Breakfast briefing: Thursday, July 9

Market wrap: US stocks ended sharply lower on Wednesday as market turmoil in China eclipsed Greece's debt crisis, while the New York Stock Exchange suffered a major outage. Fears that a rout in Chinese stocks could seriously harm the country's economy and spread beyond its borders pushed the S&P 500 below its 200-day moving average for the first time since October and into negative territory for 2015. - Reuters

The DJIA fell 261.49 points, or 1.47%, to end at 17,515.42. The S&P 500 ost 34.65 points, or 1.66%, to 2,046.69 and the Nasdaq dropped 87.70 points, or 1.75%, to 4,909.76.

Forex summary

*The local currency lost 0.02% to 3.8080 per US$

*It fell 0.72% to 4.2053 per euro

*Up 0.61% to 5.8680 to the pound sterling

*0.07% down to 2.8086 per Singapore dollar

*0.51% higher to 2.8177 per Aussie

*Up 0.10% to 3.1513 per 100 yen

Energy

US crude futures fell more than 1% on Wednesday after a surprise build in stockpiles while gasoline rallied on bets for strong fuel demand through the peak summer driving season. Brent settled up 20 cents, or 0.4%, at US$57.05, bucking the trend in US crude for a second straight day. - Reuters

Top foreign news

UK to scale back bank levy: The United Kingdom will largely replace a levy on bank balance sheets with a surcharge on profits in a move experts said would help quell talk among lenders of moving elsewhere to lighten their regulatory burden. British Finance Minister George Osborne offered further comfort to banks facing a welter of new rules since the financial crisis by asking their regulator, the Bank of Eng- land, to help keep Britain a “highly attractive” location for lenders. - Reuters

S’pore to pay employers for hiring older, skilled locals: Singapore will pay employers to hire older, local pro- fessionals, and will tighten rules on hiring foreigners, as part of its efforts to address public anger over the growing number of foreigners working in the tiny island state. From Oct 1, for two years, the government will pay employers 10% to 40% of gross monthly salary, capped at S$2,800 (RM7,852), for hiring lo- cal managers and professionals for mid-level jobs paying at least S$4,000 a month, if those hired are over 40 and have been unemployed for at least six months, the ministry of manpower said. - Reuters

Some large Greek banks may be shut: Some large Greek banks may have to be shut and taken over by stronger rivals as part of a restructuring of the sector that would follow any bailout of the country, European officials have told Reuters. One official said that Greece's four big banks - National Bank of Greece, Eurobank, Piraeus and Alpha Bank - could be reduced to just two, a measure that would doubtless encounter fierce resistance in Athens. - Reuters

China bans big shareholders from cutting stakes for next six months: China's securities regulator took the drastic step of ordering shareholders with stakes of more than 5 percent from selling shares for the next six months in a bid to halt a plunge in stock prices that is starting to roil global financial markets. The China Securities Regulatory Commission said on its website late on Wednesday that it would deal severely with any shareholders who violated the rule. - Reuters

More data needed before Fed can hike, as Greek worries loom: Fed minutes: Federal Reserve officials needed to see more signs of a strengthening US economy before raising interest rates, according to minutes of a June Fed policy meeting, at which Greece's debt crisis was cited as a serious concern. The minutes from the June 16-17 meeting show how the central bank continues to grapple with its plan to raise interest rates later this year, in the wake of mixed economic data domestically and market turmoil gathering steam abroad. The minutes underscored the view that a Fed rate hike would likely have to wait until at least September. - Reuters

Top local stories

China equity turmoil: Slumping stock prices in China wreaked fresh havoc across the region, with benchmark indices in Shanghai and Hong Kong the worst hit, as fresh measures by the Chinese authorities to stem recent sharp losses failed to calm nervy investors. The Shanghai Composite Index fell 5.9% yesterday to 3,507 points. The stock measure has fallen 32% over the past three weeks. At home, the benchmark FTSE Bursa Malaysia KL Composite Index fell below the key 1,700-point level, as weak corporate earnings outlook and rising political risk exacerbated the impact of external concerns. - StarBiz

AirAsia down on concerns over fate of Indonesia AirAsia: Concerns that PT Indonesia AirAsia may be shut down by the end of this month has caused AirAsia Bhd’s shares to fall as much as 23 sen, wiping out a whopping RM640mil from its market capitalisation. Indonesia AirAsia, however, said the suggestion that its operational licence would be called into question was not accurate. - StarBiz

AirAsia X files complaint with SC: AirAsia X Bhd has lodged an official complaint with the Securities Commission (SC) against GMT Research and seeks the regulator’s appropriate action against the research house for various mis- leading statements and allegations. - StarBiz

WCT unit wins RM1.2bil award in Dubai: A tribunal in Dubai has awarded a wholly-owned subsidiary of WCT Holdings Bhd RM1.19bil in claims over a contract dispute against Meydan Group LLC. WCT Bhd (Dubai branch) and its joint-venture partner Arabtec Construction LLC had contested Meydan’s move in 2009 to terminate its contract for the construction and completion the Nad Al-Sheba race course project in Dubai.

SC liberalises fund management rules: The Securities Commission (SC) is liberalising its fund management regulations, in hopes of encouraging competition and entrepreneurship within the industry. The regulator has introduced a new category of fund management licence, which would allow for the setting up of boutique fund management companies with a paid-up capital of as little as RM500,000. This is as opposed to applying for a full-fledged fund management licence, which costs RM2mil. - StarBiz

Higher yields for corporate bonds, says MARC report: Corporate bond yields are expected to continue trending upwards and the yield spread widening in the second half of 2015, according to a report by Malaysian Rating Corp Bhd (MARC). This is in tandem with the second-half outlook for Malaysian Government Securities (MGS) yields, which is expected to have an upside bias, mainly premised on the US Federal Reserve’s interest rate lift-off sometime this year. - StarBiz

Pan Borneo Highway to boost Sarawak players: The RM16bil Sarawak stretch of the Pan Borneo Highway can boost key contractors in the country’s largest state, including Naim Holdings Bhd, Zecon Bhd, Cahya Mata Sarawak Bhd and Hock Seng Lee Bhd. CIMB Research construction analyst Sharizan Rosely said these companies were among those that were likely to be in a position of strength when bidding for the multi-billion contract. - StarBiz

MRCB and DRB-Hicom get RM310mil construction job: Malaysian Resources Corp Bhd (MRCB) has partnered DRB-Hicom Bhd to undertake an RM310mil construction job at the new integrated immi- gration, Customs, quarantine and security complex in Bukit Kayu Hitam, Kedah. The companies will take up the job via a joint-venture (JV) company in which MRCB will own 51% and DRB-Hicom 49%. - StarBiz

In line with Sime Darby’s plan: The proposed disposal of Sime Darby Bhd’s 30% stake in Tesco Malaysia is in line with the plantation giant’s move to dispose of its non-core business and ease future cashflow.
MIDF Research, in a report yesterday, noted that Tesco Malaysia only accounted for 0.6% of Sime Darby’s total earnings last year. - StarBiz

Berjaya Land: Penang luxury home market stable: Berjaya Land Bhd, which has sold 40% of the Jesselton Villas bungalow lots at the Penang Turf Club, sees a stable mar- ket for luxury housing products in Penang. Group executive director Eason Phan said as long as the developer came out with the right product for the discerning property buyers, there was demand. - StarBiz

Selangor seeks JVpartners for housing projects: The Selangor government is looking for joint venture partners to develop housing projects in Shah Alam, Gombak and Bukit Beruntung. The first phase of these developments, consisting of high rise and township projects, has an estimated gross development value of up to RM10bil. - StarBiz

LPI Q2 net profit swells: LPI Capital Bhd posted a 67.5% jump in its net profit for the second quarter, mainly due to a gain on disposal of RM39.2mil worth of equity investments. LPI’s net profit for the quarter rose to RM85.74mil while its revenue rose marginally by 4.34% to RM304.73mil. The company said despite the growth in gross and net earned premiums, its general insurance segment recorded a lower profit before tax of RM63.3mil due to higher claims and management expenses. - StarBiz

Former Integrax shareholders file suit against TNB: Integrax Bhd's former deputy chairman Amin Halim Rasip and disgruntled shareholders have filed a lawsuit against Tenaga Nasional Bhd (TNB) relating to the takeover offer for the port operator. The suit comes after the takeover exercise was completed in April. In a filing with Bursa Malaysia, TNB said the plaintiffs were seeking relief against the utility company claiming that the offer document dated Jan 30, 2015 is “erroneous and void”. - Edge FD

Wing Tai mulls increasing number of Uniqlo outlets: Retail and property group Wing Tai Malaysia Bhd is considering upping the number of Japan’s Uniqlo brand clothing stores due to its popularity in the suburbs of major cities in Malaysia, while it seeks to consolidate stores like Topman and Topshop and remove non-performing ones. Chief financial officer Lee Kong Beng said Wing Tai is now one of the top four biggest players in the domestic lifestyle retail market, with 85 outlets distributing 12 international brands. - Edge FD

Events calender:

National Bureau of Statistics of China releases the Consumer Price Index for June (0130 GMT).

The Bank of England announces Interest Rate decision (1100 GMT) 

AGMs/EGMs

KPJ Healthcare Bhd

Time: 12:30

Venue: The Puteri Pacific Hotel,  Jalan Abdullah Ibrahim,  Johor Baru