Thursday, June 14, 2018

FW: RHB FIC Credit Markets Monthly Review - 14/6/18

 

 

 

14 June 2018

 

Credit Markets Monthly Review

May 2018

 

UST and MYR government bond yields continue to head north, rise in yields to again attract better investment entry levels

 

Market Review

 

¨      MYR Credit Market: Trading sentiments for MYR bonds turned a tad more cautious as government bond yields continue to edge higher for both the MGS/GII segment tracking upwardly movement in UST yields as well as recent reduction in non-resident holdings seen in MYR government bonds. However, on a longer term view, we remain constructive of the MYR bond market as the recent upward adjustment in bond yields could again pave the way for better investment entry levels for real money investors. The strong demand seen during the post GE14 tender for the reopening of the 7-year GII 8/25 with a robust BTC of 3.40x reinforces our view that investors’ interest are still aplenty when valuations turns attractive.

¨      APAC USD Credit Market: Banking and financial institutions continue to remain as key issuance sectors in the Asian USD credit space during the month of May. Notable banking and financial institution prints concluded during the period in review include, KEXIM senior unsecured floating rate prints comprising of 3-year and 5-year papers with a combined issuance size of USD1.5bn, with an assigned rating of Aa2 and AA- by Moody’s and Fitch Ratings respectively. Also in the offing was China Merchant Bank rated A3 by Moody’s with a benchmark print size of USD500m. The bonds were issued as part of China Merchant Bank’s EURO MTN programme which was issued with a coupon of 3.075%. Other active issuers tapping the Asian USD credit space include Perusahaan Listrik Negara (Listrik Negara), with another hallmark long-dated 30-year USD1bn print with an assigned rating of Baa2 and BBB by Moody’s and Fitch respectively. The senior unsecured issuance by Listrik, was priced with a coupon of 6.15% and is part of its Euro MTN issue. The issuance window for USD primary space remains active as issuers continue to price their respective funding needs via the bond market ahead of a rising interest rate environment, as the Fed is expected to embark on further interest rate normalisation plans in the 2H18, with upside risks in terms of steeper path to interest rate hikes in 2019 and 2020 based on the Fed’s dot plot projections.

 

FW: Global Markets Daily: Moving on to ECB

 

 

Moving on to ECB

Global Markets Daily
by Saktiandi Supaat

FX Research

The Fed raised the Fed Fund Target range from 1.5-1.75% to 1.75-2.00% overnight, as expected and signaled two more hikes, according to the dots plot this year. This was enough to swing the USD higher against all currencies. EURUSD slipped to a low of 1.1726 at one point overnight. But, this USD move was quickly reversed out and it served to be merely a brief interruption to the EURUSD which remain on its way higher towards the 1.18. Markets have moved on as most of the action taken...

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FW: Fixed Income Daily Pulse - 13 June 2018

 

 

Apologies for the delay.

 

Good Morning ,

 

Wednesday’s trade recap by our trading desk:-

 

After a quiet few days, market activity picked up slightly today, ahead of FOMC rate decision tonight. There was strong buying flows on MGS stocks up to 3y while some demand was seen on other benchmarks as well. While trading volume is still relatively light, it definitely improved over the last few days. Yields ended the day easing 1-2 bps on the front part of the curve. MYR on the other hand weakened slightly today to just below 4.000 levels as market is expecting the Fed to hike rates tonight. The forward guidance after this meeting should give a good indication of Fed hiking 3 or 4 times this year.

Malaysia Government Bonds Benchmark Issues

MGS

Closing Level (%)

Change (bp)

Volume (RM m)

3-yr

3.680

-2.0

82

5-yr

3.870

-

-

7-yr

4.060

-1.0

-

10-yr

4.230

-1.0

140

15-yr

4.650

+1.0

4

20-yr

4.895

-

10

30-yr

5.000

-

-

Source: BondStream, AmBank *Closing levels are based on traders’ quotes.

Interest Rate Swap Closing Rates

IRS

Closing Yield (%)

Change (bp)

1-yr

3.735

-0.5

3-yr

3.803

-1.0

5-yr

3.895

-0.5

7-yr

4.000

-1.3

10-yr

4.150

-

Source: Bloomberg, AmBank

 

Best regards,

Fixed Income Research & Strategy

AmBank Research, AmBank (M) Berhad

+603 2036 2255 (DL) +03 2031 7218 (Fax)

Level 15, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur

 

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FW: AmBank Research - Transport Sector: Facing various headwinds NEUTRAL, 14 Jun 2018

 

 

SECTOR FOCUS OF THE DAY

Transport Sector: Facing various headwinds                                                        NEUTRAL

 

We are NEUTRAL on the transportation sector over the next 12 months. While there are plenty of opportunities in store for players, particularly, in the tourism and e-commerce space, we are mindful of various headwinds such as the increased regulatory risk on the back of the change in the political landscape following the 14th general election (GE14), potential dial-back of certain major initiatives by the preceding administration and rising fuel costs.

 

Our top pick for the sector is AirAsia (BUY, FV: RM3.63). AirAsia is a good proxy to the growing low-cost air travel market in the region, underpinned by rising per capita incomes and a young demographic. Its strong market presence (in terms of the number of routes, and frequencies for each route) enables it to compete effectively against its rivals (both low-cost and full-service). It has struck a chord with investors with its plans to monetise some of its auxiliary businesses and assets, including its leasing arm and ground handling unit, which could translate to special dividend payouts to shareholders.

 

 

 

QUICK TAKES

MSM Malaysia: Minimal impact from gas tariff hike                                          SELL

Plantation Sector: EU to withdraw demand for ban on palm biodiesel     NEUTRAL

 

 

RETAIL RESEARCH

Stocks On Radar: Inari Amertron, Eversendai Corporation, Sunway Construction, YTL Power International

         

ECONOMIC HIGHLIGHT

US: Fed features multiple instances of more hawkish language

 

NEWS HIGHLIGHTS

Construction Sector: New tender for rail project

Supermax: Gets Japanese licence for contact lens business

Plantation Sector: CPO futures hit two-year low

Property Sector: Battersea Power Station deal above board

 

 

 

DISCLAIMER:

The information and opinions in this report are prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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FW: 20180614 AmBank FX Daily Outlook

 

 

 

Highlights of today’s AmBank FX Daily Outlook as follows:-

 

  • Feds takes the fourth
  • MYR to fluctuate in the range of 3.9874 – 3.9986 against US dollar
  • Key Watch: (i) EU ECB Interest Rate Decision; (ii) May US, UK & China Retail Sales; (iii) Apr US Business Inventories; (iv) May Germany & India CPI; (v) May Australia Unemployment Rate; (vi) May China & Apr Japan Industrial Production

 

Best regards,

FX Research & Strategy

AmBank Research, AmBank (M) Berhad

+603 2036 2255 (DL) +03 2031 7218 (Fax)

Level 15, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur

 

 

 

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FW: RHB FIC Rates & FX Market Update - 14/6/18

 

 

 

14 June 2018

 

 

Rates & FX Market Update

 

 

Fed Signalled another 2 Rate Hikes Over 2H18

 

Highlights

 

¨    Global Markets: The FOMC unanimously delivered a 25bps hike as expected, and signalled another 2 rounds of tightening over 2H18, convincingly leaning towards the hawkish side. 10y yields broke above the 3% level intra-day, but finished the day at 2.966% after Chairperson Powell offered some words of caution on US inflation; DXY was in the red overnight post-conference. We reiterate our previously-held view for a total of 4 rate hikes in 2018, with the dot plot now converging towards the above; stay neutral UST.

¨    AxJ Markets: Over in Malaysia, Moody’s warned that the government’s review of large infrastructure projects and other government-linked obligations will play a “key role” in determining contingent liability risks, as authorities continue to scrutinize existing mandates in order to rein in costs. Still, revenue remains a concern for rating agencies and investors alike, with the lowering of the GST rate and the return of energy subsidies. USDMYR remains under the 4 handle, although global monetary tightening continues to be a headwind for EM assets, including Malaysia; stay neutral MYR for now.

¨    GBP was unchanged overnight against the USD, with recent weakness due to lingering political concerns over the Brexit process. May inflation came in line against consensus expectations (2.4% y-o-y), largely supported by a surge in energy prices, implying a mild slippage in non-oil categories. We think the GBP will remain under pressure over the coming months on Brexit-related uncertainties and dollar strength, with the EUR likely to hold its recent range as ECB debates the timing of normalization; stay neutral GBP.

 

 

 

 

FW: CIMB FX Daily 14 June 2018 - USD Flails Despite Hawkish FOMC Decision

 

 

Good morning,

While we look back 

  • The Dollar Index was heavy starting from the London open to around 93.60, before the FOMC decision saw the DXY surge to a high of 94.0 before gains were promptly erased as investors are still looking ahead to two big risk events this week: June ECB meeting and the US tariffs on China deadline.
  • The weaker USD reaction suggests that investors are unwilling to be bullish USD before the outcome of the live June ECB meeting is known.  
  • EURUSD rose by around 0.4% to 1.1790 during the London open only to be whipsawed to 1.1726 after the FOMC decision.
  • The USDJPY saw more muted movements in comparison to its G3 peers, with a momentary surge to 110.85 after the FOMC decision promptly erased for the pair to close at 110.34.  


(See attached file: FX Daily 140618.pdf)

Regards,

J Suresh Sundaram
Treasury FX Research
CIMB Investment Bank Berhad
Tel: +603-2261 8339


Think Before You Print

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FW: RHB | Economic Research | Tracking Global News

 

 

 

 

Economic Research

14 June 2018

Global News

 

Economic Update

 

 

 

Tracking Global News

 

 

Fed Hikes Rates, Points to Two More Increases in 2018

 

Eurozone Industrial Production Continues to Falter

 

UK Inflation Defies Expectations By Remaining At2.4%

 

Singapore's Unemployment Rate Declines in Q1

 

 

Economists: 

Arup Raha  | +65 6232 3896

Peck Boon Soon  | +603 9280 2163

Vincent Loo Yeong Hong  | +603 9280 2172

Ahmad Nazmi Idrus  | +603 9280 2179

Aris Nazman Maslan | +603 9280 2184

 

 

 

To access our recent reports please click on the links below:

 

13 June 2018

12 June 2018

11 June 2018

07 June 2018

05 June 2018

04 June 2018

 

Economics Team

Arup Raha

Group Chief Economist

arup.raha@rhbgroup.com

+65 6232 3896

Peck Boon Soon

Chief ASEAN Economist

bspeck@rhbgroup.com

+603 9280 2163

Vincent Loo Yeong Hong

Malaysia, Singapore

vincent.loo@rhgroup.com

+603 9280 2172

Ahmad Nazmi Idrus

Indonesia

ahmad.nazmi.idrus@rhbgroup.com

+603 9280 2179

Aris Nazman Maslan

Thailand, Philippines , Vietnam

mohd.aris.nazman@rhbgroup.com

+603 9280 2184

 

 

 

 

 

 

 

 

 

FW: [Maybank IB] Today's Research - Malaysia

 

 

header

 

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COMPANY
RESEARCH

Sime Darby Property | Clearing the doubts
Wei Sum Wong

Gas Malaysia | Tariff adjustment in line
Chi Wei Tan

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COMPANY RESEARCH

Malaysia

TP Revision

Sime Darby Property (SDPR MK)
by Wei Sum Wong

Share Price:

MYR1.25

Target Price:

MYR1.53

Recommendation:

Hold

Clearing the doubts

Key takeaways from SDPR meeting: 1) sale of BPS2 commercial spaces to EPF-PNB would be concluded by July 2018 with earnings to be recognised upon completion of the BPS2 construction works in 4Q 2019-3Q 2020 and 2) management has received positive responses from the state government on its MVV project in Labu. We lower our FY18-20 earnings forecasts by -2% to -15%. Our RNAV-TP is lowered to MYR1.53 (-4sen; on an unchanged 0.55x P/RNAV peg). HOLD.

FYE Jun (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

2,590.7

2,564.4

2,970.7

2,676.9

EBITDA

1,033.1

556.2

1,563.2

1,145.8

Core net profit

749.1

607.9

983.8

788.0

Core EPS (sen)

11.0

8.9

14.5

11.6

Core EPS growth (%)

33.6

(18.8)

61.8

(19.9)

Net DPS (sen)

0.0

0.0

5.8

0.0

Core P/E (x)

11.3

14.0

8.6

10.8

P/BV (x)

1.6

1.3

0.9

0.8

Net dividend yield (%)

0.0

0.0

4.6

0.0

ROAE (%)

18.2

10.7

12.2

7.8

ROAA (%)

6.2

4.5

7.1

5.7

EV/EBITDA (x)

na

na

6.1

8.0

Net debt/equity (%)

22.4

1.4

7.8

4.0

Malaysia

Company Update

Gas Malaysia (GMB MK)
by Chi Wei Tan

Share Price:

MYR2.94

Target Price:

MYR3.00

Recommendation:

Hold

Tariff adjustment in line

With doubts having emerged over the integrity of the pass-through mechanism, it was a relief to see a tariff surcharge being maintained in 2H18, albeit at a lower quantum. Net gas tariff is set to increase marginally by 0.5% in 2H18. There is no change to our earnings forecasts. Maintain HOLD with an unchanged MYR3.00 TP.

FYE Dec (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

4,053.0

5,348.8

6,042.3

6,649.6

EBITDA

264.6

301.7

293.2

303.0

Core net profit

165.1

194.6

173.2

184.1

Core EPS (sen)

12.9

15.2

13.5

14.3

Core EPS growth (%)

55.6

17.9

(11.0)

6.3

Net DPS (sen)

12.9

13.0

13.5

14.3

Core P/E (x)

22.9

19.4

21.8

20.5

P/BV (x)

3.7

3.6

3.6

3.6

Net dividend yield (%)

4.4

4.4

4.6

4.9

ROAE (%)

16.6

18.8

16.5

17.5

ROAA (%)

7.7

8.5

7.1

7.0

EV/EBITDA (x)

10.2

12.3

12.2

11.6

Net debt/equity (%)

net cash

net cash

net cash

net cash

MACRO RESEARCH

MY: Traders' Almanac

KLCSU Index: Potentially One More Leg Down
by Nik Ihsan Raja Abdullah

Technical Research

FBMKLCI gapped down at the opening bell and stayed in the negative territory throughout the day. At day's end, the benchmark fell 0.59pts to 1,763.57, extending losses for a fourth consecutive day. Sentiment was rather cautious with losers outpacing gainers by 469 to 397. A total of 2.1b shares worth MYR2.0b changed hands. Expect market to remain lackluster today as investors may choose to stay sidelines ahead of the Hari Raya holiday.

NEWS

Outside Malaysia:

U.S: Powell lauds economy as Fed Nudges up interest-rate hike path. Federal Reserve officials raised interest rates for the second time this year and upgraded their forecast to four total increases in 2018, as unemployment falls and inflation overshoots their target faster than previously projected. The so-called "dot plot" released showed eight Fed policy makers expected four or more quarter-point rate increases for the full year, compared with seven officials during the previous forecast round in March. The number viewing three or fewer hikes as appropriate fell to seven from eight. The median estimate implied three increases in 2019 to put the rate above the level where officials see policy neither stimulating nor restraining the economy. (Source: Bloomberg)

U.S: Trump says he may upset China on trade as tariffs loom. President Donald Trump said he'll confront China "very strongly" over trade in the coming weeks, as his administration prepares to follow through on a threat to slap tariffs on Chinese imports. "China could be a little bit upset about trade because we are very strongly clamping down on trade," Trump said in an interview. The interview was conducted aboard Air Force One after Trump met North Korean leader Kim Jong Un in Singapore. Trump has convened a meeting at the White House to talk with his trade team about whether to move forward with tariffs on Chinese goods, according to two people familiar with the plans. (Source: Bloomberg)

U.K: Inflation stays put as fuel prices rise most since 2011. The biggest increase in auto-fuel prices in more than seven years helped keep U.K. inflation from continuing its downward path last month. Consumer-price growth stayed at 2.4% YoY in May. Upward pressure was led by the price of fuel, which leaped by 3.8% in the month, the sharpest rise since January 2011, the Office for National Statistics said. There was also pressure from air fares and ferry prices. These effects were partly offset by computer games and energy prices, which failed to match the large gains seen a year earlier. (Source: Bloomberg)

U.K: Housing market stuck in the doldrums as prices stagnate. The U.K. housing market stayed stuck in a rut in May as activity and prices remained broadly flat, according to the Royal Institution of Chartered Surveyors. RICS's gauge of prices came in at minus 3 last month, up from minus 7 in April but still consistent with no change in prices, the organization said in a report. While there was some cause for optimism, with a measure of new instructions turning positive for the first time in 27 months, forward- looking indexes suggested the market is unlikely to gain near- term impetus, RICS said. (Source: Bloomberg)

India: Inflation picked up for a second straight month, giving ammunition to the central bank to further tighten monetary policy and squeezing returns for bond investors. Consumer prices rose 4.87% YoY in May, the statistics ministry said. It was the highest reading since January and comes on the back of rising food and fuel prices. The central bank expects oil averaging around USD78 a barrel to stoke inflation by 30 basis points, complicating its job of keeping inflation at the 4% mid-point of its target band over the medium term. (Source: Bloomberg)

Other News:

GFM Services: Bags MYR33.4m facilities management contract from Perkeso. The group has won a four-year contract worth MYR33.4m from Pertubuhan Keselamatan Sosial (PERKESO) to provide integrated facilities management services for PERKESO's Rehabilitation Centre in Malacca through an open tender. GFM said that the contract is for a period of four years, commencing June 2018 until June 2022. (Source: The Edge Markets)

E.A. Technique: Bags contract from Petronas Carigali for fast crew boats. The group has recently been awarded a contract by Petronas Carigali S/B for the provision of a unit of Fast Crew Boat for Petroleum Arrangement Contractors (PACs) Production Operations, shared between Petronas Carigali and EnQuest Petroleum Production Malaysia Ltd. E.A. Technique said the three-year contract was offered vide a letter of award dated May 24, 2018. The job will start in July. (Source: The Edge Markets)

Enra: Buys Australian specialty chemicals distributor for MYR13.5m. The group is acquiring International Chemicals Engineering Pty Ltd (ICE), an Australian company involved in importing and distributing specialty chemicals in Australia and New Zealand. The acquisition price will be a cash consideration of up to AUD2.9m (MYR8.7m) and the assumption of AUD1.6m of existing shareholders' loans in ICE. The aggregate of these amount to AUD4.5m (MYR13.5m). (Source: The Edge Markets)

Petra Energy: Gets 1-year contract extension from Petronas Carigali. The group has received a one-year extension on its contract from Petronas Carigali S/B for the provision of hook-up, commissioning and topside major maintenance services. The contract was previously awarded to Petra Energy by Petronas Carigali for duration of five years from May 21, 2013 to May 20, 2018. No contract value was stated in the announcement. (Source: The Edge Markets)

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