Market Thoughts

US stocks closed out a volatile session on Wall Street in positive territory Thursday after a brief drop that pushed the S&P 500 below 1,600, amid caution ahead of the government's monthly jobs report and as the U.S. dollar tumbled against the Japanese yen. Meanwhile, European shares reversed early gains to closed lower after both the European Central Bank and the Bank of England left their main benchmark interest rates unchanged. On the local market, the FBM KLCI fell 4.82 points to 1769.60 points. Following the volatile global markets, we expect the FBM KLCI to remain sideways with a negative bias. The index continue to hover below 1800 points with support levels at 1765 points and 1750 points.

Stocks in trading interest are: HeiTech Padu as the group won a RM19m government contract for the maintenance and service of computer system; and Prestariang after EPF became a major shareholder of the group with a 5.21% stake.

Malaysia News & Highlights

Celcom Axiata to set up or upgrade 120 LTE stations in Sarawak

The race to see who can provide the widest coverage for mobile data connectivity in the fourth generation (4G) spectrum is on, with Celcom Axiata Bhd, a unit of Axiata Group Bhd, promising to set up or upgrade 120 long-term evolution (LTE) network sites in Sarawak. Celcom’s flamboyant chief executive officer (CEO) Datuk Seri Shazalli Ramly said during a media briefing via video conferencing from Kuching that 120 of the 1,200 4G LTE sites to be set up by end-February 2014 would be located in Sarawak. (Source: The Star)

Petronas to take over RM1b Johor water project

Petroliam Nasional Bhd (Petronas) is taking over the RM1 billion water supply project in Pengerang, Johor, to help speed up its development. The project includes developing commercial infrastructure and underground piping for the supply of raw water to the 8,800ha Pengerang Integrated Petroleum Complex (PIPC). Located within the RM170 billion PIPC is Petronas' RM60 billion Refinery and Petrochemical Integrated Development (Rapid) project. Petronas president and group chief executive officer Tan Sri Shamsul Azhar Abbas said development at Rapid may slow as there is no water supply now. (Source: Business Times)

Opening of KLIA2 to boost Brahim’s revenue

Leading local halal food and beverage (F&B) group, Brahim's Holdings Bhd, expects its F&B division to contribute between 10% and 20% next year towards the group's revenue following the opening of KL International Airport 2 (KLIA2). Executive chairman Datuk Ibrahim Ahmad Badawi said the company would enlarge its footprint in the airport food and beverage business. “Host Sdn Bhd, our 51% subsidiary, was successful in its bid to secure a five-year contract to open new outlets in the KLIA2 terminal,” he told reporters after the company's AGM here yesterday. (Source: The Star)

Ingress takeover offer extended

Ingress Corp Bhd’s major shareholders Datuk Rameli Musa and Datuk Dr Abdul Wahab Ismail have extended the takeover offer deadline to June 25 to garner more shares from minorities. This is the second extension for the privatization offer at Rm1.85 per share. The offer was originally closed on May 28 and extended to next Tuesday (June 11). (Source: The Edge)

EPF now owns 5.21% of Prestariang

The Employees Provident Fund (EPF) has emerged as a substantial shareholder of Prestariang Bhd with a 5.21% stake or 11.41 million shares. The pension fund acquired 477,300 shares in the provider of information communications technology (ICT) training, certification and software company on June 3. Prestariang provides ICT training, certification and software certified by technology giants such as IBM and Microsoft, largely to the public sector focusing on local university students and Government agencies. (Source: The Star)

HeiTech Padu wins RM19m job

HeiTech Padu Bhd has secured a contract from the Government for the maintenance and services of computer systems for the data centre at the Immigration Department valued at RM19mil. According to a filing with Bursa Malaysia, the contract is for a period of two years from July 2013 to June 2015, and will only contribute positively to the future earnings of the group. (Source: The Star)

Foreign News

U.S. Stocks Advance on Stimulus Bets Before Jobs Report

U.S. stocks rose, with the Standard & Poor’s 500 Index erasing earlier losses to snap a two-day losing streak, as investors weighed the Federal Reserve’s stimulus plans before a report on employment growth. The S&P 500 added 0.9 percent to 1,622.56 at 4 p.m. in New York after falling as much as 0.7 percent earlier in the day. The Dow Jones Industrial Average added 80.03 points, or 0.5 percent, to 15,040.62. Almost 6.9 billion shares traded hands on U.S. exchanges today, 8.7 percent higher than the three-month average.

Firing Decline Helps Boost Confidence in U.S.: Economy

Applications for unemployment benefits declined last week and Americans’ views of the economy were the brightest since early 2008 on the heels of a housing market recovery and higher stock prices. Jobless claims fell 11,000 in the week ended June 1 to 346,000, the Labor Department said today in Washington. Sentiment about the state of the economy improved to the best level since January 2008, helping keep the Bloomberg Consumer Comfort Index at minus 29.7, close to a five-year high.

European Stocks Decline After Draghi Comments on Stimulus

European stocks declined, reversing earlier gains, as the European Central Bank refrained from announcing additional stimulus measures immediately even as it held its benchmark interest rate. The Stoxx 600 dropped 1.2 percent to 291.69 at the close of trading in London, after earlier gaining as much as 0.4 percent. The benchmark gauge has still rallied 4.3 percent so far this year as central banks around the world continued their stimulus measures.

Draghi Sees Economy Recovering as ECB Rates Left on Hold

European Central Bank President Mario Draghi said the euro-area economy will return to growth by the end of the year, handing policy makers a reason to hold back fresh stimulus. “Euro-area economic activity should stabilize and recover in the course of the year, albeit at a subdued pace,” Draghi told reporters in Frankfurt. “We will monitor very closely all incoming developments and we stand ready to act.” Draghi spoke after the ECB’s Governing Council left its main refinancing rate at 0.5 percent after reducing it by a quarter point last month. The decision was predicted by 57 of the 59 economists in a Bloomberg News survey.

German Factory Orders Fall; Economy Struggles to Recover

German factory orders fell more than economists predicted in April as Europe’s largest economy struggled to gain strength. Orders, adjusted for seasonal swings and inflation, decreased 2.3 percent from March, when they increased a revised 2.3 percent, the Economy Ministry in Berlin said today. Economists forecast a 1 percent drop, according to the median of 39 estimates in a Bloomberg News survey. In the year, workday-adjusted orders fell 0.4 percent.

Japanese Stock Futures Drop as Yen Climbs Most in Two Years

Japanese equity futures fell, signaling a third day of losses for the Nikkei 225 Stock Average, on concern the yen’s biggest increase in two years against the dollar will hurt corporate profits. Futures on Japan’s Nikkei 225 Stock Average expiring this month closed at 12,700 in Chicago, 1.9 percent lower than 12,820 at the close in Osaka, Japan. They were bid in the pre-market at 12,680 in Osaka at 8:05 a.m. local time. The yen strengthened 2 percent to 97.07 per dollar yesterday, touching a seven-week high.

(Source: Bloomberg)