MO R N I N G C O F F E E Tuesday, April 3, 2012

U.S. and European market roundup
US stocks started the second quarter with a bang on Monday, with the S&P 500 climbing to a fresh 4-year high as manufacturing data from the US and China helped support the outlook for economic growth. The US Institute for Supply Management's Index of national manufacturing activity rose to 53.4, exceeding forecasts. China's Purchasing Managers' Index hit an 11-month high to 53.1 from 51 in February. (Reuter)
European stocks climbed as reports showed manufacturing expanded more than forecast in the US and China. Finance ministers from the 17-member monetary union unveiled a package including 500b-euro in fresh bailout funds on top of 300b-euro already committed to rescue programs. Germany's central bank last week said it won't accept bank bonds guaranteed by Ireland, Greece and Portugal as collateral, which raised question about policy cohesiveness in the euro region. Euro-area manufacturing contracted for an eighth month in March, adding signs that the economy of the 17 countries using the single currency continued to shrink in the first quarter. (Bloomberg)

Macro News
Tourism industry is the seventh largest contributor to the country's economy, with a GNI total of RM37.4b last year. It is expected to contribute RM66.7b of GNI by 2020, according to the ETP annual report. The Tourism National Key Economic Area (NKEA) has identifired 12 Entry Point Projects (EPPs) across 5 thems to achieve its GNI target. The first theme is affordable luxury shopping such as duty free for wider range of goods, making Bukit Bintang-KLCC as premier shopping district and opening 3 new premium outlets. The second theme is family fund which includes the development of an eco-nature resort city in Sabah and developing cruise-related tourism
products. Third theme are events, entertainment, spa and sports whereby the ministry will target more
international events, establish dedicated entertainment zones. The fourth theme is business tourism and the last theme is nature adventure which poses Malaysia as the pre-eminent global bio-diversity hub. (Business Times)

Corporate News
Singapore DBS bank Ltd has obtained the nod from Bank Negara to commence the discussion involving the acquisition of Temasek 's stake in Alliance Finance Group (AFG). As at March 31, Temasek's Duxton Investments Pte Ltd and locally Langkah Bahagia are joint owners of a 29.06% control interest on AFG. Temasek effective interest in AFG stands at 12.2%. (StarBiz)

CIMB Group Holding Bhd acquired Royal Bank Of Scotland's (RBS) cash equities and associated investment banking business for RM894.4mil. The country second largest lender extend itself into Asia-Pacific territory and emerging as the largest franchise based in Asia Pacific excluding Japan. CIMB will pay RBS about RM417.6mil in new capital. (StarBiz)

Petroliam Nasional Bhd is studying a Canadian acquisition exceeding USD5b (RM15.3b) as part of the company's drive to supply natural gas to Asia. In June 2011, Petronal agreed to pay Progress Energy Resources Corp C$1.07b (RM3.27b) for a 50% stake in 3 natural gas fields in Canada. As part of the purchase, it agreed to invest as much as C$600m (RM1.8b) in the company if it develops a terminal to export LNG from Canada's west coast. President and CEO Datuk Shamsul Azhar Abbas said that a deal may be announced within 3 months. Petronas aiming to grow its presence in Australia and Canada. (Business Times)

Navis Capital Partner Ltd has bought a 27.48% stake or 114.8mil shares in SEG International Bhd(SEGi), from Cerahsar Sdn Bhd (21.53% stake) and Segmen Entiti Sdn Bhd (6.28% stake). Tan Chow Yin, a partner in Navis and Nicholas Rupert Hylett Bloy, one of the founders of Navis Capital Partners has been appointed as Non executive director of SEGi. (Starbiz)

Press Metal Bhd (PMB) new alumunium smelting plant in Bintulu, is the first customer of Bakun Power. PMB is purchasing 480MW to power its new smelter which was on track to start commercial operation by June this year. The new smelter has a production capacity of 240,000 tonnes per annum, which is double the capacity of its alumunium smelter in Balingan, Mukah division. The Balingan smelter is currently running at full capacity of 120,000 tonnes per annum. (StarBiz)

SP Setia is expecting its China-Malaysia Qinzhou Industrial Park (QIP) venture to bring its overseas expansion drive to another level. SP Setia has teamed up with Rimbunan Hijau to form a 45:55 JV company to undertake the QIP project. The QIP is the third industrial park in China to be developed under the umbrella of governemnt-togovernment collaboration after the China-Singapore Suzhou Industrial Park and Tianjin Eco-City. Based on a preliminary estimation, the total estimated cost for the start-up district alone is expected to be approximately 5.4byuan (RM2.6b). (Business Times)

Muhibbah Engineering (M) Bhd's 50:50 JV with Australia's Monadelphous Group Ltd has won an additional contract for the construction and commissioning of a shiploader associated with the Wiggins Island Coal Export Terminal Pty Ltd's (WICET) worth A$60m (RM192m). (The Edge Daily)

Lembaga Tabung Haji (LTH) is considering a proposal to acquire a 95% stake in PT TH Indo Plantations (THIP) from an Indonesian-based company. THIP owns and operates 83,879ha of palm plantations in Riau, Indonesia. (StarBiz)

Source:Jupiter Securities Research 03 April 2012