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Wednesday, June 27, 2018
FW: AAM News: Korea National Pension Service’s CIO search fails, =?UTF-8?Q?_report_says ?=
FW: RHB | Economic Research | Tracking Global News
Economic Research | 27 June 2018 | |||
Global News | ||||
Economics View | ||||
BOJ Still A Distant From Stimulus Exit Door China’s Manufacturing Outlook Dims, Retail Sector Remains Solid Singapore Industrial Production Growth Exceeds Forecast Economists: Arup Raha | +65 6232 3896 Peck Boon Soon | +603 9280 2163 Vincent Loo Yeong Hong | +603 9280 2172 Ahmad Nazmi Idrus | +603 9280 2179 Aris Nazman Maslan | +603 9280 2184 | ||||
To access our recent reports please click on the links below: | ||||
Economics Team | ||||
Arup Raha | Group Chief Economist | +65 6232 3896 | ||
Peck Boon Soon | Chief ASEAN Economist | +603 9280 2163 | ||
Vincent Loo Yeong Hong | Malaysia, Singapore | +603 9280 2172 | ||
Ahmad Nazmi Idrus | Indonesia | +603 9280 2179 | ||
Aris Nazman Maslan | Thailand, Philippines , Vietnam | +603 9280 2184 | ||
Tuesday, June 26, 2018
FW: AmBank Research - Banking Sector: Consumer loan growth, CI ratio to improve in 2H18 OVERWEIGHT, 26 Jun 2018
SECTOR FOCUS OF THE DAY
Banking Sector: Consumer loan growth, CI ratio to improve in 2H18 OVERWEIGHT
We continue to be OVERWEIGHT on the banking sector. We now expect the sector's core earnings to grow by 7.6% in 2018 (previously: 9.2%) after lowering our expectation for banks’ non-interest income. This will be contributed by an increase in revenue and improvement in operating expenses (2017 core earnings growth: 10.6%).
For 2018, we retain our loan growth expectation of 5.0% for the Malaysian banking industry supported by a GDP growth of 5.5% (loan-to-GDP multiplier of close to 1.0x). Domestic demand and improvement in external trade remain the drivers of economic growth.
We are upgrading our call on Maybank to a BUY (FV: RM10.70/share) from HOLD arising from an attractive valuation with the stock now trading at 1.3x to our FY19 BV/share estimate. Our other BUY calls are RHB Bank (FV: RM6.10/share), Public Bank (FV: RM26.20/share), Alliance Bank (FV: RM5.00/share), BIMB Holdings (FV: RM5.40/share) and CIMB (FV: RM6.80/share).
Others:
Telekom Malaysia: Worsening credit outlook boosts consolidation push BUY
FBM KLCI ETF: Three FBM KLCI constituents replaced HOLD
RETAIL RESEARCH
Stocks On Radar: Scientex, Scicom MSC, Chemical Company of Malaysia, Boustead Plantations
FOREIGN EXCHANGE
USD/MYR: MYR remains undervalued
NEWS HIGHLIGHTS
MBSB: Done with clean-up
Telecommunication Sector: Shares of telcos fall on earning outlook worries
Kelington Group: YTD new orders hit RM181m
Grand-Flo: Expects a better year with pickup in IT business
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: CIMB Fixed Income Daily - 26 Jun 2018 - Regional bonds mixed amid stronger USD; UST yields fall further on ongoing trade concerns
US Treasuries strengthened amid continued safe haven demand. News reported Chinese president Xi remarking to a group of chiefs of multinational companies that China will step up fight against Trump’s anti-trade rhetoric. Meantime, US Treasury secretary said there’s planned restrictions on foreign investment in US technology industries and this will not be limited to Chinese interest. In US macroeconomic data release, new homes sales rose by 6.7% mom in May against +0.8% consensus.
Thai government bonds mostly saw firmer yields despite net selling pressure from foreign players. Thai BMA reported foreign investors sold net amount of Bt4.35b of THB-denominated bonds on Monday. Hence, we think select domestic players supported the market on the day.
Coming back from the Hari Raya holiday, IndoGB market saw weakness amid USD strength and the offerish situation owed mainly to offshore participants. Data show foreigners’ bond holdings saw decline of IDR1.84t week-on-week to 21 Jun. Meantime, yields rose 25bps on average.
Today MoF will be holding its usual sukuk auction with IDR4t amount target. Also, BI will have its policy meeting scheduled for Thursday, with Bloomberg consensus showing another hike rate That being said, expect weaker market this especially if USD continues to strengthen.
Benchmark Malaysian government bonds saw little movement, despite the weak MYR, but we noted stronger flows along off-the-runs as domestic players especially bought papers with attractive spreads above the benchmarks. MGS 05/35 fell 4bps on the day to 4.91% whilst the 10y MGS (MGS 06/28) shed 1bp to 4.20%.
We think risk aversion away from the EM could find some exhaustion if it hasn’t already. We think a continuous pricing of monetary policy and pre-emptive US rates communication will moderate this so-called EM strife. The Fed has moved to signal four hikes in 2018 but ECB has turned its back on its hawkish signal as we mentioned. Meantime, the BoJ has maintained its policy rate and QE program. As such, we expect EM resilience to accompany in the medium-term though USD could maintain some strength. We expect Malaysian bonds to be supported in the coming week. We further opine that macro conditions remain supportive for bonds, as GDP growth is anticipated above 5% and inflation still benign – which in turn indicates stable interest rate movement in Malaysia well into 2019.
Malaysia had 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%.
CIMB Treasury & Markets Research-Fixed Income
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FW: RHB FIC Daily Snapshot 260618
RHB FIC DAILY SNAPSHOT | | | | | |||
26/6/2018 9:04 | | | | | | ||
| | | 1-Day | 3-Mth | 6-Mth | ||
| 25-Jun-18 | 22-Jun-18 | Chg (%) | Avg | Avg | ||
Commodities | | | | | | ||
Brent Crude Aug 18 | 74.73 | 75.55 | -1.09 | 74.50 | 70.85 | ||
Brent Crude Sep 18 | 74.55 | 75.32 | -1.02 | 74.13 | 70.49 | ||
Brent Crude Oct 18 | 74.22 | 74.94 | -0.96 | 73.70 | 70.10 | ||
WTI Crude Oil | 68.08 | 68.58 | -0.73 | 67.05 | 64.18 | ||
CPO Future Aug 18 | 2,290.00 | 2,284.00 | 0.26 | 2,398.15 | 2,448.14 | ||
CPO Future Sep 18 | 2,291.00 | 2,285.00 | 0.26 | 2,399.12 | 2,448.23 | ||
CPO Future Oct 18 | 2,307.00 | 2,303.00 | 0.17 | 2,400.98 | 2,446.88 | ||
GOLD spot US$/Oz | 1,265.61 | 1,269.41 | -0.30 | 1,310.87 | 1,318.65 | ||
Bloomberg Industrial Metals Subindex | 130.89 | 133.22 | -1.75 | 135.59 | 135.69 | ||
Bloomberg Agriculture Subindex | 44.55 | 45.34 | -1.75 | 48.41 | 48.44 | ||
| | | | | | ||
Forex | | | | | | ||
USD/MYR | 4.0177 | 4.0022 | 0.39 | 3.9385 | 3.9383 | ||
GBP/USD | 1.3281 | 1.3261 | 0.15 | 1.3659 | 1.3762 | ||
EUR/USD | 1.1704 | 1.1651 | 0.45 | 1.1964 | 1.2108 | ||
USD/JPY | 109.77 | 109.97 | -0.18 | 108.88 | 108.86 | ||
AUD/USD | 0.7414 | 0.7440 | -0.35 | 0.7584 | 0.7723 | ||
USD/SGD | 1.3621 | 1.3586 | 0.26 | 1.3316 | 1.3263 | ||
USD/HKD | 7.8470 | 7.8463 | 0.01 | 7.8480 | 7.8368 | ||
USD/KRW | 1,116.96 | 1,107.53 | 0.85 | 1,077.09 | 1,074.82 | ||
USD/CNY | 6.5410 | 6.5052 | 0.55 | 6.3600 | 6.3687 | ||
USD/THB | 32.933 | 32.934 | 0.00 | 31.821 | 31.745 | ||
USD/IDR | 14,159 | 14,086 | 0.52 | 13,922 | 13,730 | ||
USD/PHP | 53.451 | 53.285 | 0.31 | 52.410 | 51.897 | ||
USD/INR | 68.1275 | 67.8313 | 0.44 | 66.8624 | 65.5872 | ||
| | | | | | ||
Forex (vs MYR) | | | | | | ||
USD/MYR | 4.0177 | 4.0022 | 0.39 | 3.9385 | 3.9383 | ||
GBP/MYR | 5.3197 | 5.3208 | -0.02 | 5.3864 | 5.4206 | ||
EUR/MYR | 4.6804 | 4.6660 | 0.31 | 4.7199 | 4.7707 | ||
AUD/MYR | 2.9825 | 2.9699 | 0.42 | 2.9893 | 3.0413 | ||
SGD/MYR | 2.9483 | 2.9490 | -0.02 | 2.9600 | 2.9700 | ||
Equity Indices | | | | | | ||
FBM KLCI | 1,678.10 | 1,694.15 | -0.95 | 1,818.84 | 1,828.29 | ||
DJIA | 24,252.80 | 24,580.89 | -1.33 | 24,542.19 | 24,852.20 | ||
S&P 500 | 2,717.07 | 2,754.88 | -1.37 | 2,697.81 | 2,716.88 | ||
NASDAQ | 7,532.01 | 7,692.82 | -2.09 | 7,328.15 | 7,287.79 | ||
| | | | | |||
| | | 1-Day | 3-Mth | 6-Mth | ||
Government Bonds | 25-Jun-18 | 22-Jun-18 | Chg (bps) | Avg | Avg | ||
MGS 11/21 (3y) | 3.61 | 3.61 | -0.60 | 3.62 | 3.50 | ||
MGS 04/23 (5y) | 3.85 | 3.83 | 1.40 | 3.75 | 3.66 | ||
MGS 03/25 (7y) | 4.04 | 4.05 | -0.40 | 3.97 | 3.94 | ||
MGS 11/27 (10y) | 4.21 | 4.21 | -0.20 | 4.12 | 4.04 | ||
MGS 11/33 (15y) | 4.63 | 4.64 | -0.80 | 4.57 | 4.50 | ||
MGS 04/37 (20y) | 4.89 | 4.89 | 0.10 | 4.75 | 4.68 | ||
MGS 03/46 (30y) | 4.93 | 4.94 | -0.90 | 4.90 | 4.87 | ||
UST 2YR | 2.53 | 2.54 | -0.83 | 2.46 | 2.29 | ||
UST 5YR | 2.75 | 2.77 | -1.53 | 2.75 | 2.63 | ||
UST 10YR | 2.88 | 2.89 | -1.46 | 2.91 | 2.82 | ||
UST 30YR | 3.02 | 3.04 | -1.50 | 3.09 | 3.05 | ||
UK 2YR | 0.74 | 0.77 | -2.80 | 0.79 | 0.73 | ||
UK 10YR | 1.29 | 1.32 | -2.50 | 1.40 | 1.42 | ||
GE 2YR | -0.67 | -0.67 | -0.80 | -0.60 | -0.59 | ||
GE 10YR | 0.33 | 0.34 | -1.00 | 0.50 | 0.55 | ||
JGB 2YR | -0.13 | -0.13 | 0.00 | -0.13 | -0.14 | ||
JGB 10YR | 0.04 | 0.04 | 0.00 | 0.05 | 0.05 | ||
AU 2YR | 2.03 | 2.03 | 0.20 | 2.04 | 2.03 | ||
AU 10YR | 2.63 | 2.65 | -2.00 | 2.74 | 2.76 | ||
SGS 2YR | 1.97 | 1.97 | 0.00 | 1.92 | 1.77 | ||
SGS 10YR | 2.55 | 2.57 | -2.19 | 2.53 | 2.38 | ||
HK 2YR | 2.07 | 2.07 | 0.00 | 1.70 | 1.55 | ||
HK 10YR | 2.34 | 2.34 | 0.00 | 2.19 | 2.12 | ||
SK 2YR | 2.05 | 2.05 | -0.30 | 2.09 | 2.11 | ||
SK 10YR | 2.60 | 2.61 | -1.30 | 2.69 | 2.69 | ||
CH 3YR | 3.39 | 3.38 | 0.80 | 3.38 | 3.51 | ||
CH 10YR | 3.59 | 3.59 | 0.60 | 3.67 | 3.78 | ||
TH 2YR | 1.72 | 1.73 | -1.10 | 1.58 | 1.46 | ||
TH 10YR | 2.62 | 2.64 | -2.90 | 2.52 | 2.44 | ||
ID 2YR | 7.01 | 7.04 | -3.30 | 6.31 | 5.88 | ||
ID 10YR | 7.62 | 7.54 | 7.60 | 7.04 | 6.72 | ||
PH 2YR | #N/A N/A | 2.82 | #VALUE! | 2.95 | 2.87 | ||
IN 2YR | 7.68 | 7.68 | -0.10 | 7.50 | 7.29 | ||
IN 10YR | 7.82 | 7.82 | 0.40 | 7.71 | 7.60 | ||
| | | | | | ||
Malaysia | | | | | | ||
Malaysian Cabinet to Be Sworn in on July 2: Palace Official | |||||||
Global | | | | | | ||
Treasuries Dip, Stocks Pare Losses After Navarro Trade Comments | | | |||||
PBOC Lowering Yuan Yields as More Issuers Face 10% Dollar Costs | | | |||||
Watch the Distribution of Fed Funds for Clues About Increases | | | |||||
Asia Extends Global Slide, Yen Gains on Trade Spat | | | | ||||
Goldman's Patel Says Trade War Risks Now More Than Just Talk | | | |||||
Nicolas Sopel
Strategist, Rates & FX Markets
RHB Research Institute Singapore Pte. Ltd.
10 Collyer Quay, #09-08, Ocean Financial Centre, Singapore 049315
Tel: +65 6533 1818 | DID: +65 6232 3874 | Fax: +65 6532 6211
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