Market Thoughts

US stocks finished near session highs Thursday, propelling the S&P 500 to a fresh intraday high, as Wall Street cheered a better-than-expected jobless claims report and after the European Central Bank cut its key interest rate. Meanwhile, European shares rebounded to a higher close on Thursday, paring losses from when ECB President Mario Draghi confirmed the central bank would not deliver any extra stimulus. On the local exchange, the FBM KLCI closed 4.19 points lower at 1713.46 points after touching an intra-day low of 1705 points. The optimism in Europe could lift the market today but there could be a selldown by investors who wish to exit before the general election.

Stocks to watch are: Daya Materials as the group has secured RM49m Euro (RM198m) contract for the ventilation system for six new vessels of the Malaysian navy; Gadang following the group venturing into power business by buying 60% of Ikhwan, an Indonesian hydroelectric utility firm for RM3m; HB Global, will be suspended from Bursa’s main market if it does not submit its audited financial statements before May 8;

Malaysia News & Highlights

M'sia, S'pore in final stages of Johor Baru-S'pore rail link plans

Malaysia and Singapore are in the final stages of their plans for the proposed rapid transport system (RTS) linking Johor Baru and the republic. “The proposed alternative will be finally presented to the two governments, including the design, taking into account also the costing. Before the year-end, I would imagine both governments will decide on the type of RTS to be implemented with the scheduled completion by 2018,” caretaker Johor Mentri Besar Datuk Abdul Ghani Othman said. (Source: The Star)

Aircel lenders mull funds from Maxis partly to prevent RM13bil of loans from becoming non-performing

Lenders to Aircel, India's seventh largest cellular company by subscribers, are taking pre-emptive action to prevent their loans, amounting to 23,000 crore rupees (RM13.12bil), from turning into a non-performing asset. They are exploring a range of options, including a possible merger with Tata Teleservices as well as an infusion of additional equity from Maxis Communications Bhd, which owns 74% of Aircel, according to three sources familiar with the developments. (Source: The Star)

Gadang buys 60% of Ikhwan

Gadang Holdings Bhd has bought a 60% stake in PT Ikhwan Mega Power, an Indonesian hydroelectric utility firm, for 9 billion rupiah (RM3mil). This is the construction company’s maiden foray into the power sector. PT Ikhwan Mega Power has a power purchase agreement with PT Perusahaan Listrik Negara, the Indonesian national power company, to develop and supply power for 15 years from a 9MW mini hydro power plant to be located in Kabupaten Tanah Datar, Sumatera Barat. (Source: The Star)

Daya Materials bags RM199mil job

Daya Materials Bhd has been awarded a 49.4 million euros (RM198.5mil) contract by Boustead Naval Shipyard Sdn Bhd, in relation to the memorandum of understanding (MoU) between its unit Daya Oci Sdn Bhd and Cofely Axima. The contract is for the provision of full package relating to the heating, ventilation and air-conditioning (HVAC) work. (Source: The Star)

AirAsia X passenger numbers up 20.9%

Long-haul low-cost carrier AirAsia X Bhd saw its passenger numbers grow 20.9% to 650,000 for its continuing routes in the first quarter, versus a year earlier. The airline recorded a revenue-passenger-kms (RPK) of 3.3 billion against capacity of 3.9 billion, resulting in a load factor of 84% and solidifying its position as the second largest low-cost carrier in South-East Asia behind its parent AirAsia Bhd, it said in a statement. (Source: The Star)

HB Global faces suspension

HB Global Ltd, formerly known as Sozo Global Ltd, will be suspended from Bursa Malaysia’s Main Market if it does not submit its audited financial statements for the financial year ended Dec 31, 2012 on or before May 8, 2013. The ready-to-serve food producer faces the risk of being suspended on May 9 should it fail to publicly announce its latest audited financial statements. The deadline for the issuance of the financial statement together with the auditors’ and directors’ reports to Bursa Malaysia was on April 30. (Source: The Star)

Nestle plans RM200mil capex mostly on liquid drinks, confectionery expansion

Nestle (M) Bhd has earmarked more than RM200mil as capital expenditure (capex) to boost its operation in the current financial year ending Dec 31, 2013 (FY12). “Bulk of the capex will be invested in liquid drinks and an expansion of the confectionery segment,” managing director Alois Hofbauer said after the company's AGM yesterday. He said last year the company spent about RM160mil as capex for the expansion of its culinary products and confectionery division. (Source: The Star)

Foreign News

U.S. Stocks Rise as ECB Cuts Rate, Jobless Claims Fall

U.S. stocks rose, sending the Standard & Poor’s 500 Index to a record high, as the European Central Bank cut its key interest rate and American jobless claims unexpectedly fell. The S&P 500 rose 0.9 percent to 1,597.59 in New York, erasing yesterday’s drop. The Dow gained 130.63 points, or 0.9 percent, to 14,831.58. About 6 billion shares traded hands on U.S. exchanges today, 4.7 percent below the three-month average.

Jobless Claims in U.S. Unexpectedly Decline to Five-Year Low

The number of Americans filing claims for jobless benefits unexpectedly dropped last week to the lowest level in more than five years, indicating companies are retaining staff even as the economy cools. Applications for unemployment insurance payments fell 18,000 to 324,000 in the week ended April 27, the fewest since January 2008, a month after the last recession started, Labor Department figures showed in Washington. Economists forecast 345,000 claims, according to the median estimate in a Bloomberg survey.

Draghi Leaves Door Open to Further Monetary Easing

European Central Bank President Mario Draghi opened a new front in the battle against the debt crisis after cutting the benchmark interest rate to a record low today. Speaking in Bratislava, Draghi signalled that officials may take the unprecedented step of charging banks to park excess cash with the ECB overnight and that another reduction in the main rate is possible.

Trade Deficit in U.S. Narrowed More Than Forecast in March

The U.S. trade deficit narrowed more than forecast in March to its second-lowest level in three years as imports of consumer goods and business equipment declined. The gap shrank 11 percent to $38.8 billion from a revised $43.6 billion in February, the Commerce Department reported in Washington. The median forecast in a Bloomberg survey of 67 economists called for a $42.3 billion deficit. Imports dropped by the most since February 2009 as the U.S. shortfall with China fell to a three-year low.

Consumer Comfort Reaches Five-Year High as U.S. Top Earners Gain

Consumer sentiment climbed last week to its highest level in more than five years as Americans felt the most upbeat about spending since before the recession began. The Bloomberg Consumer Comfort Index improved to minus 28.9 in the week ended April 28, its highest since January 2008, from minus 29.9 the week earlier. The buying-climate gauge rose to minus 32.5, the best reading since November 2007, a month before the worst economic slump since the Great Depression began.

Indonesia Bonds Drop Most in Three Weeks After S&P Cuts Outlook

Indonesian government bonds fell, with the 10-year yield rising the most in more than three weeks, after Standard & Poor’s cut its outlook on the country’s debt rating. Rupiah forwards dropped by the most since January. S&P revised its view on the nation’s debt to stable from positive, citing a stalling of reform momentum and a weaker external profile in a statement. The company maintained Indonesia’s rating at its highest junk level of BB+. The yield on the 5.625 percent notes due May 2023 rose five basis points to 5.56 percent as of 5:39 p.m. in Jakarta, the most since April 8, prices from the Inter Dealer Market Association show. The yield dropped seven basis points last month after climbing 38 basis points in the first quarter.

(Source: Bloomberg)