Economy

US: Too soon to cut US stimulus. Nobel Prize-winning economist Joseph Stiglitz said it would be premature for the US Federal Reserve to reduce monetary stimulus even if there is little evidence it helped the world’s largest economy. He further said that the US economy is still in the recovery phase, so maintaining the momentum of the growth is still a main issue even after strong growth in the past few months. Growth may slow this year to 2% from 2.2% in 2012 before expanding 2.7% in 2014, the fastest pace since 2006, according to consensus forecasts. (Bloomberg)

EU: To move spotlight from austerity to reforms on Wednesday. The European Commission will further shift the EU’s policy focus from austerity to structural reforms to revive growth when it presents economic recommendations for each member state on Wednesday. The 17 countries that share the Euro will have halved the pace of budget consolidation in 2013 compared to 2012, as the overall budget deficit of the euro zone fell by 1.5% of GDP in 2012 but will only shrink a further 0.7% this year. (Reuters)

EU: Seen lifting budget procedure against Italy this week. The European Commission will recommend lifting tight controls on Italy’s public spending imposed in 2009 when Rome breached the European Union’s deficit ceiling of 3% of GDP. The recommendation will be accompanied by a series of conditions including maintaining the budget deficit below the EU limit of 3% of GDP, cutting public debt, which is expected to top 130% of GDP this year and reforming the banking sector. (Reuters)

Thailand: Finance Minister hopes for rate cut. Thailand’s finance minister said he hoped the central bank’s monetary policy committee would cut the policy rate more than 25 basis points at its meeting tomorrow following weaker-than-expected GDP data for the 1Q plus government pressure for a rate reduction. (Reuters)

Markets

Maybank: Expands overseas property loan scheme. Malayan Banking Bhd (Maybank) is targeting to secure RM200m in financing for properties in Sydney, Perth and Singapore this year, as it expands its overseas mortgage loan scheme to include purchases of residential properties in the three new markets. Maybank deputy president and head of community financial services, Datuk Lim Hong Tat said since the scheme was launched in 2011, total financing secured has reached some RM720m. Of this amount, over 90% has been for London properties while the balance has been for Melbourne purchases. (SunBiz)

SapuraKencana: Bags ExxonMobil contract worth between RM300m and RM500m. SapuraKencana Petroleum’s unit has secured a contract from ExxonMobil Exploration and Production Malaysia Inc valued at between RM300m and RM500m. SapuraKencana said its Kencana HL SB had on May 16 accepted the contract to provide hook-up and commissioning and topside major maintenance services. The contract was for a primary term of five years with an option to extend for another year. (StarBiz)

Petronas Chemicals: Posts higher net profit. Petronas Chemicals Group Bhd (Petchem) net profit for the first quarter ended March 31 grew to RM1.1bn from RM1.0bn a year ago driven by improved product spread. Earnings per share for the quarter stood at 14 sen against 13 sen in the corresponding period last year. In line with the growth, Petchem earnings before interest, tax, depreciation and ammortisation (EBITDA) rose by 10% to RM1.8bn while EBITDA margins strengthened to 40%. The group registered a 2% increase in revenue at RM4.5bn supported by slightly higher product prices. (StarBiz)

UMW: Mulls bids for Coates Hire. UMW Holdings is among companies studying bids for Coates Hire Ltd, the Australian equipment rental company part-owned by Carlyle Group LP, two people with knowledge of the matter said. Offers for Coates Hire, which also counts Seven Group Holdings Ltd's National Hire Group Ltd among its shareholders, are due next month, said the people. The owners, who appointed Goldman Sachs Group Inc to advise on the sale, are seeking more than AUD3bn (RM8.7bn). (Bloomberg)  Naim Holdings: Pre-tax profit more than doubled in Q1. Naim Holdings’ pre-tax profit more than doubled to RM51.4m for the first quarter ended March 31, from the RM23.0m recorded in the same period last year. Revenue was also sharply higher at RM128.9m during the period under review, from RM94.2m chalked up in the same quarter a year ago. The group attributed the better performance to higher property sales and improvement in the performance of its associates. (Bernama)

MISC: Subsidiary buys 33% of MILS-Seafrigo. MISC’s whollyowned subsidiary MISC Integrated Logistics SB has entered into an agreement with ETB Seafrigo for the purchase of a 33 per cent stake in MILS-Seafrigo SB for RM500,000. MISC said the acquisition will enable MILS to have full control over the equity and strategic direction of MILS-Seafrigo. MILS is a Malaysian firm with principal activities in the provision of integrated logistics services. Upon the completion of the acquisition, MILS-Seafrigo will become a wholly-owned subsidiary of MILS. (Business Times)

MARKET UPDATE

US stock market was closed for the Memorial Day holiday on Monday. Over in Europe, stocks rebounded on Monday from their first weekly loss in more than a month, driven by gains in the automotive, banking and technology sectors. However, trading volume was capped due to public holidays in the US and UK (spring bank holiday). Key indices such as Germany’s DAX and France’s CAC 40 gained 0.9% and 1.0% respectively. Notable gainers in European markets included Vivendi (+2.8%), Fiat (+4.4%), SAP (+2.1%) and Club Med (+22.4% after receiving a takeover bid).

Asian stock markets closed mixed yesterday. Japan’s Nikkei 225 index tumbled 3.2% amid strengthening yen and continued concerns on increased volatility in the Japanese bond market. The stronger yen took its toll on exporters such as Sony (-6.3%) and Toyota Motor (-5.0%). China’s Shanghai Composite added 0.2%, while Hong Kong’s Hang Seng Index rebounded 0.3% on low trading volume, snapping a four-day losing streak. Investors in both the markets remained cautious amid recent data indicating uncertain economic conditions in China. Key Asean stock markets closed lower with Philippines’ PSE, Indonesia’s JSE and Thailand’s SET indices losing 2.4%, 1.4% and 0.9% respectively. Across the causeway, Singapore’s STI ended marginally lower (- 0.06%) but overall market was positive with 281 gainers and 156 losers.

Back to the homefront, Bursa Malaysia continued to be under pressure from profit-taking yesterday The FBM KLCI closed 5.9 pts or 0.3% lower to 1,767.1 pts, marking a third consecutive day of decline in KLCI. Large-cap stocks, in particular index-linked ones, continued to be trimmed down by funds. Leading losers in the KLCI include Petronas Dagangan (-1.6%), Genting (-1.4%) and CIMB (-1.2%), while gainers include UEM Land (+2.5%) and Astro (+2.3%). Trading volume declined to 1.62bn units (from 2.14bln units in the previous trading day). Despite the decline in KLCI, overall market breadth was positive with 489 gainers, 341 losers and 254 traded unchanged. The top active volume list was dominated by penny stocks such as TH Heavy, CSL and Daya which generally closed higher. Counters which may attract investors’ interest today include the ones which reported earnings such as Petronas Chemicals, MPHB, Naim, Parkson, E&O and Kossan Rubber as well as companies winning contracts such as Dayang and SapuraKencana.

Source: PublicInvest Research - 28 May 2013