Market Thoughts

US stocks bounced off their worst levels but still ended in negative territory Monday, as initial euphoria over Cyprus fizzled and even after Eurogroup head's Jeroen Dijsselbloem backtracked on his previous comments that the island nation's bailout is a template for bank rescues. Smilarly, European shares erased their early gains to finish in negative territory, pressured by banks, after comments from the head of the Eurogroup who said a Cyprus bailout deal could be a new template for resolving euro zone banking problems. On the local market, the FBM KLCI surged 17 points to 1643.89 points. We expect profit taking to kick in following the decline in US and European markets.

Stock could stir investor interest are: a) Shangri-La following the major shareholder Robert Kuok acquiring 22.2 percent block of shares from Standard Chartered Private Equity at RM3.35 per share which prompted the talk of privatisation of the hotelier; b) Alam Maritim after the group secured a RM182m oil & gas contract for the provision of underwater services; c) ETI TECH as the group has failed to settle debts worth RM11.7m to Maybank; d) Emas Kiara after the group has decided to sell a piece of industrial land for about RM33.5m and subsequently JV development with Sabah government; and e) TRC as the group will team up with Prasarana on a RM687.6m GDV of mixed development project near Subang.

Malaysia News & Highlights

EPF eyes Asean, China equities

The Employees Provident Fund (EPF), the world's sixth-largest sovereign provident fund, plans to invest more in private equities this year, especially in emerging markets in Asean and China. EPF, which manages the pension fund of Malaysia's 12 million workers, now invests two per cent, or RM10 billion, of its more than RM300 billion assets in local and foreign private equities. Its chairman Tan Sri Samsudin Osman said emerging markets have much potential, adding that EPF will be including private equities under its strategic investment plans, which it revises twice each year."The two per cent will definitely grow but it will depend on our periodic investment revisions," Samsudin said after the Global Private Equities Summit 2013, here, yesterday. (Source: Business Times)

Abu Sahid plans to raise stake in Scomi

To recap, Abu Sahid had disputed IJM Corp Bhd's emergence as a shareholder in Scomi, citing that it will dilute the stake of current shareholders. IJM's entry into Scomi is said to have the backing of Shah Hakim. Under the deal, Scomi would issue RM110 million worth of convertible debt to IJM, which, upon conversion, would see the construction company owning 24.3 per cent of Scomi. The convertible debt proposal went ahead after gaining shareholders' approval. Abu Sahid, who owns 6.8 per cent stake in Scomi, however, looks to be staying for the long run. "I have enough shares in Scomi to shake everybody," he declared in jest. The tycoon last bought Scomi shares on March 19 when he acquired some 1.19 million shares. "I am monitoring and observing what they are doing. I will continue to buy Scomi shares as long as I have the money. I have nothing to hide," he added. (Source: Business Times)

Kuok Brothers buys 22% of Shangri-la Hotels

Kuok Brothers Sdn Bhd has bought some 98 million shares, or 22.28% stake in Shangri-la Hotels (M) Bhd via a direct business transaction. Kuok Brothers entered into a share purchase agreement with Standard Chartered Private Equity Ltd on March 20 for the purchase. The price transacted for the stake was undisclosed. (Source: The Star)

UMW Equipment secures RM45mil contract

The UMW group, through its wholly-owned subsidiary UMW Equipment Sdn Bhd, has secured a contract worth RM45mil to supply airport fire-fighting vehicles and a tactical simulator static cabin to Malaysia Airports Holdings Bhd (MAHB). “The contract includes comprehensive maintenance services of airport fire vehicles and provisional spare parts. The supply, delivery, testing and commissioning of the vehicles are in-line with the second phase of fleet replacement by MAHB,” UMW group said in a statement. The handover for the second phase of fleet replacement is scheduled for April 2014. This will be followed by its second and third deliveries in July and October 2014. The fourth and final delivery of the airport fire-fighting vehicles will take place sometime in March 2015. (Source: The Star)

TRC teams up with SPNB for project with RM688m GDV

TRC Synergy Bhd has teamed up with Syarikat Prasarana Negara Bhd (SPNB) to develop 49,776 sq m in Subang for a commercial-residential project with a gross development value (GDV) of RM687.5mil. In a filing with Bursa Malaysia yesterday, TRC said its unit ADS Projek Sdn Bhd had inked an agreement with SPNB for the joint development of the land surrounding station two of the Kelana Jaya Line extension project. “Based on the preliminary proposal, the proposed joint land development shall be a mixed development comprising basement parking, retail podium with car parks, LRT user car parks, offices, hotel, apartments, retail and food court and SoHo. “The proposed development is estimated to generate a GDV of RM687.59mil. The estimated GDV is derived based on the prevailing market prices of the surrounding developments,” it said. (Source: The Star)

ETP projects to drive construction growth by 11.2pc

The construction industry is expected to grow by 11.2 per cent this year, driven by various projects under the Economic Transformation Programme (ETP) initiated by the government last year. Master Builders' Association Malaysia (MBAM) president Matthew Tee said the MY Rapid Transit (MRT) project and other Entry Point Projects (EPPs) will help to boost growth. "We have all these projects initiated by the government and we reckon that if they are implemented this year, we can achieve the number," he said at the 5th Malaysian Construction Summit themed "Challenges Facing the Construction Industry", which was launched by Works Ministry secretary-general Datuk Himmat Singh, yesterday. (Source: Business Times)

Perodua to upgrade all operations over 5 years

Perusahaan Otomobil Kedua Sdn Bhd (Perodua) will invest RM2.3 billion over the next five years to upgrade all of its operations in a bid to become a global company. The national carmaker said its state-of-the-art new manufacturing plant in Rawang, called Perodua Global Manufacturing Sdn Bhd, will be operational by the middle of 2014. The plant, which was named after the approval of the company's shareholders, is being built for RM790 million. According to Perodua managing director Datuk Aminar Rashid Salleh, the plant will have an expected production capacity of 100,000 vehicles per annum on a single shift."So far, everything is per schedule and Perodua will start hiring 1,200 workers soon. "With the support of our partner Daihatsu Motor Co this new plant will be a role model for the entire Perodua group in terms of overall operation and approach," he said in a statement issued yesterday. (Source: Business Times)

KKB Engineering associate is Petronas supplier

KKB Engineering Bhd’s associate Oceanmight Sdn Bhd has been licensed as an approved supplier by Petroliam Nasional Bhd (Petronas). In a filing, KKB said the licence, which is valid for three years and will expire in 2016, was for the category of “offshore facilities const-major onshore fabrication”. (Source: The Star)

Alam Maritim bags RM182mil contract

Alam Maritim Resources Bhd has secured a contract worth RM182mil from an independent oil and gas (O&G) exploration and production company for the provision of underwater services comprising subsea inspection, maintenance and repair. In a filing with Bursa Malaysia, the company said its wholly owned subsidiary Alam Maritim (M) Sdn Bhd had received the letter of award from the independent O&G company. The contract was for a period of three years, with an extension option exercisable by its client for another year. (Source: The Star)

Foreign News

U.S. Stocks Decline as Optimism Fades After Cyprus Deal

U.S. stocks fell, after the Standard & Poor’s 500 Index rose to within a point of its record high, amid concern Cyprus’s bank-restructuring plan will pave the way for losses on deposits in other European nations. The S&P 500 fell 0.3 percent to 1,551.69 at 4 p.m. in New York, after rallying as much as 0.5 percent earlier. The Dow Jones Industrial Average lost 64.28 points, or 0.4 percent, to 14,447.75. About 5.9 billion shares traded hands on U.S. exchanges today, 6.1 percent below the three-month average.

European Stocks Decline as Cyprus Optimism Wanes

European stocks declined as a report sparked concern a rescue plan for Cyprus that involves shrinking its banking system may set a precedent for other euro- area lenders. The Stoxx Europe 600 Index (SXXP) slid 0.3 percent to 293.25 at the close of trading, after rising as much as 1 percent and falling as much as 0.5 percent. The index has still gained 4.9 percent so far this year.

Emerging Stocks Rise on Cyprus as Brazilian Equities Drop

Emerging-market stocks advanced for the first time in three days after Cyprus avoided a disorderly default by agreeing on the outline of a bailout. Brazilian equities dropped to an eight-month low. The MSCI emerging-markets stock gauge rose 0.7 percent to 1,022.27 in New York. Cyprus agreed on an accord with creditors, paving the way for 10 billion euros ($13 billion) of emergency loans to stave off the threat of default.

Euro Trades Near 4-Month Low as Cyprus Spurs Debt Crisis Jitters

The euro traded 0.2 percent from a four-month low as a Cyprus bailout plan to tax bank depositors cast doubt on the safety of financial assets in the region. The 17-nation currency held its biggest decline in almost nine months ahead of debt auctions in Italy where lawmakers are still trying to form a government after inconclusive elections last month. The yen traded near a three-week high before Bank of Japan (8301) Governor Haruhiko Kuroda speaks to lawmakers today.

Pound Rises to Six-Week High Against Euro on Cyprus; Gilts Gain

The pound rose to a six-week high against the euro amid concern political wrangling over a 10 billion-euro ($13 billion) bailout of Cyprus has undermined faith in Europe’s financial system. Sterling extended two weeks of gain versus the common currency as Reuters reported Dutch Finance Minister Jeroen Dijsselbloem as saying the Cypriot rescue plan, which included losses for some bondholders and depositors, may become a template for euro-area bank bailouts. The pound was also supported as an U.K. industry report showed house prices rose this month. Gilts advanced, pushing 10-year yields to the lowest level this year.

(Source: Bloomberg)