Breakfast briefing: Tuesday, September 15

Market wrap: US stocks closed down on Monday as many investors put off making big bets ahead of the Federal Reserve's policy meeting this week and others worried about weak economic data from China. Stocks are expected to stay volatile ahead of a Federal Reserve announcement scheduled for Thursday after a two-day meeting at which it will decide whether or not to make its first interest rate increase since 2006. - Reuters

The DJIA fell 62.13 points, or 0.38%, to 16,370.96, the S&P 500 lost 8.02 points, or 0.41%, to 1,953.03 and the Nasdaq dropped 16.58 points, or 0.34%, to 4,805.76.

Forex summary

*The local currency gained 0.22% to  4.3005 per US$

*It rose 0.51% to 4.8615 per euro

*Up 0.33% to 6.6365 to the pound sterling

*0.23% down to 3.0699 per Singapore dollar

*0.32% lower to3.0793 per Aussie

*Up 0.45% to 3.5686 per 100 yen


Brent fell almost 4% on Monday, narrowing US crude's discount against the global oil benchmark to the lowest level since January, after an industry report of a large supply draw and government data forecasting lower US crude output. A report from market intelligence firm Genscape estimating a drawdown of about 1.8 million barrels last week at the Cushing, Oklahoma delivery point for US crude helped US crude futures outperform Brent. Brent settled down US$1.77, or 3.7%, at US$46.37 a barrel, the lowest settlement in two weeks. - Reuters

Top foreign news

Credibility, 'gradual' approach at stake as Fed weighs rate rise: The US Federal Reserve, facing this week its biggest policy decision yet under chair Janet Yellen, puts its credibility on the line regardless of whether it waits or raises interest rates for the first time in nearly a decade. In a way it is a "damned if you do, damned if you don't" situation for the Fed despite months of fine-tuning its message, dissecting economic data, and carefully building a consensus around the idea of a cautious and gradual "lift-off" from near zero rates towards levels it considers normal. - Reuters

China seizes US$157bil unused funds for new projects: Chinese authorities have seized up to 1 trillion yuan (US$157 billion) from local governments who failed to use their budget allocations, sources said, as Beijing looks for ways to spend its way out of an economic slowdown. Two sources close to the government said budget funds repossessed from local governments would be used to pay for other investments. - Reuters

As Airbus opens US factory, CEO sees plane output soaring: Airbus Group SA opened its first jetliner factory on US soil on Monday and does not anticipate taking a hit to aircraft orders from the economic slowdown in China, chief executive Tom Enders said. The US$600 million plant in Alabama will help Airbus meet plans to churn out 50 narrow-body jets a month by 2017, up from 42 currently. Airbus is considering lifting that to 60 or more to meet a backlog of more than 5,400 planes. - Reuters

BoJ seen holding fire despite global risks: The Bank of Japan is expected to warn of heightening global risks at its monetary meeting on Tuesday, but will hold off on expanding stimulus to preserve its limited policy options in case a looming US rate hike decision sparks a fresh wave of market volatility. - Reuters

Credit Suisse to pay US$80mil to settle dark pool allegations: Credit Suisse Group AG will pay more than US$80 million to settle allegations that it did not disclose how it operated its dark pool private share trading exchange to clients, Bloomberg reported, citing sources. The Swiss bank will pay more than US$50 million in fines and disgorgement to the US Securities and Exchange Commission and about US$30 million to the New York Attorney General, the news agency reported. - Reuters

Top local stories

ValueCap boosts market: A RM20bil package to support undervalued stocks through ValueCap sent the local bourse 36 points or 2.25% higher to 1,639.63 on Monday, thanks to strong buying from local funds. It was one of the biggest single-day gains for the FBM Kuala Lumpur Composite Index in recent months after the Prime Minister announced several measures to stabilise the money markets. - StarBiz

Najib says economy diversified now: Malaysia’s current economic situation is very different from when the country was affected by the Asian financial crisis in 1997-1998, and is much stronger now, according to the Prime Minister. Datuk Seri Najib Tun Razak said the country’s economic structure had been diversified since then, with commodity-based sectors such as agriculture and mining now only contributing 18.2% to gross domestic product compared with 26.9% in 1998. - StarBiz

Khazanah to invest RM6.77bil in key sectors: Khazanah Nasional Bhd will be investing RM6.77bil to support the economic measures announced by Prime Minister Datuk Seri Tun Najib Razak. It said the investment would be channelled towards key sectors such as leisure and tourism, healthcare and health tourism, export-oriented creative industries, innovation and technology and business process outsourcing. The bulk of investment, or RM4.5bil, will be set aside as development cost for Desaru Coast Destination Resort, an integrated leisure and tourism resort in Johor, between now and 2022. - StarBiz

Puncak agrees to extension: Puncak Niaga Holdings Bhd has agreed to a further extension until Oct 15 for the fulfillment of the conditions precedent stated in the conditional sale and purchase agreement with Pengurusan Air Selangor Sdn Bhd (Air Selangor). It will be the eighth extension since Puncak Niaga signed the agreement with Air Selangor last November. - StarBiz

Mudajaya wins RM489m Rapid contract: Mudajaya Group Bhd has secured a RM489mil contract to construct a workers village and temporary construction facilities for the utilities, interconnecting and off-site facilities for Petroliam Nasional Bhd’s (Petronas) Rapid project in Pengerang, Johor. - StarBiz

Harvest Court to diversify into property sector: Harvest Court Industries Bhd, which makes timber-related products, plans to diversify into property development while focusing more on timber services to return to profitability by the end of its financial year 2017. Managing director Datuk Eddie Chai Woon Chet said the company had identified two prime areas in Selayang, Selangor, and Malacca for development. - StarBiz

QL sale of Lay Hong shares irks market: The RM61mil worth of Lay Hong Bhd shares that were sold last week by QL Resources Bhd were acquired by a group of high net worth individuals, sources said. The identity of the said individuals are yet to be known, but the transaction seems to have irked the market. Lay Hong shares fell 5% on Monday to RM3.71 apiece, reflecting the significant discount to the price that QL Resources offloaded its block. - StarBiz

BIMB's Q2 profit flat: BIMB Holdings Bhd ’s net profit was flat at RM129.89mil for the second quarter as higher costs offset income growth. The group’s revenue increased 10.9% to RM814.71mil, while earnings per share of the financial services provider stood at .42 sen compared with 8.68 sen previously. - StarBiz

Halex unit ventures into Cambodia gaming: Agro chemical maker and distributor Halex Holdings Bhd is venturing into the Cambodian gaming business. Halex said its subsidiary Halex International Sdn Bhd has signed a memorandum of understanding on the purchase of at 51% stake in VW Win Holdings Plc. - StarBiz

Bracing for Indonesia levy impact: Local palm oil refiners are bracing to retain their refining margins in the coming months as their competitive advantage is expected to be affected by the new palm oil levy imposed by Indonesia in July. CIMB Research said Indonesian refiners are regaining margin advantage as the new export levy has lowered the domestic crude palm oil price by US$30 to US$50 per tonne, helping to improve the processing margins of downstream processors in the republic. - StarBiz

Indonesia revokes MAA unit's licence: MAA Group Bhd ’s Indonesian operating licence has been revoked by the Indonesia Financial Services Authority, Otoritas Jasa Keuangan (OJK). The PN17-status company said its sub-subsidiary PT MAA General Insurance received a letter dated Sept 10, 2015 from OJK stating that the operating licence has been revoked with effect from Sept 3, 2015. - StarBiz

Breakfast Briefing