Market Thoughts

US stocks logged gains across the board Tuesday, erasing most of their losses from the previous day's selloff, as a batch of better-than-expected economic reports trumped worries over a credit crunch in China. Similarly, European shares rebounded from seven-month lows to close higher on Tuesday afternoon. Investor sentiment was boosted after the Chinese central bank held a press conference to try to allay fears of a credit squeeze in the country.

On the local market, the FBM KLCI fell 9.55 points to 1728.64 points. Following the optimism from China, we expect the index to rebound today.

Stocks to watch are: a) AirAsia as the group has terminated the JV agreement with ANA Holdings Inc. for the operation of AirAsia Japan; b) Mah Sing, the group is poised to achieve its RM3b sales target this year; c) Perisai, the group is targeting revenue and profit growth of 30 per cent in the next three to four years, beginning financial year ending December 31 2014; and d) Planters such as TH Plantations, KLK and Sime Darby as the media reported that the Roundtable on Sustainable Palm Oil (RSPO) has identified its members for the allegedly involved in the current forest fire in Indonesia.

Malaysia News & Highlights

AirAsia terminates Japan joint venture

AirAsia Bhd has terminated its AirAsia Japan joint venture with ANA Holdings Inc, calling off the partnership with the Japanese airline due to differences in management. The joint venture had faced numerous challenges from its inception, stemming mainly from a fundamental difference of opinion on cost management and the base of the domestic operations. Earlier this month, the Malaysian low cost carrier (LCC) had hinted on the possibility of dissolving the joint venture. (Source: The Star)

Prolintas to invest RM8b in 2 new highways

Projek Lintasan Kota Sdn Bhd (Prolintas) is preparing a RM8 billion war chest to build two new highways in Peninsular Malaysia, said industry players and analysts who cover the construction sector. Business Times was told that works on the infrastructure projects can take place within the next 12 months as Prolintas has already secured the concessions. The projects are the Damansara-Shah Alam Elevated Expressway (DASH) and the Sungai Besi-Ulu Klang Elevated Expressway (SUKE). (Source: Business Times)

Inari completes RM102.87mil acquisition of Amertron

Inari Bhd has completed its acquisition of opto-electronics manufacturer Amertron Inc (Global) Ltd for RM102.87mil. The acquisition included the takeover of Amertron's wholly-owned subsidiaries, Amertron Incorporated, which operates two manufacturing facilities in Clark Field and Paranaque, the Philippines, and Amertron Technology (Kunshan) Co Ltd which has a manufacturing facility in Kunshan, China. (Source: The Star)

Glomac net profit soars in Q4

Glomac Bhd saw its net profit soar 44.23% in the fourth quarter ended April 30 to RM31.19mil from RM21.63mil previously on the back of ongoing projects such as Glomac Damansara, Bandar Saujana Utama, Saujana Rawang and Lakeside Residences. Revenue fell 9.78% to RM220.55mil against RM244.46mil in the same period a year ago, while earnings per share (EPS) stood at 4.1 sen. The property developer has declared a dividend of 3.5 sen for the quarter, taking its full-year payout to 6.5 sen. (Source: The Star)

Perisai Petroleum targets 30pc growth after 2014

Perisai Petroleum Teknologi Bhd is targeting revenue and profit growth of 30 per cent in the next three to four years, beginning financial year ending December 31 2014. Managing director Izzet Ishak said the growth will be derived from the company's US$640 million (RM2.05 billion) capital expenditure (capex) commitment in the next three years. The bulk of the capex will be spent on two business segments, name-ly drilling and offshore oil and gas production, he said after the company's annual general meeting and extraordinary general meeting (EGM) yesterday. (Source: Business Times)

Manulife, ACE among bidders for AMMB’s insurance stake

Insurers Manulife Financial Corp and ACE Insurance are among the shortlisted bidders for a majority stake in the life insurance division of AMMB Holdings Bhd, a deal that could be worth as much as US$600mil, people with knowledge of the sale process said. According to Dow Jones, the sale is the latest in a string of transactions by foreign players looking for a piece of South-East Asia’s financial industry. (Source: The Star)

Foreign News

U.S. Stocks Rebound From Nine-Week Low on Economic Data

U.S. stocks rose, as the Standard & Poor’s 500 Index rebounded from a nine-week low, after data showed durable-good orders and home sales increased more than forecast and consumer confidence climbed. The S&P 500 climbed 1 percent to 1,588.03 in New York. TheDow Jones Industrial Average rose 100.75 points, or 0.7 percent, to 14,760.31 today.

Orders for U.S. Durable Goods Rose More Than Forecast

Orders for U.S. durable goods rose more than forecast in May, reflecting broad-based gains that signal manufacturing is stabilizing. Bookings for goods meant to last at least three years climbed 3.6 percent for a second month, the Commerce Department reported today in Washington. The median forecast of 81 economists surveyed by Bloomberg called for a 3 percent increase. Excluding transportation gear, where demand is volatile month to month, orders advanced 0.7 percent, also topping projections.

U.S. Housing Prices Increased More Than Forecast in April

Home prices climbed more than forecast in the 12 months through April, rising by the most in more than seven years and showing further strength in the U.S. housing market. The S&P/Case-Shiller index of property values increased 12.1 percent from April 2012, the biggest year-over-year gain since March 2006, after advancing 10.9 percent a month earlier, a report showed today in New York. The median forecast in a Bloomberg survey of 28 economists called for a 10.6 percent advance.

European Stocks Rebound as China Allays Crunch Concern

European stocks climbed from a six-month low as the People’s Bank of China allayed concern over a cash crunch, and as U.S. data on durable goods, new-home sales and confidence increased more than economists had projected. The Stoxx Europe 600 Index increased 1.5 percent to 279.69 at the close of trading, its biggest gain in two months. The benchmark gauge entered a correction yesterday, having slumped more than 10 percent since May 22, when Federal Reserve Chairman Ben S. Bernanke commented on the possibility of paring bond purchases. It has dropped 4.8 percent this quarter, the most since September 2011.

Asia Futures Heed U.S. Stock Jump on Economy as Oil Falls

Asian equity futures from Japan to Australia rose, tracking a rebound in U.S. stocks after better-than-estimated data bolstered the outlook for the world’s largest economy and concern over China’s cash crunch eased. Crude fell the first day this week. Futures due in September on Japan’s Nikkei 225 Stock Average closed up 1.2 percent in Chicago and added 1.6 percent by 3 a.m. in Osaka, while contracts on Hong Kong’s Hang Seng Index gained 1 percent. S&P/ASX 200 Index futures climbed 0.6 percent in Sydney.

Global Central Bankers Say Tighter Policy Is a Long Way Off

Global central bankers led by Federal Reserve officials said they are still a long way off from tightening monetary policy, seeking to calm investors unnerved by the Fed’s push toward curtailing bond-buying. The comments, along with efforts by the People’s Bank of China to allay concern over a cash crunch, helped halt a slide in stocks after the Fed’s June 19 decision to outline a timetable for tapering quantitative easing. Bank of England Governor Mervyn King and European Central Bank Executive Board member Benoit Coeure today echoed Fed counterparts in saying policy will stay loose to safeguard economic expansion.

PBOC Says It Will Ensure Stability of China Money Market

China’s central bank said it will use tools to safeguard stability in money markets and tight liquidity is set to ease, giving the first official signs of relief for a cash squeeze in the world’s second-largest economy. The People’s Bank of China has provided liquidity to some financial institutions to stabilize money-market rates and will use short-term liquidity operations and standing lending-facility tools to ensure steady markets, according to a statement posted to its website yesterday. It also called on commercial banks to improve their liquidity management. (Source: Bloomberg)