Market Thoughts

US stocks finished near session highs Monday, with the S&P 500 setting a record close and the Nasdaq ending at its best level since November 2000, following a better-than-expected pending home sales report and after Italy's new prime minister named his cabinet over the weekend, ending two months of political deadlock in the nation.

Similarly, European shares closed higher on Monday, boosted by the formation of a growth and reform-minded government in Italy and hopes of central bank stimulus measures later this week. On the local exchange, the FBM KLCI fell 3.32 points to 1707.97 points. Following the optimism in the US and Europe, the FBM KLCI could retest its resistance of 1718 points today and attempt to extend its record high.

Stocks might lure investor interest today are: Sunway as the group bagged a RM222m building contract for a new mixed commercial project at the eastern corner of KLCC; Southern Steel following the group returns to the black with higher 3Q results; BTM Resources as the group disposed boiler for RM4.2m.

Malaysia News & Highlights

I&P plans luxury residential towers

I&P Group Sdn Bhd is hoping that its strategy of building luxury residential towers will lead to better results for the company. Its group managing director Datuk Jamaludin Osman said its first project, which is worth RM800 million, will be launched in Bandar Kinrara, Puchong, Selangor, this year. I&P, a wholly-owned unit of Permodalan Nasional Bhd, has 13 ongoing township projects and around 2,000ha landbank in the Klang Valley and Johor Baru. These include Bandar Baru Sri Petaling, TemasyaGlenmarie, Bandar Kinrara, Alam Impian and Alam Damai in the Klang Valley, and Taman Industri Jaya, Taman Rinting and Taman Perling in Johor. For the new project in Bandar Kinrara, Jamaludin said it will comprise five serviced apartment blocks totalling 1,200 units. Speaking to Business Times in an interview recently, he said the company will be launching the first block, featuring 236 serviced apartments, within the next two months. (Source: Business Times)

Ninian secures enough MBf shares to take company private

Tan Sri Dr Ninian Mogan Lourdenadin has secured enough shares in MBf Holdings Bhd, paving the way for him to take the financial services company private. In a statement yesterday, Ninian, through Tor Private Ltd, Nadin Holdings Sdn Bhd, Impact Action Sdn Bhd and Market Share Investments Ltd (joint offerors), managed to garner 571.2 million shares, or 98.9 per cent acceptance, needed to take the company private. "Based on the acceptance level, the joint offerors have received acceptances of not less than nine tenths in the nominal value of the offer shares," Hong Leong Investment Bank said on behalf of the joint offerors. Ninian and parties in concert also secured 262.8 million warrants, or 99.1 per cent of the total. He had revised the offer to RM1.775 per MBf share and RM0.775 per warrant cash. (Source: Business Times)

Sunway wins RM222m job from Cititower

Sunway Bhd, controlled by property tycoon Tan Sri Jeffrey Cheah, has won a RM222 million contract from Cititower Sdn Bhd to construct a new mixed-commercial project at the eastern corner of the Kuala Lumpur City Centre. The company said its unit, Sunway Construction Sdn Bhd, had accepted a letter of award that includes the construction and completion of piling and sub-structure works as well as associated works for Lot 185 and Lot 167(K). Cititower is a joint venture between KLCC Holdings and QD Asia Pacific. The project could take up to 82 weeks to complete with a commencement date yet to be fixed. "It is expected to contribute positively to the earnings of the Sunway group from the financial year ending December 31 2013 onwards," the company said. In a filing to Bursa Malaysia yesterday, Sunway said the proposed project is subject to normal risk of price fluctuation for construction materials. (Source: Business Times)

Petronas, Japex ink deal on Progress Energy

Petroliam Nasional Bhd (Petronas) has completed a deal with Japan Petroleum Exploration Co (Japex) for the latter to acquire a 10 per cent interest in Canada's Progress Energy's natural gas assets worth between C$9 billion and C$11 billion (RM26.91 billion and RM32.89 billion). In a statement, Petronas said the previously announced transaction will see Japex Montney Ltd, the Canadian subsidiary of Japex, becoming a stakeholder in Progress Energy. "Japex will be entitled to 10 per cent of Progress Energy, which includes assets in northeast British Columbia and in the proposed Pacific NorthWest LNG export facility on Canada's West Coast near Prince Rupert, British Columbia. (Source: Business Times)

KDEB wants to buy KHSB stake for RM193mil

Kumpulan Darul Ehsan Bhd (KDEB) is proposing to acquire a 56.57% stake in Kumpulan Hartanah Selangor Bhd (KHSB) for RM193.47mil cash. In a note to Bursa Malaysia yesterday, KHSB said KDEB has offered to purchase 254.56 million ordinary shares of RM1 each in KHSB under the takeover offer. “The proposed acquisition is undertaken as part of KDEB’s streamlining exercise in order to restructure its assets and operations.“Subsequent to the completion of the proposed acquisition, KDEB will be able to control KHSB directly instead of through another public listed company.Therefore, the future development strategies or projects of the land held by the KHSB group and its timing thereof can be more easily reorganised to achieve the development strategies of KDEB and consequently, its ultimate shareholder.”(Source: The Star)

Sona Petroleum making plans for listing

Sona Petroleum Bhd is seeking to be the country’s third largest publicly traded oil and gas special purpose acquisition company (Spac). With this in mind, Sona Petroleum has made plans to float its shares on the the Main Market of Bursa Malaysia. Sona, however, did not give a time frame on when its expectation to be a listed entity on Bursa Malaysia will materialise.For the record, Malaysia is the only country in Southeast Asia that permits the listing of Spac, though there are already many such listings in the United States and Europe. One of the main purposes for a Spac listing is to enable the investing public to invest in sectors and businesses that unique and, although more speculative, should offer a higher return. (Source: Business Times)

CIMB Niaga first quarter income expands 12%

CIMB Group Holdings Bhd’s Indonesian unit PT Bank CIMB Niaga’s net profit climbed 12% to 1.05 trillion rupiah (RM327.63mil) for the first quarter ended March 31, 2013, compared to the previous corresponding quarter. CIMB said the improved performance was due to a higher operating income and lower provision expenses, resulting from loans growth and improvements in asset quality.“In the first quarter of 2013, CIMB Niaga managed to maintain its position as the fifth-largest bank in Indonesia, with assets totaling 217.46 trillion rupiah (RM67.8bil), up 26% from the first-quarter 2012 total of 172.68 trillion rupiah (RM53.87bil). (Source: The Star)

Takaful Malaysia sees revenue boost from Indonesian ops

Syarikat Takaful Malaysia Bhd expects revenue contributions from its Indonesian operations to increase to 20 per cent once the ruling on the sales of takaful products by standalone takaful companies comes into force in 2015. Group managing director Datuk Hassan Kamil said the Indonesian operations contribute about 10 per cent to the company's revenue."Our takaful unit in Indonesia is a standalone company. By 2015, we hope that the competition there will be more equal and fair. "Currently, the playing field there is not level. "A lot of conventional firms operate as windows and they have an advantage over us as they use their conventional arms to support the takaful window, without the need for a separate capital," he said. (Source: Business Times)

Tadmax sells China unit for RM20m

Tadmax Resources Bhd said it had entered into an agreement with Justin Adrian to sell the company’s 100 per cent stake in Chongqing Liangshan Wijaya Food Ltd (CLWFL) for RM20 million. CLWFL is a company incorporated in China and has a plant in mainland China. Tadmax said its initial investment cost in CLWFL was RM24.38 million. Not much is known about Justin Adrian, except that he is an Indonesian citizen. (Source: Business Times)

Maybank launches Manchester United Visa Infinite credit card

Malayan Banking Bhd (Maybank) aims to sustain its market leadership in the credit card segment and targets an expansion in the number of its credit cards for the high-net worth segment in terms of volume and value this year. The bank, which is the largest in Malaysia by asset size, is the market leader locally in the credit card segment with a 26% market share in terms of transaction value. (Source: The Star)

OSK-DMG becomes member of RHB banking group

DMG & Partners Securities Pte Ltd (branded as OSK-DMG) is now a member of the RHB banking group, a leading financial services provider in Malaysia. This follows the successful business merger between RHB Investment Bank Bhd (RHBIB) and OSK Investment Bank Bhd (OSKIB) on April 13, 2013. OSK-DMG is a joint-venture between Deutsche Asia Pacific Holdings Pte Ltd (a subsidiary of the Deutsche Bank Group) and OSKIB. With the merger, the 51% stake previously held by OSKIB is now owned by RHBIB. (Source: The Star)

Foreign News

S&P 500 Rises to Record While Euro Gains With Italy Bonds

Stocks climbed, sending the Standard & Poor’s 500 Index to a record closing level, after U.S. home sales increased and investors speculated central banks will continue to stimulate the economy. The euro rose with Italian bonds as the country formed a government The S&P 500 rose 0.7 percent to 1,593.61 as of 4 p.m. New York time, while the Stoxx Europe 600 Index climbed 0.5 percent.

Consumer Demand Cools Even as U.S. Home Market Holds Up

Spending by U.S. consumers cooled in March after the strongest gain in five months, showing the biggest part of the economy lost momentum as the first quarter drew to a close. Purchases advanced 0.2 percent, more than projected and reflecting a surge in outlays for utilities and other services that is unlikely to be repeated, after a 0.7 percent increase the prior month, Commerce Department figures showed. Another report showed more Americans than forecast signed contracts to purchase previously owned homes in March.

Europe Stocks Rise on Italy, U.S. Consumer-Spending Data

European stocks rose, pushing the Stoxx Europe 600 Index toward its longest streak of monthly gains since 1997, as Italy formed a new government and as U.S. consumer spending unexpectedly increased in March. The Stoxx 600 advanced 0.5 percent to 297.39, its highest level since April 2. The benchmark gauge has climbed 1.2 percent in April, its 11th month of gains, as investors bet the region’s central bank will cut rates and as companies reported better- than-expected results.

Euro-Area Economic Confidence Falls More Than Forecast

Economic confidence in the euro area decreased more than economists forecast in April as the 17- nation currency bloc struggled to emerge from a recession and the bailout of Cyprus renewed debt-crisis concerns. An index of executive and consumer sentiment dropped to 88.6 from a revised 90.1 in March, the European Commission in Brussels said today. That’s the lowest since December. Economists had forecast a decline to 89.3, according to the median of 26 estimates in a Bloomberg News survey.

South Korea Production Falls as Weak Yen Clouds Export Outlook

South Korea’s industrial production declined in March as the yen’s decline clouds the outlook for the nation’s exports. Output fell 2.6 percent from February when it slid 0.9 percent, Statistics Korea said. The median estimate of 11 economists in a Bloomberg News survey was for a 0.9 percent decline. Production fell 3 percent from a year earlier. Weakness in the yen, which aids export rivals in Japan, is likely to have a bigger impact on South Korea’s economy from this quarter, Bank of Korea director general Kim Young Bae said.

(Source: Bloomberg)