Market Thoughts

US stocks rallied to close near session highs Thursday, with major averages wiping out the previous session's losses, lifted by a pair of better-than-expected economic data and as investors shrugged off another steep selloff in the Japanese market. Meanwhile, European shares pared losses to close marginally lower after upbeat economic reports from the U.S.

On the local exchange, the FBM KLCI plunged 32.25 points to 1742.87 points. Following the optimism in the US, we expect the FBM KLCI to rebound on bargain hunting.

Stocks in action are: a) MISC and Sapurakencana as the two will replace Bumi Armada and YTL Power in the FBM KLCI; b) Gamuda after the group has proposed to buy a few plots of land in Rawang measuring 290ha for RM620m; c) MAHB after AirAsia called for independent probe in the delay in building KLIA2; and d) YTL Corp as the group said that it is keen to bid for the high speed rail between KL-Singapore.

Malaysia News & Highlights

Khazanah said to plan RM1.26b IPO of theme parks

Khazanah Nasional Bhd, Malaysia’s state investment company, plans to raise as much as US$400mil (RM1.26bil) in an initial public offering (IPO) of its theme park business, said two people with knowledge of the matter. Khazanah was working with Malayan Banking Bhd and Bank of America Corp on the share sale of Themed Attractions and Resorts Bhd, the people said, asking not to be named as the process was private. The Kuala Lumpur IPO may raise US$300mil to US$400mil as early as this year, they added. (Source: The Star)

Mah Sing plans REIT launch

Mah Sing Group Bhd, Malaysia's fifth largest property developer by revenue, aims to launch a Real Estate Investment Trust (REIT) in five years, comprising commercial assets worth over RM1 billion. The company may look at injecting assets such as malls, Grade A office towers and hotels into the REIT. Mah Sing now has 31 projects worth around RM28 billion in gross development value. This includes 22 projects under various development stages in the Klang Valley, Penang, Johor and Sabah, and nine that are in the planning stages. (Source: Business Times)

YTL awaits Govt move on KL-S'pore fast rail link project

YTL Corp Bhd is waiting for the Government's next move on the high-speed rail link between Singapore and Malaysia. “We will wait. It will happen because this Government has made their promises, sometime ahead of schedule,” YTL Corp managing director Tan Sri Dr Francis Yeoh said on the sidelines of Invest Malaysia 2013. (Source: The Star)

AirAsia calls for independent probe in the delay in building KLIA2

AirAsia Bhd has asked the Government to set up an independent body to probe the much-delayed construction of the new low-cost airport, klia2. Chief executive officer Aireen Omar said that an independent body should evaluate three key points regarding the project the current progress of the project, when it can be completed and how much it is going to cost? (Source: The Star)

MMC on track to list Malakoff by first half next year

MMC Corp Bhd is on track to list unit Malakoff Corp Bhd on the Main Market of Bursa Malaysia by the first half of next year. Group managing director Datuk Hasni Harun said the company would make an announcement in September on the listing status to comply with the Securities Commission’s regulatory requirements. “Then, we would look for five cornerstone investors to take part in our initial public offering, three local and two foreign investors,” he told reporters on the sidelines of the Invest Malaysia 2013 conference here yesterday. (Source: The Star)

SapuraKencana, MISC in FBM KLCI list

FTSE Group and Bursa Malaysia Bhd announced that MISC Bhd and SapuraKencana Petroleum Bhd will replace Bumi Armada Bhd and YTL Power International Bhd in the FTSE Bursa Malaysia KLCI. Bursa Malaysia said the replacement follows the semi-annual review of the FTSE Bursa Malaysia Index Series yesterday. (Source: Business Times)

Gamuda to buy Rawang land for RM620m

Gamuda Bhd has proposed to buy a few plots of land in Rawang measuring a total of 290ha for RM620 million cash. In a filing to Bursa Malaysia yesterday, the company said the plots are close to the Rawang South Interchange of the North-South Expressway, which connects to the Guthrie Corridor Expressway and Latar Highway (Source: Business Times)

MISC allocates RM1.6bil for capital expenditure

MISC Bhd has allocated US$500mil (RM1.56bil) for its capital expenditure (capex) this year. Corporate planning and development vice-president Yee Yang Chiensaid the capex would be utilised for its offshore site, among others. “We have enough cash to fund our capex. We are not raising any capital,” Yee said on the sideline of Invest Malaysia 2013 conference. (Source: The Star)

Hospital operator IHH plans to go big in China, India

IHH Healthcare Bhd, Asia's largest hospital operator, plans to increase its presence in China and India to capitalise on the huge population base there, according to managing director Dr Lim Cheok Ping. “It is actually part of our next five-year plan. We want to penetrate both markets in a big way,” he said, adding, “We want to manage more and own more hospitals in both countries.” (Source: The Star)

Glomac confident of RM900mil sales

Property developer Glomac Bhd is confident of selling RM900mil worth of properties for the financial year ending April 30, 2014. Managing director and chief executive officer Datuk F.D. Iskandar said the target was set on the back of new launches scheduled for this year as well as higher sales value from maturing development. “Currently, we are undertaking between 13 and 15 new projects with unbilled sales at an all-time high of RM827mil and total gross development value of RM7bil. (Source: The Star)

Foreign News

U.S. Stocks Climb as Asian Futures Signal Post-Rout Rally

U.S. equities rose and Asian stock futures signaled a rebound after yesterday’s rout as better-than-forecast U.S. economic data and speculation the Federal Reserve will look to maintain record-low interest rates bolstered markets. The yen pared this week’s gains. The Standard & Poor’s 500 Index posted its second-biggest advance of the year, climbing 1.5 percent to 1,636.36 in New York after losing 1.9 percent in the previous three sessions, the biggest drop in almost two months. The MSCI All-Country World Index, the benchmark gauge of global stocks, rebounded from the lowest level since April to add 0.5 percent. Futures on Japan’s Nikkei 225, which tumbled the most in three weeks yesterday, jumped 3.8 percent, while contracts on Hong Kong’s Hang Seng Index rose 1.1 percent. The yen weakened 0.1 percent versus the dollar, cutting the week’s climb to 2.2 percent.

Jobless Claims in U.S. Fell by 12,000 Last Week to 334,000

Fewer Americans than forecast filed applications for unemployment benefits last week, showing companies are refraining from firing workers even as growth cools this quarter. Jobless claims dropped by 12,000 to 334,000 in the week ended June 8 from 346,000 the prior period, the Labor Department reported in Washington. The median forecast of 51 economists surveyed by Bloomberg called for 346,000. No states were estimated and there was nothing unusual in the data, a Labor Department spokesman said as the figures were released.

Retail Sales in U.S. Increased More Than Forecast in May

Retail sales in the U.S. rose more than forecast in May, showing job gains and lower borrowing costs are encouraging consumers to spend. The 0.6 percent increase was the biggest in three months and followed a 0.1 percent gain in April, Commerce Department figures showed in Washington. The median forecast of 83 economists surveyed by Bloomberg called for a 0.4 percent advance. The figures used to calculate economic growth, which exclude categories such as automobiles, climbed 0.3 percent.

Asia Stock Futures Signal Rebound on U.S. Economic Data

Stock futures in Japan, Hong Kong and Australia rose, indicating equity gauges in Asia will rebound from a rout yesterday that erased the regional benchmark’s gains for the year, on positive U.S. economic data and bets the Federal Reserve will maintain record-low rates.

China Stocks Fall to 6-Month Low After Holiday on Economy

China’s stocks fell after a three-day holiday, dragging the benchmark index to a six-month low, as government reports showed industrial production and exports trailed economists’ estimates. The Shanghai Composite Index dropped 2.8 percent to 2,148.36 at the close, the lowest level since Dec. 13. The CSI 300 Index declined 3.4 percent to 2,399.94. Mainland markets were shut for the Dragon Boat holiday. Hong Kong’s Hang Seng China Enterprises Index lost 3.3 percent, heading for a bear market, as trading resumed following a one-day holiday.

Indonesia Unexpectedly Raises Rate for First Time Since 2011

Bank Indonesia unexpectedly raised its key interest rate for the first time since 2011 as Governor Agus Martowardojo accelerates efforts to support the currency and cool inflation expectations. The rupiah pared losses. The central bank increased the reference rate by a quarter of a percentage point to 6 percent, it said in Jakarta. All 19 economists surveyed by Bloomberg News expected no change. (Source: Bloomberg)