Market Thoughts

US markets ended near their best levels Tuesday, with the Dow posting a new high and S&P 500 finishing less than 2 points from its closing peak. Stocks moved higher on a handful of encouraging economic reports that pointed to an improving economy and as investors seemed to temporarily overlook worries in the euro zone. Similarly, European shares closed in positive territory, lifted by data showing continued gradual improvement in the U.S. economy, but ongoing worries over Cyprus kept a damper on gains. On the local market, the FBM KLCI rose 8.94 points to 1652.83 points after hitting an intraday high of 1660 points. We expect the index to be positive today following the optimism in the US and Europe with potential profit taking to kick in due to concern on the general election.

Stocks in action are: Sime Darby as the group plans to expand its healthcare division in Asia; Ayer Molek after Bursa has dismissed the group appeal from being delisted from the stock exchange; and George Kent as its water concession has been terminated in Papua New Guinea.

Malaysia News & Highlights

Sime access to Indonesia via JV with Aussie Ramsay, IPO of hospital assets possible

Sime Darby Bhd is tying up with Australia's largest hospital operator Ramsay Health Care Ltd, in a move that gives the local conglomerate access to the Indonesian market and possibly lead to an initial public offering of their hospital assets. Sime Darby told Bursa Malaysia yesterday that its unit Sime Darby Holdings Bhd would set up a joint venture with AH Holdings Health Care Pty Ltd, a wholly-owned subsidiary of Ramsay. (Source: The Star)

Former Axis adviser charged with four counts of furnishing Bursa with false statements

A former Axis Incorporation Bhd adviser has claimed trial in the Sessions Court here to supplying false company income information to Bursa Malaysia Securities Bhd. Lee Koon Huat, 58, was charged with four counts of furnishing Bursa Malaysia with false statements in the form of condensed consolidated income statements for Axis. The alleged offences occurred at the offices of Bursa Malaysia Securities at Bukit Kewangan here between Aug 28, 2006 and May 29, 2008. (Source: The Star)

Bursa rejects Ayer Molek’s delisting appeal

Bursa Malaysia has dismissed The Ayer Molek Rubber Company Bhd’s appeal from being delisted from the stock exchange until the Federal Court decides on Ayer Molek’s claim for the return of the 287.7ha in Segamat, which the company says is central to its regularisation plan. (Source: Business Times)

DRB-Hicom, Saab AB ink MoU

Automotive conglomerate DRB-Hicom Bhd has signed a memorandum of understanding (MoU) with Sweden’s Saab AB to outline an industrial cooperation to look into areas of technology and expertise transfer to Malaysia. DRB-Hicom said the MoU broadened and deepened the existing relationship between the two companies, which had already signed an Industrial Cooperation Teaming Agreement at Lima 2011 to collaborate on an Airborne Early Warning and Control System. (Source: The Star)

Perodua expands parts distribution ops centre

Perusahaaan Otomobil Kedua Sdn Bhd (Perodua) has expanded its parts distribution operations centre to a larger facility here to better serve its customers in Sabah and Sarawak via faster delivery time for parts as well as a larger inventory. The new centre will allow Perodua to increase the number of line items by 300% to 6,600 units from 2,200 units to effectively increase the total stock value by 329% to RM1.2mil from RM280,000 previously. The centre will also be almost 2.5 times larger than the previous centre with a total land size of 20,000 square feet from about 8,200 square feet. (Source: The Star)

George Kent's project terminated

George Kent (Malaysia) Bhd, a company specialising in mechanical and engineering work, said its water concession in Papua New Guinea has been terminated. In a statement to the stock exchange, George Kent said its 19 per cent associate company, PNG Water Ltd, has been notified by Eda Ranu that its concession agreement for a water project in Papua New Guinea has been terminated. In 1997, PNG Water had entered into a 22-year concession agreement with NCD Water & Sewerage Pty Ltd for a water concession business in Port Moresby. The concession was supposed to expire in 2019. (Source: Business Times)

Foreign News

S&P 500 Rebounds Toward Record on Housing, Orders Data

The Standard & Poor’s 500 Index rebounded to within two points of its record after orders for U.S. durable goods climbed more than forecast in February and home prices increased the most since June 2006. The S&P 500 added 0.8 percent to 1,563.77 at 4 p.m. in New York, after the equity benchmark fell 0.3 percent yesterday. The Dow Jones Industrial Average rose 111.90 points, or 0.8 percent, to 14,559.65, reaching another record. About 5.2 billion shares changed hands on U.S. exchanges today, 18 percent below the three-month average.

Orders for U.S. Durable Goods Rise More Than Forecast

Orders for U.S. durable goods climbed more than forecast in February as companies looked past budget squabbles in Washington and focused on expanding capacity to meet growing demand. Bookings (DGNOCHNG) for goods meant to last at least three years rose 5.7 percent, the most since September, after a 3.8 percent drop the prior month, the Commerce Department said today in Washington. Other reports showed sales of new homes in February capped the best two months since 2008 and residential real- estate prices rose in January by the most since June 2006. Households are also poised to keep spending as rising property values help repair finances tattered by the recession even as concern about government budget cuts shakes Americans’ sentiment

European Stocks Rise on U.S. Data; Morrison, Celesio Gain

European stocks advanced as better- than-estimated U.S. durable-goods orders and housing data helped offset concern euro-area lawmakers will impose losses on bank deposits in the region. The Stoxx Europe 600 Index added 0.2 percent to 293.76 at the close in London. The benchmark gauge is heading for a 10th month of gains, its longest winning streak since July 1997, after U.S. data beat forecasts and amid optimism central banks will continue monetary stimulus.

Emerging-Market Stocks Rise on U.S. Data as Mexico Climbs

Emerging-market stocks rose for a second day, led by Mexico, amid better-than estimated American economic reports. Brazilian equities rebounded from an eight- month low as exporters followed commodities higher. The MSCI Emerging Markets Index added 0.6 percent to 1,028.65 in New York. Data showing U.S. durable-goods orders an home prices rose more than forecast bolstered the outlook for the world’s biggest economy. Cypriot Finance Minister Michael Sarris sought to play down calls for the nation to exit the euro after Cyprus mooted a new rescue plan.

Euro Near 4-Month Low Ahead of Confidence Data, Italian Auctions

The euro traded within 0.3 percent of a four-month low versus the dollar as concerns that debt- crisis contagion will spread threatened to sap confidence in the 17-nation currency bloc. The shared currency remained lower for a second day after dropping 1.1 percent on March 25 as Italy prepared to auction as much as 7 billion euros ($9 billion) of bonds, and ahead of data forecast to show continued weakness in euro-area consumer sentiment.

(Source: Bloomberg)