Subject: Market Updates: 19 May 2010

Malaysia - Equity

The stock market closed mixed yesterday following lack of fresh market stimulating news, with losses in Maybank and PLUS, dragging the key index 0.3 per cent lower.


The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) fell 4.10 points to 1,330.17, after trading at an intraday-high of 1,333.27. It opened 1.0 point lower at 1,332.27.

A dealer said bargain-hunting activities emerged in selected index-linked counters but investors preferred to remain on the sidelines due to lingering concerns over the European debt crisis.

The Finance Index erased 55.39 points to 12,032.73, the Industrial Index edged down 1.72 points to 2,693.12 and the Plantation Index slipped 9.19 points to 6,339.86.

The FBM Emas Index lost 19.79 points to 8,947.90, the FBM70 declined 12.33 points lower to 8,785.07 and the FBM ACE Index shed 4.15 points to 3,985.19.

Advancers led decliners 336 to 295 while 287 counters closed unchanged, 460 untraded and 29 others were suspended.

Overall trading volume was slightly higher at 690.919 million shares, worth RM1.144 billion, compared with 633.061 million shares, worth RM1.009 billion, transacted on Monday.

The main market volume rose to 600.555 million shares, worth RM1.126 billion, versus Monday's turnover of 512.210 million shares valued at RM982.330 million.

Talam led the most active counter with 122.592 million shares changing hands. It perked 1 sen to 15 sen.

This was followed by newly-listed Masterskill Education Group Bhd. The share traded within a high of RM4.01 and a low of RM3.60 before finishing 16 sen higher at RM3.96 with 77.519 million shares traded.
The shares of the country's largest operator of a non-government nursing college debut at RM3.60 for a discount of 20 sen with 500,000 shares changing hands at the opening bell. Masterskill successfully priced its initial public offer at the top end of its indicative range of RM3.80 for the institutional tranche and RM3.50 for the retail portion.

For the other actives, Oilcorp lost half-a-sen to 8 sen, MY E.G. Services perked 6 sen to 64.5 sen and Transmile rose 3.5 sen to 49.5 sen.

Among heavyweights, Maybank lost 10 sen to RM7.58, PLUS slipped 11 sen to RM3.39 and Telekom Malaysia was unchanged at RM3.37

Zhulian Corp Bhd has proposed a bonus issue of 115 million new shares on a one for three basis. It said on Tuesday, May 18 that its issued and paid-up share capital was RM172.5 million, comprising of 345 million 50 sen shares. Zhulian said the proposed bonus issue shall be wholly capitalised from the company's retained profit accounts.

Sarawak Cable Bhd, which is slated to be listed on the Bursa Malaysia main market on May 25, received commendable response for its initial public offering with the public tranche of six million new shares oversubscribed by 6.43 times. The company received a total of 2,904 applications for 44.59 million shares from the Malaysian public.

SEG Interna-tional Bhd's (SEGi) proposed one-into-two share split has been approved by Bursa Malaysia, and is now pending the approval of its shareholders at an EGM to be convened, it told Bursa Malaysia.

RM

The ringgit ended higher against the US dollar yesterday amid rumours of China's revaluation of its yuan, dealers said.

At 5pm, the local currency was traded at 3.2100/2150 compared with 3.2265/2295 Monday

China's Foreign Ministry spokesman, Ma Zhaoxu said yesterday, based on global and Chinese economic development levels and conditions, the country would further improve the yuan exchange rate mechanism.

Meanwhile, the ringgit traded mixed against other major currencies.

It was lower against the Singapore dollar at 2.3123/3176 from 2.3099/3154 Monday but appreciated against the Japanese yen to 3.4598/4659 from 3.9625/9678 previously.

The local currency dipped against the euro at 3.9790/9837 from 3.9625/9678 on Monday and firmed against the British pound at 4.6368/6431 from 4.6504/6563 previously.


CPO

Palm oil futures rallied from the lowest level in more than three months yesterday as crude oil gained before a US Energy Department report forecast to show refinery operating rates increased and gasoline inventories fell.

August-delivery palm oil rose 0.8 per cent to RM2,445 a metric ton on the Malaysia Derivatives Exchange to end a three-day losing streak. Vegetable oils track crude oil as they can be used in biofuels.

Crude oil in New York rebounded as much as 2.7 per cent to US$71.99 a barrel, the first increase in six days, and last traded at US$71.87 a barrel.


The contract fell to less than US$70 a barrel Monday for the first time since February 5 on concerns that European nations' debt-cutting measures will slow the economic recovery and reduce demand.

News




UTILICO Emerging Market Ltd, a UK-based investment fund, could be owning a sizeable amount of Malaysia Airports Holdings Bhd (MAHB) shares, based on information posted on its website.
Utilico, listed on London's Alternative Investment Market, said as at end of February this year, as much as 11.5 per cent of its gross assets were invested in MAHB. Utilico did not state how many shares it owns in the airport operator, but the amount could be sizeable as the British fund had also stated that 4.3 per cent of its gross assets are invested in Puncak Niaga Holdings Bhd, a water treatment operator. Information obtained from recent fillings to the Malaysian stock exchange show that Utilico owns 6.87 per cent of Puncak Niaga. It has been a shareholder of Puncak since 2006
EON Capital Bhd's board of directors will meet on or before May 21 to consider several matters concerning Hong Leong Bank Bhd's offer to acquire the entire assets of the company. The company told Bursa Malaysia that it will discuss the independent financial adviser's opinion on the acquisition and finalisation of the terms of the proposed distribution. EONCap said an announcement will be released upon conclusion of the board meeting.

BERJAYA Corp Bhd (BCorp) , which will launch the country's first sports betting in the third quarter of this year, will use a system from a reputable supplier with a proven track record in Asia. BCorp is buying a 70 per cent stake in Ascot Sports Sdn Bhd from its chairman Tan Sri Vincent Tan for RM525 million in cash.
Ascot will now have the exclusive approval to operate sports betting and distributed in those states where Sports Toto has a presence.

Telekom Malaysia Bhd (TM), the country's largest telecommunications company, will not need to raise funds to meet its capital expenditure (capex) requirements of about RM2 billion this year, its chief said. It has a healthy level of internally-generated funds that it can draw from and doing so would not affect its dividend payouts to shareholders, group chief executive officer Datuk Zamzamzairani Isa said. TM has a cash balance of RM3.5 billion as at the end of last year.

Scomi Engineering Bhd is selling its machine shop operations to Japan's Sumitomo Corp for US$101.45 million (RM327.7 million) as it seeks to focus on its monorail business. The deal is due for completion by the end of June 2010, subject to conditions being met

AEON Co (M) Bhd, operator of the Jusco department stores-cum-supermarkets, is looking at new retail formats and expansion to Sabah, Sarawak and Asean countries as part of its growth strategy. The retailer recognises, however, that it could face challenges in executing its plans. Chairman Datuk Abdullah Mohd Yusof said that while it was keen to pursue plans for smaller outlets and neighbourhood shopping centres, there were difficulties in obtaining suitable sites and getting government approvals.



Integrated facilities management (IFM) and property developer Faber Group Bhd hopes its revenue from overseas will reach RM1 billion this year, by expanding on its non-concession income base. The group will continue to focus on its businesses in the UAE and India to expand its non-concession income base, especially in the areas of bio-medical engineering services and facilities engineering services.

Pacificmas Bhd hopes to conclude the sale of its insurance arm by October this year to meet the deadline imposed by the regulator on parent Oversea-Chinese Banking Corporation Ltd (OCBC), says its top executive. In April 2008, Singapore's OCBC announced the takeover of PacificMas Bhd, but on a condition that it could not own two insurance companies in Malaysia. Since OCBC already owned 87 per cent of Great Eastern in Malaysia, it decided to sell the insurance business of PacificMas, and retain Great Eastern general insurance licence held under Overseas Assurance Corporation Bhd (OACM). PacificMas is currently in talks with two suitors, namely Great Eastern Holdings Bhd and Canadian based Fairfax Asia Ltd to dispose of its insurance unit, The Pacific Insurance Bhd (PIB).

HONG Leong Industries Bhd has proposed to issue medium-term notes (MTNs) of up to RM600 million in nominal value to raise funds for its working capital and investment purposes. The tenure of the proposed MTN programme is up to seven years from the date of the first issuance. The MTNs will be issued via private placement to OCBC Bank (Malaysia) Bhd.

MUDA Holdings Bhd's unit Muda Paper Mills Sdn Bhd has signed a deal with AmBank (M) Bhd, Malayan Banking Bhd and OCBC Bank (Malaysia) Bhd for a RM150 million syndicated term loan to partly finance capacity expansion at its plant in Kajang, Selangor. The plant expansion will propel the group to be the largest producer of recycled industrial grade paper in Malaysia, with a combined output of 500,000 tonnes per year.



RAM Ratings opines that Fraser & Neave Holdings Bhd's (F&N Holdings or the group) proposed disposal of its 100 per cent equity interest in Malaya Glass Products Sdn Bhd (MGP) has no impact on the AA1(s)/P1(s) ratings of F&N Capital Sdn Bhd's (F&N Capital) RM1 billion Commercial Papers/Medium-Term Notes Programme (2008/2015) (CP/MTN). The long-term rating has a stable outlook.




LFE Corp Bhd's unit LFE Engineering Sdn Bhd is selling its entire stake in LFE Engineering (Shanghai) Ltd and Loong Fuat Engineering Ltd to Green Resource Engineering Co Ltd for RM6 million. The sale is to ease the group's cash flow and focus on business in the Middle East and Vietnam. Biscuit maker Hup Seng Industries Bhd will churn out new products aimed at teenagers, young adults and professionals within the next couple of years Chairman Keh (Kerk) Chu Koh said the company had identified the three target groups as offering good market prospects although women were the ones who normally bought biscuits for their households.

MalaysiaA LNG Sdn Bhd, which is a 90 per cent subsidiary of Petroliam Nasional Bhd, wants to raise production of liquefied natural gas (LNG) to meet growing global demand. Malaysia LNG managing director and chief executive officer Medan Abdullah said LNG consumption is expected to rise in line with the recovering global economy. Medan, however, did not provide details.

1Malaysia Development Bhd (1MDB), a government-owned strategic development company, has managed to meet one of its main targets, which is to secure RM5 billion of foreign direct investment (FDI) commitments for the country. To date, 1MDB has convinced foreign investors to pledge some US$17 billion (RM55 billion) although the money has yet to be invested in Malaysia. Another key performance indicator is that it has to generate enough cash to cover its borrowing cost and the cost of operations. Unlike state investment arm Khazanah Nasional Bhd, 1MDB's main objective is to bring in FDI and direct the investment into projects with high multiplier effects, essentially those which can generate a lot of spin-off economic activities.

Western Digital Corp will further expand its research and development as well as manufacturing activities in Malaysia, involving US$1.2 billion (RM3.9 billion) investment, over the next five years. Western Digital president and chief executive officer Datuk John F. Coyne informed Prime Minister Datuk Seri Najib Razak of its decision during a meeting at the Prime Minister's Office in Putrajaya yesterday. The company's decision to further invest in Malaysia was made after discussions with Najib during his working visit to Washington, the US, last month.


Malaysia will offer around US$1 billion (RM3.23 billion) in a global sukuk to investors from today, its first international debt sale since 2002, two sources familiar with the planned issue said. The government was targeting about US$1 billion for the bond that would be entirely sukuk and would be launched at the Islamic economic forum in Kuala Lumpur. CIMB, HSBC and Barclays are managing the deal for the government. A global investor roadshow will start later this week. All three banks declined comment or were not immediately available.

Results

Malaysian Resources Corp Bhd (MRCB) net profit for the first quarter ended March 31, 2010 surged to RM9.85 million from RM153,000 a year ago. Revenue rose 24% to RM189.68 million from RM152.6 million a year ago. Earnings per share was 0.93 sen compared to 0.02 sen a year earlier. MRCB attributed the higher revenue to increased activities of its ongoing projects in all of its business segments.

AEON Co (M) Bhd registered an impressive 58% jump in net profit to RM41.17mil for its first quarter ended March 31, compared with the previous corresponding quarter. Revenue stood at RM730.28mil against RM697.3mil previously.

ASIA

The euro edged up yesterday and Asian markets rose on bargain hunting after hitting earlier lows due to news that a eurozone crisis meeting failed to reach a deal on a trillion-dollar rescue fund.

Eyes had been on Brussels where finance ministers of the 16 euro member states are trying to agree funding arrangements for the bailout for struggling economies, which many fear may not be enough to prevent a financial meltdown.

However, despite seven-hour negotiations on Monday they had still not finalised an agreement and said they would reconvene on Friday.

The news weighed on the euro in the morning but it rose in early London trade to US$1.2396 from US$1.2394 in New York late on Monday where it had slightly rebounded from its four-year low of US$1.2234.


Sydney edged up 3.5 points to 4,470.7.

Takeover target AXA Asia Pacific has yet to decide to terminate an agreed US$13 billion (US$1 = RM3.23) takeover deal with National Australia Bank, which has been blocked by the competition regulator, a top official told a shareholders meeting.The agreed deal to take over AXA Asia Pacific is in limbo after the competition regulator blocked the deal, citing lack of competition in the retail investment platform. NAB's agreement is set to expire on May 31 and the firms are still awaiting details from the regulator for its reasons for blocking the deal.


Tokyo added 6.88 points to 10,242.64 after it hit an 11-week low on Monday, helped by a pick-up in the euro against the yen, which lifted exporters.

Shanghai rallied 1.36 per cent, or 34.85 points, to 2,594.78 as bargain hunters moved in following a five per cent tumble on Monday to its lowest level in more than a year.

Dealers in China are on edge that the government will announce fresh credit-tightening moves to rein in soaring property prices and rising inflation.

In other markets:



Singapore: The Straits Times Index gained 0.4 per cent to 2,844.35 at the close.

Among the most active shares in the market, Hong Leong Asia Ltd, the firm that got 87 per cent of its sales from China last year, fell 3.5 per cent to S$3.86; Olam International rose 2.1 per cent to S$2.44 and SIA Engineering rose 2.4 per cent to S$3.83.

Wilmar International, the world's largest listed plantation company, said yesterday it was looking into media reports that it had colluded with tax officials to obtain fraudulent tax refunds. Two Indonesian newspapers, quoting Indonesian lawmaker Bambang Soesatyo from the Golkar Party, said Singapore's Wilmar had received or was due to receive total "questionable" tax refunds worth 3.6 trillion rupiah (100 rupiah = RM0.036) over the three years from 2007 to 2009.

Hong Kong: Shares rose yesterday as dealers took profits from the previous day's heavy losses on both indexes.

The benchmark Hang Seng Index ended up 1.17 per cent, or 229.74 points, at 19,944.94. Turnover was HK$57.67 billion .

Shanghai closed up 1.36 per cent, reversing early losses as property stocks rebounded, dealers said

* Seoul closed 0.50 per cent, or 8.27 points, lower at 1,643.24.

* Manila closed 0.74 per cent, or 24.24 points, lower at 3,265.07.
Metropolitan Bank and Trust fell 0.87 per cent to 57 pesos, but First Philippine Holdings bucked the trend, adding 0.90 per cent to 56 pesos.

* Jakarta gained 0.52 per cent, or 14.72 points, to 2,834.19.

* Taipei fell 0.18 per cent, or 13.42 points, to 7,585.30.
United Microelectronics Corp was 1.35 per cent lower to 14.7 Taiwan dollars while Hon Hai was flat at 141.0.

* Wellington fell 0.60 per cent, or 19.07 points, to 3,151.68.

Telecom ended unchanged at NZ$2.07 , discount retailer The Warehouse fell 2.2 per cent to 3.49 and Kiwi Income Property fell 1.0 per cent to 96 cents.

EUROPE


European shares rose yesterday, snapping two consecutive days of falls as sovereign debt fears waned after Greece had received funds from the European Union to repay its immediate debt.

Banks rebounded to feature among the best performers following a flat performance in the previous session. Banco Santander, BNP Paribas, UBS and Societe Generale rose 3.6 to 6.4 per cent.

The pan-European FTSEurofirst 300 index of top shares provisionally closed up 1.4 per cent at 1,026.98 points.

London's benchmark FTSE 100 index was up 0.85 per cent at 5,307.34 points.

In Paris, the CAC 40 jumped 2.08 per cent to 3,617.32 points and in Frankfurt the DAX gained 1.47 per cent to 6,155.93 euros.

British consumer price inflation jumped to a 17-month high in April, driven by big rises in tax on alcohol and tobacco as well as higher prices for women's clothing and food, data showed yesterday. Sterling rose against the dollar after the numbers, suggesting investors believe the Bank of England might raise interest rates from their current record low earlier than hitherto expected, though analysts' views were mixed. Annual consumer price inflation rose to 3.7 per cent last month, up from 3.4 per cent in March, while the longer-running retail price inflation series hit its highest level in more than 18 years, the Office for National Statistics said.

US


Stocks slumped Tuesday as the euro touched a fresh four-year low versus the dollar, keeping Europe's woes front and center and overshadowing better-than-expected earnings from big U.S. retailers.

The Dow Jones industrial average lost 115 points, or 1.1%. The S&P 500 index lost 16 points, or 1.4%. The Nasdaq composite lost 37 points, or 1.6%.

Technology and financial shares led the declines Tuesday. Intel , Cisco Systems, Hewlett-Packard and Advanced Micro Devices were among the big losers. Bank of America, Wells Fargo and a number of regional banks all declined, dragging down the KBW Bank index by 3.7%.

The CBOE Volatility index, or the VIX, the market's fear gauge, spiked 7% to $33.24, its highest point in over a week.

World markets: Markets across the Atlantic rallied Tuesday, although the euro remained volatile.

The British FTSE 100 gained 0.9%, the German DAX gained 1.5% and the French CAC 40 gained 2.1%.

The dollar fell 0.2% versus the yen.

Asian markets ended higher, with the Hong Kong Hang Seng rising 1.2%, the Japanese Nikkei ending just above breakeven and the Shanghai Composite adding 1.4%.

Economy: A report on the housing market offered a mixed take on the health of the industry.

Housing starts rose 5.8% to a seasonally adjusted annualized rate of 672,000 in April from 635,000 in March. Economists surveyed by Briefing.com expected 655,000.

But building permits, a measure of builder confidence, fell 11.5% in April to a seasonally adjusted rate of 606,000 from 685,000 in March. Economists expected a rate of 680,000.

Another report showed that the Producer Price index (PPI), a key measure of wholesale inflation, fell 0.1% in April after rising 0.7% in March. The so-called Core PPI, which strips out volatile food and energy prices, rose 0.2% after rising 0.1% in March. Economists thought Core PPI would rise 0.1%.

Corporate profits: Dow retailers Home Depot and Wal-Mart Stores both reported better-than-expected quarterly results.

Home Depot reported a 41% jump in fiscal first-quarter earnings thanks to strength in seasonal items and better profitability. The home improvement retailer also boosted its full-year earnings outlook. Shares lost 2.4%.

Wal-Mart Stores reported improved earnings from a year ago that beat estimates, but issued a second-quarter earnings forecast that was short of expectations. Separately, the company said it was cutting prices on a number of food and household products. Shares gained 1.9%.

Wal-Mart was the Dow's only gainer, with 29 of 30 Dow issues falling, led by tech and financial names.

Commodities: U.S. light crude oil for June delivery fell 67 cents to settle at $69.41 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $13.50 to settle at $1,216.80 an ounce. Bonds: Treasury prices rose, lowering the yield on the 10-year note to 3.39% from 3.47% late Monday.