KUALA LUMPUR: The lacklustre performance on Wall Street and at Bursa Malaysia will continue this week, starting July 13 in the absence of strong positive economic data and fresh corporate news. However, investors should keep an eye on stocks including Genting, O&G, plantations and Supermax.
For the trading week ended July 10, trading volume on Bursa Malaysia shrank, mirroring the lack of interest from investors. Amid the lacklustre performance ahead, investors have to take cognizance that the broad-based liquidity-driven rally in the past three month has almost ground to a halt.
According to EPFR Global, investors are heading to the sidelines in early July as vacations loom and the second quarter earnings season start, as reflected in the emerging markets equity funds that recorded outflows for the second time in three weeks.
EPFR said equity funds posted outflows of US$1.87 billion during the first week of July while fixed income funds absorbed a net US$2.95 billion.
On the local front, Macquarie Equities Research has maintained an outperform on Genting as it believes its revised net asset value (RNAV) based target price of RM7.50 has further upside from three sources.
It said in a recent research note Genting would benefit from higher revenue risk in Singapore, new production or transactions in its oil and gas (O&G) division and revenue surprises as its Malaysian leisure and power divisions.
The research house reckoned the Sentosa integrated resort (IR) could be on track for a soft opening in January and its expected Sentosa to pre-market its theme park.
Oil prices sank below US$60 a barrel, ending a week in which crude has fallen more than 10% as concerns grew about the US economy and health of corporations which are to issue their second quarter earnings.
This could provide a dampener to O&G stocks as contracts, which were negotiated last year, would be renegotiated as prices have soften. Oil surged to US$147 in June last year and fell to a low of around US$32 in December.
Kencana Petroleum has received the Securities Commission’s approval for its proposed private placement of 10% of its paid-up and is now awaiting the Bursa Securities’ approval.
On plantations, AmResearch said that in spite of the fall in CPO prices recently, it is still keeping its Overweight stance on the plantation sector.
“We expect a recovery in CPO prices underpinned by demand for the coming festive season in China, India and Muslim countries. Furthermore, there is a risk that palm oil production would remain soft due to the unfavourable weather.
"We have BUY recommendations on IOI Corp and Kuala Lumpur Kepong. On the SGX, we are positive on Wilmar International Ltd and Indofood Agri-Resources,” it said.
On July 10, the MPOB (Malaysian Palm Oil Board) announced June palm oil inventory rose 2.5% month-on-month 1.4 million tonnes in June on the back of higher CPO production. CPO price averaged RM2,446/tonne in June, 11% lower than the average of RM2,742/tonne realised in May.
“Price discount between CPO and soybean oil increased from 10% in May to 19% in June. This is between the five-year average price discount of 20% and 10-year average of 18% between the two commodities,” said AmResearch.
After climbing 8.5% month-on-month in May, CPO production rose at a slower pace of 3.6% month-on-month to 1.45 million tonne in June. On a year-on-year basis, CPO output declined 1.6% in June. Year-to-date, palm oil production totalled 7.9 million tonne, 3.4% lower than the same period last year.
Supermax was the second company to report its second quarter earnings for the period ended June 30. On June 10, it announced net profit of RM25.78 million for the second quarter ended June 30, 2009.
The glove maker said this was a 90% increase from the RM13.52 million a year ago “as a result of management focus on extracting greater efficiency from its wholly owned manufacturing facilities and higher contribution from its overseas distribution centres”.
In Boustead Holdings, the SC has approved its renounceable rights issue of up to 260.41 million new ordinary shares of 50 sen each at an issue price of RM2.80 per rights share on the basis of two rights shares for every five existing ordinary shares.
Arisaig Asean Fund Ltd has ceased to be a substantial shareholder in KPJ Healthcare after disposing of 1.58 million shares on July 8.
In OSK Holdings Bhd, the shareholders had approved a special resolution to distribute 98.67 million shares in OSK Ventures to the shareholders.
For the trading week ended July 10, trading volume on Bursa Malaysia shrank, mirroring the lack of interest from investors. Amid the lacklustre performance ahead, investors have to take cognizance that the broad-based liquidity-driven rally in the past three month has almost ground to a halt.
According to EPFR Global, investors are heading to the sidelines in early July as vacations loom and the second quarter earnings season start, as reflected in the emerging markets equity funds that recorded outflows for the second time in three weeks.
EPFR said equity funds posted outflows of US$1.87 billion during the first week of July while fixed income funds absorbed a net US$2.95 billion.
On the local front, Macquarie Equities Research has maintained an outperform on Genting as it believes its revised net asset value (RNAV) based target price of RM7.50 has further upside from three sources.
It said in a recent research note Genting would benefit from higher revenue risk in Singapore, new production or transactions in its oil and gas (O&G) division and revenue surprises as its Malaysian leisure and power divisions.
The research house reckoned the Sentosa integrated resort (IR) could be on track for a soft opening in January and its expected Sentosa to pre-market its theme park.
Oil prices sank below US$60 a barrel, ending a week in which crude has fallen more than 10% as concerns grew about the US economy and health of corporations which are to issue their second quarter earnings.
This could provide a dampener to O&G stocks as contracts, which were negotiated last year, would be renegotiated as prices have soften. Oil surged to US$147 in June last year and fell to a low of around US$32 in December.
Kencana Petroleum has received the Securities Commission’s approval for its proposed private placement of 10% of its paid-up and is now awaiting the Bursa Securities’ approval.
On plantations, AmResearch said that in spite of the fall in CPO prices recently, it is still keeping its Overweight stance on the plantation sector.
“We expect a recovery in CPO prices underpinned by demand for the coming festive season in China, India and Muslim countries. Furthermore, there is a risk that palm oil production would remain soft due to the unfavourable weather.
"We have BUY recommendations on IOI Corp and Kuala Lumpur Kepong. On the SGX, we are positive on Wilmar International Ltd and Indofood Agri-Resources,” it said.
On July 10, the MPOB (Malaysian Palm Oil Board) announced June palm oil inventory rose 2.5% month-on-month 1.4 million tonnes in June on the back of higher CPO production. CPO price averaged RM2,446/tonne in June, 11% lower than the average of RM2,742/tonne realised in May.
“Price discount between CPO and soybean oil increased from 10% in May to 19% in June. This is between the five-year average price discount of 20% and 10-year average of 18% between the two commodities,” said AmResearch.
After climbing 8.5% month-on-month in May, CPO production rose at a slower pace of 3.6% month-on-month to 1.45 million tonne in June. On a year-on-year basis, CPO output declined 1.6% in June. Year-to-date, palm oil production totalled 7.9 million tonne, 3.4% lower than the same period last year.
Supermax was the second company to report its second quarter earnings for the period ended June 30. On June 10, it announced net profit of RM25.78 million for the second quarter ended June 30, 2009.
The glove maker said this was a 90% increase from the RM13.52 million a year ago “as a result of management focus on extracting greater efficiency from its wholly owned manufacturing facilities and higher contribution from its overseas distribution centres”.
In Boustead Holdings, the SC has approved its renounceable rights issue of up to 260.41 million new ordinary shares of 50 sen each at an issue price of RM2.80 per rights share on the basis of two rights shares for every five existing ordinary shares.
Arisaig Asean Fund Ltd has ceased to be a substantial shareholder in KPJ Healthcare after disposing of 1.58 million shares on July 8.
In OSK Holdings Bhd, the shareholders had approved a special resolution to distribute 98.67 million shares in OSK Ventures to the shareholders.