HEADLINES

US: More data needed before Fed can hike, as Greek worries loom. Federal Reserve officials needed to see more signs of a strengthening US economy before raising interest rates, at which Greece's debt crisis was cited as a serious concern. The minutes underscored the view that a Fed rate hike would likely have to wait until at least Sept. (Reuters)

US: Fed to change way to calculate fed funds rate. The US Federal Reserve plans to change the way it calculates the overnight interest rate on interbank loans it targets to achieve its policy objective in early 2016, the New York Federal Reserve said. The average or effective rate in the federal funds market will be changed to a "volume-weighted median" from the current "volume-weighted mean" in an effort "to provide a more robust measure of trading conditions federal funds market". (Reuters)

EU: Greece seeks new EU loan deal in race to avert collapse. A race to save Greece from bankruptcy and keep it in the euro gathered pace when Athens formally applied for a three-year loan and European authorities launched an accelerated review of the request. (Reuters)

EU: IMF chief says cannot bend rules for Greece. The head of the IMF reiterated that the global financial institution cannot bend its rules when it comes to Greece, striking a somber tone in commenting on the "acute crisis" in the euro zone country. (Reuters)

UK: Osborne announces new compulsory wage rate for workers. Britain will introduce a new, compulsory National Living Wage for workers aged over 25 which will rise steadily between its introduction next April and 2020, finance minister George Osborne said. Osborne said the new wage rate would be set at GBP7.20 (USD11.06) an hour, higher than the GBP6.70 hourly rate that the existing minimum wage is set to reach in Oct. (Reuters)

China: Ramps up policy response as panic grips stock market. China’s policy makers are up-sizing their response to an equities rout that’s erased USD3.5trn in value after measures so far failed to quell investor panic. Among the latest developments, state-backed China Securities Finance Corp. is seeking at least CNY500bn (USD81bn) in liquidity to support the stock market, according to people familiar with the matter. (Bloomberg)

Markets

AirAsia (Outperform, TP: RM2.53): Indonesia AirAsia to meet ministry to ensure directive met. Indonesia AirAsia (IAA) has categorically stated it has never been put in a difficult financial situation since it was set up in 2004 and its level of equity has never been an issue where in its operations would be affected. IAA president director Sunu Widyatmoko said its operation remains as per normal and refuted suggestions that its operational licence would be called into question. (StarBiz)

DRB-Hicom (Outperform, TP: RM2.71), MRCB: Get RM310m construction job. Malaysian Resources Corp (MRCB) has partnered DRB-Hicom to undertake an RM310m construction job at the new integrated immigration, Customs, quarantine and security (ICQS) complex at Bukit Kayu Hitam, Kedah. Both companies will take up the job via a joint-venture (JV) company in which MRCB owns 51% and DRB-Hicom the remaining 49%. (StarBiz)

FGV (Neutral, TP: RM1.87): Eyes USD262m asset sale as Eagle High irks investors. Felda Global Ventures Holdings plans to raise more than RM1bn (USD260m) selling non- core assets as the world’s biggest crude palm oil producer focuses on plantations to repair investor confidence dented by an acquisition. Unprofitable crushing and refining businesses in the US and Canada that have drawn initial bids ranging from USD180m to USD250m may be sold later this month, CEO Mohd Emir Mavani Abdullah said. (Financial Daily)

Super Enterprise: Receives conditional voluntary take-over offer. Super Enterprise Holdings has announced it has received a press notice from MCC LABL2 Netherlands B.V. for a conditional voluntary take-over offer at RM3.80 per share. Super Enterprise said the offer to shareholders was to acquire all ordinary shares of RM1 each, which are not yet held by MCC LABL2. (Financial Daily)

Meda Inc: Aborts RM31.7m land acquisition deal in Hulu Langat. Property developer Meda Inc has aborted the proposed acquisition of a RM31.7m freehold land in Hulu Langat district, Selangor. Meda Inc said it was terminating the sale and purchase agreement (SPA) for the acquisition of the 3.9-ha land in Tempat Sungai Sekamat in Cheras. (Financial Daily)

Asia Bio: Plans private placement to raise up to RM15.2m. Asia Bioenergy Technologies (Asia Bio) has proposed a private placement of 152.1m shares or not more than 10% of its issued and paid up share capital to raise up to RM15.2m for the company’s technology incubation fund and working capital. The exercise will raise the company’s share base to 1.7bn shares from 866.7m shares. (Financial Daily)

Berjaya Land: Penang luxury home market stable. Berjaya Land, which has sold 40% of the Jesselton Villas bungalow lots at the Penang Turf Club (PTC), sees a stable market for luxury housing products in Penang. Group executive director Eason Phan said as long as the developer came out with the right product for the discerning property buyers, there was demand. “We will start the construction for the infrastructure in the 4Q2015, which will take 12 months to complete,” he said. These 69 units formed the first phase of Jesselton Villas known as Kensington Gardens. There are two more planned phases which are yet to be named. (StarBiz)

MARKET UPDATE

US markets closed lower overnight despite 3 ½ hours of halted trading on the New York Stock Exchange owing to a computer malfunction and which forced traders to route orders elsewhere. The Dow Jones Industrial Average and S&P 500 were down 1.5% and 1.7% respectively. Minutes of the Federal Open Market Committee’s meeting released last night showed policymakers expressing confidence that the US economy was moving towards conditions that would support an interest rate increase. Nonetheless, they are also taking cognizance of the current Greek situation and expressed their doubts over whether conclusive agreements could be met, while acknowledging challenges in economic growth prospects abroad, particularly China. Alcoa unofficially kicked-off the 2Q result reporting season for US stocks, though in a less upbeat fashion this time round in missing estimates as prices of aluminum fell in the face of surging exports from China. European markets closed higher for the first time in a few days as the Greek government worked around the clock to propose reform measures to European leaders by tomorrow, and which has to be accepted by Sunday. For a start, the government has said it intends to clear its debt arrears though it has also asked for a new 3-year loan from the Eurozone’s stabilization fund. Italy’s FTSE MIB led the way with a 2.6% gain. Elsewhere, benchmarks in UK, France, Spain and Germany rose 0.9%, 0.8%, 0.8% and 0.7% respectively. China’s stock market rout has extended into Hong Kong, with the Shanghai Composite tumbling another 5.9% for the day to chalk up a 1-month 31.4% decline. Meanwhile, the Hang Seng Index saw an overnight 5.8% slump, the biggest single-day drop since 2008. The general fear is that Chinese policy makers have lost control of the market, part of it stemming from the move to suspend trading in 1,323 companies on its two main bourses, 353 in Shanghai and 970 in Shenzhen, and in the process lock up about USD2.6tln worth of shares. The Straits Times and FBM KLCI were 1.7% and 1.0% lower while the SET Index (Thailand) and Jakarta Composite Index were 1.1% and 0.7% lower respectively.

WCT Holdings has won its arbitration case against Meydan Group LLC with regard to the cancelled race course project in Dubai way back in 2009. Undoubtedly positive, the move will see the company being paid RM1.2bn for various costs incurred. Please refer to the accompanying report today for more details. Felda Global Ventures is looking to dispose of about RM1bn worth of its non-core assets, amongst which are the crushing and refining businesses in the US and Canada, a travel agency, and engineering and IT units, intending to focus solely on plantations only as it works on repairing investor confidence which has recently taken a beating. Air Asia X has taken an unprecedented move (in recent memory) in urging the Securities Commission to take action against GMT Research, saying that the Hong Kongbased research firm had made various misleading statements and allegations about it in recent weeks.

Source: PublicInvest Research - 9 Jul 2015