Breakfast briefing: Tuesday, January 5

Market wrap: US stocks began 2016 sharply lower on Monday, with the Dow marking its worst start to a year since 2008, after weak Chinese economic data fanned fears of a global slowdown. Indexes partly recovered late in the session, following a turnaround in oil prices that caused energy shares to cut losses. - Reuters

The DJIA closed down 276.09 points, or 1.58%, to 17,148.94, the S&P 500 lost 31.28 points, or 1.53%, to 2,012.66 and the Nasdaq dropped 104.32 points, or 2.08%t, to 4,903.09.

Forex summary

*The ringgit lost 0.18% to 4.2933 per US$

*It rose 0.73% to 4.7144 per euro

*Up 0.18% to 6.4092 to the pound sterling

*0.14% lower to 3.0555 per Singapore dollar

*0.16% higher to 3.1322 per Aussie

*Down 0.23% to 3.6478 per 100 yen

Energy

Oil prices fell on Monday in volatile trade, with gains from an early rally on Middle East tensions vanishing as sliding global stock markets and worries about China extended crude's slump into the first trading day of 2016. Brent LCOc1 settled down 6 cents at US$37.22 a barrel. It hit a session high of US$38.99, its highest in nearly three weeks. - Reuters
 
Top foreign stories

Volkswagen faces billions in penalties as US sues for environment violations: The US Justice Department on Monday filed a civil lawsuit against Volkswagen AG for allegedly violating the Clean Air Act by installing illegal devices to impair emission control systems in nearly 600,000 vehicles. VW could face fines in theory exceeding US$90 billion – or as much as US$37,500 per vehicle per violation of the law, based on the complaint. - Reuters

GM invests US$500m in Lyft: General Motors Inc said on Monday it will invest US$500 million in Lyft Inc and laid out plans to develop an on-demand network of self-driving cars with the ride-sharing service. The biggest single Detroit-Silicon Valley crossover deal to date comes as automakers work out how to respond to the rush of technology companies such as Apple, Alphabet and Uber - Lyft's biggest rival - to control cars of the future and likely reshape the global auto industry. - Reuters

US factory, construction data point to tepid growth: US manufacturing contracted further in December as lower oil prices undercut spending in the energy sector while construction spending fell in November for the first time in nearly 1-1/2 years, suggesting the economy ended 2015 with less momentum. The US Institute for Supply Management said its index of national factory activity fell to 48.2 from 48.6 in November and is now at its lowest level since June 2009. In a separate report, the Commerce Department said construction spending slipped 0.4%, the first and also biggest drop since June 2014, after a downwardly revised 0.3% gain in October. - Reuters

Top local stories

Bearish start to 2016 for stock markets: Asian stocks started off on the wrong foot in 2016, as weak Chinese manufacturing data sparked a huge sell-off in mainland China bourses that quickly spread to other markets in the world. The worst-ever start to a year for Chinese shares triggered a trading halt in more than US$7 trillion of equities, futures and options, putting the nation’s new market circuit breakers to the test on their first day. - StarBiz/Bloomberg

TNB plans US$3bil global sukuk issue: Tenaga Nasional Bhd (TNB) plans to tap the dollar debt market for the first time in two decades with its debut offering of global Islamic bonds, or sukuk. The utility is asking bankers to submit pitches for a US$3bil sukuk programme, sources say, and the proceeds will be used to fund overseas investments including the purchase of a 30% stake in Turkish power firm Gama Enerji A.S. for US$243mil. - Bloomberg

Tabung Haji slashes stake in aquaculture firm:  Lembaga Tabung Haji has ceased to be a substantial shareholder of Borneo Aqua Harvest Bhd (Bahvest) after reducing its stake by slightly more than half. Bahvesst told Bursa Malaysia that LTH has reduced its stake to 4.61% from 9.56% prior to the sale.

Ikhmas Jaya gets RM166mil contract: Ikhmas Jaya Group Bhd has accepted a letter of award to undertake the construction of a RM166.4mil “suite” serviced apartments for Bina Puri Holdings’s property subsidiary Star Effort Sdn Bhd. The project consists of two-blocks of suite serviced apartments with 357 units in Jalan Talalla, Section 69, Kuala Lumpur. - StarBiz

China Railway details Bandar Malaysia deal: China Railway Group Ltd told the Hong Kong Stock Exchange that it and its joint-venture partner Iskandar Waterfront Holdings Bhd (IWH) will pay a combined RM5.28bil for their controlling 60% equity interest in Bandar Malaysia Sdn Bhd. The disclosed figure was lower than the RM7.41bil price tag announced on Thursday. The discrepancy could be due to the omission of the relocation cost for the Sungei Besi land, which some analysts had estimated at more than RM2bil. - StarBiz

Bandar Malaysia stake price ‘reasonable’: The RM7.41bil price tag for the sale of 1Malaysia Development Bhd’s (1MDB) 60% stake in Bandar Malaysia is considered reasonable, based on the valuation of surrounding plots of land within the vicinity. UOBKayhian said the price was “fair” given the asking prices for land in the surrounding and more developed areas ranged between RM350 and RM650 per sq ft. - StarBiz

IOI Properties on track for RM2bil sales this year: IOI Properties Group Bhd is on track for RM2bil sales for financial year ending June 30, 2016, despite the softening property market. Chief executive officer Lee Yeow Seng said the group had already achieved more than RM1bil in sales from various projects including in China and Singapore. - Bernama

Petronas Dagangan to manage inventories: Petronas Dagangan Bhd will continue to focus this year on managing inventories to help cut operating costs and sustain dividend payments as it anticipates continued oil market turmoil. - Bloomberg

Sarawak Cable eyes two more Sumatra projects: Sarawak Cable Bhd will take on two more joint-venture hydro power plant projects in north Sumatra, Indonesia, where its first such project is nearing completion. Group managing director and CEO Aaron Toh Chee Ching said SCB would team up with Indonesian partners for the projects, which would each have a generation capacity of 10MW. The projects have been approved by the local authorities. - StarBiz

XOX fixes rights issue price at 20 sen per share: XOX Bhd has fixed the issue price of its renounceable rights issue of up to 356 million new shares at 20 sen per share, which could raise up to RM71.2 million. XOX said it had also fixed the exercise price of the free warrants that will come with the rights shares — on the basis of one free warrant for every one rights share subscribed - also at 20 sen each. - Edge FD

Mercedes not raising prices for now: Premium vehicle maker Mercedes-Benz Malaysia, which has received an extension on import duty and excise tax exemptions on its locally assembled luxury hybrid vehicles, said it will not be raising the prices of its vehicles for now. - Edge FD

AGMs/EGMs

V.S. Industry Bhd

Time: 10am

Venue: Perwira 1, Le Grandeur Palm Resort Johor, Jalan Persiaran Golf, Off Jalan Jumbo, 81250 Senai, Johor

Shareholder approval is sought for:

* Payment of a final single tier dividend of 1.2 sen per share for the financial year ended July 31, 2015.

* Payment of directors’ fees totalling RM412,000 for the financial year ended July 31, 2015.

* Re-elect as directors Datuk Gan Sem Yam, Tang Sim Cheow and Pan Swee Keat.

* Re-appoint KPMG as auditors

* Renewal of shareholders’ mandate for recurrent related party transactions of a revenue or trading nature with V.S. International Group Limited, its subsidiaries and associates  as well as with  Lip Sheng International Ltd and/or Lip Sheng Precision (Zhuhai) Co Ltd.

* Retaining Tan Sri Mohd Nadzmi Bin Mohd Salleh, Pan Swee Keat and Tang Sim Cheow as independent non-executive directors.