KUALA LUMPUR (Feb 4): Index-linked stocks may continue to be hit tomorrow if foreign selling of equities in Asia’s emerging markets continues unabated. The FBM KLCI fell 1.4% at market close today.
But if the selloff is seen as overdone, stocks that have been beaten down today may stage a rebound.
In a report today, Societe Generale (SG) said that equities of emerging markets in Asia are no longer appealing and the current derating process, which is at its initial stage, may intensify in the coming months.
The French multinational bank said fiscal tightening measures by the US government had exposed the weaknesses of emerging equity markets, as they were the main beneficiaries of the US quantitative easing (QE) programme.
“However, after reaping profits over the last five years, what was considered a yield-attractive destination became a risky area when initial signals regarding a future tapering of the Fed programme were sent back to the market at the end of May 2013,” said the bank.
The deterioration in the balance of payments of ASEAN countries like Malaysia, Indonesia, Thailand and the Philippines had also triggered substantial outflows since the end of May 2013, and this continued to accelerate.
But UBS AG CEO Sergio Ermotti said today the selloff in emerging-market assets that sent the benchmark equity index to the lowest valuation since the 2008 financial crisis may have gone too far.
Global investors pulled US$6.3 billion from developing-nation equities in the week through Jan. 29, the biggest outflow since August 2011.
AirAsia X Bhd (AAX) today announced that its unit Thai AirAsia X Co. Ltd (TAAX) has been given the nod to operate in Thailand.
The low-cost long haul carrier said “TAAX has officially received the approval from the Department of Civil Aviation of Thailand for the Air Operator's Certificate (AOC) on 3 February 2014.”
It added that with the AOC, TAAX would now commence application for operating permits and slots to its intended international routes.
It said TAAX would lease two Airbus 330-300 from a subsidiary of the company in its first year of operations.
AAX will hold 49% of the share capital of TAAX.
The carrier also announced that Nadda Buranasiri has been appointed CEO of TAAX.
YTL Corporation Bhd announced today that its wholly-owned subsidiary, YTL Hotels & Properties Sdn Bhd (YTLHP), has acquired Thermae Development Company Ltd, the operator of Thermae Bath Spa complex.
YTLHP bought the entire issued and paid-up share capital of Thermae Development for a total of RM65.2 million (£12,000,000).
“The acquisition is not expected to have any material effect on the earnings, gearing and net assets of YTL Corp group for the current financial year.”
Malaysia Airports Holdings Bhd (MAHB) said today the main contractor for its new low-cost terminal klia2 has missed the Jan 31 handover deadline.
The operator of Malaysia’s 39 airports announced it has yet to receive the certificate of completion and compliance (CCC) for the klia2 terminal building from UEMC-Bina Puri JV, scheduled on Jan 31.
The klia2 terminal building is targeted to open on May 2, 2014, but many analysts believe this deadline could again be pushed to a later date.
Without the contractor’s handover of the main terminal, MAHB will not be able to carry out the required rehearsals for operations of the new budget terminal — touted to be the world’s largest — before opening its doors to the public on May 2.
Petra Energy Bhd said its joint venture company working on Petronas’ risk service contract (RSC) has discovered oil.
Petra Energy stated that Petroliam Nasional Berhad (Petronas) had announced the first oil production from the Kapal, Banang & Meranti (KBM) Cluster fields, offshore Peninsular Malaysia.
The production commenced on Dec 16, 2013. The initial production rate from the cluster were over 10,000 barrels of oil per day (bopd), with peak production reaching 13,000 bopd.
The KBM Cluster, operated by Coastal Energy KBM Sdn Bhd, was developed with Petra Energy’s joint venture partner under a RSC since June 2012.
“The KBM Cluster is an eight-year development project, with Kapal being in its first development and production phase.”
Muhibbah Engineering Bhd’s unit has secured a contract worth RM30 million for steel structure erection works in Bintulu, Sarawak.
The company said its wholly-owned unit Muhibbah Steel Industries Sdn Bhd had on Jan 30, 2014, accepted the letter of award from JGC Sdn Bhd (JGC) for the project involving Petronas LNG Train 9 in Bintulu.
JGC is the main contractor of Petronas LNG 9 Sdn Bhd, a wholly owned subsidiary of Petronas.
Muhibbah said the contract is scheduled to commence in February 2014 with a targeted completion date by the second quarter of 2015.
The contract was expected to contribute positively to its earnings for the current and future financial years, said Muhibbah.
Written by Ho Wah Foon of theedgemalaysia.com
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