Monday, September 19, 2016

Plantation: October CPO export tax increased to 6.5%. An increase in Malaysia’s crude palm oil (CPO) export tax for October is expected to dampen already weakening demand for the tropical oil, but likely

Malaysia Construction | Breaking ground
Chew Hann Wong



Sector Note
by Chew Hann Wong

Breaking ground

Infrastructure job awards in 1H16 has exceeded the value in the whole of 2015. With construction jobs from the property sector expected to stay subdue, the infrastructure sector will support the construction sector’s orderbook replenishment in the current year and into 2017. Higher GDE in the upcoming National Budget 2017, in driving towards the 11MP’s target, will be positive. Sustained new flows will sustain interest in the sector. Our top BUY pick is Gamuda, followed by Sunway Construction.


Outside Malaysia:

U.S. Consumer sentiment gauge in September holds at lowest since April, as people became more optimistic about the economic outlook but less sanguine about their incomes and buying plans. The University of Michigan’s preliminary index of sentiment was unchanged at 89.8, according to a report. Consumers’ views of current economic conditions fell to an almost one-year low, while households’ plans to purchase automobiles and other big-ticket items became more dependent on low interest rates. Retail sales fell in August for the first time in five months, hinting at a smaller rebound in the economy this quarter, and the Federal Reserve is expected to hold off from raising interest rates when policy makers meet next week. (Source: Bloomberg)

U.S: Consumer prices rose more than forecast in August on higher shelter and health-care prices, indicating that inflation continues to move toward the Federal Reserve’s goal. The consumer-price index climbed 0.2% after being little changed the previous month, Labor Department figures showed. Excluding volatile food and fuel costs, the so-called core measure rose a bigger-than-forecast 0.3% from a month earlier. (Source: Bloomberg)

U.S: Household wealth rose by USD 1.08tr in 2Q 2016, boosted by higher financial assets and rising real-estate values, figures from the Federal Reserve in Washington showed. Net worth for households and non-profit groups rose by USD 1.08tr, or 1.2%, to USD 89.1tr in April through June from the previous three months, according to the Fed’s financial accounts report. Value of financial assets, including stocks and pension fund holdings, increased by USD 715b. Household real-estate assets in net worth climbed by USD 416.7b; owner’s equity as a share of total real-estate holdings increased to 57.1% from 56.6%. (Source: Bloomberg)

U.K: Business confidence drops to four-year low, Lloyds says. Economic uncertainty and U.K. demand seen as biggest threats, according to Lloyds Banking Group’s Business in Britain report. Confidence index based on respondents’ expected sales, orders and profits over the next six months drops to 12%, down from 38% in January. “The EU referendum vote has introduced a level of uncertainty for companies. While sentiment has fallen to a four-year low, it remains well above the lows reached during the global financial crisis of 2008/9,” Managing Director for Mid Markets and SME Banking Tim Hinton said in statement. (Source: Bloomberg)

Other News:

Plantation: October CPO export tax increased to 6.5%. An increase in Malaysia’s crude palm oil (CPO) export tax for October is expected to dampen already weakening demand for the tropical oil, but likely below-average production in coming months could support prices.CPO prices have risen about 9% since July due to tight supplies following last year’s El Nino dry weather pattern, which damages crops across Southeast Asia and lowers palm yields. The price increase led the world’s No. 2 producer after Indonesia to increase its October CPO export tax to 6.5% from 5% in September. (Source: The Sun Daily)

CIMB: CIMB-Principal launches Global Sukuk UCITS Fund. CIMB-Principal Islamic Asset Management (Ireland) PLC has obtained approval from the central bank of Ireland to launch its Global Sukuk UCITS Fund, Malaysia’s first global sukuk fund under the Undertakings for Collective Investment in Transferable Securities (UCITS) structure. CIMB-Principal Islamic Asset Management Sdn Bhd will act as the investment manager and master distributor of the fund. The fund will be offered to investors for a minimum investment of USD1,000 (MYR4,144) and is ideal for investors who seek a diversified portfolio and capital appreciation over the long term. The fund has an initial offer price of USD10 per share. The syariah adviser for the fund is CIMB Islamic Bank Bhd. The fund offers an option for fixed income asset managers to hold investment exposure to Middle East and Asian economies. (Source: The Sun Daily)

Asia Brands: Proposes to sell B.U.M. Marketing (M). Asia Brands has entered into a non-binding term sheet with Trackland Sdn Bhd for the proposed disposal of its entire 100% stake in B.U.M. Marketing (Malaysia) Sdn Bhd (BUMM) for MYR7.2m. The transaction is subject to the satisfaction of conditions, including a satisfactory due diligence to be conducted by Trackland on BUMM, as well as the finalisation of a binding definitive agreement between the parties. The purchase consideration consists of MYR5.0m to be paid on Oct 1, 2016, and MYR2.2m to be paid in six monthly instalments. (Source: The Sun Daily)

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