Market Flash: iSHARES MSCI Indonesia Investable Market Index Fund (EIDO:US) PRICE: 28.530 USD Down -0.360 (-1.246%) >>> BI: Rupiah Melemah Akibat Kondisi Eropa >>> Pertemuan FED pertimbangkan langkah baru dorong ekonomi >>> KIJA akan Terbitkan MEN Valas USD150 Juta >>> PT Indika Energy Perusahaan Teladan Dunia 2011 >>> Govt Promises Revision of Cost Recovery Regulation >>> BPMigas Demands PGN to Pay US$6 per MMBTU >>> Jababeka to Raise US$150 Million from Debt Markets >>> SCG Chemicals buys Chandra Asri >>> Solusi Tunas eyes Rp380 bio IPO >>> SMR Utama scouts Rp300 bio IPO >>> Alam Sutera picks two bond arrangers >>> ASII Tetap Rajai Penjualan Mobil Agustus 2011 >>> Perusahaan Thailand kuasai Saham TPIA senilai Rp 3,76 Triliun >>> Agis Main ke Tambang, Sahamnya Masuk Dalam Pengawasan >>> ACES Mendekati The Northern Agar Mau Kurangi Kepemilikan >>> IHSG masih harus berjuang terus bertahan diatas MA200 >>> Melirik Peluang Akumulasi di Saham Perbankan >>> Analisa Saham BUMI: Kuat Bertahan & Berpeluang Kembali Uptrend >>> Analisa Saham JSMR: Bertahan Di Support, What Next? >>> INDF Tertahan Di Area Support Kuat, Berpeluang Rebound >>> ASII Break Minor Support, Sell on Strength >>> ADRO Membentuk Descending Wedges, Berpeluang Rebound Terbatas >>> Wall Street ends flat as early gains evaporate >>> Fed begins policy meeting, tiptoes toward easing >>> Fed meeting to help decide on long-term Treasuries >>> Greece Makes 'Good Progress' in Reform Talks: EC >>> China worried Europe debt crisis will hit trade >>> China could roll out 4.65tr yuan stimulus package >>> IMF sees Mideast stagnation >>> NYMEX-Crude ends higher at Oct contract expiry >>> Asian Crude Palm Oil Up On Technical Buying, Soyoil >>> Foreign net Sell - 61.785.746

Sabtu, 08 Januari 2011

Detikfinance Asing Lepas Saham Rp 1,5 Triliun, IHSG Terpuruk 104 Poin

Jakarta - Aksi jual masif melanda lantai bursa sehingga Indeks Harga Saham Gabungan (IHSG) terpuruk 104 poin. Investor asing tercatat melepas saham hingga Rp 1,5 triliun.

Membuka perdagangan pagi tadi, IHSG melemah 16,678 poin (0,45%) ke level 3.719,579. Indeks belum mampu mencetak penguatan dan masih terpaksa melanjutkan pelemahan.

Pada penutupan perdagangan sesi I, IHSG anjlok 79,142 poin (2,12%) ke level 3.657,115. Dengan pelemahan tersebut, mau tidak mau indeks dipaksa kembali ke level 3.600.

Menutup perdagangan di akhir pekan, Jumat (7/1/2011), IHSG terjun bebas 104,804 poin (2,81%) ke level 3.631,453. Sementara Indeks LQ 45 turun 23,548 poin (3,54%) ke level 642,535.

Sejak awal pembukaan perdagangan, IHSG terus-terusan berjalan di zona merah. Bahkan, semakin lama penurunannya semakin tajam dan sempat anjlok lebih dari 125 poin.

Semua sektor di Bursa Efek Indonesia (BEI) terkena tekanan jual, baik saham unggulan maupun saham-saham lapis kedua dan ketiga. Tidak hanya investor lokal, asing juga tercatat melakukan penjualan bersih hingga Rp 1,5 triliun.

Koreksi terjadi di semua sektor dengan pelemahan yang cukup signifikan, rata-rata melemah di atas 2%. Pelemahan tertinggi diderita sektor finansial, infrastruktur, aneka industri dan pertambangan yang terkoreksi hingga 3%.

Saking dalamnya koreksi, IHSG sempat menyentuh level terendahnya di 3.607,326. Raihan tertingginya hanya menyentuh level 3.734,372 pada saat pembukaan bursa.

Perdagangan berjalan cukup ramai dengan frekuensi transaksi mencapai 122.605 kali pada volume 4,634 miliar lembar saham senilai Rp 6,656 triliun. Sebanyak 28 saham naik, 220 saham turun dan 59 saham stagnan.

Transaksi investor asing tercatat melakukan penjualan bersih (foreign nett sell) sebesar Rp 1,51 triliun di seluruh pasar.

Tidak seperti IHSG, beberapa bursa di Asia berhasil mencetak penguatan setelah pagi tadi berjalan di teritori negatif. Namun, masih ada beberapa yang melemah tipis.

Berikut kondisi bursa-bursa regional di sore hari ini:

  • Indeks Komposit Shanghai naik 14,60 poin (0,52%) ke level 2.838,80.
  • Indeks Hang Seng turun 99,67 poin (0,42%) ke level 23.686,63.   
  • Indeks Nikkei 225 naik tipis 11,28 poin (0,11%) ke level 10.541,04.   
  • Indeks Straits Times melemah 24,86 poin (0,76%) ke level 3.254,84.   
Saham-saham yang naik signifikan dan masuk dalam jajaran top gainers diantaranya Dian Swastatika (DSSA) naik Rp 4.200 ke Rp 25.200, Indo Citra Finance (INCF) naik Rp 400 ke Rp 3.100, Cahaya Kalbar (CEKA) naik Rp 150 ke Rp 1.100, dan Sumber Alfaria (AMRT) naik Rp 125 ke Rp 2.900.

Sementara saham-saham yang turun cukup dalam dan masuk dalam katagori top losers antara lain Indo Tambangraya (ITMG) turun Rp 2.000 ke Rp 53.500, Astra Internasional (ASII) turun Rp 2.000 ke Rp 49.000, Sepatu Bata (BATA) turun Rp 1.600 ke Rp 66.000, dan United Tractor (UNTR) turun Rp 1.300 ke Rp 24.600.

Jumat, 07 Januari 2011

Credit Suisse Southeast Asia: We expect infrastructure, banks and consumer stocks to lead in 2011 (Update 1)

With the Southeast Asian economies returning to pre-crisis growth mode, the equity markets in the region also delivered strong gains of up to 46% in 2010, led by Indonesia and Thailand. Will the strong market performance be repeated in 2011? We still see absolute upside potential for the region in view of its robust earnings growth prospects and continued global capital flows into higher-yielding emerging market
assets, but it would be unrealistic to expect a strong outperformance similar to 2010, especially from Indonesia and Thailand, given the markets' extended valuations. Unlike most other Asian markets, which are still trading below their mid-cycle P/Es, Indonesia's re-rating has catapulted its P/E 2011E (at 14.5x) to a 17.9% premium over its 10-year average, while Thailand's P/E 2011E of 12.6x is at a smaller 10.5% premium.

With the US Federal Reserve implementing the second phase of quantitative easing (QE2), the huge liquidity flows will continue to be imported into Asia, particularly the emerging markets, reducing the cost of capital and supporting the credit cycle in these markets. This should sustain the improving trend in investment and domestic consumption in the Southeast Asian markets. At the same time, rising commodity prices, particularly rice, palm oil and rubber, are expected to lift rural incomes in Thailand, Malaysia and Indonesia, supporting domestic demand at a time of softening export momentum. The recent sharp run-up in the oil price, though a threat to inflation, bodes well for energy plays and the capital goods sector, such as oil rig builders. Meanwhile, the prospect of a national election in Singapore, Thailand and possibly Malaysia in 2011 suggests that government policies will stay pro-growth, with investment in infrastructure projects a key feature of government spending programs in Thailand and Malaysia.

We see banks, infrastructure/construction and selective consumer and commodity/energy stocks in the Southeast Asia region as well placed to ride on the trend of rising commodity/oil prices, increased investment in infrastructure and strong consumer demand

Deutsche Bank Indonesia Coal Sector : Rising thermal coal prices

Indonesia key beneficiary of rising coal prices amidst supply disruptions Indonesian coal is set to benefit from the price outlook amid the persistent weather issues, which are likely to severely impact Australia likely through 1Q11F. Indonesia remains the world’s largest thermal coal exporter, accounting for nearly half of Asia-Pacific’s seaborne supply; it should grow by some 10% over the next two years. Our preferred names are those with the largest exposures to coal prices (HRUM, INDY and ADRO).

Adaro has relatively been a laggard due to volume shortfalls but this has already been priced-in, in our view.
Strong coal price outlook in the next two years The current spot of about US$126/t already exceeds our above-consensus 2011F forecast of US$115/t. We recently forecast prices to reach US$135/t in 2012F and US$120/t in 2013F, reiterating our bullish stance on coal for the next two-three years. Companies to benefit the most are those with greater spot exposure, and higher operating and financial leverage. These include HRUM, INDY and ADRO (have only priced around 23-25% of their 2011F volumes) and Bumi (financial leverage), whose earnings would change 1.8-2.5% for every 1% change in the spot benchmark price.


Revised EPS implies at least 78% and 58% growth in 2011F and 2012F The price upgrades moderated 2011F earnings cuts of 5-25% due to lower volumes (weather) and higher costs (fuel price and mining contractors’
rates). Hence, for 2012F, we raise EPS by up to 7%. This still allows for the above-mentioned strong earnings growth rates in the next two years.


Sector target price PER of 19.4x and 11.8x in FY11 and FY12 NPV is based on life-of-mine DCF, while the revised target prices are set relative to the NPV. The revised target prices would imply a sector target 2012F PER of 11.8x, in line with the sector’s mid-cycle PER of 12x. Meanwhile, the target 2011F PER of 19.4x compares to the historical peak PER of 20-28x, which coincided with the previous coal price up-cycle in 2007-2008. The sector currently trades at an average of 14.5x 2011F PER at our US$115/t base case coal price forecast, or 11.7x 2011F PER at the US$130/t near-spot. We initiate Harum with Buy; maintain Buys for Adaro, Indika, PTBA, ITMG, and Hold for Bumi. 


Key risks: commodity price fluctuations and production disruption.

Bloomberg Indonesia Stocks: Adaro Energy, Batubara Bukit Asam, Lippo

Indonesia’s Jakarta Composite index fell 47.45 points, or 1.3 percent, to 3,736.26 at the 4 p.m. local-time close, declining for the first time in eight days.

Coal producers: PT Adaro Energy (ADRO IJ), Indonesia’s second-biggest coal producer, fell 2.6 percent to 2,775 rupiah and PT Tambang Batubara Bukit Asam (PTBA IJ), the state-run coal miner, lost 4.1 percent to 23,200 rupiah. Mining companies fell amid concern recent gains were excessive relative to their earnings outlook, according to Pardomuan Sihombing, an analyst at PT Recapital Securities in Jakarta.
Adaro and Bukit Asam’s 14-day relative-strength indexes, which shows how rapidly prices advanced or fell during the period, rose to 69 and 67 yesterday, near the 70-level, which suggest to some analysts prices are poised to fall.

PT Lippo Karawaci (LPKR IJ), Indonesia’s largest property developer, gained 1.4 percent to 740 rupiah, the highest close since May 28, 2009. The company said it posted a one-time gain of 195 billion rupiah ($21.7 million) from selling two hospitals.

To contact the reporter on this story: Berni Moestafa in Jakarta

Inilah.com BBRI akan Pecah Nilai Saham Jadi Rp250

INILAH.COM, Jakarta - PT Bank Rakyat Indonesia Tbk (BBRI) akan memperdagangkan saham dengan nilai nominal baru sebesar Rp250 pada 11 Januari 2011 di pasar reguler dan pasar negoisasi.

Hal itu disampaikan manajemen BRI dalam keterbukaan informasi ke Bursa Efek Indonesia (BEI) Kamis (6/1). Perseroan melakukan pemecahan nilai nominal saham seri A Dwiwarna dan seri B dari Rp500 per saham menjadi Rp250 per saham atau dengan rasio 1:2.

Adapun jadwal perdagangan yaitu akhir perdagangan saham dengan nilai nominal lama Rp500 di pasar reguler dan pasar negoisasi pada 10 Januari 2011. Awal perdagangan saham dengan nilai nominal baru Rp250 di pasar reguler dan pasar negoisasi pada 11 Januari 2011. Akhir penyelesaian transaksi saham dengan nilai nominal lama Rp500 di pasar reguler dan pasar negoisasi pada 13 Januari 2011.

Selain itu, penentuan pemegang rekening yang berhak atas hasil perubahan nominal saham perseroan pada 13 Januari 2011. Saham dengan nilai nominal baru Rp250 didistribusikan kepada pemegang rekening pada 14 Januari 2011. Awal perdagangan saham dengan nilai nominal baru Rp250 di pasar tunai pada 14 Januari 2011. Tanggal dimulainya penyelesaian transaksi saham dengan nilai nominal Rp250 pada 14 Januari 2011. [hid]

Insider Stories - Timah 2010 net income might rise 100%

Tin producer PT Timah Tbk (TINS) estimates to post Rp627 billion net income at end of last year, a 100% jump from Rp313.75 billion a year earlier, underpinned by higher profit margin.
 
Timah Corporate Secretary Abrun Abubakar said the higher tin price benefited company last year. Timah price soared to US$18,000-US$19,000 per ton at end of last year from initial period of US$14,000 per ton.
"Our margin rose as the company's selling price increased, which in return doubled bottom line," he said as reported by Investor Daily today.
 
By end of 3Q 2010, Timah posted Rp5.6 trillion, a slight increase from the same period a year earlier. However, 3Q net income rose 178% to Rp475.4 billion.

Insider Stories - XL Axiata records 40.1 mio subscribers

Indonesia third largest cellular operator PT XL Axiata Tbk (EXCL) recorded 40.1 million subscribers at end of last year, a 27.7% growth from 31.4 million subscribers a year earlier.
 
XL President Director Hasnul Suhaimi said the subscribers experienced a steep increase in 4Q 2010."In the last quarter of 2010, we booked a steep jump in subscribers number, mostly in Central Java and Yogyakarta," said today.
 
However, the subscribers growth in 2011 is expected not as high as last year as Indonesian cellular market experiences a stagnancy, counting 90% of the total population.   
XL Axiata remains positive on subscriber growth. It is eyeing a 11%-12% growth this year, meaning 44.5 million-44.9 million subscribers. "We aim to grow above cellular industry at approximately of 10% a year," he said.
 
XL won't optimize voice and sms tarriffs due it had dragged down the tarriffs last year. "If we tried to put down tarriffs, services quality would be a trade-off. It would be useless," 
Hasnul said The company is focusing on data services, which is showing an uptrend this year. Data services contributed 9%-10% to the company's consolidated revenue. This is expected to reach a minimum target of 15% and 20% maximum.

Associated Press Stocks end lower after unemployment claims rise

NEW YORK (AP) -- Stocks slipped Thursday after the government reported an increase in applications for unemployment benefits last week.

The Labor Department said Thursday that 409,000 people made first-time claims for benefits. That's up 18,000 from the previous week, when applications fell to their lowest level in more than two years. The number of applications suggests that companies are adding jobs, but slowly.

The report came a day after ADP estimated that companies added nearly 300,000 jobs last month, far more than the 100,000 economists expected. That report pushed stock prices higher and Treasury prices lower as investors became more optimistic about the job market.

In a week with several reports on employment, the most important one will arrive on Friday morning when the Labor Department releases its monthly survey of all U.S. payrolls and the unemployment rate. Economists expect the rate fell to 9.7 percent in December from 9.8 percent the previous month.
Many retailers fell after reporting weaker sales in December. Target Corp. fell 7 percent to $54.93 and Gap Inc. fell 7 percent to $20.70. Macy's Inc. fell 4 percent to $23.97.

A blizzard in the Northeast hurt sales after Christmas. Retail sales were strong in November since many customers shopped earlier in the holiday season this year. Analysts still expect overall retail spending in November and December to increase by the largest amount since 2006.

The Dow Jones industrial average fell 25.58 points, or 0.2 percent, to close at 11,697.31.
The Standard & Poor's 500 index fell 2.71, or 0.2 percent, to close at 1,273.85. The Nasdaq composite index rose 7.69, or 0.3 percent, to 2,709.89.

Bloomberg Japan Steelmakers May Seek New Coal Supply Sources After Floods

Steelmakers in Japan, the world’s largest coal importer, may seek alternative sources amid concern about supplies after the worst floods in 50 years cut output from producers in Australia’s Queensland state. Kobe Steel Ltd., Japan’s fourth-largest mill, is “concerned” about the impact of floods and may seek supplies from North America and Africa to make up for shortfalls, President Hiroshi Sato told a group of reporters today in

Tokyo. Nippon Steel Corp., the nation’s largest producer, will look into other regions to secure supplies if disruption continues, President Shoji Muneoka also said today.“I expect there will be a big impact” on the Japanese steel industry because of floods in Queensland, Sato said, without giving specific details.

Japanese steelmakers imported 58 percent of their coking coal requirements from Australia last financial year, according to data from Tokyo-based Nippon Steel. BHP Billiton Ltd., Rio Tinto Group, Macarthur Coal Ltd. and Anglo American Plc are among producers that have declared force majeure, a legal clause invoked by companies when they can’t meet obligations because of circumstances beyond their control.

Nippon Steel shares closed down 1 percent at 290 yen in Tokyo. Kobe Steel also declined 1 percent to 207 yen. “Rising prices cannot be avoided,” Sato also said today.

Contract prices for coking coal may rise to more than $300 a metric ton because of floods in Australia’s Queensland state, according to analyst David Brennan at Daiwa Capital Markets. Mills agreed to pay $225 a ton for hard coking coal under a three-month accord starting Jan. 1 this year, Bank of America Merrill Lynch analysts wrote in a Dec. 21 report.

PalmOil HQ Crude Palm Oil Ends Up On Speculative Buying, Fundamentals

Crude palm oil futures on Malaysia’s derivatives exchange rebounded Thursday on speculative buying and as traders worry about tight supplies amid a surging demand for vegetable oils.The market was due for a recovery after broad-based selling Wednesday that dragged palm oil prices to their lowest level in three weeks, trade participants said.

The benchmark March contract on the Bursa Malaysia Derivatives exchange ended MYR56 or 1.5% higher at MYR3,864 a metric ton after moving in a MYR3,857-MYR3,894 range.Palm oil’s outlook is “still bullish” as demand from palm oil-consuming countries will pick up in the next two months when winter ends, Govindlal Patel, director at Rajkot-based GGN International, told Dow Jones Newswires.

Demand for palm oil usually take a hit in winter as the oil tends to solidify in cold weather.
Some trade participants said tight palm oil supplies may boost prices towards MYR4,000/ton in the next few months.But analysts fear that slumping palm oil refining margins and the tropical oil’s narrowing discount to rival soyoil will curb the current rally.

Palm oil rose to MYR3,905/ton Tuesday, its highest level since March 2008.“We believe that the palm oil rally could be closer to its end, as Australia’s weather bureau has predicted that the La Nina will weaken in coming months, suggesting that the worst is over,” Credit Suisse said in a report.

Separately, Thailand plans to import 30,000 tons of CPO from Malaysia in a bid to end the domestic vegoil shortage, according to the Bangkok Post Thursday, quoting Apichart Jongskul, secretary-general at the Office of Agricultural Economics.

Retailers in Thailand have been rationing sales of bottled cooking oil in supermarkets since late December due to the lean production season at a time when demand is high.

In the cash market, palm olein for February was traded at $1,282.50/ton, March at $1,280/ton, April, May, June at $1,265/ton-$1,272.50. Shipments for October, November, December delivery were done at $1,230-$1,235/ton, said a Singapore-based physical market broker.

Cash CPO for prompt shipment was offered MYR70 higher at MYR3,880/ton.Open interest on the BMD was 89,274 lots, versus 87,872 lots Wednesday. One lot is equivalent to 25 tons.
A total of 20,333 lots of CPO were traded versus 22,852 lots Wednesday.

Bloomberg Wheat Declines on Speculation Higher U.S. Acreage May Ease Supply Concern

Wheat fell in Chicago on reduced concern about global supply amid expectations for increased plantings in the U.S., the world’s largest exporter. March-delivery wheat dropped 0.7 percent to $8.0225 a bushel on the Chicago Board of Trade at 11:05 a.m. Paris time. The grain surged 47 percent last year as Russia’s worst drought in at least half a century, dry weather elsewhere in Europe and flooding in Canada slashed harvests.
U.S. farmers likely increased winter-wheat planting by 4.6 million acres to 41.9 million acres, McHenry, Illinois-based researcher and broker Allendale Inc. said in an e-mail today. Farm Futures said Jan. 4 its survey showed farmers seeded 42.37 million acres.

“It will certainly assist in terms of keeping supply pressure,” Michael Pitts, a commodity sales director at National Australia Bank Ltd., said by phone from Sydney today. “There are still concerns about protein wheat at this stage.” Higher plantings should help ease those concerns, he said.

Excessive rains in Canada, Australia and Germany reduced the protein content of some wheat harvests, lowering supply of milling-quality grain. The U.S. Department of Agriculture is scheduled to release its next estimates on global agricultural supply, including U.S. wheat, corn and soybean crops, on Jan. 12.
Milling wheat for March delivery added 0.3 percent to 251.75 euros ($330.20) a metric ton on NYSE Liffe in Paris.
Corn, Soybeans
March-delivery corn slipped 0.1 percent to $6.1875 a bushel in Chicago and soybeans were little changed at $13.9375 a bushel. Corn jumped 52 percent last year and soybeans added 34 percent as dry weather affected Argentina and Brazil, the world’s largest exporters of both crops after the U.S., adding to concerns global supply may tighten.

World food prices rose to a record in December on higher sugar, grain and oilseed costs, the United Nations said yesterday, exceeding levels reached in 2008 that sparked deadly riots from Haiti to Egypt.
An index of 55 food commodities tracked by the UN’s Food and Agriculture Organization gained for a sixth month to 214.7 points, above the prior all-time high of 213.5 in June 2008. The gauges for sugar and meat prices advanced to records.

Grain prices may extend 2010’s gains in the next few months on concern that dry weather in South America might hurt crops, said Abdolreza Abbassian, an economist at the FAO. Advances for corn and soybeans will lift wheat prices, he said.

The Economic Times Barclays: Gold price to average $1,500 an ounce in 2011

NEW YORK: The price of gold will average nearly $1,500 an ounce this year as investors keep buying the metal as a safe haven on bullish factors including low interest rates, currency weakness and inflation fears, Barclays Capital said on Thursday.

Barcap raised its 2011 forecast to $1,495 an ounce with a range between $1,300 and $1,620 an ounce. In November, the bank had a forecast of $1,445 for this year.

"A clouded macro environment against a backdrop of low interest rates, growing uncertainty surrounding currency debasement and medium-term inflation fears as well as geopolitical tensions continue to stoke investor's appetite for a portfolio diversifier and a safe haven," Barcap's precious metals analyst Suki Cooper said in a note.

On Thursday, bullion traded at $1,372 an ounce. Barcap also expects silver to average $29.10 an ounce, platinum at $1,815 an ounce and palladium $820 an ounce for 2011.

Commodity Online Great future for rare earth metals: Jim Rogers

Which is the ideal metal commodity that you should think about investing in? Gold, silver, copper etc are certainly hot among the precious and metals camp for investors. But global investing guru in commodities Jim Rogers feels that investing in rare earth metals is going to bring great rewards.

“The future of rare earth is great. What is happening is the prices are going through the roof because the Chinese do control the supply, but it is pure simple capitalistic economics now,” Rogers told India’s business television channel ET Now.

Rogers, who is chairman of who is chairman of Rogers Holdings and founder of the Rogers International Commodity Index, has been a proponent of astute investment strategies in commodities.

Known for his investment fascination for China, Rogers said that rare earth makes great investing sense because the bulk of the metal is produced by China.

“Well, China does produce 97% of rare earth. Uranium is not a rare earth, but they do produce a lot of uranium as well,” he said.

Rogers said that a lot of other people apart from China are opening mines because they can make a lot of money and governments are behind the companies opening new mines.

“So it’s all going to bring a new supply and eventually the price of rare earth will come down again. But in the mean time until the new mines can come on stream, somebody is going to make a lot of money,” the legendary commodities investor who is known for his famous books like Hot Commodities and A Bull in China said.   more ...

Bloomberg Steelmaking Coal Price May Exceed $300 on Australian Floods, Daiwa Says

Steelmaking coal contract prices may rise to more than $300 a metric ton after the worst floods in 50 years disrupted output from producers including BHP Billiton Ltd. and Rio Tinto Group in Australia’s Queensland state, according to Daiwa Capital Markets.

Flooding may cut as much as 10 million tons of coking coal from the market if disruptions to mining last six weeks, David Brennan, a Melbourne-based analyst at Daiwa, wrote in a research note yesterday.
BHP, Rio, Macarthur Coal Ltd. and Anglo American Plc are among producers that have declared force majeure, a legal clause invoked by companies when they can’t meet obligations because of circumstances beyond their control. Record rainfall has spread floods across an area the size of France and Germany, forcing the evacuation of towns, closing mines and spoiling crops.

Steelmakers were confronted with a threefold increase in annual contract prices to about $300 a ton in 2008 after rains and floods affected mining in Queensland. Mills agreed to pay $225 a ton for hard coking coal under a three-month accord starting Jan. 1 this year, Bank of America Merrill Lynch analysts wrote in a Dec. 21 report.

Flooding has cut output of steelmaking coal by 3 million tons and of the thermal variety burned at power-stations by 1.5 million tons, according to estimates from Colin Hamilton, an analyst at Macquarie Group Ltd. in London.

Kamis, 06 Januari 2011

CLSA INDO: Lippo Karawaci (LPKR IJ) update by Sarina Lesmina

  • LPKR sold its Lippo Cikarang Siloam hospital to FREIT, and also assisted FREIT in their acquisition of Mochtar Riady Comprehensive Cancer Centre in Jakarta.  Total value is S$205.5m (US$160m)
  • Maintain BUY. LPKR is in a sweet spot in health care business as the largest provider of medical services in Indonesia.  The company will also expand mall management and has sufficient land bank for their property development in the foreseeable future. 
  • Stock is now trading at 39% discount to our NAV assumption.  Note that our NAV does not include the hospital expansion yet.  We believe there is plenty of upside to our numbers as they roll out their expansion plan. Please see pdf file for details

CLSA INDO: 2010 car and motorcycle sales up to historic high by Sarina Lesmina

Preliminary domestic motorcycle sales for FY10 rose 26% YoY to 7.36m units, a historical high.  Previously, AISI (Indo Association of Motorcycle Industries) predicted sales of 7m units.  Astra’s Honda commanded 46.1% market share with 3.4m units sold in 2010, while Yahama at 44.8% share with 3.3m units sold, followed by Suzuki with 7.1% share. 
Comment: We expect motorcycle sales to grow 15% this year after a strong run last year. Motorcycle sales dropped 6% in 2009 due to the financial crisis.  Industry players expect motorcycle sales to remain strong this year to 8.3m units, given motorcycle are exempted from the ban on subsidized fuel use. Key thing to watch is inflation and interest rate and how it will affect the financing companies in lending out to buyers.
At the same time, car sales reached 763,000 units, up 57% YoY, and just like motorcycle sales, it is also a historical high. 
Comment: For FY11, we expect national car sales to soften by 10% due to the ban on subsidized fuel usage for passenger cars to be rolled out in Greater Jakarta in Mar2011, and the remaining of Java-Bali by end of 2011. We think our assumption is conservative given lack of public transport in Indonesia, difficult implementation of the ban, and low car penetration despite the record sales. Progressive tax on car purchases is another headwind for the market; we also think implementation is not going to be easy.

CLSA INDO: coal sector, substantial upgrade - Top picks PTBA, BUMI, ADRO

Since our “Craving for Coal” report was published in Nov 2010 (let me know if you want a copy of the report), supply disruptions from unseasonably heavy rains in Australia have been substantial.

While most of the losses are focused on coking coal, where Queensland supplies over half the worlds’ HCC, the thermal coal market will also tighten as a result of the rains. Thesupply losses from Queensland will be complimented by other coals switching from the thermal to semi soft coking market.

Responding to supply disruptions, spot thermal coal prices are already above $130/t FOB Newcastle having been boosted by generally higher energy prices globally and the much colder than average winter in the northern hemisphere.

We are making a substantial upgrade, raising thermal coal price forecasts to US$125mt for this year and US$115 for 2012.

But rising coal prices is more than a Queensland event, in our view. The theme is structural. With the continued destruction of fiat monetary systems globally,commodity is back in vogue. Moreover, we forecast China’s import dependency for thermal coal to rise from 7% in 2010 to 13%, or 255 million tonnes, by 2015. Indian domestic coal output will also struggle to meet demand growth from the country’s power sector, driving imports to 200 million tonnes in 15CL. India also remains a cornerstone market for Indonesia.

In his latest report “The Big Dig” (attached), Nick Cashmore is re-iterating our thermal coal super-cycle call. In this environment, Indonesian thermal coal producers are firmly in the driving seat; we expect sector earnings will double this year.

And despite strong gains in recent months, the sector is still a long way from peakvaluations trading at 12x 2011 earnings and 10x 2012 profits. This compares with a five-year average of 13.3x forward earnings.

Sector returns will be concentrated.  Indo’s nine largest thermal coal producers account for 85% of aggregate coal produced in Indonesia Adaro (ADRO IJ), Bukit Asam (PTBA IJ), and Bumi Resources (BUMI IJ) have the best leverage into the cycle. OWT.

Earning wise, four Indo coal companies (PTBA, ADRO, BUMI, and ITMG) are forecasted to make US$2.6bn combined, or 3x and 2.1x 2008 and 2009 profits respectively.

We forecast 23% upside for our leaders. 

Key points:

  • Sector earnings to double this year from 2010.  Aggregate 2011 earnings of PTBA, ADRO, BUMI and ITMG are 2x 2009 and 3x 2008
  • Sector 2011 production at 163m tonnes up 13.5% from 2010
  • While valuations still far from peak valuations trading at 12x 2011 P/E
  • Top picks: PTBA, ADRO, BUMI

Changes in recommendation:

  • BUMI: now a BUY with 4000 target (from outperform with 3100 target).
  • ADRO: now a BUY with 3500 target (buy, 3100).
  • PTBA: now a BUY with a 30,600 target (buy, 26,750).
  • ITMG: now an OUTPERFORM with a 62,900 target (outperform, 60,000).
 

NISP Sekuritas Daily 6 Jan 2011 (Economy, Telecommunication, SMCB, LPKR, TINS, MEDC)

Bank Indonesia maintains interest rate at 6.5% (Economy)
·                      Bank Indonesia has maintained interest rate at 6.5% for another time, lower than 2010 inflation of 6.96%. This news was expected by the market as Bank Indonesia has stressed before that as core inflation was still low, inflation was mostly due to the volatile goods component. Central bank Governor, Darmin Nasution, stated that the Bank sees that inflation was not a monetary phenomenon, as such did not have to be addressed by a change in monetary policy.
·                      Foreign reserves reached US$96.2bn at the end of 2010 or equal to 7.1x government monthly needs and interest payment. While banking credit has grown by 22.8% YoY in 2010. 2010 GDP is expected to be around 6.0% YoY where 4Q10 GDP is forecasted to reach 6.1% YoY.
·                      The bank believes that with better steps made by the government to ensure the stability and distribution of foodstuffs, inflation can be in the target of 5%±1% in 2011 and 4,5%±1% in 2012.

BRTI prepares interconnection tariff for text message (Telecommunication)
·                      Indonesian Telecommunication Regulatory Board (BRTI) prepares new regulation in text message services where the regulator plans to implement interconnection tariff scheme of Rp23/sms as compared to current sender keeps all (SKA) scheme. The regulator said this new rules is prepared to prevent current grievance from consumer about spam text message.
·                      This regulation will require additional infrastructure from telecommunication operator, hence, cost. However, this would benefit operators with large subscriber base.
·                      There is no further details about this new regulation, BRTI sees this new scheme will still acceptable by telecommunication services subscriber.

Holcim Indonesia dismisses dividend rumors (SMCB, Rp2,300)
·                      Holcim Indonesia dismissed rumors that the company may pay any interim or special dividend soon. The company’s quasi reorganization which has been approved by its share holders, enables the company to start paying dividends in accordance with Bapepam regulations.
·                      However spokesman of the company said that there is no near plan to pay out dividends, and any decision will wait for the company’s Annual General Meeting.
·                      SMCB is trading at 2011F consensus PER of 15.0x and EV/EBITDA of 8.7x.

Lippo Karawaci completes sale of 2 hospitals (LPKR, Rp730)
·                      Lippo Karawaci has completed sale of Siloam Hospitals Lippo Cikarang and Mochtar Riady Comprehensive Cancer Centre, with a total value of Sin$205.5mn or US$160mn to First Real Estate Investment Trust (First REIT) Singapore . First REIT is managed by Lippo Karawaci-owned, Bowsprit Capital Corporation Limited (Bowsprit).
·                      With the sale, the company recorded a gain of Rp195bn which will be amortized 15 years. Management reiterated it strategy to grow from a US$3bn property company to a US$8bn company.
·                      LPKR is trading at 2011F consensus PER of 23.1x and EV/EBITDA of 18.1x.

Timah sees two fold growth in 2010 net income (TINS, Rp2,850)
·                      Timah said strong tin price pushes up its 2010 financial performance with net income to come at Rp627.0bn, 100% YoY higher than Rp313.8bn a year earlier. Despite no shared hints for revenue, Timah said its profitability jumped by more than two fold fueled by favorable tin price. Nevertheless, this Rp627bn net income may disappoint consensus expectation as it is still far from the lowest estimate at Rp662.0bn, while mean estimate stood at Rp886.7bn.
·                      The net income translates into Rp152bn of net income for 4Q10, or relatively flat compared to Rp153.1bn in 3Q10. We foresee such condition was due to unfavorable weather condition.
·                      This year, Timah aims to increase offshore production given depleting inland reserves. The company will employ five new dredging vessels to support this plan. Nevertheless, Timah maintain its production target unchanged at 45,000 tons this year, which is similar to 2010’s production target.
·                      TINS is trading at 2011F consensus PER of 12.8x and EV/EBITDA of 6.6x.

KPPU charges Medco Rp11bn (MEDC, Rp3,400)
·                      Business Competition Supervisory Board (KPPU) charges Medco Energi International and Medco E&P Tomori Sulawesi Rp11bn as the board claims these companies have violated competition rules.
·                      Besides Medco, KPPU also charged Pertamina and Mistubishi, which are members of Donggi – Senoro consortium along with Medco Energi Internasional. However, the board said this consortium may continue its plan on Donggi – Senoro.
·                      The decision may cost several billion of Rupiah to the consortium. However, we prefer to see positive long term impact for Medco when this project starts to commence.
·                      MEDC is trading at 2011F consensus PER of 25.2x and EV/EBITDA of 5.9x.

Bloomberg Coking Coal Contract Price May Rise 33% on Australian Floods

Steelmakers in Asia may be forced to pay as much as 33 percent more for hard coking coal after the worst floods in 50 years in Australia’s Queensland state disrupted output from the world’s biggest shipper of the fuel.

Prices may increase to between $270 and $300 a metric ton, analysts from Macquarie Group Ltd., Morgan Stanley and Daiwa Capital Markets said. Mills agreed to pay $225 a ton for the three months starting Jan. 1, Bank of America Merrill Lynch analysts said last month.

“Queensland accounts for the majority of the premium hard coking coal supply on a global seaborne basis,” Alex Tonks, a commodity strategist at Bank of America Merrill Lynch in Sydney, said by telephone. “A lot of operations have been impacted. It certainly looks pretty bad at this stage.”

Rain in the Australian state has inundated an area the size of France and Germany, prompting BHP Billiton Ltd. and Rio Tinto Group to declare force majeure, a legal clause that allows mines to miss deliveries. About 37 percent of the world’s traded coking coal is affected, according to Macquarie. Queensland floods in 2008 left steel producers, including Japan’s Nippon Steel Corp. and JFE Holdings Inc., with a threefold increase in annual contract prices to about $300 a ton.

Australian free-on-board prices may climb to $270 a ton for three-month contracts starting April 1 as the floods threaten to take as much as 10 million tons of metallurgical coal out of the market, said Colin Hamilton, a London-based Macquarie analyst.   more ...

Bloomberg Maybank Said to Plan $1.4 Billion Bid for Broker Kim Eng

Malayan Banking Bhd., Malaysia’s biggest lender by assets, is planning an offer of about 4.2 billion ringgit ($1.4 billion) for Singapore broker Kim Eng Holdings Ltd., two people with knowledge of the matter said.

Maybank, as the Kuala Lumpur-based bank is known, will make a general offer to shareholders, said the people, declining to be identified as the plans are confidential. Both companies’ shares were suspended today pending an announcement. Kim Eng said Dec. 17 it had been approached about a takeover.

Tengku Zafrul Tengku Abdul Aziz, chief executive officer of Maybank Investment Bank Bhd., in September said the company wanted to expand investment-banking operations abroad, starting with its Asian neighbors Singapore and Indonesia. Maybank has commercial and retail banking operations in those countries.

Yuanta Securities Asia Financial Services Ltd. sold 168.5 million Kim Eng shares to a unit of Maybank for S$522.3 million, or S$3.1 a share, according to a Taiwan Stock Exchange statement today. That’s equivalent to about 28 percent of Kim Eng, based on Kim Eng’s 600 million outstanding shares.
Kim Eng rose 2.7 percent to S$2.70 yesterday in Singapore trading, taking gains in the past month to 47 percent.

Nomura Singapore Ltd. and Maybank Investment Bank are advising Maybank on the offer, one of the people said.   more ...

Bloomberg Aneka Tambang, Astra, Berau, Timah: Indonesia Equity Preview

The following stocks may have unusual price changes in Indonesian trading. Stock symbols are in parentheses, and share prices are as of the last close.

The Jakarta Composite index rose 0.6 percent to 3,783.71.

PT Aneka Tambang (ANTM IJ): Gold futures for February delivery slipped 0.4 percent to settle at $1,373.70 an ounce at 1:49 p.m. yesterday, capping the biggest two-day drop in 11 months. Aneka, an Indonesian gold and nickel producer, fell 1.9 percent to 2,525 rupiah.

PT Astra International (ASII IJ): Indonesia’s domestic vehicle sales rose 57 percent to a record of 763,415 units last year, Investor Daily Indonesia reported, citing preliminary data from automotive retailers. Astra, Indonesia’s biggest automotive retailer, dropped 0.9 percent to 52,050 rupiah.

PT Berau Coal Energy (BRAU IJ): The Indonesian coal producer is targeting several midsize coal mining companies for acquisition, Bisnis Indonesia reported, citing Director Didik Cahyanto. Berau fell 3.5 percent to 550 rupiah.

PT Timah (TINS IJ): Net income at the tin producer may have risen 100 percent to 627 billion rupiah ($70 million) last year from 313.75 billion rupiah in 2009 as the price of metal gained, Investor Daily Indonesia reported, citing Corporate Secretary Abrun Abubakar. Timah declined 1.7 percent to 2,850 rupiah.

To contact the reporter on this story: Berni Moestafa in Jakarta

JPM Indo: Medco Energi - Senoro project launch is near

The long wait for Senoro project is about to end, after the anti-monopoly agency (KPPU) slaps only minor fine totalling to Rp31bn (Medco’s portion Rp5bn), but allowing the project to go ahead despite the alleged lack-of-competition during the project’s tender process. KPPU ruling should be the last regulatory/political obstacle for the Senoro project go-ahead. (Bisnis Indonesia, Investor Daily, Kontan, MetroTVnews.com).

The KPPU announcement follows the signing of the Senoro FID (Final Investment Decision) on 31 Dec, with construction to start in Jan-2011 for Oct-2014 completion. Yesterday, there were press reports that subsidiary PT Medco E&P Tomori Sulawesi has signed the deal to sell a 20% stake in Senoro-Toili PSC, to Tomori E&P Limited, on 22 Dec.

One of my top 5 stock picks for 1H11. The launch of Senoro project should be a positive event for the stock. Newsflow on funding facilities for the project may be the next catalyst. There is room for 4Q10 earnings to surprise substantially, driven by a one-off gain from the sale of Senoro-Toili PSC. It would be sensible in my opinion to expect Medco paying a special dividend from the sale.

My recent meeting with Medco’s management suggests that the company is in the monetization mood, which often co-incides with positive newsflow and share price appreciation. There is room for Medco to farm-out Block A PSC later in 2011, realizing the capital gain while at the same time firming-up its true worth. There are press reports (12/29) that GoI will cut income tax on the sale of oil and gas blocks from 20% to 5% on exploration blocks, and to 7% on exploitation blocks. JPM rates O/W.

Insider Stories - UBS Singapore holds 15% Citra Marga

UBS AG Singapore Non-Treaty Omnibus Account, usually acting as a custodian for certain client, has shown itself as new holder of 301.25 million shares or 15.06% in toll road operator PT Citra Marga Nusaphala Persada Tbk (CMNP).
 
Indrawan Sumantri, Citra Marga Director, in an official statement to Indonesia Stock Exchange (IDX), said UBS AG Singapore shareholding in Citra Marga lifted up from 0.06% or 1.25 million shares. But, no detail information who is investor behind the foreign custodian. Post divestment PT Bhakti Investama Tbk (BHIT) owns 72.06 million shares or 3.60% stake. From the disposal, Bhakti bagged Rp510 billion. 
 
A rumor said Bhakti sold Citra Marga to Indonesian tycoon Prajogo Pangestu, controlling shareholder of PT Barito Pacific Tbk (BRPT).

Bloomberg Indonesia Stocks: Astra Agro Lestari, Benakat Petroleum, Timah

Indonesia’s Jakarta Composite index rose 23.65 points, or 0.6 percent, to 3,783.71 as of the 4 p.m. local-time close, the highest level since Dec. 9. The gauge gained for a seventh straight day, the longest winning streak since the eight-day rally ending Oct. 6.

Banks: PT Bank Mandiri (BMRI IJ), the largest bank by assets, surged 3.8 percent to 6,850 rupiah and PT Bank Rakyat Indonesia (BBRI IJ), the second biggest, rose 2.9 percent to 10,600 rupiah. Bank Indonesia kept today its reference interest rate at a record low of 6.5 percent even after consumer prices rose at the fastest pace in 20 months.

Oil companies: PT Medco Energi Internasional (MEDC IJ), the biggest listed oil company, declined 1.5 percent to 3,400 rupiah and PT Benakat Petroleum Energy (BIPI IJ) dropped 1.9 percent to 105 rupiah. Crude oil futures tumbled the most in seven weeks, dropping 2.4 percent to $89.38 a barrel in New York yesterday. Oil was at $88.60 a barrel in after-hours trading.

PT Astra Agro Lestari (AALI IJ), the largest listed plantation company, slipped 1.9 percent to 25,950 rupiah. Palm oil futures dropped 2.4 percent to 3,793 ringgit ($1,236) a metric ton in Kuala Lumpur, declining for the first time in four days. Astra Agro plants only oil palm trees.

PT Timah (TINS IJ), the biggest tin producer, fell 1.7 percent to 2,850 rupiah. Tin for three-month delivery plunged 2.1 percent to $26,345 a metric ton in London yesterday, the biggest decline since Nov. 22. The metal slipped 0.6 percent to $26,180 a ton today.

To contact the reporter on this story: Berni Moestafa in Jakarta

HellenicShippingNews 2010 was Up for Commodities, Will 2011 be Better?

As the year 2010 came to an end, it is interesting to look back and wonder how commodity markets (energy, the entire metals complex and agriculture) in 2010 were driven by a combination of factors including macroeconomic data, sovereign debt issues, differential monetary policies, demand strength, weather aberrations and currency dynamics. Cautious outlook at the beginning of the year has now gradually given way to robust optimism. An indication of growing confidence about growth prospects is that commodities production, consumption, trade and prices all hit new highs during the year.

Looking back, it is evident, the prices of copper and gold hit historical levels in 2010. Silver and sugar prices reached their 30-year highs. Demand strength has made a significant contribution to the price spurt in energy (crude and coal) as well as metals. Commodity prices have surged to record nominal highs in recent days and oil continues to consolidate near the $90 a barrel mark. It is important to realize that while most commodities are at record nominal highs, they remain well below their inflation-adjusted highs seen over 30 years ago during the stagflation of the 1970s.

Gold price rallied more than +28% in 2010, marking the strongest rise since 1979 when price more than doubled. There are two main reasons driving the metal higher: sovereign crisis in the European periphery and QE by the Fed. These two factors will continue to support gold next year. In 2Q10, gold made a record high of $1,266 as Greece was facing insolvency and the euro was threatened to be disintegrated. At that time, gold was trading in sync with US dollar, signaling extreme risk aversion. In early November and early December, gold also surged to all-time highs of $1,424 and $1,432 respectively amid resurface of sovereign concerns in the 16-nation region. Ireland was at risk and sought bailout from the EU/IMF in late November. However, it failed to stem contagious risks and the problem continued to spread to neighboring countries such as Spain and Portugal. The problem remains unresolved so far. While the post-2013 mechanism may be helpful in the future, EU finance leaders failed to agree on new initiatives to solve the current crisis.   more ...

Reuters China initiates action to keep a lid on commodity price

Reuters reported that China battling inflation has vowed to crackdown on speculation, hoarding and price gouging. Here's a look at some of the actions it has taken to keep a lid on commodity prices in the last two months.

1. Monetary policy
The People Bank of China raised interest rates by 25 basis points on Christmas Day, the second hike in just over two months. It last raised rates in October and also increased banks' required reserve ratios three times in the past month to drain liquidity from the market.

2. Action on commodity trading exchanges
The government said last week that it will maintain its crackdown on price speculation in 2011, focusing on cotton, edible oils, grains and vegetables.
China three main commodity exchanges in Shanghai, Dalian and Zhengzhou have raised trading margins to force traders to back their positions with more cash. They also widened trading bands, allowing prices to fluctuate more without hitting the headline-grabbing up or down limits.

One newspaper report said the three exchanges are also considering raising the lot size of their futures contracts to curb speculation. Sugar and cotton dealers said the authorities also threatened to close trading in certain agricultural commodity contracts if there was excessive price speculation.

Live Mint India: More steel price hikes expected

JSW Steel Ltd and Steel Authority of India Ltd hiked prices between 3% and 5%, Reuters reported on Monday. It’s not hard to guess the reason. Prices of iron ore, a key ingredient, have been gaining steadily since July, squeezing steel producer margins. Floods in Australia have now added to the woes. Prices of spot Chinese iron ore (with 62% iron content) rose some 20% in the quarter ended December as demand eased in developed markets and India banned exports, adding further pressure to the margins of steel makers.

Spot prices of coking coal, the second key ingredient, have jumped 10% to $256 (Rs11,445 today) a tonne over the past month as monsoon rains in Queensland, the heart of Australia’s coal production territory, disrupted mining and transport. Australia accounts for two-thirds of world coking coal exports and the flood-hit region for 40% of that country’s output. So roughly a quarter of the world coking output is shut down. There is also uncertainty on resumption of supply. Once business is back to normal, the situation should improve.

Indian steel makers are heavily dependent on foreign coal. According to estimates from Gujarat NRE Coke Ltd, at least 60% of local coking coal demand is met through imports; of this, 85% comes from Australia.
To be sure, steel manufacturers tie-up coal supply through quarterly contracts and the rise in spot prices may not have an immediate effect. However, traders and analysts estimate that contract prices could rise up to $300 a tonne for the June quarter compared with the $225 for the three months ending March.

For the September 2010 quarter, raw material costs for the top 10 local steel makers rose to 45% of net sales, compared with 42% a year ago. With miners holding pricing power, this ratio is likely to increase over the next couple of quarters.

While some steel makers such as Tata Steel Ltd will be less affected as they have captive coking coal supply, others have no option but to import. Expect more price increases on the way in the near term.

Bloomberg Australian Floods May Cut China Steel Output, Deutsche Bank Says

Daniel Brebner, an analyst with Deutsche Bank AG in London, comments on the impact of rain and flooding in Australia that have forced mines to close. Floods in the state of Queensland have covered an area the size of France and Germany. Coking coal and iron ore are used to make steel. Thermal coal, a source of power generation, can sometimes be sold to steelmakers if it’s of sufficient quality. China made 44 percent of the world’s steel in November, according to the World Steel Association. Brebner commented in a report today.
“Both coking coal and thermal coal are impacted, however coking coal may be more critical as Australia is the key global seaborne supplier. It is possible that, with constraints also for high-rank thermal, steel producers in China and elsewhere might have to lower steel production as a consequence, thereby putting pressure on iron-ore pricing.”

Bloomberg Queensland Floods Force Evacuations as Rivers Swell

Swollen rivers are forcing more evacuations in the Australian state of Queensland, where floods have caused billions of dollars in damage across an area the size of France and Germany.

About 1,200 houses have been inundated and 4,000 residents evacuated in the state’s worst flooding in 50 years, according to the Queensland government. Water levels are rising in St George, a town of 3,500 people about 500 kilometers (310 miles) inland from the state capital, Brisbane, and may peak early next week, the Bureau of Meteorology said on its website.

“I don’t want a second wasted in the huge recovery and rebuilding task before us,” state Premier Anna Bligh said yesterday after holding an emergency Cabinet meeting. She appointed a senior army officer to lead the effort and told reporters the disaster was “on an unprecedented scale.”

The Queensland government says floods are affecting about a million square kilometers of the state, which is Australia’s largest coal exporter and accounts for about 20 percent of the nation’s A$1.28 trillion ($1.28 trillion) economy. Record rainfall has closed mines and spoiled crops and may have a “significant impact” on the nation’s economy as exports are interrupted, according to Donald McGauchie, a Reserve Bank of Australia board member.

Bligh, who told reporters yesterday the cost of rebuilding damaged infrastructure may run into billions of dollars, named Major General Mick Slater, a Commander of the First Division, to head a new flood recovery taskforce. The flooding may cost more than A$5 billion, the Australian Financial Review reported today, citing Bligh.

Bloomberg Crude Oil Rises as U.S. Service Industries Expand, Companies Add Employees

Crude oil rose after reports showed that U.S. service industries expanded and companies added workers in December, signaling that fuel demand will increase in the world’s biggest oil-consuming country.

Futures climbed 1 percent after the Institute for Supply Management’s non-factory index, which covers about 90 percent of the economy, advanced to 57.1. Oil dropped to a two-week low earlier today as the Dollar Index strengthened, curbing the appeal of commodities as an investment.

“There are continuing signs that the economy is improving,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “The economic headlines suggest that consumption will grow.”

Crude oil for February delivery increased 92 cents to settle at $90.30 a barrel on the New York Mercantile Exchange. Futures touched $88.10, the lowest price since Dec. 20. Oil is up 10 percent from a year ago.
Brent crude oil for February settlement rose $1.97, or 2.1 percent, to $95.50 a barrel on the London-based ICE Futures Europe exchange.

A report today from ADP Employer Services showed companies boosted payrolls in December by the most since records began in 2001. Employment increased by 297,000, almost three times the 100,000 median estimate of economists surveyed.   more ...

Bloomberg U.S. Stocks Climb as Employment, Services Data Bolster Optimism in Economy

U.S. stocks rose, sending the Standard & Poor’s 500 Index to a two-year high, after higher- than-estimated growth in payrolls and service industries bolstered optimism in the economy.

American Express Co. and Walt Disney Co. climbed at least 2.5 percent to lead the Dow Jones Industrial Average to its highest close since August 2008. J. Crew Group Inc. climbed 2.3 percent as three people with knowledge of the matter said Sears Holdings Corp. and Urban Outfitters Inc. are weighing rival bids for the retailer. Mosaic Co. rallied 2.8 percent after the fertilizer company’s earnings topped estimates.

The S&P 500 rose 0.5 percent to 1,276.55 as of 4 p.m. in New York, its highest level since Sept. 2, 2008. The Dow increased 32.29 points, or 0.3 percent, to 11,723.57. The Dollar Index, a gauge of the currency versus six major peers, rallied 1 percent for its biggest advance since Dec. 15.

“There was a pretty positive response to the economic news this morning and the market’s carrying that through,” said Bruce McCain, who oversees $25 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “By and large, most of the economic reports do seem to be picking up and suggest we seem to have good momentum going into this quarter and the year.”
The S&P 500 erased a 0.4 percent drop in the first half hour of trading after a report showed service industries grew at the fastest pace in almost five years. ADP Employer Services said before exchanges opened that companies added 297,000 jobs last month, almost triple the median economist estimate.

Jobs Report
The ADP data came two days before a Labor Department report that’s forecast to show the U.S. added 150,000 jobs in December and the unemployment rate slipped to 9.7 percent from 9.8 percent, according to the median estimate of economists in a Bloomberg survey. U.S. equity index futures trimmed losses in pre-market trading after the data.

The Institute for Supply Management’s non-manufacturing index rose to 57.1 last month, the highest level since 2006, according to a report today. The index covers about 90 percent of the U.S. economy. The median estimate in a Bloomberg survey of economists called was 55.7.
“Futures were ugly and now we’re coming back off that; ADP helped, ISM helped too,” said Jason Brady, a managing director at Thornburg Investment Management in Santa Fe, New Mexico, which oversees about $74 billion in assets. The dollar is rallying because “one, it’s better economic news. Two, it’s a little more yield support. Treasuries go higher in yield, and the dollar is a slightly more attractive place to be. Three, we got more noise from Europe.”
Dollar Rises

The U.S. currency rose against the euro amid concern the European debt crisis will worsen. The Swiss National Bank excluded securities issued by Allied Irish Banks Plc, Anglo Irish Bank Corp. and Bank of Ireland Plc from the list of assets it accepts as collateral for its repurchase operations, according to its website.

To contact the reporters on this story: Inyoung Hwang in New York