Market Thoughts

US stocks regained their footing in choppy trading Wednesday, with the Dow and S&P 500 closing at a fresh high, but a sharp decline in Apple kept a lid on the Nasdaq's gains. Similarly, European shares closed higher, as better-than-expected U.S. housing data led the Dow and the S&P 500 to another all-time high.

On the local exchange, the benchmark FBM KLCI fell 5.40 points to 1783.03 points as investors take profit from the historical high. Following the optimism in the US, we expect the local market to be positive today. The KLCI could re-test the resistance of 1800 points.

Index-linked stocks and GLCs might see some trading interest for today following Malaysia recorded lower-than-expected 1Q GDP of 4.1% and announcement of Prime Minister Datuk Seri Najib’s new cabinet line-up for his continuity of ETP.

Malaysia News & Highlights

WCT confident of securing RM1.5bil jobs

Construction company and property developer WCT Bhd is confident of capturing RM1.5bil worth of domestic and overseas construction projects this year. Deputy managing director Goh Chin Liong said the company has already secured RM500mil worth of projects and was now tendering for contracts worth RM5bil locally and overseas. “Of the RM5bil, RM2bil is from overseas, especially in the Middle East while RM3bil is from domestic projects,” he told reporters after the company’s AGM here yesterday. (Source: The Star)

San Miguel may scrap deal to sell bank stake to CIMB

San Miguel Corp may walk away from a 12.2 billion peso (RM891 million) agreement to sell its majority stake in Bank of Commerce to CIMB Group Holdings Bhd. San Miguel, the Philippines' largest company, confirmed in a stock exchange filing President Ramon Ang's comments that he will know in about a week whether to proceed with or scrap the CIMB deal. The Philippine Daily Inquirer published Ang's comments yesterday and reported that Philippine laws restricting foreign ownership of real estate have become a stumbling block, citing unidentified sources. (Source: Business Times)

Astro signs RM497.5mil deal with Measat

Astro Malaysia Holdings Bhd has entered into an agreement with Measat Global Bhd (MGB) for the utilisation of transponder capacity on the Measat-3c satellite for a fee of RM497.5mil. In a filing with Bursa Malaysia, Astro said the related party transaction signed via its unit Measat Broadcast Network Systems Sdn Bhd, and MGB's unit Measat Satellite Systems Sdn Bhd, would enable Astro to utilise transponder capacity of 6 Ku-band transponders on the satellite in tranches over a period of 15 years starting from the commencement date. It said thesatellite is expected to be launched by the third quarter of 2015. (Source: The Star)

Pharmaniaga swings into the black

Pharmaniaga Bhd posted a higher net profit of RM24.77mil for its first quarter ended March 31, 2013, reversing a loss of RM7.9mil recorded in the preceding quarter. Revenue rose to RM500.3mil from RM482.4mil previously. Year-on-year, the company recorded a 13.6% lower net profit for the quarter under review from RM28.68mil previously. “It is a good start to the financial year with the group registering a higher profit. (Source: The Star)

Dialog posts higher earnings

Dialog Group Bhd recorded a 13% growth in net profit in third-quarter 2013, from RM41.4mil to RM46.8mil, on the back of increasing engineering, procurement, construction and commissioning activities in the Pengerang Deepwater Terminal in Johor. Its quarterly revenue came in at RM636.3mil, 52% higher than the RM420mil recorded in the corresponding period of the previous financial year. On a cumulative basis, the group did 11% better in net profit for the nine-month period from RM127.4mil in the corresponding period last year to RM141.06mil. (Source: The Star)

Globetronics spends RM40mil on new chips for US and Japan smart mobile devices

Globetronics Technology Bhd plans to spend RM35mil to RM40mil on fresh designing and development activities in the second half of 2013. Globetronics chief executive officer Heng Huck Lee said the company would use the money to develop the next generation of sensor chips that would enhance the interface features and applications of smart mobile devices. “These sensor chips are for customers in the US and Japan,” he said. Globetronics' sensor chip business would generate about 15% of the group's revenue this year, compared with about 6% a year ago, said Heng in an interview after the group AGM. (Source: The Star)

Foreign News

S&P 500 Extends Record High While Euro Slumps on Economy

Stocks rose, sending the Standard & Poor’s 500 Index to another record, as weakness in manufacturing and a drop in wholesale inflation fueled bets the Federal Reserve will be in no rush to scale back stimulus. The euro slid as the region’s recession deepened. The Standard & Poor’s 500 Index increased 0.5 percent to 1,658.78 at 4 p.m. in New York, reaching an all-time high for the ninth time in 10 days. The yield on 10-year Treasuries slid three basis points to 1.94 percent, retreating from a two-month high. The Dollar Index jumped to the highest level since July as the euro slid to a six-week low. Gold and silver tumbled more than 2 percent to help lead commodities lower.

Production Falls as U.S. Feels Global Weakness: Economy

Industrial production declined in April by the most in eight months, indicating American manufacturers will provide little support for an economy beset by weaker global markets and federal budget cuts. The larger-than-forecast 0.5 percent decrease in output at factories, mines and utilities followed a revised 0.3 percent gain that was weaker than first reported, Federal Reserve figures showed today in Washington. An increase in homebuilder optimism indicated housing remains the economy’s bright spot.

Foreign Demand for U.S. Financial Assets Declined in March

International demand for U.S. stocks, bonds and other financial assets weakened for a second straight month in March as a stronger economic outlook emboldened investors to take other risks. Net selling of long-term equities, notes and bonds totaled $13.5 billion during the month, the biggest net sales total since May 2009 after selling of $13.3 billion in February, the Treasury Department said today in Washington. The median estimate of five economists surveyed by Bloomberg was for net buying of $35 billion of long-term assets.

European Stocks Advance as BOE Raises Growth Forecast

European stocks rose, extending their highest level since June 2008, after the Bank of England raised its growth forecast for Europe’s third-biggest economy. The Stoxx Europe 600 Index gained 0.8 percent to 308.06 at the close in London. The equity benchmark has rallied 10 percent so far in 2013, its best start to a year since 1998, as central banks around the world maintained their stimulus measures

China Retains Position as the Largest Foreign Creditor of U.S.

China retained its lead over Japan as the largest foreign creditor to America in March, U.S. Treasury Department data show. China’s holdings of Treasuries fell 0.1 percent in March to $1.25 trillion, while Japan reduced its stake by 0.05 percent to $1.1 trillion, according to data released yesterday. China held 11 percent of the U.S. debt, compared with 9.7 percent by Japan. China’s stake reached a record $1.31 billion in July 2011.

(Source: Bloomberg)