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| | | SECTOR RESEARCH | | | | | | Loan growth picks up in April | NEUTRAL
by Desmond Ch'ng |
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| | | | | | As guided by the larger banks, corporate loan drawdowns are picking up pace. Latest developments point to a continued pick-up in household loan demand especially during the prevailing tax-free (GST-SST) period, but the sustainability of corporate lending amid the cancellation of infra projects remains to be seen. We maintain our industry loan growth forecast of 4.5% for 2018 (4.1% in 2017) and our Neutral call on the sector, with AMMB, Alliance Bank, HLFG and BIMB being our BUYs. | |
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| | MACRO RESEARCH | | | | | | FBM Small Cap Index: Double Bottom Pattern; ST Rebound
by Nik Ihsan Raja Abdullah |
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| | | | | | FBMKLCI ended lower in volatile session. At day's end, the benchmark index eased 1.21pts to 1,755.17. Decliners were led by PMETAL, TM and SIMEPLANT. Market breadth, however, was positive with gainers outpacing losers by 477 to 444. A total of 2.76b shares worth MYR2.82b changed hands. Market could snap a two-day decline after Wall Street ended firmer overnight. That said, volatility will continue to stay elevated amid trade war worries. | |
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| NEWS | | | Outside Malaysia:
E.U: ECB slowed net buying of Italy bonds in May on reinvestments. The European Central Bank said it bought fewer Italian bonds in May than the size of the country's economy would warrant, but for reasons unrelated to the country's shift toward euro-skepticism. "Several countries saw their share in net purchases go down in May 2018, not just Italy," an ECB spokesman said in a statement. "This is the result of agreed and communicated rules on the timing of re-investments during the net purchases phase." (Source: Bloomberg)
E.U: Investor confidence in Euro economy knocked by Italy turmoil. Investors are worried that political upheaval in Italy will derail euro-area economic growth. Concerns over the new populist government's euro-skeptic tendencies and budget-busting spending plans prompted a slide in sentiment among financial-market participants, according to a survey by Sentix. Expectations for the euro-area economy dropped to the lowest since August 2012, when the region was embroiled in a debt crisis that threatened to break up the bloc. "The new government in Italy is giving investors' fears for the euro zone," Sentix said. While U.S. tariffs on steel and aluminium are "also having a negative impact" it added that those concerns "seem to be even lower than those before the government in Rome reopened the euro crisis. (Source: Bloomberg)
India: Modi bets on poll gain from welfare plan for 500 million Indians. Prime Minister Narendra Modi is set to extend a welfare program to India's 500 million workers as he bids for re-election in 2019, but he has limited time and resources to implement the ambitious plan. Modi aims to initially provide three programs -- old age pension, life insurance and maternity benefits, while leaving out unemployment, child support and other benefits -- to most working citizens, government officials said, asking not to be identified as discussions are private. While it could translate into significant political gains to offset the challenges he faces in the lead up to the national poll, it is likely to add pressure on India's fiscal deficit, already one of the widest in Asia. (Source: Bloomberg)
Crude Oil: OPEC holds production steady while ministers discuss next move. The Organization of Petroleum Exporting Countries pumped 31.9 million barrels a day last month, unchanged from revised levels for April, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. April's output was the lowest in a year. OPEC and its allies are discussing whether to revive output after supply curbs they agreed to in late 2016 succeeded in clearing a global oil glut and prices rose to a three-year high. Saudi Arabia and Russia, the biggest two producers in the accord, have signalled that more oil will flow later this year to make up for potential declines in Iran and Venezuela. (Source: Bloomberg) | |
| | | | | Other News:
Construction: KL City Hall to scrap 10 projects worth MYR1b. Kuala Lumpur City Hall (DBKL) will terminate 10 projects worth MYR1b, said Mayor Tan Sri Mhd Amin Nordin Abd Aziz. "DBKL has decided to reduce the number of projects, which include roads and parking projects, and will also scrap the sports club projects," he told reporters after attending a meeting with the Council of Eminent Persons at Menara Ilham today. He said some of these projects were still in the tendering stage while some had not been tendered out. The decision was taken by DBKL's top management and his attendance at the CEP's meeting was to brief the council on the decision. (Source: The Sun Daily)
Berjaya Land: Exits long-delayed Vietnam financial centre project. Bland said it is selling off the entire 32.5% of total capital contribution in Berjaya Vietnam Financial Center Ltd (BVFC Ltd) to local firms Vinhomes Joint Stock Co and Can Gio Tourist City Corp for VND884.93b (MYR154.86m) cash. BLand's capital contribution in BVFC Ltd originally amounted to VND967.31b. The proposed disposal will result in an estimated loss of about MYR25.1m. (Source: The Edge Financial Daily)
Cymao Holdings: To sell industrial land for MYR12mi cash, more than half its market cap. The group will dispose of two parcels of industrial land for MYR12m cash, which is more than half its market capitalisation at the moment. Cymao Plywood S/B, a wholly-owned subsidiary of Cymao, has entered into a sale and purchase agreement with South Pacific Fish Processing S/B for the disposal. The disposal of land was a result of the closure of Cymao Plywood's mill, which will enable the group to unlock the value of land and availability of additional funds for working capital requirements of the group. (Source: The Edge Financial Daily) | |
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