY?
The unprecedented move by a U.S. Treasury Secretary to attend this week's informal meeting of EU finance ministers in Poland raised market expectations, particularly given there appears to be openness in some EU capitals to the idea of a U.S. TALF-like leveraging of Europe's bailout funds. Rhetoric alone won't be enough to appease investors' nervousness, particularly given credit and secondary bond market prices are implying the near certainty of a Greek default that goes well beyond the scope of the private sector involvement plan already under way. Investor sentiment will also take a knock if the European Commission's plan to lay out options for euro bonds continues to encounter such strong opposition that it becomes a non-starter. And last but not least, the slow progress in ratifying the EFSF country by country is being closely monitored - delays or rejections would imperil the plan to transfer bond buying powers from the ECB and to allow it to support banks.

4/ IN THE LINE OF FIRE
European banks already face challenges in raising capital to deal with any further write-offs that they might suffer on their peripheral exposure. Any "disorderly" default by Greece would suck other euro zone sovereigns (notably Italy and even France) into the debt crisis, wreak havoc on the European financial system, and make it well nigh impossible for banks to raise funds in the market. Shares in European banks are still 56 percent lower than they were before the collapse of Lehman Brothers three years ago. Few are willing to view valuations as supportive, even though the 12-month forward P/E ratio for the STOXX Europe 600 banking index is at its lowest ever, 5.73. That's because analysts are continuing to cut their earnings estimates for financial institutions, with some even going into negative territory, making forward P/E less useful as a compass for investors.

5/ ANY WHICH WAY BUT UP?
Financial market interest in the coming week's BRICS meeting is running high given speculation over what these emerging market powers might be willing to do - as a group or individually - to help out the euro zone by buying southern European sovereign bonds. Barring any sign of such interest, the euro could find itself extending losses. The single currency faces drags from the broad trend of a narrowing U.S./German two-year spread, a shift in market expectations of ECB policy, as well as the various sovereign and financial sector problems that make up the euro zone crisis. A protracted euro slide, especially against the yen, raises the risk of intervention by Tokyo, especially as the Japanese half-year draws closer. Sterling will be the other currency in the spotlight in the coming week as BOE minutes will show how many MPC members have swung in favor of another round of quantitative easing.

Source: The Edge

KLSE catalyst: Malaysian Companies Capable Of Securing Infrastructure Projects In India

A Delhi Build Contractor Firm Said Malaysian company able to secure project at India does this mean it will push the stock market especially prproperty stock and trade/service stock??
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NEW YORK, Sept 18 (Bernama) -- Malaysian companies have a good chance of bagging lucrative infrastructure deals in India, Indian infrastructure experts said on Saturday.

At a one-day conference, held at the Indian consulate general here, many Indian experts were saying that Malaysian companies, which have played a pioneering role in Malaysia's infrastructure development, had a good chance of bagging attractive deals in India.

Some representatives of Indian companies at the conference admitted that their companies had strong ties with Malaysian companies which, they said, could become effective partners in tapping India's infrastructure market.

They said the Indian government, which is aggressively pushing investments for the country's infrastructure development, has announced investments of US$1 trillion for infrastructure projects connected with the construction and development of roads, airports, seaports, railways, urban development and energy.

Pratap Vijay Padodre, President/Chief Executive Officer of Aspire, who has a good knowledge of Malaysia's infrastructure, urged Malaysia to tap the opportunities in India's infrastructural development.

"Malaysia is already actively engaged in India's road development sector. However, instead of enhancing its presence and engaging more, Malaysian companies seem to have loosened their grip.

"As the global economic recovery has not, yet, gained in strength and many countries face the danger of a renewed recession, India is one of the few countries that will continue to post economic growth.

"Besides engaging in the logistics sector, Malaysian companies can also benefit from opportunities in areas such as power and water," he told Bernama in an interview.

Sanjay Divakar Joshi, Chief Operating officer of Delhi-based LancoInfratech Ltd, was equally optimistic of Malaysian companies entering the Indian infrastructure market.

"India builds about 20 km of road a day. The Indian government is developing roads all over the country. There is emphasis on developing connectivity with the rural areas.

"Malaysian companies, generally, have been successful in infrastructure development. The Malaysian group, Scomi, has been instrumental in setting up the monorail project in Mumbai. Such projects are also coming up in Chennai, Hyderabad and other cities as well," Joshi added.

Another Malaysian company, Genting Bhd, has also invested in power projects in Andhra Pradesh and Tamil Nadu in cooperation with Lanco, a US$2.5 billion conglomerate with varied interest such as power resources, infrastructure and solar energy, is handling several major projects in India, particularly in road development, he added.

Another promising area, Joshi said is airport development.

'A country the size of India has only 100 airports. There is room for many more. Malaysia Airports Holding Bhd, which holds stakes in Hyderabad airport, can also help in the development and management of airports in India," he added.

Joshi also said India was establishing some 35 non-metro airports in second-tier cities in the country.

"We are doing construction work for two airports in Varanasi and Bhubaneshwar," he added.

There are 11 major ports in India under government control.

"Ownership of these ports rests with the government," he added.

He advised Malaysian newcomer companies to consider teaming up with an Indian partner to tap the market citing Plus Expressways which has maintained a presence in India where it was engaged in several projects.

Source: Bernama

More Debt Created by TNB-TNB to issue RM5bil sukuk for Janamanjung plant soon

PETALING JAYA: Tenaga Nasional Bhd (TNB) will raise RM5bil from a 20-year ringgit-denominated sukuk issuance at the end of next month to finance the extension of its Janamanjung power plant.
This comes at a time when the national utility company is facing a severe gas supply shortage that may result in it incurring additional fuel cost.
In a Bernama report on Thursday, TNB president and chief executive officer Datuk Seri Che Khalib Mohd Noh said the group would do its book-building exercise in the third week of October. “The timing is good as the domestic market is now flush with liquidity,” he said.
In April, TNB awarded French group Alstom a 650-million-euro (RM2.8bil) contract to build the Janamanjung 1,000-MW supercritical coal-fired power plant.
Alstom will engineer, procure, construct and commission a 1,000-MW steam turbine, a generator, a supercritical boiler and auxiliaries. The plant is expected to come online in 2015.
The plant will be the single largest in South-East Asia and will produce enough electricity to power nearly two million households in the country.
The project follows TNB's 1999 contract with Alstom to build the currently operating 2,100-MW Manjung coal-fired power plant.
The supercritical power plant operates at a higher temperature than regular coal-fired power plants. Its high temperature increases the pressure at which it operates, which in turn improves its efficiency, increasing the amount of power output and decreasing emission per unit of fuel burned.
Meanwhile, TNB is still bogged down by cost concerns whereby it may incur additional fuel costs of up to RM3bil.
On Tuesday, Che Khalib said the company's fourth-quarter performance would be weak and his earnings estimate for 2011 had gone haywire and had been cut by more than 50%, marred by a continued gas supply shortage.
Analysts have said the gas shortage might only be permanently resolved by the second half of 2012, when Petronas Gas' regasification terminal in Malacca was operational and Malaysia started importing liquefied natural gas at market prices.

Source: The Star

MASKargo sees 25% growth !! MAS Share up for 25%

MASKargo seem will be catalyst for MAS stock.
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TOULOUSE: Malaysia Airlines Cargo Sdn Bhd (MASKargo) expects its revenue to grow by about RM200mil or 25% for the financial year ending Dec 31, 2012 (FY12).
“We have plans to grow by 25% in terms of revenue via new routes and higher capacity,” managing director Shahari Sulaiman said after taking delivery of MASKargo's first of its four A330-200F from Airbus on Thursday.
MASKargo is expected to receive its second A330-200F in November and another two aircraft next year.

Shahari: MASKargo’s main priority now is to strengthen its order book and operations.

 

Shahari said the growth would be contributed mainly by the new aircraft, which would enable it to operate more efficiently.
He explained that the new A330-200F, which had a maximum capacity of 70 tonnes, would make money if it was filled with 55 tonnes per flight. Its existing 747-400F, which has a capacity of 110 tonnes, would require at least 85 tonnes per flight to make money.
Shahari also said that MASKargo was “on target” to exceed RM2bil in revenue this year. It recorded revenue of RM2.4bil in financial year 2010.
On the possibility of MASKargo being listed, Shahari said this was not its main priority at the moment as it wanted to strengthen its order book and operations.
MASKargo intends to expand both its network and capacity with the new freighters. The four A330 freighters would complement its two 747-400F freighters in the current fleet, Shahari said.
“The airline industry experienced a 35% increase in fuel price over the last year, prompting us to cut the capacity on our leased 747-200F freighter network.
“The A330 freighters provide us with an opportunity to grow our capacity as we are able to serve more markets,” he said.
This also marks the first time that MASKargo is parking its new aircraft in its balance sheet.
Shahari said the new aircraft was just like any other investment that the company had made in the past in IT system, talents and ground-handling capacity.
“The A330-200F freighter has a book value of more than US$200mil each at 2011 price. Owning these planes strengthens our balance sheet and allows us to better manage our operating expenses.”
MASKargo is phasing out its leased 747-200F classic freighters by the year-end.

Source: The Star

GLC investment : Ekuinas investing RM98.3m in Burger King, San Francisco Coffee

Ekuinas investing RM 100 mil in food chain !!
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KUALA LUMPUR:   Ekuiti Nasional Bhd (Ekuinas) is investing a total of RM98.3 million into the Burger King and San Francisco Coffee franchises, marking its entry into the fast growing consumer food and beverage sector.
The government-linked private equity fund management company announced on Thursday, Sept 15 that it would invest RM68.2 million in the local franchise of Burger King, which involves a capital injection of RM60 million into Malaysian franchisee Cosmo Restaurants Sdn Bhd.
Ekuinas also announced it was acquiring a 90% equity stake in Lyndarahim Ventures Sdn Bhd, which is the owner and operator of San Francisco Coffee, for a total investment of RM17.5 million out of which RM14.5 million will be injected as new capital into the company.
Ekuinas will allocate an additional RM12.5 million investment to expand their specialty coffee operations regionally, as well as to invest in addition F&B brands.
The two investments will see Ekuinas aggressively expanding the Malaysian operations of Burger King and transforming the operations of San Francisco Coffee.
The two investments are Ekuinas' most recent, following direct investment in four companies in 2010 and one recently through its outsourced programme. In total, Ekuinas has undertaken investments amount to RM594.84 million and facilitated economic capital deployment of RM717.48 million into the Malaysian economy.
Burger King, under Cosmo Restaurants Sdn Bhd (currently majority owned by CIMB PE through its funds under management, who will continue to retain a significant minority interest in the company), currently has 24 outlets across Malaysia, and intends to extend the brand experience by rolling out new outlets.
San Francisco Coffee, which currently holds approximately 7% market share in the specialist coffee chain, believes that the newly-inked partnership would assist the company - owned by former Bank Pembangunan president Datuk Abdul Rahim Zin - in fast-tracking customer growth both locally and in Singapore.
Abdul Rahim will retain a 10% stake and assume the role of chairman, and will have the option of increasing his stake in the company at a later date.
Commenting on Ekuinas' latest investment, chairman Raja Tan Sri Arshad Raja Tun Uda said that "we are pleased to undertake these investments given that the F&B sector is one of Ekuinas' six core sectors."
He added that as the sector had a market size of RM23 billion, out of which the chained F&B segment was estimated to be worth RM5.6 billion, the Malaysian foodservice industry offered significant growth potential.

Source: The Edge

MAS losing money: QPR sponsorship a ‘good deal’ for MAS

 A move that can be question?
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KUALA LUMPUR: The recently inked home jersey sponsorship between Malaysian Airline System Bhd (MAS) with Barclays Premier League club Queens Park Rangers (QPR) is a “good deal” for the national carrier, said Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar.

Azman’s comments come on the back of MAS getting flak for the sponsorship arrangement.

Much of the brickbats stem from the national carrier looking at such a sponsorship after bleeding a net loss of over RM520 million in 2QFY11 ended June 30.

“We felt that we got a good deal that stands on its own commercially. I think all the numbers are there, we (just need to) add value,” Azman told newsmen at the sidelines of Forbes Global CEO Conference yesterday. Khazanah owns a 69.5% stake in MAS.

In a statement yesterday, MAS’ top official said the latest sponsorship enables the national carrier to reinforce its global full-service presence and premium franchise via football fans from Europe, the Americas, Asia-Pacific, Australia and other regions.

“It also celebrates MAS’ recent collaboration framework with AirAsia,” said MAS executive director Mohd Rashdan Md Yusof.

QPR, however, is among the less celebrated teams in the Barclay’s Premier League (BPL). After a 15-year absence the team is now back in the top flight of English football but is unlikely to impress.

As an indication of its stature, QPR’s ground Loftus Road has a capacity of only some 18,500, in contrast to other teams which have stadiums with capacities exceeding 50,000 spectators. Other teams MAS was linked to were much more well known with larger followings.

MAS was the official air charterer of Manchester United’s Asian Tour in 2005 and 2007.  It was also the official air charterer for Chelsea’s Asian Tour in 2008 and this year. Arsenal had also travelled on MAS charter flights for its Asian tour this year.

Other issues with regard to transparency have irked market watchers as well. Under this plan, MAS will sponsor the jerseys of QPR during its BPL home matches for the 2011/12 and 2012/13 seasons while budget airline AirAsia Bhd will sponsor QPR’s away match and “third” jerseys for the two seasons.

MAS has yet to disclose details of the sponsorship deal. Based on unconfirmed reports, MAS may have committed over £3 million (RM14.6 million) for the QPR jersey sponsorship.

In contrast, AirAsia announced to Bursa Malaysia on Monday that it had committed some £500,000 for the QPR sponsorship and highlighted that the transaction was a related party transaction (RPT) given that Tan Sri Tony Fernandes has interest in both AirAsia and QPR.

Interestingly apart from being the “away shirt” sponsor of QPR, AirAsia will also receive the rights to advertise at the QPR’s Loftus Road Stadium and get match tickets and hospitality benefits.

MAS, however, has kept mum and did not announce the QPR sponsorship deal to Bursa, and said the transaction is not considered an RPT despite Fernandes owning a stake in MAS via Tune Air.

In a response to The Edge Financial Daily’s queries, MAS responded: “The sponsorship quantum is a matter agreed between QPR and MAS.

“MAS did not make an announcement to Bursa yesterday as the QPR transaction does not fall under the categories for RPT requiring an announcement.”

These sponsorships issues came just a month after MAS and AirAsia shareholders agreed to swap shares under a deal that will pave way for a tie-up between the two airlines.

Under the deal, Khazanah has taken up a 10% stake in AirAsia while Tune Air Sdn Bhd, which owns some 23% in AirAsia, has subscribed to 20.5% of MAS’ shares.

Separately, at the sidelines of the Forbes conference, Fernandes said: “Malaysia has to change its way of thinking and stop this defeatist attitude... If we continue to not brand ourselves we might as well allow a foreign airline to be the national carrier of this country.

“We have built ourselves by investing in the brand and if we really want to be a global leader and have brands that are globally recognised (then) we have to invest. It’s a tiny investment in relation to what you want to build,” added Fernandes.

Nevertheless, the question remains: will MAS be able to raise its profile with the sponsorship and how does such move fit in its strategy?

Source: The edge

TA Coverage news : Plantation Sector in a Festive Mood

Slow down in production
MPOB released the monthly palm oil data for the month of August. Production for August declined 4.8% MoM to 1.67mn tonnes, moderating the YTD growth to 8.2% from 8.9% in previous month. This is within expectations as the Muslim fasting month of Ramadan fall within this month. On a YoY basis, production increased by 3.8% thanks to normalising yield and weather pattern.

Lower production lead to lower stocks
Inventory level declined further this month by 5.6% to 1.89mn tonnes after peaking to 2.05mn tones. The decline was in‐line with the drop in production volume as well as the high base effect in the previous month. Export/stock ratio increased slightly to 0.90x from a low of 0.88x in the previous month. Slight decrease in exports As expected, exports figure mirrored the rest with a slight drop of 2.7% to 1.69mn tonnes due
to slowing down in trade. Some of the traders were off for most part of the month especially toward the end of the month since the Hari Raya Puasa coincided with Malaysia’s National day, which translated into longer holidays. Some of the main exports destination continue to show increase in demand especially the US (+61% MoM), India (+29.4% MoM) and Pakistan (+14.5%). However, this was offset by a decrease in order from other regions of the world. Threat from the neighbouring country? Indonesia will be implementing the new tax structure soon, which involves reducing maximum tax rate for CPO exports even though the Indonesia Palm Oil Association urged the government not to impose higher export taxes on crude than its refined products as it could encourage smuggling and harm the processing industry. Following the new structure, which will take effect on 1st of October, a maximum tax of 10% will be introduced. The tax rate for RBD palm olein will be at 13% where as CPO will be taxed at maximum of 22.5%. As such, we could see some turbulence in September figure. However, we are leaving our earnings forecasts unchanged at this juncture as it is difficult to gauge the quantitative impact of the new tax structure on the Malaysian plantation players.

Neutral Call
We maintain our Plantation sector’s recommendation as Neutral as well as the CY11 average price assumption of RM3,300/tonne on the back of anticipation that the uncertain global economic outlook will negatively impact equity outlook. Sime Darby and Boustead remained the top stock picks in the sector. Key risk factors to our recommendations include, 1) sharp correction in crude oil price, 2) strong USD, 3) production of vegetable oils disappoints, and 4) impact of inflationary pressure on demand for vegetable oils.

Source: TA

TA Coverage news : Oil and Gas Sector for 2012

The News
The government has proposed to undertake two Oil & Gas (O&G) projects in Brunei. The first project, by Petronas, is to build a petrochemical complex with BASF on a 60 hectare plot of land in Pulau Muara Besar with an investment of approximately USD1.6bn (RM4.9bn) whilst the second is for the development of a
fabrication yard by Malaysia Marine and Heavy Engineering Holdings Bhd (MHB). According to newswire more details will be available by the end of the year or the beginning of 2012. MHB’s (Sell, TP: RM6.06) management refused to provide any further details citing that the project is at an infant stage at this juncture. We believe that it is likely that Petronas Chemicals (Buy, TP: RM7.28) could be involved in the Brunei project. Hypothetically speaking, Petronas, BASF, the Bruneian government and Petronas Chemicals could form a joint venture for the project. This will allow Brunei to leverage on the petrochemical industry in return for Petronas’s exploration rights. Petronas has already begun exploration in the CA1 and CA2 areas and in Block M, which is outside CA1 and CA2. Since his tenure, Prime Minister Datuk Seri Najib Tun Razak seems to have set up ties with Brunei enabling both countries to leverage on each other’s assets. In return for
investments from Malaysia to Brunei in the O&G sector, Najib has also discussed investment opportunities for Brunei in the Sabah tourism sector and hydro power generation in Sarawak.

Impact
Once again this is another bit of positive news for the sector as a whole. For the petrochemical plant, companies like KNM (Buy, TP: RM1.90) will certainly benefit from process equipment fabrication. The  development of the yard in Brunei by MHB seems to suggest the long term viability of Petronas’ exploration and production activity. Deepwater activities are set for growth in Brunei as exploration & production
activities in shallower fields have almost dried out.

Maintain Overweight
We reiterate our Overweight call on the sector as positive news flow continues to be a catalyst. We have mostly Buys in the sector except for MHB and Kencana.

Source: TA

No Affirmative to Bumiputra: Najis Said Affirmative Action Will Remain For Bumis But More Market Friendly Now

Seems good since this is time for bumi to become capable
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KUALA LUMPUR, Sept 14 (Bernama) -- Prime Minister Datuk Seri Najib Tun Razak said affirmative actions to help Bumiputeras, which were introduced under the banner of New Economic Policy (NEP), would remain but have shifted to become more market friendly and merit based.

Najib, who is also the Finance Minister said the current government strategy of creating more opportunities for the Bumiputeras rather than imposing quotas on others, have also attracted the non-Bumiputeras.

"What we found out is that this way (affirmative action under NEP), firstly, has not been very popular with the market. And secondly, is not really helping the Bumiputeras.

"What we are trying to do now is to shift that - affirmative action remains - but it should be more market friendly and it should be more on the basis of merit," said the Prime Minister at the 11th Forbes Global CEO Conference here Tuesday.

"In other words, we create opportunities for them to grow rather than imposing quotas on others. So that's a general philosophy, we are moving towards and it's becoming better and has better attraction to the non-Bumiputeras," he said.

Najib was sharing his insights on the country's performance and challenges since taking the helm in 2009.

The 45-minute dialogue was chaired by Forbes Chairman and Editor-in-Chief of Forbes Asia, Steve Forbes.

On whether it was time for Asean to look into a new currency, Najib said Asean countries were still open to the idea over the longer term, but the approach must be in a steady manner to avoid disruption in the currency and financial market.

"I do accept the fact that in the short and medium term, the US dollar will continue to be the major international currency and Euro will also be an important international currency. I don't see that picture changing in the short and medium term.

"But in the long term, it (the idea of new currency for Asean) is still open. But let us approach it in a steady manner so that we do not disrupt the currency and financial market," Najib said.

He pointed out that Malaysia was one of the first countries to use local currency to conduct business and trade with China.

On the introduction of the goods and services tax (GST), Najib said the government has instructed the Inland Revenue Board to set up the system to enable its implementation.

He said it was important to be prepared as there would be glitches and further reassessment when it comes to the time of implementation.

"The question is the timing of it. I guess when the time is right, in the near future... probably after the next general election, we will introduce the GST," said Najib.

At the same time, he said there has been a growing acceptance among the people on the implementation of the GST.

Of the 12 million people, only 1.2 million people are paying taxes, said the Prime Minister.

"Our plan is to reduce our fiscal deficit from 5.6 per cent to 5.4 per cent this year and down to about three per cent in the next few years. So once we reduce our fiscal deficit, then there will be greater confidence in the economy and we should be able to see stronger fundamentals in Malaysia," Najib said.

Source: Bernama

A waste by MAS : MAS sponsorship for Queen Park Rangers jersey to cost RM18mil !!

MAS has waste RM 18 mil only for sake of famous.
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PETALING JAYA: Malaysia Airlines' (MAS) recently-announced sponsorship for the Queen Park Rangers (QPR) home jersey in the Barclays Premier League will cost the national carrier some RM18mil or 3.7mil, according to a source.
The total sponsorship fee for both MAS and AirAsia for the English professional football club, which involves a term of two years, would cost some RM30mil (6.2mil), the source added.
“MAS will take up a bulk or almost 60% of the total fees while the remaining will be forked out by AirAsia Bhd and its related companies which could also involve AirAsia X.

This is how the new queens park rangers home jersey will look like now that Malaysia Airlines are the new sponsors.

 

“Typically, the home jersey sponsorship is more expensive than the away jersey,” the source said.
On Monday, MAS and AirAsia signed a jersey deal for QPR which will see the MAS logo adorn the jersey at home while the AirAsia logo will be used on the team's away games.
“This sponsorship is the first major initiative of our new brand and marketing strategy that would see important advertising money spent on boosting our top line. This is a key component in our drive to regain global market share, profitability,” said MAS executive director Mohammed Rashdan Yusof.
Even so, most analysts are not thrilled. Their main grouse is that MAS should instead be focusing on strengthening its flagging financial status and showing some concrete moves towards this end.
Moreover, the crucial post of a chief executive officer for MAS has still yet to be filled.
The sponsorship deal by the two airlines closely follows a landmark share-swap deal involving the major shareholders of the respective airlines in early August which had turned the rivals into allies.
AirAsia's chief steward and major shareholder Tan Sri Tony Fernandes and his partner, Datuk Kamarudin Meranun, collectively own a 75% stake in Tune QPR Sdn Bhd, which in turn owns 66% of QPR Holdings Ltd. Fernandes, who only recently acquired the stake in the football club, is currently chairman of QPR.
In an earlier announcement to Bursa Malaysia, AirAsia said it would cough up some RM2.4mil or 500,000 as sponsorship fees for the duration of the two-year term.
Only in June this year, Genting UK, the largest casino operator in Britain, sealed a pact to be the main jersey sponsor for Aston Villa for two years. Although the amount was not disclosed, a source said the total sponsorship fees for the two years collectively involved some RM17mil or 3.5mil.

Sourece: The Star

The borther of hell : MAS and AirAsia lobbying power too strong for Malaysia Airports

The hell brother is continue pressure MAHB.
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PETALING JAYA: The lobbying power of Malaysia Airlines (MAS) and AirAsia has proved to be too strong for airport operator Malaysia Airports Holdings Bhd (MAHB), based on the Government's decision to reverse an increase in aeronautical charges at local airports to be implemented by MAHB.
Analysts said they were not surprised by MAHB's announcement on Friday that the Transport Ministry had asked it to put on hold the recently announced increases in passenger service charge (PSC), aircraft landing and parking charges.
MAHB had previously announced that travellers going overseas via the KL International Airport (KLIA) would have to pay RM65 (up from RM51), while the charge for those departing from the Low-Cost Carrier Terminal (LCCT) would be RM32 (up from RM25). The aircraft landing and parking charges were to be gradually increased by 30% and 64% respectively over three years starting January next year.
“The Government's move to put on hold the recently approved increases in airport charges for an indefinite period did not come as a surprise, given the intense lobbying from AirAsia and MAS following the sealing of their collaboration agreement early last month,” OSK Research said in a report yesterday.
“While the freeze on raising tariff is negative for MAHB, the turn of events demonstrates the Government's (i.e. Khazanah Nasional Bhd) commitment to the recently signed collaboration between AirAsia and MAS.” it said.
CIMB Research said that the U-turn showed the strength of the airline lobby at the moment, with both MAS and AirAsia under the stewardship of Tan Sri Tony Fernandes.
“The hikes came at a time when MAS is racking up huge losses, which may have made the lobbying easier. MAS needs every bit of help it can get and aeronautical charge hikes fly in the face of the Government's priority of turning MAS's fortunes around.
“On the other hand, MAHB is currently earning decent profits with the existing tariffs. Furthermore, MAHB cannot discriminate between the airlines by charging different fees,” the research house said in a report.
CIMB Research also said the MAHB management revealed that the Government would continue to pay RM14 per passenger as compensation for international passengers departing from the non-LCCT airports.
“However, we are unclear if the Government will compensate MAHB for the proposed RM7 per passenger hike for each international departure from LCCT airports.
“While the management mentioned that it is still in discussions with the Government, we note that the 2009 restructuring agreement had allowed for a PSC hike only in 2014, rather than in 2011, and we are uncertain if MAHB will receive any compensation for this hike deferment,” it added.
The research house has reflected the tariff hike deferrals by removing them from its earnings model.
“We now reduce our earnings per share forecasts by 6.6% for financial year 2012 (FY12) and 7.9% for FY13. By itself, this would have reduced our end-2011 target price from RM8 to RM7.50.
“However, we are also taking the opportunity to roll forward the time horizon of our target price from end-2011 to end-2012. Our new discounted cashflow-derived target price is RM7.80,” CIMB Research said.
Meanwhile, OSK Research said it continued to view MAHB as a defensive aviation play, which would do well in both good and bad times, owing to resilient air travel demand and its large base of low-cost carrier passengers.

Source: The Star

Lynas Fulfils All Requirements, Says Western Australian Minister for Mines and Petroleum

So its ok with Australia then when will the Lynas will be  stock listed in malaysia?/
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PERTH, Sept 12 (Bernama) -- Western Australian Minister for Mines and Petroleum Norman Moore says there is no concern by the Australian government in respect to any operations of Lynas Corporation Ltd as the company has fulfilled all the requirements.

The Minister also voiced his pleasure in the company's involvement in developing its Mount Weld rare earth project as it has given Western Australia a chance to be a part of the world's rare earth business.

Moore, who is responsible for initiating the single biggest overhaul of Western Australia's mining industry's occupational health and safety system, also assured Malaysians that the level of radioactivity attached to the product from Mount Weld was very low, that it was not considered as Dangerous goods from the point of transportation regulations.

"So it can be transported from Mount Weld to Fremantle Port and exported (to Malaysia) from there and does not require the regulatory arrangement that would relate to dangerous goods with such a low level of radioactivity attached to it. So, it meets all the requirements," he told reporters at his office.

Lynas is building a RM700 million rare earth processing plant in Gebeng, Pahang, using raw materials sourced from its Mount Weld mine, to produce rare earth products essential for making hi-tech gadgets.

From the mine, the raw materials are taken to its concentration plant within the site and processed into concentrates before they are shipped from Port of Fremantle to Malaysia to be processed into rare earth products at its Gebeng plant.

Moore said the project was important because rare earth was in demand due to the range of products using this material.

"As you are aware, there is severe competition in the world. The Chinese government has almost a monopoly with respect to rare earth, so we are aware that other countries would like to have access to rare earth and as such, we are very keen for this project to go ahead," he added.

Meanwhile, China, which produces 95 per cent of the world's rare earth, has been cutting its export quota, causing a global shortage of rare earth.

With the rush to find alternative source, Lynas jumped onto the bandwagon, with its rich deposits of rare earth at its mine in Mount Weld, and had set up a Plant in Malaysia to be nearer to the markets.

As for opposition by some Green Party members in Australia to Lynas' Malaysian project, he said, products using rare earth were also green-related.

"Ironically, the products that used rare earth are in fact related to the things like wind turbines that the Greens might be supportive of developing because they are looking for renewable energy sources," he said.

Moore said he did not understand why they should oppose to a plant being developed in Malaysia which would provide employment and opportunities for the Malaysian people, adding that it was unfortunate for them to be also involved in Malaysian politics and the exaggerated circumstances surrounding the Gebeng plant.

"I must confess I don't understand the politics of Malaysia at the moment. I understand you are in an election mood and I can understand Green Group seeking to take advantage of the opportunities to promote the green agenda but I think it is unfortunate that the Australian Green should involve themselves in Malaysian politics, particularly these days, to be exaggerating the circumstances surrounding the project," he added.

Moore said the mining and transportation of the rare earth products from Mount Weld would be done under strict regulations in Western Australia and processing in Malaysia would be done under Malaysian laws which were rigorous as that of Australia's.

Source: Bernama

Bumi Contractor will get MRT project !!

Who will be slected to implemented the project..AZRB, TRC or Johaki?
......................

Works Ministry To Discuss Bumi Contracts With Prasarana

TAMPIN, Sept 10 (Bernama) -- The Works Ministry will hold discussions with Syarikat Prasarana Negara Bhd (Prasarana) to identify job scope and contracts worth RM8 billion to be distributed to Bumiputera contractors via the implementation of the Sg Buloh-Kajang stretch of the Mass Rapid Transit (MRT) system.

Its minister, Datuk Shaziman Abu Mansor, said he would meet Prasarana officials next week to determine the areas of work suitable to be undertaken by Bumiputera contractors according to their ability and capacity.

"Via this way, we will find the best mechanism to distribute the contracts to the Bumiputera contractors," he told reporters at his Hari Raya open house here.

Shaziman said the meeting would be a follow-up to the announcement made by Prime Minister Datuk Seri Najib Tun Abdul Razak who had earlier allocated RM8 billion worth of projects under the Sg Buloh-Kajang MRT to Bumiputera contractors.

Shaziman said the initiative was also intented to ensure the distribution was done systematically to avoid any hiccups in future.

The minister also said he would meet the Bumiputera Contractors Association to brief them on how they can participate in the project.

Source: Bernama

Europe debt crisis fears hammer euro, stocks and euro fiat money !!

The debt mean the destruction of Euro Fiat..
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NEW YORK: Growing doubts about Europe's ability to resolve its debt crisis punished the euro and world stock markets on Friday, Sept 9, while G7 finance ministers met to discuss measures to revive economic growth.
The euro hit 6-1/2 month lows against the U.S. dollar on nervousness over the outcome of a Greek debt swap deal and on jitters fueled by the planned resignation of Juergen Stark, the top German on the European Central Bank's board, in protest
over its controversial bond-buying program.
Bond buying has been one of the ECB's main weapons in fighting the debt crisis. The Stark news kindled uncertainty over internal ECB support for it and pummeled the euro, a day after a sell-off on the ECB backing away from further interest rate rises.
The nervousness fueled safe-haven buying of German and U.S. government debt. The 10-year Bund yield hit another record low, while 10-year U.S. Treasuries yields touched a 60-year trough.
"Europe is the No. 1 thing causing pressure on the market as the realization grows that what we've done so far hasn't worked," said Liz Ann Sonders, the New York-based chief investment strategist at Charles Schwab Corp, which has $1.65
trillion in client assets.
Stark's departure highlighted divisions within the ECB on the handling of Europe's debt woes. The ECB later confirmed Stark will step down at the end of the year.
"When you get a new story like this, that there's internal turmoil on the ECB, that immediately has implications for the bond-buying program, which immediately has implications on the capital level in European banks," said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.
Traders, surprised by the Stark news, were keeping tabs on developments with Greece's debt swap. The deal is critical for Athens to secure a second 109 billion euro bailout and avert a near-term default that could ripple across Europe and the global banking system.
Banks and insurers face a Friday deadline to indicate whether they will join an exchange of Greek debt, part of an international bailout package agreed in July. It is expected 70 percent of the private investors would agree to such a move, below the 90 percent threshold that Greece has said it wants to go through with the deal.
The cost to insure Greek sovereign debt for five years surged to a record high of 3,106 basis points, up nearly 300 basis points on the day, according to data vendor Markit.
Finance ministers and central bankers from the Group of Seven industrialized nations were meeting in Marseille, where host France has called for a coordinated response from G7 members to deal with Europe's debt crisis and the region's shaky banks.
In the United States, President Barack Obama unveiled his $447 billion plan to revive economic growth late on Thursday, but investors worried that Congress would not pass the measure and the Federal Reserve may not follow quickly enough with its own action.
Fed Chairman Ben Bernanke, in a speech on Thursday, left the door open for more monetary stimulus but withheld details on the timing and what type of measures the Fed would enact.
The Dow Jones industrial average finished down 303.68 points, or 2.69 percent, at 10,992.13. The Standard & Poor's 500 Index ended 31.67 points lower, or 2.67 percent, at 1,154.23. The Nasdaq Composite Index closed down 61.15 points, or 2.42 percent, at 2,467.99.
For the week, the Dow fell 2.2 percent; the S&P 500 lost 1.7 percent and the Nasdaq slipped 0.5 percent.
The FTSEurofirst 300 index of top European shares lost 2.6 percent on the day and the MSCI world equity index was off 3.2 percent. Both indexes were down 3.7 percent on the week, their third-largest drop in the past 12 months.
Earlier, Tokyo's benchmark Nikkei ended down 0.6 percent, bringing its weekly loss to 2.4 percent.
Another retreat in equities boosted safe-haven German and U.S. government bond prices. The 10-year Bund yield touched an all-time low of 1.74 percent, while the benchmark 10-year U.S. Treasury was last down 1.6 percent against the dollar at $1.3668 after touching its lowest in 6-1/2 months at $1.3627.
The single currency has fallen 5 percent in September.
Gold slipped after soaring to a record high above $1,900 an ounce earlier this week due to its appeal as both a safe haven and a hedge against inflation. It ended down 0.6 percent at $1,860 an ounce as nervous investors sold the metal on growing concerns its run-up had been overdone.

Source: Reuters