HSBC maintains Malaysia's GDP forecast

KUALA LUMPUR: HSBC Global Research is maintaining its Gross Domestic Product (GDP) growth forecast for 2014 and 2015 at 5.2 per cent and 5.0 per cent, respectively, saying the pick up in growth will be boosted by positive net exports.

"This year's expansion may appear to be faster than 2013's 4.7 per cent, but sequential growth each quarter should actually be slower.

"We expect average quarterly growth of 0.9 per cent over 2014 versus a 1.2 per cent average for 2013 and a trend pace of 1.1 per cent," the research firm said in a note.

HSBC also said the recovery cycle in Malaysia's exports would be underpinned by higher shipments for both manufactured products and commodities.

Growth, however, would likely be modest, given HSBC's view for modest recovery in the United States and Europe, as well as, stable growth in China.

But, it will likely still outstrip the rise in imports, where gains should be tempered by a noticeable weakening in domestic demand, it added.

Domestic slowdown would likely reflect the impact government fiscal consolidation efforts have on both public and consumer expenditure.

Hike in subsidised fuel prices last September coupled with further fiscal consolidation this year should result in Malaysia's deficit narrowing further to 3.5 per cent of GDP against the 3.9 per cent registered last year.

"As evident by cuts to sugar, fuel and electricity subsidies over the past few months and plans to restructure the revenue base through a six per cent Goods and Services Tax in April 2015, the government remains committed to fiscal consolidation," it added.

On inflation, HSBC expected it to average around 3.2 per cent this year, assuming no changes to fuel prices, and this was in line with Bank Negara

Malaysia's forecast of between 3.0 and 4.0 per cent. -

Asian shares mostly up

HONG KONG: Asian markets mostly rose Thursday following another record close on Wall Street as US private jobs growth picked up, but Shanghai gave up early gains despite China unveiling a mini stimulus programme.
Global shares have enjoyed a broad rally this week following upbeat manufacturing data in key economies, while investors are keenly awaiting the release of a US non-farm payrolls report on Friday.
Tokyo added 0.84 percent, or 125.56 points, to 15,071.88, Sydney gained 0.12 percent, or 6.6 points, to close at 5,409.9 and in the afternoon Hong Kong was 0.21 per cent higher.
But Seoul slipped 0.18 per cent, or 3.55 points, to 1,993.70 and Shanghai was 0.57 per cent lower in late trade.
Beijing on Wednesday announced a series of spending measures aimed at kickstarting the Chinese economy, a key driver of global growth but one which has shown signs of slowing in recent months.
The plan includes extra spending on railways, improving low-income housing and tax relief for small businesses, which have been struggling along with the economy.
Wednesday's announcement comes after a weak run of Chinese indicators, including on trade, investment and industrial output. The economy grew an annual 7.7 per cent in 2013, the same as in 2012 - which was the slowest since 1999, while leaders have set a target of 7.5 per cent for this year.
"It's very obvious that the leaders feel the need to stabilise growth," Mizuho economist Shen Jianguang told Dow Jones Newswires. "Overall, the 7.5 per cent growth target means that the government still cares a lot about economic growth."
However, the government made no mention of monetary policy, such as a reduction in the amount of cash banks must keep in reserve, or an interest rate cut.
On Wall Street the S&P 500 closed at a second straight record high after payrolls firm ADP said US businesses added 191,000 jobs in March, returning to the level of growth seen in December before severe winter weather struck the country. The February number was also revised up by 39,000 to 178,000 jobs.
The S&P 500 rose 0.29 per cent, the Dow added 0.24 per cent and the Nasdaq finished 0.20 per cent higher.
In addition, US factory orders rose 1.6 per cent in February, better than forecasts of a 1.1 per cent increase.
The results raised hopes for a strong March government jobs reports on Friday following three months of slowing caused by the winter storms.
On currency markets the dollar bought 103.92 yen in Tokyo, compared with 103.85 in New York late Wednesday.
The euro was at US$1.3760 against US$1.3765, while it also fetched 142.99 yen, up from 142.96 yen.
The euro will be in focus over the next few days as the European Central Bank holds a policy meeting Thursday, with investors looking to find out its plans after inflation eased to a four-and-a-half-year low in March.
Oil prices were mixed. New York's West Texas Intermediate for May delivery eased 20 cents to US$99.42 a barrel in afternoon trade but Brent North Sea crude for May was up 11 cents at US$104.90.
Gold fetched US$1,293.00 an ounce at 0600 GMT compared with US$1,283.33 late Wednesday.
In other markets: - Taipei fell 0.19 per cent, or 16.91 points, to 8,888.54.
Taiwan Semiconductor Manufacturing Co slipped 1.25 per cent to Tw$118.5 while smartphone maker HTC added 0.33 per cent to Tw$154.0.-

Kenanga maintains 'underweight' on media

KUALA LUMPUR: Kenanga Research is maintaining an 'underweight' call on the media sector.

It said the FIFA World Cup football tournament which will kick-off at the end of the second quarter 2014, is expected to boost the TV segment advertisement expenditure (adex) by about 10 per cent month-on-month.

"Year-to-date February gross adex advanced by double-digit growth year-on-year, underpinned by the strong television and newspaper segments.

"However, these factors do not prompt us to change our bearish sector view as the ongoing subsidy rationalisation, is expected to continue to weigh heavily

on consumer sentiment.

"The upcoming FIFA World Cup and Visit Malaysia Year may to a certain extent, provide some cheer and help cushion the negative impact," it  said in a research note today.

The research house said that the sector incumbents seems to have begun offering more discounted rates to advertisers to boost gross adex which may not

translate into better net adex revenue.

Kenanga Research said it was leaving its 2014 total gross adex growth forecast unchanged at 6.8 per cent year-on year.

MIDF: CPO prices to average RM2,700 a tonne

KUALA LUMPUR: The crude palm oil (CPO) prices are expected to remain strong and average around RM2,700 per tonne this year, says MIDF Research.

The research house said CPO exports to China and India would pick up in the second quarter of the year as the winter season was expected to end soon.

Palm oil demand also tends to pick up ahead of Ramadhan and the festive season, it said in a statement today.

"A prolonged dry weather in palm oil producing countries as a result of the El Nino phenomenon remains a supply threat.

"And, higher CPO prices will lift the earnings of plantation companies," it added.

The research house is maintaining a positive stance on the plantation sector with top picks being Sime Darby, TH Plantation and Felda Global Ventures, at

target price of RM10.26, RM2.10 and RM5.20 respectively.

Oil prices mixed in Asian trade

SINGAPORE: Oil prices were mixed in Asian trade Thursday as investors weighed a surprisingly robust US stockpiles report with an expected return of Libyan supply after a months-long disruption in exports, analysts said.
New York's West Texas Intermediate for May delivery eased 21 cents to US$99.41 a barrel in mid-morning trade and Brent North Sea crude for May was up 12 cents at US$104.91.
"There is some downward pressure from the Libyan side," Tan Chee Tat, investment analyst at Phillip Futures in Singapore, told AFP.
Tan said investors are digesting reports that the North African state, a member of oil producing cartel OPEC, may be close to reaching a deal with rebels who have blockaded oil terminals since July.
"This would release about 600,000 barrels of crude per day into the market," he said.
Libyan exports have dwindled to around 250,000 barrels a day from 1.5 million following the blockade, initially sparked by protesters demanding jobs.
Negative sentiment over the prospective surge in global supply was however pared by an upbeat US stockpiles data that confounded market expectations.
The US Energy Information Administration said Wednesday American crude inventories slid 2.4 million barrels in the week to March 28, contrary to analyst expectations for a gain of 700,000 barrels.
The latest figures suggest higher demand in the world's top crude consumer, though the figures may have been distorted by a transport bottleneck after an oil spill shut down a key Texas coast channel last week.
Tan said investors will next be closely watching US jobless claims figures out later Thursday for clues about the strength of recovery in the US economy.

AirAsia plans to connect Vizag and KL

NEW DELHI: AirAsia is planning to operate thrice weekly from Visakhapatnam, also known as Vizag, to Kuala Lumpur, and if all goes well, the inaugural flight may take off in October, said a report.

Vizag is a port city on the southeast coast of India in the state of Andhra Pradesh.

Based on the success of the Kuala Lumpur flight, AirAsia may also plan to operate to Vizag from Bangkok besides connecting Vizag to other destinations in India, The Hindu reported.

These are some of the plans of the low cost airline as part of its efforts to develop a long-term relationship with Vizag, the report quoted AirAsia India general manager Suresh Nair as saying at a meeting organised by the Air Travellers' Association India (ATAI) in the city.

AirAsia plans to fix the inaugural fares at Rs.8,000 (RM437) from Vizag to Kuala Lumpur and back, Suresh said and expressed the view that Vizag has

immense potential for growth in view of the strong industry base, tourist potential and proposed investments in various sectors.

ATAI president D.Varada Reddy said 44 services were operating in and out of Vizag Airport and the latest entrant was Air Costa, which was providing direct connections to Hyderabad and Bangalore.

The number was expected to go up to 60 by end-May, he said.

He said Air Arabia was also ready to operate daily from Sharjah to Vizag and was awaiting permission from the Union government in this regard.

Air Lanka plans to fly to Vizag in view of the presence of a large number of Buddhist heritage sites in and around Visakhapatnam.

He told the AirAsia delegation that two international flights were operating out of Vizag.

Air India flies from Vizag to Dubai via Hyderabad daily and the frequency of the direct flight from Vizag to Singapore by Silk Air was increased from thrice to four times a week recently.-

Brent near 5-month low below US$105

SINGAPORE: Brent crude inched up on Thursday, but prices held near a five-month low under US$105 a barrel as the market braced for a rise in Libyan supply after the government moved closer to a deal with rebels to reopen oil ports.

A more than US$3 drop in Brent prices this week has closed its gap with the US oil benchmark - a closely watched and heavily traded spread - to the narrowest since September.

Brent crude rose 11 cents to US$104.90 a barrel by 0306 GMT, after falling nearly US$1 on Wednesday to close at US$104.79, the lowest since early November.

US crude, or the West Texas Intermediate (WTI), fell 23 cents to US$99.39 a barrel, hovering near a one-week intraday low of US$98.86 hit in the previous session.

Hopes for an end to an eight-month standoff that dried up petroleum revenue in Libya were lifted as a government spokesman said an agreement with rebels to reopen key oil ports could be finalised in two to three days.

The restart of Libya's eastern oil ports could release about 600,000 barrels per day (bpd) of crude, although some analysts remained cautious.

"I won't rule out the possibility that it might be another empty promise but it definitely has an impact on market sentiment," Phillips Futures analyst Tan Chee Tat said.

Goldman Sachs analysts said the ports' restart will have a limited impact on global oil balances because Libya's production is significantly below the bank's forecast of 500,000 bpd.

Libya's crude output has fallen to around 150,000 bpd from 1.4 million bpd in July when a wave of protests started across the vast north African country, whose proximity to Europe just across the Mediterranean makes it a strategic energy supplier.

In the short term, demand for Libyan oil is likely to be limited due to reliability issues while shipping and insurance costs are expected to rise in light of the recent hostilities, the bank's analysts led by Jeffrey Currie said in a note.

"We note that in that previous episode of negotiations, a final deal was not reached and as such we remain cautious to the possibility that the recent announcement simply reflects a change in bargaining power rather than a structural move toward consensus," Goldman Sachs said.

US crude losses were checked by a surprise drop in inventories last week and as stockpiles at WTI's delivery point in Cushing, Oklahoma, fell for the ninth week, Energy Information Administration data showed.

Brent's premium to WTI stood at US$5.51, off US$4.81 reached on Wednesday - its narrowest in more than six months.

Oil may draw support from data showing US companies stepped up hiring in March, offering fresh evidence the economy was regaining momentum after a weather-driven lull over the winter.

A key senator called upon Washington to allow the shipment of condensate that has become abundant during the country's energy boom in an ongoing debate on a 40-year ban on most US crude exports.

Separately, Iran and Russia have made progress toward an oil-for-goods deal that sources said could be worth up to US$20 billion and enable Tehran to boost vital energy exports in defiance of Western sanctions, people familiar with the negotiations told Reuters.