Market Thoughts

US stocks finished at session lows Monday, posting their sharpest one-day drop this year, as disappointing economic data from China triggered a selloff in commodities. Meanwhile, major averages added to their losses following two explosions at the Boston Marathon finish line, injuring several spectators and runners. Similarly, European shares closed lower after news of an unexpected slowdown in China sparked a commodities sell-off. On the local exchange, the FBM KLCI was flat after shedding 0.76 points to 1697.77 points. The index came off its historical high and we expect further downside today following the bearish performance of US markets.

Stocks that may lure investors’ interest are: Puncak Niaga as its unit bagged a RM187.3 million oil and gas contract; Bina Puri following it secured a warehouse construction project in Thailand; Dijaya Corp as it has acquired prime development land in Selangor which earmarked for a township development with GDV of RM20 billion; and Hwang-DBS following it has given permission from Bank Negara to start preliminary talks with AMMB Holdings and Affin Holdings for the proposed sales of its entire 100% shareholding in HwangDBS Investment Bank Bhd.

Malaysia News & Highlights

DRB-Hicom eyes RM5bil gross development value

DRB-Hicom Bhd has plans to develop its sizeable parcel of land spanning 365.02ha in Johor at a gross development value (GDV) of RM5bil. “The balance 365.02ha should yield a GDV of about RM5bil. The first release (launch) is targeted to be in the second quarter of 2014,” chief operating officer Datuk Mohamed Razeek Md Hussain Maricar toldStarBiz. (Source: The Star)

Hwang-DBS gets nod for sale talks, offer in region of RM1.4bil

Hwang-DBS (M) Bhd has obtained permission from Bank Negara to commence preliminary negotiations with Affin Holdings Bhd and AMMB Holdings Bhd for the potential sale of its entire 100% shareholding in HwangDBS Investment Bank Bhd. It said the central bank's approval, via a letter dated April 12, was valid for six months. (Source: The Star)

Dijaya buys land for RM1.3bil to build self-contained township in Canal City, Selangor

Property developer Dijaya Corp Bhd has acquired 474.29ha of prime development land in Canal City, Selangor, earmarked for an integrated self-contained township development, for RM1.3bil. The company told Bursa Malaysia that it had entered into an agreement to acquire the land from Permodalan Negeri Selangor Bhd (PNSB) via a deferred payment method spanning over a period of up to 20 years. (Source: The Star)

Puncak Niaga in RM187.3mil oil and gas deal

Puncak Niaga Holdings Bhd's wholly owned sub-subsidiary, GOM Resources Sdn Bhd, has signed a service contract worth US$62.4mil (RM187.3mil) with HESS Exploration And Production Malaysia B.V. In a filing with Bursa Malaysia, Puncak Niaga said the contract included the provision of integrated transportation and installation of offshore facilities for early production scheme, integrated gas development project and North Malay basin field. (Source: The Star)

SP Setia: KL land buy completed at RM294.97mil

SP Setia Bhd has completed the acquisition of a freehold land measuring 12,456 sq m in Kuala Lumpur for RM294.97mil. “The board of SP Setia is pleased to announce that the proposed acquisition has been completed,” it told Bursa Malaysia. The company announced in December last year that its subsidiary, Setia Hicon Sdn Bhd, had bought the parcel of land on which the British High Commission is located in Jalan Ampang. (Source: The Star)

Bina Puri wins RM80mil Thai job

Bina Puri Holdings Bhd has secured a contract worth 808.8 million Thai baht (about RM80.88mil) from Thai Consumer Distribution Centre Co Ltd to design and build a distribution centre in Bangkok. In a filing with Bursa Malaysia, Bina Puri said its unit Bina Puri (Thailand) Ltd had accepted the letter of award to design and build Unilever Distribution Centre 2 Thailand at Ban Klong Prueng, Suwinthawong Road. (Source: The Star)

TAS gets RM160m vessel contracts

TAS Offshore Bhd has secured new contracts for the sale of two units of anchor-handling tug oil recovery supply vessels and two units of offshore construction vessels with an aggregate value of about RM160mil. The company told Bursa Malaysia that the four vessels were sold to overseas customers. (Source: The Star)

Foreign News

S&P 500 Falls Most Since November as Chinese Growth Slows

U.S. stocks tumbled, sending the Standard & Poor’s 500 Index to its biggest drop of the year as a gauge of market volatility jumped the most in 20 months, after China’s economy grew at a slower pace than forecast. The S&P 500 dropped 2.3 percent to 1,552.36 in New York, the biggest decline since Nov. 7. The index has lost 2.6 percent since April 11. The Dow Jones Industrial Average erased 265.86 points, or 1.8 percent, to 14,599.20. The Russell 2000 Index, which is made up of smaller companies, retreated 3.8 percent, the most in 17 months. About 8.5 billion shares traded on U.S. exchanges today, 33 percent higher than the three-month average.

European Stocks Decline on Chinese Economic Growth Report

European stocks retreated, following their biggest weekly gain in a month, as China’s economy grew at a slower pace than estimated and a gauge of manufacturing in the New York area missed forecasts. The Stoxx Europe 600 Index declined 0.7 percent to 290.43 at the close in London. The benchmark measure gained 1.8 percent last week, its biggest rally since March 8. The gauge has still fallen 1.1 percent so far this month as reports on U.S. jobs and services missed economists’ estimates.

U.K Stocks Drop on China GDP Report; Fresnillio Tumbles

U.K. stocks declined, following the second-biggest weekly increase this year for the benchmark index, as slower-than-forecast economic growth in China led to a selloff in the shares of mining companies. The FTSE 100 Index fell 40.79 points, or 0.6 percent, to 6,343.6 at the close in London. The gauge climbed 2.2 percent last week, its biggest advance since early January, as Chinese imports beat forecasts. The broader FTSE All-Share Index slid 0.7 percent and Ireland’s ISEQ Index dropped 0.5 percent today.

Emerging-Market Stocks Slide Most Since July on China

Emerging-market stocks plunged the most since July, led by commodity producers, after China’s economic growth unexpectedly slowed. The MSCI Emerging Markets Index sank 1.6 percent to 1,003.29, the most since July 23. Government data today showed Chinese gross domestic product expanded 7.7 percent in the first quarter from a year earlier, less than the 8 percent median forecast in a Bloomberg survey of 41 economists. March industrial production also increased less than estimated.

Asian Stocks Drop as China GDP Grows Less Than Estimated

Asian stocks dropped, with the regional benchmark index retreating from the highest level in 20 months, after Chinese economic growth and industrial production expanded less than economists’ estimated. The MSCI Asia Pacific Index fell 0.7 percent to 137.22 as of 8:25 p.m. in Tokyo, with about three shares sliding for each that rose. Chinese gross domestic product expanded 7.7 percent in the first quarter, missing economists estimates, data released today showed.

China Stuck With Sub-8% Growth as G-20 Confronts Slowdown

China’s longest streak of expansion below 8 percent in at least 20 years is sending a message to suppliers and investors around the world to get used to slower growth in the second-biggest economy. The 7.7 percent increase in first-quarter gross domestic product from a year earlier marked the first time in data going back two decades that four periods in a row have seen growth of less than 8 percent. The figure released yesterday by the National Bureau of Statistics in Beijing was also the worst miss of analyst estimates since the third quarter of 2008, according to data compiled by Bloomberg. A sustained shift to a lower-growth gear would affect everything from iron-ore demand in Australia to the fortunes of companies including carmaker General Motors Co., who are counting on China to drive profits. It increases challenges for global policy makers contending with Europe’s debt turmoil and Japan’s record monetary easing, with BHP Billiton Ltd. saying GDP gains will moderate toward 6 percent later this decade.

Yen Declines Amid BOJ Stimulus as Draghi Sees No Currency War

The yen fell against major peers before Bank of Japan board member Ryuzo Miyao speaks this week amid speculation the central bank will continue monetary stimulus even after a U.S. warning to refrain from competitive devaluation. European Central Bank President Mario Draghi yesterday said there is no currency war after the U.S. Treasury said Japan must avoid weakening the currency to boost exports. The dollar fell versus most of its 16 major counterparts before U.S. data that may show inflation was contained and growth in factory output slowed.

(Source: Bloomberg)