Business & Markets 2012
Written by Ho Wah Foon of theedgemalaysia.com
Sunday, 11 November 2012 22:47
KUALA LUMPUR (Nov 11): The local stock market is likely to stay soft in this coming holiday-shortened trading week in line with Wall Street outlook, according to analysts.
Another foreign development that is being closely watched is the current 18th National Congress of China, which will see a change in the top leadership of the republic. China is one of top two trading partners of Malaysia.
Local issues such as the timing of the 13th general election, third quarter corporate earnings and release of third quarter gross domestic product (GDP) data on Friday may also affect local sentiment.
According to Reuters, Wall Street's post-election sell-off may gather steam in the coming weeks as worries mount on the looming "fiscal cliff" and technical weakness suggests a possible correction ahead.
The benchmark Standard & Poor's 500 closed below its 200-day moving average — a measure of the market's long-term trend — last Thursday for the first time in five months, and ended below the average again last Friday.
At the heart of the market's worry is whether US leaders can come to agreement on some US$600 billion in spending cuts and tax increases due to kick in early next year. Some fear big cutbacks could send the US economy into recession.
Last Friday, US stocks advanced but ended near flat, as investors turned their attention from the presidential election to the coming negotiations over the "fiscal cliff".
The Dow Jones Industrial Average edged up 4.07 points, or 0.03%, to 12,815.39 at the close. The Standard & Poor's 500 Index rose 2.34 points, or 0.175, to 1,379.85. The Nasdaq Composite Index rose 9.29 points, or 0.32%, to 2,904.87.
The eurozone is not inspiring confidence, either. Greece's finance minister said his country was running out of cash, growth in Germany is expected to weaken in the next two quarters, and France's central bank said the country's economy would slip into recession as 2012 ends.
Stocks to Watch
Based on reported corporate earnings and developments last Friday and over the weekend, stocks to watch on Monday may include MALAYAN BANKING BHD [] (Maybank); UEM LAND HOLDINGS BHD []; METRONIC GLOBAL BHD []; and ICAPITAL.BIZ BHD [].
Maybank announced that its net profit for the third quarter ended Sept 31, 2012 (3QFY12) increased by 12.99% to about RM1.5 billion compared with RM1.33 billion in the corresponding quarter last year.
Its net interest income and Islamic banking income for the quarter rose 14.1% over the same quarter last year largely due to the growth of the group's net loans and advances. Non-interest income increased by 7.6%, due to higher unrealised gain on revaluation of securities held for trading and derivatives.
UEM Land is expected to finalise negotiations with a "reputable" joint venture (JV) partner by the end of the year for its latest project, the 250-acre AutoCity in Gerbang Nusajaya, according to Credit Suisse.
Credit Suisse, which had a meeting with UEM Land recently, highlighted that the property developer is expected to announce several other new projects in the 4,500-acre Gerbang Nusajaya development by December.
Next in the pipeline is the Asian Trade Centre (China Mall) expected to be announced by first quarter 2013, the research report said. China Mall will be a trading centre for Chinese products, planned with reference to Dragon Mart, Dubai.
Metronic announced that its wholly-owned unit Metronic Engineering Sdn Bhd (MESB) has received a Letter of Acceptance (LoA) from Mass Rapid Transit Corporation Sdn Bhd (MRT Corp) for a proposed job.
The LoA states that MESB's offer to undertake and complete the engineering, procurement, CONSTRUCTION [], testing and commissioning of building management system on a design and build basis is accepted by MRT Corp.
The contract value of the project is about RM43.04 million, and shall commence on Nov 8, 2012 and must be completed by end-July, 2017, or 55 months from the date of the LoA.
According to Metronic's directors, the contract will have a positive effect on the earnings per share of the group.
Hedge fund Laxey Partners (UK) Ltd failed miserably in its aggressive attempt to grab a seat on the board of directors of icapital at last Saturday's annual general meeting (AGM).
This will mean that Tan Teng Boo, the managing director of Capital Dynamics Asset Management, will continue to manage the close-end fund icapital.biz.
The failure to get elected ended the tension in icapital sparked by Laxey, which demanded Tan to pay attention to the discount the share price of icapital.biz suffered in relation to its net asset value. But the debate stirred up also forced Tan to state his commitment on the discount issue at the AGM.