Market Thoughts

US stocks finished near session highs across the board Wednesday, boosted by financials and materials, with the Dow and S&P 500 logging fresh closing highs. Meanwhile in the European markets, the risk-on rally continued on Wednesday, with shares extending gains to close higher, boosted by upbeat Chinese export data. On the local exchange, the FBM KLCI shed 2.73 points to 1774 points as investors took profit from the post-election rally. We expect the index to consolidate before embarking on an uptrend. The index could be moving towards its immediate resistance of 1800 points in the near term.

We might see selling pressure on China-based companies listed on Bursa Malaysia following discrepancy found in HB Global’s financial results and the stock was classified as PN17 status. Meanwhile, investors could find interest in IOI Corp following the media reported that the group may re-list its property unit in coming September this year.

Malaysia News & Highlights

Petronas strikes RM2.6b deal

Petroliam Nasional Bhd (Petronas), via subsidiary Petronas Brasil E&P Limitada, has reached an agreement with OGX Petroleo e Gas S A (OGX) to acquire OGX’s interest in two offshore blocks in Brazil’s Campos Basin. In a statement yesterday, the national oil company said Petronas Brasil would acquire 40% of OGX’s interest in Blocks BM-C-39 and BM-C-40, respectively, for a total consideration of US$850mil (RM2.6bil). (Source: The Star)

IOI Property is a RM15bil property giant in the making, slated for relisting in Sept

IOI Properties Bhd, which is set to demerge from parent IOI Corp Bhd, will seek relisting on the main market of Bursa Malaysia to become one of the biggest listed property companies in the country with total assets of RM15bil, sources said. To be listed in September, the asset size of IOI Properties would be worth more than RM12bil even after deducting liabilities, said a source. (Source: The Star)

AirAsia X to issue 790 million new shares

Long-haul AirAsia Bhd affiliate, AirAsia X, which is en route to be listed on the Main Market of Bursa Malaysia, will issue a total of 790.12 million new shares for its initial public offering (IPO). The company said in its prospectus exposure on the Securities Commission website that it would issue 538.01 million institutional shares and 252.11 million retail shares, representing 22.7% and 10.6% respectively of its issued and paid-up capital. (Source: The Star)

AirAsia to venture into global shared services business

AirAsia Bhd is set to venture into the global shared services business via the establishment of a new subsidiary, AirAsia Global Shared Services Sdn Bhd (AGSS). In a filing with Bursa Malaysia yesterday, AirAsia said the objective of establishing AGSS was to provide shared business, support and outsourcing services, develop or use multimedia technologies in producing or enhancing products and services, and for process development and provision of training. (Source: The Star)

Goldis plans share distribution

Goldis Bhd has proposed to distribute its entire equity interest in IGB Corp Bhd via its wholly-owned subsidiary Steady Paramount Sdn Bhd to shareholders via a capital distribution. In a filing with Bursa Malaysia, Goldis said shareholders, whose names appear in Goldis’ record of depositors at the close of business on a date to be determined and announced later, would be entitled to receive one ordinary share of RM1 each in Steady Paramount for every 10 ordinary shares held in Goldis. Steady Paramount has about 30.59% stake in IGB Corp, representing a fair value of RM1.007mil. “Shareholders who do not wish to receive the Steady Paramount shares can elect to receive cash of RM1.72 for each Goldis share held,” it added. (Source: The Star)

China-based HB Global slips into PN17 category

China-based HB Global Ltd, previously known as Sozo Global Ltd, has slipped into Practice Note 17 (PN17) category after its external auditors raised a red flag on its latest audited financial statements. The company has had difficulty submitting its latest audited financial statements by the end of April, announcing on Bursa Malaysia that it would be delayed. (Source: The Star)

CIMB gets Hong Kong banking licence

CIMB Bank Bhd, the bank arm of CIMB Group Holdings Bhd, has been granted a banking licence in Hong Kong. This licence was given out by the Hong Kong Monetary Authority (HKMA) under the banking ordinance, HKMA said in a short message on its website. (Source: Business Times)

Perisai profit at RM15.5mil

Perisai Petroleum Teknologi Bhd posted RM15.5mil in pre-tax profit for the first quarter ended March 31 compared with RM16.1mil million last year. Revenue, however, rose marginally to RM31.7mil from RM31.5mil in 2012, the company said in a statement. (Source: The Star)

Foreign News

U.S. Stocks Climb After Dow Tops 15,000 Amid Earnings

U.S. stocks rose, after the Dow Jones Industrial Average climbed above 15,000 for the first time yesterday, as earnings forecasts from Whole Foods Market Inc. and Electronic Arts Inc. beat analyst estimates. Whole Foods Market and Electronic Arts gained more than 10 percent. J.C. Penney Co. added 7.4 percent as quarterly sales declined less than in the year-earlier period. Symantec Corp. lost 2.4 percent after it said sales and revenue will miss analyst estimates. The Standard & Poor’s 500 Index rose 0.4 percent to 1,632.69 at 4 p.m. in New York. The Dow added 48.92 points, or 0.3 percent, to 15,105.12. More than 6.2 billion shares traded hands on U.S. exchanges today, about in line with the three-month average.

Euro Climbs Most in 3 Weeks on Signs of German Economic Growth

The euro rallied the most in three weeks against the dollar as German industrial production unexpectedly rose for a second month in March, a sign that Europe’s largest economy may be returning to growth. New Zealand’s dollar fell to a five-week low versus its U.S. peer after Reserve Bank Governor Graeme Wheeler said the central bank has sold the currency and may do so again. Norway’s krone gained the most against the greenback of its 16 most-traded peers after policy makers declined to lower the benchmark rate. Stanley Druckenmiller, who made $1 billion for George Soros as his chief strategist by forcing a devaluation of the pound in 1992, said investors should bet against Australia’s dollar.

Emerging Stocks Rally as China Exports Fuel Tech Advance

Emerging-market stocks rallied, erasing this year’s declines, as China’s export growth stoked gains in technology companies and a surge in Turkish banking shares sent the Borsa Istanbul index to a record. The MSCI Emerging Markets Index added 0.8 percent to 1,061.09, its highest close since March 11. The 14.7 percent increase in exports was led by a 57.2 percent jump in shipments to Hong Kong that highlighted suspicions of false transactions used to mask capital flows into China. Investors speculated Standard & Poor’s will raise Turkey to investment grade.

N.Z. Jobs Rise at Record Pace, Kiwi Erases Intervention Loss

New Zealand employers added the most workers on record in the three months through March, driving the kiwi to erase losses triggered yesterday by the central bank’s announcement of intervention to weaken it. Employment surged 1.7 percent, or 38,000 jobs, from the fourth quarter, Statistics New Zealand said in a report today in Wellington. The median forecast in a Bloomberg News survey of 11 economists was for a 0.8 percent gain. The jobless rate fell to a three-year low of 6.2 percent, less than the 6.8 percent predicted by economists. The data underscores the dilemma confronting Governor Graeme Wheeler, who is resorting to currency intervention and lending restrictions to steer the economy as surging house prices rule out interest rate cuts and the kiwi’s strength bars rate increases. He has signaled he won’t raise the official cash rate from a record-low 2.5 percent this year.

Gold Advances Most in Two Weeks on India, China Demand

Gold futures posted the biggest gain in almost two weeks as demand for bars and jewelry increased in India and China, the world’s largest consumers of the metal. Imports by China from Hong Kong more than doubled to an all-time high in March, Hong Kong government data showed yesterday. India’s purchases are set to top 100 metric tons in May for the second straight month, according to MMTC-PAMP India Pvt., a bullion refiner. Last month, gold had the biggest two-day drop in 33 years, slumping into a bear market. The metal has climbed 12 percent from a 26-month low on April 16.

(Source: Bloomberg)