Market Updates

Malaysia - Equity

The stock market closed higher yesterday on gains in selected heavyweights and lower liners.

The market also took the cue from overnight gains on Wall Street and signs of recovery in the US economy.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) gained 2.69 points to close at 1,335.86 after opening 0.36 point lower at 1,332.81.

The Finance Index added 9.51 points to 11,992.99. The Industrial Index, however, was down 1.06 points to 2,764.8 and the Plantation Index slipped 5.88 points to 6,443.54. The FBM Emas Index rose 16.75 points to 9,040.53 and the FBM70 surged 13.32 points to 8,962.46.

The FBM ACE Index, however, plunged 13.59 points to 4,163.63.

Decliners outpaced advancers by 363 to 347 while 279 counters were unchanged, 378 untraded and 26 others suspended.

Turnover rose to 898.809 million shares worth RM987.982 million from 831.081 million shares worth RM1.117 billion on Wednesday.

Among active stocks, KNM Group rose 3.5 sen to 54.5 sen, Advance Information Marketing gained 2 sen to 40.5 sen, Intelligent Edge Technologies declined 3 sen to 3.5 sen and Talam Corp was down a sen to 14.5 sen.

In heavyweights, Maybank rose 3 sen to RM7.48, Sime Darby declined 1 sen to RM8.75, CIMB Group Holdings eased 2 sen to RM14.14 and Maxis was flat at RM5.31.

Berjaya Corp Bhd (BCorp) has offered its shareholders stakes in Hong Kong-listed Cosway Corp Ltd at no extra cost under a plan to implement a restricted offer for sale (ROS) and cash dividend payout. The proposed special interim tier-one cash dividend of 4.5 sen per BCorp share would only be paid if the ROS of up to HK$491.56mil Cosway Corp’s irredeemable convertible unsecured loan stocks (Iculs) exercise was implemented. BCorp shareholders will be offered to buy Cosway Corp Iculs on the basis of two Cosway Corp Iculs for every one BCorp share held at a date to be determined. This means that BCorp shareholders can opt to apply the special dividend to take up their entitlement of the ROS without having to come up with any additional cash.

RM

The ringgit closed firmer against the US dollar yesterday.

At 5pm, the local currency strengthened against the greenback to 3.1960/2000 from 3.2160/2200 on Wednesday.

Against other major currencies the the local note was mostly lower.

The ringgit was lower versus the Singapore dollar at 2.3322/3373 from 2.3299/3350 on Wednesday, but it rose against the Japanese yen to 3.3989/4053 from 3.4388/4446 previously.

The ringgit weakened slightly against the euro to 4.2299/2362 from 4.2287/2346 on Wednesday.

But the local note increased against the British pound to 4.8630/8710 from 4.8812/8880 previously.

CPO

Crude palm oil (CPO) futures on Bursa Malaysia Derivatives extended its losses to three consecutive days yesterday, in line with the downtrend on the US and China soyaoil markets, said dealers.

They said the lower performance of the CPO futures was despite, crude oil prices firming above US$83 a barrel yesterday.

May 2010 fell RM15 to RM2,551 a tonne, June 2010 shed RM14 to RM2,545, July 2010 declined RM16 to RM2,531 and August 2010 shed RM16 to RM2,525.

News

The management of Transmile Group Bhd, led by its managing director Liu Tai Shin, hopes to resolve its debt issues by the end of this year. The air cargo operator, whose troubles started following an accounting scandal in mid-2007, has defaulted on its loans for more than two years.Transmile's debt obligation includes a syndicated term loan of US$66.9 million (RM214 million), medium term notes amounting to RM105 million and guaranteed convertible bonds of US$65.6 million (RM210 million). On Malaysian Trustees Bhd's notice to Transmile for payment of its commercial papers and medium term notes programme totalling RM106.1 million, due and owing as at March 24 2010, Transmile said, it had yet to receive word from MTB following the issuance of the notice. In the notice dated March 26 2010, MTB said should Transmile be unable to pay the debt by April 14 2010, winding-up proceedings will be instituted against the company.

Meanwhile, Transmile Group Bhd has filed civil suits against its former chief executive officer Gan Boon Aun and chief financial officer Lo Chok Ping in a move to restore its reputation in the corporate world. Transmile is seeking compensatory damages to be determined by the High Court, special damages of RM10.6 million, costs on a full indemnity basis and interest on special and/or general damages as may be awarded by the High Court. Liu said it took the management almost three years to gather enough evidence for a suit to be filed against the two.

Infrastructure and energy group MMC Corp Bhd is keen to spend as much as US$1.2 billion (RM3.9 billion) to expand its 2,100-megawatt (MW) Tanjung Bin Power Plant by another 800MW if the government is agreeable. Peninsular Malaysia may not be able to meet the increasing demand for power by 2015 and the country's electricity reserve margin could fall below the 20 per cent threshold if there are no efforts made to boost production capacity. Future power supply in the peninsula is at risk after it was confirmed that electricity from the Bakun hydroelectric dam in Sarawak would only be used to meet the state's power needs. MMC has yet to submit any proposal to the government.

Plus Expressways Bhd, Southeast Asia's largest toll operator by market capitalisation, hopes to offer technical and consultancy services to highway operators overseas by early next year, its top official said yesterday. The company sees opportunities to export its expertise and experience in expressway operations and management to Vietnam, the Middle East and some South African nations.PLUS has two operations each in India and Indonesia. The company hopes to start construction on the 116km Cikampek-Palimanan toll road project in Indonesia next year and to begin toll collection by 2014. In India, it recently bought up to a 74 per cent stake in Indu Navayuga Infra Project Pte Ltd for about RM74 million. The concession company is expected to start operations this week.

Petra Perdana Bhd, an offshore marine services firm, has yet to decide whether to keep its 29.6 per cent stake in associate company Petra Energy Bhd.With a stake of under 30 per cent, Petra Perdana cannot consolidate Petra Energy's earnings into its accounts. As such, some analysts think the company may eventually sell the stake.

Malaysia Building Society Bhd (MBSB), a housing loan provider, expects higher revenue and net profit this year on stronger growth from its retail business and corporate financing.As for its corporate loan portfolio, MBSB will provide financing for government contracts which includes construction and supply or even project financing, said Ahmad Zaini. For its financial year ended December 31, MBSB saw its revenue grow 29 per cent to RM537.96 million, while net profit surged 76 per cent to RM57.2 million. Its retail loans and financing in 2009 was up 27.1 per cent, driven by a 101 per cent overall growth in Islamic financing.On its plan to become a full-fledged bank, MBSB said the rationale behind it was to strengthen its presence and a banking platform would allow it to do so.

Scomi Group Bhd, an oil and gas services provider, bagged RM60.5 million worth of jobs in Asia within the first three months of this year. The group said its oilfield services business has successfully secured the RM60.5 million projects in Malaysia, Thailand and Indonesia, which will robustly contribute to the group's revenue in the first quarter of 2010. These contracts are in addition to its existing oilfield services order book of RM1.2 billion as at December 2009.

QSR Brands Bhd, operator of Kentucky Fried Chicken (KFC) and Pizza Hut restaurant chains, will invest some RM80 million this year to open more outlets and refurbish the existing ones. It is planning to open some 40 KFC and 25 Pizza Hut outlets as well as refurbish 40 KFC and 12 Pizza Hut outlets this year.

The Berjaya group is planning to develop a US$500 million (RM1.6 billion) property project in Japan, making it the second major Malaysian firm to invest in the Land of the Rising Sun in less than a month. On April 15, YTL Corporation completed the purchase of a prime Japanese resort for RM205 million and it plans to purchase more properties there. Berjaya, controlled by Tan Sri Vincent Tan Chee Yioun, plans to build a hotel and residential properties on Okinawa Island in the south of Japan. Development is due to start in 2011 or 2012 and the work will take about five years.

Silver Bird Group Bhd, the country's largest local bakery company, expects contribution from its Singapore business to increase to more than 20 per cent of total revenue this year, driven by aggressive marketing campaigns and new products. The company has tied up with Singapore's biggest retail group, NTUC-Fair Price Supermarket Group, to distribute Silver Bird's bread products in the city-state.

DRB-HICOM Bhd and its 40 per cent-owned Suzuki Malaysia Automobile Sdn Bhd (SMA) are working on becoming a regional hub for Suzuki Motor Corp to export Suzuki cars to other countries in Southeast Asia.

DRB-HICOM and SMA have impressed with the quality of Suzuki Swift 1.5L hatchback produced at the former's automotive complex in Pekan, Pahang, that matches Suzuki's global quality standard, senior company executives said.After having assembled the Swift 1.5L for three years solely for the domestic sales, SMA has been asked by its Japanese principal to make its first overseas shipment. Yesterday, SMA marked the new responsibility by sending an initial 10 units of the Swift 1.5L to Brunei to help boost Suzuki's presence in a small but thriving market there with a total industry volume of 12,000 units a year.

EQUINE Capital Bhd (ECB) plans to sell 6.04 acres of leasehold land Petaling, Selangor to Safetags Solution Sdn Bhd, a subsidiary of Titijaya Group, for RM19.6 million. It will use proceeds from the proposed disposal repay bank borrowings and for working capital. ECB had planned to develop the land into a commercial centre with transportation hub within its Pusat Bandar Putra Permai township.

MAA Holdings Bhd (MAAH) said it has received approval from Bank Negara Malaysia to pursue merger and acquisition activities, including a potential sale of its subsidiary Malaysian Assurance Alliance Bhd (MAA) within 12 months to further strengthen its capital base. This is part of measures to meet the minimum capital adequacy ratio required by all insurers under the Risk Based Capital Framework. MAAH told Bursa Malaysia yesterday that further announcements will be made upon further deliberation between MAA board of directors, MAAH and the central bank.

BURSA Malaysia Bhd has publicly reprimanded Golden Plus Holdings Bhd for failing to submit its quarterly reports since April 30 2009, annual audited report for the financial year ended December 31 2009 and annual report for the same year. Golden Plus’ various reasons for the delay in submission of the financial statements including representations of lack of authority and refusal in the execution of the directors’ report by the relevant parties do not absolve the firm ’s liability.

PRINTED circuit board maker and seller AE Multi Holdings Bhd has terminated negotiations to buy a 18 per cent stake in cruise business, BL Holdings Ltd (BLHL). BLHL is the owner of Ben's Entertainment City.

AE Multi had initially planned to invest some S$500,000 in the firm . No reason was given for the termination.

BANK Negara Malaysia hinted yesterday that Malaysia's economy can grow at a faster pace than the 4.5 per cent to 5.5 per cent forecast earlier. Governor Tan Sri Dr Zeti Akhtar Aziz said there is an upside potential to the growth forecast of the gross domestic product (GDP)

On the weak Greek economy and delay in its rescue package affecting Euro zone and spreading to other markets, Zeti said there will be some volatility expected but it should not destabilise the financial markets.

ASIA

Asian markets suffered from the eurozone debt crisis yesterday after Spain's credit rating was downgraded, while the euro remained stuck near one-year lows.

The International Monetary Fund said confidence in the entire 16-nation euro area was at risk, while Greece's prime minister said the European Union "must prevent a fire" from engulfing the regional and world economy.

The news weighed on the euro, which hovered near one-year lows against the greenback at 1.3210 dollars, from 1.3201 in New York late Wednesday.

Global markets were sent reeling after Standard & Poor's downgraded its credit rating for Greece to "junk" status on Tuesday, while Portugal also saw its rating lowered.

Asia ignored a rally on Wall Street sparked by news that the Federal Reserve looks unlikely to raise interest rates in the very near future after keeping borrowing costs ultra-low on Wednesday.

Asian fears were stoked after the credit rating of Spain, whose economy is five times the size of Greece's, was downgraded by S&P to "AA" from "AA+" while its outlook was lowered to negative.

The International Monetary Fund (IMF) warned yesterday Asian economies were at risk of overheating as strong capital inflows fan inflationary pressures and raise the risk of damaging bubbles. The IMF urged regional leaders to return to "more normal" monetary policies after the global financial crisis and increase the flexibility of their exchange rates to counter speculative funds flowing into their economies.

SINGAPORE: STOCKS tracked gains in Southeast Asian markets yesterday after positive Federal Reserve comments on the US economy.

The benchmark Straits Times Index closed up 0.92 per cent, or 26.97 points, at 2,959.01.

Genting Singapore shot up 8.7 per cent as its casino continued to attract crowds despite the opening of a rival venue by Las Vegas Sands.

HONG KONG: SHARES fell 0.81 per cent yesterday due to concerns that Europe's sovereign-debt crisis will spread after Spain's credit rating was downgraded.

The benchmark Hang Seng Index gave up 170.48 points to end at 20,778.92. The index remained below the 200-day moving average, currently at the 21,133 mark, which could act as near-term resistance, traders said.

TOKYO: Tokyo was closed for a public holiday.

Japan’s consumer prices fell for a 13th month in March, indicating the economy remains hampered by deflation even as the export-led recovery starts to spread. Prices excluding fresh food slid 1.2 percent from a year earlier, after dropping 1.2 percent in February, the statistics bureau said yesterday in Tokyo. The result matched the median estimate of 28 economists surveyed by Bloomberg News.

SYDNEY: Sydney fell 0.77 per cent, or 37.2 points, to end at 4,785.6

SHANGHAI: Shanghai fell 1.10 per cent, or 31.90 points, to 2,868.43.

SEOUL: Seoul ended 0.32 per cent, or 5.49 points, off at 1,728.42.

TAIPEI: Taipei closed down 0.34 per cent, or 27.50 points, at 8,054.05.

JAKARTA: Jakarta gained 0.81 per cent, or 23.55 points, to 2,926.86.

BANGKOK: Bangkok edged up 0.50 per cent, or 3.71 points, to close at 753.20, recovering some of the losses seen a day earlier when security forces and anti-government protesters had clashed in the capital.

MANILA: Manila gained 0.37 per cent, or 12.22 points, to close at 3,297.00.

MUMBAI: Mumbai rose 0.71 per cent, or 123.39 points, to 17,503.47.

EUROPE

European shares rallied and the euro clawed back from one-year low levels against the dollar yesterday on news that a Greek debt bailout was close and positive results from top companies.

The markets and the single currency were pounded for two straight days after ratings agency Standard & Poor's downgraded debt from Greece, Portugal and Spain, fuelling fears of contagion from the crisis in Athens.

But major European bourses returned to positive territory yesterday after a top European Union official said talks on a bailout for Greece were nearing completion.

"Expectations of an announcement about a joint EU-IMF bailout of Greece within days have also helped soothe investor anxiety about an imminent Greek default," said analyst Michael Hewson at CMC Markets.

London's FTSE 100 index closed 0.56 per cent higher to 5,617.84 points, while the Frankfurt DAX was up 1.0 per cent to 6,144.91 and the Paris CAC 40 rose 1.42 per cent to finish at 3,840.62 .

New Zealand’s central bank Governor Alan Bollard has given himself “wriggle room” to delay raising the benchmark interest rate until July, economists said. Bollard yesterday said he expects to raise the official cash rate from a record-low 2.5 percent “over coming months” provided the economy strengthens as he has forecast. The wording changed from an earlier pledge to increase borrowing costs “around the middle of 2010.” Highlighting the flexibility in the language, economists and traders took opposing stances on the outlook for borrowing costs. Nine of 12 economists surveyed by Bloomberg News yesterday expect an increase at the next review on June 10, with three tipping the third quarter. Currency traders pushed the New Zealand dollar lower as they bet on a later adjustment.

The U.K. economy will “crawl” this year and expand less than previously forecast as consumer spending remains weak, the National Institute of Economic and Social Research said. Gross domestic product will increase 1 percent in 2010, the London-based research group, whose clients include the Bank of England and the Treasury, said yesterday in a quarterly report. Niesr estimated expansion of 1.1 percent in January. With an election on May 6, Prime Minister Gordon Brown is trying to persuade voters he is best placed to steer the economic recovery after slowing growth intensified political squabbling on how to cut the country’s record deficit. The British economy remains in a “fragile state,” former Bank of England policy maker Timothy Besley said on April 27.

US

Stocks jumped Thursday, with the blue-chip Dow index ending more than 120 points higher, as investors reacted to a rise in Exxon Mobil earnings and brushed off concerns about European debt problems.

The Dow Jones industrial average gained 122 points, or 1.1%, to end at 11,167.32. The S&P 500 index added 15 points, or 1.3%, to settle at 1,206.77. The Nasdaq composite rose 40 points, or 1.6%, to end at 2,511.92.

Gains were broad based, with 27 of the 30 Dow components ending higher. Financial shares led the advance, and the tech sector got a boost after Hewlett-Packard said late Wednesday it will buy struggling smart phone maker Palm for $1.2 billion, although HP's stock ended 0.8% lower.

On Wednesday, the Dow rose back above 11,000 after the Federal Reserve left interest rates unchanged and said the economy is improving. The central bank's pledge to keep interest rates low helped investors turn their focus away from the debt issues in Europe.

Market breadth was positive. On the New York Stock Exchange, winners topped losers almost four to one on volume of 1.4 billion shares. On the Nasdaq, advancers beat decliners three to one, on volume of 3 billion shares.

European concerns easing: On Tuesday, rating agency Standard and Poor's downgraded the sovereign debt ratings of Greece to junk status and lowered Portugal's investment grade status. On Wednesday, S&P also downgraded its investment grade rating of Spain's long-term debt.

Worries about Greece have abated recently as European officials seem to be nearing agreement on a rescue package for the debt-laden nation.

Earnings: Several big corporations reported their quarterly results before the opening bell Thursday.

Exxon Mobil reported a surge in earnings but still missed Wall Street expectations. The oil giant said it earned $1.33 per share in the first quarter, which fell short of the $1.41 per share forecast by a consensus of analyst opinions from Thomson Reuters. The stock closed 0.9% lower.

Aetna managed to beat expectations when it reported operating earnings of 98 cents per share for the first quarter, compared to 96 cents in the prior year. Excluding certain charges, EPS was 77 cents, the insurer said. Analysts had forecast EPS of 68 cents.

Procter & Gamble reported a profit for its third quarter that managed to edge above expectations. The company reported earnings of 83 cents per share, which was slightly lower than its year-earlier EPS of 84 cents. Analysts expected EPS of 82 cents.

Viacom reported a surge in profit for the quarter, with diluted earnings of 40 cents per share. That was a 38% jump from 29 cents per share in the year-earlier quarter.

Economy: The Senate officially started debate of Wall Street reform late Wednesday, after three days of standoff and three failed votes to move forward. Republicans waived their right to block the bill, after it became clear Democrats had clinched the 60 votes needed to end the filibuster.

The government released its weekly report on initial claims for unemployment benefits before the opening bell Thursday. The number of first-time filers fell 11,000 to 448,000 in the week ended April 24. Analysts expected a drop to 445,000 new claims.

Also on Thursday morning, the House Financial Services committee held a hearing on potential implications of the Greece crisis.

World markets: European shares, including Britain's FTSE 100, the CAC 40 in France and Germany's DAX, ended higher.

But Asian markets continued to struggle. The Shanghai Composite tumbled 1.1% and the Hang Seng in Hong Kong fell 0.8%. Japan was closed for a holiday.

The dollar and commodities: The dollar declined 0.2% against the euro and 0.8% against the British pound, but rose 0.1% against the Japanese yen.

U.S. light crude oil for June delivery rose $1.95 to settle at $85.17 a barrel.

COMEX gold for June delivery fell $3 to end at $1,168.80 an ounce.

Bonds: Treasury prices inched up, with the yield on the benchmark 10-year note falling to 3.74%.

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