Malaysia Daily, Maybank KE (2014-09-19)

Daily 19 September 2014 SECTOR UPDATE Malaysia Construction: Maintain Overweight SCORE is scoring well Upbeat on significant progress in SCORE as more construction works has since rolled out and more detailed development plans have been made to ensure sustainable growth. Ample construction jobs to be dished out which is medium term positive for Sarawak based contractors and those from Peninsular with track record. OVERWEIGHT on Sarawak construction with HSL as Top Pick. Click here for full report » MY Banking: Maintain Neutral OPR unchanged at 3.25% No impact to our earnings forecasts which incorporate a full 50bp increase only for 2015. Operating environment still challenging. Stay NEUTRAL. BUY AFG, HL Bank and HL Financial Group. Click here for full report » ECONOMICS BNM Monetary Policy OPR paused at 3.25% In contrary to our expectation, Bank Negara Malaysia (BNM) kept Overnight Policy Rate (OPR) at 3.25%, citing moderating domestic demand going forward and stable inflation for the rest of this year. Although Monetary Policy Statement (MPS) maintained reference to "destabilising financial imbalances" and added "further adjustment to the degree of monetary may be taken", it appears growth is taking precedence now given the remarks on ensuring "the sustainability of the growth prospect of the Malaysian economy". With OPR to be on pause for the rest of 2014, it is more likely that OPR will be adjusted in 2H 2015 as underlying inflation trend get clearer post-GST introduction and as US interest rate normalises Click here for full report » Technicals Liquidate on rebound rallies The FBMKLCI gained 1.54 points to 1,845.32 yesterday, while the FBMEMAS and FBM100 closed lower marginally by 6.08 points and 0.01 points, respectively. We recommend a �Sell on Rallies� stance for the index. Trading idea is a take profit call on TAS with downside target areas at MYR0.89 & MYR0.54. Click here for full report » Other Local News Construction: MYR20b for 10MP projects. Some MYR20b worth of construction works for new highways under the 10th Malaysian Plan (10MP) are expected to commence next year pending final approval, said Works Minister Datuk Fadillah Yusof. There are seven new highways under the plan, including the Kuala Lumpur Outer Ring Road, the Kinrara-Damansara Expressway, the Damansara Shah Alam Elevated Expressway and the West Coast Expressway. (Source: The New Straits Times) Utilities: 1MDB Planning biggest bond sale. 1Malaysia Development (1MDB) plans to sell as much as MYR8.4b of Islamic bonds, the world�s biggest offering of sukuk in 2014. The sovereign wealth fund, whose debt has tripled in two years, is seeking approval from the Securities Commission Malaysia for the sale. The proceeds will be used to help fund construction of a 2,000MW plant in Negeri Sembilan. (Source: The Edge Financial Daily) RHB: RHB Islamic co-manages HK USD1b sukuk issuance. RHB Banking Group's Islamic banking arm, RHB Islamic Bank, co-managed Hong Kong government's inaugural USD1b (MYR3.24b) sukuk issuance, marking the world's first US dollar-denominated sukuk originated by a "AAA"-rated government. Meanwhile, RHB Investment Bank was appointed lead manager-cum-underwriter to IDB Trust Services Ltd's recent five-year USD1.5b sukuk issuance under its USD10b sukuk programme guaranteed by Jeddah-based Islamic Development Bank. (Source: The New Straits Times) Outside Malaysia U.S: August Slump in housing starts led by multifamily. Beginning home construction fell 14.4%, the most since April 2013, to a 956,000 annualized rate following July's revised 1.12 million pace that was the strongest since November 2007, the Commerce Department said. Work on apartments and condominiums, which tend to be volatile, dropped 31.7% after jumping 44.9% in July. (Source: Bloomberg) U.S: Jobless claims decline to two-month low of 280,000, a sign the labor market continues to strengthen. Claims decreased by 36,000 in the period ended Sept. 13, the Labor Department said. Those already collecting unemployment benefits fell to a more than seven-year low. (Source: Bloomberg) China: New-home prices fell in all but two cities monitored by the government last month as tight credit damped demand even as local home-purchase restrictions were eased. Prices dropped in 68 of the 70 cities in August from July, including in Beijing and Shanghai, the National Bureau of Statistics said, the most since January 2011 when the government changed the way it compiles the data. Home sales slumped 11% in the first eight months of this year amid an economic slowdown after banks tightened property lending to curb default risks. (Source: Bloomberg) Indonesia: Bank Indonesia (BI) relaxes rules for FX spot and derivative trading to boost local trading volume, it says in statement in Jakarta. To name a few of the rules, BI allows netting of FX derivatives, including unwinding, early terminating and rollover as long as still in line with timeframe of underlying transactions. Trades with domestic parties can use underlying including international trade, investments, FDI and loans, excluding deposits and cash transfers; trades with foreign parties can use same underlying excluding central bank bills for derivatives. (Source: Bloomberg)     Key Indices Value YTD (%) Daily (%) KLCI 1,845.3 (1.2) 0.1 JCI 5,208.1 21.9 0.4 STI 3,297.3 4.1 0.0 SET 1,584.2 22.0 0.9 HSI 24,168.7 3.7 (0.9) KOSPI 2,047.7 1.8 (0.7) TWSE 9,237.0 7.3 0.5 DJIA 17,266.0 4.2 0.6 S&P 2,011.4 8.8 0.5 FTSE 6,819.3 1.0 0.6 MYR/USD 3.2 (0.9) 0.8 CPO (1mth) 2,170.0 (17.4) 0.6 Crude Oil (1mth) 93.1 (5.4) (1.4) Gold 1,223.9 1.8 (1.1) TOP STOCK PICKS Buy rated large caps Price Target Tenaga 12.34 14.00 Axiata 6.96 7.60 Sime Darby 9.11 10.20 Gamuda 4.80 5.30 UMW O&G 3.81 5.15 AFG 4.98 5.50 Perdana Petroleum 1.78 2.55 Hock Seng Lee 1.84 2.25