Breakfast briefing: Thursday, August 13

Market wrap: Stocks, the US dollar, and emerging market currencies around the world remained under pressure for a second day on Wednesday after China's yuan weakened again, a day after the country devalued its currency. - Reuters

The DJIA fell 0.33 points to end barely changed at 17402.51, the S&P 500 rose 1.98 points, or 0.1%, to 2,086.05 and the Nasdaq added 7.59 points, or 0.15%, to 5,044.39.

Forex summary

*The local currency rises 0.76% to 3.9967 per US$

*It is up  0.62% to 4.4563 per euro

*Up 0.63% to 6.2488 to the pound sterling

*0.08% down to 2.8576 per Singapore dollar

*0.29% lower to 2.9454 per Aussie

*Up 0.84% to 3.2154 per 100 yen


Oil prices were steady early on Thursday, supported by lower US stockpiles and a firm demand outlook, but worries over China's economy continued to weigh. A 1.7-million barrel drop in US.stockpiles last week helped to at least temporarily halt a price slide that has lasted since May and seen WTI and Brent lose over a quarter of their value. Brent futures LCOc1 were 5 cents higher at USA$49.71 a barrel. - Reuters

Top foreign news

Far from done: China’s new exchange rate policy is guiding the currency down. The central bank has fixed the official price of the yuan against the US dollar sharply weaker for the second day running. It’s the strongest signal yet that the country’s devaluation push is far from a one-off.  - Reuters

US budget deficit widens:
The United States posted a budget deficit of US$149.2 billion in July, up 58% from the same period last year, the Treasury Department said on Wednesday. Analysts polled by Reuters had expected a US$132 billion deficit for July. The government had a deficit of US$94.6 billion in July of 2014, according to Treasury's monthly budget statement. - Reuters

Alibaba posts slowest revenue growth in three years: The company's revenue for the three months through June rose 28%to US$3.27 billion, well below a forecast of US$3.39 billion in a Thomson Reuters SmartEstimate poll of 28 analysts. - Reuters

Japan machinery orders tumble in June: Japan's core machinery orders tumbled the most in over a year, adding to fears of an economic contraction in the second quarter as exports slumped and consumer spending slackened. The 7.9% fall in the key gauge of capital spending followed a recent run of soft indicators - including exports and factory output - which led analysts to forecast a second-quarter contraction when economic growth figures come out on Aug 17. - Reuters

Top local stories

Little cheer for exporters: In an environment where most emerging market currencies have weakened against the US dollar, a cheaper ringgit does not necessarily translate into higher exports for Malaysian producers. The devaluation of the yuan and depreciation of other currencies would neither help exporters nor give them an advantage over their competitors, said economists. _ StarBiz

TRX land: Affin says it’s a willing buyer, willing seller deal: Affin Holdings Bhd has justified its purchase of a 54,266 sq ft plot at the Tun Razak Exchange (TRX) in Kuala Lumpur, and confirmed that it had used C H Williams Talhar & Wong (WTW) as its independent valuer. Affin said the purchase consideration of RM255mil, made through its unit Affin Bank Bhd, was done on a willing buyer, willing seller basis after considering the property’s market value of RM261mil. - StarBiz

Winners and losers as ringgit weakens: The steep decline in the value of the ringgit is not bad news for everyone. Export-oriented sectors such as rubber product manufacturers, semiconductor firms and furniture producers are prime beneficiaries because their production costs are mainly in ringgit while sales are in US dollars. The losers are companies which import their raw materials in US dollars but sell the products in ringgit, and those with exposure to US dollar debt. - StarBiz

Stock markets take a hit: The shockwave from China’s weaker currency continues to pummel stock markets around the world, extending the rout on Bursa Malaysia. Global investors have been shifting their money from emerging markets, including Malaysia, ahead of the anticipated interest rate hike in the United States. The surprise move by China to devalue its currency, analysts said, accelerated the outflow. - StarBiz

Ringgit affected by yuan and oil woes: The depreciating yuan, plummeting commodity prices and an expected hike in benchmark US interest rates continue to weigh on the ringgit, which breached the 4.0 to the US dollar psychological level in early morning trade yesterday. The currency closed at 4.0275 amid broad losses in the stock market and slowing demand for Malaysian debt papers. - StarBiz

HLB plans to raise RM3bil: Hong Leong Bank (HLB) is proposing a renounceable rights issue of new shares to raise gross proceeds of up to RM3bil. It said the entitlement basis and the issue price for the rights shares had not been fixed yet. - StarBiz

Nestle Q2 profit up 4.6% on cost savings: Nestle (M) Bhd slashed its cost of sales by almost a fifth in the second quarter, which helped boost its net profit by 4.6% year-on-year to RM123.9mil. This was despite a 10% slide in revenue to RM1.14bil. - Reuters

Weak CPO prices put pressure on earnings: The quarterly earnings of most plantation companies will continue to be undermined by the weak CPO prices now hovering below RM2,100 per tonne. Market sentiment is also pressured by ris- ing stockpile and higher production outlook in the nearby months, plantation analysts say. - StarBiz

Karex to buy Medical-Latex for RM13mil: Karex Bhd is proposing to buy the entire equity interest in Medical- Latex (Dua) Sdn Bhd from Beiersdorf Aktiengesellschaft for RM13mil. Karex said the acquisition would allow it to build on MLD’s reputation as one of the leading premium quality condom manufacturers. - StarBiz

Costlier MRT third line: The third line or circle line completing the country’s first mass rapid transit network system is expected to be costlier than two earlier similar routes as it would be mostly underground. This is based on the two earlier lines that proved underground portions to be the most expensive parts of their entire project packages. - StarBiz

Economists say capital controls not necessary: There’s no need to impose capital controls to prevent further depreciation of the ringgit as the country’s economic fundamentals are still strong, said economists. Former CIMB Investment Bank Bhd chief economist Lee Heng Guie said there is not much the author- ities can do to prevent the ringgit from falling further. - digitaledge

Genting Malaysia to raise RM2.4b from fixed-income market: Genting Malaysia Bhd is raising RM2.4 billion in two tranches from the fixed income market and the book building exercise closed this week, according to sources. “They are raising it for working capital purposes as well as for their integrated theme park project that is slated to open by the end of next year. The group went on a roadshow for it last week and closed it recently,” a source. - digitaledge

PUC Founder to bid for more renewable energy quota in 2016: IT solutions and fingerprint verification products provider PUC Founder (MSC) Bhd, which is diversifying into the provision of energy services, is bidding for more renewable energy (RE) quota from the Sus- tainable Energy Development Authority (Seda) next year. Cheong Chia Chieh, managing director of the Bursa Malaysia ACE Market-listed company, said PUC Founder will be bidding for the 50-megawatt quota made available by Seda next year. It may also purchase quota not utilised by other parties. - digitaledge

Aemulus gets nod to list on Bursa: Aemulus Holdings Bhd, a Penang-based electrical and electronic (E&E) engineering company in the semiconductor tester industry, has received the green light from Bursa Securities to list on the ACE Market of Bursa Malaysia. The IPO involves a public issue of 87.79 million new shares of 10 sen each, comprising 21.94 million shares available for purchase by the Malaysian public, 13.17 million shares available for application by eligible directors, employees and business associates of the group, and 52.68 million shares allocated for private placement to selected investors. - digitaledge

Barakah Offshore bags RM30m job from Petronas: Barakah Offshore Petroleum Bhd has bagged a contract worth up to RM30 million from Petronas Carigali Sdn Bhd to provide cleaning pipeline inspection gauges and associated services in Sabah and Sarawak. - digitaledge

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