Oil to drive investor interest on Bursa Malaysia

by SHAZNI ONG/ pic by MUHD AMIN NAHARUL

INVESTORS are expected to remain vigilant for any impetus in the local stock market this week, as oil prices surged to six-month highs yesterday — hitting their highest since May at the open — on fears over supply disruptions while Wall Street futures fell and safe-haven bets returned.

Saturday’s attacks on Saudi Arabia’s crude facilities knocked out more than 5% of global oil supply and sent oil prices surging as much as 20% yesterday.

Reuters noted global bonds were sold off last week — sending yields higher — led by a broader risk rally on hopes the US and China would soon end their long trade war.

Investors also await the outcome of the US Federal Reserve’s policy meeting tomorrow at which it is widely expected to ease interest rates and signal its future policy path.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the surge in Brent crude price following the attack on Saudi Arabian oil facilities should be positive for Malaysia, given the oil and gas sector is one of the main contributors to the government’s revenue.

He said Bank Negara Malaysia (BNM) is not in a hurry to cut rates although the inflation rate has been low amid economic uncertainty globally.

The central bank now has more room to reduce the rates in the future and provide monetary stimulus should the situation warrants for such a policy response.

“The FTSE Bursa Malaysia KLCI (FBM KLCI) has already in an oversold position from a technical analysis standpoint. Therefore, a rebound this week is likely to happen. Perhaps, the FBM KLCI could range between 1,610 and 1,615 this week,” he told The Malaysian Reserve yesterday.

Bursa Malaysia closed at 1,601 points last Friday on last-minute buying after hovering in the red most of the day and the absence of local buying impetus. Below are some companies that could see active trading in the week ahead.

Axiata, Digi

This week marks the second week since the proposed merger between Axiata Group Bhd and Telenor ASA, DiGi.Com Bhd’s parent, ended.

Investors fled from Axiata and Digi last Tuesday on the news erasing some RM9.2 billion in combined market capitalisation.

The now-defunct merger had been proposed in response to heightened competition, rising data monetisation cost and increasing capital expenditure despite flat revenue growth.

Axiata and Telenor have said they do not rule out the possibility of a future transaction. Share prices of both telecommunication companies since then retraced some of their losses.

PetChem

Petronas Chemicals Group Bhd (PetChem) last Friday announced it completed the acquisition of Dutch firm Da Vinci Group BV, marking PetChem’s maiden entry into specialty chemicals.

With the completion of the acquisition, Da Vinci is now a wholly owned subsidiary of PetChem. Da Vinci is involved in own-brand reselling, formulating and manufacturing of silicones, lube oil additives and chemicals.

In a statement, PetChem MD and CEO Datuk Sazali Hamzah said the acquisition of Da Vinci provides a compelling entry point for PetChem to grow into silicones business and enhance its competitive position in attractive end-markets such as personal care, construction, paints and coatings, electronics, automotive and healthcare, particularly in the Asia- Pacific region.

Hong Leong Financial Group

Investors’ interest could edge to Hong Leong Financial Group Bhd after Hong Leong Group and private equity firm TPG’s announcement last week on the purchase of Columbia Asia Hospitals in South-East Asia for US$1.2 billion (RM5.02 billion).

In total, Hong Leong Group and TPG will acquire 17 Columbia Asia hospitals with a breakdown of 12 hospitals in Malaysia, three hospitals in Indonesia and two hospitals and a clinic in

Vietnam. The transaction is expected to be completed by the end of 2019. However, the 11 hospitals in India are not a part of the transaction and will continue to operate with no changes under the existing ownership of International Columbia US, LLC, which is managed by Seattle-based Columbia Pacific Management.

Pos Malaysia

There could be a possibility of a potential postage rate hike by Pos Malaysia Bhd in the future.

Speculation is rife that Pos Malaysia would be increasing its postal tariff after the price of domestic mail rose to 60 sen in 2010.

Communications and Multimedia Minister Gobind Singh Deo last Thursday said he would make an announcement soon at least by the next session of Parliament.

“We are looking at something but to be fair to them, there is a discussion and they are supposed to share with me a report on this…once I get the report, I will hold a press conference and I will let you all know what the direction is,” he said, adding the matter will be finalised by the end of this year.