Stocks to Watch Plantation-related counters, Petronas-related stocks, airline services-related stocks, GHL

Business & Markets 2012
Written by Surin Murugiah of   
Tuesday, 03 July 2012 00:00

KUALA LUMPUR (July 3): The FBM KLCI could see its gains capped on Tuesday as the initial euphoria from last week's eurozone leaders' agreement on measures to cut soaring borrowing costs in Italy and Spain, in addition to directly recapitalising regional banks, could be short-lived.

Eurozone manufacturing took another hefty blow in June while China and Japan, Asia's biggest exporters, were hit by crumbling orders from abroad, intensifying worries that the global economy is deteriorating, according to Reuters. Business surveys released on Monday, covering thousands of factories across the world, showed activity in Chinese and Japanese manufacturers hitting seven-month lows, and signaled that worse may be yet to come for eurozone companies, it said.

Among the stocks that could be in focus on Tuesday are PLANTATION []-related counters, Petroliam Nasional Bhd-related stocks (Petronas), airline services related stocks and GHL SYSTEMS BHD [].

Malaysian crude palm oil (CPO) futures rose to a one-month high on Monday, driven by stronger demand outlook for palm oil as a worsening US drought could further tighten global oilseed supplies, said Reuters. Market optimism after Europe leaders agreed to shore up the region's troubled banks and rising demand ahead of Ramadan that begins in end July continued to support prices, it said.

Moody's Investors Services said Petronas's A1 issuer and senior unsecured ratings were not affected by the company's announcement that it will acquire Progress Energy Resources Corp (Progress Energy). The rating agency in a statement on Monday said the transaction, valued at about C$5.5 billion (RM17.07 billion), would be funded from Petronas' internal funds.

At Mar 31, 2012, Petronas reported cash of RM142 billion (US$46.3 billion) and fund investments of RM22.4 billion (US$7.3 billion), it said. A Moody's vice president and senior analyst Simon Wong said the successful acquisition of Progress Energy could substantially increase Petronas's medium-to-long-term oil and gas resources as well as its reserve life.

PETRONAS DAGANGAN BHD [] (PetDag) and e-pay (M) Sdn Bhd have jointly signed a nine year extension agreement to provide electronic payment services for mobile reloads, online games top ups, event tickets and bill payment collection at all Petronas stations via Verifone terminals distributed by GHL. In a statement Monday, e-pay said it would be PetDag's exclusive partner for the usage of payment terminals at all Petronas stations. e-pay was founded in 1999 by Loh Wee Hian, the current executive chairman of GHL.

The International Air Transport Association (IATA) said that global traffic results for May showing a general downward trend in line with deteriorating global economic conditions. In a statement on Monday, IATA said that while passenger demand was 4.5% ahead of levels in May 2011, growth was virtually flat compared to April.