Malaysia - Equity

The stock market closed firmer yesterday as investors increased their holdings following report of the country's strong economic growth data of 10.1 per cent for the first quarter.

At the closing bell, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) rose 2.82 points to close at 1,346.92, pushed by gains mostly in Maybank.

Prime Minister Datuk Seri Najib Tun Razak said yesterday that the 10.1 per cent growth marked the highest first-quarter performance since 2000 which was at 11.7 per cent. With this, the gross domestic product for this year had been revised upwards to 6 per cent, he said.
The Finance Index rose 68.83 points to 12,121.35 and the Industrial Index edged up 0.89 point to 2,743.82 while the Plantation Index dropped 17.88 points to 6,417.73.

The FBM Emas Index advanced 24.65 points to 9,054.7 and the FBM70 increased 44.851 points to 8,870.37 while the FBM ACE Index declined 13.91 points to 3,964.04.

Gainers led losers by 396 to 253 while 285 counters closed unchanged, 443 untraded and 34 suspended.

On Bursa Malaysia, top gainers DFZ Capital and Fraser & Neave Holdings rose 22 sen each to be at RM4.20 and RM11.30 respectively and United Malacca rose 20 sen to RM8.02.

Of the actives, Advance Information dropped 6.5 sen to 16 sen, Transmile Group rose 14 sen to 50 sen and Maxbiz Corp went down 2 sen to 23.5 sen.

Meanwhile, among the heavyweights, Maybank gained 12 sen to RM7.72 after posting higher a pre-tax profit of RM1.455 billion for its third quarter ended March 31, compared to RM653.9 million during the same period last year.

CIMB Group rose 4 sen to RM14.48, Maxis and MISC were both flat at RM5.33 and RM8.33 respectively and Tenaga Nasional added 10 sen to RM8.49.

Maxbiz Corp Bhd, which received an unusual market activity (UMA) query from Bursa Malaysia yesterday, said it was not aware of any activity that may have contributed to the UMA. The company said it did not have any corporate developments relating to the group's business and affairs that had not been previously announced. It was also not aware of any rumour or report concerning the business and affairs of the group nor any other possible explanation to account for the UMA.

Separately, the company said in a late announcement to Bursa that there was a deviation of 10% or more between the loss after tax and minority interest (LATMI) stated in the announced unaudited financial statements and the audited financial statements for the financial year ended Dec 31, 2009. Its LATMI for the year ended Dec 31, 2009 of RM2.904mil stated in the announced unaudited financial statements had deviated by 17.26% to LATMI of RM3.510mil as stated in the audited statement, it said One of the main reasons was the auditors had reversed Maxbiz's revenue by RM408,785.06.
RM

The ringgit ended higher against the US dollar yesterday on the back of the country's strong gross domestic product (GDP) data for the first quarter this year, dealers said. At 5pm, the local currency was traded at 3.1950/1000 compared with 3.2030/2070 yesterday.

A dealer said the ringgit's strength hinged on the inflow of funds into the equity markets.

The ringgit was mostly higher against other major currencies.

The local currency was higher against the Singapore dollar at 2.3127/3170 from 2.3182/3232 on Wednesday.

The ringgit even appreciated against the yen to 3.4230/4294 from 3.4463/4521 previously.

The ringgit was stronger against the euro at 4.0199/0272 from 4.0710/0767 on Wednesday and higher against the British pound at 4.7209/7296 from 4.8093/8163 previously.

CPO

Crude palm oil (CPO) futures on Bursa Malaysia Derivatives were weak yesterday, hitting an almost three-week low on lack of demand amid a stronger ringgit, dealers said. The drop in the CPO futures was in line with the fall in the soyabean futures market.

May 2010 and June 2010 declined RM35 each to settle at RM2,511 a tonne and RM2,486 respectively.

Similarly, July 2010 and August 2010 declined RM35 each to RM2,472 and RM2,464 respectively.

News

Bank Negara Malaysia yesterday raised the Overnight Policy Rate (OPR) by another 25 basis points (bps) to 2.5 per cent, in a further move to normalise monetary conditions. The move to raise borrowing costs, through the benchmark interest rate, had been widely anticipated by the market. Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said that at the new level, the stance of the monetary policy continues to be accommodative and supportive of economic growth. The central bank will revise its annual growth forecast during the presentation of the fiscal budget in October.

Prime Minister Datuk Seri Najib Razak said the government has no intention of covering up any weaknesses or losses in government-linked companies (GLC) as it was against the principle of sound corporate governance.Sime Darby Bhd has asked group chief executive Datuk Seri Ahmad Zubir Murshid to leave the group ahead of his contract expiry on November 26 2010 as the group deals with losses in its energy division.
Analysts expect Sime Darby Bhd to make losses in its third quarter ended March 2010 as it has to make provisions to cover cost overruns in its energy and utilities division.

Sime said its second-half numbers would be hit by a RM964 million negative impact due to cost overruns in four projects. The group has already booked losses of RM867 million on two projects before.

DIGI.COM Bhd, the country's third largest mobile operator, expects its margins to be under pressure this year, partly as a result of handset subsidies. The company, which registered an Ebitda (earnings before interest, tax, depreciation and ammortisation) margin of 44.6 per cent in first quarter this year, said margins may decline to about 43 per cent level by year-end. The company is in an aggressive mode to woo postpaid subscribers this year, after it has resolved most of its bad debt issues. Its bad debts are currently in a "manageable" level.

Among its strategy to sign-up more postpaid customer base include subsidies on mobile phones and smart phones such as the trendy Apple iPhone 3GS. The company has allocated some RM700 million in capital expenditure (capex) this year, which will mainly be used to strengthen its mobile coverage network. More than half of its allocated capex will be spent on expanding its 3G coverage, which currently is at 30 per cent.

National oil company Petroliam Nasional Bhd (Petronas), as part of an international consortium with Spanish and Indian companies, has been awarded a contract by Petroleos De Venezuela SA (PDVSA) to develop and produce hydrocarbons in Vene-zuela. This marked the maiden entry of Petronas into Vene-zuela. Petronas and its four consortium partners - Spain's Repsol YPF, India's ONGC Videsh Ltd, Indian Oil Corp Ltd and Oil India Ltd - on February 10 this year signed a deal to develop hydrocarbons from the Carabobo Project in the Orinoco region. It was witnessed by Venezuelan President Hugo Chavez Frias. Petronas didn't disclose how much the deal is worth.

Oman Air plans to sign a code- share agreement with national carrier Malaysia Airlines (MAS) by June 1.Currently, KL is only Oman Air's second destination in the east, the other being Bangkok. The carrier started four weekly flights between Muscat and KL on May 1

Air Asia will be flying to Teheran, Iran, from July onwards, expanding its range of destinations in the Middle East. Transport Minister Datuk Seri Ong Tee Keat said this will make the airline the only low-cost carrier to serve the region. He said the flights, which will run five times a week, was consistent with the government's aim to strengthen greater air links with the Middle East.

New Hoong Fatt Holdings Bhd, an automotive parts manufacturer, will spend RM36 million in capital expenditure this year, which include increasing factory capacity by 10 percentage points to 80 per cent this year to tap on the rebounding automotive market in the country and the region. Its managing director Chin Jit Sin said of the RM36 million, RM8 million will be used to build a new factory on 2.4ha next to its existing two plants Klang, Selangor.

There is scepticism that Ascot Sports Sdn Bhd, in which Berjaya Corp Bhd has proposed to acquire a 70% stake for RM525mil, can achieve RM375mil minimum profit guarantee over three years or an average of RM125mil a year. This is because Ascot Sports, in its financial statement for the year ended Dec 31, 2008, has recorded a consolidated net liabilities of RM11.2mil and loss after tax of RM4.6mil To recap, Berjaya Corp through AmInvestment Bank Bhd announced on Wednesday a proposal to buy the stake from Tan Sri Vincent Tan, who is also chairman and chief executive officer of Berjaya Corp. His son, Datuk Robin Tan, who is also chief executive officer of Berjaya Land Bhd, owns the remaining stake in Ascot Sports.The sale comes with a minimum profit guarantee of RM375mil over three years or an average of RM125mil. The acquisition is pegged to a price-to-earnings (P/E) ratio of six times.

The RHB banking group will revise its base lending rate per annum for RHB Bank Bhd and RHB Islamic Bank's base financing rate from 5.80% to 6.05% with effect from Monday. It said in a statement that the new FD rates, also effective May 17, were 2.5% for 1-5 months (previously 2.25% for 1-11 months), 2.70% for 6-11 months, 3.00% for 12 months (previously 2.60%) and 3.10% for 13-35 months. The Shin Yang group of companies will list its timber operations after its shipping company has made it to the Main Market of Bursa Malaysia Shin Yang is currently the biggest player in downstream timber processing in Sarawak. The group owns seven plywood mills in Bintulu and Miri and veneer plants Shin Yang Shipping Corp Bhd, a home-grown leading shipping company, held its underwriting ceremony yesterday for its forthcoming initial public offering (IPO) scheduled for the middle of this year.

Malaysia is pressing ahead with a sovereign bond issue despite recent unease in regional credit markets and has mandated CIMB and HSBC to arrange the sale, sources said yesterday. But the government has not decided when to launch the sale given the current volatility, said one source familiar with the plan. The issue, Malaysia's first sovereign since 2002, would be of a "decent benchmark size" but is likely to be smaller than national oil firm Petroliam Nasional Bhd's (Petronas) recent US$4.5 billion (RM14.4 billion) bond, the source added.
There was no other details immediately available, including the tenor.The source said the government had not decided if the sale would consist of conventional and Islamic paper or only sukuk. A second source, whose bank bid for the deal but did not get it, said that CIMB and HSBC had won the mandate. CIMB and HSBC declined to comment.

Results

Top lender Malayan Banking Bhd (Maybank) saw net profit double to RM1 billion from RM503.3 million in its third quarter, helped by a strong increase in non-interest income and lower bad-loan provisions. It was its best quarterly performance ever, leading the group to raise its key performance targets for the full year ending June 30 2010. For the nine months so far this year, net profit stood at RM2.9 billion compared with RM1.8 billion before. Revenue improved to RM13.8 million from RM12.7 billion. Revenue in the third quarter grew to RM4.6 billion from RM4.3 billion a year ago. Maybank's non-interest income in that quarter surged by 82 per cent as it posted higher unrealised gains on revaluation of derivatives, higher income from fees and foreign exchange gains as the ringgit strengthened. Net interest income increased by 8 per cent to RM1.67 billion, while income from Islamic banking grew 4 pe cent to RM341.5 million. Provisions for bad loans fell by
nearly half to RM215.5 million. Its net non-performing loan ratio improved further to 1.4 per cent from 1.6 per cent as at end-June last year.

Green Packet Bhd, a telecommunications solutions and broadband service provider, believes the worst is over and expects remaining quarters to perform better than its fiscal first quarter. Although the firm's first quarter net loss expanded to RM44 million, from RM22 million in the same period last year, the company remained optimistic that it will be able to achieve an Ebitda (earnings before interest, tax, depreciation and ammortisation) break even by the end of this year. For the first quarter ended March 31 this year, it posted a narrower Ebitda loss of RM29.8 million, an improvement from a loss of RM56.2 million in the fourth quarter of last year. For the January-March period, its sales more than doubled to RM86.8 million, from RM41.5 million a year ago. Its quarterly sales were also 53 per cent higher quarter-on-quarter.

Kuwait Finance House (Malaysia) Bhd (KFHMB) recorded a net loss of RM30.9 million for the year ended December 31, 2009 following higher allowances and impairment for losses on financing of RM184.7 million.
The group's revenue for the year stood at RM485.0 million, the company said in a statement today. Despite the tough operating environment, KFHMB said it continued to provide support for its customers with a total distributable income amounting to RM162.3 million.

Sunrise Bhd, which announced a net profit of RM23.52 million for the third quarter ended March 31, 2010 (3QFY10) on the back of RM112.16 million in revenue, is confident of the company's prospects in the current financial year given its substantial locked-in unbilled sales of RM907 million as at April 30, 2010.Unbilled sales as at April 30, 2010 stand at RM907 million, up from RM714 million at end-2009, underpinning the company's earnings strength. Unbilled sales will rise further as RM164 million worth of sales (mostly from 28 Mont'Kiara) are pending SPA completion," Sunrise said in a separate statement.Earnings per share (EPS) for 3QFY10 stood at 4.75 sen compared with 6.13 sen in 3QFY09. In the previous corresponding quarter, the company achieved a net profit of RM30.57 million and revenue of RM112.16 million. For the nine-month period, Sunrise posted a lower net profit of RM95.30 million on the back of RM460.74 million in revenue compared with
RM113.05 million and RM566.58 million, respectively, a year earlier while EPS was 19.24 sen. The higher net profit in the previous corresponding period included a one-off gain of RM19.4 million from the sale of office space in Plaza Mont'Kiara and an Australian asset. Excluding these one-off gains, its underlying net profit for the nine months to March 31, 2010 would have increased by 2% year-on-year from an adjusted net profit of RM93.6 million in the FY09 period.

JT International Bhd (JTI) posted a 14.89% rise in net profit to RM37.8 million for the first quarter ended March 31, 2010 from RM32.99 million a year earlier on higher sales volume and higher cigarette prices.
Announcing its results on Thursday, May 13, the country's second-largest tobacco manufacturer said revenue increased by 7.4% to RM313.2 million from RM291.5 million a year earlier. Basic earnings per share were 14.44 sen. The stock closed at RM5.36 on Thursday, down 12 sen. On a quarterly basis, JTI's net profit more than doubled from RM18.5 million in the preceding quarter.

ASIA

A pledge by Spain to cut its budget deficit and positive European economic data eased concerns that the eurozone crisis could hit the global recovery, lifting Asian markets yesterday.

Sentiment was also bolstered after US shares rallied on data showing exports and imports soared, pointing to continued improvement in global trade, while a flurry of strong corporate earnings results lifted Japanese shares.

Fears that the eurozone crisis could derail a global recovery eased after Madrid announced deep cuts to public sector salaries, Brussels sought unprecedented powers to scrutinise budgets and Greece received an IMF loan.
Singapore: Stocks fell back to finish lower after posting small gains earlier in the day. The benchmark Straits Times Index closed down 0.43 per cent, or 12.41 points, at 2,867.92.

Losers were led by a 1 per cent drop in Singapore Telecommunications after Southeast Asia's biggest telco warned of lower earnings from Singapore and India in the coming year having beat expectations with a 6.6 per cent rise in quarterly profit.

Impairment losses on intangible assets widened Genting Singapore Plc's losses to S$396.2 million (RM920.72 million) for the first quarter ended March 31 (1QFY10) compared with S$31.8 million a year ago. The casino operator, a subsidiary of Genting Bhd, said it had made a hefty impairment loss of S$478.1 million relating to its operations in the UK.However, the group described the impairment loss as "not meaningful". It noted that excluding the lump sum, Genting Singapore actually recorded a net profit of S$81.8 million. The net profit was attributed to the rise in earnings before interest, tax, depreciation and amortisation (Ebitda) to S$108.9 million compared to a loss of S$11.6 million a year ago following the opening of the integrated resort on Sentosa Island, Resorts World Sentosa (RWS), in Singapore. Other factors that contributed to the rise in its profits were its UK casino operations, which generated an Ebitda of S$16.7 million compared with
S$8.5 million in 1QFY09, it said.

Budget carrier Tiger Airways said yesterday it had earned S$28.2 million (S$1 = RM2.32) in the year ended March, in a dramatic turnaround from huge losses the previous year. Losses in the previous financial year totalled S$50.8 million, the carrier said in its first full-year report as a listed company, after its listing on Singapore's stock market in January. The robust annual results were supported by a 53.8 per cent increase in passenger numbers. Total revenue was S$486.2 million, up 28.6 per cent from S$378 million the year before.

Hong Kong:

Shares rose 1.04 per cent yesterday, in line with regional markets, as dealers took their cue from a strong lead on the mainland and Wall Street.

The benchmark Hang Seng Index added 209.97 points to close at 20,422.46.

While the market was boosted by China shares, Europe holds the key to the sustainability of the local market's gains, traders said.

Sydney rose 1.74 per cent, or 79.4 points, to close at 4,652.5, with dealers welcoming news that employment was on the rise.

Australia & New Zealand Banking Group Ltd said it was "shocked" to learn that a drug trafficking ring was allegedly operating from a bank office in Melbourne, and is helping police with the investigation. Seven ANZ Bank employees have been allegedly linked to dealing drugs and another seven to buying from them, the Herald Sun newspaper reported today, citing an unidentified person.

Tokyo ended 2.18 per cent, or 226.52 points, higher at 10,620.55.

"On top of strong performances in the global market, Japanese corporate earnings are helping today's mood," said Hikaru Sato, senior technical analyst at Daiwa Securities Capital Markets.

Shanghai rose 2.21 per cent or 54.79 points, to end at 2,710.51, helped by banks and telecom stocks on bargain hunting after recent declines caused by fears that Beijing will move to tighten credit to cool the property market.

"The market has fallen so much, it's only natural that there will be some technical rebound," Qiu Yanying, an analyst at TX Investment, said.

Sentiment was helped by data out of the US showing its trade deficit widened for the second consecutive month in March to its highest level since December 2008.

In other markets:

* Manila closed 1.78 per cent, or 58.28, higher at 3,327.69.

The market is at its highest level for more than 27 months following Monday's relatively peaceful general election.

* Seoul closed 1.90 per cent, or 31.55 points, higher at 1,694.58.

* Taipei rose 2.21 per cent, or 167.87 points, to 7,770.57.

* Bangkok lost 0.93 per cent, or 7.17 points, to close at 766.55.

The index was hit as tensions in the capital began to rise when the government issued a warning to the "Red Shirts" that it would seal off their protest site later Thursday. * Mumbai rose 0.41 per cent, or 70.06 points, to 17,265.87. Jakarta was closed for a public holiday.
EUROPE

European shares edged up yesterday as strong earnings from BT and Sainsbury offset rising concerns that fiscal tightening in Europe could result in a slowdown in the region's growth.

The FTSEurofirst 300 index of top European shares closed 0.1 per cent higher at 1,049.89 points, its highest closing level in more than a week in a volatile session where the index swung between positive and negative territory.

The benchmark London FTSE 100 index of leading shares gained 0.93 per cent to 5,433.73 points.

In Paris, the CAC 40 edged up 0.06 per cent to 3,731.54 points while in Frankfurt the DAX jumped 1.11 per cent to 6,251.97 points.

After Spain cut public salaries, Portuguese ministers yesterday took their turn to enforce a "fiscal shock" to stop the country becoming the next battleground in Europe's debt crisis. Portugal's Socialist government has agreed tax hikes, wage cuts and to freeze major public works such as a new Lisbon airport as it battles to reduce Portugal's public deficit from a record 9.4 per cent to target of a 5.1 percent of gross domestic product by next year, reports said. The Jornal de Negocios business daily described the measures as a "fiscal shock". "All taxes are going up," reported Diario de Noticias. Portugal's public debt, which came to 76.6 per cent of GDP last year, is projected to widen to 86 per cent in 2010, beyond the 60 per cent eurozone rule.

US

Stocks slumped Thursday, with the Dow losing 114 points, as investors stepped back after propelling markets 5% higher in just three days.

The dollar strengthened versus the euro, dragging down dollar-traded oil, gold prices and stocks.

The Dow Jones industrial average lost 114 points, or 1%. The S&P 500 index lost 14 points, or 1.2% and the Nasdaq composite lost 30 points, or 1.3%.

Labor market: Approximately 444,000 Americans filed new claims for unemployment last week, according to the weekly jobless claims report from the Labor Department, the lowest number since late March. Claims stood at a revised 448,000 the previous week. Economists surveyed by Briefing.com expected claims to fall to 440,000.

It was the fourth consecutive week of declining claims, but the improvement hasn't been sufficient to drive real job growth.

Continuing claims, a measure of Americans who have been receiving benefits for a week or more, rose to 4,627,000 from 4,615,000 the previous week. Economists expected 4,570,000 on average.

Banks: Reports Thursday said some of the financial industry's leading corporations are facing investigations at both the federal and state level, as inquiries into the events that contributed to the crisis accelerate.

The Wall Street Journal cited a source that said the Securities and Exchange Commission has sent civil subpoenas to JPMorgan Chase, Citigroup, Deutsche Bank and UBS .

New York Attorney General Andrew Cuomo's office confirmed reports that it is investigating whether many of the same firms provided misleading information to credit rating agencies.

In addition to UBS and Deutsche Bank, Cuomo is looking at Goldman Sach, Morgan Stanley , Credit Suisse, Citigroup, Credit Agricole and Merrill Lynch, which has since been bought by Bank of America .

Bank stocks as a whole were modestly lower, with the KBW Bank index off 0.3%.

Technology: Apple and online auctioneer eBay both gained after reportedly receiving upgrades from Morgan Stanley.

But Cisco Systems shares fell 4% even after the company reported higher sales and earnings that beat estimates during what its chief executive called the company's "best quarter" ever.

World markets: Stocks around the globe were mostly higher. In Europe , Germany's DAX gained 1.1%, France's CAC 40 was barely changed and the London FTSE rose 0.9%.

Asian markets rose, with Japan's Nikkei gaining 2.2% and Hong Kong's Hang Seng adding 1%.

Dollar and commodities: The dollar gained 0.6% versus the euro and fell 0.6% against the yen. The euro remains at a 14-month low versus the dollar.

U.S. light crude oil for June delivery fell $1.25 to settle at $74.40 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery lost $13.90 to settle at $1,229.20 after settling at a record high of $1243.10 Wednesday. Bonds: Treasury prices rose, pushing the yield on the 10-year note down to 3.56% from 3.57% late Wednesday.