Breakfast briefing: Thursday, July 2

Market wrap: US stocks closed higher on Wednesday but were down from earlier highs as energy stocks declined and Greece's debt crisis showed no clear signs of resolution. - Reuters

The DJIA rose 138.4 points, or 0.79%, to 17,757.91, the S&P 500 gained 14.31 points, or 0.69%, to 2,077.42, and the Nasdaq added 26.26 points, or 0.53%, to 5,013.12.

Forex summary

The ringgit closed firmer against the US dollar yesterday as the positive credit ratings and upward revision of Malaysia's outlook by Fitch Rating Agency helped bolster demand for the local unit. - Bernama

*The local currency rose 0.66% to 3.7485 per US$

*It was 0.61% higher to 3.1788 per euro

*Up 1.04% to 5.8706 to the pound sterling

*0.77% higher to 2.7803 per Singapore dollar

*0.18% up to 2.8912 per Aussie

*Down 0.01% to 3.0437 per 100 yen

Energy

Oil prices fell over 1% on Wednesday after Greece became the first developed economy to default on a loan with the International Monetary Fund, and as both US and Opec production hit new records. Front-month Brent crude futures traded at US$62.79 per barrel at 0654 GMT, down 80 cents. - Reuters

Top foreign news

Greek PM digs in against bailout: A defiant Prime Minister Alexis Tsipras urged Greeks on Wednesday to reject an international bailout deal, wrecking any prospect of repairing broken relations with European Union partners before a referendum on Sunday that may decide Greece's future in Europe. Less than 24 hours after he wrote a conciliatory letter to creditors asking for a new bailout that would accept many of their terms, Tsipras abruptly switched back into combative mode in a television address. Greece was being "blackmailed", he said, quashing talk that he might delay the vote, call it off or urge Greeks to vote "Yes". - Reuters

IMF's Lagarde says Greece must reform before debt relief: The head of the International Monetary Fund suggested that Greece should move to reform its economy before its European creditors give it a break on its debt. "Given where we are, my suspicion is it would be much preferable to see a deliberate move towards reforms (and) for that to be followed through by the other side of the balance," Christine Lagarde said. - Reuters

Moody's also cuts Greece's ratings after default: Moody's cut its rating on Greece to 'Caa3' from 'Caa2' as the country became the first developed economy to default on a loan with the International Monetary Fund. "Without support from official creditors, and the economic and fiscal reforms needed to retain that support and to place its own finances on a more sustainable footing, Greece will default on its privately held obligations at some point," the ratings agency said. - Reuters

Bullish US jobs, factory data brighten growth picture: US private employers hired the most workers in six months in June and factory activity picked up, providing fresh evidence the economy was gathering solid momentum after contracting at the start of the year. The brightening growth outlook was also bolstered by other data on Wednesday showing auto sales remained strong in June and construction spending rose in May to its highest level in just over 6-1/2 years. The recent raft of upbeat data supports views of a September interest rate hike from the Federal Reserve, although market-based forecasting tools suggest lift-off may not occur until late in the year or even in 2016. - Reuters

US probing whether airlines collude to keep airfares high: The US Justice Department is investigating whether US airlines are working together to keep ticket prices high, spokeswoman Emily Pierce said on Wednesday. An Associated Press said the department was trying to determine whether the airlines were colluding to grow slowly in a bid to keep airfares high. - Reuters

Boeing raises jetliner list prices: Boeing Co raised list prices for its jetliners by 2.9% on Wednesday, reflecting a range of costs that go into making the planes, the company said. The price of the company's forthcoming 777X, due for delivery by 2020, rose to US$400 million in the new price list, which Boeing posted on its website. - Reuters

Siemens to open plant to turn electricity from wind into hydrogen: Siemens will on Thursday start an energy project to convert wind power into hydrogen for re-use as a general fuel or in natural gas pipelines. Siemens' electrolysis plant in Mainz is based on Proton Exchange Membrane (PEM) technology, which allows the capture and storage of electricity into hydrogen. It said the plant can process up to 6 megawatts of electricity, making it the biggest PEM installation of its kind worldwide and able to supply 2,000 fuel cell cars. - Reuters

Top local stories

Upside for ringgit: The worst seems to be over for the ringgit for now. The risk of the currency’s further depreciation has diminished significantly after Fitch Ratings on Tuesday surprisingly upgraded its sovereign rating outlook for Malaysia to “stable” from “negative”, while reaffirming the country’s long-term rating at “A-”. Working in favour of the ringgit is the 18-month postponement of Umno’s party elections, as that has removed some political uncertainties that had been weighing on investor sentiment over the past few months. - StarBiz

Stock market rally seen temporary: The local stock market and the ringgit rallied to their best levels in weeks after Fitch Ratings upgraded its outlook on Malaysia’s government debt, but mar- ket observers warn that the relief may be temporary as concerns continue to loom. Market watchers don’t know for how long the relief can last but said that a possible hike in US interest rates would put an end to the cheap cost of funding for over- seas investors. Furthermore, the ongoing economic problems in Europe, weak commodity prices and less-than- robust corporate earnings locally, are all issues for the local market to continue to wrestle with. - StarBiz

Franklin Templeton: Malaysia can absorb external headwinds: Franklin Templeton Investments believes the fundamentals of Malaysia’s economy are still stable, enabling it to absorb head- winds from current external risks as its regulators are likely to maintain prudent monetary policies to mitigate any adverse impact. “We believe economic activity will remain healthy, and regulators are likely to maintain prudent monetary policies to sufficiently mitigate the adverse impact of a negative trend in the external sector, in particular due to commodity and currency weakness,” said the investment firm’s executive director and head of Malaysia fixed income and sukuk Hanifah Hashim. - Edge FD

UEM Sunrise bets on landed properties: UEM Sunrise Bhd sees demand for landed residential properties in Iskandar Malaysia remaining good, as most prospective property buyers still prefer this type of properties.  Acting chief marketing officer Zadil Hanief Mohamed Zaidi said on that note, the company was upbeat that its new project, Estuari Gardens @ Puteri Harbour, would do well based on buyers’ preference. - StarBiz

CIMB’s separation scheme costs RM443mil: Malaysia’s second largest lender by assets, CIMB Group Holdings Bhd, has completed a RM443.3mil Mutual Separation Scheme.
The group said the job cuts that involved 11.1% of its workforce in Malaysia and Indonesian banking arm PT CIMB Niaga TBK, could save RM291.6mil a year. - StarBiz

Stiff competition to affect telcos’ profits: Profits of telecommunications companies (telcos) in the second quarter ended June 30 may fall short of market’s expectation, as the industry struggles with weak prepaid reload sales and stiff competition. At least one research house has slashed earnings forecast. AllianceDBS Research believed a price war was brewing in the industry, which would hurt margins. The firm said competition among the big telcos – Maxis Bhd, Celcom Axiata Bhd and DiGi.com Bhd – had intensified since late April when Celcom introduced a new entry-level postpaid plan which significantly undercut all competitors’ plans. - StarBiz

Kenanga sees Bumi Armada doubling earnings in two years: Bumi Armada Bhd is expected to double its earnings in the next two years with the commencement some of its floating production, storage and offloading vessels (FPSOs) that are currently under conversion, according to Kenanga Research. - StarBiz

IHH nears China venture: IHH Healthcare Bhd is one step closer to opening its first hospital in China with a local partner after having obtained a 20-year business licence from the local authority in Shanghai. The JV, ParkwayHealth Shanghai International Hospital Co Ltd, is intended as a medical and health-related facilities and service provider. - StarBiz

Maybank co-founder raises stake in Chin Teck: Malayan Banking Bhd co-founder Gan Boon Koo has surfaced as a substantial shareholder of Chin Teck Plantations Bhd, holding an 8.6% equity interest in the plantation company. - Edge FD

Tadmax completes sale of land to 1MDB unit: Tadmax Resources Bhd has completed the disposal of a parcel of land in Pulau Indah, Selangor to 1Malaysia Development Bhd (1MDB) unit Ivory Merge Sdn Bhd for RM294.38 million. In a filing with Bursa Malaysia yesterday, Tadmax said that pursuant to the terms of the agreements, the company had secured the requisite approval for land partitioning, and had further secured the issuance of the separate document title of the land on June 26. - Edge FD

Keladi Maju names new MD: Keladi Maju Bhd, a property developer controlled by Tan Sri Robert Tan Hua Choon, has appointed former IJM Corp Bhd chief executive officer Datuk Teh Kian Meng its managing director. - StarBiz

Cypark tweaks private placement plan due to market conditions: Cypark Resources Bhd has revised its private placement plan in line with its falling share price. The proposed placement will now be made in tranches, with the issue price of the first tranche being set 10.7% lower than what the company had indicated back in February. - StarBiz

Lii Hen proposes bonus issue, share split: Furniture maker Lii Hen Industries Bhd, which saw its share price rallied to an all-time high of RM4.85 yesterday, has proposed a bonus issue of 30 million new shares on a one-for- two basis and a proposed share split. Lii Hen said the proposed corporate exercises are to reward shareholders and that they also can improve liquidity and marketability of Lii Hen shares. - Edge FD

Time dotCom declares special dividend of 73.5 sen: Fixed-line telecommunications provider Time dot-Com Bhd has declared a special interim single-tier dividend of 73.5 sen per share for the financial year ending Dec 31, 2015. The dividend is payable on July 29. - Edge FD

Innity sees up to 30% growth in digital adex:  Innity Corp Bhd, an online media and advertising technology provider, expects its digital advertising expenditure (adex) to grow at an average of 20% to 30% year-on-year across the region. Its chief executive officer, Peter Phang Chee Leong, said the region's digital adex growth was slightly higher than Malaysia’s overall adex growth of between 12% and 15%. - Bernama

Events calendar

Australian Bureau of Statistics announces the trade balance for May (0130 GMT).

The US Department of Labour releases the Unemployment Rate for June. The consensus view is for a slight drop to 5.4% from 5.5% (1230 GMT).

Release of ECB Monetary Policy Meeting Accounts (1130 GMT)

AGMs/EGMs

Genting Malaysia Bhd (fka Resorts)

Time: 10am

Venue: Wisma Genting, Jalan Sultan Ismail, Kuala Lumpur

Dayang Enterprise Holdings Bhd

Time: 11.30am 

Venue: Imperial Hotel, Lot 827, Jalan Pos, Miri, Sarawak