FW: RHB | FIC Rates & FX Market Update - 27/6/18

 

 

 

27 June 2018

 

 

Rates & FX Market Update

 

 

Strong Singapore IP Anchored SGD against Regional FX

 

Highlights

 

¨    Global Markets: Markets were once again dominated by trade tensions and geopolitical news flows. On the latter, US President is pressing its allies to stop Iranian oil imports pushing Brent higher despite the Saudi increase output. While in theory rising inflationary pressure should push US Treasury yields higher, trade tensions kept yields in balance and Treasuries closed the day flat. On FX markets, the USD rose across the board; the EURUSD closed -0.46% lower since ECB Lane (Governor of the Central Bank of Ireland) said that inflation is rising but below its target.

¨    AxJ Markets: Over in Singapore, IP surged 11.1% y-o-y (consensus: 10.0%), driven by pharma and petrochemicals, and continues to showcase Singapore’s economic strength in these areas. SGD outperformed most regional currencies overnight on the solid print, although global trade tension persists which continue to generate headwinds for the export-dependent nation; stay neutral SGD.

¨    CNY fell c.0.6% against the USD overnight, extending its losing streak against the Greenback as doubts over the resiliency of the Chinese economy on any major trade war with the US surfaced. PBOC weakened its fixing by 0.6% to 6.5569, although markets are looking for an even weaker Yuan over the coming days, especially as PBoC remains on easing mode; stay neutral CNY over the medium term.

 

 

 

 

FW: CIMB Fixed Income Daily - 27 Jun 2018 - Bonds still pressured by trade concerns; UST rangebound overnight

 

 

CIMB Fixed Income Daily - 27 Jun 2018 - Bonds still pressured by trade concerns; UST rangebound overnight 

 

US Treasuries closed rangebound despite concerns over global trade whilst UST players took on $34b auction of 2y notes. In China earlier on Monday, president Xi sounded tough on trade saying “in the West you have the notion that if somebody hits you on the left cheek, you turn the other cheek. In our culture we punch back”. Atlanta Fed president Raphael Bostic said if trade concerns escalate he may vote against a fourth hike this year.

 

Tuesday’s Treasury auction garnered bid against cover of 2.73x but which is lower against average of 2.85x in the prior 12 2T auctions. High yield was 2.538% which is higher than 1.879% average past 12 auctions but lower than 2.590% for the 2T auction last month. Indirect bidders which includes foreign central banks ended up with 42.3% of the amount sold but lower than 47.1% average prior 12 auctions. Sale of 5T amounting to $36b is up on Wednesday.

 

Malaysian government bonds saw heavier trading at RM2.37b volume. However, interest was more towards off-the-runs for a second consecutive day especially from domestic players, for maturities up to 2023. Meanwhile, the central bank released information for upcoming reopening of the 15y GII (GII 06/33) amounting to RM3.5b which we think is slightly on the high side. WI was 4.85/70%. We noted GII 10/35 was traded last at 5.00% which is on the more attractive side.

 

Current low inflation should add more demand into longer-tenor MGS and GII, in our opinion. Last week, Malaysia reported headline inflation nudging up to 1.8% yoy in May (CIMB: +2.0% yoy, Bloomberg consensus: +1.8% yoy, Apr: +1.4% yoy), amid the low base in fuel inflation. In comparison, core inflation was unchanged at +1.5% yoy in May. Our CIMB economist says to account for downward consumer price adjustments resulting from the GST cut, the reintroduction of the sales and service tax (SST) in Sep, and curbed spillover effect from global oil prices to retail RON95 petrol and diesel prices, she is revising down CIMB’s 2018 headline inflation forecast from 2.6% to 1.3%, which is well below Bank Negara Malaysia’s policy target of 2-3%.

 

In Indonesia, with risk-off mode still in play the Rupiah and IndoGBs remained under pressure. Though we noted defensive bids there was also foreign outflows mostly on non-benchmark bonds with maturity 5-10y. Market volume leapt to IDR 29.5 trillion whilst trade concentration stayed at the belly and the tail of the curve.

 

CIMB Treasury & Markets Research-Fixed Income

Tel: +603 2261 8557

www.cimb.com

Find us on Bloomberg at CIMR <Go> 

 

 

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FW: [Maybank IB] Today's Research - Malaysia

 

 

FEATURED CALLS Malaysia | Sime Darby Property Value emerges Wei Sum Wong   COMPANY RESEARCH Yinson Holdings | 1QFY19 results preview Thong Jung Liaw MACRO RESEARCH Malaysia | KLFIN Index: Potential Short-Term Rebound Nik Ihsan Raja Abdullah NEWS Outside Malaysia Other News COMPANY RESEARCH Malaysia Rating Change Sime Darby Property (SDPR MK) by Wei Sum Wong Share Price: MYR1.20 Target Price: MYR1.53 Recommendation: Buy Value emerges Recent weakness in SDPR's share price has created a buying opportunity, to accumulate shares in this land-rich yet strong balance sheet company. The sale of Battersea Power Station (BPS) commercial spaces will be concluded in July 2018 and SDPR is now working with the Negeri Sembilan State Government for its MVV land. We lower earnings forecasts but maintain MYR1.53 RNAV-TP (on 0.55x P/RNAV). We upgrade SDPR to BUY. FYE Jun (MYR m) FY16A FY17A FY18E FY19E Revenue 2,590.7 2,564.4 3,183.5 2,869.6 EBITDA 1,033.1 556.2 1,543.0 1,033.0 Core net profit 749.1 607.9 983.1 705.1 Core EPS (sen) 11.0 8.9 14.5 10.4 Core EPS growth (%) 33.6 (18.8) 61.7 (28.3) Net DPS (sen) 0.0 0.0 5.8 3.7 Core P/E (x) na na 8.3 11.6 P/BV (x) na na 0.8 0.8 Net dividend yield (%) na na 4.8 3.1 ROAE (%) 18.2 10.7 12.2 7.0 ROAA (%) 6.2 4.5 7.1 5.0 EV/EBITDA (x) na na 5.8 8.4 Net debt/equity (%) 22.4 1.4 5.8 2.6 Wei Sum Wong    (603) 2297 8679    weisum@maybank-ib.com Malaysia Results Preview Yinson Holdings (YNS MK) by Thong Jung Liaw Share Price: MYR4.65 Target Price: MYR4.60 Recommendation: Buy 1QFY19 results preview We expect 1QFY1/19 results, due this week, to be in line, on softer YoY earnings. We remain upbeat on Yinson's business direction, its ability to create value, steady earnings growth, a visible tender pipeline and cashflow strength. Our estimates currently exclude the FPSO FEP win. Our unchanged TP of MYR4.60 is SOP-based. Maintain BUY. FYE Jan (MYR m) FY17A FY18A FY19E FY20E Revenue 764.2 910.2 1,113.4 1,114.1 EBITDA 283.8 645.0 771.4 771.7 Core net profit 219.5 341.6 294.0 279.2 Core EPS (sen) 20.6 31.4 26.9 25.5 Core EPS growth (%) 26.8 52.6 (14.3) (5.1) Net DPS (sen) 16.8 10.0 10.0 10.0 Core P/E (x) 14.1 11.3 17.3 18.2 P/BV (x) 1.3 1.5 1.8 1.7 Net dividend yield (%) 5.8 2.8 2.2 2.2 ROAE (%) 8.5 11.6 10.8 9.6 ROAA (%) 3.9 5.3 4.4 4.0 EV/EBITDA (x) 21.4 10.8 9.3 8.9 Net debt/equity (%) 114.7 90.1 72.9 57.3 Thong Jung Liaw    (603) 2297 8688    tjliaw@maybank-ib.com MACRO RESEARCH MY: Traders' Almanac KLFIN Index: Potential Short-Term Rebound by Nik Ihsan Raja Abdullah Technical Research FBMKLCI fell for the second day in a subdued session. At day's end, the benchmark fell 2.24pts to 1,675.85. Declines were led by RHBBANK, DIGI, and TM. Market breadth remained negative with losers outpacing gainers by 547 to 264. A total of 1.87b shares worth MYR1.93b changed hands. The recovery in oil price along with positive overnight US markets could lift sentiment today. We expect bargain hunting activities to pick up. Nik Ihsan Raja Abdullah    (603) 2297 8694    nikmohdihsan.ra@maybank-ib.com Tee Sze Chiah     (603) 2082 6858     szechiah.t@maybank-ib.com NEWS Outside Malaysia: U.S: Consumer confidence cools on drop in optimism for economy. U.S. consumer sentiment eased in June as Americans became less optimistic for the economy and income growth, according to figures from the New York-based Conference Board. Confidence index fell to 126.4 from 128.8 in May (prev. 128). Present conditions measure little changed at 161.1 after 161.2. Consumer expectations gauge fell to 103.2, lowest in 2018, from 107.2. (Source: Bloomberg) U.S: Trump signals he favors Mnuchin's path to shield tech from China. President Donald Trump signaled he may take a less confrontational path toward curbing Chinese investments in sensitive American technologies, potentially relying on a U.S. committee that scrutinizes foreign acquisitions for national security risks. Trump made remarks at the White House that appeared to align with Treasury Secretary Steven Mnuchin's approach, in an internal administration debate over how to protect U.S. intellectual property from China. Trump directed the Treasury Department in March to weigh options for restricting Chinese investment in American companies. In May, he said the U.S. "will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology." (Source: Bloomberg) U.S: Home prices in 20 cities continued to advance at a solid, albeit a touch slower, pace in April, reflecting lingering inventory shortages, according to S&P CoreLogic Case-Shiller data. 20-city property values index increased 6.6% YoY, after rising 6.7% YoY. National home-price gauge advanced 6.4% YoY after 6.5%. Seasonally adjusted 20-city index rose 0.2% MoM (est 0.4%), the smallest gain since July. The report indicates a respite in the steady acceleration in property values since the end of 2014. Seattle, San Francisco and Las Vegas led the gain among cities posting a year-over-year advance in April. Price gains in this recovery have been supported by healthy demand amid a strong labor market and improving consumer finances. (Source: Bloomberg) S. Korea: Consumer confidence fell to the lowest in more than a year as a slowdown in hiring and tensions between the U.S. and China clouded the economic outlook. The Bank of Korea's monthly consumer sentiment index dropped to 105.5 in June from 107.9 the previous month, according to a statement by the central bank. The decline was the biggest since November 2016, when the country was mired in a political scandal that led to the ouster of the then president. The drop comes as China and the U.S. -- South Korea's two biggest trade partners -- escalate threats of tariffs and other protectionist measures. A slowdown in global trade would be a blow for the South Korean economy. (Source: Bloomberg) Other News: Oil & Gas: Malaysia resumes exports of Bentara crude after output rises. Malaysia has resumed exports of Bentara crude oil after a hiatus as field upgrading increased oil output from the field, two industry sources said on Tuesday. Malaysia's state-owned Petroliam Nasional Bhd, or Petronas, is about to finalise a deal to sell 150,000-barrel cargo of Bentara crude for Aug. 15 to 19 loading on Tuesday after selling 110,000 barrels of the grade last month, one of the sources said. "The field's production is currently at 150,000 barrels per day (bpd), up from 50,000 bpd in 2015, the source said, declining to be named. (Source: The Star) T7 Global: Keen to proceed with ECRL project despite lower cost. The group is keen on continuing to participate in the controversial East Coast Railway Line project even if it is to be implemented at a substantially lower cost, as long as the group "can make a decent profit" from it, its executive deputy chairman Tan Sri Tan Kean Soon said today. Last night, Prime Minister Tun Dr Mahathir Mohamad said the Pakatan Harapan-led government will proceed with the ECRL if it can obtain more favourable terms through renegotiation and if the project's cost is brought down from the current MYR55b. (Source: The Edge Markets) MSM Malaysia: Eyes Africa and China as new export markets. The country's leading refined sugar producer, is now looking to penetrate the African and Chinese markets to make full use of the new production capacity that will come on stream once its new sugar refinery in Tanjung Langsat, Johor, commences operations next month. MSM, which currently commands about two-thirds of the domestic refined sugar market, is now studying options on how to enter the two markets so that it does not "financially burden MSM" unnecessarily, according to its group's chairman Datuk Wira Azhar Abdul Hamid. (Source: The Edge Markets)   Our team profiles: Regional, Malaysia, Singapore, Indonesia, Thailand, Vietnam, Philippines, Greater China & India Disclaimer This email and its attachment(s) are confidential and are intended solely for the use of the individual to whom it is addressed. Any views or opinions expressed are solely those of the author and do not necessarily represent those of Maybank Kim Eng or any of its affiliates. Intended recipients of this email are prohibited from disseminating, forwarding, printing and/or copying its contents. If you are not the intended recipient of this email, you are strictly prohibited to take any action based upon them, which also includes dissemination, forwarding, printing and copying of its contents. Maybank Kim Eng Research sent this e-mail to you because your Notification Preferences indicate that you want to receive information about our daily research reports. If you wish to read Disclaimer in details, please click HERE. 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FW: AmBank Research - CB Industrial: Sluggish order book HOLD, 27 Jun 2018

 

 

STOCK FOCUS OF THE DAY

CB Industrial: Sluggish order book            HOLD

 

Maintain HOLD on CB Industrial Product Holding (CBIP) with a lower fair value of RM1.36/share (vs. RM1.45/share previously). Our fair value is based on an FY19F fully diluted PE of 10x. In the past five years, CBIP’s PE ranged from a low of 9.0x to a high of 14.0x. Average PE was 11.5x.

 

CBIP’s 87.4mil warrants will expire in November 2019. As the exercise price of the warrants is RM2.40/share compared with CBIP’s share price of RM1.32, the warrants are out-of-the-money. We have increased CBIP’s FY18F net profit by 15.5% to account for a recovery in the operating profit margin of the mill manufacturing division. The unit’s EBITDA margin is expected to normalise to 22% in FY18F after being hit by cost overruns and impairments in FY17. 

 

We do not expect the plantation division to swing into profitability any time soon as the oil palm trees are still young and CPO prices are in the doldrums. CBIP’s plantation unit in Kalimantan has been bleeding since FY12. Mature areas stood at 3,000ha to 4,000ha as at end-FY17.

 

 

RETAIL RESEARCH

Stocks On Radar: Paramount Corporation, PIE Industrial, Ekovest, DRB-Hicom 

 

 

ECONOMIC HIGHLIGHT

Malaysia: Expect BNM to maintain policy rate

 

 

NEWS HIGHLIGHTS

Credit default swap: Malaysian debt risk on uptrend

Hai-O: net profit down on lower contribution from MLM business

T7 Global: Keen to proceed with ECRL project despite lower cost

MSM: Prepares for sugar liberalisation

 

 

 

DISCLAIMER:

The information and opinions in this report are prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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FW: 20180627 AmBank FX Daily Outlook

 

 

Highlights of today’s AmBank FX Daily Outlook as follows:-

Dollar surged as trade war dominate headlines MYR to fluctuate in the range of 4.0126 – 4.0287 against US dollar Key Watch: (i) US Fed Quarles & Rosengren Speech; (ii) EU ECB Non-Monetary Policy Meeting; (iii) UK BoE Carney Speech; (iv) US MBA Mortgage Application, May Durable Goods Orders, Wholesale Inventories & Pending Home Sales

 

Best regards,

FX Research & Strategy

AmBank Research, AmBank (M) Berhad

+603 2036 2255 (DL) +03 2031 7218 (Fax)

Level 15, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur

 

 

 

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This message may contain confidential and privileged information for its intended recipient(s) only. If you are not an intended recipient, you are hereby notified that any review, dissemination, and distribution, printing or copying of this message or any part thereof is strictly prohibited. Please delete the entire message and inform the sender of the error. Any opinions, conclusions and other information in this message that are unrelated to official business of AmBank Group are those of the individual sender and shall be understood as neither explicitly given nor endorsed by AmBank Group.

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