Market Thoughts

US stocks closed sharply lower across the board Tuesday, with the Dow logging its worst one-day drop since June, pressured by several disappointing quarterly results and amid renewed fears over Spain's weak economy. Similarly, European markets were down after being hit by worries over weak company results and Spain's debt crisis.

Yesterday, the FBM KLCI gained 2.95 points to 1664.90 points. The index has been consolidating below its all-time high of 1670 points but we expect further downside today following the bearish sentiment in the US and Europe. Market direction for this two weeks will depend on US corporate earnings and economic announcements such as housing data later today and US third quarter GDP on Friday.

Malaysia News & Highlights

Bumi Armada's Nigeria contract extended one-year, value RM100m
Bumi Armada Bhd's contract to provide its floating production, storage and offloading (FPSO) unit in the Okoro-Setu field, off Nigeria, has been extended another year. It said on Tuesday Afren Energy Resources Ltd had exercised the first of the five one-year extensions from the original contract for the FPSO Armada Perkasa with effect from July 1, 2013. The Malaysia-based international offshore oil and gas services provider said the contract extension was estimated at RM100mil. (Source: The Star)

Daya inks joint RM250mil Sabah project
Daya Materials Bhd's unit, Daya CMT Sdn Bhd (DCMT), has signed a memorandum of understanding (MoU) with Chang Cheng Realty Sdn Bhd for a development and construction project in Sabah. The project has a gross development value of RM250mil.Daya Materials said the MoU was entered through DCMT's wholly-owned subsidiary, Daya Land and Development Sdn Bhd.Under the agreement, related parties will jointly develop and construct one block of 28-storey retail/showroom/service suites, 40 blocks of four-storey shop-office and eight blocks of three-storey shops on four parcels of empty land in Penampang. (Source: The Star)

UEM Land in JV to develop tech park in Iskandar
UEM Land Bhd, a wholly-owned subsidiary of UEM Land Holdings Bhd, has entered into a joint-venture agreement with Singaporean business space solutions provider Ascendas Land International Pte Ltd to develop an integrated eco-friendly tech park in Nusajaya, Johor at a projected investment value of S$1.5bil (RM3.7bil).UEM Land and Ascendas would hold 40% and 60% in the joint venture respectively, the companies said in a joint statement. A signing ceremony was held in Singapore yesterday to seal the partnership. The 210ha freehold integrated tech park would be located in Gerbang Nusajaya within the Nusajaya regional city in Iskandar Malaysia, the statement said. (Source: The Star)

Scientex proposes 8 sen dividend for FY ended July 2012
Industrial packaging manufacturer and property developer Scientex Bhd has proposed a final single-tier dividend of 8.0 sen per share for its financial year ended July 31, 2012 (FY12). The company said on Tuesday the final dividend would be paid on Jan 31 next year, when approved by shareholders at its AGM. This was in addition to a single-tier interim dividend of 6 sen per share paid on July 27, 2012. Scientex said the total dividends of FY12 amounted to 14 sen per share, or a payout of RM30.1mil, which was 36% of Scientex's net profit of RM83.9 million for the year. (Source: The Star)

DiGi Q3 net profit rises 7.84%
DiGi.com Bhd's third-quarter net profit for the period ended Sept 30 rose 7.84% to RM315.37mil on the back of revenues increasing as well to RM1.58bil from RM1.52bil. (Source: The Star)

Dialog sells 50pc stake in Tracerco
Dialog Group Bhd’s wholly-owned unit Dialog Systems Sdn Bhd has inked a deal with Johnson Matthey Investments Ltd to dispose of its 50 per cent stake in Tracerco Asia Sdn Bhd for RM5.99 million. Dialog said it is divesting its equity interest in Tracerco to focus on marketing its diagnostic services and specialist measurement products. (Source: Business Times)

Astro wins Singapore court ruling against Lippo
Malaysian billionaire T. Ananda Krishnan's Astro group won a Singapore court ruling upholding a US$250 million (RM763 million) arbitration award against Lippo Group, its former Indonesian partner, Bloomberg reported yesterday. Meanwhile, Astro's court win yesterday did nothing to help its share price, which continued to slide for the second day since its listing on Bursa Malaysia last Friday. (Source: Business Times)

Cocoaland sees potential
Confectionery manufacturer Cocoaland Bhd is looking forward to Thai Beverage Pcl emerging officially as the new controlling shareholder of Fraser and Neave Ltd (F&N) to help drive Cocoaland's business strategy forward. As at end-June, Cocoaland was sitting on a cash pile of RM41.02mil and it is in a net cash position with zero debt. It is expected to tap into the cash reserve to finance most of its expansion plans. (Source: The Star)

Enter the new Lexus LS
Lexus Malaysia, a division of UMW Toyota Motor Sdn Bhd, has unveiled its latest flagship model, the new Lexus LS. The LS is in a class of its own in a market dominated by European marques and is widely regarded as the ultimate Japanese luxury saloon. The model is available in four variants - the LS 460, which is priced at RM788,000 each, the LS 460 F SPORT (RM818,000), the long-wheel base LS 460L (RM 878,000) and the top of the line LS 600h L (RM1.07 million) (Source: Business Times)

Sunway REIT Q1 pre-tax profit up
Sunway Real Estate Investment Trust's (REIT) pre-tax profit for the first quarter ended Sept 30 rose to RM52.01mil from RM43.86mil in the same period last year. (Source: The Star)

Squabble at Scomi
The ongoing squabble at Scomi Group Bhd is likely to turn the attention to an upcoming EGM where shareholders will have to approve the issuance of new shares amounting to around 15% in equity to IJM Corp Bhd, insiders say. IJM, which has already bought a 10% stake in Scomi, had subscribed to Scomi's redeemable convertible secured bonds that can be converted into new shares of the latter. If and when that transpires, then IJM will emerge as the clear single-largest shareholders of Scomi, with a 25% stake. (Source: The Star)

BRDB to be delisted soon
Bandar Raya Developments Bhd (BRDB) will be delisted on Oct 29 following the completion of a general offer for its shares and warrants by Ambang Sehati Sdn Bhd, which is controlled by BRDB chairman Datuk Mohamed Moiz Jabir Mohamed Ali Moiz. When the offer for BRDB shares closed on Oct 4, Ambang Sehati had more than 97% of the listed property company's shares. (Source: The Star)

Palm oil down on profit-taking, high stocks concerns
Malaysian palm oil futures fell on Tuesday as investors booked profits after the previous session's three-week high and on worries that October's stronger-than-expected exports were not enough to ease record high stocks in the world's No.2 producer. Prices shot up to RM2,580 on Monday, a level unseen since Sept. 28, after data from cargo surveyors showed that exports in the first 20 days of the month surged as much as 16.7 percent. (Source: Business Times)

Steel anti-dumping duty
In a first for the local steel industry, Malaysia will likely impose an anti-dumping duty by Feb 19 next year if the Government is satisfied that the import of steel wire rods (SWR) from certain countries indeed constitutes dumping and is causing material injury to domestic steel players. This matter will be decided after the International Trade and Industry Ministry (Miti) concludes its investigation into a petition alleging that imports of SWR from Taiwan, China, Indonesia, South Korea and Turkey are priced much lower than the price in the domestic market of these countries. (Source: The Star)

Foreign News

Dow Drops Most Since June Amid Disappointing Earnings
U.S. stocks retreated, giving the Dow Jones Industrial Average its biggest decline since June, amid disappointing results at companies from 3M Co. to DuPont Co. and as commodities erased their gain for the year. The Standard & Poor’s 500 Index decreased 1.4 percent to 1,413.11 at 4 p.m. New York time, the lowest level since Sept. 5. The Dow slumped 243.36 points, or 1.8 percent, to 13,102.53. Volume for exchange-listed stocks in the U.S. was 6.6 billion shares, or 9.1 percent above the three-month average.

European Stocks Decline to Seven-Week Low on Results
European stocks declined for a third day, with the Stoxx Europe 600 Index sliding to its lowest level in almost seven weeks as results from companies including Alfa Laval AB and D.E Master Blenders 1753 NV disappointed investors. The Stoxx Europe 600 Index lost 1.7 percent to 268.40 at the close of trading, its lowest level since Sept. 5. The gauge has erased most of the gains since European Central Bank officials agreed on an unlimited bond-purchase program.

Asian Stocks Decline for Third Day on Earnings, Europe
Asian stocks fell, with the regional benchmark index bound for a third day of losses, after companies including Acer Inc. posted earnings that missed estimates and Moody’s Investors Service lowered credit ratings on five Spanish regions. The MSCI Asia Pacific Index lost 0.5 percent to 122.59 as of 9:02 p.m. in Tokyo, erasing gains of as much as 0.3 percent. Almost two shares dropped for each that climbed on the measure. The gauge rebounded 13 percent from this year’s low on June 4 through yesterday as stimulus measures in the U.S., Japan and China boosted market sentiment amid a global economic slowdown and Europe’s debt crisis

Oil Falls to Three-Month Low as Earnings Bolster Concern
Oil dropped to a three-month low in New York as companies reported earnings results that missed analyst forecasts, bolstering concern that the global economy and fuel demand will slow. Crude fell for a fourth day and equities for a third day as companies such as DuPont Co. posted smaller profits than forecast. Sixty percent of the 145 S&P 500 members to have reported earnings missed projections, according to data compiled by Bloomberg. The government may report tomorrow that U.S. oil supplies rose last week, a Bloomberg survey showed.

Gold Futures Fall to Six-Week Low as Dollar Extends Rally
Gold futures fell to a six-week low as the dollar’s advance curbed demand for the metal as an alternative investment. Palladium tumbled the most since March. The greenback rose for the fourth straight session, the longest rally in five months. The euro dropped as Spain’s economy contracted for the fifth straight quarter and French industrial confidence fell to the lowest in more than three years. Gold has declined 4.1 percent this month.
(Source: Bloomberg)