Monday, April 1st, 2019


WTI hits 2019 high as oil extends Q1 gains on tight supply

LONDON, April 1 — US crude oil hit a 2019 high today and Brent gained a dollar after tight supply and positive signs for the global economy drove both benchmarks’ largest first-quarter gains in nearly a decade. US West Texas Intermediate (WTI)…

Eurozone inflation slows amid economic cooldown fears

BRUSSELS, April 1 — Inflation in the eurozone slowed in March, data showed today, amid worries that the European economy is cooling as the effects of Brexit finally take a toll. The slowdown of inflation comes as signs are multiplying of slower…

Saudi Aramco world’s most profitable company in 2018

DUBAI, April 1 — Oil giant Saudi Aramco revealed today it made the world’s biggest corporate profit last year, opening its secretive accounts for the first time as it prepares to raise funds from investors. International ratings agencies Fitch…

High-dividend play on dovish expectations

PETALING JAYA: The dovish tilt by major central banks as well as Bank Negara Malaysia (BNM) may continue, potentially stirring interest in high dividend yielders, according to HLIB Research.

“For equities, we expect high dividend yielding stocks to garner interest on back of dovish expectations. In this regard, we like selective real estate investment trusts (REITs) like IGB REIT and MRCB-Quill REIT, Bermaz Auto Bhd (BAuto), Taliworks Corp Bhd and Lii Hen Industries Bhd. For liquid large cap yield, we highlight Malayan Banking Bhd (Maybank) (6.4-6.6%),” it said in a note today.

Year-to-date, the 10-year Malaysian Government Securities yield has fallen 32bps to 3.75%.

HLIB Research said external uncertainties will persist into Q2 and as such, opined that BNM will continue with its dovish bias for the upcoming Monetary Policy Committee meeting in May 6-7. It does not anticipate an overnight policy rate cut in 2019.

“Consequently, we reckon there could be a possible sequential weakening of the ringgit in Q2 and export plays could return; we like Top Glove Corp Bhd and Lii Hen (also a yield play).”

Following earnings changes, in particular the downgrade of the plantation sector to “underweight” from “neutral”, HLIB Research’s KLCI target is cut to 1,710 points from 1,750 points. It also projected KLCI earnings per share growth of 2.1% for 2019 and 4.5% for 2020.

This comes on back of lacklustre earnings outlook which is below the post global financial crisis compound annual growth rate of 6.2%.

It added that the lower gross domestic product projections by BNM reflects the challenges Malaysia faces as it walks a thin rope, balancing between growth and fiscal prudence against an uncertain external backdrop.

The research house’s top picks are Maybank, Top Glove, Sunway Bhd, IGB REIT, TIME dotCom Bhd, DRB-Hicom Bhd, BAuto, Taliworks, Frontken Corp Bhd and Lii Hen.

Manufacturing PMI continues to decline

PETALING JAYA: The latest Purchasing Managers’ Index (PMI) data indicated that Malaysian manufacturers continued to face a challenging business environment at the end of the first quarter, with key survey gauges such as output and new orders falling.

The headline Nikkei Malaysia Manufacturing PMI – a composite single-figure indicator of manufacturing performance – registered 47.2 in March, down slightly from February’s reading of 47.6, and below the long-run survey average.

IHS Markit, which compiles the survey, however, said firms also grew more optimistic about the outlook, citing input cost and output price levels were broadly stable in March, while manufacturers held employment steady.

An analysis of comparable historical official data on Malaysian manufacturing output suggests that, at current levels, the survey data are indicative of annual output growth close to 4%.

A deterioration in the production trend commonly reflected tougher demand conditions, according to the anecdotal evidence from the survey provided by PMI panel member companies, particularly in overseas markets.

Meanwhile, Malaysian goods producers focused additional resources to clearing outstanding business in March. Efficiency gains reportedly helped ease pressures on capacity. Some panel members attributed backlog depletion to higher staffing levels.

However, manufacturing employment was broadly stable overall in March, as hiring in some instances was offset by other firms reducing workforce numbers due to softer demand.

Malaysian manufacturers were cautious towards inventory levels in March, with both pre- and post-production stocks falling. Holdings of finished items were depleted as firms stepped up efforts to ship orders in a timely fashion, while input stocks were cut for efficiency purposes.

Subsequently, the manufacturing industry saw lower purchasing activity. Elsewhere, survey data signalled stable price levels, with input prices and output charges both broadly unchanged since February.

Against the challenges signalled by latest data, Malaysian manufacturers reported their strongest degree of optimism towards future output in almost one year, supported by forecasts of improved sales, new projects and products and successful new contract tenders.

Commenting on the survey data, IHS Markit chief business economist Chris Williamson said Malaysia’s manufacturing companies reported increasing headwinds on current business activity in March, though also reported a brightening outlook which adds to hopes that the recent slowdown will start to ease in coming months.

“While several key survey gauges fell in March, it’s important to bear in mind that, when compared against official measures, the survey is still broadly indicative of the economy growing at an annual rate of 4–4.5%, with manufacturing output increasing at an annual pace of just under 4%.

“As with many other fast-growing economies, in Malaysia the PMI gauges have to drop much further below 50 to indicate either a contracting manufacturing sector or a decline in GDP.”

He said encouragingly, the survey found companies have become more optimistic about the year ahead, with expectations of future output growth rising to the highest for nearly a year. Indices of purchasing and inventories consequently came off recent lows as companies started to plan for demand in coming months.

“However, major headwinds persisted, including a fourth successive monthly deterioration in export business, plus growing concerns over the impact of trade wars and slower global economic growth,” he added.

Finance stocks drag Bursa Malaysia lower at close

KUALA LUMPUR: It was no laughing matter that financial stocks lost 231.76 points or 1.37% in trading on April Fool’s Day today, dragging Bursa Malaysia to close lower and bucking the regional trend, a dealer said.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) ended at 1,628.66, 14.97 points weaker compared with Friday’s close of 1,643.63.

The index opened 2.8 points higher at 1,646.43 and moved between 1,628.44 and 1,647.59 throughout the day.

Market breadth was, however, positive with gainers outnumbering decliners 445 to 411, while 378 counters remained unchanged, 623 were untraded and 19 others were suspended.

Volume increased to 2.63 billion units worth RM1.97 billion from 2.47 billion units worth RM2.24 billion last Friday.

A dealer told Bernama that finance stocks were badly hit today due to, among others, profit taking after the local bourse made some gains last week, tracking the Wall Street.

“On top of that, Public Bank, which has the biggest weightage among FBM KLCI components, saw its share price weakened further after a rating agency downgraded it. At the close, shares of Public Bank declined by 68 sen to RM22.48, followed by Hong Leong which lost 32 sen to RM19.98.

“Basically, our finance sector is currently under pressure, as its growth is not as strong as in the previous years. I think this sector is now in its maturing stage,” he told Bernama.

Asked if today’s stock market performance was the result of a report today quoting former finance minister Tun Daim Zainuddin on the need for a consolidation of local banks, he begged to differ.

The dealer echoed that consolidation was the way to go for local banks but added: “I think the process is ongoing. The banks are actively looking.”

In an interview with a local newspaper, Daim was reported as suggesting in 1998 having only four big banks as he believed that a certain size was needed in order to weather financial storms that happened about every decade.

Of the heavyweights, Maybank slipped seven sen to RM9.20, PChem and Tenaga eased four sen each to RM9.12 and RM12.62, respectively, while Maxis rose one sen to RM5.37.

Among actives, Konsortium Transnasional added nine sen to 17.5 sen, Sapura improved one sen to 34.5 sen, and Gets Global inched up 1.5 sen to 35 sen; but Bumi Armada was half-a-sen weaker at 18.5 sen.

The FBM Emas Index fell 73.44 points to 11,480.40, the FBM Emas Shariah Index eased 15.12 points to 11,672.94, and FBMT 100 decreased 79.05 points to 11,328.30.

The FBM Ace Index narrowed 8.21 points to 4,823.94 but the FBM 70 was 2.23 points higher at 14,214.87.

Sector-wise, the Industrial Products and Services Index was 0.18 point weaker at 168.75, the Financial Services Index erased 231.76 points to 16,737.37 while the Plantation Index was 2.03 points better at 7,188.14.

Main Market volume increased to 1.93 billion shares worth RM1.82 billion from 1.68 billion shares worth RM2.07 billion.

Warrants dropped to 413.77 million units valued at RM87.86 million versus 505.03 million units valued at RM106.82 million.

Volume on the ACE Market declined to 277.44 million shares worth RM58.07 million compared with 282.91 million shares worth RM59.35 million.

Consumer products and services accounted for 489.37 million shares traded on the Main Market, industrial products and services (305.49 million), construction (216.42 million), technology (154.63 million), SPAC (nil), financial services (46.44 million), property (152.84 million), plantation (14.90 million), REITs (10.69 million), closed/fund (24,700), energy (399.38 million), healthcare (26.31 million), telecommunications and media (27.09 million), transportation and logistics (71 million), and utilities (19.89 million). — Bernama

Emerging shares boosted by China data but Turkey falls

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Global rally puts FTSE 100 on track for biggest daily gain in two months

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Sterling rises as May faces pressure to go for soft Brexit

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EasyJet says Brexit, economic uncertainty hits demand

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