Market Thoughts

US stocks closed higher but off their best levels after St. Louis Fed president James Bullard and New York Fed president William Dudley dampened speculation the central bank was ready to consider "tapering" its bond-buying. Meanwhile, European shares closed narrowly lower on Tuesday, with global markets cautious amid ongoing worries the Federal Reserve may taper its bond purchase program.

On the local market, the FBM KLCI rose 10.23 points to 1787.38 points. We expect the index's positive momentum to retest the resistance of 1800 points. Attention now turns to Federal Reserve Chairman Ben Bernanke's testimony to the Senate later today as markets look for any clues as to whether the Fed would signal a willingness to begin withdrawing some stimulus at its June meeting.

Stocks in action are: Dayang after the group bagged RM2b Hook-UP, Commissioning and Topside Maintenance contract from Sarawak Shell and Sabah Shell; Protasco as the group secured RM37m road project in Kedah from JKR; Perdana Petroleum, the group plans to sell seven older vessels following its clean-up exercise and to bring down the maintenance costs.

Malaysia News & Highlights

Dayang Ent clinches RM2b contract

Dayang Enterprise Holdings Bhd’s unit Dayang Enterprise Sdn Bhd has clinched a RM2 billion contract from Sarawak Shell Bhd and Sabah Shell Petroleum Co Ltd. The contract is to provide hook-up, commissioning and topside services to Sabah and Sarawak Shell units. The company said the contract is for five years with an extension option of one year. (Source: Business Times)

THHE concludes private placement

TH Heavy Engineering Bhd (THHE) has completed its proposed private placement following the listing of 92.79 million shares on the Main Market of Bursa Malaysia. The company said the new shares of 25 sen each represents some 10 per cent of the existing issued and paid-up share capital of THHE. The company’s share price rose four sen to close at 75 sen yesterday. (Source: Business Times)

CIMB's Q1 net profit surges to RM1.39b

MALAYSIA'S second-largest lender CIMB Group Holdings Bhd has reported a 37.1 per cent increase in net profit to RM1.39 billion in the first quarter ended March 31 2013, from RM1.01 billion in the same quarter last year. This translated into net earnings of 18.7 sen per share. Its annualised net return on average equity during the quarter was 19 per cent. Its chief executive Datuk Seri Nazir Razak said CIMB Group recorded steady growth across most business segments during the quarter. "The first-quarter results were glossed by the gain on sale of our 51 per cent interest in CIMB Aviva. "Excluding one-off gains and charges, the group's net profit would have grown by 4.2 per cent year-on-year," he said in a statement issued yesterday. (Source: Business Times)

Syed Mokhtar may make fresh bid for Bernas

Tan Sri Syed Mokhtar Albukhary's plan for complete ownership of Padi Beras Nasional Bhd (Bernas) has been stymied, but the entrepreneur is expected to be back soon with a fresh offer for the national rice company. Syed Mokhtar will now have to rewire his RM3.70-a-share offer after he failed to get enough shares from minority stakeholders. He had used his investment firm Perspective Lane (M) Sdn Bhd and private vehicles Seaport Terminal (Johore) Sdn Bhd Kelana Ventures Sdn Bhd and Acara Kreatif Sdn Bhd to undertake the privatisation deal. Maybank Investment Bank Bhd, the merchant bank acting on behalf of the four privately-held companies, said they now collectively own 83.7 per cent of Bernas. This means Bernas no longer complies with Bursa Malaysia's listing rules of having at least 25 per cent public shareholding spread. (Source: Business Times)

Suria Capital, SBC to develop KK Port area

SBC Corp Bhd has teamed up with Suria Capital Holdings Bhd to develop 6.5ha within the Kota Kinabalu Port area into a mixed development of residential, retail, office towers and hotel. According to SBC, which signed a joint-venture agreement with Suria Capital yesterday, the entire project will carry a minimum net sale value of RM1.8 billion. (Source: Business Times)

Perdana ‘super clean’ now; will sell all old vessels following RM68mil loss writedown

Perdana Petroleum Bhd, which is currently bidding for some RM1bil worth of contracts locally, has completed cleaning up its books, writing down a total of RM68mil in impairment loss for old vessels over the past two years. Executive director Datuk Henry Kho said the writedown was part of its clean-up exercise for a clean slate following the boardroom tussle in 2010. “Over the past two years, we have been cleaning up our old assets and we have completed it. Its super clean now,” he said after its AGM yesterday. Kho said the company would now focus on new vessels, as it would be disposing of the final seven older vessels. Last week, Perdana announced that it signed a memorandum of agreement with Maimah Marine Pte Ltd to sell the vessels for US$3.48mil. (Source: The Star)

Bumi Armada Q1 profit up 22%

International offshore oilfield services provider Bumi Armada Bhd’s net profit for the first quarter 2013 was 22% up from RM89.7mil to RM109.7mil, supported by a new floating production, storage and offloading vessel (FPSO) contract and fleet expansion. Executive director Hassan Basma said in a press statement that the stronger performance for the quarter was the result of the new Oil and Natural Gas Corporation FPSO award, contributions from new offshore support vessels such as the Armada Hibiscus, Armada Tuah 107, 108 and 302 and the LukOil engineering, procurement, installation and commission project in the Caspian Sea. (Source: The Star)

EPF adds to global acquisitions

THE Employees Provident Fund (EPF) invested a further US$1.3 billion (RM3.9 billion) in global real estate, bonds and equities in the first quarter of 2013.With the additional investment, EPF's total overseas exposure constitutes 17.55 per cent of its total investment cost as at March 31 2013, 5.45 per cent short of the 23 per cent limit set by Finance Ministry. The fund's investment assets now exceed half a trillion ringgit and it is growing at an average of eight to nine per cent a year. In a statement yesterday on its first quarter unaudited investment results, chief executive officer Datuk Shahril Ridza Ridzuan said: "The constraints in the domestic market make it imperative for us to find suitable investments globally that fit our long-term diversification programme. (Source: Business Times)

TSH's palm oil planted areas to exceed 50,000ha

TSH Resources Bhd is poised to record a major milestone this year as its oil palm planted areas are expected to exceed the 50,000ha mark.TSH has some 46,500ha planted with oil palm, making it one of the country's top medium-sized plantation companies. "TSH is set for growth and exciting times in the next few years because the company has put in a lot of money into planting the young trees and has not harvested them yet," said TSH chairman Datuk Dr Kelvin Tan Aik Pen. TSH's fresh fruit bunches (FFB) production is expected to grow by 30 per cent this year. "We will continue to improve in 2014, 2015 and beyond," he said. (Source: Business Times)

Foreign News

U.S. Stocks Rise as Bullard Says Stimulus Should Continue

U.S. stocks rose, sending benchmark indexes to records, after Federal Reserve Bank of St. Louis President James Bullard said the central bank should continue its bond buying to boost growth. The Standard & Poor’s 500 Index gained 0.2 percent to an all-time high of 1,669.16 at 4 p.m. in New York. The Dow Jones Industrial Average added 52.30 points, or 0.3 percent, to 15,387.58. About 6.2 billion shares changed hands today, in line with the three-month average.

U.K. Inflation Rate Falls More Than Forecast to 2.4%: Economy

U.K. inflation slowed more than economists forecast in April to a seven-month low and producer prices rose the least since 2009 as fuel costs fell. Consumer prices rose 2.4 percent from a year earlier, down from 2.8 percent in March, the Office for National Statistics said in London. The median forecast of 35 economists in a Bloomberg News survey was 2.6 percent. Core inflation also cooled, while factory-gate prices increased at the slowest annual pace in 3 1/2 years. The pound weakened.

Gold Declines in New York as U.S. Stimulus Outlook Curbs Demand

Gold declined, following its first gain in eight sessions, as speculation the U.S. Federal Reserve may taper its bond-buying plan curbed demand for the metal as a protection of wealth. Fed Chairman Ben S. Bernanke will discuss the economic outlook in congressional testimony and the central bank will publish minutes of its latest meeting tomorrow. Fed Bank of Chicago President Charles Evans said the economy has improved “quite a lot.” Gold futures rose 1.4 percent yesterday, the first gain since May 8, after Moody’s Investors Service said U.S. policy makers must address debt woes to avoid a credit-rating cut this year.

Asia Stocks Fall From Five-Year High as ICBC Declines

Asian stocks retreated from the highest level since June 2008 as Australian banks dropped and Industrial & Commercial Bank of China Ltd. fell after Goldman Sachs Group Inc. sold a $1.1 billion stake. The MSCI Asia Pacific Index slid 0.3 percent to 143.91 as of 7:40 p.m. in Hong Kong after gaining as much as 0.1 percent. The equity gauge surged about 12 percent this year and closed yesterday at the highest level since June 2008 as U.S. economic data improved and Japanese Prime Minister Shinzo Abe took steps to counter deflation. The Bank of Japan started a two-day policy meeting today.

Indonesia’s Basri Sees Fuel Subsidies, Infrastructure as Key

Indonesia’s new Finance Minister Chatib Basri said cutting fuel subsidies and building more infrastructure will be his two main priorities. Reducing subsidies will strengthen the rupiah, Asia’s worst performer in the past 12 months excluding the yen, Basri said in a Bloomberg TV interview with Rishaad Salamat. The land acquisition law, signed by President Susilo Bambang Yudhoyono in December, will speed up infrastructure development over the next few years as access to land has held back development, Basri, who was sworn in today, said by telephone.

(Source: Bloomberg)