Market Thoughts

US stocks ended higher Thursday lifted by an upbeat jobless claims report, with the Dow and S&P 500 closing at fresh levels, while weakness in large tech companies limited gains on the Nasdaq. Similarly, European shares closed higher after better-than-expected initial jobless claims data from the U.S. The numbers are important as a key metric for Fed policy makers, who have said they may taper off asset purchases once the labor market improves.

On the local exchange, the FBM KLCI rose 10.84 points to a new peak of 1707.04 points. Following the positive performance of US and European markets, we expect the FBM KLCI to test its resistance of 1710 points and extend its record high.

Stocks might lure investor interest are: Dayang and Petra Energy as the media reported that they may secure the RM3b hook up, construction and commission portion of the Pan Malaysian cluster of jobs; MBF after the major shareholders revised higher its offer price to RM1.775 per share and RM0.775 per warrant to privatize the company; and Mitrajaya following the group has secured RM11.7m contract from East Economic Region Development Council.

Malaysia News & Highlights

20 destinations on Malindo Air's radar

2-YEAR TARGET: Malindo Air plans to fly new routes such as China, Japan, South Korea and Indonesia from June. MALAYSIA'S first hybrid airline Malindo Air has mapped out a strategy to fly to some 20 destinations such as China, Japan and South Korea over the next two years. The airline's chief executive officer Chandran Ramamuthy said between now and June, Malindo Air will fly to Miri, Sibu, Bintulu, Penang and New Delhi. Malindo Air started its maiden flight on March 22 from Kuala Lumpur International Airport (KLIA) in Sepang. Currently, it offers four daily flights between KLIA and Kuching and three daily flights between KLIA and Kota Kinabalu. In the second half of this year, the airline hopes to fly to China, northern Japan, South Korea and Indonesia from the klia2 terminal, Chandran said. Klia2, the country's new low-cost carrier terminal, is slated to open on June 28 this year. It will be able to accommodate up to 45 million passengers a year. (Source: Business Times)

EPF accepts Petronas offer for MISC stake

The Employees Provident Fund (EPF) has accepted Petroliam Nasional Bhd's enhanced takeover offer for its stake in MISC Bhd for RM5.50 per share, MISC said in a statement yesterday. This came three days after Business Times had reported, quoting a banker close to the EPF, that the pension fund would not reject the enhanced offer. The EPF acceptance raises Petronas' stake in MISC to 79.77 per cent from 70.27 per cent previously, according to Bloomberg. MISC's shares closed one sen lower at RM5.41 yesterday. (Source: Business Times)

E&O has sold all 73 landed properties in RM260.6mil Villas By-The-Sea project

Eastern & Oriental Bhd (E&O) has completely sold all the 73 landed properties in the RM260.6mil Villas By-The-Sea project. The first batch of 40 two- to three-storey detached villas were sold and delivered to the purchasers in 2009, while the second batch of 33 units of three-storey detached and three-storey super-semi-detached villas were recently completed and delivered. The project was a collaboration between E&O, CIMB-Mapletree Management Sdn Bhd (CIMB-Mapletree) and the Al Salam Bank of Bahrain, the parties who had signed an agreement in 2006 to jointly-develop the villas. A private event was held in Penang to mark the culmination of this successful collaboration. (Source: The Star)

MBf’s privatisation offer revised

MBf Holdings Bhd’s joint-offerors have revised upwards their privatisation offer for the company for a second time to RM1.775 for the mother share and 77.5 sen for the warrant. These offer prices are higher than the first revision of RM1.70 (mother share) and 70 sen (warrants) on March 14, which were, in turn, higher than the first time the privatisation bid was announced at RM1.50 for the mother share and 50 sen for the warrants. StarBiz had reported at the end of last month that MBf minorities would most likely remain “adamantly opposed” to the previous offer price. A minority shareholder had told StarBiz then that an offer deemed fairer would be around RM1.85 per share. The minority shareholder had said that the rationale for the RM1.85 that was being requested had factored in the 35-sen special dividend on top of the original takeover offer price of RM1.50. (Source: The Star)

Axiata pre-qualified to bid for Myanmar mobile licence

The government of Myanmar has announced 12 international consortia that have pre-qualified to bid for two mobile licences, a report by Reuters showed.“The pre-qualified applicants would be required to submit their applications to the committee by June 3, 2013,” the Telecommunications Operator Tender Evaluation and Selection Committee said on its website yesterday. The committee expects to announce the two winners that would receive 15-year telecommunications licences by June 27, 2013. Axiata Group Bhd, along with several telecommunications companies from Europe, China, Japan and Singapore have pre-qualified for the bid. DiGi.Com Bhd’s major shareholder Telenor ASA is also in the running to bid for the two licences. (Source: The Star)

Trading in KLCCP to be suspended

The last day for the trading of KLCC Property Holdings Bhd’s (KLCCP) shares on the Main Market of Bursa Malaysia is on April 22. Trading will be suspended the following day. Its investment banker CIMB said this was pursuant to the entitlement date for the bonus redeemable preference shares issue on April 29. It said in a Bursa Malaysia filing that upon completion of the corporate exercise, its resultant stapled securities – every one stapled security comprising one share stapled to one unit – will be quoted and traded as one security on Bursa Malaysia and would not be able to be traded separately. (Source: The Star)

LTH buys stake in Petra Energy

Lembaga Tabung Haji has emerged as a substantial shareholder in Petra Energy Bhd with a direct stake of 6.51%. It had 20.94 million shares in Petra now which it acquired on Monday. (Source: The Star)

Offerors hold 98% stake in TWP

Tradewinds Plantation Bhd’s (TWP) potential privatisation by joint-offerors Perspective Lane Sdn Bhd, Kelana Venture Sdn Bhd, Seaport Terminal (Johor) Sdn Bhd and Acara Kreatif Sdn Bhd has received valid acceptances to the said offer of 127.08 million shares (or 24.02%) of its issued and paid-up share capital. Pursuant to this, the joint-offerors and persons acting in concert now collectively hold 97.72% of TWP’s issued and paid-up share capital. “As stated in the offer document, the joint-offerors do not intend to maintain the listing status of TWP if they receive acceptances under the offer, resulting in them holding in aggregate of 90% or more of the TWP’s shares, and intend to compulsorily acquire any outstanding offer shares for which valid acceptances have not been received,” the company said in a filing Bursa Malaysia. (Source: The Star)

Tadmax expects to be back in the black

Tadmax Resources Bhd expects to be back in the black this year with potential disposals of tracts of land in Selangor and Indonesia. Managing director and chief executive Datuk Faizal Abdullah said it is currently talking to several parties to sell its 319ha in Pulau Indah, Selangor, and another 40ha in Papua New Guinea. "We have spoken to several companies who have shown keen interest in our land on Pulau Indah. Faizal said the company is expected to net a profit of at least RM250 million once the sale of Pulau Indah and Papua New Guinea land goes through. The company has been posting losses since 2009. (Source: Business Times)

UMW Toyota Motor to beef up sales

UMW Toyota Motor Sdn Bhd will strengthen its operations to meet an initial sales target of more than 105,500 units for its Toyota and Lexus brands this year. UMW Toyota Motor president Datuk Ismet Suki said in the area of after-sales, the company would strive for more than 1.14 million vehicles serviced. “We strongly believe that the automotive industry would continue to grow despite the prevailing challenging market conditions,” he at the opening of a 3S (sales, service and spare parts) and body and paint centre yesterday. (Source: The Star)

Foreign News

U.S. Stocks Rise as Retailers Rally, Jobless Claims Fall

U.S. stocks advanced, extending a rally in the Standard & Poor’s 500 Index to a fourth day, as retailers climbed amid rising March sales and jobless claims dropped more than estimated. The S&P 500 advanced 0.4 percent to 1,593.37 at 4 p.m. in New York, setting a high for the second straight day. The Dow Jones Industrial Average increased 62.90 points, or 0.4 percent, to 14,865.14, its third-straight record. About 6.2 billion shares changed hands on U.S. exchanges, in line with the three- month average.

Obama Budget Shows $1 Trillion Tax Gap With Republicans

President Barack Obama and congressional Republicans are $1 trillion and a conceptual leap apart on taxes, a policy gap accentuated by the administration’s 2014 budget. Obama yesterday proposed higher taxes for top earners, estates, private-equity managers and tobacco users, wrapped inside a call for “reforming our tax code.” Republicans instantly rejected any tax increase as unacceptable.

Jobless Claims in U.S. Plunged More Than Forecast Last Week

Applications for unemployment benefits in the U.S. plunged more than forecast last week unwinding a surge caused by the Easter holiday and spring break at schools. Jobless claims decreased by 42,000 to 346,000 in the week ended April 6, from a revised 388,000, Labor Department figures showed today in Washington. The median forecast of 49 economists surveyed by Bloomberg called for a drop to 360,000. A Labor Department official said no states were estimated and there was nothing unusual in the data.

Australia’s Unemployment Rate Jumps to Three-Year High: Economy

Australia’s unemployment rate climbed in March to the highest level in more than three years, sending the local dollar and bond yields lower as traders added to bets the central bank will resume interest rate cuts. The jobless rate rose to 5.6 percent from 5.4 percent, the statistics bureau said in Sydney, the highest since November 2009. That compares with the median estimate for unemployment to hold steady in a Bloomberg survey of 24 economists. The number of people employed fell by 36,100, almost five times more than economists forecast.

China Lending Tops Forecasts While Adding to Financial Risks

China’s new yuan loans and money supply exceeded analyst estimates last month, aiding the nation’s recovery from the slowest growth in 13 years while adding to financial risks that may presage tighter credit. New local-currency lending in March was 1.06 trillion yuan ($171 billion), the People’s Bank of China said in Beijing. That compares with the 900 billion yuan median estimate in a Bloomberg News survey of 34 economists and 620 billion yuan in February. M2, China’s broadest measure of money supply, rose 15.7 percent, compared with the median forecast for 14.6 percent.

N.Korea Calls Zone Closing Temporary Amid Missile Test Alert

North Korea called the closing of an industrial park jointly run with South Korea temporary, signaling a possible moderation in tone as the region remained on alert for a missile launch by the totalitarian state. While blaming the South for this week’s suspension of operations at the Gaeseong complex north of the border, the move is “temporary,” the official Korean Central News Agency said, citing an unidentified government spokesman. South Korean Unification Minister Ryoo Kihl Jae called for dialogue between the two sides to resolve the issue.

(Source: Bloomberg)