Economy

US: Fischer says temporary inflation factors still a Fed concern. Federal Reserve Vice Chairman Stanley Fischer said low US inflation, while probably restrained by temporary factors, remains a concern as the labor market nears a sweet spot. (Bloomberg)

EU: Greece sees bailout within reach as Germany says deal desirable. Greece and its creditors closed in on a deal setting out the terms of a third bailout, as German Chancellor Angela Merkel’s government signaled its desire to have an agreement wrapped up. Negotiators are tackling details including Greece’s fiscal outlook and the size of the total bailout, which may end up slightly higher than the EUR86bn (USD95bn) envisaged. (Bloomberg)

UK: BOE’s Miles saw ‘reasonable’ case to raise UK rate last week. David Miles said there was a “reasonable” argument for the Bank of England to raise interest rates at its meeting last week in order to avoid faster tightening in future. (Bloomberg)

China: Under mounting pressure to ease policy as economy stumbles. China is under growing pressure to further stimulate its economy after disappointing data over the weekend showed another heavy fall in factory-gate prices and a surprise slump in exports. Producer prices in July hit their lowest point since late 2009, during the aftermath of the global financial crisis, and have been sliding continuously for more than three years. (Reuters)

Japan: Consumer confidence falls to lowest in six months in July. Japanese consumer confidence tumbled in July to the lowest in six months, raising the risk of weakness in spending that could weigh on the economy this quarter. An index of confidence dropped to 40.3 from 41.7 in June, according to data released. Worsening sentiment could damp personal consumption, which has failed to fully recover from a sales-tax hike last year. (Bloomberg)

Singapore: Shrinking economy worsens bank risk as loans slump. Slumping property and oil prices have dragged a gauge of Singaporean banks’ loan quality to the worst in six years, inflating their borrowing costs. Lenders have placed 2.3% of their loan books in a “special mention” category that signals potential weakness, the highest since 2009. (Bloomberg)

Markets

AirAsia (Outperform, TP: RM1.88): AirAsia Indonesia to meet equity rule. AirAsia’s Indonesian unit is confident it can meet a rule set by the country to increase its equity portion to keep its operating licence. “We are in the process of converting our debt (group level) to equity. It should be no problem,” co-founder and group CEO Tan Sri Tony Fernandes said. AirAsia Indonesia, which contributed more than a quarter of the group passenger volume, has until end Sept to comply with the regulation. (StarBiz)

Affin Bank: Buys TRX land for RM255m. Affin Bank is acquiring 54,266 sq ft of land within the financial quarter of the Tun Razak Exchange (TRX) international financial district for RM255m to house its new headquarters. 1MDB Real Estate, the master developer of TRX, said the sale and purchase agreement (SPA) with Affin Bank was signed after extensive negotiations that began in 2012. (SunBiz)

Scomi Energy Services: Secures RM140m worth of marine contracts. Scomi Energy Services' marine services has secured more than RM140m worth of contracts in the last four months mainly for transportation of coal and provision of offshore vessel services to clients in Indonesia, Malaysia and Thailand. Its president of marine services, Mukhnizam Mahmud said, the company's target market remains in the Southeast Asian region, with Malaysia and Indonesia as the key locations for its coal logistics operations. (SunBiz)

MPHB Capital: Ends JV development plan. The JV to redevelop the Gombak site of the once-popular but now-long-closed Mimaland recreational park has been terminated. MPHB Capital said its 98.2% owned subsidiary Mimaland, which owns the 324-acre land (comprising seven parcels), and BRDB’s unit Magna Senandung SB entered into a deed of termination on Monday. The property developer did not provide any reason for the cancellation. (StarBiz)

The Media Shoppe: CEO ceases to be a substantial shareholder. The Media Shoppe (TMS) CEO Chan Hooi Guan has ceased to be a substantial shareholder of TMS following the disposal of his shares in Master Knowledge SB. Master Knowledge is the single largest shareholder of TMS with 7.6% stakes or 66m shares in TMS. Another shareholder, Lee Chi Yeng, also ceased to be a substantial shareholder of TMS through the disposal of her shares in Master Knowledge. (StarBiz)

Matrix Concept: 2Q earnings slump as revenue falls. Matrix Concept Holdings’ net profit for the 2QFY15 fell 30% to RM29.9m on the back of revenue which dropped 26% to RM120.4m. The decline was mainly due to the lower revenue recognition in the quarter under review. The developer’s total unbilled sales from ongoing projects amounted to RM540m as at June 30 and that will last it until 2018. (StarBiz)

IPO: Bison offers 81m shares. Newsstand and convenience store operator Bison Consolidated is offering 80.6m shares for its proposed IPO on the Main Market of Bursa Malaysia. Of the amount, 62.3m shares are for institutional offering while 18.3m shares are for retail subscription. Institutional offering represented 20.1% while retail portion represented 5.9% of its enlarged issued and paid-up capital. Bison owns and runs newsstands such as myNEWS.com and newsplus. (StarBiz)

MARKET UPDATE

The FBM KLCI might recoup some of the losses yesterday as US and European stocks started the week strongly, lifted by the boom in mergers and acquisitions and shrugging off further signs of weakness in the Chinese economy. The market sentiment was buoyed by news that Warren Buffett is paying c.USD32bn for Precision Castparts Corp. Key monthly jobs data, released last Friday showed the US economy added 215,000 jobs in July, slightly below market forecasts but keeping alive the prospect of the Federal Reserve raising interest rates in September, the first increase since the financial crisis. At the closing bell, the Dow Jones Industrial Average added 241.79 points or 1.4% to 17615.17, marking the Dow’s first closing gain of August. Meanwhile, the Nasdaq Composite rose 58.25 points or 1.2% to 5101.80 and the S&P 500 gained 26.61 points or 1.3% to 2104.18. Energy firms in the S&P 500 gained 3.1% as a rebound in oil prices lifted beaten-down shares. As for economic data, the update on U.S. inflation will be released later this week, with a reading on producer prices in July. Across the Atlantic, European stocks also extended their gains led by gains by miners. Performance-wise, FTSE 100 closed higher by 0.3% at 6,736.22, Germany’s DAX 30 added 1.0% at 11,604.78 and France’s CAC 40 tacked on 0.8% to 5,195.41. Oil prices reversed an early loss, jumping 2.5% to USD44.96 a barrel.

Back home, the FBM KLCI slumped to their lowest in more than two years amid a fall in the ringgit and weak oil prices. The bellwether index shed 1.68% to 1,654.37 with 1.91bn shares changed hands valued at RM1.99bn. The losses were broad based with 923 decliners and only 94 gainers. In the region, stocks in China on Monday posted their biggest one-day gain in a month on expectations Beijing will maintain its market support by buying shares. The Shanghai Composite Index jumped 4.9% higher at 3,928.42. Elsewhere, the Hang Seng Index fell 0.1%, Nikkei Stock Average rose 0.1%, S&P ASX 200 advanced 0.4% and Kospi lost 0.4%.

Source: PublicInvest Research - 11 Aug 2015