REGIONAL PLANTATION (NEUTRAL) Sector Update: Indonesian PalmOil Pours in Malaysia's palm oil inventory rose to 2.06m tonnes in February dueto the sharp increase in processed palm oil imported from Indonesia, withoutwhich the inventory would have been flat m-o-m. We suspect this is temporaryand will only artificially suppress palm oil price. Although we believe palmoil price can still scale higher due to potentially disappointing production inthe near term, we are concerned about a potential pullback in soybean price. Onfurther price strength, we would suggest a tactical sell on plantation stocks.Maintain Neutral on sector.

Cautious trading. The FBM KLCI ended at 1,564.75, down 14.25 pts, as  investors unloaded their holdings oncontinuing concerns  over China's growthoutlook following a huge trade deficit. Losers led gainers 516 to 260 while 318counters were unchanged. Among the key market news today are Malaysia's IPIgrew at the slower pace in January 2012, Datuk Mohd Kamil Jamil stronglytipped  to head Proton, AirAsia X willstop operating the loss-making Christchurch route, Khazanah sells stake inIndian lender Yes Bank for USD105m, Kimlun bags RM151.6m jobs and Paramountpays RM125m for industrial land in Selangor. Overnight, US blue-chip stocksextended gains into a fourth session on Monday ahead of a monetary policydecision from the Federal Reserve and a rush of economic releases this week.The DJIA's 37.69 pts climb to 12,959.71 may help to harness investor interestin the local bourse today.

The Employees Provident Fund (EPF) sold a whopping RM441.09mworth of Malaysia-listed equities on 7 March alone, in line with its trend ofactive disposals over the last two weeks. Bursa Malaysia filings showed that on7 March, the EPF along with its portfolio managers dumped a total 83.68m shareson the open market, substantially more than the 7.4m shares it had acquired thesame day. The number of shares disposed of represents almost half the totalvolume traded that day, which stood at 173.14m shares. Fund managers reckon thatthe fund was merely taking profit but its aggressive selling had dragged theFBM KLCI down from its all-time high last week. (StarBiz)

REDTONE International, a communications  solutions provider, is bidding for governmentprojects worth up to RM800m. REDtone managing director Datuk Wei Chuan Bengadded that he expected revenue contribution from the public sector to be more"balanced" over the next few years. Currently, contracts from thegovernment and related agencies contribute about 30% of the company'srevenue.(BT)

Loss-making PFCE will transform into an oil and gas(O&G) counter after DAT Group SB proposed to inject its wholly-owned unit,PFC Engineering SB (PESB) into the former for RM300m. DAT, which is owned byPFCE's group executive chairman Datuk Abu Talib Mohamed and son Muammar Gadaffi,will be issued 500m new PFCE shares priced at RM0.60 per share, which willresult in them controlling 91% of PFCE. In a statement yesterday, PFCE said thedeal will give it an immediate presence in the O&G industry. (MalaysianReserve)

Kimlun Corp has secured two construction projects in JohorBahru totaling RM151.6m, bringing the construction company's estimatedoutstanding orderbook to about RM1.5bil. The first project is the constructionof service apartments and ancillary buildings and the second, the constructionof 244units of houses. The first project's total contract sum is RM114.7m andis expected to be completed in Feb 2014. The second project total contract sumis RM36.9m, with an estimated time of completion in Sept 2013.  (Malaysian Reserve) Please see accompanyingreport

The government's 1Bestarinet project is in the process ofbeing implemented by YTL Communications SB (YTL Comms), a unit of YTL PowerInternational. Although no official announcement has been made by the government on the project award,sources said that YTL Comms has already rolled out the service to a number ofschools in the Klang Valley, having started doing so from Dec 2011.  (Financial Daily)

AirAsia X SB will stop flying the loss-makingKL-Christchurch route effective end-May due to volatile jet fuel prices.Christchurch will be the fourth destination the long-haul low-cost carrier haswithdrawn from in recent months after announcing that it would stop flying toLondon, Paris, Delhi and Mumbai. AirAsia X CEO Azran Osman-Rani told The Edgeyesterday that the capacity from Christchurch would be redeployed to Taipei,Perth and other routes. He said in a statement that since the suspension of itsflights to Europe and India, the airline has increased flight frequencies toTokyo and a new route to Sydney. (Financial Daily)

Malaysia: Moderate growth in Jan IPI Malaysia's Januaryindustrial production grew at a moderate pace, in line with marketexpectations. It went up by 0.2% year-on-year in January, as polled by BusinessTimes. The increase was due to the growth by the manufacturing index (1.2%) andelectricity index (2.7%) while mining posted a decline of 2.7%.  The Statistics Department in releasing the data said weakness in Januarycould stem from fewer working days from an earlier Lunar New Year (versus Feb2011). Considering January and February data in tandem will provide a betterread on industrial production growth, it said. (Bloomberg)

Vietnam cut its interest rates to support a slowing economyeven as the nation faces Asia's fastest inflation. The State Bank of Vietnamreduced the  refinancing rate for thefirst time since 2009 to 14% from 15%, effective today, it said in a statementon its website yesterday. It also cut the discount rate to 12% from 13% and thedong deposit cap for terms of one-month and above to 13% from 14%. (Bloomberg)

India's industrial production unexpectedly rose at thefastest pace in seven months in January, weathering the highest interest ratessince 2008 and weaker global growth. Output at factories, utilities and minesadvanced 6.8% from a year earlier, after a revised 2.5% climb in December, theCentral Statistical Office said in a statement in New Delhi yesterday. Thefigure exceeded all 26 estimates in a Bloomberg News survey. A history ofswings in the data may prevent the report from easing concern that the cost ofcredit and the impact of Europe's debt crisis are dimming India's economicoutlook. (Bloomberg)

Euro-area finance ministers will move toward completing thenext Greek bailout this week as they meet in Brussels last night. LuxembourgPrime Minister Jean-Claude Juncker, who heads the group of euro-region financeministers, said he had 'no doubt' that a second bailout program for Greecewould be approved and he expected a final decision on 12 March. (Bloomberg)

Italy's gross domestic product declined by 0.7% in thefourth quarter, compared to the three months in the prior quarter, Italy'sstatistical office, ISTAT. Compared to the year-ago quarter, GDP fell 0.4%. Thefigure was in line with expectations and confirmed a preliminary estimatereleased in February. The data confirmed that Italy hasnow experienced twoconsecutive quarters of shrinking GDP, the technical definition of an economyentering recession. (Bloomberg)

The Federal Reserve will show how the capital of 19 US banksmight fare through a deep recession and a second housing crisis when theyunveil stress-test results in three days. The tests will show results forrevenues, capital ratios and profits or losses at each firm over a nine-quarter period, the Fed said in a paperreleased yesterday in Washington. The results will be released on 15 March.Templates included in the Fed release yesterday showed an array of categoriesit plans to disclose, from trading and counterparty losses to credit cards andfirst-lien mortgages.  (Bloomberg)

Source: OSK188