Market Thoughts

US stocks finished sharply lower in volatile trading Tuesday after briefly wiping out most of their losses, with all key S&P sectors closing in the red, as the Bank of Japan's latest monetary policy decision disappointed investors. Similarly, European shares closed sharply lower, on ongoing concerns about the scaling back of monetary stimulus programs by central banks. On the local exchange, the FBM KLCI fell 8.23 points to 1779.57 points. Today, Asian stocks could be set for heavy losses after global equity markets skidded 1 percent and the yen soared 3 percent amid disappointment at Bank of Japan inaction to calm a volatile government bond market.

Stocks in focus are: a) CIMB as the group will pay RM945m to buy a 58% stake in San Miguel Corp’s banking unit; b) DRB Hicom as the group has proposed to enter China vehicle market through an acquisition of a HK company; c) Patimas, the group informed Bursa that its directors have not received any offer from Tencent Holdings Ltd of HK to acquire 15% of stake in the group; d) AirAsia, the group may dissolve its Japan based JV with All Nippon Airways (ANA) due to disagreement between the companies over how to operate the business; e) Benelac after the EGM’s approval on its Melaka land sale amidst questioning by the shareholders of the pricing of the land; and f) Favelle Favco following the group won a contract worth RM161m to supply offshore and tower cranes

Malaysia News & Highlights

US$20b earmarked for Canada project

PETROLIAM Nasional Bhd (Petronas) expects to invest some US$20 billion (RM63 billion) in its west Canada liquefied natural gas (LNG) export project. Petronas vice-president of corporate planning Md Arif Mahmood said the estimated cost includes the construction of a LNG plant on Lelu Island and a 750km pipeline, to be built by TransCanada Corp, to supply gas to two trains at the facility. "The project, known as Pacific NorthWest LNG, will build two trains of six million tonnes per annum (mtpa) each by the end of 2018 or early 2019. There is space to build a third train and the capacity could go up to 18 mtpa," he said on the sidelines of the three-day Asia Oil and Gas Conference, which closed here yesterday. (Source: Business Times)

'BIMB-Tabung Haji talks will be arms' length'

BIMB Holdings Bhd says the proposed deal to buy Lembaga Tabung Haji's (Tabung Haji) stake in Bank Islam Malaysia Bhd will be done on an arm's length basis. BIMB yesterday received approval from Bank Negara Malaysia to start talks to buy Tabung Haji's 18.5 per cent stake in the bank. BIMB owns 51 per cent of Bank Islam, while the remaining 30.5 per cent stake is held by the Dubai Financial Group (DFG). In a statement to Bursa Malaysia yesterday, BIMB said the central bank has set December 31 2013 as the deadline for the proposed acquisition. BIMB has already begun discussions with DFG to acquire the latter's interest in the bank and has till the end of this month to announce the result of the discussions. The talks were originally slated to be concluded on March 31. A source familiar with the negotiations told Business Times that the talks are still ongoing and nothing has yet materialised. (Source: Business Times)

San Miguel to sell 58pc stake in bank to CIMB

US$300M DEAL: Purchase paves way for lender’s entry into the Philippines

MALAYSIA'S second-largest lender, CIMB Group Holdings Bhd, will pay nearly US$300 million (RM945 million) to buy a 58 per cent stake in San Miguel Corp's banking unit, the president of San Miguel said yesterday. "We reached a deal last night. Closing is within 30 days. Same terms," Ramon Ang said on the sidelines of San Miguel's stockholders' meeting. The deal involving San Miguel's unlisted unit, Bank of Commerce, which has assets worth more than US$2 billion, paves the way for CIMB's entry into the Philippines as part of its Southeast Asia expansion drive. For San Miguel, the sale provides more funds to use for acquisitions and expansion. Closing the deal had hit a snag due to minor issues related to the bank's information technology infrastructure and property holdings. (Source: Business Times)

Stop Perstima's bullying tactics, group urges govt

MALAYSIAN Tin Can Manufacturers Association (MTCMA) has warned that canned food and beverages will become more expensive if the government were to support Persaduran Timah Malaysia Bhd's (Perstima) proposal for an anti-dumping duty on tin plate imports. "If the government proceeds to slap an anti-dumping duty on tin plate imports, we'll have no choice but to pass on the higher costs to our clients, who are mainly in the food and beverage sector," said MTCMA committee member Datuk Anthony See. "This would mean costlier biscuit tins, milk powder tins, paint cans, canned food and beverages," he said here yesterday. (Source: Business Times)

Malindo targets 5-8pc share of local market

BUDDING hybrid airline Malindo Air is targeting a five to eight per cent share of the domestic market by year-end. Speaking to the media during the airline's inaugural flight from Kuala Lumpur to Sibu, its chief executive officer Chandran Ramamuthy said it is premature to talk about Malindo's market share as it was just in operation for two and a half months.However, its presence in the market will be strengthened with more aircraft coming on stream, he added."We have 10 aircraft to operate by end of this year and we should have a five to eight per cent domestic market share by year-end," Chandran said. Malindo is expected to operate 10 to 12 Boeing 737-900ER aircraft and six ATR 72-600 turboprop aricraft by 2013. (Source: Business Times)

DRB-HICOM: Plan to access China vehicle market

DRB-HICOM Bhd has proposed to acquire a 100 per cent equity interest in Symphony Lotus Ltd (SLL), a company incorporated in Hong Kong, which will allow the group access to the vast China vehicle market. Its wholly-owned subsidiary, Lotus Advance Technologies Sdn Bhd (LATSB), had yesterday entered into a conditional share sale and purchase agreement with SLL shareholders for a total consideration of US$15 million (RM47 million). This is to be satisfied by acquiring one million ordinary shares of US$1 each in SLL, representing the entire equity interest in SLL, for a total cash consideration of US$3, and proposed transfer and assignment of the amount owing by SLL to SLL's shareholders to LATSB for a total cash consideration of US$15 million, DRB-HICOM said in a filing to Bursa Malaysia. (Source: Business Times)

TNB said to plan bid for Ireland’s Bord Gais unit

Tenaga Nasional Bhd (TNB) is considering a bid for the retail and power generation unit of Irish state-owned gas company Bord Gais. Eireann, according to two people with knowledge of the matter. A successful offer would mark the Kuala Lumpur-based company's initial foray into the European utilities market, said one of the people, who asked not to be identified, as the talks are private. Fazlur Rahman Zainuddin, chief financial officer at TNB, didn't immediately respond to calls and e-mail seeking comment on the planned bid. UK energy companies Centrica Plc and SSE Plc are also among companies preparing bids with initial offers for Bord Gais Energy due today. In an e-mail response to questions, a Bord Gais spokesman declined to comment on potential bidders. (Source: Bernama)

Benalec shareholders approve Melaka land sale

Shareholders of Benalec Holdings Bhd voted overwhelmingly in favour of the disposal of three parcels of land valued at RM96.95 million to companies that one of its executive director and a major shareholder have interests in. According to an announcement by Bursa yesterday, 99.78% of the shareholders voted in favour of the three resolutions for the disposal of the land parcels at an EGM. (Source: The Edge)

Offer for MPHB Cap shares extended

Multi-Purpose Holdings Bhd has extended the offer for MPHB Capital Bhd shares to June 18 from June 13, and has delayed the listing of the company. In filings with Bursa Malaysia, the company said the delay was to facilitate an extended period of time for shareholders to accept and pay for the offer shares and to apply and pay for the excess offer shares, after taking into consideration shareholder feedback. The listing will be on June 28 instead of June 25. (Source: The Star)

Favelle Favco gets RM161.1mil jobs

Favelle Favco Bhd has secured RM161.1mil in contracts to supply six offshore cranes to six different international companies. The company told Bursa Malaysia yesterday that its units, Favelle Favco Cranes Pte Ltd, Favelle Favco Cranes Pty Ltd and Favelle Favco Cranes (M) Sdn Bhd, had received the purchase orders in May and June. It expects to deliver the cranes from the third quarter of 2013 and said the contracts would contribute positively to its earnings and assets from the current financial year. (Source: The Star)

Pantai to invest RM530mil

Integrated healthcare services provider Pantai Holdings Bhd plans to augment its foothold in the country with the addition of three new hospitals with a total investment of RM530mil. Chief operating officer for its Malaysian operations Aminudin Dawan said two hospitals, one each in Kota Kinabalu, Sabah, and Manjung, Perak, were scheduled to be operational by the first quarter of next year, while the one in Medini, Iskandar Malaysia, Johor, would be operational by the last quarter of 2015. He said the company would build the Gleneagles Medini on a 6.06ha site in Medini, Iskandar, in phases. (Source: Bernama)

Pesona bags RM87m contract

Pesona Metro Holdings Bhd announced to Bursa Malaysia yesterday that it had been awarded an RM87.154mil contract by Putrajaya Holdings Sdn Bhd. In a statement, it said that unit Pesona Metro Sdn Bhd had received the letter of award from Putrajaya Holdings for the proposed construction and completion of the remaining and rectification works of a Government office building and external works for the Election Commission. The duration of the project is 11 months from the date of possession of the site. Pesona added that the expected completion date was on May 9, 2014. (Source: The Star)

Pulau Indah shortlists contractors for Medini project

Pulau Indah Ventures Sdn Bhd has shortlisted seven contractors from Malaysia and Singapore to undertake its Afiniti Residences@Medini Iskandar Malaysia project here. Chairman Tan Sri Syed Anwar Jamalullail said about 40 contractors from both countries had been invited to bid for the project, with 14 qualifying for the second round before the figure was trimmed down to seven. “Pilling work will start by the end of next month and the project is expected to be completed in the fourth-quarter of 2015,” he told reporters at a press conference yesterday. (Source: The Star)

Sabah aims for RM10bil-RM15bil investments this year

Sabah expects to attract from RM10bil to RM15bil in investments this year, with the bulk to come from the palm oil sector, especially downstream processing, including in biomass. Sabah chief minister Datuk Seri Musa Aman said the state has Palm Oil Industrial Cluster (POIC) Sabah Sdn Bhd and Sawit Kinabalu to push for new frontiers in value-added ventures. (Source: Bernama)

Foreign News

U.S. Stocks Decline as BOJ Leaves Stimulus Unchanged

U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a second day, after Bank of Japan Governor Haruhiko Kuroda said he sees no need to expand monetary stimulus immediately. The S&P 500 declined 1 percent to 1,626.13 at 4 p.m. in New York. The Dow Jones Industrial Average slipped 116.57 points, or 0.8 percent, to 15,122.02. About 6.4 billion shares changed hands, in line with the three-month average.

Job Openings in the U.S. Decreased in April to 3.76 Million

Job openings in the U.S. fell in April as companies continued to assess the effects of higher taxes and reduced government spending before adding workers. The number of positions waiting to be filled fell by 118,000 to 3.76 million from a revised 3.88 million the prior month, the Labor Department reported in Washington.

U.K. Industrial Output Increased on Mining in April: Economy

U.K. industrial production unexpectedly rose in April, boosted by increased output at oil and water companies. Manufacturing fell after gains in February and March. Output at factories, utilities and mines rose 0.1 percent from March, the Office for National Statistics said in London. The median forecast of 28 economists in a Bloomberg News survey was for no change. Manufacturing dropped 0.2 percent after gains averaging 0.9 percent in the previous two months.

Kuroda Stares Down Bond Volatility With Stimulus Unchanged

Bank of Japan policy makers refrained from expanding their tools to address bond-market volatility, sticking with an April plan to double the monetary base as they seek to rekindle inflation and stoke growth. BOJ Governor Haruhiko Kuroda and his fellow board members left unaltered the one-year fixed-rate loan facility the bank has tapped seven times amid a surge in 10-year government bond yields from a record low in April. At a press briefing in Tokyo, Kuroda said that the central bank will discuss longer funding operations if they become necessary.

Yen Rallies Most in 3 Years as BOJ Refrains From Added Stimulus

The yen rose the most in three years against the dollar as the Bank of Japan refrained from adding more stimulus measures that tend to weaken a currency. Japan’s currency snapped a two-day decline as BOJ Governor Haruhiko Kuroda held back from extending the maturity of loans to banks as part of its monetary stimulus that pushed the yen down almost 10 percent this year. The currency extended gains versus the dollar as Treasuries rallied even after demand slumped at a Treasury auction of three-year notes. Australia’s dollar dropped to an almost three-year low after data showed home-loan approvals expanded by less than economists forecast.

(Source: Bloomberg)