MONEY MASTER

KUALA LUMPUR: Franklin Templeton Investments, which managed US$753.8 billion (RM2.99 trillion) worth of assets globally as at Dec 31, 2017, is “underweight” on the Malaysian equity market, which it sees as neither cheap enough nor growing fast enough. “Malaysia has this issue whereby it is never cheap enough to be a significant part of Franklin Templeton’s portfolio, and it is not fast-growing enough in terms of listed companies,” Chetan Sehgal, its managing director and director of global emerging markets and small-cap strategy, told a media briefing yesterday on the asset management company’s 2018 emerging market outlook. Nevertheless, given the country’s strong gross domestic product growth and exports recorded last year, Franklin Templeton still sees some sweet spots in the equity market here, namely export-related and banking counters. “The thing is that exporters in Malaysia have done very well despite the fact that the currency has appreciated ... this ...

As we usher in the New Year after the benchmark FBM KLCI closing in the positive zone in 2017  — the first time in three years, many investors would ponder whether the strong momentum could continue into 2018. The following is the list of factors that could possibly swing the market moving forward: Malaysia’s GE14 The much anticipated 14th general election (GE14) did not materialise in 2017, will definitely take place in 2018 before Aug 24 this year as the mandate of the ruling Barisan National (BN) coalition will end in June 2018. Analysts have in general expects the GE14 to be the main driver of investors’ sentiment in early 2018 before a return to fundamentals post GE14. So far, most research analysts view that the poll is likely to be in between February and April. The pre-election rally is expected to lift sentiments and improve the “feel-good” factor, which is important for incumbent governments. The election-play counters, companies that are perceive...

KUALA LUMPUR: Turnover rent structure has helped Hektar Real Estate Investment Trust (Hektar REIT) to manage rental pressures amid a weak retail environment coupled with the overbuilding of malls in the Klang Valley. Hektar Asset Management Sdn Bhd, the manager of Hektar REIT, said that while the average rental reversion measured on base rent was reduced by 7.1% in the first half of 2017, the lower base rent was covered by turnover rent. The base rent is a fixed initial rent that has been agreed upon while turnover rent depends on the annual turnover of the retail’s business. “When the tenants do well and their sales go up, then they can afford to pay more rent as a percentage of that (increased revenue),” said Hektar Asset Management chief executive officer Datuk Hisham Othman. “This structure also allowed us to monitor the performance of our tenants and by having their sales figures in hand, we can foresee the direction of where the business is heading,” H...

Retain HOLD with a target price (TP) of RM2.62 Press Metal Bhd (April 19, RM2.79) Maintain hold with a fair value of RM2.62:  The global demand for aluminium is expected to grow modestly at 5% annually from financial year 2017 (FY17) to forecasted FY19 (FY19F), largely attributed to the transportation and construction segments which account for half of the global primary demand, while supply is expected to remain flat at 60 million tonnes. Currently, demand for aluminium stands at 59 million tonnes with supply at 59 million tonnes. The slow supply growth is mainly due to the curb on aluminium production in China where the government has issued a policy draft to cut down production during the winter season. The curb is to tackle pollution which worsens in winter. Experts reckoned that if the China policy kicks in, they forecast a reduction of 1.3 million tonnes of aluminium production (4% of total production in China). The positive outlook for aluminium i...

Retain OUTPERFORM with higher target price (TP) of RM3.22 Astro Malaysia Holdings Bhd (April 18, RM2.69) Maintain outperform with a higher target price (TP) of RM3.22:  We met with Astro Malaysia Holdings Bhd recently to get updates on business operations and strategies moving forward. Despite current cautious consumer sentiment and weak advertisement expenditure (adex), we believe Astro’s earnings will remain resilient on the back of its subscription-based business model with a vast 5.1 million household customer base. Its advertising income has consistently outperformed the industry, with an overall +10% year-on-year (y-o-y) adex growth in the financial year 2017 (FY17) compared with a 2% contraction for the industry. The pay TV segment is anticipated to remain challenging, with management expecting pay TV subscribers base to remain flat at about 3.4 million to 3.5 million household base. The group will be focusing on the upselling of premium content and val...

Retain HOLD with a target price (TP) of RM7.35 MISC Bhd (April 18, RM7.33) Maintain hold with a fair value of RM7.35:  Further to our update last Friday, management has claimed that the upstream report on Chevron’s award of another floating, storage and offloading vessel (FSO) to MISC Bhd is incorrect as the project’s details are still at a preliminary stage and far from completion. Recall that the report had indicated that the FSO could be used for the Ubon field in the Gulf of Thailand. The Ubon project has been downsized in the past year as Chevron and its joint-venture partners sought to improve the project’s economic viability. The revised version of the development plan includes a downsized processing platform and an FSO for associated liquids. Back in August last year, MISC secured its maiden project in Thailand with a US$230 million charter from Chevron to lease and operate an FSO for the Benchamas 2 project, at Block B8/32 in the Pattini bas...

Economy US: Consumer comfort declines to match low for this year.  Consumer confidence in the US fell last week to match the lowest level this year as Americans grew more pessimistic about the economy and the buying climate. The Bloomberg Consumer Comfort Index slipped to 43.6 in the period ended March 20 from 44.3 the prior week. The measures tracking current views of the economy and the buying climate both dropped to the lowest level since mid-Dec, while perceptions of personal finances rose to a five-month high. (Bloomberg) US: Atlanta Fed downgrades 1Q GDP view to 1.4%.  The US economy is on track to grow 1.4% in the 1Q following disappointing data on durables goods orders and home resales, the Atlanta Federal Reserve's GDPNow forecast model showed. That pace was weaker than the regional Fed's prior estimate of 1.9% on March 19, the Atlanta Fed said. (Reuters) US: Jobless claims climbed less than forecast last week . Filings for US unemployment benefits last w...

Yesterday, the Kuala Lumpur High Court today dismissed the Home Ministry's application to stop The Edge Weekly and The Edge Financial Daily from resuming publication, pending the outcome of its appeal.  The Edge publication can resume pending outcome from appeal Among other things, Asmabi had said that Zahid was himself "in doubt" on whether The Edge had published its articles by relying on allegedly unverified information on online news portals, especially Sarawak Report. In the legal challenge filed by The Edge, the home minister and the Home Ministry’s secretary-general are named as respondents. A hearing date has yet to be fixed at the Court of Appeal for the government's appeal against the September 21 ruling, Loke said. She also disagreed that the High Court's decision today would render the government's appeal academic. "It is not academic because we are still going to argue that the decision of minister is right. If we ar...