Pesona Metro: Bags MYR402m contract to build Eaton Residences on Jln Kia Peng. Pesona Metro Holdings’s wholly-owned unit has bagged a MYR402m contract from City View Ventures S/B to build a 52-storey condominium block on Lot 371, Jalan Kia Peng, here

FEATURE CALLS Malaysia | Budget 2017 Sustaining growth Chew Hann Wong Malaysia | Budget 2017 As expected… Suhaimi Ilias

MACRO RESEARCH Malaysia | Suggests no more GDP slowdown in 2H 2016 20162016 Suhaimi Ilias Malaysia | Continued sub-2% inflation Suhaimi Ilias Malaysia | Fixed Income View Winson Phoon

NEWS Outside Malaysia Other News

MACRO RESEARCH MY: Budget 2017 Strategy Research by Chew Hann Wong Sustaining growth Budget 2017 is responsible, balancing growth with fiscal prudence. Positives incl. lower tax rates for companies with growth, and a new MYR3b fund to invest in small-mid caps. Construction will see sustained order book visibility but property stocks may see near-term weakness as expectations on policy easing did not materialise. The drop in fixed broadband price points could be negative for TM. We retain our 1,710 end-2016 KLCI target, and introduce 1,820 for end-2017. Chew Hann Wong    (603) 2297 8686    wchewh@maybank-ib.com MY: Budget 2017 Economics Research by Suhaimi Ilias As expected… Themed “Accelerating Growth, Ensuring Fiscal Prudence, Enhancing Wellbeing of People”, Budget 2017 maintains commitment to fiscal discipline and consolidation; supports domestic demand via corporate income tax rate cut, incentives for tourism, SMEs, exports and digital economy, and infrastructure investment; and focuses on the wellbeing of the low- and middle-income groups by addressing the issues of inclusivity, equality, cost of living and affordable housing. Suhaimi Ilias    (603) 2297 8682    suhaimi_ilias@maybank-ib.com Zamros Dzulkafli    (603) 2082 6818    zamros.d@maybank-ib.com MY: Index of Leading Economic Indicators, August 2016 Economics Research by Suhaimi Ilias Suggests no more GDP slowdown in 2H 2016 20162016 Index of leading economic indicators rebounded +0.2% YoY in Aug 2016 (July 2016: -2.5% YoY) - first YoY growth since Oct 2015. Together with earlier released data like industrial production index and imports of capital and consumption goods, the numbers for July-Aug 2016 suggest GDP growth slowdown since 2Q 2015 have stabilized at least in 2H 2016. Suhaimi Ilias    (603) 2297 8682    suhaimi_ilias@maybank-ib.com Zamros Dzulkafli    (603) 2082 6818    zamros.d@maybank-ib.com MY: Malaysia CPI, Sep 2016 Economics Research by Suhaimi Ilias Continued sub-2% inflation Inflation rate in Sep 2016 remained at +1.5% YoY (Aug 2016: +1.5% YoY). Core inflation eased slightly to +2.1% YoY (Aug 2016: +2.2% YoY). YTD 2016 inflation and core inflation are +2.2% YoY and +2.6% YoY respectively. No change in our 2016 and 2017 inflation rate forecasts of 2.0%-2.5% for both years. Suhaimi Ilias    (603) 2297 8682    suhaimi_ilias@maybank-ib.com Zamros Dzulkafli    (603) 2082 6818    zamros.d@maybank-ib.com MY: Market Flash: Budget 2017 Fixed Income Research by Winson Phoon Fixed Income View Budget 2017 displays a similar policy tone on fiscal discipline with a target to trim deficit/GDP ratio to 3.0% in 2017 while reiterating the 3.1% target in 2016. Our forecast on government bond supply in 2016 is lowered marginally to MYR86.5b from MYR87b; no change to our 2017 forecast at MYR104b. Overall, the gov't commitment to fiscal consolidation should provide some resilience to the sovereign rating of Malaysia, but with limited visibility to rating upside in the near term, in our view. Winson Phoon    (603) 2074 7176    winsonphoon@maybank-ib.com Se Tho Mun Yi    (603) 2074 7606    munyi.st@maybank-ib.com

NEWS Outside Malaysia: U.K: Budget deficit leaves Hammond little room for maneuver. Britain is on course to borrow billions of pounds more than planned this year, leaving Chancellor of the Exchequer Philip Hammond little room for generosity as he prepares new budget plans to help the economy cope with Brexit. The budget shortfall in the first six months of the fiscal year declined just 5% to GBP 45.5b (USD 55.7b), a fraction of the pace envisaged before Britain voted to leave the European Union, figures from the Office for National Statistics showed. In September alone, the deficit widened to GBP 10.6b, the highest for the month in two years. (Source: Bloomberg) Japan: Exports drop for 12th month in dismal year for trade. Japan’s exports fell for a 12th consecutive month in September, rounding out a year’s worth of poor returns for an economy struggling with a resurgent yen and weak global demand. Overseas shipments dropped 6.9% YoY in September, the Ministry of Finance said. Imports fell 16.3% YoY during the same period, resulting in a trade surplus of JPY 498.3b (USD 4.8b). (Source: Bloomberg) Japan: Loan demand from households drops in October: BOJ survey. Demand from household’s drops to 10, compared with 14 in the previous survey, according to the Bank of Japan’s survey of senior loan officers at Japanese banks. Survey measures how demand for loans has changed from 3 months ago as demand from companies rose to 6 from 4 while demand from local government declined to -4 from 3. (Source: Bloomberg) Other News: Pesona Metro: Bags MYR402m contract to build Eaton Residences on Jln Kia Peng. Pesona Metro Holdings’s wholly-owned unit has bagged a MYR402m contract from City View Ventures S/B to build a 52-storey condominium block on Lot 371, Jalan Kia Peng, here. Pesona Metro said the job will take 43 months, starting from Dec 1, 2016, and will contribute positively to its earnings while enhancing its net assets in the course of work. Pesona Metro will use internal funds to finance the project, hence it expects there to be no material impact on its gearing. (Source: The Edge Financial Daily) Sinotop: Proposes capital reduction, repayment and diversification. The proposed capital reduction and repayment will give rise to a credit of about MYR276.43m, which would be used to set off against the accumulated losses and for capital repayment to the shareholders. The cancellation of 14 sen of the par value of each existing Sinotop share, will see 12.49 sen per share set off against the accumulated losses of the company and 1.51 sen per share repaid to Sinotop shareholders. Sinotop is also proposing a share consolidation of the company’s issued and outstanding ordinary shares at a ratio of five ordinary shares of 6 sen each (after the proposed capital reduction and repayment) to one consolidated share of 30 sen each. The China-based fabric manufacturer proposes to diversify its core business to involve project management and infrastructure construction-related businesses via its 100% subsidiary company Gorgeous Goldhill S/B. (Source: The Sun Daily) CIMB: Expects to start Philippines ops by second half of next year. The group expects to kick off operations in the Philippines, the market that will complete its Asean footprint, by the second half of next year. Chief executive officer Tengku Datuk Seri Zafrul Aziz says the banking group has submitted its proposal to start a branch there and is awaiting regulatory approval. CIMB is partnering the Philippines’ telecommunications company, Philippine Long Distance Telephone Company (PLDT), to offer digital financial offerings and solutions. The Philippines was the missing link for it to complete its Asean footprint. It aims to complete this dream by 2018 in line with its T18 initiatives. (Source: The Star)