Highlights

The global markets reacted aggressively on the tapering of QE which was proposed by the Fed to scale down on the bond purchase program. The local bond market (eg MGS and GII) corrected across all benchmark and gave back the earlier gains after GE 13. It may not have stabilized given that the volatility in the U.S. market remains high. However, we do not see any aggressive liquidation by foreign investors on their holding. There are still good value opportunities on selected govvies papers.

Last week, we saw strong selling pressure on pre- and post-FOMC meeting which resulted in the further realignment of the yield curves. Local players were mostly sidelined waiting for the market to stabilize before re-entering into the market. However, there were activities on foreign investors unloading their holding in ringgit asset but the markets also witnessing local and foreign players supporting the market due to attractive yields at almost 2-year high. We feel that the current yield level provide opportunities for investors to start searching for good value papers. Having said that, investors also need to enhance its book capability to withstand fluctuation in mark-to-market value that cause by the increase in volatility.

Market data watch for this week:- US Initial Jobess Claim on 27 Jun 2013.

Fixed Income Securities

On the govvies market, nearly most of the MGS papers were traded upwards, and the most declined papers were MGS 09/15 and MGS 05/27 (off-the-run) closed at 3.40% (+30 bps) and 3.78% (+27 bps), respectively. The most active traded securities were MGS 10/15, MGS 08/15 and MGS 09/16, which all of it are off-the-run securities, with trading volume of RM1.57 billion, RM1.29 billion and RM1.17 billion, respectively.

On the local PDS (including quasi-) market, trading activites have slightly picked up with total trading volume amounted to RM4.0 billion vs RM3.9 billion the week before, and the actively traded securities were PLUS 12/38 (4.50%), Prasarana 05/23 (3.79%), PLUS 01/28 (4.26%) and MACB 12/24 4.07%), with a trading volume of RM270 million, RM190 million, RM170 million and RM115 million, respectively.

Boustead Holdings Bhd (AAA(bg)) has issued additional RM160.0 million, with tenor of 3 years and coupon rate at 3.90%,  from its RM1 billion Guaranteed MTN Programme on 17 Jun 2013. (FAST)

There will be an early partial redemtion on Perdana Parkcity Sdn Bhd's RM800 million MTN Programme for theamount of RM16.7 million on 27Jun2013. (FAST)

Maju Expressway Sdn Bhd (AA-) wish to seek the IMTNholders' approval for Bright Focus Bhd (MEX's shareholder) to effect the proposed acquisition by purchasing all the IMTN for the time being outstanding at the yield between 3.43% to 4.33%. In addition, Bright Focus Bhd proposes to issue IMTN to finance the proposed acquisition. (FAST)

Global News

New Zealand ecnomic growth slowed in the first 3 months, the GDP grew by 2.4% YoY, ended in March after the drought earlier this year sapped mild prodiction. (ICN)

President Vladimir Putin unveiled a $13 billion investment plan on Friday to build new roads and railways by tapping a reserve fund, hoping to revive Russia's economy and avoid stagnation. (Reuters)

China's central bank faced down the country's cash-hungry banks on Friday, letting interest rates again spike to extraordinary levels as it increases the pressure on the banks to rein in rampant informal lending and speculative trading. (Reuters)

Borrowing costs rose at Spanish and French debt auctions on last Thursday after the U.S. Federal Reserve clearly signalled an end to the money-printing that has underpinned a global rally in riskier assets. (Reuters)

China is set to offer up to CNY24.2bn (USD3.94bn) of 3-year municipal government bonds on June 28. (Reuters)

Source: Kenanga