Economy
US: Job openings decreased in May to 5.7m. A drop in US job openings in May is still consistent with resilient demand for workers, a Labor Department report showed Tuesday. The number of positions waiting to be filled declined by 301,000 to 5.7m, according to the Job Openings and Labor Turnover Survey, or JOLTS. Analysts had forecast 5.95m openings, and April’s reading was revised to 5.97m from a previously reported record-high of 6.04m. (Bloomberg)
US: Fed’s Brainard backs balance-sheet runoff ‘soon,’ wary on rates. Federal Reserve Governor Lael Brainard sounded a note of caution over further interest-rate increases while signaling she’s comfortable with pressing ahead “soon” with plans to start shrinking the central bank’s USD4.5trn balance sheet. “I will want to monitor inflation developments carefully, and to move cautiously on further increases in the federal funds rate, so as to help guide inflation back up around our symmetric target,” Brainard said. (Bloomberg)
EU: Italy’s production rises more than expected, boosting outlook. Italian industrial production rebounded in May, signaling that economic growth for the rest of the year may equal or exceed the pace posted in the first quarter. Production increased 0.7% from April, when it fell a revised 0.5%, statistics agency Istat said Tuesday in Rome. On an annual, workday adjusted basis, industrial output was up 2.8% in May. (Bloomberg)
UK, US: Business casts doubt on UK-US Post-Brexit trade deal. The transatlantic trade deal US President Donald Trump is offering UK Prime Minister Theresa May will ultimately prove easy to promise and hard to deliver. That’s the warning of business leaders and trade analysts after Trump told May last week that the post-Brexit accord she hankers after can be lined up "very, very quickly." (Bloomberg)
UK: BOE’s Broadbent sounds new Brexit warning on risks to trade. The BOE has issued a new Brexit warning. A reduction in trade with the European Union after leaving the bloc would be damaging to the UK by forcing it to refocus production away from its specializations, Deputy Governor Ben Broadbent said. It would also hurt EU growth, albeit on a much smaller scale, he said. (Bloomberg)
UK: Treads softly in Saudi as commercial ties offer Brexit hope. Foreign Secretary Boris Johnson, who once accused Saudi leaders of “puppeteering and playing proxy wars” in the Middle East, is now taking on the role of peacemaker in the spat between the kingdom and Qatar. A cheerleader for Brexit, Johnson and his colleagues now seek friends in the Gulf to help make it a success, and his tone has grown conciliatory. (Bloomberg)
China: Yuan safety net challenged by hawkish global central banks. China’s ability to shore up its currency and limit capital leaking across its borders is facing an increasing challenge as global central banks strike a more hawkish tone. So far, the yuan is enduring, partly thanks to speculated state intervention and weakness in the greenback. Against a basket of peers, the currency is near the highest since March - even as it trades at an almost three-year low against the euro. (Bloomberg)
Markets
Axiata (Neutral, TP: RM4.70): Nepal’s central bank bars Axiata from repatriating dividends. Nepal’s central bank has barred Axiata Group from repatriating its dividends until the issue of capital gains tax (CGT) related to the Ncell deal is settled, the country’s top English daily reported. The Himalayan Times said the Nepalese tax administration is in the process of taking necessary steps to recover the CGT owed from the deal and will not allow Axiata to take away the dividend until the selling company clears its tax liability. (The Edge)
Far East: Sells land to TR Plantations. Far East Holdings (FEHB) is selling two plots of agricultural land in Pahang to TR Plantations SB for a total of RM8.16m cash. The first plot of agricultural land “No PT 10329” measures 414.05 acres and is being sold for RM4.97m. The second plot of agricultural land “No PT 10331” measures 265.71 acres and is being sold for RM3.19m. It said it is selling the two plots of land as they are not located in the vicinity of FEHB’s group of estates. “It is not viable for FEHB to create an operating unit to run the oil palm plantation,” it added. (The Edge)
Lotte: Maybank IB buys 17.1m shares to stabilise price. Maybank Investment Bank (Maybank IB) has bought 17.1m shares in Lotte Chemical Titan Holding as part of its exercise to stabilise the share price of the integrated petrochemical firm. Maybank IB said it bought the shares at RM6.4718 apiece, for a total of RM110.67m. As for Lotte Chemical Titan, Maybank said it is allowed to buy up to 27.77m shares, equivalent to a 4.8% of the total number of shares offered under the IPO. (The Edge)
UPA: To get RM32.6m from compulsory government land acquisition for MRT2. Paper and printing machine seller UPA Corp said the government, via the Federal Territory Lands and Mines Office, has notified the firm that it would be awarded RM32.67m, for the compulsory acquisition of three plots of land it owns. “The company will make further announcement as and when there are material developments in due course,” UPA Corp said. UPA Corp said the compensation notice was the result of claims it had submitted to the government in relation to the acquisition, in accordance with the Land Acquisition Act 1960. (The Edge)
BHIC: Ministry claims RM148m damages for breach of contract. The Defence Ministry is claiming nearly RM148m in damages from Boustead Heavy Industries Corporation (BHIC) over the breach of an obligation under the in-service support for the Royal Malaysian Navy Scorpene submarines contract. The contract was awarded to BHIC's unit Boustead DCNS Naval Corporation SB (BDNC) in Aug 2010. BHIC said BDNC has received a letter from the ministry claiming RM53.2m and a further EUR19.3m (RM94.52m) in damages. BDNC is a JV company between BHIC Defence Technologies SB (60%) — a wholly-owned subsidiary of BHIC — and French naval group DCNS S.A. (40%). (The Edge)
Titijaya: Starts construction of The Shore, Kota Kinabalu. Titijaya Land has begun construction of its new waterfront premium commercial hub in Kota Kinabalu, Sabah, known as The Shore. The 1.82-acre luxury mixed commercial development has a GDV of RM575m. The 25-storey project comprises 561 serviced residences with built-ups ranging from 409 sq ft to 541 sq ft and priced from RM453,000, said the developer in a press release following the ground-breaking ceremony of the project today. (The Edge)
Mudajaya: Plans placement to raise up to RM75.45m to fund Perak power plant. Mudajaya Group is planning to place out up to 10% of its issued share capital to select private investors to raise up to RM75.45m, to partially fund the construction of a new solar power plant in Kuala Kangsar, Perak. Of the amount to be raised, it expects to use RM55m from the proceeds for the plant or power concession asset, with the remainder to be used as working capital and to defray expenses related to the corporate exercise, said Mudajaya. (The Edge)
ML Global: Bags RM68m subcontract for Pan Borneo Highway. ML Global has bagged a RM68.14m subcontract from Samling Ekovest JV SB (SEJV) to undertake piling works in the Bau–Lundu stretch and the KSR Section in Sarawak under the Pan Borneo Highway project. ML Global said its indirect 70%-owned subsidiary MGB Geotech SB has accepted a Letter of Award from SEJV to appoint MGB Geotech as a sub-contractor to SEJV for the sub contract works. The construction period is for 20 months, with completion by Oct 31, 2018. With the project in hand, ML Global’s current outstanding order book stands at RM2.05bn. (The Edge)
Kobay: Faces RM2.86m suit over work dispute, counter sues. Kobay Technology said a RM2.86m suit has been filed against its wholly-owned unit over a dispute concerning the completion of residual work under a purchase order. Kobay said the suit against Bend Weld Engineering SB (BWE) was filed by NGL Tech SB. In response, BWE counter-sued NGL for a declaration that it is entitled to payment from NGL for work done, and that NGL is not entitled to back-charge BWE for work that NGL took over from BWE. BWE is claiming RM1.39m for work that it has completed. (The Edge)
MESB: Plans RM9.2m cash call for business expansion, working capital. Loss-making MESB, the distributor of Alain Delon and Pierre Cardin apparel brands in Malaysia, has proposed to raise RM9.2m via placement, which it plans to use for business expansion and working capital. MESB said the proceeds raised will be used to open new consignment counters, and the launch of a new brand and product lines. MESB said the placement will involve the issuance of 12.6m new shares — equivalent to 30% of its share capital — at 73sen apiece to independent third party investors. (The Edge)
Pasukhas: Inks MoU to buy 61% of PT Indomuda. Engineering solutions provider Pasukhas Group said its wholly-owned subsidiary Pasukhas Energy SB has entered into a MoU with IR Hariyanto for the proposed acquisition of a 61% stake in PT Indomuda Satria Internusa. Jakarta-based PT Indomuda provides engineering services for oil and gas, petrochemical and power plants, and also produces, trades and exports coal. The company also builds and operates coal fired and hydro power plants and provides onshore and offshore drilling services. The purchase consideration for PT Indomuda shall be mutually agreed on by the parties and will be set forth in a share sale agreement, Pasukhas said. (The Edge)
Sealink: To see RM52m proceeds from charter, sale of vessels. Shipping group Sealink International has bagged a charter contract for one of its safety standby vessels and is selling two ageing vessels for combined proceeds of RM52m. Sealink said the disposal of the vessels is part of the group's strategy to continually modernise and upgrade its fleet of vessels. "Sealink Group constantly sells older vessels and replace them with newer vessels in line with the changing requirements of the oil and gas industry," it said. (The Edge)
Market Update
The FBM KLCI might open flat today after global stocks struggled to establish a clear direction overnight and bond markets put in mixed performances as a lack of significant economic data releases or corporate news allowed forthcoming central bank events to dominate the agenda. Fresh concerns about the Trump campaign’s involvement with Russia during last year’s presidential election did help fuel a brief bout of selling on Wall Street that took the S&P 500 down as much as 0.6%. The latest worries came as Donald Trump’s eldest son released an email chain in which he welcomed what he had been told was an attempt by Moscow to damage Hillary Clinton’s election campaign. At the closing bell, the Dow Jones Industrial Average edged up less than a point to close at 21,409.07 after falling more than 120 points earlier. The S&P 500 lost 1.90 points to finish at 2,425.53. The Nasdaq Composite Index rose 16.91 points, or 0.3%, to end at 6,193.30. Across the Atlantic, European stocks finished with losses Tuesday, as investors took a cautious approach ahead of US Federal Reserve Chairwoman Janet Yellen’s testimony to Congress. Performance wise, Germany’s DAX 30 index fell 0.1% to close at 12,437.02, France’s CAC 40 index was down 0.5% to finish at 5,140.60 and the UK’s FTSE 100 index gave up 0.6% to end at 7,329.76.
Back home, the FBM KLCI index lost 2.10 points or 0.12% to 1,755.03 points. Trading volume increased to 1.73bn worth RM2.07bn. Market breadth was negative with 199 gainers as compared to 714 losers. In the region, Japan’s Nikkei Stock Average finished up 0.6%, Hong Kong’s Hang Seng Index gained 1.5%, the Shanghai Composite Index was down 0.3% and Australia’s S&P/ASX 200 pared early declines to gain 0.1% after ending a three-session losing streak on Monday.
Source: PublicInvest Research - 12 Jul 2017
