Subject: Market Updates: 17 May 2010

Malaysia - Equity

The stock market closed lower across the board as investors retreated from the market ahead of the weekend and lack of market moving factors.



At 5pm, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) ended 7.62 points easier at 1,339.3, dragged by losses made by Sime Darby Bhd, the second largest company in terms of KLCI weightage.

Despite the 10.1 per cent economic growth announced on Thursday, the favourable data is yet to have any impact on the local bourse as external factors like the credit crisis in Eurozone and Sime Darby's anticipated losses in the second-half kept investors at bay.

The FBM KLCI, which opened 7.01 per cent lower at 1,339.91, moved between 1,337.36 and 1,341.23 throughout the day.

The Finance Index slipped 10.3 points to 12,111.05, the Industrial Index erased 43.12 points to 2,700.70 while the Plantation Index added 7.74 points to 6,425.47.

The FBM Emas Index declined 38.96 points to 9,015.74, the FBM70 edged up 0.52 of point to 8,870.89 but the FBM Ace Index advanced 50.07 points to 4,014.11.

Decliners led advancers 371 to 293 while 260 counters closed unchanged, 453 untraded and 32 others were suspended.

Total turnover dropped to 682.221 million shares, worth RM1.084 billion, from Thursday's close of 905.772 million shares valued at RM1.04 billion.

Topping the actives and losers' list was Sime Darby, which lost 40 sen or more than 5 per cent to RM8.25. It lost 42 sen to RM8.23 at the opening bell dragging the broader FBM KLCI index lower by 7.6 points to close at 1,339.3 points.

Other losers, British American Tobacco dropped 28 sen to RM43.20 and Bintulu Port Holdings was 14 sen lower at RM6.20.

Other actives include Olympia Industries, which added 4.5 sen to 27 sen, while Advance Information shed 2.5 sen to 13.5 sen.

Among the heavyweights, Maybank and Maxis were both unchanged at RM7.72 and RM5.33, respectively, CIMB Group lost 8 sen to RM14.40 while Tenaga added 1 sen to RM8.50.

The Employees Provident Fund (EPF), undeterred by Malaysian Resources Corp Bhd's (MRCB) minority shareholders' decision not to accept its conditional takeover offer in late March, has been buying up the shares in the open market. Filings with Bursa Malaysia showed the EPF acquired 41.998 million shares or 3.07% in the construction and property development company from March 23 to May 10. The filings showed there had been two sizeable acquisitions of MRCB shares ? 12.38 million shares on March 25 and 22.82 million shares the next day. Following the acquisitions, its shareholding in MRCB has increased to 569.898 million shares or 41.67%, based on the paid-up of 1.37 billion shares. To recap, on March 3, the EPF had served a conditional takeover offer on MRCB for a cash consideration of RM1.50 per share. The EPF had to make the offer as it held more than 33% stake after the rights issue.

RM

The ringgit ended higher against the US dollar Friay on strong buying interest, with sentiment also boosted by the country's bullish economic outlook.

At 5pm, the ringgit was traded at 3.1835/1860 compared with 3.1950/1000 on Thursday . The dealers said sentiment seems to be improving, after better-than-expected gross domestic product data for the first quarter of this year.

The ringgit was mostly higher against other major currencies.

It was higher against the Singapore dollar at 2.3079/3160 from 2.3127/3170 on Thursday but fell versus the yen to 3.4457/4511 from 3.4230/4294 previously.

The ringgit was stronger against the euro at 3.9818/9865 from 4.0199/0272 on Thursday and higher against the British pound at 4.6424/6477 from 4.7209/7296 previously.

CPO

CRUDE palm oil (CPO) futures on Bursa Malaysia Derivatives ended at a three-and-half week low Friday on concerns over the European debt crisis and China's move to tighten its monetary policy, dealers said.

The market also took the cue from weaker performance on the local bourse and lower crude oil prices.

May 2010 eased RM1 to RM2,512 a tonne while both June 2010 and July 2010 lost RM16 each to RM2,470 and RM2,456, respectively. August 2010 was down RM17 to RM2,447.

News

Malaysia's second largest banking group, CIMB Group Holdings Bhd, plans to raise its stake in Indonesia's fifth largest lender by up to 19.7 per cent to better leverage on that country's fast-growing economy.
If successful, its shareholding in Bank CIMB Niaga will increase to 97.9 per cent from 78.3 per cent at present. CIMB announced in a stock exchange filing that it would buy about 17 per cent of the lender from Khazanah Nasional Bhd for RM1.7 billion. Khazanah, which is Malaysia's investment arm, has the option of selling to CIMB another 2.7 per cent stake for RM254 million if it wants to dispose of its entire holdings in CIMB Niaga. As payment, CIMB will issue up to 134 million new shares to Khazanah priced at RM14.50 each. Khazanah currently owns 28 per cent of CIMB.

The country's largest lender Malayan Banking Bhd (Maybank) is considering a dual listing in Indonesia once rules there permit this, its chief said. It is the second Malaysian lender to have voiced interest in a dual-listing there after CIMB Group Holdings Bhd earlier this month.Maybank already has a subsidiary listed on the Indonesian stock exchange, namely Bank Internasional Indonesia. Wahid said the group, in its pursuit of growth, is looking to add more Maybank branches in the region. In Cambodia, it plans to add three branches to its existing eight over the next one year, while in China it aims to convert a representative office in Beijing into a full-fledged branch, and also set up two new branches in other cities. It has only one branch in China now, in Shanghai.


Soft drinks and dairy products group Fraser & Neave Holdings Bhd (F&N) is divesting its entire stake in its glass manufacturing arm, Malaya Glass Products Sdn Bhd (MGP), to Berli Jucker Public Co Ltd (BJC) and ACI International Pty Ltd for US$221.7 million (RM707 million). With the settlement of intercompany loans, total proceeds from the disposal will be about US$259.6 million (RM828 million). F&N chief executive officer Tan Ang Meng said the group decided to exit from the glass manufacturing business to unlock the value of its investment in MGP and enable the group to fast-track its vision to be a regional food and beverage (F&B) enterprise.

Metech Group Bhd plans to sell a controlling 51 per cent stake in its unit Metech Aluminium Industries Sdn Bhd to Tong Herr Resources Bhd for RM35.1 million. The two companies entered into a sale and purchase agreement Friday for the proposed sale.

Genting Plantations Bhd's unit, Asianindo Holdings Pte Ltd, has signed a US$145 million (RM463 million) syndicated term loan to fund its plantation business in Indonesia. The company received the 10-year loan from Oversea-Chinese Banking Corp Ltd and DBS Bank Ltd, Labuan branch.



MAIKA Holdings Bhd's board of directors say they are not seeking an alternative person to make a takeover offer for the company's shares other than G Team Resources & Holdings Bhd. Maika confirmed that it has received the takeover offer from investment holding company G Team to buy over all of its 125 million voting shares at 80 sen per share in cash.

Sealink International Bhd has won a long-term charter contract for an offshore support vessel to Australia and sold another vessel to an overseas client last March. The company told Bursa Malaysia that both deals were worth a combined RM88 million. The charter deal is for a period of three years, while the vessel sold is expected to be delivered around year-end.



Digital township I-City signed a memorandum of understanding (MOU) with the Malaysian-Russian Business Association (Malruba) and Hexagon Solutions Sdn Bhd to set up an innovation centre, which is expected to be completed by year-end. The centre will occupy about 15,000 to 20,000 sq ft of office space in i-City and be equipped with laboratory facilities, research and development facilities, an information and communications technology (ICT) library, a lecture hall and a showroom for innovative ICT products.

Pacificmas Bhd has received Bank Negara Malaysia's nod to start talks with Fairfax Asia Ltd over sale of its subsidiary, The Pacific Insurance Bhd. PacificMas said the company and Fairfax must obtain the Minister of Finance's approval, with the recommendation of Bank Negara, before entering into any agreement to dispose of the insurance unit.

DIGI.COM Bhd's subsidiary DiGi Telecommunication Sdn Bhd (DiGi Tel) and Baraka Telecom Sdn Bhd have mutually terminated the Mobile Virtual Network Operator (MVNO) Roaming Agreement, which was signed a year ago. DiGi.Com said the termination of the agreement was due to Baraka re-considering its MVNO business in Malaysia.

Malaysia Airports Holdings Bhd has lined up investors for a 20ha site in the vicinity of the KL International Airport Aeropolis in Sepang, Selangor.

Under its five-year development plan, the airport operator has earmarked some 1,092ha surrounding the KLIA for commercial development to increase its non-aeronautical income. MAHB land development general manager Muhd Najib Mohd Rawi said it was evaluating proposals from interested investors.

Information technology firm CBS Technology Bhd is developing a website to help Malaysian businesses tap a potential market of 600 million Muslims in the region.

The website, scheduled to be launched in the third quarter of the year, will enable small- and medium-sized enterprises (SMEs) to market their halal products and services online.

BANK Negara Malaysia is finalising the new third-party motor insurance scheme and is expected to submit its proposal to the Finance Ministry by July for approval by the Cabinet, said its Deputy Minister Datuk Dr Awang Adek Hussin. He said the central bank was collecting feedback from relevant parties before getting back to the ministry.

A bizarre tussle between Maxbiz Corp Bhd, a loss-making fabric dyeing house, and its creditors could hamper the company's plan to return to the black next year. The disagreement centres around an 8ha site in Malacca.
Maxbiz is selling it to JPC Property Management Sdn Bhd for RM22.5 million, enough to almost settle its outstanding redeemable convertible secured loan stocks of RM22.6 million. But creditors want to sell it for less, at RM15.3 million. Maxbiz chief executive officer Datuk Vincent Leong said Pacific Trustees Bhd (PTB), the agent acting on behalf of creditors, still plans to go ahead and auction the land in Batu Berendam.

Miri based Shin Yang Shipping Corp, which is en route to a listing on the Main Market of Bursa Malaysia, hopes to raise RM176 million in its initial public offering . The proceeds will be used to part finance the construction of seven new vessels, expand existing shipyard and build another shipyard in Tanjung Manis, Sibu.
The company, which aims be listed by the middle of the year, is offering 176,386 million new ordinary shares of RM1 in the offer.

Malaysia will begin cross-trading shares with Thailand by the second half of next year, followed by Singapore and the Philippines, in a regional drive to lure more overseas funds, the head of Bursa Malaysia said.A Southeast Asian trading link may help trim costs, attract foreign investors and compete with the emerging markets of China and India. The exchanges of Malaysia, Indonesia, Singapore, Thailand and the Philippines, on February 23 2009, signed a preliminary agreement to develop links for cross-border trading among the Association of Southeast Asian Nations (Asean)
Singapore and the Philippines will follow soon after Thailand, though not necessarily next year, Yusli said. Asean's member states are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Bursa has also received "expressions of interest" from North Asian exchanges about the possibility of joining the network, Yusli said.

Results

AMMB Holdings Bhd reporteda record net profit, breaching the billion-ringgit mark, for the financial year ended March 31 2010.

This was achieved on the back of higher revenue and better-than-expected growth in loans and deposits. Net profit increased 17.2 per cent to RM1.01 billion, while revenue rose 22.2 per cent to RM3.58 billion. AMMB's net non-performing loans (NPLs) showed further improvement at 1.5 per cent, from 2.6 per cent previously.n the year reviewed, AMMB's higher net profit was contributed by all business divisions. Investment banking profit more than doubled (142.3 per cent) due to improved capital and equity markets. Combined life and general insurance profit increased four-fifths; corporate and institutional banking rose a fifth; while business and retail banking grew 10.8 per cent and 8.1 per cent respectively. Net loans increased 13.1 per cent, while the ratio of loans to deposits reached 91.7 per cent. The risk-weighted capital adequacy ratio was 15.8 per cent.




IOI Corp Bhd's net profit for the quarter to March 2010 increased almost 15-fold to RM549 million compared with RM37.3 million a year ago, mainly on higher contributions from the property and manufacturing segments. The higher profit is also attributable to unrealised translation gain on US dollar-denominated borrowings of RM231.5 million compared with a loss of RM232.4 million in the third quarter of 2009 The plantation segment's profit of RM282 million for the third quarter 2010 is in line with the comparable quarter in 2009. The slightly lower fresh fruit bunch production for the current quarter was cushioned by higher average crude palm oil prices realised. Average crude palm oil prices realised for third quarter of this year was RM2,480 a tonne compared to RM2,274 a tonne for the third quarter of 2009. The resource-based manufacturing segment reported an operating profit of RM128.6 million for the third quarter of this year compared to RM109.6 million in the third quarter of 2009. The property segment's operating profit of RM124.7 million for the third quarter of this year is 76 per cent higher than the profit reported for the third quarter of 2009, contributed mainly by an overall increase in sales.

ASIA

Dealers moved to offload euros in Asian trade Friday, unconvinced that Europe's economic problems had been laid to rest by a trillion-dollar rescue package put together by the EU and the IMF.

The unit later dived to 1.2447 dollars in London, its lowest point in 18 months, despite efforts by eurozone countries to cut spending and grapple with the region's debt problem.

A negative lead from Wall Street also hit sentiment, after US shares fell in response to a bomb blast outside a prison in Greece and the spectre arose of criminal charges against a group of US banks.

"Four days on from Monday's mega European bailout package the market finds itself pondering the medium-term impact of Europe's massive debt burden," David Croy, strategist at ANZ bank in Wellington, said.

SINGAPORE: SHARES slipped as regional sentiment weakened amid doubts that troubled European nations can overhaul their poor public finances and fears that t growth would suffer even more if austerity moves succeed.

The benchmark Straits Times Index closed down 0.44 per cent, or 12.71 points, at 2,855.21.

DBS slid 12 cents to S$14.36, Singapore Telecom eased a cent to S$2.96 and Singapore Airlines was 16 cents off at s$14.80.

Genting Singapore, which operates one of the city-state's two mega casinos, reported its losses rose 12-fold in the three months to March, hurt by impairment losses on its UK casino operations.
Genting Singapore, a unit of Malaysia's Genting Bhd (, reported a net loss of S$396 million (S$1 = RM2.31) for the first quarter, widening from S$32 million a year ago. Resorts World at Sentosa, and its casino achieved EBITDA of S$109 million.

HONG KONG: STOCKS fell 1.36 per cent Friday as investors worried that spending cuts in Europe could stifle the global economic recovery and slash profits for local firms such as fashion retailer Esprit Holdings.

The benchmark Hang Seng Index ended down 277.03 points at 20,145.43, its lowest close in a week.

Investors remain cautious amid negative local and global factors

Tokyo fell 1.49 per cent, or 158,04 points, to 10.462,51, with exporters dragging the index lower due to the yen's recent relative strength.

Japan's Shinsei Bank and Aozora Bank confirmed yesterday that a merger planned for later this year has been scrapped, with the mid-sized lenders at odds over business strategy. The announcement sent shares in both companies plummeting and prompted a rebuke from the country's banking minister towards Shinsei.

Toyota Motor Corp said it would close one of its four vehicle plants in Thailand as the economic crisis hammered exports, in a rare move for what was until a few years ago the world's fastest-growing carmaker.
Toyota said it would close its Thai Auto Works (TAW) factory, which builds the Fortuner and Vigo multi-purpose vehicles, at end-May, transferring production to two other plants that build the two models.



Sydney closed 0.89 per cent, or 41.4 points, at 4,611.1.

Markets took their lead from a 1.05 per cent fall on the Dow after a report showed new claims for US unemployment benefits fell last week for the fourth time in a row but slower than expected, underscoring the slow pace of recovery.

National Australia Bank Ltd, which has seen its US$13 billion (US$1 = RM3.19) takeover bid for AXA Asia Pacific Holdings Ltd blocked by the competition regulator, is preparing to sell some assets to appease the government watchdog. NAB, staring at an end of May deadline for its agreement with AXA Asia and its parent AXA SA, is expected to submit a plan in the next 10 days that will outline measures meant to overcome the regulatory hurdles.


Australian Treasurer Wayne Swan vowed yesterday to stand firm on a planned new tax on mining profits, to be set at 40 per cent, despite widespread criticism from the country's booming resources sector. Swan promised "generous transitional provisions for existing projects" but said the government would not bend on plans to legislate the tax in 2011, well after looming elections, and introduce it in July 2012. The centre-left Labour government has been losing support in recent opinion polls and the tax is shaping as a major issue in the elections, expected in October.

Shanghai finished 0.51 per cent, or 13.88 points, down at 2,696.63 as investors stayed on the sidelines amid concerns that China's government could launch fresh tightening measures over the weekend, dealers said.

"It's too early to say that the index is near the bottom as policy uncertainties are still weighing on the market," Zhang Gang, an analyst with Central China Securities, told Dow Jones Newswires.

Nigeria and a Chinese state firm have signed a US$23 billion (US$1 = RM3.19) deal to build three refineries and a petrochemical complex in one of Africa's biggest tie-ups with China. Nigerian National Petroleum Corp and China State Construction Engineering Corp Ltd sealed the deal in Abuja on Thursday.

Bangkok was 1.2 per cent lower by midday amid fears at the escalating unrest on the streets, but ended the day on a slight rise, up by 0.29 per cent, or 2.24 points, at 768.79.

In other markets:

* Seoul closed flat, edging up 1.05 points at 1,695.63.

* Manila also ended flat, putting on 2.73 points to 3,330.42.

* Jakarta gained 0.38 per cent, or 10.76 points, to 2,858.38.

* Taipei was almost unchanged, adding 1.56 points to reach 7,772.13.

* Mumbai fell 1.57 per cent, or 271.27 points, at 16,994.60.
India's top utility vehicle and tractor maker Mahindra & Mahindra, is considering bidding for South Korea's Ssangyong Motor, sources with knowledge of the development said, in a deal reportedly worth up to US$500 million (US$1 = RM3.19). Ssangyong, 10 per cent owned by China's SAIC Motor Corp, has been in court-led restructuring since early 2009, hammered by one of the industry's worst downturns, and is looking for a buyer to stay afloat with fresh capital. A Seoul court kicked off the sale process this week and set the May 28 deadline for a letter of intent.

Bids for one set of nationwide third-generation (3G) mobile spectrum licences in India reached US$3.5 billion on the 31st day of an auction, an indication the government could earn revenue of about 639 billion rupees (100 rupees = RM7.10) from the auction. As of Saturday, 172 rounds of bidding had been completed, the Department of Telecommunications (DoT) said on its website. Nine mobile operators, including Bharti Airtel, Reliance Communications and Vodafone's Indian unit, are participating in the auction.

EUROPE

European shares closed 3.4 per cent lower, hammered by mounting concerns that tough eurozone austerity measures would slow growth in the region.

The pan-European FTSEurofirst 300 index of top shares closed down 3.4 per cent at 1,014.25 points, having earlier dropped to as low as 1,010.85.

In London, the benchmark FTSE 100 index of leading shares closed down 3.14 per cent to 5,262.85 points. In Paris, the CAC 40 plunged 4.59 per cent to 3,560.36 and in Frankfurt the DAX tumbled 3.12 per cent to 6,056.71 points.

Madrid, Milan, Lisbon - all seen as weaker eurozone members left vulnerable in the fallout from the Greek debt crisis - were more badly hit, with Spanish stocks down more than 6 per cent.

EasyJet founder Stelios Haji-Ioannou has resigned from the airline's board, the British group announced on Friday, amid a row over strategy. He was joined in stepping down from the board by fellow non-executive director Bob Rothenberg. Haji-Ioannou is unhappy with EasyJet's plans to increase its number of planes while claiming that the company is not on course to improve shareholders' returns. The row over strategy has already led to EasyJet chief executive Andy Harrison announcing his resignation. He is set to leave in June to be replaced by Carolyn McCall, who is stepping down as chief executive of the Guardian Media Group.

US


Stocks slumped Friday on worries that Europe's economic woes could spread to the United States, while the euro fell to 18-month lows versus the dollar and gold hit fresh records.

Investors dumped stocks and fled to safe-haven areas of the market such as the dollar, gold and government debt .

Despite the drop, the three major indexes finished higher for the week, with the Dow rising 2.3%, the S&P up 2.2% and the Nasdaq up 3.6%.



The Dow Jones industrial average lost 163 points, or 1.5%. The S&P 500 fell 22 points, or 1.9% and the Nasdaq composite lost 47 points, or 2%. Markets had seen even bigger losses earlier in the afternoon, but managed to trim a little by the close.

On the move: Stock declines were broad based, with all 30 Dow stocks falling, led by Boeing, Caterpillar, Chevron, Exxon Mobil and IBM.

Credit card stocks fell after the Senate proposed a new rule that would limit the amount companies charge consumers using their debit cards. Shares of Visa, MasterCard and Capitol One Financial all fell.

A variety of financial shares fell, dragging down the KBW Bank index by 3.2%.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 7 to 1 on volume of 1.52 billion shares. On the Nasdaq, decliners topped advancers five to one on volume of 2.6 billion.

World markets: Stocks around the globe were mostly lower as worries about the crisis took its toll. In Europe , Britain's FTSE lost 3.1%, Germany's DAX lost 3.1% and France's CAC 40 lost 4.6%.

Asian markets fell, with Japan's Nikkei losing 1.5% and Hong Kong's Hang Seng losing 1.4%.

Dollar and commodities: The dollar gained 1.4% versus the euro and fell 0.3% against the yen. The euro slid to an 18-month low versus the dollar.

U.S. light crude oil for June delivery dropped $2.79 to settle at $71.61 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery lost $1.40 to settle at $1,227.70 an ounce after touching an intraday record of $1,249.70 earlier.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.44% from 3.56% late Thursday.


0:00 / 0:58 Retail stocks in flux

Retail sales: April retail sales rose 0.4%, the Commerce Department reported. The figure was double what economists surveyed by Briefing.com were expecting but weaker than the revised 2.1% climb in sales seen in March.

Retail sales excluding autos rose 0.4%, short of the 0.5% economists were expecting. Sales rose 1.2% in March.

Economy: The Federal Reserve said industrial production rose 0.8% in April, in line with expectations and following an increase of 0.2% in March. Capacity utilization rose to 73.7% from 73.1% in March. Economists expected 73.9%.

The University of Michigan's consumer sentiment index rose to 73.3 from 72.2. Economists expected it to rise to 73.5. Business inventories rose 0.4% in March after gaining 0.4% in February, in line with estimates.