Malaysia, Indonesia agree to strengthen commodity prices

Kuala Lumpur (ANTARA News) - Malaysia and Indonesia have agreed to work together to strengthen commodity prices in particular palm oil and rubber prices amid the current sagging world prices.

Malaysia and Indonesia jointly account for 85 percent of global palm oil production and 40 percent of natural rubber production.

Both countries in a joint statement released here Wednesday said they have also agreed to take appropriate measures to ensure stable prices in particular for palm oil.

"These measures include managing palm oil stocks and reducing supply through
replanting programmes," said the statement.

Plantation Industries and Commodities Minister Peter Chin Fah Kui and Minister of Agriculture of the Republic of Indonesia Dr. Ir. Anton Apriyanto met Wednesday to discuss bilateral cooperation on the matter.

The Indonesian Minister is in the city to attend the Developing-Eight (D-8) Ministers Meeting.

For palm oil, the ministers have agreed to accelerate replanting of oil palm trees which are above 25-years old, implementation of biofuel programme, increasing domestic demand for crude palm oil and jointly engage major importing countries of palm based methyl ester in addressing non-tariff barriers for the exports of biofuel.

Malaysia has implemented the blending of five percent palm based methyl ester with fossil diesel.

Indonesia implemented a minimum of one percent blending programme in the public transportation sector and a minimum of 2.5 percent blending in the industry and commercial sector. These minimum percentages will be increased to 2.5 percent in the public transportation sector and five percent in the industrial and commercial sectors.

Both ministers also want to exchange production and stock level data on a regular basis to facilitate stock management and promote palm oil through engaging the related legislators of importing countries.

As for rubber, both countries will accelerate replanting of rubber trees aimed at managing the supply of natural rubber.

"Malaysia has revised upwards the original target of replanting rubber areas to 50,000 hectares in 2009 from 32,000 hectares. Indonesia is replanting 55,000 hectares with rubber in 2009," the statement was quoted by Bernama as saying.

Meanwhile, both countries also agreed to control the expansion of new planted area for rubber, encouraging the reduction of tapping frequency.

The ministers hope that these measures will reduce price volatility and contribute towards stability of both palm oil and natural rubber prices in the longer term.

UAE, Kuwait shares 'among world's most attractive'

By Soren Billing
Investors are beginning to differentiate between different GCC stock markets, and valuations in the UAE and Kuwait are among the most attractive in the world, Rasmala said on Thursday.

The regional investment bank said that although it is cautiously optimistic that the worst is now over, a recovery will not be uniform across GCC markets and sectors.

“The global economic picture will be important, but domestic factors will increasingly play their part as governments across the region announce fiscal, monetary and regulatory measures to deal with the current challenges posed by the global economic crisis and lower oil prices,” Khaled Al Masri, partner at the bank, said.
The region’s markets reacted differently to local, regional and international factors in December, signaling that investors are beginning to differentiate between markets and stocks after an indiscriminate sell-off over the past few months.

Valuations of UAE listed equities, which are trading at around five times 2008 earnings, are the lowest in the region and among the most attractive globally, according to Rasmala.

“Lingering uncertainties surrounding the announced restructuring of the mortgage sector and a decimated domestic investor base are precluding a near-term recovery in the market, despite extremely attractive valuations,” Al Masri said.

Valuations of Kuwaiti stocks are also seen as some of the most attractive in the region, but continuing fears over the investment sector and lingering political squabbles are weighing on investors and delaying a recovery, despite official support for the market.

The Kuwaiti central bank last month cut its repurchase rate by 50 basis points to 2.5 percent and has lowered the minimum reserve requirements for banks.

With current valuations at under nine times 2008 earnings, a dividend yield of close to 5 percent and an expansionary fiscal and monetary policy, Rasmala believes Saudi equities are well positioned for any improvement in the global economic environment.

Gas rich neighbour Qatar was the best performing regional market in December, with gains of close to 13 percent.

“The market has been exhibiting sensitivity to both the global environment and oil prices and has benefited from the improvement of both these factors over the month, and the Qatari economy is expected to be one of the fastest growing global economies over the next few years,” Al Masri said.

Valuations of Omani stocks are in line with the regional average and the market awaits fourth quarter results from leading companies to determine whether current valuations are attractive, according to Rasmala.

Source : Arabian Business