On The Platter
TECHNOLOGY (OVERWEIGHT) Sector Update: Turning Positive With
the next results season just around the corner, we assess some coincident and lagging
indicators for the global HDD and semiconductor industries that could help us form expectations on the
technology sector‟s upcoming numbers. Overall, we are positive on the local HDD
component, and semiconductor packaging and testing companies under our
coverage. For the former, we see rising demand and higher ASPs driving growth,
while we expect the latter to see demand recovery in the second half of the
year. That said, we are upgrading our call on the sector to OVERWEIGHT.
KURASIA (FV RM0.77–
TRADING BUY) Corporate News Flash: BNM Approves KIMB Sale
Market Review
Takes a breather.
The FBM KLCI erased 7.36 pts to 1,599.27, weighed down by a spike in Spanish
bond yields at a recent auction and fading prospects of further monetary stimulus
in the US. Among the key corporate headlines are: AMMB gets nod to acquire a 100%
stake in Kurnia Insurans (M) Bhd, Pharmanagia expects to spend RM95m in capex this
year, the Axiata Group has given its commitment for a stronger foothold in
India and Xian Leng Bhd has been suspended ahead of the special audit results
on its capex in recent years. Overnight, the Dow closed 124.8 points lower
dampened by weaker demand at a Spanish debt auction and the
Federal Reserve„s reluctance to
add more monetary stimulus, which raised concerns on the sustainability of the
current economic recovery.
MEDIA HIGHLIGHTS
Wall Street down on
stimulus doubt, Spain debt sale
US stocks fell for a second day on Wednesday as investors
contemplated a world without monetary stimulus and a poorly received bond
auction in Spain suggested the effects of Europe‟s funding operations were
waning. Spanish borrowing costs jumped at bond auctions, raising concerns that
the rally in the troubled sovereign debt of euro-zone peripheral nations may be
coming to an end. The yield on Spain‟s 10-year bond leaped to 5.7%, its highest
since January. Stocks continued to feel the fallout from the minutes from the
Federal Reserve‟s latest meeting, published on Tuesday. The DJIA fell 124.80
pts, or 0.95%, to 13,074.15. The S&P 500 Index lost 14.42 pts, or 1.02%, to
1,398.96. The Nasdaq Composite Index dropped 45.48 pts, or 1.46%, to 3,068.09.
(Financial Daily)
Axiata to stay put in
India
The Axiata Group will stay put in the Indian mobile market
but is hoping to operate in a more stable regulatory environment. The Indian
Government‟s recent revocation of 122 of the 2G licences issued in 2008 had
created uncertainty and angered some foreign investors, some of whom have
threatened to withdraw from the market place and to even sue the government. However,
Axiata president and group chief executive officer Datuk Seri Jamaludin Ibrahim
said, “we want more of a stronger foothold there.” (StarBiz)
MSC up despite
worries over Indonesia’s tax hike plan
The share price of Malaysia Smelting Corp (MSC) was not
affected by the news that the Indonesian government may increase the
export tax on coal and base metals this year. The firmness in the share
price could be supported by a report by
Bloomberg yesterday that said Indonesia was not formally discussing a
suggestion from the industry ministry to tax exports of coal and minerals,
according to government and industry officials. (StarBiz)
AMMB gets nod to buy
Kurnia
The proposed sale of Kurnia Insurans (M) to AmG Insurance
takes another step forward. AMMB Holdings announced yesterday that it had
received the Finance Ministry‟s approval, through Bank Negara, for the acquisition
of a 100% equity interest in Kurnia Insurans by AmG. AMMB has a 51% stake in
AmG, while Kurnia Insurans is wholly owned by Kurnia Asia. (StarBiz) Please see
accompanying report
Maybank pushing for
top 5 ranking in Cambodia
To further strengthen its regional footprint, Malayan
Banking (Maybank) recently incorporated
its branch in Cambodia and aims to be among the top five banks in Cambodia by
2015. It is currently ranked seventh in terms or assets among 33 banks, and has
11 branches in Cambodia. Since establishing its presence in Cambodia in 1993,
Maybank announced that it will be investing in a new 10-storey corporate office
in Phnom Penh which is expected to be ready in two years. “Maybank Cambodia had
been growing at a healthy pace with assets and deposits doubling in the last
four years since its branch expansion got underway,” said president and chief executive officer
Datuk Seri Abdul Wahid Omar. (Malaysian Reserve)
Pharmaniaga to set up
plant in Indonesia
Pharmaniaga has set side RM30m to build a manufacturing
plant in Indonesia which the company hopes will act as a “gateway for exports”
into the republic of almost 240m people. The funding is to come from internally
generated funds. According to the company, it is now in discussions with a few
parties and has yet to decide on the purchase target. (Malaysian Reserve)
ECONOMIC
HIGHLIGHTS
Philippines: March
inflation unexpectedly eases to 30-month low
Philippine inflation unexpectedly slowed to a 30-month low
in March as gains in transport costs eased, supporting the central bank‟s
decision to cut interest rates twice in the first quarter. Consumer prices rose
2.6% from a year earlier, after a 2.7% advance in February, the National
Statistics Office said yesterday.
Inflation may accelerate in the coming months after the government
approved an increase in minimum fares for jeepneys, a common form of public
transport, and as wage boards study petitions to raise the minimum pay. (Bloomberg)
US: Service
industries kept expanding in March
Service industries in the U.S. grew in March, capping the
strongest quarter in a year and indicating the world‟s largest economy will
keep generating jobs. The Institute for Supply Management‟s non-manufacturing
index fell to 56 from a one-year high of 57.3 in February, the Tempe,
Arizona-based group‟s data showed yesterday. Last month‟s reading still topped
the average for the previous economic expansion. Another report showed companies added an
estimated 209,000 workers to payrolls in March. Sales at businesses like
restaurants and retailers are climbing as an improving labor market shores up
household incomes and confidence in the face of more expensive gasoline.
(Bloomberg)Indian services grew at the slowest pace in five months in March, bolstering
the case for a cut in interest rates to support economic expansion. The Purchasing Managers‟ Index fell to 52.3
from 56.5 in February, HSBC Holdings Plc and Markit Economics said yesterday. A
reading above 50 indicates expansion. The report follows a decline in the
manufacturing PMI for March that signaled slower Indian factory-output growth
as the highest borrowing costs since 2008 sap domestic demand and the debt
crisis in Europe crimps exports. The Reserve Bank of India is juggling the need
to shield growth with inflation risks from a weaker rupee, rising energy costs and
government spending. (Bloomberg)
China: Speeds opening
as QFII quota increased to USD80bn
China accelerated the opening of its capital markets by more
than doubling the amount foreigners can invest in stocks, bonds and bank
deposits as the government shifts its growth model to domestic consumption from
exports. The China Securities Regulatory Commission increased the quotas for
qualified foreign institutional investors to USD80bn from USD30bn, according to
a statement on its website yesterday. Offshore investors will also be allowed
to pump an extra 50bn yuan (USD7.95bn) of local currency into the country, up
from 20bn yuan. China has pledged this
year to free up control of the yuan and liberalize interest rates as the
government deepens reforms to revive growth and offset slowing exports and a
cooling housing market. (Bloomberg)
Australia: Export
slump intensifies rate-cut pressure
Australia unexpectedly posted back-to-back trade deficits as
coal and metal exports slumped, sending the currency lower and intensifying
pressure on the central bank to resume cutting interest rates. Imports outpaced
exports by AUD480m in February, from a
revised AUD971m deficit a month earlier, the first consecutive shortfalls
in two years, a Bureau of Statistics report showed yesterday. The data boost
the case for Reserve Bank of Australia Governor Glenn Stevens to lower rates at
the 1 May policy meeting because
overseas shipments account for about a quarter of gross domestic product.
(Bloomberg)
UK: House prices
surge most in almost three years
U.K. house prices rose the most in almost three years in
March, boosted by demand from first-time buyers before the expiry of a tax
holiday on some home purchases, Halifax said. Prices jumped 2.2% from February
to an average GBP163,803 (USD260,300), the mortgage unit of Lloyds Banking
Group Plc said in a statement in London yesterday. That‟s the biggest monthly
increase since May 2009. From a year earlier, values were up 0.8%. (Bloomberg)
EU: ECB keeps rate at
1% as economy shrinks, German price risks
The European Central Bank left interest rates unchanged as
policy makers balance the threat of inflation in Germany against the need to
fight the sovereign debt crisis. ECB officials meeting in Frankfurt yesterday
kept the benchmark rate at a record low
of 1%. While nations from Greece to Spain are battling recessions and record
unemployment, workers in Germany are winning some of the biggest pay increases
in 20 years, widening the gaps between Europe‟s largest economy and its
euro-area peers. (Bloomberg)
US: Service
industries kept expanding in March
Service industries in the U.S. grew in March, capping the
strongest quarter in a year and indicating the world‟s largest economy will
keep generating jobs. The Institute for Supply Management‟s non-manufacturing
index fell to 56 from a one-year high of 57.3 in February, the Tempe,
Arizona-based group‟s data showed yesterday. Last month‟s reading still topped
the average for the previous economic expansion. Another report showed companies added an
estimated 209,000 workers to payrolls in March. Sales at businesses like
restaurants and retailers are climbing as an improving labor market shores up
household incomes and confidence in the face of more expensive gasoline.
(Bloomberg)
Source: OSK188
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