MO R N I N G C O F F E E Monday, April 9, 2012



U.S. and European market roundup
After the S&P 500's rise of about 30% since last October, there is concern that buying interest is not strong enough to drive further gains, particularly after soft March US employment figures were released last Friday. Friday's non farm payrolls report was a disappointment, with only 120,000 jobs added in March, short of expectations for a gain of 203,000 jobs. Since October, estimates for 1Q earnings growth have tumbled while the S&P 500 has surged. Investors will assess whether slower growth is priced into the US stock market, or if the S&P 500's retreat from last Monday's 4-year high is the start of a larger decline ' if results disappoint. (Reuter)

European stocks rebounded on last Friday, trimming a third week of losses as rebound in commodity companies offset renewed concern about the euro area. Banks still retreated. Spanish bonds fell, widening the spread between yields on 10-year Spanish and German debt to more than 400 basis points for the first time since Dec. 12. Spanish Prime Minister said Spain is in extreme difficulty. The government has widened its budget deficit target to 5.3% of GDP from 4.4% and warned that public debt will surge to a record 79.8% of GDP this year. (Bloomberg)

Macro News
BNM international reserves rose USD900m to USD135.7b as at March 30, from USD134.8b as of Feb 29. The central bank said this reserves level has taken into account the quarterly adjustment for foreign exchange revaluation loss, following the strengthening of ringgit against major and regional currencies during the quarter. The reserve position was sufficient to finance 9.4 months of retained imports and is 4 times the short-term external debt. (The Edge Daily)

Corporate News
Pakistan's palm oil importers want their government to reduce duty on palm oil product imports from Malaysia just like the 15% duty cut made for Indonesia. They said the Federal Ministry of Commerce had yet to implement the duty cut that was supposed to come into effect in early 2012. The country consumes around 2.2 million tonnes edible oil every year out of which 0.63 million tonne is contributed by the local growers and the remaining is imported to bridge the demand and supply gap. (Bernama)

Malaysian Building Society Bhd (MBSB) will start extending home loan financing facilities to the second generation of property purchasers for its housing project in Sepang, president and CEO Datuk Ahmad Zaini Othman said. This special financing facility would allow home buyers to stretch monthly home-loan repayments to the kids (second generation) of these home buyers, most of whom are retirees in their 50's. According to Ahmad Zaini,these property buyers will be offered a slightly higher interest rate of base financing rate (BFR) minus 0.5% with a tenure of 30 years, or age 70, whichever comes first.These interest rates are slightly higher than the conventional type of housing loans because of the buyers' advanced age profile. Analysts and economists note that this type of second-generation property financing is a result of rising property prices despite Bank Negara's recent moves to stem spiralling home prices. (StarBiz)

Sime Darby Property Bhd plans to build its 11th township development north of its existing Denai Alam township in Selangor. Sime Darby Property head of property development Zulkifli Tahmali said the township is at its planning stage but will measure 404.8ha along the Gutherie Corridor Expressway. The new township will be a mix of
residential, commercial and industrial development. The company also plans to launch 8 more properties with a gross sales value of RM1.2b by FYE June. (Business Times)

Scomi Engineering Bhd is hopeful that its bid for the monorail project in Chennai, the capital city of Tamil Nadu, will succeed. The 111km in India's fifth most populous state is phase one of the 300km stretch which state government plan to build to ease traffic flow. If successful it would be Scomi's biggest ever monorail project. In India, Scomi emerged as a well-recognized brand after successful implemented the country first monorail project in financial district of Mumbai. Scomi and its consortium partner, Larsen &Toubro, secured the RM1.85bil Mumbai monorail project in November 2008. (Starbiz)

Asia-EP Resources Bhd expects to return to the black in its financial year ending Feb 28, 2013 (FY13). AsiaEP was currently in talk with some parties for potential joint ventures, no detail were reveal yet. AsiaEP had been in the red for the past three financial years. For FY11, its net loss widened to RM33m on revenue of RM8.3m from a net loss of RM2.9m on revenue of RM9.9m. The company is expected to see another year of red for FY12. Nine month ended Nov 30, 2011, AsiaEP's net loss stood at RM6.4m on revenue of RM680,000, compared with a net loss of Rm1.8m on revenue of RM8mil previously. (StarBiz)

Ingress Corp Bhd will establish a switching station for Tenaga Nasional Bhd in a deal worth RM26.6m. The 275-kilovolt station will be set up at Pantai Remis, Selangor. The estimated 18 months project will start between May and July this year. (The Edge Daily)

Perusahaan Otomobil Kedua Sdn Bhd (Perodua) is venturing into the used-car business to expand its revenue base. Perodua hopes to establish an organisational structure for its used-car business by mid of the year. (Business Times)

Source:Jupiter Securities Research 09 April 2012