Breakfast briefing: Friday, July 3

Market wrap: US stocks closed down slightly on Thursday after the International Monetary Fund warned Greece ahead of its Sunday referendum that it faces a huge financial hole, and mixed jobs data dampened the US economic outlook. - Reuters

The DJIA fell 27.8 points, or 0.16%, to 17,730.11; the S&P 500 dipped 0.64 points, or 0.03%, to 2,076.78, and the Nasdaq dropped 3.91 points, or 0.08%, to 5,009.21.

Forex summary

The ringgit reversed gains to close easier against the US dollar yesterday, dampened by profit-taking and dampened local unit buying, a dealer said. - Bernama

*The local currency declined 0.71% to 3.7753 per US$

*It was 0.07% lower to 3.1818 per euro

*Down 0.34% to 5.8903 to the pound sterling

*0.35% higher to 2.7919 per Singapore dollar

*0.70% up to 2.8710 per Aussie

*Flat at 3.0677 per 100 yen

Energy

Crude oil prices ended little changed on Thursday as the first weekly gain in the US rig count this year pared earlier gains. Pulling crude futures off highs was the latest data on the U.S. oil rig count from Baker Hughes. The firm said the number of rigs drilling for oil rose by 12 this week, the first rise since December. Brent crude rose 6 cents to settle at US$62.07 a barrel, after trading from US$61.90 to US$63.20. Prices turned lower in post-settlement trading. - Reuters

Top foreign news

IMF warns of huge financial hole as Greek vote looms: The International Monetary Fund delivered a stark warning on Thursday of the huge financial hole facing Greece as angry and uncertain voters prepare for a referendum that could decide their country's future in Europe. Days after Greece defaulted on part of its IMF debt, the Fund said Greece needed an extra 50 billion euros over the next three years, including 36 billion from its European partners, to stay afloat. It also needed significant debt relief. - Reuters

Mixed US jobs report dampens September rate hike bets: US job growth slowed in June and Americans left the labour force in droves, tempering expectations for a September interest rate hike from the Federal Reserve. The Labor Department said nonfarm payrolls rose 223,000 last month after a downwardly revised 254,000 increase in May, with construction and government employment unchanged, and the mining sector purging more jobs. April payrolls were also lowered, meaning 60,000 fewer jobs were created during the two months than previously reported. The unemployment rate fell two-tenths of a percentage point to 5.3 percent, the lowest since April 2008. - Reuters

BP reaches US$18.7bil settlement over deadly 2010 spill: BP Plc will pay up to US$18.7 billion in penalties to the US government and five states to resolve nearly all claims from its deadly Gulf of Mexico oil spill five years ago in the largest corporate settlement in US history. The agreement adds to the US$43.8 billion that BP had previously set aside for criminal and civil penalties and cleanup costs. The company said its total pre-tax charge for the spill now stands USat $53.8 billion. - Reuters

Heinz completes Kraft purchase, Buffett joins board: H.J. Heinz Co on Thursday completed its purchase of Kraft Foods Group Inc, creating the third largest food and beverage company in North America and fifth largest worldwide. The new company, Kraft Heinz Co, will have roughly US$28 billion of annual revenue. Berkshire Hathaway Inc and Brazilian investment firm 3G Capital, which together bought Heinz in 2013, own 51% of Kraft Heinz and control six of its 11 board seats, including one for Berkshire chairman Warren Buffett. Alex Behring, 3G's managing partner, is Kraft Heinz's chairman. - Reuters

Top local stories

Mixed views on AAX: While Tan Sri Tony Fernandes remains bullish about the prospects for his loss-making AirAsia X Bhd (AAX), one research house downgraded its rating on the long-haul, low-cost airline, giving it a tar- get price of a mere 17 sen. CIMB Research said its downgrade rating from “hold” to “reduce” was on the back of a more challenging outlook and continuing drain on AAX’s cash. - StarBiz

Mueller unveils a flat MAS structure: Malaysia Airlines Bhd unveiled a structure that is flat and having several new faces at the apex management team. Christoph Mueller, the current Malaysia Airlines (MAS) chief executive officer and CEO designate of the new airline has broken the operations of the loss-making airline into eight divisions. Out of the eight divisions, the top positions in four are still vacant -  head of commercial, chief financial officer, executive counsel and head of strategy and PMO, according to documents sighted by StarBiz. Of the four positions that have been filled, three are new to the airline. They are chief operations officer Peter Bellew, chief informa- tion officer Tan Kok Meng, interim chief human resources officer Claudia Maria Cadena Tarazona. The head of corporate safety oversight Datuk Capt Badrul Hisham Yusoff is from the old MAS. - StarBiz

Fitch affirms Genting Bhd and Genting Singapore ratings: Fitch Ratings has affirmed  Genting Bhd's Long-Term Foreign Currency Issuer Default Rating (IDR) and senior unsecured rating at 'A-'. Fitch said it also affirmed the Long-Term Foreign and Local Currency IDRs on Genting's 52%-owned subsidiary, Genting Singapore Plc, at 'A-' and its S$2.31 billion perpetual capital securities at 'BBB'. - Reuters

Chia, Kuan take up Mpay shares: The private placement by Managepay Systems Bhd (Mpay) has attracted investors such as former Hong Leong Financial Group Bhd CEO Datuk Yvonne Chia and Fajarbaru Builder Group Bhd chairman Tan Sri Kuan Peng Ching @ Kuan Peng Soon. It said Chia has will subscribe for 20 million shares for RM4.6mil, while Kuan will subscribe for five million shares for RM1.15mil. - StarBiz

Eco World to unveil three London projects: Eco World Investment Co Ltd, a private vehicle controlled by Tan Sri Liew Kee Sin, has set a target to launch its three London property projects within the next two years now that “the major approvals” are in place. The three projects – London City Island, Embassy Gardens and Wardian London – have a total gross development value of 2.257 billion pounds (RM13.33bil). A financing package of £1.1bil for the development of the three projects from CIMB Bank Bhd and Maybank Investment Bank Bhd had already been secured, said Eco World International executive vice-chairman Tan Sri Liew Kee Sin.

Dayang launches offer for Perdana Petroleum: Dayang Enterprise Holdings Bhd has launched a conditional mandatory takeover offer for all the shares it does not already own in Perdana Petroleum Bhd (PPB) for RM66.59mil cash or RM1.55 a share. Dayang said it was buying 42.96 million shares of Perdana Petroleum, representing 5.74%, from Affin Hwang Investment Management Bhd. - StarBiz

Suit filed to annul Multi-Usage AGM: A suit has been filed in the Penang High Court to annul the Multi-Usage Holdings Bhd (MUH) AGM held on Monday, where three directors were voted out, and to cancel all resolutions that were approved. - StarBiz

Masteel sees lower steel bar supply from China: Malaysia Steel Works (KL) Bhd (Masteel), which reported a net loss for its first quarter ended March 31, 2015, is expecting lower steel bar supply from China due to tighter government controls on imports. The company said the Government had levied a 5% import duty on all carbon steel bars and wire rods effective June 11 and there would be RM50,000 fines for any usage of construction material not certified in accordance to the Construction Industry Development Board Act starting from June 1. - StarBiz

Affirmation of fiscal reforms: Fitch Rating’s assertion of Malaysia’s credit rating at A- and rating outlook to “stable” is seen as a positive sign for the country, JP Morgan said. It said Fitch’s revised sovereign rating outlook from negative to stable was an affirmation of fiscal reforms that have been taking place, such as the fuel subsidy reforms and successful introduction of the goods and services tax in April. - StarBiz

Palm oil inventories likely down 3%: CIMB Research is estimating that palm oil inventories that is set to be announced on July 10 could post a 3% month- on-month decline to 2.17 million tonnes at end-June. CIMB Research’s assumptions are based on 6-month average domestic consumption of 252,000 tonnes and flattish imports for June 2015. - StarBiz

Retail sales forecast lowered for third time: The Malaysia Retailers Association has lowered the projected retail sales growth rate in 2015 for the third time from 4.9% to 4% as consumers hold back their spending due to higher costs of living, a weak ringgit and higher cost of doing business. The association said retail sales grew 4.6% in the first quarter of 2015 and turned negative –3% in the second quarter. - StarBiz

Airbase to complete move by end-2016: The relocation of the Royal Malaysian Air Force Sungai Besi airbase has started and is expected to be completed by end-2016, said the master developer of Bandar Malaysia, 1MDB Real Estate Sdn Bhd, a wholly-owned unit of 1Malaysia Development Bhd. The defence facility located in Jalan Lapangan Terbang Lama has been earmarked by the government to be relocated to different sites throughout the country to make way for the development of the 198ha Bandar Malaysia. - Edge FD

Genting Malaysia gets nod to sell Genting HK stake: Genting Malaysia Bhd has secured its shareholders’ mandate to sell its entire 17.8% equity stake, or 1.43 billion shares, in Genting Hong Kong Ltd even as some minority shareholders view the selling price as too low. At the company's AGM, Genting Malaysia’s board told shareholders that Tan Sri Lim Kok Thay, whose family controls the Genting group, has expressed interest in buying Genting Hong Kong shares. - Edge FD

Zaharaton, Jauhari get on board Taliworks: Former Malaysia Airlines managing director and CEO Ahmad Jauhari Yahya and former Economic Planning Unit director-general Raja Datuk Zaharaton Raja Zainal Abidin have joined Taliworks Corp Bhd as independent, non-executive directors. - StarBiz

Events calendar

Release of May 2015 External Trade Statistics for Malaysia at noon

Markit Economics releases the June Services Purchasing Managers Index (PMI) For Japan (0135 GMT).

The HSBC China Services PMI for June released by Markit Economics (0145 GMT)

The Chartered Institute of Purchasing & Supply and Markit Economics publish the PMI for the UK (0830 GMT).