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Thursday, May 22, 2008

Wall Street stocks tumble on US$135 oil

NEW YORK, May 22 — Wall Street pitched lower for the second straight session yesterday as record-high oil prices and a bleak economic assessment from the Federal Reserve deepened investors' worry about rising costs and a shaky employment picture. The Dow Jones industrial average fell 227 points, logging its widest two-day loss since late February.

Early in the day, stocks began falling on the surging price of oil, which shot up more than US$4 and breached US$135 a barrel for the first time on the futures market yesterday.

The stock market slumped further after minutes from last month's Fed meeting revealed that while policymakers expected sharply lower economic growth and higher unemployment later this year, inflationary risks are likely to keep the central bank from cutting rates again. Lower interest rates spur economic growth, but they also tend to accelerate inflation.

High commodities prices have been a big source of anxiety for investors, as many retailers and credit card companies have noticed consumers paring back spending on discretionary items, including clothing and jewelry, to be able to afford necessities such as gasoline and groceries.

Meanwhile, the Fed's minutes suggest the central bank's two main priorities — making sure the economy is growing, and keeping inflation in check — are both going to be tough to achieve through monetary policy. That is a troubling prospect for investors hoping that the economy will bounce back in the second half of the year and that the central bank will be able to concentrate on controlling inflation.

"It absolutely underscores the two competing mandates for the Federal Reserve: growth, and price stability. It captures the tug-of-war between the two mandates, crystallises how different those two mandates are," said Quincy Krosby, chief investment strategist for The Hartford. "If employment deteriorates dramatically, the Fed has a choice — do they worry about inflationary pressure, or do they want to continue to support their growth mandate?"

The Dow fell 227.49, or 1.77 per cent, to 12,601.19, after falling nearly 200 points on Tuesday. The blue chip index's two-day drop of about 427 points, or 3.3 per cent, is its biggest since Feb 28-29.

Broader stock indicators also stumbled. The Standard & Poor's 500 index fell 22.69, or 1.61 per cent, to 1,390.71, while the Nasdaq composite index fell 43.99, or 1.77 per cent, to 2,448.27.

Crude oil soared US$4.19 to settle at US$133.17 a barrel on the New York Mercantile Exchange — about US$20 higher than it was at the beginning of May. It passed US$135 a barrel in after-hours trading.

"There's almost a parabolic rise going on," said Richard E. Cripps, chief market strategist for Stifel Nicolaus. "I do sense that the stock market is searching for where that oil peak is going to be ... but till it finally gets there and backs off, I think the stock market is under pressure."

Strong demand out of China, supply disruptions in Nigeria, the dollar's slump versus other world currencies, and political tension in the Middle East have been keeping oil on the incline.

"The factors affecting commodities, the strongest catalysts, are outside the United States," the Hartford's Krosby noted. "The Fed's ability to dampen inflationary expectations have become not completely limited, but more limited than if we were having this discussion 10 years ago."

And although jitters over the housing-driven credit crisis have calmed since March, they are far from over. Financial stocks took a hit yesterday after Moody's Investors Service said it is "conducting a thorough review" regarding the possibility that computer errors incorrectly gave high quality ratings to certain debt securities that later sank in value.

"That would create some real carnage in an industry that doesn't need it," said Jim Herrick, manager of equity trading at Baird & Co., referring to the banks and other financial services companies that have lost billions of dollars due to bad bets on mortgages and other debt. — AP

Robert Kuok still tops Malaysia’s rich list with US$10b

SINGAPORE, May 22 — Tycoon Tan Sri Robert Kuok continues to maintain his lead position as Malaysia's richest man in the latest Forbes Asia's rich list.

Kuok, 84, who has many businesses, including Hong Kong property and media interests, and most notably palm oil giant Wilmar, increased his net worth by US$2.4 billion last year to hit US$10 billion.

The latest ranking list also saw Berjaya Corp's Tan Sri Vincent Tan joining the billionaires' club, Forbes Asia said in a news release here.

There are 10 billionaires in the list this year, one more than last year.

Tan, who rose from 14th to ninth position, has a net worth of US$1.3 billion, up nearly US$1 billion from last year.

Forbes Asia said Tan’s company Berjaya Corporation had bucked the trend with its stock price up nearly three-fold over the past 12 months.

Tan reigns over a vast US$4 billion — combined sales — network of enterprises spanning industries such as gaming, media, telecom, consumer products and retail as well as real estate.

Still in second place is Ananda Krishnan, who heads telecom company Maxis. But his wealth dipped to US$7.2 billion, which is US$200 million less than last year.

The third richest in the list is IOI Corporation group executive chairman Tan Sri Lee Shin Cheng, who was ranked fourth last year, but as the oil palm plantation giant soared in value, his wealth rose from US$1.6 billion to US$5.5 billion, Forbes Asia said.

The highest new entry is Puan Sri Lee Kim Hua, widow of renowned gaming tycoon Tan Sri Lim Goh Tong who was ranked third last year but died in October.

She and her family are worth US$3.4 billion and ranked fifth, even as son Tan Sri Lim Kok Thay, who runs Genting, is listed on his own with US$345 million, putting him in 15th place.

Lee is one of three women on the list alongside Selangor Properties' chairman Puan Sri Chong Chook Yew, ranked 24th (US$245 million), and daughter of the Sultan of Perak, Raja Datuk Seri Eleena Raja Azlan Shah, ranked 35th (US$150 million).

Among the newcomers is Datuk Nazir Razak, group chief executive of CIMB Group and the youngest son of second Prime Minister, the late Tun Abdul Razak Hussein. Nazir managed to scrape into the 40th position as the last richest Malaysian in Forbes Asia's top 40 with a net worth of US$100 million.

The collective wealth of the top 40 is US$46 billion, up US$3 billion from last year.

While 16 people managed to add to their wealth, 18 saw their net worth slip, with seven of them losing at least a quarter of their worth.

Tan Sri Syed Mokhtar Al-Bukhary, the richest Malay tycoon and a billionaire, dropped one position from seventh to eighth after his net worth was reduced by US$200 million to US$1.8 billion.

The Malaysia Rich List appears in the June 2 issue of Forbes Asia.

The top 10 richest in Malaysia are:

1) Robert Kuok, US$10 billion.

2) Ananda Krishnan, US$7.2 billion.

3) Lee Shin Cheng, US$5.5 billion.

4) Teh Hong Piow, US$3.5 billion.

5) Lee Kim Hua & family, US$3.4 billion.

6) Quek Leng Chan, US$2.4 billion.

7) Yeoh Tiong Lay & family, US$2.1 billion.

8) Syed Mokhtar Al-Bukhary, US$1.8 billion.

9) Vincent Tan, US$1.3 billion.

10) Tiong Hiew King, US$1.1 billion. — Bernama