Market Thoughts

US stocks finished flat in lackluster trading Monday after the S&P 500 briefly touched a new all-time high. The Dow Jones Industrial Average slipped 26.81 points to end at 15,091.68, led by Intel and Alcoa. The blue-chip index traded in a narrow 60-point range. Meanwhile, European shares snapped a four-day rally, with euro zone finance ministers set to meet in Brussels to discuss bank bailouts and the prospects of a banking union. They are also expected to sign off on the latest tranche of aid for Greece. On the local exchange, the FBM KLCI surged 15.52 points to 1787.90 points. We expect the index to remain positive with one eye on consolidation before testing its immediate resistance of 1800 points. Market outlook remains bullish after the general election as investor interest and liquidity return to the market.

Stocks in action are: a) MMC following the group allocates for RM2.2b to upgrade its ports in Johor and is seeking RM160m compensation from Saudi government for the termination of the Jazan Economic City development; b) Pasdec following the group bagged RM58m contract to build a specialist hospital in Kuantan; c) Malton as the group plans to sell its office building in PJ to Jcorp for RM140m via asset exchange exercise; and d) Scomi after the group secured RM98.5m oil service contract in Turkmenistan

Malaysia News & Highlights

Scomi secures RM98.5mil contract

Oil and gas services provider Scomi Group Bhd has secured a contract worth RM98.5mil from Dragon Oil (Turkmenistan) Ltd for the provision of drilling and completion fluids services in Turkmenistan. “This win is certainly testimony of the quality of our products and services to our client. Our drilling and completion fluid solutions have been formulated to meet the needs of our client. “Our ability to provide consistent performance and the technology behind our products was instrumental in winning this contract for us,” the company’s president, market units for Scomi oilfields services division, Wan Ruzlan (pic) said in a statememt. (Source: The Star)

MMC puts off Malakoff listing till next year

MMC Corp Bhd has shelved the listing of Malakoff Corp Bhd until mid-2014 because it wants to first upgrade its Tanjung Bin power plant in Johor and ramp up its generating capacity. Group managing director Datuk Hasni Harun said the conglomerate wants to increase its generation capacity to 10,000 megawatts (MW) from 5,020MW. “The 5,020MW is expected to increase to 6,000MW by 2016 once Tanjung Bin is fully operational,” he said after its annual shareholders’ meeting here yesterday. (Source: Business Times)

Pasdec unit wins RM58mil job

Pasdec Holdings Bhd’s wholly-owned subsidiary, Pasdec Bina Sdn Bhd, has been awarded a RM57.95mil contract by Pahang Specialist Hospital Sdn Bhd to construct and complete main works for a private nine-storey specialist hospital in Tanjung Lumpur, Kuantan. In a filing with Bursa Malaysia, the company said the contract was for a period of 18 months and was expected to be completed on Oct 29, 2014. (Source: The Star)

AirAsia X looking at US$300m IPO

Malaysian long-haul low-cost carrier AirAsia X said it is looking to raise US$300 million (RM894 million) in an initial public offer (IPO), throwing its hat into an expanding fundraising ring as Southeast Asian airlines seek to build up their fleets and ride a boom in regional passenger traffic. The funds will help AirAsia to repay debt as well as pay for existing planes and aircraft on order. The airline is keen to set up a second base in Thailand that will allow it to deploy more aircraft in different areas. (Source: Business Times)

Malaysia's I-Bhd and Thailand's CPN in mall joint venture with GDV of RM580mil

Property developer I-Bhd and Thai mall specialist CPN Global Company Ltd have entered into a joint venture to build a 1.5 million sq ft mall in I-Bhd's flagship development i-City with a gross development value of RM580mil. I-Bhd would have a 40% stake via i-City Properties Sdn Bhd (ICP) in the joint venture while CPN would have the remainder stake via two locally incorporated companies CPN Real Estate Sdn Bhd and CPN Malls Malaysia Sdn Bhd. Construction for the mall will begin next year and is targeted for completion by the end of 2016. (Source: The Star)

Malton sells building to JCorp for RM140mil via asset exchange exercise

Property developer Malton Bhd is selling a 20-storey office building located in Petaling Jaya to Johor Corp for RM140mil via an asset exchange exercise. Malton said in a filing with Bursa Malaysia that a sale and purchase agreement was entered into between a wholly-owned subsidiary, Khuan Choo Property Management Sdn Bhd (KCPM), and Bukit Damansara Development Sdn Bhd (BDDSB), a subsidiary of JCorp. It said the disposal of the property, known as VSQ would see KCPM and BDDSB enter into a “proposed asset exchange”, in which KCPM would acquire the redeveloped Pusat Bandar Damansara Kuala Lumpur (PBD Complex) from BDDSB worth RM140mil. (Source: The Star)

Ho Hup receives nod for regularisation plan

Ho Hup Construction Company Bhd is one step closer to exiting PN17 status, having received the nod for its financial regularization plan yesterday from Bursa Malaysia. (Source: The Edge)

Foreign News

Most U.S. Stocks Fall After Record Highs Amid Sales Data

Most U.S. stocks fell, after benchmark indexes climbed to record levels last week, even as government data showed retail sales unexpectedly rose in April. The Standard & Poor’s 500 Index rose less than 1 point to 1,633.77 at 4 p.m. in New York. The Dow Jones Industrial Average slid 26.81 points, or 0.2 percent, to 15,091.68. Almost 5.3 billion shares traded hands on U.S. exchanges today, or 16 percent below the three-month average, as about seven stocks declined for every five that advanced

Retail Sales Gain Shows Resilient American

Consumer Sales at U.S. retailers unexpectedly advanced in April, helping ease concern of a sustained pullback in consumer spending that would stifle the economy. The 0.1 percent gain followed a 0.5 percent decrease in March, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg survey called for a 0.3 percent drop. Retail purchases climbed by the most in four months minus receipts from service stations, where cheaper gasoline prices depressed the dollar value of sales.

European Stocks Decline From 2008 High; Commerzbank Sinks

European stocks declined from the highest level in almost five years as bank and airline shares retreated, overshadowing better-than-forecast retail sales data in the U.S. The Stoxx Europe 600 Index slipped 0.2 percent to 304.46 at the close of trading, snapping four days of gains. The gauge advanced 1.3 percent last week as companies from BT Group Plc to Hochtief AG posted better-than-expected earnings and European Central Bank President Mario Draghi said policy makers are ready to cut interest rates if needed. The measure has climbed 8.9 percent in 2013.

Euro Recession Seen Longest in Single Currency Era

Euro-area data this week will probably reveal economic scars of the sovereign debt crisis confirming that the region is now suffering the longest recession since the single currency’s creation. Gross domestic product in the 17-nation economy fell 0.1 percent in the first three months of 2013, a sixth straight quarterly decline, according to the median of 39 economists’ forecasts in a Bloomberg News survey. That would exceed the 15-month contraction in 2008-2009 during the financial crisis, and is the longest streak since the euro’s founding in 1999.

China’s Investment Slows as Production Trails Estimates

China’s fixed-asset investment unexpectedly decelerated last month while industrial output trailed estimates, adding to concerns that the economy will fail to show much of a recovery this quarter. Fixed-asset investment excluding rural households in the first four months of the year increased 20.6 percent, the National Bureau of Statistics said today in Beijing, compared with 20.9 percent in the first quarter. Production grew 9.3 percent in April from a year earlier and retail sales climbed 12.8 percent, according to the agency.

(Source: Bloomberg)