Market Thoughts

US stocks finished off their best levels but the Dow still posted a fresh closing high Tuesday. And the S&P 500 traded within 2 points of its all-time peak earlier in the session. Meanwhile, European shares closed mixed, with upward momentum coming from the basic resources sector. Miners in particular rose on better-than-expected results from aluminum producer Alcoa, which kicked off the first quarter earning season on Monday. On the local exchange, the FBM KLCI rose 2.28 points to 1690.27 points. Following the recent optimism, the index could retest its resistance of 1700 points and attempt a new record high.

Stocks in action are: Far East, has proposed a final net dividend of 17.5 sen/share; TDM following its proposed final net dividend of 22 sen/share, and corporate exercises of bonus issue and share split; and Land & General for its proposed renounceable rights issue and ICULS.

Malaysia News & Highlights

New plant to boost competitive edge

NESTLE (Malaysia) Bhd, which currently controls half of the domestic ready-to-drink market, is set to shake up the food and beverage market when its spanking new plant in Shah Alam opens in mid-2014. The 40,601.9 sq m land on which the plant is being built, is located next to Nestle's existing factory in Shah Alam. It was bought from British American Tobacco two years ago. "The ready-to-drink market is very competitive and important to us as Nestle Malaysia is a market leader in the segment with a 50 per cent share,"Nestle Malaysia managing director Alois Hofbauer said in an interview. He however, did not reveal the investment amount nor capacity of the new plant. (Source: Business Times)

WCT: RM1b Oman job has never taken off

WCT Bhd says its RM1 billion highway job in Oman has never taken off as the contract is never formalised or completed. The company said since receiving the notification of acceptance of the tender in mid-2012 from Oman's Transport and Communications Ministry, the remainder of the procedures to formalise the contract had not been completed. "Hence, the company did not receive any notification to commence work and construction works for the project had therefore in fact never been commenced," it told Bursa Malaysia yesterday. Oman awarded the highway project to WCT in August last year. WCT said it was notified on Monday of the cancellation by the Omani government, without specific reason. (Source: Business Times)

CIMB Thai expects Q1 loans to grow 8pc

CIMB Thai Bank pcl said yesterday it expected first quarter loan growth of eight per cent, compared with its full-year target of 25 per cent to 30 per cent. Loan growth in the January-March period was mainly due to demand from the housing sector and small- to medium-sized businesses, president Subhak Siwaraksa told reporters. The Thai unit of Malaysia's CIMB Group Holding Bhd is due to report first-quarter earnings later this month. Subhak said the bank had no plans to raise capital in the next three years because it had sufficient funds to run its business. (Source: Business Times)

Gabungan AQRS plans to sell land

Gabungan AQRS Bhd is proposing to dispose of two parcels of land in Penang to Ocean Mix Sdn Bhd for RM50 million cash. In a filing to Bursa Malaysia yesterday, the company said the disposal will allow the group to realise an immediate capital gain and the cash will be used for its property development activities. The estimated gain from disposal is about RM15.44 milion, it said. (Source: Business Times)

Maxis expands to cover new Apple devices

Maxis Bhd has made available its “super-fast Internet through its 4G LTE network” for customers using the iPhone 5, iPad mini and iPad 4.The telco said the three Apple devices joined the Nokia Lumia 920 and HTC One XL which were the first two smartphones to be activated on Maxis’ 4G LTE network. “Since the launch of our high-speed 4G LTE network on Jan 1, we have worked hard to expand our footprint. We have quadrupled our 4G LTE coverage, allowing approximately 100,000 customers to enjoy super fast Internet. “With this announcement, even more customers will be able to enjoy incredible Internet speeds from Maxis,” joint chief operating officer Mark Dioguardi said in a statement.(Source: The Star)

KSK board accepts SCR offer

KSK Group Bhd’s board of directors have deliberated and decided to present the proposed selective capital reduction and repayment (SCR) exercise to its shareholders for their consideration.In a filing with Bursa Malaysia, KSK, formerly known as Kurnia Asia Bhd said its board had a meeting yesterday to deliberate on the letter of offer from major shareholder, Tan Sri Kua Sian Kooi, requesting the company to undertake a selective capital reduction and repayment exercise. Kua, who is also the executive chairman of KSK, holds a 51.38% stake in the company, equivalent to 770.65 million shares out of the total 1.5 billion shares. (Source: The Star)

Dividend, bonus issue from TDM

TDM Bhd has declared a tax-free, first and final dividend of 22 sen per share for the financial year ended Dec 31, 2012 (FY12) and also proposed a bonus issue and share split. In a filing with Bursa Malaysia, the company said it has proposed a bonus issue of 49.39 million new TDM shares on the basis of one bonus share for every five existing shares held. It has also proposed for a share split, which involved the subdivision of each TDM share into five ordinary shares of 20 sen each in TDM.It also proposed a corporate exercise involving a share buy-back up to 10% of the issued and paid-up share capital.In a separate filing, the group said its revenue declined 11.65% to RM455.26mil, while net profit fell 36.5% to RM103.36mil for FY12 compared to the previous corresponding period. (Source: The Star)

L&G proposes RM77.8mil cash call

Land & General Bhd (L&G) has proposed a cash call worth RM77.78mil to fund its acquisition of a 13-storey office tower in Putrajaya for RM72.49mil cash from a subsidiary of Malaysia Land Properties Sdn Bhd. In an announcement, the company told Bursa that the multiple proposals included a rights issue of RM77.78mil nominal value of five-year, 1%, irredeemable convertible unsecured loan stocks (Iculs) at 100% of the nominal value of 13 sen each on the basis of 13 sen for every existing share of 20 sen each in L&G. The conversion price of the Iculs is 26 sen for one new L&G share, it added. It expected the proposals to be completed by the second quarter of 2014. (Source: The Star)

LBS Bina likely to make major announcement, share price up

LBS Bina Group Bhd would be making a “major announcement” following the suspension of its securities, sources said. It is widely speculated that the property firm would be signing an agreement with Zhuhai Holdings Investment Group Ltd to dispose of its assets worth RM660mil in Zhuhai, China to the latter. (Source: The Star)

Wijaya Baru to sell Klang land for RM48.35mil

Wijaya Baru Development Sdn Bhd, a wholly-owned subsidiary of Tadmax Resources Bhd, has proposed to dispose of 24.28ha of leasehold land in Klang to Inai Kiara Sdn Bhd for RM48.35mil.Tadmax said in a filing with Bursa Malaysia yesterday that the rational for the sale was to dispose of idle assets, which were in excess of requirement and to reduce the group's borrowings. Wijaya Baru offers building and construction services and infrastructure development, road and drainage construction, dredging and turnkey contracting. (Source: The Star)

Secondary property market transaction value to go up

The Malaysian Institute of Estate Agents (MIEA) is targeting the transaction value of the secondary property market to increase by between 5% and 8% this year. MIEA president Nixon Paul says: “Historically, the transaction value would increase at about that range every year.” Speaking at a press conference on the Malaysian Secondary Property Exhibition (Maspex) 2013, Paul said for this year, the market would see a dramatic increase in residential properties priced from RM300,000 to RM700,000. MIEA will be organising the inaugural Maspex 2013, featuring 32 real estate agencies from April 12 to April 14 at the Tropicana City Mall here. (Source: The Star)

Foreign News

U.S. Stocks Rise Amid Earnings Optimism, China Data

U.S. stocks rose, giving the Standard & Poor’s 500 Index its first back-to-back gain in more than three weeks, on optimism over earnings and as commodities gained amid a report showing China’s inflation slowed. Raw-materials producers rose 1.1 percent amid speculation that tamed inflation would reduce pressure on Chinese policy makers to tighten credit. Microsoft Corp. and Intel Corp. rallied more than 3.1 percent as investors snapped up technology shares, the worst performing group this year. Alcoa Inc. was unchanged after posting earnings. J.C. Penney Co. slumped 12 percent as it ousted Chief Executive Officer Ron Johnson and reinstated his predecessor, Myron E. Ullman III.

Bernanke Says Fed to Press Banks to Curb Liquidity Risk

Federal Reserve Chairman Ben S. Bernanke said the Fed plans to avert strains in the banking system by pushing financial companies to better manage liquidity risk and reduce reliance on wholesale funding. Regulators “will continue to press banks to reduce further their dependence on wholesale funding, which proved highly unreliable during the crisis,” Bernanke said in a speech yesterday in Stone Mountain, Georgia. “Banks of all sizes need to further strengthen their ability to identify, quantify and manage their liquidity risks.”

EU Said to Push to Fine Banks Over Yen Libor and Euribor Rates

European Union regulators are pushing to fine banks before the end of the year for attempting to fix benchmark interest rates tied to the euro and yen currencies, two people familiar with the investigation said. Several banks want to resolve the antitrust probe and may negotiate with the EU for a settlement as early as October, said the people, who asked not to be named because the talks are in private. The EU would seek to include U.S. firms, such Citigroup Inc., that so far haven’t been punished by U.K. or U.S. regulators, one of the people said.

China Tightening Pressure Eases With March Inflation

China’s inflation eased more than forecast from a 10-month high as food-price gains ebbed, reducing pressure on policy makers to tighten credit as the world’s second-largest economy recovers from a slowdown. The consumer price index rose 2.1 percent in March from a year earlier, the National Bureau of Statistics said in Beijing. That compares with the 2.5 percent median estimate in a Bloomberg news survey of 38 economists and a 3.2 percent gain in February when spending for the Lunar New Year holiday pushed up prices.

Fitch Cuts China Yuan Debt Rating on Local Government Borrowing

Fitch Ratings Ltd. cut China’s long- term local-currency debt rating, citing increasing risks to the country’s financial stability given the lack of transparency in the increased borrowing of local governments. Fitch lowered the rating to “A+”, its fifth-highest level, from “AA-,” the London-based company said in an e- mailed statement today. The company estimates total credit in China’s economy, including various forms of so-called shadow banking, may have reached 198 percent of gross domestic product at the end of 2012, up from 125 percent at end-2008.

North Korea Warns Foreigners to Leave Seoul Amid Tensions

North Korea said foreigners in South Korea could be in danger and pulled its workers from an industrial park jointly run with the South, as Kim Jong Un escalated his campaign to raise tensions on the peninsula. Foreigners including business executives and tourists should prepare measures for shelter and evacuation in case of war, North Korean’s official Korean Central News Agency reported, citing the state-run Korea Asia-Pacific Peace Committee. South Korea’s government has said North Korea may conduct a nuclear test or launch a missile as soon as tomorrow.

(Source: Bloomberg)