MARKET STRATEGY
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MY Strategy: Maintain Neutral
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The
Yen connection
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- We
continue to expect the USD/JPY to edge higher to 109 by end-2014,
JPY/MYR to end 2014 at 2.99.
- TNB is
the main beneficiary from its MYR3.4b Yen loans; auto players
with Yen-denoted imports would also gain.
- No
change in stock calls; TNB is one of our top big-cap BUYs.
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ECONOMICS
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Singapore CPI, August 2014
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Decelerated
for the second month
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- Inflation
rate in Aug 2014 eased to +0.9% YoY (Jul 2014: +1.2% YoY),
mainly on decline in car prices and housing costs.
- But
core inflation rate (CPI ex-accommodation and private road
transport) remained relatively stable ranging between +2.1% and
+2.2% since May 2014 (Aug 14: +2.1% YoY; Jul 14: +2.2% YoY).
- We revised
our 2014 CPI forecast to +1.7% versus +2.0% previously (YTD
2014: +1.5%; 2013: +2.5%) with domestic factors to remain as the
main inflation driver.
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Technicals
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Next
stop is 1,832 and below
The FBMKLCI declined 5.86 points to 1,840.19 yesterday, while the
FBMEMAS and FBM100 also closed lower by 44.71 points and 42.73
points, respectively. We recommend a �Sell on
Rallies� stance for
the index.
Trading idea is a Take profit call on COASTAL with downside target
areas at MYR4.39 & MYR4.22.
Click here for full report »
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Other Local News
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Power:
TNB and 1MDB in MYR6b power deal in Bangladesh. Malaysia
and Bangladesh have inked a government-to-government memorandum of
understanding (MOU) for a MYR6b power plant project in Maheshkali,
Bangladesh. The independent power project will involve Bangladesh
Power Development and a Malaysian consortium comprising Tenaga
Nasional and Powertek, a subsidiary of 1Malaysia Development. It will
see a 1,320MW coal-fired power plant being built in Maheshkali, Cox's
Bazar, Banagladesh, with 2019 as its expected commercial operation
date. (Source: The Star)
Oil & Gas: Petronas moves to fuel production. Petroliam
Nasional (Petronas) will spend more than MYR1.1b over the next three
to four years in its exploration and production technology centre to
research and develop innovative and applicable technologies to
rejuvenate and enhance oil production. The petroleum giant is looking
at the implementation of the Enhanced Oil Recovery (EOR) programme to
enhance crude oil production in maturing fields. There are currently
10 EOR projects in the pipeline at various stages, and the entire
programme is scheduled to be rolled out in phases over the next
decade. (Source: The New Straits Times)
MAHB: Considers offer of right of first refusal on Istanbul
airport. Malaysia Airports Holdings unit Malaysia Airports MSC
Sdn Bhd has received a notice and offer of right of first refusal
(ROFR) regarding TAV Havalimanlari Holding A.S's (TAV) offer to
acquire a 40% equity stake in both Istanbul Sabiha G�k�e and LGM
Havalimani Letmeleri Ticaret Ve Turizm A.S for EUR285m. The 40%
stakes in both companies are held by Limak and Limak Yatirim.
(Source: The Star)
Sona Petroleum: Optimistic of SC nod for MYR895m Thai deal.
Sona Petroleum is confident of getting the Securities Commission�s (SC)
approval for its first qualifying acquisition to put it on track to
complete the deal by the end of the year. The special-purpose
acquisition company (SPAC), which had on Aug 29 submitted its
proposal for a USD281m (MYR895.2m) deal to buy a 40% stake in the
Thai unit of UK-listed Salamander Energy Plc to the SC, is expected
to know the regulator's decision by next month. (Source: The Star)
MRCB: Shortlisted for incinerator project. Malaysian Resources
Corp (MRCB) said it has been shortlisted for the 1,000-tonne-per-day
waste-to-energy incinerator project in Taman Beringin, Kepong, which
is estimated to cost up to MYR800m. It is said that MRCB will team up
with South Korea's Hyundai Rotem Co to bid for the concession, which
may be up to 30 years. (Source: The Edge Financial Daily).
External reserves as of 15 Sep 2014 amounted to MYR422.3b or
USD131.5b - equivalent to 8.9 months of retained imports and 1.2
times of the country's short-term external debt. This was down
from MYR424.2b or USD132.0b at 29 Aug 2014. The current reserves
level reflects the weaker Malaysian Ringgit as it depreciated by 2.2%
against the US Dollar during the period, indicating primarily
short-term or portfolio capital outflows. The external reserves trend
also suggests continued modest external trade surplus for Aug-Sep
2014. To note, trade surplus has narrowed from the recent high of
MYR10.4b in Feb 2014 to MYR3.6b in July 2014. (Source: BNM,
MaybankKE)
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Outside Malaysia
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E.U:
Euro-area manufacturing and services growth unexpectedly slowed to the
weakest pace this year, increasing pressure on the European Central
Bank to add stimulus to the economy. Purchasing Managers Indexes for
both industries fell and a composite gauge dropped to 52.3 in
September from 52.5 in August, London-based Markit Economics said.
(Source: Bloomberg)
Germany: Manufacturing expanded at the slowest pace in 15 months
in September as new orders fell, signaling uneven momentum in
Europe's largest economy. Markit Economics said its Purchasing
Managers Index fell to
50.3 from 51.4 in August, the weakest since June 2013. A gauge of
services rose to 55.4 from 54.9, offsetting the drop in factory
output and pushing the composite index up to 54 from 53.7. A reading
above 50 indicates expansion. (Source: Bloomberg)
China: Manufacturing rebound relieves growth concerns
suggesting export demand is helping the economy withstand a property
slump. The preliminary Purchasing Managers' Index from HSBC Holdings
Plc and Markit Economics was at 50.5, matching the highest estimates
in a Bloomberg News survey of analysts and up from August's final
reading of 50.2. (Source: Bloomberg)
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Key Indices
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Value
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YTD
(%)
|
Daily
(%)
|
KLCI
|
1,840.2
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(1.4)
|
(0.3)
|
JCI
|
5,188.1
|
21.4
|
(0.6)
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STI
|
3,298.1
|
4.1
|
0.0
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SET
|
1,590.1
|
22.4
|
0.0
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HSI
|
23,837.1
|
2.3
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(0.5)
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KOSPI
|
2,028.9
|
0.9
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(0.5)
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TWSE
|
9,084.9
|
5.5
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(0.5)
|
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DJIA
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17,055.9
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2.9
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(0.7)
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S&P
|
1,982.8
|
7.3
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(0.6)
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FTSE
|
6,676.1
|
(1.1)
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(1.4)
|
|
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MYR/USD
|
3.2
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(1.0)
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(0.0)
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CPO (1mth)
|
2,152.0
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(18.1)
|
1.4
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Crude Oil (1mth)
|
91.6
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(7.0)
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0.0
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Gold
|
1,223.4
|
1.8
|
0.7
|
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TOP STOCK PICKS
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Buy rated large caps
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Price
|
Target
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Tenaga
|
|
12.28
|
14.00
|
Axiata
|
|
6.96
|
7.60
|
Sime Darby
|
|
9.12
|
10.20
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Gamuda
|
|
4.81
|
5.30
|
UMW O&G
|
|
3.85
|
5.15
|
AFG
|
|
4.99
|
5.50
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Perdana Petroleum
|
|
1.77
|
2.55
|
Hock Seng Lee
|
|
1.84
|
2.25
|
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