Economy

Global: World trade seen growing 2.4% in 2017, uncertainty weighs — WTO. World trade is on track to expand by 2.4% this year, though there is "deep uncertainty" about economic and policy developments, particularly in the US, the World Trade Organization (WTO) said. The range for growth this year has been adjusted to between 1.8% and 3.6%, from 1.8% to 3.1% last Sept, it said, pointing to a risk that trade activity could be "stifled" due to lack of clarity about government policies. "We should see trade as part of the solution to economic difficulties, not part of the problem," WTO director-general Roberto Azevedo said. "Overall cautious optimism but trade growth remains fragile and there are considerable risks on the downside. Much of uncertainty is political," he said. (Reuters)

Global: Opec says oil deal bearing fruit, but US pumping more. World oil production fell in Mar thanks to a deal to cut output, Opec said, but the cartel’s efforts to fight a global glut are threatened by American firms pumping oil with gusto. The world produced a total of 95.82m barrels per day (mb/d) last month, a fall of 230,000 barrels from Feb, the Opec said in its monthly report. The production by Opec itself, which accounts for about a third of the world’s output, fell by 153,000 barrels per day to 31.93 mb/d, according to secondary sources cited in the report. This takes it below a target included in an output reduction deal by Opec and some non-Opec producers including Russia which came into force on Jan 1 for an initial run of six months. (AFP)

US: Trump says China not FX manipulator, sees Dollar too strong. President Donald Trump said he won’t brand China a currency manipulator, retreating from core campaign promise, though he argued that a strong dollar is hampering the ability of American firms to compete. Trump appeared to acknowledge that China hasn’t beenintervening to weaken its currency recently. “They’re not currency manipulators," he said. US 10-year bond yields slumped and the dollar fell after Trump indicated in the interview that the US currency is getting so strong that it’s harmful to the economy, while other nations “are devaluing” their currencies. (Bloomberg)

US, Russia: Relations at another low after Syria attacks. Russian President Vladimir Putin said trust had eroded between the US and Russia under President Donald Trump as Moscow delivered an unusually hostile reception to Secretary of State Rex Tillerson in a faceoff over Syria. Any hope in Russia that the Trump administration would herald less confrontational relations has been dashed in the past week after the new US leader fired missiles at Syria to punish Moscow's ally for its suspected use of poison gas. In Washington, Trump said the US was not getting along "at all" with Moscow, adding that the relationship "may be at an all-time low." (Reuters)

UK: Households feel the pinch as real earnings almost stagnate. UK living standards are under more pressure than at any time in 2 1/2 years and the squeeze is getting tighter. Adjusted for inflation, regular pay rose just 0.1% in the three months through Feb, the weakest since the 3Q of 2014. That figure could turn negative in the coming months if forecasts for a further pickup in price growth -- to 3.0% or even higher -- come to pass. Inflation has jumped in the past year because of the pound’s decline since the Brexit vote and that, coupled with lackluster wage growth, is eating into the spending power of consumers, the engine of the economy. (Bloomberg)

China: Mar producer inflation cools for first time in 7 months on steel glut fears. China's producer price inflation cooled for the first time in seven months in Mar as iron ore and coal prices tumbled, pressured by fears that Chinese steel production is outweighing demand and threatening a glut of the metal later this year. A renaissance in China's steel industry has been a major driver of the world's second-largest economy in recent quarters, helping to generate the strongest profit growth in years and adding to a reflationary pulse being felt across the global manufacturing sector. But after cranking out as much metal as possible in recent months, Chinese steel mills are now starting to cut prices, threatening to snuff out a bull market that had pushed prices of some steel construction products to their highest since 2014. (Reuters)

Malaysia: MWIA inks MoU with Guangxi Forestry Industry Trade Association. The Malaysian Wood Industries Association (MWIA) has signed a MoU with Guangxi Forestry Industry Trade Association to promote collaboration and exchange of information between the two countries on timber trade. MWIA president, Datuk Low Kian Chuan, said the collaboration would create an information-sharing platform to strengthen cooperation on market development, technology, human resources, management and trade for mutual benefits. “The collaboration would also optimise the association member’s resources in planting as well as trading sawn timber, veneers and wood-working machineries,” he said. (Bernama)

Markets

PDZ: Another owned container ship arrested. Another container ship owned by PDZ Holdings, PDZ Maju, has been detained under judicial order and the dispute is set to be taken to court. This follows the arrest of PDZ Mewah in Jan following a writ in admiralty action in rem and an arrest warrant served by Dan-Bunkering (Singapore) Pte Ltd for alleged non-payment of marine fuel/gas oil supplied to the vessel. (Three more writs for action against PDZ Mewah were later served.) PDZ previously said the expected losses from PDZ Mewah’s arrest would be in the range of RM90,000 to RM100,000 per month, due to the additional costs from buying slots from third party vessels. Together with the arrest of PDZ Maju, the combined monthly losses would therefore range from RM135,000 to RM150,000. (StarBiz)

Lion Industries: Sells steel plant to Yinson for RM47.7m. Lion Industries Corp is selling one of its steel factories to Yinson Corp SB for RM47.7m through a sale and leaseback arrangement. Through the sale and leaseback arrangement, Lion Industries said that it could use the proceeds to partly settle its debt to Yinson without disrupting its plant operations. Lion Industries said its unit Lion Metal Industries SB had entered into a sale and purchase agreement with Yinson for the disposal of a 3.23-ha parcel of land in Klang, Selangor, for RM45m excluding tax. (StarBiz)

MNC Wireless, M3Tech: To tie up for DFTZ venture. MNC Wireless and M3 Technologies (Asia) (M3Tech) have emerged as among the first technology firms to establish a presence in the Malaysia Digital Free Trade Zone (DFTZ) after entering a MoU for the development of an e-commerce platform. MNC said that the collaboration would entail an inclusive e-commerce platform with integrated payment gateway solutions and end-to-end logistics support, which will be operated in the DFTZ. (StarBiz)

Heineken: Reports satisfactory first quarter performance. Heineken Malaysia has reported a satisfactory performance for its 1Q ended March 31, 2017 despite challenging market conditions compounded by economic pressures. The group reported a marginally lower net profit of RM48.9m for the quarter compared to RM50m during the previous year’s corresponding period. Its revenue base declined by 12.5% to RM401.1m from RM458m a year ago, as Heineken’s business was impacted by soft consumer sentiment. (StarBiz)

Auto (Neutral): Customs lower excise duty for 2WD, 4WD not exceeding 1,500cc. The Government has agreed to streamline the excise duty rate for two- and four-wheel drive vehicles with engine capacity of not more than 1,500cc to 60% effective immediately. “Through this move, the price of vehicles to purchasers must be maintained and vehicle manufacturers cannot raise the prices based on the increase in excise duty rate which have been gazetted through the Excise Duty Order 2017 on March 31, 2017,” he said. Prior to this, the RMCD in the Federal Government Gazette stated that the excise duty for MPV, sports utility and van with the capacity of 1.5 litres and below have been increased by 5% from 60% to 65% effective Apr 1. (Bernama)

MARKET UPDATE

The FBM KLCI might struggle to open higher today after US stocks remained under pressure and Treasury bonds maintained their upward momentum overnight as simmering geopolitical tensions kept the mood in the markets extremely nervous. The caution was exacerbated by uncertainty about the imminent quarterly earnings season in the US, while trading conditions were very thin ahead of an extended weekend break in many countries. However, activity in the currency and fixed income markets was enlivened late in the day as the dollar retreated in response to remarks from President Donald Trump. On Wall Street, the S&P 500 lost 8.85 points, or 0.4%, to finish at 2,344.93, the Dow Jones Industrial Average fell 59.44 points, or 0.3%, to 20,591.86 and the Nasdaq Composite Index gave away 30.61 points to close at 5,836.16, a decline of 0.5%. In Europe, the main equity indices closed mixed with Germany’s DAX 30 index rose 0.1% to 12,154.70, France’s CAC 40 ended marginally lower at 5,101.11 and the UK’s FTSE 100 fell 0.2% to 7,348.99, pressured by the benchmark’s heavyweight miners and supermarkets shares.

Back home, the FBM KLCI index gained 8.24 points or 0.47% to 1,744.08 points. Trading volume decreased to 4.02bn worth RM2.40bn. However, market breadth was negative with 427 gainers as compared to 506 losers. In the region, performance was mixed with Japan’s Nikkei shedding 1.0% due to stronger yen, underperforming the regional markets. Elsewhere, Hong Kong’s Hang Seng index was up 0.9%, while on the mainland the Shanghai Composite fell 0.5% as recently rallying infrastructure stocks lost momentum. Meanwhile, Australia’s S&P/ASX 200 closed flat.

Source: PublicInvest Research - 13 Apr 2017