MO R N I N G C O F F E E Thursday, April 5, 2012

U.S. and European market roundup
US stocks fell for a second day on Wednesday as investors contemplated a world without monetary stimulus and a poorly received bond auction in Spain suggested the effects of Europe's funding operations were waning. Selling was broad as indexes tracking 9 of the 10 S&P 500 sectors ended lower, with financial, materials and technology shares the worst performers. Spanish borrowing costs jumped at bond auctions, raising concerns that the rally in troubled sovereign debt of euro zone peripheral nations sparked by the European Central Bank's 2 Long Term Refinancing Operations may be coming to an end. (Reuter)

European stocks markets sank as factory orders in Germany trailed forecast and the US Federal Reserve said it will refrain from providing further stimulus unless the recovery in the world's largest economy falters. ECB President Mario Draghi said that the euro area's economic outlook remains subject to downside risks after the central bank left its benchmark interest
rate unchanged at 1%. (Bloomberg)

Macro News
The property market saw the highest growth in transactions in 2011 over the last 5 years with a total of 430,403 transactions worth RM137.83b, representing a 14.3% growth in volume from 376,583 transactions and 28.3% growth in value from RM107.44b in 2010. Last year saw several big value transactions exceeding RM5 million. They included Wisma Shun Li in Kuala Lumpur, Lanai Complex in Putrajaya, Kemayan City in Johor and East Coast Mall in Pahang. The residential sub-sector continued to drive the property market, accounting for 62.7% of the total transactions recorded. In the primary residential market, the sales performance was in an upward trend from 2010. Almost 50,000 units were launched and out of the total, over 22,000 units were sold. Sales performance was at 46.3%. Affordable housing below RM250,000 saw high demand, making up 45% of the total new launches. The commercial sub-sector recorded over 80% occupancy rate for purpose-built office while takeup space exceeded 250,000 sq m last year, with 40 new office buildings entering the market. The house price index rose 6.6% to 156.9 points during the fourth quarter of 2011. In line with that, the All House Price Index hit RM217,297 in the same quarter. (The Sun Daily)

Corporate News
Petronas Engen unit, the biggest South African importer of Iranian crude, said it has suspended imports of oil from the Middle Eastern nation amid economic sanctions by the US and the EU. The company has contingency supplies in place, said Engen spokeswoman. Engen, which operates the country's second biggest refinery basedin Durban and with a capacity of 135,000 barrels a day, normally source about 80% of its supplies from Iran. Engen's cost to convert the refinery to handle other oil is expected to be USD39m (RM119m). (Business Times)

Axiata Group Bhd will stay put in the Indian mobile market. The Indian Government's recent revocation on 122 of the 2G license issued in 20007 had created uncertainty. Axiata is a regional telecom player with 19.7% stake in India's Idea Cellular. Idea has since grown to become the third largest in term of subscriber; it has 110mil mobile subscribers in a market compromising 656mil user as at end-February this year. Idea is one of the seven companies affected. (StarBiz)

Pharmaniaga Bhd is allocating some RM95m in capital expenditure this year. This will include spending for the company's expansion into the regional market, beginning with Indonesia. About TM30m is to be spent on setting up a manufacturing plant in Indonesia to meet the local demand for generic drugs. The rest of the capex will be used for the other regional expansion such as into Vietnam and Mynamar, upgrading its existing plants in Malaysia and improving its information system. (Business Times)

KPJ Healthcare Bhd may be affected is the purposed new healthcare system (1Care) for Malaysian impose a standardize fee schedule, said RAM rating. At presents, the healthcare industry and KPJ are subject to regulatory controls. The health Ministry is looking into implementing 1Care for Malaysia, which RAM rating said could change the landscape of the industry. Following the implementation of 1Care, public and [rivate hospitals may be
integrated under a common network. (Starbiz)

Maybank aims to be among the top 5 banks in Cambodia by 2015, With 11 branches and total asset of USD313m (RM958m) in the kingdom, the bank now ranked seventh in terms of assets among 33 banks operating in Cambodia. Maybank as developed an ATM network, which is inter-linked in the country and regionally across Malaysia, Singapore, Brunei, the Philippines and Papua New Guinea. Maybank Cambodia has seen its assets and deposits doubling in the last 4 years. Loans expanded almost 6 fold from USD30m to USD168m (RM108m to RM514m). (Business Times)

At least four different groups of entrepreneurs are in various stage of putting together application to have their Special Purpose Acquisition Companies (SPACs) listed on Bursa Malaysia. SPACs- are essentially shell companies raising funds for the purpose of acquiring businesses. The interest is said to be partly spurred by the successful takeoff of Malaysia' s first SPAC, Hibiscus Petroleum Bhd. However sources said all the SPAC being purposed has yet to received approval form the Securities Commission (SC) for a listing. Hibiscus managed to raise RM234mil from its IPO offering lasy July. (StarBiz)

AMMB Holdings Bhd's 51% owned general insurance subsidiary AmG Insurance Bhd has received the
government's nod for the acquisition of Kurnia Asia's 100% stake in Kurnia Insurans (M) Bhd. If the deal
completed, it would result in the merged AmG and Kurnia business acquiring the leading position in Malaysian motor insurance market. AmG is a 51: 49 JV company owned by AMMB And Insurance Australia Group (IAG). (Business Times)

Source:Jupiter Securities Research 05 April 2012