Futures Stock Daily Commentary

[adie]

Just wanted to share..

Futures KLCI Index 05/12/14

Market continues to be bearish as market action yesterday saw the index failing to sustain correction resulting in a long upper shadow in the candlestick chart. Current price remains below the shorter term moving average in hourly 10, 30 and 40 moving average line indicating a more downside potential even at this level. Momentum studies are in selling mode but yet to cross into oversold levels. Eyes will continue to be on large foreign shareholding counters which might see the direction of the index which has seen generally heavy selling by overseas fund with the Ringgit at its steepest decline since the financial crisis.
Overall still paints a bearish mood for the spot futures contract and could see it re-test the previous day low 1,738.0 and 1,720.0 before a more bearish target at 1,700.0 Caution though in case of week-end Friday profit taking activities but Resistance should capped at 3rd December low 1,751.0 and 1,775.5

Local Markets
Selling pressure continue on local stocks today as bearish sentiment caused by lower crude oil prices re-emerged with persistence selling on counters across the board. Reassessment of the country’s capability of meeting its budget deficit target were the main topic and also caused the Ringgit to weakened further to near 3.4460 region. Stocks such as Tenaga Nasional Bhd and PPB Group Bhd were among the major losers of the index today. The FBM KLCI index extended previous day decline of 1.56% to a further 12.46 points lower to settle at 1,745.69 the steep weaken of the currency has prompted the Bank Negara Malaysia to issue reminder to banks to guard against speculation in the Ringgit. Losers outnumbered gainers 534 to 270 while 308 counters remained unchanged.
Index futures contract of the benchmark index extended declines to track the lower cash index as the spot month contract closes at par with the underlying. The December contract settled 8.5 points lower to 1,745.0 after opening higher initially. Total of 9,701 lot were traded today while open interest decline slightly at 24,384 contracts from previous 24,923
Asian Region
Japanese stocks extended its gain for the fifth day running as the TOPIX index closes at a seven-year high. Carmakers Toyota Motor Corp and Honda Motor Co. both gained as investors were optimistic after positive data in the U.S. renewed momentum in the U.S. economic recovery.
Nikkei 225 index rose 0.9% to close at 17,887.21 while TOPIX index gained 0.8% to settle at 1,440.60
Hong Kong stocks rose sending the Hang Seng index to a 1.7% gain led by energy shares after recovery in crude oil prices. The benchmark index settled the day at 23,832.6 with volume 86% higher than 30-day average
Stocks in China rose as brokerage and oil companies extended gains sending the benchmark index rising the most in two years. Shares of brokerage on speculation stock market’s world-beating rally have further to run. PetroChina Co. and China Petroleum and Chemical Corp both jump and hit daily 10% limit for the day.
The Shanghai Composite Index surged 4.3% to settle at 2,899.46 and extending its past month gain to 19%
US Market
Stocks mostly fall with energy shares declining after European Central Bank (ECB) President Mario Draghi comments disappoint market. Anticipation were for the central bank to start a quantitative easing (QE) to counter the recent slide in the region however latest comments suggest more time to access is needed. This offset a data which showed fewer Americans filed for unemployment benefits ahead of jobs report on Friday.
S&P 500 index lost 0.1% to close at 2.071.92 while Dow Jones Industrial Average declined 12.52 points to settle at 17,900.1

 

[adie]

Futures Crude Palm Oil 05/12/14

CPO February futures opened slightly higher reaching day high at RM 2,189, then declined to touch day low at RM 2,152, picked up and traded mixed in the afternoon session to settle - 1 point at RM 2,169. Total volume of 44,200 lots was traded with open interest at 194,408 contracts held.
The market is taking a pause from earlier volatile moves in unclear trading psychology as price has factored-in the latest fundamentals and technical signals. Minds will focus now speculate on next week’s MPOB palm report on Wednesday 10th and first 10 days December export numbers. There may be conflicting talks about coming lower production against lower exports.
Overnight soybean oil and crude oil has reached stability mode in the near term. Candlestick pattern is neutral, with the 10 day and 20 days moving averages at 2,186 an 2,210 capping further price rallies. In the absence of surprise events, trading is expected to be mixed featuring quick entry and exit strategies on day trade activities. Price may fluctuate within a range of resistance pegged at RM 2,193 and support pegged at RM 2,153.
Market view: Lacklustre, intraday range trading may prevail.

Palm Oil
Palm oil inventories in Malaysia probably climbed to the highest since February 2013 as a tax exemption on exports failed to spur shipments from the world's second largest producer. Futures in Kuala Lumpur are headed for the third annual loss in four years as global cooking oil supplies expand and a plunge in crude oil to the lowest since 2009 reduces demand for blending with gasoline.
Palm oil futures for February delivey closed with a dipped of 0.28% to close at 2,1656 Ringgit per metric ton on Bursa Malaysia Derivbatives.
Soybean Oil
U.S soybean inventories before the 2015 harvest will be 5.1% smaller than the government forecast in November, while corn and wheat reserves will be bigger, according to a survey of 26 analysts and trading firms by Bloomberg News.
Soybean oil for January delivery fell 0.75% to close at $31.70 a pound and soybean for January delivery gained 1.23% to close at $10.1050 a bushel.
As at 9.45am, soybean oil is trading at $31.67 a pound a slight dip from previous closing price while soybean is trading at $10.0375 a bushel a dipped of 0.67% from previous closing price.

 

[adie]

Malaysia Daily 05/12/14

COMPANY UPDATE
Genting Malaysia: Maintain Buy
Much more to come
•Phase 2 has been confirmed. When completed, it will expand RWG room inventory by 20%.
•We leave our earnings forecasts unchanged for now as construction has not commenced yet.
•Maintain BUY and MYR5.05 TP. GENM is also in good stead to win an upstate NY casino licence on 17 Dec 2014, we opine.

RESULTS REVIEW
Oldtown: Maintain Buy
2H should be stronger HoH Shariah-compliant
•F&B sales to be seasonally stronger in 2HFY15 while hiccups in FMCG exports have been resolved.
•Market share remains strong, distributorship revamp should be positive on FMCG sales growth.
•BUY maintained, with an unchanged TP of MYR2.00.

SPECIAL FEATURE
Only World Group: Not Rated
F&B powerhouse
•OWG’s key operations are in food services, water amusement parks and management of family attractions.
•We forecast a 12% 3-year (FY6/14-17) EPS CAGR, mainly underpinned by new food service outlets.
•Based on CY15F EPS of 8.7sen, we derive an indicative fair value of MYR1.09, representing an upside potential of 24%.

Technicals
To end a bad week at much lower levels
The FBMKLCI tumbled 12.46 points to 1,745.69 yesterday, while the FBMEMAS and FBM100 also closed lower by 71.82 points and 72.17 points, respectively. In terms of market breadth, the gainer-to-loser ratio was 286-to-519 while 309 counters were unchanged. A total of 1.88b shares were traded valued at MYR2.26b.
Trading idea is a Take Profit call on Gamuda with downside target areas at MYR4.66, MYR4.17 and MYR3.70.

Other Local News

Petroliam Nasional (Petronas): Canada project decision delayed. Petronas and its partners; Japex, Brunei Petroleum, Indian Oil Corp and Sinopec have decided to defer the final investment decision (FID) of the MYR109.2b Pacific NorthWest LNG project in Canada due to the decline in oil prices. However, Petronas said that the project would move ahead, citing that the British Columbia provincial government and Pacific NorthWest LNG had resolved key matters that provided certainty for advancing development of the proposed liquefied natural gas (LNG) facility. Petronas was supposed to announce the FID by year-end. (Source: The New Straits Times)

Malaysian Airline System (MAS): Last trading Dec 12. The last day of trading for MAS shares will be on December 12 before the counter is delisted under a privatization exercise by its majority shareholder, Khazanah Nasional Bhd. MAS said it has set an ex-date for its selective capital reduction (SCR) and repayment exercise on December 17. (Source: The New Straits Times)

Gamuda: Bidding for Penang job. Gamuda has submitted its bid for the Project Delivery Partner (PDP) to implement Penang's MYR27b public transport master plan, which includes improving Penang's highway network, light rail transit, but rapid transit, trams and new ferry services. The Penang government has set December 16 as the deadline for contenders to propose how they would implement the master plan if they awarded the tender. (Source: The New Straits Times) Group managing director Datuk Lin Yun Ling also mentioned that Gamuda, which owns a 40% stake in Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) will only relinquish the water treatment assets of the Selangor government if the offer price is as its book value of MYR2.8b at least. (Source: The Edge Financial Daily)

Malaysia Airport Holdings (MAHB): Prices MYR1b sukuk at annual rate of 5.75%. MAHB announced yesterday that it had price its inaugural MYR1b perpetual non-call 10-year subordinated sukuk at an annual rate of 5.75%. MAHB reportedly said that it would raise MYR1b in sukuk as costs for the klia2 terminal had risen to MYR4b from MYR3.1b after numerous delays. This is also the first rated perpetual sukuk in Malaysia and assigned a long-term ratings of AA2 to it. (Source: The Edge Financial Daily)

Sime Darby: To extend NBPOL offer period. Sime Darby plans to extend the offer period for the takeover of New Britain Palm Oil Ltd (NBPOL) from Dec 18, 2014 to Jan 20, 2015. Sime Darby had secured 58.7% of NBPOL's voting shares as of yesterday following Kulim shareholders approval, meeting one of the conditions precedent of the offer, being the minimum acceptance condition of the offer of not less than 51% voting rights in NBPOL received by Sime Darby Plantations. (Source: The Edge Financial Daily)

Outside Malaysia

U.S: Fed saw broad-based employment gains ahead of jobs report. A Federal Reserve survey showed businesses across the country are hiring workers in industries from aerospace to finance, adding to evidence of labor-market strength ahead of key jobs data. "Employment gains were widespread," the central bank said in its Beige Book, which is based on reports gathered on or before Nov. 24 by regional Fed banks. Consumer spending improved as gasoline prices plunged, and in a number of districts, business contacts "remained optimistic about the outlook," according to the report. (Source: Bloomberg)

E.U: ECB keeps rates unchanged as Draghi gauges stimulus speed limit. The 24-member Governing Council left the main refinancing rate at 0.05% at its meeting in Frankfurt. The deposit rate remained at minus 0.2% and the marginal lending rate at 0.3%. (Source: Bloomberg)

E.U: ECB said to prepare broad-based QE plan for January meeting. The European Central Bank's Governing Council expects to consider a package of broad-based asset purchases including sovereign debt next month, two euro-area central-bank officials familiar with the deliberations said. While the proposal is envisaged to include various types of bonds, it won’t encompass equities, said the officials, who asked not to be identified because the discussions are private. They said no decision on implementing quantitative easing has been taken yet, and the composition of the program may be influenced by incoming data. An ECB spokesman declined to comment. (Source: Bloomberg)

U.K: House price growth eased last month as demand softened and a further cooling is likely into 2015, according to Halifax. Values in the quarter through November rose an annual 8.2%, down from 8.8% in October and marking a fourth consecutive slowdown, the mortgage lender said. Prices increased 0.4% on the month. "Receding buyer interest combined with a revival in private housing completions has brought supply and demand into better balance," Martin Ellis, housing economist at Halifax, said in a statement. (Source: Bloomberg)

 

[adie]

Futures KLCI Index 08/12/14

FKLI open lower and hit the fresh low at 1732 in an early session amid on bargain hunting in Oil and gas related stocks. The market is still in the strong bearish momentum as foreign investors participation declines.
Technically, the "Hammer" formation on the daily chart could mark the potential of the reversal pattern. The low of the long lower shadow implies that sellers drove prices lower during the session. However, the strong finish indicates that buyers regained their footing to end the session on a strong note. While this may seem enough to act on, hammers require further bullish confirmation.
The price are still traded below 5SMA at 1761.0 and if the price may breach above it, it may extend the price to test another resistance at 1770.5. Support located 1738.0-1732.0.

Local Markets
Local stocks closed mostly higher on bargain hunting as hard hit stocks rebounded led by Tenaga Nasional Bhd (TNB) while Petronas related shares like Petronas Dagangan also rose. Plunge in crude oil prices has seen local shares hit the hardest with the Oil and Gas sectors falling for two consecutive sessions which initially started on Monday. The benchmark FBM KLCI index settled just 0.21% higher after briefly touching day low 1,743.40 before recovered to close at 1,749.37 as buyers moved in on blue-chip stocks. Gainers beat losers 459 to 330 while 3088 counters remained unchanged.
The index futures contracts stage a mild rebound on profit taking as bargain hunting in O&G related stocks helped push the cash market higher. The spot month December futures contract recovered from earlier declines to settle the day 3.5 points higher at 1,478.50 almost on par with the underlying index. Total volume traded were recorded at 10,194 lots while open interest stood at 25,514 contacts

Asian Region
Benchmark indices rose as stocks continue to extend gains cheering on the depreciation of the currency Yen which has weakened past 120 yen per dollar. Exporters again led the gains with Sony Corp and Nissan Motor Co. among them all chalking up gains. The positive data from the U.S. on ADP employment numbers also further boosted sentiments. The TOPIX index climbed 0.4% to close at 1,445.67 while Nikkei 225 index added 0.2% to settle at 17,920.45
Chinese stocks extended gains capping the steepest weekly rally since 2009 with the benchmark index gaining 21% over the past month. Share turnover went above 1 trillion yuan for the day which also saw a 165 point swing in the morning recording its biggest in four years. The Shanghai Composite index eventually settled for a 1.3% gain to close at 2,937.65
Hong Kong stocks rose sending the benchmark index just above the green for the week led by brokerage shares which saw Haitong Securities rallying 12% on takeover talks. Property counter also recorded gains while energy shares declines as crude oil prices resumes its plunge. The Hang Seng index closed 0.7% higher at 24,002.64 just 0.1% gain week to week.

US Market
Wall Street closed higher for the seventh week running as economic data continues to paint a positive picture on the economic recovery after a better than expected jobs report. Non-farm payrolls recorded a 321,000 increase in November beating estimates of 230,000 while unemployment rate was steady at six year low 5.8% The impressive report though could also mean a sooner than expected interest rate adjustment by the U.S. Fed.
The Dow Jones Industrial Average rose 0.33% or 58.69 points to close the week at 17,958.79 while the S&P 500 index gained 3.45 point to settle at 2,075.37

 

[adie]

Malaysia Daily 08/12/14


COMPANY UPDATE
SapuraKencana Petroleum: Maintain Buy
Bags MYR1.58b jobs
•Job wins a positive against a volatile backdrop.
•Aims to be Shariah compliant; Nov 2015 is a realistic target.
•Maintain BUY and MYR3.80 SOP-based TP.

Bumi Armada: Maintain Buy
In search for a new CEO
•CEO/Director Hassan Basma resigns, citing family reasons.
•In search for a new CEO, business as usual.
•Maintain BUY with an unchanged SOP-TP of MYR2.05.

RESULTS PREVIEW
Berjaya Auto: Maintain Buy
2QFY4/15E: Stays solid Shariah-compliant
•Shave FY15/16/17 forecasts by 2-4% as we lower vehicle sales forecasts on weaker consumer sentiment ahead.
•BAuto’s growth trajectory remains intact, backed by attractive new Mazda launches and weakness in the Yen.
•Maintain BUY with a lower TP of MYR4.20 (-3%) pegged to unchanged 13x CY15 PER.

REGIONAL SECTOR UPDATE
The Cockpit View: Upgrade to Overweight
How high can you go?
•Airline stocks have seen resurgence in investor interest. Trading volumes at the highest levels since 2003.
•Upgrade sector to OVERWEIGHT; direct fuel cost savings will propel near-term strong profit growth.
•Earnings forecast revisions will be dynamic, due to volatility of oil prices. Trade on momentum.

SECTOR UPDATE
MY Banking Sector: Maintain Neutral
A look at foreign holdings
•Foreign shareholdings have not returned to pre-GFC levels, but are still high relative to the post-GFC troughs.
•Risk remains of near-term price volatility from foreign selling pressure.
•Stay NEUTRAL. BUY AFG, HL Bank and RHB Capital.

ECONOMICS
External Trade, Oct 2014
Surplus shrinks, deficit next…?
•Exports declined (-3.1% YoY) and imports surged (+9.1% YoY) causing trade surplus to shrink sharply (MYR+1.2b).
•But trade deficit unlikely. Exports fall is due to one-off high base effect given the record-high value in Oct 2013, and export outlook is positive in view of rising imports of intermediate goods. Lower crude oil price has small negative net effect on trade balance. The economy is also not “over-investing” and “over-heating”.

Technicals
Sell FBM KLCI as window dressing emerges
The FBM KLCI plunged 71.52 points WoW to close at 1,749.37, as heavy foreign selling activities persisted. Volume fell from 2.76b to 1.40b shares. The index fall was synonymous with a weaker Ringgit.
Trading idea is a Take profit call on UZMA with downside target areas at MYR1.67 & MYR1.22.

Other Local News
Malaysia Airlines: Appointment shows govt commitment. Khazanah Nasional Bhd has appointed Christoph R. Mueller, the German head at Ireland’s national carrier (Aer Lingus plc) as the head of Malaysia Airlines (MAS) new company (NewCo), Malaysia Airlines Bhd last week. Mueller, who is the outgoing Aer Lingus chief will be the first non-Malaysian CEO of MAS and will also join the MAS board as non-executive director effective January 1. MAS NewCo will start operations on July 1 next year. (Source: The New Straits Times)

Astro Malaysia Holdings: BPL is driver for Astro earnings. Astro Malaysia Holdings has mentioned that the Malaysian broadcasting rights for the sought-after English Barclays Premier League (BPL) does not pose a drag on its earnings. Astro's will hope to bring more seasons of the BPL to their customers as half of Astro's 4.2m subscribers signing up for its sports package. Astro's current rights for the BPL are for three seasons starting from season 2013/2014 to 2015/2016. (Source: The Edge Financial Daily)

IOI Properties Group: Eyes Taipei 101. IOI Properties Group is making a bold move into the Taiwan real estate as it proposes to buy a stake in iconic skyscraper Taipei 101 for MYR2.74b at a time when the ringgit is weakening. The hefty price tag of the 37.17% stake in Taipei Financial Center Corp that owns Taipei 101 is about one-third of IOI Prop's market cap. (Source: The Star)

External reserves as of 30 November 2014 amounted to MYR411.7b or USD125.7b - equivalent to 8.4 months of retained imports and 1.1 times of the country's short-term external debt. The reserve level was lower compared to MYR414.5b or USD126.6b at 15 November 2014. Foreigners were net sellers of equities for the third consecutive month in November 2014 by -MYR0.3b. In the first 11 months of this year, foreign net selling on equities has totaled MYR3.94b, erasing the MYR2.4b of foreign net buying in 2014. In contrast, there was no major foreign sell off in the bond market as foreign holdings of total debt securities edged up slightly to MYR251.1b in October 2014, with a MoM increase of MYR1.8b driven by foreigners adding positions in discount instruments while shedding MYR3.1b of MGS holdings. The Ringgit eased further in November 2014 closing at 3.3830 against USD. The Ringgit kept a downside bias on back of firm US Dollar tone, slide in oil prices as well as Fitch’s scrutiny on Malaysia’s contingent liabilities. (Source: BNM, MKE)

Outside Malaysia
U.S: Hiring surge shows strength of expansion in November as bears flee. The 321,000 advance in payrolls followed a 243,000 increase in October that was stronger than previously reported, Labor Department figures showed. It marked the 10th straight month that employment has increased by at least 200,000, the longest stretch since the 19 months that ended in March 1995. The jobless rate held at a six-year low of 5.8%, and earnings rose by the most since June of last year. (Source: Bloomberg)

U.S: Consumer credit rose less than forecast in October as Americans tempered their credit-card use ahead of the holiday-shopping season. The USD 13.2b gain in credit was the smallest in a year and followed a revised USD 15.4b advance in September. (Source: Bloomberg)

Germany: Factory orders beat forecast in October a sign Europe's largest economy is continuing its recovery from a mid-year dip. Orders, adjusted for seasonal swings and inflation, climbed 2.5% MoM after a revised increase of 1.1% MoM in September. Orders grew 2.4% YoY. (Source: Bloomberg)

Ireland: Raised by S&P as economy strengthens, banks recover. Ireland's credit rating was raised one level by Standard & Poor's as the nation’s economy and its bailed-out banks recover from western Europe's worst real-estate crash. The rating was raised to A from A- with a stable outlook, S&P said in a statement. That still leaves it five levels below the top AAA rating. "The upgrade reflects our view of Ireland's solid economic growth prospects, which we expect to underpin further improvements in the government's budgetary position." S&P said. (Source: Bloomberg)

 

[adie]

Futures Crude Palm Oil 08/12/14

FCPO February benchmark earned RM4 and managed to close above 2170 level on Friday amid range bound trading as investors forecast that the output production will decrease with recent uncertain weather. The price hovering between 20 points range on technical rebound from recent selloff
The doji formation on the daily chart indicate Indecision. Price are still supported by the 5SMA at 2152. The near term trend still remain negative bias as the price still traded below 10 and 20 SMA at 2179 and 2208 respectively, while the MACD histogram is showing the Selling momentum started to diminishing.
Market View: Stay short as price traded trade below SMA 10 at 2180 with the target around 2150-2130 while resistance located around 2180-2199.

Palm Oil
Malaysian palm oil futures ended higher on Friday, reversing most of the week's steep losses as cautious investors held back from another sell-off, and instead pinned hopes on output and stockpiles easing in December.
Prices dropped early in the session, tracking weakness in crude oil. Brent fell close to USD69 a barrel, putting it on track for a second weekly decline, as cuts to Saudi Arabia's official selling prices reverberated across the market.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange edged up 0.3 percent to 2,173 ringgit per tonne by Friday's close, pulling up from the intraday low of 2,153 ringgit. Total traded volume stood at 39,667 lots while open interest is at 199,604.
Soybean Oil
Soyoil rose on Friday to close 1.20% higher after recently rebounding from its 3 month low support area of 31.35 on bargain hunting activities.
The U.S. Department of Agriculture on Thursday reported soybean export sales at a robust 1.180 million tonnes in the latest week, topping analyst forecasts.

 

[adie]

Futures KLCI Index 09/12/14

Spot month contract extended declines as selling continue with the stochastic momentum falling into oversold territory. However with prices struggling to move above the near term hourly 20 moving average while global crude oil prices continue to extend declines, we do not expect any strong correction anytime soon. The next support target of 1,698.0 of 6th September day low could materialize by middle of the month. Lack of bullish catalyst also contributed to the bearish sentiment with only the possibly window dressing before the year closes off giving any upside reasoning.
With such a bearish indicator signals, we would expect a more range-bound downside bias market for today wish support peg at 20th August low at 1,729.5 while further down at 1,698.0 Resistance in event of correction is seen at 1,746.0 and 3rd December low 1,751 while further up at 1,760.5

Local Markets
Stocks falls as the index extended its decline after lack of catalyst resulted in lack of buying interest despite a sell down last week. Shares has come under pressure in recent days after a plunge in crude oil prices raises concern on the sustainability of the country to achieve budget deficit target of an oil exporting reliant country. The Oil and Gas sector has been the hardest hit in last week decline. The negative sentiment is also reflected in the weakening Ringgit as fund outflow in expected with speculation of a rising interest rate environment in the U.S. The FBMKLCI index closed at 1,740.84 down 8.53 points for the day
Index futures contract traded lower for the day tracking the weaker cash index. The spot month December contract saw a 15.5 point swing extending its volatile movement since the sell-off in oil prices. The contract settled 12 points down at 1,736.5 a 4 point discount to the underlying cash market. A total of 8,546 lots were traded today while open interest declined to 25,322 contracts from 25,514 contracts previous trading day.
Asian Region
Stocks closed higher as the TOPIX index settling higher for the seventh straight days with the currency Yen trading near last Friday’s low level continuing to boost export related market. Stocks such as Bridgestone Corp and Toyota Motor Corp pushes the benchmark index higher, TOPIX index added 0.1% to close at 1,447.58 while Nikkei 225 index settled 0.1% higher at 17,935.64
Shares in Hong Kong closed higher with the benchmark index continue to make headwinds after breaking the 24,000.00 level. Chinese insurers and banks were the major gainers in the index today while Chinese brokers also continue to extend last week’s gains. The Hang Seng index settled 0.2% higher at 24,047.67
Mainland China stocks meanwhile rose pushing the benchmark index above 3,000 for the first time in three years after a report showed trade balance at surplus. A 21% rally over the past month has seen the Shanghai Index beating the other 93 global indexes tracked by Bloomberg. The Shanghai Composite Index surged 2.8% to close at 3,020.26
US Market
Wall Street closed lower overnight snapping a consecutive days of winning streak with the benchmark indices falling back from records mostly led by energy producer shares. The correction came after the S&P 500 index capped a seventh straight weekly gain rebounding 11% from October low. Exxon Mobil and Chevron led markets lower with the group of energy shares recording a decline of 3.9% overnight.
At close, the S&P 500 declined 0.7% to 2,060.31 while Dow Jones Industrial Average recorded a 0.6% decline or 106.31 points lower at 17,852.48

 

[adie]

Malaysia Daily 09/12/14

COMPANY UPDATE
IJM Corporation: Maintain Buy
Monetizing India highway Shariah-compliant
•Disposing 100% stake in an India highway for MYR295m with estimated MYR188m gain from disposal.
•Positive on the disposal to unlock value of its overseas assets.
•Construction orderbook to chalk new high. Maintain BUY.

Sunway: Maintain Hold
Injecting hotel, office into a REIT Shariah-compliant
•Positive on the latest asset injections into its REIT vehicle.
•The asset disposals will likely result in net disposal gains of MYR24m; special dividend is likely.
•Minimal impact to our earnings forecasts. Maintain HOLD rating and MYR3.05 TP (on 0.59x P/RNAV target).

Sunway REIT: Maintain Hold
New asset injection
•Positive on the latest yield-enhancing acquisitions; the 10-year lease agreement (hotel) will enhance earnings visibility.
•The new assets could lift our FY15-17 EPU estimates by 2-4%.
•Maintain earnings forecasts and MYR1.42 DCF-based TP for now pending further details. HOLD.

RESULTS REVIEW
Berjaya Auto: Maintain Buy
Steady as she goes Shariah-compliant
•1HFY4/15 earnings within our forecast but above consensus.
•BAuto is a beneficiary from the weaker Yen and gradual reduction of import duty for cars imported from Japan.
•Reiterate BUY. TP is unchanged at MYR4.20 (13x CY15 PER).

ECONOMICS
Crude Oil
Q&A on oil price impact
•For Malaysia, lower crude oil price is generally seen as negative on budget balance, trade balance and sovereign credit ratings, adds pressure to Ringgit and growth, but there are mitigating factors, while the "positive" inflation impact is tempered by GST introduction next year.
•With crude oil price likely to stay low, the Government need to be "realistic" about the -3% of GDP budget deficit target, focusing on avoiding deterioration from 2014's position instead

Technicals
Persistent and rotational foreign selling
The FBMKLCI declined 8.53 points to 1,740.84 yesterday, while the FBMEMAS and FBM100 also closed lower by 54.57 points and 51.39 points, respectively. In terms of market breadth, the gainer-to-loser ratio was 261-to-537 while 293 counters were unchanged. A total of 1.25b shares were traded valued at MYR1.53b.
Trading idea is a Take profit call on PANTECH with downside target areas at MYR0.735, MYR0.45 and MYR0.31.

Other Local News
Malaysia Airlines. New team being formed. Malaysia Airlines Bhd (MAB), a company specially incorporated to take over national carrier Malaysia Airlines (MAS) is expected to unveil its senior management team before CEO-designate Christoph Mueller makes his way to Malaysia to helm the new company (NewCo) early next year. It is understood that the company will announce the management line-up before July next next year. (Source: The New Straits Times)

Eastern & Oriental (E&O): Gets nod for STP2 reclamation works. E&O has obtained the planning permission from the Penang Town and Rural Planning Department to proceed with reclamation works for phase 2 of its Seri Tanjung Pinang (STP2) development through its subsidiary, Tanjung Pinang Development (TPD) Sdn Bhd. TPD is inviting qualified and experienced contractors to take part in a pre-qualification exercise for the reclamation project with the closing date for the submission of the completed pre-qualification document on December 24, 2014. (Source: The Edge Financial Daily)

Wah Seong Corp: Plans to sell green power in Cambodia for 20 years. Wah Seong Corp via its subsidiary, P.M.T.I Energy (Cambodia) Co Ltd (PMTIEC) is venturing into a biomass power plant project in Cambodia. PMTIEC has signed a Power Purchase Agreement (PPA) with Baitang to sell 3.5MW per hour of electricty generated to Baitang for 20 years from the first day of the completion of Initial Capacity Test. (Source: The New Straits Times)

IOI Properties Group: Taipei 101 buy caught up in politics. IOI Properties is facing a major hurdle in acquiring a 37.17% stake in Taipei Financial Center Corp (TFCC), which owns the iconic Taipei 101 building in Taiwan, after the republic's government said it was opposed to foreign control of the national landmark. (Source: The Edge Financial Daily)

Outside Malaysia
E.U: ECB slows asset purchases even amid Draghi balance-sheet pledge. The ECB settled EUR 233 m (USD 286m) of asset- backed-securities purchases in the week ended Dec. 5, after spending EUR 368 million in the first week of the program. The Frankfurt-based central bank also bought EUR 3.126b euros of covered bonds, down from EUR 5.078b the previous week. (Source: Bloomberg)

Germany: Industrial production rose for a second month in October in a sign that a slow recovery in Europe's largest economy is continuing. Production, adjusted for seasonal swings, gained 0.2% MoM from September, when it climbed a revised 1.1% MoM, the Economy Ministry in Berlin said. Output advanced 0.8% YoY. (Source: Bloomberg)

China: Trade surplus climbed to a record in November after an unexpected decline in imports on lower crude oil and other commodity prices. Overseas shipments rose 4.7% YoY while imports fell 6.7% YoY leaving a trade surplus of USD 54.47b, the customs administration said. (Source: Bloomberg)

Japan: Recession was deeper than initially estimated as company investment unexpectedly shrank, a blow to Prime Minister Shinzo Abe as he campaigns for re-election on his economic credentials. The economy contracted an annualized 1.9% in the July to September period from the previous quarter, weaker than the 1.6% drop reported in preliminary data. (Source: Bloomberg)

India: Current-account gap widens to largest in a year on gold. The July-September shortfall in the broadest measure of trade widened to USD 10.1b from USD 7.8b the previous quarter, the Reserve Bank of India said. The gap amounts to 2.1% of GDP which was lower than the 2.5% the central bank considers sustainable. (Source: Bloomberg)

Australia: Banks face AUD 25b fresh capital after inquiry. Commonwealth Bank of Australia and its three main competitors may need as much as AUD 30b (USD 25b) in fresh capital after a government inquiry said lenders should have "unquestionably strong" reserves. Australian banks' capital buffers should be in the top quartile of global lenders and they should set aside more funds against potential mortgage losses, the Financial System Inquiry report released by Treasurer Joe Hockey. (Source: Bloomberg)

 

[adie]

Futures Crude Palm Oil 09/12/14

CPO February futures opened higher reaching day high at RM 2,204 in the morning session, but declined in the afternoon session to day’s low at RM 2,170 and settled – 1 point from previous day at RM 2,171. Total volume of 33,853 lots was traded with open interest at 195,945 contracts held.
The market was up initially in tandem with weekend gains in crude oil and soybean oil prices. However, due to a lack of follow-through buying support and meeting a previous crucial resistance near the 20 days moving averages at RM 2,206, prices retreated. Also, uncertainty surrounds the upcoming MPOB statistics report including first 10 days December export numbers tomorrow.
With price falls in crude oil and soybean oil markets overnight and continued strength in overseas US Dollar rates, commodities prices in general should display weak signals and selling spill-over is bound to affect palm trading. Candlestick pattern shows a bearish “dark cloud”, with MACD flatly weak and Stochastics oscillator poised to “hook down” again. The nearest resistance is pegged at the 10 days moving average level at RM 2,176 and the next aimed support may be at or slightly below RM 2,130.
Market view: Bearish interests are expected to dominate on intraday rallies with general price movement skewed towards the downside.

Palm Oil
Palm oil futures for February delivery end little changed at 2171 Ringgit per metric ton on Bursa Malaysia Derivatives, after touching 2,204 Ringgit in intraday trading, highest level for most active month contract since November 27th. Ringgit has fallen to five year low as U.S jobs data fuel rate bets and with weak Ringgit it would support the palm oil prices in Malaysia.
Refined palm oil for May delivery ends with a dipped of 0.1% at 5,038 Yuan per metric ton on Dalian Commodity Exchange.
Soybean Oil
After starting higher, the CME Group corn and soy market closed lower Monday. At the close, the January soybean oil futures closed with a fall of 0.72% at $31.85 a pound while the soybeean for January delivery gained 0.74% at $10.4375 a bushel.
As at 10AM, soybean oil is trading at $31.85 a pound, further down of 0.35% from previous closing price and soybean fell 0.29% to close at $10.4075 a bushel a fall of 0.29% from previous closing price.

 

[adie]

Futures FKLI Index 10/12/14

Spot month contract prices manage to settle off the day low yesterday and above the previous day closing indicating short term support seems identified. With stochastic at oversold level while RSI lingering at 30.0 reading a potential rebound could be on the cards. However prices remains below the near term indicative 20 hourly moving average 1,738.0 which could serve as resistance target. Any break with volume above the line could be the first real sign of a much anticipated Santa Clause rally subject to crude oil price remain steady at current level. However with no other indicator supporting this, we still remain cautions on any buy position and only quick profit on day-trade should be the strategy. Buying on the breakout resistance with strong volume would be a firmer move.
Support is peg at yesterday low 1,721.0 and if breach could see further down at 1,710.0 Resistance is seen at 1,738.0 hourly 20 MA and 1,750.0

Local Markets
Local stocks extend declines as lack of catalyst lead to decline in blue-chip due to weak support. Crude oil prices continue to be the focus of the day with the energy prices falling into a 5-year low leading oil and gas heavyweights to losses. Petronas Gas and SapuraKencana led decline in the sector with other sectors failing to support the market. The FBM KLCI index settled 2.74 points lower at 1,738.10 Loser beat gainers 646 to 216 while 239 counters remained unchanged.
Index futures contract settle lower across the board tracking the weaker underlying market with the spot month price touching a day low of 1,721.0 The December contract however manage to rebound of the low to close the day 2.5 points lower at 1,734.0 just off the day high of 1,735.5 Total volume traded were recorded at 9,477 lots while open interest rose to 27,248 from 25,322 contracts the previous trading day
Asian Region
Japan stocks snap a successive winning streak with the TOPIX recording its first decline for the month after exporters fall back on rebound in Yen. Energy stocks extended its decline on continuing worsening oil prices dragging down the benchmark index. TOPIX index declined 0.8% to settle at 1,436.09 falling from a seven-year high while Nikkei 225 index recorded a 0.7% decline at 17,813.38
Hong Kong stocks plunge recording its first decline in 4 days as Chinese insurers fall back from recent highs with other recent top gainers like Ping An Insurance and Haitong all recording huge losses in the bourse. Falling crude oil prices also dragged energy stocks Cnooc and PetroChina down south after the commodity touched a 5-year low. Hang Seng index settled 2.3% lower at 23,485.83
Mainland China shares falls to its biggest decline since 2009 after move by the Government to tighten collateral rules for short-term loans ked to decline in Yuan while falling crude oil prices continue to beat down energy stocks. The Shanghai Composite Index plunged 5.4% to settle at 2,856.27
US Market
Wall Street ended little change overnight after the S&P 500 drop as much as 1.3% on intraday movement after rebound in energy stocks offset global economic concern. Financial shares were among the big losers after China’s move to curb short-term collateral and a fall in U.K. manufacturing reignite concern on health of European economies. S&P 500 ended less than 0.1% to close at 2,059.82 while Dow Jones Industrial Average settled 51.28 points lower at 17,801.20