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Breakfast briefing: Thursday, June 30

by June 30, 2016 General

MarketWrap: Stock markets around the world rebounded for the second straight day on Wednesday as fears about last week’s Brexit vote eased and investors wagered central banks would ultimately ride to the rescue with more stimulus. – Reuters

The DJIA rose 284.96 points, or 1.64%, to close at 17,694.68, the S&P 500 gained 34.68 points, or 1.7%, to finish at 2,070.77 and the Nasdaq added 87.38 points, or 1.86%, to end at 4,779.25.

Forex summary

*The ringgit gained 0.72% to 4.0115 per US$

*It was 0.24% higher at 4.4589 per euro

*Up 0.30% to 5.3945 to the pound sterling

*0.57% higher to 2.9786 per Singapore dollar

*0.24% up to 2.9931 per Aussie

*Up 0.65% to 3.9038 per 100 yen


Oil prices surged 4% on Wednesday after a larger-than-expected drawdown in US crude inventories. It was a second straight day of gains for oil, which has risen nearly 8% since Monday’s settlement to recover almost all of what it lost after Britain’s shock vote to exit the European Union. Brent crude futures settled up US$2.03, or 4.2%, at US$50.61 per barrel. It hit a near one-week high of US$50.74 during the session. – Reuters

Top foreign stories

Global M&A declines in second quarter as mega deals seen too risky: The value of announced mergers and acquisitions (M&As) worldwide dropped by a third in the second quarter of 2016, as a wave of transactions were abandoned in the wake of concerns over regulatory and tax risks or national security. – Reuters

Most big US banks pass Fed’s stress test, boosting shareholder payouts: Nearly all of the largest US banks are on steady enough footing to increase payouts to shareholders, the US Federal Reserve said on Wednesday, with just two subsidiaries of foreign banks failing its annual stress test. – Reuters

Alcoa spins off smelting business: Metals company Alcoa Inc said on Wednesday it will spin off its traditional aluminium smelting business as part of its planned company split, with up to 19.9% of the new company owned by its business that serves aerospace and transportation industries. – Reuters

Monsanto in talks with Bayer, others about ‘strategic options’: Monsanto Co is in talks with Bayer AG and other companies regarding “alternative strategic options,” a month after it rejected the German company’s US$62-billion takeover offer, the US seed producer said on Wednesday. – Reuters

Top local stories

ICPT rebate maintained: Tenaga Nasional Bhd (TNB) said the Government is maintaining its imbalance cost pass-through (ICPT) rebate at 1.52 sen per kWh hour despite the rise in gas prices. The rebate amounted to RM758.03mil and was made possible by lower liquefied natural gas (LNG) and coal prices, higher performance of coal power plants and a reduction in the use of LNG for electricity generation. – StarBiz

Gas tariffs to go up: Gas Malaysia Bhd will from July raise natural gas tariffs for the non-power sector in Peninsular Malaysia by 5.95% to RM27.05 per one million British thermal units from RM25.53. The company said said the selling price for residential customers would be maintained at RM19.52/MMBtu. – StarBiz

Berjaya Corp Q4 loss widens to RM369m: Berjaya Corp Bhd (BCorp)’s losses widened to RM368.91mil for the fourth quarter from a previous loss of RM274.97mil, mainly due to non-cash goodwill impairment charges. Its revenue was up 6.94% to RM2.48bil. The company declared a dividend of 2.16 sen for the period. – StarBiz

Maxis unit to issue RM10bil Islamic bonds: Maxis Bhd unit Maxis Broadband Sdn Bhd plans to issue Islamic medium-term notes with a nominal value of up to RM10bil, which will be partly used to finance the group’s internal reorganisation exercise. – StarBiz

Malaysian developers with exposure to UK give assurance: Two Malaysian developers with exposure to the UK – SP Setia Bhd and Eastern & Oriental Bhd – have assured that their investments there will not be adversely hit by the fluctuation of the British pound due to the Brexit vote. – StarBiz

George Kent profit boosted by projects: George Kent (M) Bhd’s first-quarter earnings increased by 52.06% to RM15.01mil on the back of a 108.32% jump in revenue to RM122.96mil. This was mainly driven by its engineering division, where there was a steady progress of construction projects in hand. – StarBiz

UEM Sunrise sells land to S. Korea’s Amorepacific:  UEM Sunrise Bhd, through its subsidiary UEM Land Bhd, has entered into an agreement with South Korea-based cosmetics company Amorepacific Corp for the sale of land parcels within the Southern Industrial and Logistics Clusters in Iskandar Puteri, Johor. The 25.37-acre land will house Amorepacific’s integrated centre for research and development, manufacturing and logistics of cosmetics products. – StarBiz

Gamuda Q3 earnings down slightly on soft property market: Gamuda Bhd’s third-quarter earnings decreased by 4.83% to RM152.69mil on the back of a 15.62% drop in revenue to RM467.29mil mainly due to a softening of the property market in Malaysia. – StarBiz

Canada resumes environ review of LNG project: The environmental review of a Petroliam Nasional Bhd (Petronas)-led liquefied natural gas (LNG) project in western Canada has resumed, starting the clock on a final three-month extension granted by the federal government, Canada’s environmental regulator said. – Reuters

Equity valuations at attractive levels now:
Equity market valuations of Asia ex-Japan is now trading at levels that was last seen during the global financial crisis in 2008, said HSBC Global Asset Management chief investment officer Denis Gould. – StarBiz

HSS Engineers to expand India ops: HSS Engineers Bhd will expand its operations in India as well as venture into the provision of support services for Malaysia’s water and power sectors. The group is also looking to expand its geo- graphical presence in India, the Middle East and Asean region through acquisition or forming strategic partnerships with companies in those countries. – StarBiz

Slowing exports a real concern: A slowdown in exports during the first half of the year paints a wor- rying picture for Malaysia’s growth prospects, given the added prospect of further volatility and uncertainties arising from the United Kingdom’s referendum to leave the European Union, say analysts. – StarBiz

GHL targets collaboration with fintech firms: GHL Systems Bhd, which expects to record better earnings this year, is eyeing a slice of the cake from the financial technology (fintech) segment. “We are interested in fintech, and we are working with many fintech companies (currently),” says GHL group chief executive offcer Kanagaraj Lorenz, without revealing the names of the companies. – Edge FD

Study: Business optimism for Q3 slips after growth in Q2: Business optimism for Malaysia has slipped slightly for the third quarter of 2016, according to Dun & Bradstreet Malaysia’s Business Optimism Index (BOI) study, which showed the BOI at 4.42 percentage points for the quarter, compared with 5.83 percentage points in the second quarter. – Edge FD