Daily FX Update, 31 March 2016

OVERNIGHT MARKET UPDATE:

·         US – Chicago Fed President Evans backed Yellen's case for a gradual approach to FOMC rate rises this year. Evans also confirmed that global growth and risks are an important consideration to policy. April would be too soon for a rate increase, Evans suggested. “My assessment is the economy is going to be strong enough, we’ll be raising rates two times this year, could well be more if we do better,” he said.

·         US – US ADP employment rose 200k in March. This was a touch higher than market expectations of 195k and confirmed ongoing robust labour market conditions. Revisions to February were minor at -9k, leaving this measure of jobs growth at 205k.

·         Euro area – There was a slight upside surprise in the flash German CPI inflation read for March, but still way below the European Central Bank’s medium-term target of close to but below 2%. The harmonised measure rose 0.8% m/m and 0.1% y/y.

·         Euro area – The headline Economic Sentiment Indicator in March fell to 103.0 points in March from 103.9 in February, mainly because of falling confidence among consumers and in the construction and services sectors.

·         Currencies – The US dollar weakened against nearly all of its developed and emerging-market rivals after Yellen’s dovish comments were echoed by Fed Evans. This has erased the probability that April hike was “live” after hawkish comments last week.

·         Equities – It was generally a positive session for equities. The DAX and FTSE closed up 1.6%. In the US the gains were more modest with the major indices all up around 0.5%.

·         Rates – European sovereign bond yields gradually rose through the day, with 10-year yields up 2 bps in both UK and Germany. UST 10-year yield was also 2 bps higher, supported by the solid ADP report.

·         Energy – Crude oil prices rallied as the USD weakened and the supply rise coming in below market expectations. EIA reported a 2.3 million barrels rise in crude-oil supplies to 534.8 million barrels, but below market expectations. 

·         Precious Metals – Gold traded lower despite the lower USD as investors turned their attention to the climb in equity markets.

RHB | Philippines | Stronger Economic Growth in an Election Year

Economic Research	31 March 2016
Philippines
Economic Outlook
Stronger Economic Growth in an Election Year The Philippines’ economy is envisaged to expand by 6.0% in 2016, strengthening from +5.8% for 2015, on the back of further acceleration in public and private sector consumption driven by the upcoming election, while a ramp-up in infrastructure will likely provide additional booster. Economist:  Rizki Fajar  | +6221 29707065
To access our recent reports please click on the links below: 15 December 2015: Strong Fiscal Position to Support Domestic Demand 28 September 2015: Domestic Demand Still Resilient To Steer The Economy Ahead 24 August 2015: The Philippines Peso: Better Positioned To Weather Headwinds 30 June 2015:  Fundamentals Remain Solid With Government Spending To Anchor Growth 31 March 2015: Growth To Accelerate This Year Amid Boost From Fiscal Incentives 17 December 2014: Growth To Improve Again In 2015, Amid Return of Government Spending

[Maybank IB] Today's Research - Malaysia

COMPANY RESEARCH Yinson Holdings | FY16 in line; FPSO Genesis to drive growth Thong Jung Liaw Westports Holdings | Still bucking the trend Yen Ling Lee

MACRO RESEARCH Malaysia | 62% FR is way too strong Lee Cheng Hooi

NEWS Outside Malaysia Other News

COMPANY RESEARCH

Malaysia Company Update Yinson Holdings (YNS MK) by Thong Jung Liaw Share Price: MYR2.75 Target Price: MYR4.35 Recommendation: Buy FY16 in line; FPSO Genesis to drive growth FY1/16 core net profit (+21% YoY) yielded no surprises, with the O&G business contributing 98% of the core profit. Meanwhile, the projected 15sen special DPS payment, post the divestment of non O&G operations by 2HCY16, is a short-term catalyst. Overall, we remain positive over Yinson’s long-term prospects, for its strong earnings growth and steady cash flow profile. Our MYR4.35 SOP-based TP offers a 58% upside. BUY. FYE Jan (MYR m) FY15A FY16A FY17E FY18E Revenue 1,083.4 986.0 996.0 1,286.2 EBITDA 225.4 261.0 288.5 417.8 Core net profit 142.6 173.1 184.2 220.0 Core EPS (sen) 13.8 16.2 17.3 20.6 Core EPS growth (%) 114.7 17.5 6.4 19.4 Net DPS (sen) 2.0 1.9 2.0 2.4 Core P/E (x) 19.9 17.0 15.9 13.3 P/BV (x) 2.0 1.3 1.2 1.1 Net dividend yield (%) 0.7 0.7 0.7 0.9 ROAE (%) 13.9 9.4 7.9 8.7 ROAA (%) 6.1 4.8 3.5 3.5 EV/EBITDA (x) 15.1 15.6 14.8 10.3 Net debt/equity (%) 31.6 51.9 55.2 51.3 Thong Jung Liaw    (603) 2297 8688    tjliaw@maybank-ib.com Ivan Yap    (603) 2297 8612    ivan.yap@maybank-ib.com

Malaysia Company Update Westports Holdings (WPRTS MK) by Yen Ling Lee Share Price: MYR4.12 Target Price: MYR4.30 Recommendation: Hold Still bucking the trend Container volumes in Jan-Feb 2016 bucked the trend with growth of estd. 8% YoY on organic growth and some ad-hoc moves. We continue to think that the volume could slow ahead on softer global trade. We maintain our earnings forecasts, projecting EPS growth of 18% in FY16 on throughput growth of 3% and a lower tax rate. Trading at 2016 PER of 23.6x, we think its share price already reflects its solid fundamentals. Maintain HOLD and DCF-derived TP of MYR4.30 (WACC: 6.7%, beta: 0.6). FYE Dec (MYR m) FY14A FY15A FY16E FY17E Revenue 1,503.0 1,578.3 1,693.4 1,770.3 EBITDA 800.8 869.1 940.1 1,017.1 Core net profit 512.2 504.9 596.4 628.2 Core EPS (sen) 15.0 14.8 17.5 18.4 Core EPS growth (%) 17.7 (1.4) 18.1 5.3 Net DPS (sen) 11.3 11.1 13.1 13.8 Core P/E (x) 27.4 27.8 23.6 22.4 P/BV (x) 8.0 7.4 6.9 6.4 Net dividend yield (%) 2.7 2.7 3.2 3.4 ROAE (%) 30.4 27.6 30.2 29.6 ROAA (%) 13.8 12.8 14.3 14.4 EV/EBITDA (x) 15.2 17.0 16.2 15.0 Net debt/equity (%) 40.0 39.7 59.9 53.0 Yen Ling Lee    (603) 2297 8691    lee.yl@maybank-ib.com

MACRO RESEARCH MY: Technicals Technical Research by Lee Cheng Hooi 62% FR is way too strong The FBMKLCI gained 2.78 points to close at 1,717.82 yesterday, while the FBMEMAS and FBM100 rose 27.96 points and 25.54 points respectively. In terms of market breadth, the gainer-to-loser ratio was 432-to-352, while 398 counters were unchanged. A total of 1.85b shares were traded valued at MYR2.34b. Lee Cheng Hooi    (603) 2297 8694    chenghooi.lee@maybank-ib.com

NEWS Outside Malaysia: Brazil: Budget deficit swells to record as economy shrinks. Brazil recorded the largest-ever primary budget gap in 12 months through February as a two-year economic recession sapped tax collection while expenses grew further. The deficit before interest payments, which includes results of states, municipalities and government-owned companies, reached BRL 125.14b (USD 5b) in the 12- month period, or a record 2.11% of gross domestic product, the central bank said. The result shows a growing mismatch between government revenue and expense over the past year, said Tulio Maciel, head of the central bank’s economic research department. “While revenues are falling sharply due to the economic situation, at a rate of 12% to 13% (a year), expenses continue to grow,” he told reporters in Brasilia. (Source: Bloomberg) E.U: Euro-area economic confidence fell to the lowest level in more than a year just as the European Central Bank deployed fresh stimulus to spur growth and quash the threat of deflation. An index of executive and consumer confidence slumped for a third month, declining to 103.0 in March from a revised 103.9 the previous month, the European Commission in Brussels said. (Source: Bloomberg) Germany: Inflation unexpectedly climbed above zero in March in a sign that domestic demand and European Central Bank stimulus may be starting to spur price gains. Consumer prices rose O.1% YoY, data from the Federal Statistics Office showed, based on a European Union-harmonized calculation. Prices rose 0.8% MoM from the previous month. (Source: Bloomberg) U.K: Consumer confidence stalls as ‘Brexit’ clouds outlook. Fears that Britain might vote to leave the European Union helped keep consumer confidence at the lowest level in more than a year, according to a survey published. GfK’s consumer-confidence index stayed at zero in March. A gauge of expectations for the economic situation over the next 12 months was minus 12, unchanged on the month and down 18 points from a year earlier. “Despite good economic headlines about low inflation, interest rates and prices in the shops, concerns about Brexit and the ongoing euro-zone crisis appear to be hitting home,” said Joe Staton, head of market dynamics at GfK. (Source: Bloomberg) Other News: Construction: AlloyMTD withdraws bid for USD2.65b project in Manila. Malaysian infrastructure conglomerate AlloyMTD Group, a merger between MTD Capital and Alloy Consolidated Sdn Bhd, has pulled out of bidding for a USD2.65b (MYR10.41b) contract to build a 47km expresssway, flood control dike, and for 700ha land reclamation works near Taguig in Manila, the Philippines. The group cited unresolved issues affecting the propriety and validity of the procurement process for the Laguna Lakeshore Expressway Dike project for the withdrawal. The bidding process has become risky for the group as the only foreign bidder due to legal questions over the government’s right to turn a portion of a lake into a land, which would then be sold to private sector. (Source: The Edge Financial Daily) Lay Hong: Partners NH Foods to expand meat-based business abroad. Integrated poultry company Lay Hong plans to set up a plant in Selangor and will have its first Nippon Nutriplus product in Malaysia by mid-year, following its joint venture (JV) with NH Foods Limited. Under the JV agreement, a private limited company named NHF Manufacturing (Malaysia) Sdn Bhd will be established with an initial authorised share capital of MYR30m divided into 30 million shares. NH Foods and Lay Hong will hold 51% and 49% stake respectively. Lay Hong expects to fund its portion for the JV company via internally-generated funds, bank borrowings and/or additional funds to be raised from the capital market. (Source: The Sun Daily) Perdana Petroleum: Cancels work barge acquisition. Perdana Petroleum has canceled the acquisition of an accommodation work barge identified as Vessel Hull No. SK 316 from Nam Cheong International Ltd. The termination of the memorandum of agreement (MOA) with Nam Cheong was necessary as to date, no potential charter contract has been identified for the vessel SK316. The group has written-off MYR36.1m being the 20% deposit for the vessel SK316 in the financial statement for the year ended Dec 31, 2015. It does not foresee any financial impact in 2016. (Source: The Sun Daily) Dialog: To build industrial estate in Pengerang. Dialog Group, which has a 46% effective interest in the MYR5b Pengerang Independent Deepwater Petroleum Terminal, plans to develop an industrial estate within its deepwater terminal land. It had incorporated a wholly owned subsidiary, Sungai Rengit Industrial Estate Sdn Bhd, to develop the industrial estate that would support the development of the petroleum and petrochemical industry in Pengerang, Johor. The terminal project would help attract MYR80b to MYR90b in investments to the area as it expanded over the years. (Source: The Star) Digi: To partner edotco for telecom infrastructure ops. DiGi.Com has appointed edotco Malaysia as its preferred partner in the telecommunications infrastructure services business. With this agreement being signed, edotco would deliver both co-location and build-to-suit sites over five years, giving Digi the advantage of further strengthening its network footprint and service quality nationwide. This agreement will pave the way for Digi to access edotco’s telecoms infrastructure footprint of over 3,600 sites nationwide and new built-to-suit sites. Both companies have been in network collaborations since 2013. (Source: The Star)