Document 6567747

October 21, 2014
Global Markets Research
Daily Market Highlights
Key Takeaways
Overnight Economic Data
Eurozone
Japan
Amid lack of market-moving data, markets turned their heads on 3Q corporate
earnings with IBM’s below consensus performance under the spotlight. Fed Fischer said
the US economy could fully recover with full employment and 2% inflation as early as
next year. Calendar was light and dataflow failed to excite overnight but this is set to change
today as China is due to release 3Q GDP and other crucial economic data which will
likely confirm growth is slowly but surely inching towards the 7% handle. RBA
minutes will also be watched but we doubt there will be any new insights.
Hong Kong
Government Bond Yield
Dollar index gyrated lower through the whole session and closed lower at 84.95, amid
lingering growth concerns that raised bets the Fed will be more careful and less
aggressive in its policy move. USDMYR closed marginally stronger at 3.2722 after a
day of tight rangetrading within 3.2657 and 3.2750. MYR may still be supported today by
correction in the USD but we caution risks from weaker than expected China data and
sell-off ahead of tomorrow’s Deepavali holiday.
MYR
Trading volume turned out thinner amid a shorter trading week in conjunction with upcoming
Deepavali celebration. Amount traded in MYR govvies was over RM1.6b versus last Friday’s
RM5.4b. Mild profit taking seen on selected stocks following the recent strong rally in local
govvies sending yields to inch 1 to 2 bps higher. Interestingly, we noticed that MGS 7/24
and MGS 9/21 appears to be trading near parity with only a tight 1-2 bps difference in
yields taking cue from the recent strong rally in MGS 7/24. A significant kink has
UST
3-year
3.48
5-year
3.63
7-year
3.77
10-year
3.78
15-year
4.16
20-year
4.25
30-year
4.58
2-year
0.37
5-year
1.42
10-year
2.19
30-year
2.97
emerged on the 7-year MGS 9/21 which could appeal to investors from a tactical play.
With the Ringgit rebounding stronger this morning, prospects of fresh leads may
potentially flow into the MYR space albeit on thinner trading volume ahead of
upcoming public holiday.
What’s Coming Up Next
Major Data
US existing home sales
UK public finance
Daily Supports - Resistances
S2
S1
Indicative
R1
R2
EURUSD
1.2707
1.2748
1.2797
1.2800
1.2860
USDJPY
106.45
106.75
106.82
107.00
107.30
GBPUSD
1.6105
1.6135
1.6164
1.6200
1.6250
AUDUSD
0.8735
0.8770
0.8791
0.8800
0.8846
EURGBP
0.7890
0.7906
0.7916
0.7925
0.7950
Japan all industry activity index & supermarket sales
China 3Q GDP, retail sales, industrial output & fixed asset investment
USDMYR
3.2520
3.2565
3.2585
3.2620
3.2690
Hong Kong CPI
EURMYR
4.1600
4.1665
4.1712
4.1870
4.2035
Major Events
RBA minutes
Japan Cabinet Office monthly economic report
Bond Tender
Nil
JPYMYR
3.0365
3.0460
3.0507
3.0536
3.0626
GBPMYR
5.2545
5.2605
5.2648
5.2660
5.2780
SGDMYR
2.5630
2.5644
2.5675
2.5700
2.5740
AUDMYR
2.8556
2.8605
2.8630
2.8727
2.8800
NZDMYR
2.5900
2.5930
2.5983
2.6026
2.6115
= above 0.1% gain
= above 0.1% loss
Name
Last Price
KLCI
Dow Jones Ind.
DoD %
YTD %
Name
1803.1
0.8
-3.4
CRB Index
16399.7
0.1
-1.1
WTI oil ($/bbl)
Brent oil ($/bbl)
Outlook
= less than 0.1% gain / loss
Last Price
DoD %
YTD %
271.1
-0.6
-3.2
82.7
-0.1
-16.0
S&P 500
1904.0
0.9
3.0
85.4
-0.9
-23.2
FTSE 100
6267.1
-0.7
-7.1
Gold (S/oz)
1246.9
0.7
3.4
Shanghai
Hang Seng
STI
Source: Bloomberg
1
2356.7
0.7
11.4
CPO (RM/tonne)
2155.0
1.2
-16.2
23070.3
0.2
-1.0
Copper ($/tonne)
6560.0
-1.2
-10.9
3181.1
0.4
0.4
Rubber (sen/kg)
385.0
1.3
-28.5
Macroeconomics
Economic Data
EU current account
JP leading index
JP nationwide dept store
sales
JP convenience store sales
HK jobless rate
For
Actual
Last
Survey
Aug
Aug F
€18.9b
104.4
€21.6b
104.0
---
Sept
Sept
Sept
-0.7%
-1.3%
3.3%
-0.3%
-2.4%
3.3%
--3.3%
Source: Bloomberg
• Calendar was light and dataflow failed to excite. In the Eurozone,
seasonally adjusted current account surplus narrowed to €18.9bn in
August, from an upwardly revised surplus of €21.6bn in July.
Smaller surplus in the services account offset higher surpluses in
the goods and income accounts.
• Japan data added to signs growth will remain anaemic although the
final print of leading index signaled growth is expected to moderate
at a lesser than initially estimated pace going forward. The final print
of August leading index moderated to 104.4, from 105.5 in July, but
better than the initial print of 104.0.
• Nationwide departmental store and convenience store sales
extended their declines, falling 0.7% and 1.3% YOY respectively in
September. Both readings fell for the 6th straight month, as dimmer
growth outlook dampened sales of household goods and food.
• Hong Kong jobless rate held steady at 3.3% for the three months to
September, a level unchanged since July, as steady economic
expansion continued to support the job market.
• Today, China 3Q GDP will take center stage to confirm that growth
is moderating towards the 7% handle. Other key data namely retail
sales, industrial production and fixed asset investment are on the
deck too. On top of this, look out for RBA minutes and US existing
home sales.
Economic Calendar Release Date
Country
Date
Event
Reporting Period
US
10/21
Existing home sales
Sept
10/22
MBA mortgage applications
Oct 17
UK
Japan
Revised
--
--
5.6%
--
Sept
0.0%
-0.2%
--
PSNCR
Sept
--
1.6b
--
10/22
BOE minutes
10/21
--
All industry activity index
Aug
-0.4%
-0.2%
--
Supermarket sales
Sept
--
-0.1%
--
Cabinet Office Monthly Economic Report
Oct
Trade balance
Sept
-¥780.0b
-¥949.7b
--
--
Fixed asset investment rural YTD
Sept
16.3%
16.5%
--
Retail sales
Sept
11.7%
11.9%
--
Industrial production
Sept
7.5%
6.9%
--
GDP
3Q
7.2%
7.5%
--
Sept
6.2%
3.9%
--
3Q
0.4%
0.5%
--
HK
10/21
CPI
AU
10/21
RBA minutes
10/22
CPI QOQ
2
-1.8%
CPI MOM
10/22
Source: Bloomberg
Prior
1.0%
10/21
10/21
China
Survey
Forex
MYR
FX Table
Nam e
• MYR that was mostly sideways through Asian session advanced 0.06% to
Last Price
DoD %
High
Low
YTD %
EURUSD
1.2800
0.31
1.2817
1.2731
-6.9
USDJPY
106.95
0.07
107.39
106.78
1.5
GBPUSD
1.6165
0.45
1.6179
1.6080
-2.4
• MYR may retain some bullish bias amid a weaker overnight USD but selling
0.46
3.2722 at closing following USD softness as European trading opened.
Renewed MYR buying interest led by firmer Asian markets led MYR higher
against 9 G10s.
AUDUSD
0.8784
0.8802
0.8745
-1.6
pressure ahead of tomorrow’s closure of Malaysian market is likely to keep
EURGBP
0.7919
-0.12 0.79305
0.7904
-4.6
gains limited.
USDMYR
3.2722
-0.06
3.2657
-0.4
USD
3.275
EURMYR
4.1743
-0.61
4.1785
4.1649
-7.5
• USD started the week weaker against 7 G10s, grinding lower amid an absence
JPYMYR
3.0599
-0.10
3.0641
3.0458
-1.9
of data and firmer US equities market. The dollar Index erased all gains in early
GBPMYR
5.2728
0.03
5.2761
5.2604
-2.7
European trading before slipping lower to close at 84.95.
SGDMYR
2.5697
-0.13
2.5716
2.5674
-0.8
• We maintain our view of a softening USD, dampened by retreating bets as
AUDMYR
2.8656
-0.43
2.8728
2.8619
-2.0
economic and higher interest rate outlook of the US dims. Solid US
NZDMYR
2.6006
-0.14
2.6026
2.5937
-3.4
Source: Bloomberg
existing home sales will likely arrest losses.
EUR
• EUR advanced 0.31% to recapture the 1.2800 level against a sliding USD
but broader recovery remains tepid, falling against 5 G10s as bets continue to
MYR vs Major Counterparts (% DOD)
shy away amid gloomy Eurozone economic outlook.
EUR
-0.61
MYR
CHF Depreciated
-0.55
-0.13
MYR
Appreciated
-0.10
-0.06
GBP
SGD
JPY
• GBP climbed 0.45% to an 8-day high of 1.6165 against a softer USD on
USD
sustained inflow as European equities slipped. GBP strengthened against 8
G10s.
-0.05 HKD
• We continue to expect subdued European economic sentiments and
-0.03 CNY
GBP
-0.60
doubtful that recovery can sustain approaching 1.29 level.
AUD
-0.43
-0.80
• EUR advance is likely to extend on the back of a softer USD but we remain
-0.40
-0.20
0.00
market weakness to firm up GBP that is supported by a comparatively
0.03
more hawkish outlook.
0.20
JPY
• JPY fell against 8 G10s and weakened 0.07% against a soft USD to close at
106.95 as support from haven demand gave way to firmer risk appetite in the
US market.
• Continued rebound in market sentiments as well as signs of extended
weakness in the Japanese economy will keep JPY pressured against USD.
AUD
• AUD strengthened 0.46% to 0.8784 against a soft USD and climbed against
9 G10s, led higher by firmer risk taking activities in the markets as well as
buoyed by speculation of liquidity injection into major Chinese banks.
• AUDUSD remains vulnerable to declines below 0.88 handle; RBA minutes
and a set of Chinese data will provide downside risks to trigger renewed
bearishness.
SGD
• SGD was also led higher by returning risk appetite, rising against 8 G10s and
advanced 0.42% against a soft USD to close at 1.2697, its strongest level
in nearly 4 weeks.
• Markets are likely to extend the rebound, but upside strength remains
fragile in our view, thus we expect SGD gains to be limited.
3
Fixed Income
US T
T e nure
C lo s ing ( %)
C hg ( bps )
2-yr UST
0.35
-2
5-yr UST
1.41
-1
10-yr UST
2.19
0
30-yr UST
2.97
0
M GS
US Treasuries
UST ended steady with short to mid ends easing 1-2 bps from
last Friday’s closing levels. Demand for safe haven garnered
traction amid declining US stocks after shares price of IBM
G II*
T e nure
C lo s ing ( %)
C hg ( bps )
C lo s ing ( %)
C hg ( bps )
3-yr
3.48
2
3.64
5-yr
3.63
0
3.78
0
7-yr
3.77
-1
3.98
-1
10-yr
3.78
1
4.11
1
15-yr
4.16
0
4.39
0
20-yr
4.25
1
4.59
0
30-yr
4.58
0
0
* M arket indicative levels
C lo s ing ( %)
1-yr
3.73
Expect players to be tracking closely tonight’s release of existing
home sales ahead of CPI data prints scheduled on Wednesday.
With Eurozone yet to be out of the woods coupled with
lingering global growth concerns, UST are expected to
range-trade with supports emerging amid the allure of safe
haven UST.
MGS
M Y R IR S Le v e ls
IR S
plunged the most in over four years after it abandoned 2015
earnings forecast.
C hg ( bps )
Trading saw thinner trading volume amid a shorter trading week in
conjunction with upcoming Deepavali celebration. Amount traded
1
3-yr
3.78
0
5-yr
3.85
-1
7-yr
4.00
1
10-yr
4.08
0
in MYR govvies was over RM1.6b versus last Friday’s RM5.4b.
Mild profit taking seen on selected stocks following the recent
strong rally in local govvies sending yields to inch 1 to 2 bps
higher. Noticed heavy volume dealt on off the run MGS 10/15 with
RM966m changing hands.
So urce : B lo omberg
Daily Trades Government Bonds
Securities
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
MGS
GII
GII
SPK
Closing
Vol
YTM (RM mil)
2/15
9/15
10/15
7/16
9/16
2/17
3/17
9/17
10/17
3/18
9/18
10/19
11/19
7/20
9/21
3/23
7/24
4/32
4/33
3/21
5/24
2/24
3.341
3.515
3.350
3.410
3.507
3.467
3.476
3.553
3.596
3.578
3.552
3.625
3.662
3.723
3.767
3.816
3.778
4.274
4.245
3.981
4.106
4.260
Source: BPAM
4
30
7
966
18
24
25
23
16
13
67
49
62
18
70
33
0
12
3
5
22
121
20
1604
Previous
YTM
3.361
3.373
4.383
3.380
3.364
3.474
3.470
3.488
3.524
3.571
3.533
3.632
3.668
3.718
3.760
3.831
3.772
4.297
4.241
3.981
4.109
4.260
Previous
Trade Date
(dd/mm/yyyy)
17/10/2014
10/10/2014
17/10/2014
16/10/2014
17/10/2014
15/10/2014
17/10/2014
17/10/2014
15/10/2014
17/10/2014
17/10/2014
17/10/2014
17/10/2014
17/10/2014
17/10/2014
17/10/2014
17/10/2014
16/10/2014
17/10/2014
17/10/2014
17/10/2014
17/10/2014
Chg
(bp)
-2
14
21
3
14
-1
1
6
7
1
2
-1
-1
0
1
-2
1
-2
0
0
0
0
Interestingly, we noticed that MGS 7/24 and MGS 9/21
appears to be trading near parity with only a tight 1-2 bps
difference in yields taking cue from the recent strong rally in
MGS 7/24. Hence a significant kink has emerged on the 7-year
MGS 9/21 which could appeal to investors from a tactical
play. Meanwhile GII 5/24 was again traded with RM121m dealt,
with levels settling at 4.11%.
With the Ringgit rebounding stronger this morning, prospects
of fresh leads may potentially flow into the MYR space albeit
on thinner trading volume ahead of upcoming public holiday.
PDS/Sukuk
In the credit trading space, trading volume was over RM248m
transacted, tracking the thinner volumes seen in MYR govvies.
Amongst GG bonds/sukuks, we saw heavy volume of RM65m
traded for BPMB ’29 with levels done 3 bps tighter to close at
4.68%.
Meanwhile HSBC Amanah ‘10/19 traded at 4.17% with RM30m
changing hands. A slew of Aman Sukuk maturing ‘2/21 and ‘5/21
traded ending at 4.32% and 4.33% respectively. Meanwhile BGSM
‘6/24 traded 1 bps inside to end at 5.19% with RM30 done.
Daily Trades: PDS / Sukuk
Securities
Khazanah Nasional Berhad
3/20
Syarikat Prasarana Negara Berhad
8/21
Perbadanan Tabung Pendidikan Tinggi Nasional 3/24
Bank Pembangunan Malaysia Berhad
9/29
Pengurusan Air SPV Berhad
11/14
Sime Darby Berhad
11/14
Putrajaya Holdings Sdn Berhad
4/15
HSBC Amanah Malaysia Berhad
10/19
Malaysia Airports Capital Berhad
8/20
Aman Sukuk Berhad
2/21
Aman Sukuk Berhad
5/21
Telekom Malaysia Berhad
6/21
Projek Lebuhraya Usahasama Berhad
1/24
Ranhill Powertron Sdn Berhad
6/15
Sabah Development Bank Berhad
7/15
Sabah Development Bank Berhad
9/15
Sabah Development Bank Berhad
7/16
Public Bank Berhad
8/17
Etiqa Takaful Berhad
5/19
CIMB Islamic Bank Berhad
9/19
Bright Focus Berhad
1/16
First Resources Limited
7/17
CIMB Group Holdings Berhad
4/15
Besraya (M) Sdn Berhad
7/18
BGSM Management Sdn Berhad
12/20
Edaran SWM Sdn Berhad
10/22
BGSM Management Sdn Berhad
6/24
Malakoff Power Berhad
12/16
WCT Holdings Berhad
8/20
Bank Muamalat Malaysia Berhad
6/16
Rating
Closing
YTM
Vol
(RM mil)
Previous
YTM
GG
GG
GG
GG
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AAA
AA1
AA1
AA1
AA1
AA1
AA1
AA+
AA2
AA2
AA3
AA3
AA3
AA3
AA3
AAAAA3
4.141
4.163
4.408
4.675
3.357
3.334
3.508
4.171
4.299
4.32
4.331
4.37
4.508
3.767
4.156
4.086
4.396
4.278
4.408
5.28
4.27
4.355
4.388
4.277
4.838
5.37
5.199
4.435
4.853
4.389
10
1
5
65
7
3
10
30
5
5
5
5
10
8
1
0
6
0
1
1
2
1
1
1
10
10
30
2
10
3
248
4.278
4.198
4.411
4.701
3.552
3.382
3.501
4.168
4.259
4.496
4.324
4.381
4.504
3.777
4.191
4.215
4.415
4.206
4.402
4.75
4.298
4.453
3.931
4.083
4.86
5.482
5.209
4.446
5.056
4.392
Previous
Trade Date
(dd/mm/yyyy)
23/04/2014
22/08/2014
17/10/2014
14/10/2014
05/09/2014
22/09/2014
26/09/2012
17/10/2014
21/08/2014
24/04/2014
17/10/2014
09/10/2014
14/10/2014
18/08/2014
03/10/2014
14/10/2014
30/09/2014
08/10/2014
23/09/2014
15/10/2014
18/09/2014
04/07/2014
22/07/2014
08/08/2012
26/09/2014
08/09/2014
23/09/2014
29/08/2014
26/03/2014
08/10/2014
Chg
(bp)
-14
-4
0
-3
-20
-5
1
0
4
-18
1
-1
0
-1
-4
-13
-2
7
1
53
-3
-10
46
19
-2
-11
-1
-1
-20
0
Spread
Against
IRS**
30
17
33
36
-37
-39
-22
33
37
40
34
38
43
4
43
36
67
50
57
144
55
58
66
46
91
135
112
71
93
66
** spread against nearest indicative tenured IRS
Source : BPAM
Market/Corporate News: What’s Brewing
The Land Public Transport Commission (SPAD) is proposing to the Government that
the upcoming Mass Rapid Transit line 2 (MRT2) would need a spur line between Sungai
Buloh and Selayang. Last week, StarBiz highlighted the alignment issue of the MRT2
that has caused confusion among the officials and industry executives in the
construction and transportation sector. Responding to this matter, SPAD chief executive
officer Mohd Nur Kamal told StarBiz that the commission was putting forward to the
Government that a spur line would be needed to connect Sungai Buloh and Selayang. It
was announced that the MRT2 project, costing an estimated RM23bil, would be from
Selayang to Putrajaya and work will start next year. But according to the master plan, it
was supposed to start in Sungai Buloh, where the MRT depot is being built, and end in
Putrajaya. The Sungai Buloh depot is regarded as possibly the largest in South-East
Asia and designed at a cost to have the capacity and support the convergence of two
MRT lines. The Sungai Buloh depot is being constructed at a cost of RM459.9mil on
65ha at the Rubber Research Institute site. The contract, which was awarded to Trans
Resources Corp Sdn Bhd (TRC) in May 2012, is expected to be completed by first
quarter of 2016. (Source : The Star)
Rating Actions
Issuer
PDS Description
Rating/Outlook
Action
Tan Chong Motor Holdings
Berhad
ADCB Finance (Cayman)
Limited
RM1.5 billion Medium-Term Notes Programme (2014/2034) and
RM1.5 billion Commercial Papers Programme (2014/2021)
RM3.5 billion MTN Programme (2010/2030) (funding conduit for
Abu Dhabi Commercial Bank PJSC)
AA2/P1 (Stable)
Assigned
AAA/P1 (Stable)
Reaffirmed
Source: MARC, RAM
5
Hong Leong Bank Berhad
Fixed Income & Economic Research, Global Markets
Level 6, Wisma Hong Leong
18, Jalan Perak
50450 Kuala Lumpur
Tel: 603-2773 0469
Fax: 603-2164 9305
Email: [email protected]
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