Economy

US: Fed's Yellen sees possible Dec rate rise, gradual hiking path. Federal Reserve Chair Janet Yellen pointed to a possible Dec interest rate "liftoff" but said rates would rise only slowly from then on to nurture the US economic recovery. Yellen laid out what now appears the base case at the US central bank - that low unemployment, continued growth and faith in a coming return of inflation means the country is ready for higher interest rates. (Reuters)

US: Service sector growth accelerates in Oct. The US services sector grew at a faster clip in Oct as employment, new orders and business activity expanded, while prices contracted for a second month, according to an industry report. The ISM said its non-manufacturing index rose to 59.1 last month from 56.9 in Sept. (Reuters)

US: Sept trade deficit smallest in seven months. The US trade deficit narrowed sharply in Sept to its lowest level in seven months as exports rebounded, a tentative sign that the worst of the drag from a stronger dollar may be over. The Commerce Department said the trade gap fell 15% to USD40.8bn, the smallest deficit since Feb. (Reuters)

India: Moves toward long-awaited bankruptcy reform with draft bill. India's government published long-awaited proposals to overhaul an outdated and overburdened bankruptcy process, calling for public comment on what could become the country's first unified bankruptcy code. The proposed bill aims to dramatically speed up decisions on whether to save or liquidate ailing companies, in a move to curb asset stripping and ensure higher recovery rates for creditors. (Reuters)

Japan: PM calls for steps to achieve a USD5trn economy. Japanese Prime Minister Shinzo Abe instructed the government to come up with an action plan by the end of the month to help achieve his goal of expanding the economy by a fifth to JPY600trn (USD4.95trn) over five years. (Reuters)

Markets

AirAsia (Outperform, TP: RM1.88): Clears the air on privatization. After weeks of speculation, AirAsia has finally cleared the air on the state of its privatisation. The low-cost carrier said its major shareholders were looking at “strategic options” on investments but had not reached any decision at this stage yet. (StarBiz)

Parkson (Outperform, TP: RM1.48): To introduce new clothing stores, 'LOL'. Parkson Holdings has tied up with private firm Superb Apparel Supply SB to establish new concept stores under the brand name 'LOL' that will sell affordable fashion apparels. The Group said Parkson Corp SB inked a shareholders' agreement with Superb Apparel for the 70:30 JV. (Financial Daily)

SapuraKencana: Gets Petronas's nod to produce gas from own field. SapuraKencana Petroleum is targeting to start commercial gas production from its own field off the coast of Sarawak in late-2017 after having secured the field development plan (FDP) approval from Petronas. The portion to be developed is the SK310 B15 gas field and is part of a production sharing contract (PSC) under Petronas. (StarBiz)

AZRB: To jointly develop RM257m GDV project in Kwasa Damansara. Ahmad Zaki Resources (AZRB) will jointly develop 188 high-rise residential units in Kwasa Damansara township in Sungai Buloh with an estimated GDV of RM257m. The group said its unit, Ahmad Zaki SB, had received a letter of award (LoA) from Kwasa Land SB, which is the master developer of the 2,230-acre Kwasa Damansara township. (StarBiz)

ECM Libra: Fixes cash component of distribution at RM177.7m. ECM Libra Financial Group, which is undertaking a distribution exercise in cash and kind to its entitled shareholders of up to about RM320.1m, has fixed the cash component at about RM177.7m. The financial and corporate advisory services provider said the cash distribution was equivalent to 62sen per ECM Libra share. (StarBiz)

Plenitude: Aims to maintain sales. Plenitude is hoping to maintain property sales of RM250m for the FYE June 30, 2016 despite adopting a cautious stance on new property launches. It plans to launch properties worth RM1bn in the next two years. Currently, Plenitude has a 1,500-acre undeveloped landbank with a potential GDV of RM12bn. (SunBiz)

MISC: Warns low oil price will hurt its heavy engineering business. MISC has warned a prolonged weakness in the price of oil is hurting its heavy engineering business, but steady income from long-term charter contracts will keep it afloat. The company posted a net profit of RM483.6m in the 3Q ended Sept 30, up from RM470.8m a year earlier. (StarBiz)

Power (Neutral): Nebras, CGN tie-up said vying with TNB for 1MDB's power arm. Qatar’s Nebras Power QSC is in talks to partner with China General Nuclear Power Corp. in the bidding for 1MDB’s power business, people with knowledge of the matter said, potentially pitting a foreign consortium against Malaysia’s biggest listed energy producer. The overseas bidders have expressed willingness to pay a higher price for the state investment company’s Edra Global Energy unit than Malaysia’s TNB, the people said, asking not to be identified as the negotiations are private. (Financial Daily)

MARKET UPDATE

The FBM KLCI might take a breather today after a mixed performance of the global equity markets overnight. On Wall Street, U.S. stocks closed lower after Federal Reserve Chairwoman Janet Yellen said a rate increase at the central bank’s December meeting was a “live possibility.” The Fed Chairwoman also said the US economy was “performing well” and was expected to continue to grow at a pace that would “return inflation to our target over the medium term”. At the closing bell, the Dow Jones Industrial Average eased 50.57 points or 0.3% to 17,867.58. Meanwhile, the S&P 500 lost 7.48 or 0.4% to 2,102.31 and the Nasdaq Composite shed 2.65 or 0.1% to 5,142.48. As for economic data, the latest data from US private payroll processor ADP showed 182,000 jobs were created last month, bolstering expectations for a solid non-farm payrolls report on Friday. Meanwhile, the Institute for Supply Management’s non-manufacturing index rose to 59.1 in October from 56.9, leaving it close to the decade-high reached in July this year. The employment sub-index improved again to 59.2. Across the Atlantic, U.K. stocks logged a third straight day in positive territory on Wednesday, with the U.K.’s FTSE 100 index rose 0.5% to 6,412.88, closing at the highest level in a week. Elsewhere, Germany’s DAX 30 index lost 0.97% to 10,845.24 and France’s CAC 40 index rose 0.3% to 4,948.29.

Back home, the FBM KLCI was trading range bound before the index heavyweights such as GENM, SIME and KLK lifted the bellwether index higher by 8 points for a second day of gains. Volume traded was 2.67bn valued at RM2.47bn, with gainers outpaced losers by 558 to 333. In the region, out-of-date comments from China’s central bank raised hopes that a trading link between Shenzhen and Hong Kong would launch by year-end, sending stocks sharply higher. The Shanghai Composite Index ended up 4.3%, while Hong Kong’s Hang Seng Index climbed more than 2%. Japan’s Nikkei Stock Average rose 1.3% after reopening after a holiday.

On corporate news, Tenaga Nasional is said to have put the lowest bid for the equity of 1MDB’s power assets. The bid is about 20% lower than the closest bid from a foreign consortium. Elsewhere, AirAsia was clarifying news that Tan Sri Tony Fernandes had started talks with bankers to take the budget airline private with the statement that it’s possible but no decision has been made.

Source: PublicInvest Research - 5 Nov 2015