Market Thoughts

European stock markets kicked off the week with gains, rebounding from last week's losses. Volumes were light, however, with U.K. and U.S. markets shut for public holidays. Asian equity markets are expected to open on the back foot on Tuesday, with negative sentiment likely to linger in the absence of an overnight lead from Wall Street, which was closed for a public holiday. On the local exchange, the FBM KLCI fell 5.93 points to 1767.13 points. Equity markets globally have come back under pressure in recent days as jitters about an early end to the Federal Reserve's ultra-lose monetary policy sparks a pull-back in stocks from lofty levels. As such, we expect the FBM KLCI to remain range bound with a negative bias. Immediate support is seen at 1750 points.

Investors may find interest in stocks such as: a) SapuraKencana and Dayang following the groups bagged oil & gas service contracts; b) UMW as the media reported that the group is bidding for Australia’s Coates Hire, a company which rents out equipment for RM8.7b; c) Naim Holdings, Bonia and Alam Maritim as the groups posted stronger quarterly results; and d) Bright Packaging after the Luxembourg based hedge fund emerged as a third largest shareholder in the company.

Malaysia News & Highlights

Malaysia's IHH expands to Vietnam with new upmarket 320-bed hospital

The latest addition to IHH Healthcare Bhd's stable of hospitals would be the upmarket City International Hospital in Vietnam, a 320-bed hospital scheduled to be ready by the first half of this year, industry sources said. At last week's teleconference media briefing by IHH, group executive director of corporate services Ahmad Shahizam Mohd Shariff said its Vietnam hospital would be opened “in just a matter of weeks”. (Source: The Star)

UEM to sell properties worth RM4bil, targets Singaporean buyers

UEM Land Holdings Bhd, Malaysia's biggest developer by market value, will start selling RM4bil (US$1.3bil) of new residential and commercial projects this year, targeting Singaporean buyers. Three-fourths of new developments will be at Nusajaya, Johor, where new condominium prices have more than doubled since 2009, said chief executive officer Datuk Wan Abdullah Wan Ibrahim. That's within the 222,600ha Iskandar Malaysia economic zone, promoted by the Government to tap demand from neighbouring Singapore for everything from seafront homes to oil storage. (Source: The Star)

SapuraKencana unit bags ExxonMobil contract worth between RM300mil and RM500m

SapuraKencana Petroleum Bhd's unit has secured a contract from ExxonMobil Exploration and Production Malaysia Inc valued at between RM300mil and RM500mil. SapuraKencana said its Kencana HL Sdn Bhd had on May 16 accepted the contract to provide hook-up and commissioning and topside major maintenance services. The contract was for a primary term of five years with an option to extend for another year. (Source: The Star)

UMW said to be bidding for Coates Hire, owners hoping for RM8.75bil

UMW Holdings Bhd is reportedly bidding for Australia's Coates Hire Ltd, a company which rents out equipment. UMW declined to comment when contacted. According to Australia's Financial Review Sunday, the final bids in the Goldman Sachs-advised auction are due early next month and the owners are hoping for a price tag of more than A$3bil (RM8.75bil). (Source: The Star)

Gromutual has GDV worth RM700mil

Gromutual Bhd plans to launch development projects worth RM700mil in gross development value (GDV) in the next few years in Johor Baru. Deputy managing director Chew Kwee Hiok said that the plan was to further tap into opportunities in the vibrant property market in the Iskandar Malaysia region.(Source: The Star)

SC looks into trading platform for unlisted firms

The Securities Commission (SC) is looking into an unlisted market where unlisted companies or small and medium enterprises (SMEs) can raise funds for growth financing, fast-tracking their transition to listing in a public market. The SC said the platform could also provide an exit avenue for existing founders and investors of these SMEs. “Under this platform, fund raising by these SMEs would be conducted in a more efficient, organised and transparent manner,” it said. (Source: The Star)

Fund’s Bright Packaging buildup ‘a surprise’

Luxembourg-based Halley Sicav-Halley Asian Prosperity hedge fund has emerged as Bright Packaging Industry Bhd’s third largest shareholder, a development that has surprised some analysts. The fund has been accumulating the Bright Packaging stocks since early this month, claiming that the move is a long-term investment. Formed in November 2012, Halley Sicav-Halley Asian Prosperity is a sub-fund under Halley Sicay, an open-ended investment company with a total of nine sub-funds. (Source: Business Times)

Dayang bags Petronas Carigali job

Dayang Enterprise Holdings Bhd’s wholly-owned subsidiary Dayang Enterprise Sdn Bhd has received a letter of award from Petronas Carigali Sdn Bhd for the provision of hook-up, commissioning and topside major maintenance services for 2013 to 2018. Dayang said the duration of the contract is for a period of five years, effective from May 2013. “The contract will not have any effect on the company’s issued and paid-up share capital and is expected to contribute positively to the earnings and net assets of Dayang Group,” Dayang told Bursa Malaysia. (Source: Business Times)

Foreign News

European Shares Rebound as Yen Strengthens; Oil Declines

European stocks rose, rebounding from the first weekly loss in a month, and Asian shares fell after Japan’s top central banker indicated that interest rates may gain as the economy improves. The Stoxx Europe 600 Index advanced 0.3 percent at the close. Standard & Poor’s 500 Index futures gained 0.1 percent. The MSCI Asia Pacific Index slid 1.3 percent. The yen strengthened 0.4 percent to 100.96 per dollar.

Li Says China Confronts ’Huge Challenges’ as Growth Levels Slow

Chinese Premier Li Keqiang said his country is confronted by “huge challenges” as it opens up the economy and that the new government’s reform measures will be accompanied by tapered-off levels of growth. Speaking in Berlin during his first trip abroad as premier, Li said the Chinese government will move forward with market-oriented reforms to generate stable growth after the economy unexpectedly slowed in the first quarter. “As the size of the Chinese economy expands, China’s economic development is entering a range of reasonable growth,” Li told a Germany-China business forum today. He called China’s 7.7 percent first-quarter expansion “within the reasonable expectations of our macroeconomic controls.”

Japanese Stock Futures Drop Before BOJ Member Speech

Japanese and Australian stock futures fell, indicating the Asia-Pacific equities benchmark index will extend its longest losing streak in more than six months, as investors await a speech by a Bank of Japan policy maker. Futures on the Nikkei 225 Stock Average traded at 13,925 in Chicago, down from 14,030 at the close in Osaka, Japan. They were bid in the premarket at 13,930 at 8:05 a.m. in Tokyo. Futures on Australia’s S&P/ASX 200 Index (AS51) lost 0.3 percent and New Zealand’s NZX 50 Index gained 0.3 percent.

U.K. Banks Cut 189,000 With Employment at Nine-Year Low

Britain’s four biggest banks will have eliminated about 189,000 jobs by the end of this year from their peak staffing levels, bringing employment to a nine-year low amid a dearth of revenue. More cuts may follow. The firms are under pressure from investors to reduce fixed costs as Europe’s sovereign debt crisis crimps income from investment banking as loans sour in the region. The four firms posted 108 billion pounds ($164 billion) of revenue for 2012, 13 percent less than in 2008. Costs as a proportion of revenue increased over the period.

Singapore Press Plans to Raise S$540 Million in Retail REIT IPO

Singapore Press Holdings Ltd.,the newspaper publisher that owns the Paragon mall along the city’s shopping belt, said it plans to raise about S$540 million ($429 million) from the initial share sale of a property trust. The real estate investment trust is expected to list in early July, Chief Financial Officer Tony Mallek said in a briefing yesterday. The REIT will buy Paragon and the Clementi Mall located in a western suburb for S$3.07 billion, Singapore Press said in a statement yesterday. It will pay a one-time dividend of 18 Singapore cents a share, the company said. The trust “allows SPH to crystallize the value in Paragon and the Clementi Mall, and release capital to fund the group’s growth and the special dividend,” it said in the statement, adding that it will hold about 70 percent of the retail REIT after it goes public.

(Source: Bloomberg)