Malaysia Daily, Maybank KE (2014-07-10)

Daily 10 July 2014 COMPANY UPDATE UMW Oil & Gas Corporation: Maintain Buy Maiden contract in Myanmar  Shariah-compliant Bags first JU drilling charter in Myanmar for USD51m. Expect more contract announcements in 2H14. Reiterate BUY and MYR5.15 TP, based on 23x FY15 PER. Click here for full report » TSH Resources: Maintain Hold Diligent planter  Shariah-compliant FFB output will grow at double digit in 2014. TSH prefers greenfield land for expansion; acquisition of brownfield assets would require fund raising via equities. Impact of El-Nino would be minimal if it is not severe and prolonged. Maintain Hold at unchanged TP of MYR3.40. Click here for full report » ECONOMICS BNM Monetary Policy Preview Figuring Out �Financial Imbalances� We investigate "financial imbalances" as the phrase becomes a key feature in BNM�s recent Monetary Policy Statements (MPS). By analysing a number of indicators in terms of their deviations from trend as indication of build up or existence of "financial imbalances". With remarks and evidence of "financial imbalances", we expect BNM to raise OPR by up to 50bps in 2H 2014, possibly as soon as this evening. Click here for full report » Technicals Feeling toppish around the 1,900 level The FBMKLCI inched down by 1.49 points to 1,891.16 yesterday, while the FBMEMAS and FBM100 fell 11.19 points and 9.98 points, respectively. We recommend a �Nibble on Dips� stance for the index. Trading idea is a Short-Term Buy on TECNIC with upside target areas at MYR4.01 & MYR4.21. Stop loss is at MYR3.30 Click here for full report » Other Local News CIMB: Explores merger with RHBCap and MBSB. CIMB Group Holdings Bhd is exploring a three-way merger with its rivals RHB Capital Bhd (RHBCap) and Malaysia Building Society Bhd (MBSB) in a move to create the country's largest banking group by assets. The enlarged banking group with combined assets of MYR613.7b would also end up ranking as the fourth largest in Asean. All three parties are said to have submitted an application to Bank Negara and approval is expected as soon as today. (Source: The Edge Financial Daily) Yinson: Gets BW offer. Yinson Holdings Bhd has received an offer from BW Offshore Ltd to either sell down or increase its stake in the Petroleo Nautipa floating production, storage and offloading facility (FPSO), which is currently in Nigerian waters. In a statement to the stock exchange yesterday, Yinson said BW Offshore had proposed to reach a mutual agreement over the eventual 100% ownership of the Petroleo Nautipa FPSO and its owner Tinworth Pte Ltd by either parties. Completion will be conditional upon receipt of Yinson's shareholder approval. The board will deliberate and decide on the offer to either acquire the 100% equity interest in Prosafe Nautipa or dispose its 100% equity interest in Nautipa. (Source: The Star) Hwang Capital: Waived from PN17 status. Hwang Capital Bhd (HCM) has been waived from being classified as Practice Note 17 (PN 17) company as the group is deemed financially healthy. Bursa Malaysia is also of the opinion that HCM will not be considered as cash company pursuant to Practice Note 16. Its third-quarter results showed that it is financially healthy with most of its borrowings repaid and is in a net cash position. (Source: The Edge Financial Daily) OPR: 25 basis-point raise expected. Bank Negara Malaysia will most likely raise the Overnight Policy Rate (OPR) today after a three-year pause, according to market expectations. The market has been looking at a hike in borrowing costs, with observers saying that the move is inevitable as the last monetary policy meeting in May had raised concerns about financial imbalances building up in the country. A 25 basis-point increase is widely expected, bringing the OPR rate to 3.25 per cent. Market expectations are, however, split on whether the central bank will proceed further on its hiking cycle this year. Two more monetary policy meetings are scheduled for September and November. (Source: Business Times) GST: Expected to contribute 0.3% to economic growth. The implementation of the Goods and Services Tax (GST) on April 1 next year is expected to contribute 0.3 per cent to Malaysia's economic growth with exports expanding 0.5 per cent from the second quarter. Deputy Finance Minister Datuk Ahmad Maslan said the country's export products will also be more competitive, as the Sales and Services Tax (SST) at present on average at about 10 per cent, will be abolished. (Source: Bernama) Outside Malaysia U.S: Fed moves closer to choosing main tool for stimulus exit. Federal Reserve officials moved closer to deciding on the main tool they will use to tighten monetary policy when the time comes, most likely next year. Most participants at the Federal Open Market Committee's June meeting agreed that the interest rate on excess reserves banks keep on deposit at the Fed "should play a central role" in the exit from extraordinary monetary stimulus, according to minutes released in Washington. (Source: Bloomberg) U.S: Some Fed officials saw investors as too complacent on risks. Some Federal Reserve policy makers were concerned investors may be growing too complacent about the economic outlook and the central bank should be on the lookout for excessive risk-taking, minutes of their June meeting show. "Signs of increased risk-taking were viewed by some participants as an indication that market participants were not factoring in sufficient uncertainty about the path of the economy and monetary policy," the minutes showed. (Source: Bloomberg) U.K: House prices rose in the second quarter, as an improving economy and rising confidence bolstered demand for property, according to Halifax. Values increased 2.3% in the three months through June to an average GBP 183,462 (USD 314,200), the Lloyds Banking Group Plc mortgage unit said. (Source: Bloomberg) China: Producer prices fall at slowest pace in two years, adding to signs of stabilization in the world's second-largest economy. The producer-price index declined 1.1% YoY, the National Bureau of Statistics said. The consumer-price index increased 2.3% YoY, below projections for a 2.4% YoY gain. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,891.20 1.3 -0.1 JCI 5,024.70 17.6 0 STI 3,275.50 3.4 -0.2 SET 1,507.90 16.1 0 HSI 23,176.10 -0.6 -1.6 KOSPI 2,000.50 -0.5 -0.3 TWSE 9,490.00 10.2 -0.4 DJIA 16,985.60 2.5 0.5 S&P 1,972.80 6.7 0.5 FTSE 6,718.00 -0.5 -0.3 MYR/USD 3.2 -3.2 0 CPO (1mth) 2,440.00 -7.2 -0.5 Crude Oil (1mth) 102.3 3.9 -1.1 Gold 1,327.80 10.5 0.7