Market Thoughts

US stocks kicked off May with a big thud, with major averages dropping nearly 1 percent across the board, as a batch of weaker-than-expected economic data overshadowed the Federal Reserve's plan to maintain its stimulus program. Meanwhile, U.K.'s FTSE 100 Index closed off its session highs on Wednesday, after worse-than-expected employment data was released in the U.S.

On the local market, the FBM KLCI rose 9.68 points to 1717.65 points. The index failed to beat its resistance of 1718 points. Following the bearish sentiment in the US, we expect the local market to be negative today.

Stocks to watch are: Nestle Malaysia as it has reported a higher earnings for its first quarter; Telekom Malaysia following it signed an agreement with five regional telco players to establish a submarine cable system; I-Bhd as the management has forecasted its pre-tax profit to triple year-on-year.

Malaysia News & Highlights

Astro and Maxis in IPTV, broadband tie-up

Astro Malaysia Holdings Bhd has teamed up with Maxis Bhd to offer consumers access to Astro TV content, high speed broadband and home-voice services via Astro B.yond IPTV (Internet Protocol Television). Astro CEO Datuk Rohana Rozhan said through the partnership with Maxis, Astro was able to co-develop high-speed fibre broadband and home-voice services via Astro B.yond IPTV “Existing customers can choose broadband bandwidth of 10, 20, 30Mbps and enjoy savings from RM53.30 per month for one of the Astro B.yond IPTV-Maxis packages,” Rohana told a press conference here yesterday. Astro has a penetration of 3.5 million out of the 6.5 million households in the country. (Source: The Star)

Ekuinas eyes RM600m investment in high-potential local firms

Government-linked private equity firm Ekuiti Nasional Bhd (Ekuinas) is looking to deploy RM600mil in high-potential Malaysian companies this year, having already committed a total of RM49mil thus far to two private firms “The RM600mil is an ambitious target, we are working on (getting) a number of investments and hope to undertake them soon,” chief executive officer Datuk Abdul Rahman Ahmad told a press conference after the announcement of its financial performance for last year. (Source: The Star)

Malaysian Palm Oil Association to exit RSPO?

The Malaysian Palm Oil Association (MPOA) is believed to be mulling over a decision to quit the Roundtable on Sustainable Palm Oil (RSPO) grouping by the end of the year, revealed industry sources The 130-member MPOA is the single largest integrated voice that represents the local private plantation industry, including plantation giants such as Sime Darby Bhd, IOI Corp Bhd, Kuala Lumpur Kepong Bhd, United Plantations Bhd and Felda Global Ventures Holdings Bhd. (Source: The Star)

TM in pact to set up Bengal Gateway submarine cable system

Telekom Malaysia Bhd (TM) has signed an agreement with five regional telco players Vodafone Group, UAE's Etisalat, Sri Lanka's Dialog Axiata, India's Reliance Jio Infocomm Ltd, and Omantel of Oman, to form a consortium for the establishment of the Bay of Bengal Gateway (BBG) submarine cable system. In a statement, its group chief financial officer Datuk Bazlan Osman said: “This initiative undertaken by the consortium is part of the six partners' continued commitment to invest in the development of internet protocol communications globally and to extend broadband connectivity to a wider audience. “The additional capacity will help to better prepare and mitigate any potential future congestion we may face.” (Source: The Star)

Hibiscus Petroleum in Aussie joint venture

Malaysian company Hibiscus Petroleum has joined Melbourne-based 3D Oil as a partner in the 9.2 million-barrel West Seahorse oilfield in Bass Strait, Australia. Hibiscus invested A$27mil in the joint venture, taking up a 13% equity stake in 3D for A$2mil, The Australian newspaper reports. “The funding gave Hibiscus a 50.1% share of the permit containing West Seahorse, 14km offshore from Ninety Mile Beach,” the newspaper said. (Source: The Star)

MAHB's March passenger traffic up 11.4pc to 6.3m

Malaysia Airports Holdings Bhd's (MAHB) airports handled 6.3 million passenger traffic in March this year, an increase of 11.4 per cent from the same month last year. Its international passengers reached 3.17 million, an increase of 15 per cent from March last year, while domestic passengers grew 8.1 per cent to 3.16 million, MAHB said in a filing to Bursa Malaysia on Tuesday. (Source: Business Times)

Foreign News

U.S. Stocks Fall on Economic Data as Fed Maintains Plan

U.S. stocks fell, dragging the Standard & Poor’s 500 Index from a record high, on slower growth in American payrolls and manufacturing as the Federal Reserve said it will maintain its bond buying to support the economy. The S&P 500 fell 0.9 percent to 1,582.70 at 4 p.m. in New York. The Dow Jones Industrial Average slipped 138.85 points, or 0.9 percent, to 14,700.95. More than 6.6 billion shares changed hands on U.S. exchanges, or 4.4 percent above the three-month average.

Fed Maintains QE Pace, Prepared to Alter as Economy Evolves

The Federal Reserve said it will keep buying bonds at a monthly pace of $85 billion while standing ready to raise or lower purchases as economic conditions evolve. Chairman Ben S. Bernanke is pressing on with his effort to boost employment as 11.7 million Americans remain jobless almost four years into the expansion. Today’s statement highlights the option to boost purchases in response to data showing economic growth is slowing, in contrast with discussion of the timing of a reduction in the pace of buying at the Fed’s March meeting.

Stocks Beat Bonds, Dollar for Second Month

Global stocks rose in April, beating bonds, the dollar and commodities for a second month, as gold and copper slumped into bear markets and investors bet equities will benefit from unprecedented economic stimulus. The MSCI All-Country World Index of equities in 45 markets climbed 2.9 percent, including dividends, as the Standard & Poor’s 500 Index increased for the sixth straight month. Bonds of all types returned 1.1 percent on average, the most since July, according to Bank of America Merrill Lynch’s Global Broad Market Index of 20,000 fixed-income securities. The Dollar Index slipped 1.5 percent. The S&P GSCI Total Return Index of 24 commodities dropped 4.7 percent, the biggest decline since May.

China Manufacturing Gauge Signals Slowdown Persisting: Economy

China’s manufacturing expanded at a weaker pace in April in a sign that the slowdown in the world’s second-largest economy is extending into the second quarter. The Purchasing Managers’ Index was at 50.6, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. That compared with the 50.7 median forecast of 31 analysts in a Bloomberg News survey and a March reading of 50.9. Readings above 50 signal expansion.

Crude Falls as U.S. Supplies Climb to 82-Year High

West Texas Intermediate crude tumbled as U.S. oil inventories reached an 82-year high amid signs of economic slowdown in the U.S. and China. Futures fell the most in two weeks after the Energy Information Administration said stockpiles jumped to 395.3 million barrels in the week ended April 26, the most in weekly data started in 1982. According to monthly data, they were last at this level in 1931. U.S. companies added fewer workers than forecast in April and China’s manufacturing grew at a weaker pace, separate reports showed.

(Source: Bloomberg)