OIL & GAS (OVERWEIGHT) Sector Update: Oil Price on aRoller Coaster In recent weeks, the price of crude oil has shot up to aboveUSD100/barrel, driven by the political tension in Iran. Going forward, we facethe risk of oil price  revisiting itsalltime high of USD147/barrel and potentially crashing after that. Should thishappen, all vessel operators, shipbuilders, process equipment manufacturers andpetrochemical operators will be negatively impacted in the longer term, whilethose that may be considered safer are the brownfield services providers, CTFoperators as well as the fabricators and pipe coaters. Maintain Overweight,with Kencana Petroleum and Dialog Group being our top picks.

Buying support.  The  FBMKLCI finished 3.53 pts higher at 1,578.36 supported by foreign institutionalbuying  on key heavyweights. However,decliners led advancers by 415 to 336, while 339 counters closed unchanged.Among the key market news today are: the Government scraps its previous salaryscheme adjustments and reinstates its old scheme with a salary hike across theboard, Proton may delay the launch of its newest model, Tan  Sri Ananda Khrishnan may put TGV CinemasSB  up for sale, Perodua in RM225mlubricants oil deal with Petronas Dagangan, Pantech buys UK-based firm for RM45mand Pintaras Jaya gets RM34.4m contract. Overnight, US stocks extended their gainsas  the deadline for private bondholdersto exchange Greece-issued debt passed with adequate participation, thus  removing an obstacle to Greece's secondbailout. The DJIA closed up 70.61 pts or 0.6%, to 12,907.94, which could buoysentiment on the local bourse today.

Civil servants are to receive salary increases of between 7%and 13% under an improved Malaysian Remuneration System. This follows thescrapping of the controversial Public Service New Remuneration Scheme (SBPA),which had come under criticism from government employees. Datuk Seri Najib TunRazak announced the improved Malaysian Remuneration System (SSM) to  the applause  of more than 10,000civil servants at the Putrajaya International Convention Centre. (StarBiz)Please see accompanying report

Perodua and Petronas Daganga have signed a RM225m deal tosupply the former with lubricant oil over the next five years. Perodua managingdirector Datuk Aminar Rashid Salleh said. He said the contract, dubbed 'PeroduaGenuine Oil', would see the second national car maker using RM45m worth of  'Petronas SL/SM' grade oil at all its serviceoutlets nationwide a year for five years with immediate effect. (FinancialDaily)

Malaysia Airports Holdings Bhd (MAHB) is expected to raiseRM616m from its private placement after fixing the issue price at RM5.60 ashare. The airport operator had earlier proposed private placement of up to110m new ordinary shares of RM1 each, representing 10% of the company's issuedand paid-up share capital, primarily to part-finance the additional capitalexpenditure incurred for the enhancements to its KLIA2 and also to defray expensesrelating to the proposed private placement. (StarBiz)

Top Glove Corp Bhd, the world's largest rubber glove makerby volume, aims to buy at least one other glove producer this year as part ofits strategy to gain market share and drive earnings, according to its chairmanand founder. The company was in talks with a number of rubber glove makers,chairman Tan Sri Lim Wee-Chai told Reuters in an interview. Lim said Top Glovewas well placed to make acquisitions on the back of its strong net cashposition. The company held some RM300m net cash as of 29 Feb, 16.7% higher thanAugust a year earlier. (Reuters)

AEON Co (M) Bhd, which operates the Jusco department storeand supermarket chain, has allocated RM350m for capital expenditure this year,particularly to increase its market penetration in the retail business. This includesthe opening of two new shopping centres as well as refurbishment of existingstores. (BT)

Pantech Group Holdings has entered into an agreement toacquire UK-based Nautic Steels (Holdings) Ltd and its wholly-owned Nautic SteelLtd from  Robert Andrews, for a maximumof GBP9.5m (RM45m). Pantech, a manufacturer of steel pipes and fittings, willwholly own the two companies which have a mainstay in milling, machining andwelding tube and pipe fittings for special metals for the marine oil industry.(StarBiz) Please see accompanying report.

Indonesia's central bank held interest rates to supportgrowth as a government plan to raise fuel prices and electricity tariffsrevives inflation risk. Governor Darmin Nasution and his board kept thereference rate at 5.75%, Bank Indonesia said in a statement in Jakartayesterday. A plan to raise prices of subsidized fuel threatens to reignite costpressure in Indonesia and limits the scope for easing after an unexpected cutin the last meeting. (Bloomberg)

The Bank of Korea held off altering borrowing costs for aninth straight month as policy makers balance the risks from Europe's debtcrisis against rising oil costs that add to price pressures. Governor KimChoong Soo and his board kept the benchmark seven-day repurchase rate unchangedat 3.25%, the central bank said in a statement in Seoul yesterday. Rising oilprices are one of the biggest concerns for South Korea, Vice Finance MinisterShin Je Yoon said yesterday.(Bloomberg)

Brazil's central bank surprised analysts by accelerating thepace of interest rate cuts, bringing borrowing costs below 10% for only thesecond time amid signs of lackluster growth in Latin America's biggesteconomy.  In a split vote yesterday,policy makers led by bank President Alexandre Tombini cut the Selic rate by75bps to 9.75%t. Two dissenting members voted to lower the rate by a half pointfor a fifth straight meeting. (Bloomberg)

The Greek government's deadline for the  biggest sovereign restructuring in historypassed with a majority of investors signaling their readiness to participate inthe debt swap.  The euro and stocksgained before the offer's close at 10 p.m. in Athens yesterday as Greek PrimeMinister Lucas Papademos told his Cabinet ministers that Greece had made 'anappropriate framework with significant incentives' for bondholders. FinanceMinister Evangelos Venizelos told Parliament that 'a historic process will becompleted last night,' and the results announced today. (Bloomberg)

The number of Americans filing claims for jobless benefitsrose to 362,000 last week, a level consistent with an improving labor market.Applications for unemployment  insurancepayments increased by 8,000 in the week ended 3 March, Labor Department figuresshowed today. Economists forecast 352,000 claims, according to the medianestimate in a Bloomberg News survey. The average over the past four weeks heldclose to a four-year low. The rate of firings indicates companies have grownmore comfortable with headcounts and could take on additional employees whendemand picks up. (Bloomberg)

Household  confidenceimproved last week to a four-year high as more Americans said the economy was improvingand decided it was a good time to shop. The Bloomberg Consumer Comfort Indexwas minus 36.7 in the period ended 4 March, the highest since April 2008, upfrom minus 38.8 in the prior period. The gauge on the state of the economyreached a one-year high, while the buying-climate measure climbed to a levellast exceeded in December 2009.  For afifth straight week, half of those surveyed also rated their personal finances aspositive, bolstered by a resilient stock market, faster job growth and risingwages.(Bloomberg)

Source: OSK188