SECTOR UPDATE
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MY Property Sector: Maintain Neutral
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Going South
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- New foreign entrants raise fears of a housing glut in Iskandar Malaysia (IM).
- Ability to absorb ample incoming supply of high-rise condominiums and retail space by end-2015/2016 remains our key concern.
- Maintain NEUTRAL; we prefer Klang Valley over IM. Top pick is Eco World (BUY; MYR6.59 TP).
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Technicals
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Headed towards 1,829 and below
The FBMKLCI declined 7.64 points to 1,837.68 yesterday, while the FBMEMAS and FBM100 also closed lower by 70.70 points and 60.69 points, respectively. We expect weaker buying interest at the supports of 1,810 to 1,829, whilst heavy liquidation would be at the resistances of 1,837 and 1,854.
Trading idea is a Take Profit call on ALAM with downside taret areas at MYR1.18 & MYR0.90.
Click here for full report »
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Other Local News
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AirAsia Bhd: Leasing arm worth prospective USD1b if listed. AirAsia Bhd's newly independent jet-leasing arm is a potential candidate for a stock exchange listing that could command half the values of its USD2b airline operation according to Chief Executive Officer Tony Fernandes. Free cash-flow of about USD40m to USD50m will be generated in the spun-off unites first few years, before expanding toward USD100m as it taps demand for planes from airlines in China and Africa. AirAsia mentioned last month it would transform a leasing business that supplies aircraft mainly to subsidiaries into a stand-alone operation called Asia Aviation Capital Ltd. (Source: The Edge Financial Daily)
1Malaysia Development Bhd: Nazri Shahruddin to helm 1MDB's power unit. Datuk Mohd Nazri Shahruddin, currently the vice president of the new business and major products in Tenaga Nasional Bhd (TNB) has been appointed the chief executive of 1Malaysia Development Bhd's (1MDB) power generation unit that is due to be listed early next year. Datuk Mohd Nazri Shahruddin has almost 35 years of experience in the industry and has been involved in significant projects, namely the first independent water and power producer project in Saudi Arabia, the Suhaibah Power and Water facility of which he headed a team from TNB, Khazanah Nasional Bhd and Malakoff Corp Bhd. (Source: The Edge Financial Daily)
SKP Resources Bhd: To buy Tecnic for MYR200m. SKP Resources Bhd will buy the entire business of smaller rival Tecnic Group Bhd for MYR200m. The proposed acquisition will be satisfied via MYR100m in cash and an issuance of 172.4m new shares in SKP at 58 sen per share. SKP had entered into a conditional share sale and purchase agreement with Tecnic for the entire issued share capital of three of Tecnic�s wholly-owned subsidiaries, Plastictecnic (M) Sdn Bhd (PSB), Sun Tong Seng Mould Tech Sdn Bhd (STSM) and Bangi Plastics Sdn Bhd (BPSB). (Source: The Edge Financial Daily)
Muda Holdings Bhd: Muda Holdings up for sale. Tan Sri Lim Guan Teik, the largest shareholder of Muda Holdings Bhd, is said to be selling his 41.5% stake in the paper mills and paper packaging company, after helming it for more than three decades. The identity of the buyer is still not clear at this juncture. Muda Holdings Bhd is the pioneer of paper milling and packing in Malaysia and the company is valued at MYR671.1m as at last Wednesday. (Source: The Edge Financial Daily)
Genting Bhd: MYR3.6b Resorts World bayshore to have 1,500 rooms under phase 1. Genting Group's proposed USD1.1b (MYR3.6b) Resorts World Bayshore City (RWBC) in Philippines will offer at least 1,500 rooms under the initial phase and will be operated among others, Genting group's "Genting Grand" and "Crockfords Tower". The first phase of the RWBC development would occupy 12 ha of the 31 ha project and consist of 77,000 square metres of retail space, a 3,000-seater theater and multiples cinemas apart from the gaming space along with condominium towers as well as conference and exhibition facilities according Resorts World Manila (RWM) Executive Vice President Steve Riley. (Source: The Edge Financial Daily)
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Outside Malaysia
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U.S: Jobless claims unexpectedly decreased last week, a sign the job market is making more headway. Jobless claims dropped by 8,000 to 287,000 in the week ended Sept. 27, a Labor Department report showed in Washington. The number of people already collecting benefits decreased to an eight-year low. Firings are hovering close to decade lows as employers benefiting from rising demand retain workers, laying the ground for more hiring and wage gains. (Source: Bloomberg)
Eurozone: ECB maintained interest rate, unveiled its version of QE, but market unimpressed. Amid remarks about the downward trends in macroeconomic conditions and the risk of deflation, the European Central Bank (ECB) kept its benchmark interest rate unchanged at the record low of 0.05% and signalled there will be no further change to the policy rate. At the same time, ECB provided details of its purchases of asset-back securities and covered bonds in both primary and secondary markets. Both programmes will commence this quarter and are for a two-year period. Market reactions - namely bonds and currency - were muted amid investors disappointment as ECB's President Mario Draghi shied away from a definitive goal on how much the central bank might buy and saying that the total stimulus may fall short of the EUR1tr (USD 1.3tr) expansion in balance sheet mentioned earlier. The refusal to specify a number may reflect divisions among ECB policymakers and/or the limitations in terms of the availability of assets of the right size, market liquidity and risk profile. This is on top of the Eurozone Treaty that bars ECB from financing governments. At the same time, Draghi again urged Eurozone governments to revamp and reform their economies to make them more efficient, competitive and productive. (Source: Bloomberg)
China: Announced plans to cap the amount of debt local governments can take on and ban them from additional borrowing through financing vehicles as authorities step up efforts to control risks to the financial system. All borrowing by provinces and cities will need to be within a quota set by the State Council, China's cabinet, and approved by the National People's Congress, according to a statement posted to the central government's website. No figures were given for the possible amounts of the quotas. The central government won't bail out local authorities, it said. (Source: Bloomberg)
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Key Indices
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Value
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YTD (%)
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Daily (%)
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KLCI
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1,845.3
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(1.2)
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(0.1)
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JCI
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5,140.9
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20.3
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0.1
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STI
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3,264.1
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3.1
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(0.4)
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SET
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1,587.4
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22.2
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0.1
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HSI
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22,933.0
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(1.6)
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0.0
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KOSPI
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1,991.5
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(1.0)
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(1.4)
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TWSE
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8,990.3
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4.4
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0.3
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DJIA
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16,804.7
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1.4
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(1.4)
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S&P
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1,946.2
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5.3
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(1.3)
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FTSE
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6,557.5
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(2.8)
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(1.0)
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MYR/USD
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3.3
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(0.1)
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(0.2)
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CPO (1mth)
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2,210.0
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(15.9)
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(1.0)
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Crude Oil (1mth)
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90.7
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(7.8)
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(0.5)
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Gold
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1,213.8
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1.0
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0.5
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TOP STOCK PICKS
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Buy rated large caps
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Price
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Target
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Tenaga
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12.32
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14.00
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Axiata
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7.01
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7.60
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Sime Darby
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9.18
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10.20
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Gamuda
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4.80
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5.30
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UMW O&G
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3.86
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5.15
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AFG
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4.95
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5.50
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Perdana Petroleum
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1.85
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2.55
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Hock Seng Lee
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1.88
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2.25
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