Market Thoughts

US stocks turned higher Monday, reversing their earlier declines, as strong gains in materials and energy offset weak housing data. Still, the S&P 500 and Nasdaq are on track for their first monthly losses since last October. Meanwhile, European shares closed mixed after disappointing corporate and macroeconomic reports from the U.S. dented upbeat momentum from Italy after its successful presidential elections. On the local exchange, the FBM KLCI was flat after adding 0.40 points to 1706.68 points. We expext the index to remain sideways under its resistance of 1717 points with market direction to be influenced by US corporate results.

Stocks to watch are: BHIC as the group has been awarded two contracts worth a total of RM515m to supply ships and vessels to the government; UEM Land following the group disposed its 12.5 acres of land in Nusajaya to Kuok Brothers and Khazanah worth RM182m; and Destini following the group will be declassified as a Practice Note 17 (PN17) company today.

Malaysia News & Highlights

UEM Land sells Puteri Harbour land to Kuok Bros-Khazanah JV for RM182mil

UEM Land Holdings Bhd has agreed to dispose of 12.518 acres in Puteri Harbour to Kuok Brothers Sdn Bhd and Khazanah Nasional Bhd for about RM182mil. In a filing with Bursa Malaysia, UEM Land said that together with its subsidiary Bandar Nusajaya Development Sdn Bhd (BNDSB), it entered into a sale and purchase agreement (SPA) with Southern Marina Development Sdn Bhd for the land disposal. Southern Marina is a joint-venture company between the Kuok Brothers Group and Khazanah with a 70% and 30% respective stake via Huge Quest Realty Sdn Bhd and Tanjung Bidara Ventures Sdn Bhd. (Source: The Star)

KLCC starts work on RM5b project

KLCC (Holdings) Sdn Bhd will develop a new mixed-commercial project at the eastern corner of the Kuala Lumpur City Centre with a gross development value (GDV) of over RM5 billion. According to group chief executive officer Hashim Wahir, the new development is part of the company's master plan for the iconic mall. It will be undertaken by the company in a 50:50 joint venture with the Qatari Investment Authority via QD Asia Pacific Ltd, a subsidiary of Qatari Diar Real Estate Investment Co, the investment arm of Qatari Investment Authority. The construction, which started yesterday, is expected to be completed by end of 2017. (Source: Business Times)

Wah Seong inks deal with Japan's Shinko

Wah Seong Corporation Bhd has inked a joint-venture (JV) agreement with Shinko Ind Ltd from Japan to form a new JV company in a bid to combine expertise and capabilities in the manufacture of turbines and other related ancillary equipment. Wah Seong entered into the JV via wholly owned subsidiary PMT Industries Sdn Bhd, which will hold a 49% stake in the JV company - PMT Shinko Turbine Sdn Bhd - while Shinko will hold the rest. The principal objective of PMT Shinko Turbine would be manufacturing turbines and other related ancillary equipment, parts and spares. (Source: The Star)

Boustead unit bags RM515m BNS contracts

Boustead Heavy Industries Corp Bhd’s (BHIC) unit Contraves Advanced Devices Sdn Bhd (CAD) has accepted two contracts from Boustead Naval Shipyard Sdn Bhd (BNS) under the littoral combat ships (LCS) programme worth RM514.98 million. BHIC said the first contract is for the Thales underwater systems Captas towed array sonar, complete with simulators valued at RM287.01 million. The second is the Thales Nederland BV SMART-S main surveillance radar with simulators worth RM227.97 million. The two contacts are over an implementation period of up to 10 years, BHIC told Bursa Malaysia yesterday. (Source: Business Times)

Destini comes out of PN17 status

Destini Bhd will be declassified as a Practice Note 17 (PN17) company today. This is upon the completion of its regularisation plan. In a filing with Bursa Malaysia, the company, which offers maintenance, repair and overhaul services for the aviation and maritime industries, said the stock exchange operator had approved its application to be declassified from its PN17 status. (Source: The Star)

MASkargo settles RM6.67mil penalty with NZ commission

MASkargo Sdn Bhd, the aircargo unit of Malaysia Airlines (MAS), has settled NZ$2.6mil (RM6.67mil) in penalties with the New Zealand Commerce Commission (NZCC) for fixing aircargo prices. In a filing with Bursa Malaysia yesterday, MAS said the NZCC had made orders consistent with an agreement between the commission, MAS and MASkargo to settle the airfreight litigation. The New Zealand High Court ordered MASkargo to make the payment in four instalments over 18 months and contribute NZ$259,079.18 to the NZCC’s court costs, payable within 14 days. (Source: The Star)

ARREIT to buy factory in Penang

Amanahraya Real Estate Investment Trust (ARREIT) has entered into a sale and purchase agreement with Precico Electronics Sdn Bhd to acquire a factory in Penang for RM41.6mil. Arreit ventured into the agreement via trustee CIMB Islamic Trustee Bhd in a bid to acquire the factory buildings located at Lorong Perusahaan, Prai Industrial Estate Mukim 1 Seberang Perai Tengah. (Source: The Star)

United Malacca warns of scam

United Malacca Bhd disclosed yesterday that it had received forged documents purportedly signed by its directors authorizing the sale of 25,000 acres (10,000 ha) of plantation land in Kanabatangan, Sabah. The forged documents received are: - I) a purported power of attorney whereby United Malacca purportedly authorises a third party to sell the Millian-Labau land and collect the proceeds; and, ii) a letter purportedly signed by the directors of United Malacca confirming the validity of this power of attorney. (Source: The Edge)

Affin denies takeover by AMMB

Affin Holdings Bhd has denied that it is in talks with AMMB Holdings Bhd over a possible takeover by the latter. Affin deputy chairman Tan Sri Lodin Wok Kamaruddin said the banking group was not in talks with anyone with regards to any acquisition or divestment of its business, except for Affin’s negotiations with HwangDBS Investment Bank Bhd over the acquisition of the latter’s investment banking unit. (Source: The Edge)

Foreign News

U.S. Stocks Gain as Caterpillar Rises, Commodities Rally

U.S. stocks rose, after the biggest weekly loss in five months for the Standard & Poor’s 500 Index, as Caterpillar Inc. jumped and a rally in commodity prices spurred energy and raw-material producers. The S&P 500 increased 0.5 percent to 1,562.50 at 4 p.m. in New York. The gauge fell 2.1 percent last week, its biggest drop since November, as earnings from Bank of America Corp. and International Business Machines Corp. missed estimates. The Dow Jones Industrial Average added 19.66 points, or 0.1 percent, to 14,567.17 today. About 5.6 billion shares traded on U.S. exchanges, 12 percent below the three-month average.

Existing U.S. Home Sales Fall on Limited Inventory: Economy

Previously owned U.S. home sales unexpectedly dropped in March as a lean supply of properties kept the industry from generating a stronger recovery. A decline in the availability of distressed homes and still-tight access to credit are holding back buyers, impeding progress in a real-estate market that’s been a source of strength for the economy. Bigger gains may emerge when rising property values encourage more Americans to put their properties on the market.

European Stocks Rise on Italy President, BOJ Stimulus

European stocks rose, rebounding from the biggest weekly drop in five months, as Italy elected a president and the Group of 20 refrained from opposing the Bank of Japan’s stimulus policies. The Stoxx Europe 600 Index advanced 0.2 percent to 285.68 at the close of trading. The benchmark gauge pared an earlier gain of as much as 0.9 percent as U.S. home sales unexpectedly fell. The measure retreated 2.5 percent last week as economic data from the U.S. to China missed forecasts. It has still risen 2.2 percent this year.

Gold Rises With Oil; Commodity Shares Lead S&P 500 Higher

Gold climbed for a fifth day, the longest rally of the year, after the metal last week posted the biggest price slump in three decades. Oil rose and energy and raw-material producers led U.S. stocks higher. Gold has rebounded after reaching a more than two-year low on April 15. The metal entered a bear market this month amid decreased demand for a hedge against inflation and concern struggling European nations will sell gold to raise cash. Data from the Shanghai Gold Exchange and the the U.S. Mint showed demand for gold has surged following the biggest price slump in three decades.

Yuan Declines After Best Week in Six Months as Fixing Weakened

The yuan fell, following its best week in six months, after the People’s Bank of China set the currency’s fixing at a level that prevents it from strengthening. The PBOC cut the reference rate by 0.03 percent to 6.2415 per dollar today. That’s more than 1 percent weaker than April 19’s closing price, meaning the currency had to fall to stay within its permitted trading band. China needs to sacrifice short-term growth to make structural adjustments, central bank Governor Zhou Xiaochuan told Bloomberg News

(Source: Bloomberg)