Elanco to become No.2 in animal health with US$7.6b Bayer deal

AUGUST 20 — Elanco Animal Health agreed to buy Bayer’s veterinary drugs unit today in a cash and stock deal valued at US$7.6 billion, creating the second largest animal health business and expanding Elanco’s reach online. The deal is the…

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LONDON, July 9 ― London's FTSE 100 ended in the red yesterday as markets remained subdued on dampened hopes of a hefty rate cut by the US central bank, while tobacco stocks jumped on Imperial Brands' buyback and dividend revision plans. UK…

Trump’s Huawei reversal buoys tech stocks on Bursa

PETALING JAYA: Technology stocks on Bursa Malaysia received a shot in the arm today after US President Donald Trump agreed to reverse the sanction against Huawei after a meeting with Chinese President Xi Jinping last Saturday.

Technology stocks such as Malaysian Pacific Industries Bhd (MPI), Greatech Technology Bhd and Pentamaster Corp Bhd were among the top winners today, with MPI emerging as the third top gainer.

MPI urged 6.51% to close at RM9.82 with 146,600 shares done while Pentamaster jumped 3.82% to close at RM2.99 with 3.15 million shares traded. ACE Market-listed Greatech saw its share price rise 15.46% to close at RM1.12 with 41.84 million shares done. It was also among the top active stocks today.

Besides Greatech, technology stocks that were on the top active list today included MyEG Services Bhd, Datasonic Group Bhd, Inari Amertron Bhd, Pre-stariang Bhd and Vsolar Group Bhd, which gained 2.7%, 9.73%, 3.75%, 10.98% and 5.3%, respectively.

The technology index opened higher at 32.76 points today and rose to an intra-day high of 33.18. It closed 3.22% stronger at 33.00 points against a 0.69% gain in the FBM KLCI to 1,683.62 points.

Hong Leong Investment Bank (HLIB) Research, which maintained its “neutral” rating on the technology sector, said the latest development is a win-win scenario and a silver lining amid dull outlooks for global semiconductor sales and capital spending.

“We cheer this development as this sanction relief will normalise the global semiconductor supply chain. As the largest telecommunication equipment vendor globally and second largest smartphone (19% market share in 1Q19) supplier, Huawei is a huge buyer of US technologies, be it chip, software or patents. US com-panies assessed that this restriction may impact their initial earnings forecasts up to 20%,” it said in its report today.

It said the truce between the US and China shows that China is not self-sufficient yet, as it relies on the US for leading-edge technologies while US companies are relying on China market for growth and profitability.

Separately, HLIB Research said Unisem (M) Bhd’s decision to shut its facility in Batam, Indonesia, is a another positive for the sector but warned that it may entail provisions for layoffs and impairments.

HLIB Research is cautiously optimistic and remains selective on technology stocks. It upgraded Frontken Corp Bhd to a “buy” from “hold”, with a higher target price of RM1.67. It expects Frontken to experience multi-year growth ahead on a sustainable global semiconductor market outlook, robust fab investment, leading-edge technology, oil and gas recovery, and strong balance sheet. The stock rose 5.22% to close at RM1.41 today.

Bursa Malaysia welcomes 2H19 on a higher note

KUALA LUMPUR: Bursa Malaysia welcomed the second half of the year (2H19) on a higher note, as investors heaved a sigh of relief following the announcement of US-China trade truce.

At 9.05am, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 7.25 points to 1,679.38 compared to Friday’s close of 1,672.13.

At the opening, the index advanced 2.78 points to 1,674.91.

Market breadth was positive as advancers outnumbered decliners 261 to 36, with 151 counters unchanged, 1,380 untraded and 18 suspended.

Turnover stood at 203.92 million worth RM90.39 million.

In a research note today, Malacca Securities Sdn Bhd said with the ceasefire announced on U.S-China trade spat, stocks on Bursa Malaysia are expected to head higher on what is deemed as a relief rally on hopes that the two economic powerhouses could come to an eventual agreement.

“As it is, the trade angst has been the major impediment to the global stock market’s performance over the past year.

“While there is still no trade agreement, the move is still as positive as it potentially breaks the impasse that could translate to firmer global trade and the corresponding improvements in the global economy,“ it said.

While the research house anticipated Malaysian equities to be firmer over the near term, the upsides might still be measured due to the FBM KLCI’s already fair valuations.

“Therefore, the key index may still find the 1,680 level a formidable level to clear over the near term. Further above, the resistance is at the 1,690 level,“ it said, adding that the supports, on the other hand, are at 1,660 and 1,650 respectively.

Among heavyweights, Maybank and Public Bank improved six sen each to RM8.94 and RM23.06, respectively, Tenaga was 16 sen higher at RM14.00, Petronas Chemicals bagged eight sen to RM8.48 and CIMB was two sen higher at RM5.40.

Of the actives, Armada and Ekovest perked 1.5 sen each to 23 sen and 86.5 sen, respectively, KNM gained two sen to 27.5 sen, IWCITY firmed three sen to RM1.09 and Hibiscus went up four sen to RM1.11.

Among top-20 gainers, Heineken jumped 54 sen to RM24.00, MPI advanced 21 sen to RM9.43, Pentamaster went up 14 sen to RM3.02, while Inari and its warrant added 13 sen each at RM1.73 and RM1.18, respectively.

The FBM Emas Index leapt 63.29 points to 11,844.87, the FBMT 100 Index increased 60.43 points to 11,692.09 and the FBM Emas Syariah Index was 68.44 better at 12,201.39.

The FBM 70 surged 116.40 points to 14,716.11 and the FBM Ace accumulated 24.06 points to 4,469.51.

Sector-wise, the Financial Services Index accumulated 63.58 points to 16,750.19, the Industrial Products & Services Index inched up 0.79 of-a-point to 161.51 but the Plantation Index eased 6.82 points to 6,962.08.

The physical price of gold as at 9.30am stood at RM178.88 per gramme, down RM2.75 from RM181.63 at 5pm last Friday. — Bernama

Bursa Malaysia welcomes second half of 2019 on a higher note

KUALA LUMPUR, July 1 — Bursa Malaysia welcomed the second half of the year (2H19) on a higher note, as investors heaved a sigh of relief following the announcement of US-China trade truce. At 9.05am, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose…

Local semiconductor sector downgraded on heightened US-China tech dispute

PETALING JAYA: TA Securities has downgraded the local semiconductor sector to “underweight” after the escalation in trade tensions between the US and China over the weekend.

“While we are maintaining our forecasts for local companies under our coverage (Inari, MPI, Unisem, and Elsoft) until we obtain further guidance from management in the upcoming results season, we have lowered valuations in view of the increasingly negative sentiment on the sector and correspondingly, downgrade our stance to underweight,” said TA Securities in a research note.

“We have recommendation of ‘buy’ on Inari Amertron Bhd (TP: RM1.80) and ‘sell’ on Malaysian Pacific Industries Bhd (MPI) (TP: RM8.90, downgraded from ‘hold’), Unisem (M) Bhd (TP: RM2.15) and Elsoft Research Bhd (TP:75 sen).”

Local semiconductor stocks took a beating on Tuesday after the US Commerce Department added Huawei to its “Entity List”, which is a trade blacklist that bars anyone on it from buying parts and components from US companies without the government’s approval first.

Shares of Inari fell the most by 6.7% to RM1.40 on Tuesday, followed by Frontken and MPI, which shed 5.6% and 4.2% to RM1.34 and RM9.10, respectively.

TA Securities expects the latest development to be short-term negative to the global semiconductor sector as its effects cascade through the supply chain.

“That said, we also view that it may not be entirely negative as we believe a fall in demand for Huawei smartphones, the world’s second largest smartphone maker, would be largely offset by consumers opting or switching to non-Chinese brands like Samsung and Apple, albeit the latter is susceptible to heightened boycott movements in China”.

TA Securities opined that semiconductor players outside of China are potential beneficiaries of any plans by manufacturers hit by the trade spat to reroute orders or readjust supply chains, albeit the impact may not be immediate and clear cut especially with prospects of a full blown trade war emanating recessionary fears.

Meanwhile, HLIB Research said the trade restriction will equally hurt US companies which increasingly rely on China market for growth and profitability.

“Apple may see limited benefit due to iPhones’ high price points and potential nationalistic retaliation by the Chinese, who are still a significant market for Apple (16% of Apple sales in 1H19).”

“Samsung is likely to have the upper hand in this dispute thanks to its wide spectrum of products and end-to-end in-house capability. Hence, the spillover effects towards non-Korean suppliers are usually hardly felt.”

While maintaining a “neutral” call on the technology sector, HLIB Research said the latest development has created more doubts in the already dull global semiconductor sales and capital spending projections.

“We also take this opportunity to downgrade Frontken to ‘hold’ from ‘buy’ with unchanged target price of RM1.55.”

The US Commerce Department added Huawei to its “Entity List” last week. – AFPPIX

Penang electrical and electronics sector remains competitive despite global uncertainties, says InvestPenang

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