Oil prices rise on Chinese bump in crude imports

Oil futures rose Thursday, extending their recent gains following a report of steep draw in U.S. crude inventories and another big increase in Chinese oil imports.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in October CLV6, +1.71% traded up 1.6% at $46.24 a barrel. November Brent crude on London’s ICE Futures exchange LCOX6, +1.38% rose 1.3% to $48.61 a barrel.

Futures maintained their gains after Chinese government data showed the country’s oil imports rose to their highest level of the year last month, the latest sign that China’s appetite for foreign crude remains voracious amid depressed oil prices.

China, the world’s No. 2 oil user after the U.S., imported 32.85 million tons of oil in August, equivalent to 7.8 million barrels a day, data from the General Administration of Customs showed Thursday. The figure is the highest level of monthly imports since December and marks an increase of 7% from a year ago.


The data are another indication that oil demand around the world has been spurred on by low prices, although signs have emerged that in the U.S. and other developed countries fuel consumption may be slowing down.

In China, oil imports have been high all year due in part to strong buying from independent refiners known as teapots. A loosening of import rules on teapots has led to a surge in foreign oil purchases by these refiners. Beijing, meanwhile, is widely seen as taking advantage of low crude prices to build its strategic oil reserves.
U.S. stockpiles

The course of U.S. oil inventories is expected to come into focus later this week. Data from the U.S. Energy Information Administration due during U.S. trading hours early Thursday are expected to show stockpiles there rose by 500,000 barrels last week, according to a Wall Street Journal survey of analysts.

But recent data from the American Petroleum Institute, an industry group, bucked those expectations, helping to fuel Thursday’s rally. The API showed a 12.1 million-barrel drop in inventories.

Prices have been rallying this week following a cooperation pact between Saudi Arabia and Russia aimed at stabilizing the oil market as a supply glut persists. But skepticism over whether big producers will follow through on formal production caps has kept those gains in check, and prices have failed to maintain any rally above $50 a barrel since June.

“Mostly, the [price] movement is down to speculation,” said Peter Lee, an oil and gas analyst at BMI Research.

“There hasn’t been a clear-cut sign from any of the other players that they will come to an agreement.”




In addition, given that output levels among members of the Organization of the Petroleum Exporting Countries are so high, “even if they would agree on a production freeze, it basically means that everyone would be producing at their peak rates,” Lee said. “It doesn’t do much in terms of the oversupply.”

An informal OPEC meeting is set for later this month.

Nymex reformulated gasoline blendstock for October RBV6, +1.72% — the benchmark gasoline contract — rose 1.3% to $1.3646 a gallon.




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KLSE IForex Stocks Recommendations : Epic Research Malaysia

INTERNATIONAL CURRENCY BUZZ

• Forex – Dollar broadly weaker on Fed rate hike doubts.

• Forex – GBP/USD slides lower after U.K. data disappoints.

• Forex – Aussie edges lower after GDP data, kiwi hits 16-month high.

EUR/USD

EURUSD closed above 1.1200 yesterday with price action now likely to stay flat within 1.1300 – 1.1270 price level into tomorrow’s ECB meeting. In the near term, expect the price to dip towards 1.1200 on the minor bearish divergence that is formed on the chart. Resistance at 1.1270 – 1.1280 remains key to the upside, and a break out above this resistance could keep the bullish momentum send EURUSD to test 1.1300 followed by 1.1341.A possible reversal near the resistance level could, however, signal a near-term weakness ,
which could be confirmed if EURUSD breaks down below 1.1200.

GBP/USD

The pound slid lower against the U.S. dollar on Wednesday, after data showing that U.K. manufacturing production fell more than expected in July dampened optimism over the strength of the economy.GBP/USD hit 1.3378 during European morning trade, the session low; the pair subsequently consolidated at 1.3388, shedding 0.36%.Cable was likely to find support at 1.3292, Tuesday’s low and resistance at 1.3446, Tuesday’s high and a one-and-a half month peak.The U.K. Office for National Statistics said that manufacturing production decreased by 0.9% in July, worse than expectations for a decline of 0.4% and following a drop of 0.2% a month earlier that was revised from an initial 0.3% decline.On an annualized basis, manufacturing production rose 0.8% in July, worse than forecasts for a 1.7% increase.However, the report also showed that industrial production inched up by 0.1% in July, better than forecasts for a 0.2% decrease and following the 0.1% gain in the preceding month.

RECOMMENDATION :

• BUY GBP/USD ABOVE 1.3445 TGT 1.3465 1.3495 SL 1.3415.

• SELL GBP/USD BELOW 1.3355 TGT 1.3335 1.3305 SL 1.3385.

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KLSE Stocks Recommendations : Epic Research Malaysia

Malaysia Stock Market:

• The FBM KLCI index lost 0.35 points or 0.02% on Wednesday. The Finance Index increased 0.26% to 14550.55 points, the Properties Index up 0.65% to 1206.69 points and the Plantation Index down 0.84% to 7845.25 points. The market traded within a range of 11.52 points between an intra-day high of 1691.61 and a low of 1680.09 during the session.

• Actively traded stocks include SANICHI, SANICHI-WD, M3TECH-WA, IRIS, CENTURY, FGV-C16, NWP, KRONO, VIVOCOM and FGV. Trading volume decreased to 1565.07 mil shares worth RM1578.42 mil as compared to Tuesday’s 1733.30 mil shares worth RM1570.06 mil.

• Leading Movers were GENM (+8 sen to RM4.58), CIMB (+7 sen to RM4.90), SKPETRO (+1 sen to RM1.57), DIGI (+3 sen to RM5.08) and HLBANK (+6 sen to RM13.20). Lagging Movers were IOICORP (-6 sen to RM4.45), WPRTS (-5 sen to RM4.45), AMMB (-4 sen to RM4.36), TENAGA (-12 sen to RM14.56) and HLFG (-12 sen to RM15.88). Market breadth was positive with 411 gainers as compared to 354 losers.

• The KLCI inched down and closed lower at 1689.57 points despite overnight gains in US market.The performance of our local bourse was limited as profit taking kicked in.

STOCK RECOMMENDATION :

• BUY KRONO ABOVE 0.275 TGT 0.290 0.300 SL 0.260.

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Asian Market Update : Epic Research Malaysia

Asian shares hovered near one-year peaks on Thursday as investors awaited Chinese trade data and a policy meeting by the European Central Bank, where it may announce an extension of its asset buying campaign.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2 per cent, but that followed four days of gains which took it to the highest since late July 2015.

South Korea's market added 0.4 per cent, having also touched a one-year top this week.

Japan's Nikkei lost 0.1 per cent, easing away from a three-month top in the face of a strengthening yen.



China's trade report should offer some guidance on the state of global demand. So far, Asia's trade recession shows no sign of abating and economists polled by Reuters expect China's exports fell 4 per cent in August, a similar rate to July.

Imports may have fallen 4.9 per cent, which would be a significant improvement from July's 12.5 per cent fall, likely due to higher commodity prices.

Beijing would welcome any sign of improvement on the trade front as the economy has become increasingly unbalanced, with growth ever more reliant on government spending as private investment fizzles.

There was little in the way of a lead from Wall Street. The Dow ended Wednesday down 0.06 per cent, while the S&P 500 lost 0.02 per cent and the Nasdaq added 0.15 per cent to eke out a record high finish.

Apple shares rose 0.6 per cent, after the biggest company by market value unveiled its new iPhone.

The main event later on Thursday will be the ECB's regular policy meeting.

Nearly all analysts polled by Reuters expect rates to remain unchanged on Thursday, though there was more uncertainty on whether the ECB would announce an extension of its 80 billion euro (S$121 billion) of monthly asset buys.

If it were to make that call, it would likely reinforce speculation of more easing before year end and could pressure the euro.

The single currency was parked at US$1.1243 on Thursday, just off the week's top of US$1.1269.

It jumped earlier in the week when a disappointing reading on the US services sector seemed to diminish the chance of a rate hike from the Federal Reserve and slugged the US dollar across the board.

Neither was there much urgency to tighten in the Fed's latest Beige Book report on the economy, which was littered with the words "modest" and "moderate".

In particular, there was little sign of the wage pressures that the Fed is counting on to push inflation higher.

Futures markets imply only around a 15 per cent chance of a rate rise in September, rising to 42 per cent for December.

The US dollar was also steady against a basket of currencies at 94.930, having touched a one-week low at 94.690.

The yen remained firm at 101.81 per US dollar due in part to talk the Bank of Japan's board was struggling to agree on a common front for more easing at its policy review later this month.

In commodity markets, US crude extended an overnight bounce after US inventory data showed what might be the largest weekly stock draw in over three decades.

US crude was 82 US cents higher at US$46.32 a barrel, while Brent futures rose 72 US cents to US$48.70.




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Opening Market Update : Epic Research Malaysia

MALAYSIA share prices opened higher on Thursday with the FTSE Bursa Malaysia Kuala Lumpur Composite Index up 1.860 points to 1,691.530.

Volume was 17.496 million lots worth RM7.794 million.

Gainers outnumbered losers 68 to 44.



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TNB inks deal with SIPP Energy, a private vehicle owned by the Johor Sultan

After two years of uncertainty and negotiations, SIPP Energy Sdn Bhd has finally received the go-ahead from the Government to build a 1,440MW power plant in Pasir Gudang, Johor.

Towards this end, it inked a 21-year power purchase agreement (PPA) with Tenaga Nasional Bhd (TNB) yesterday.

The national utility company told the stock exchange that SIPP’s unit, Southern Power Generation Sdn Bhd, will construct, own, operate and maintain the gas-fired combined cycle electricity generating plant.

SIPP, which is a private vehicle owned by the Johor Sultan, was first awarded the project in June 2014 as part of a consortium with TNB and YTL Power International Bhd to build a 1,000MW-1,400MW power plant.






However, YTL Power and TNB subsequently left the consortium, leaving SIPP to negotiate the deal on its own.

SIPP continued its negotiations, but was reportedly faced with roadblocks in getting the final go-ahead, mainly due to tariff rates.

The company is believed to have sought a tariff rate of about 39 sen per kWh. However, the rate of new concessions has to be benchmarked against the last completed gas-fired power plant.

In this case, Malaysia’s last completed gas-fired power plant was built by TNB in Prai, Penang, and was paid a tariff of 34.7 sen per kWh.

According to an industry source, the tariff rate for the Pasir Gudang power plant is likely to be slightly above the 34.7 sen per kWh benchmark.

This, he said, was in relation to the stronger US dollar, which translates to higher costs for the contractor.

“The Energy Commission makes the final decision on tariff rates and will inform the related parties.

“In this case, the rate is likely to be slightly higher than that of the power plant in Prai, because of the currency exchange rate,” he told StarBiz.

Previous reports, quoting industry sources, stated that SIPP had put in a revised submission of 36.7 sen per kWh after its initial submission of 39.19 sen per kWh was rejected by the Energy Commission (EC).

TNB, in its brief announcement yesterday, said the new plant would comprise of two generating blocks, with each block having a capacity of 720MW and an expected commercial operation date of Jan 1, 2020.

“The PPA governs the obligations of the parties to sell and purchase the generating capacity and, to the extent despatched, the electrical energy generated by the facility.

“The PPA will be for a period of 21 years from the commercial operation date of the first generating block,” said the power giant.

It said the signing of the PPA would not have any effect on the issued and paid-up share capital and the shareholdings of its substantial shareholders.

It added that the PPA would have a neutral impact on its earnings over the term of the PPA.

Back in 2014, the project, dubbed Project 4A, had been awarded directly to the consortium, without going through a competitive bid.

The move raised eyebrows as it went against the general principle in the reform of the energy sector, whereby all power plants are to be awarded based on a competitive tender.

In response, the Energy, Green Technology and Water Ministry (KeTTHA) had stated that the project was directly awarded as it needed to be fast-tracked and brought forward to 2018 from an earlier planned commissioning period in 2020.

It added that there had been an emergency situation on May 7, 2014, during which six states were affected by power outages and TNB had to exercise load-shedding in order to stabilise the system.

YTL Power subsequently pulled out of the consortium due to the misconceptions, leaving SIPP to work with TNB.

However, TNB later confirmed that it had also exited the consortium after their proposal, submitted in May 2015, was not accepted by the EC.

Following TNB’s exit from the project, SIPP was reportedly given a three-month extension to put in its proposal.

In November last year, StarBiz reported that SIPP submitted its proposal for the 4A project with at least two different options for the Government to consider.

The submissions reportedly included revised tariff rates.

They also included a possible increase in the capacity of the power plant.




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Japan's Daikin to build US$29.3m air conditioning equipment plant in M'sia

Daikin Industries of Japan will build a commercial air conditioning equipment plant in Malaysia.

The plant will be constructed on the outskirts of Kuala Lumpur, with initial investment projected to top 3 bln yen (US$29.3 mln), Reuters reported quoting Japan's Nikkei.

Daikin Industries' new factory is to produce large air conditioning units beginning in 2018 for installation in airports and other commercial facilities, the report said.


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Why many firms are at risk of sliding and failing

Many companies, even well-established ones, are at risk of sliding into irrelevance and failure because they do not reinvent themselves continuously.

This was the key message of former Harvard Business Review editor Kate Sweetman, who said companies today were vulnerable to “six blindfolds” and risk losing out to competition.

Sweetman said many established companies became too arrogant and end up either being replaced or overtaken by their competition, adding that many firms refused to believe that any problems existed.

“This means being either completely blind to organisational or individual problems or dismissing them to protect oneself and or the company,” Sweetman said at Menara Star during a learning session organised by leadership development firm Leaderonomics.



“Many also dismiss their competitors’ successes by refusing to accept a competitor’s success as valid and downplaying a competitor’s strategy and product innovations.”

This, she said, was usually because of companies’ own past successes.

Another blindfold, Sweetman said, was that companies refused to acknowledge negative feedback.

“This refers to the inability to hear anything negative about a project, the company, or yourself and to confront the brutal facts as they will get in the way of agendas, deadlines and commitments,” she said.

She also said plenty of companies had the inability to transfer learning, knowledge, ideas and information across boundaries in ways that resulted in the ability to take action.

The sixth blindfold, said Sweetman, was that companies often thought they knew what’s best for their customers.

“This refers to an inability to have empathy for customer frustration and needs and a lack of inquisitiveness to find out ways to perfectly align to customers’ current and future needs.”

To avoid the blindfolds or rather, pitfalls, Sweetman emphasised that a mindset shift was imperative.

The learning session, themed “Reinvention: Accelerating Results In The Age of Disruption,” also featured a panel discussion that comprised Sweetman, Connecting the Dots Consultancy chief executive officer Bharat Avalani, Selfdrvn founder and chief executive officer Lam Mun Choong, Valiram Group global chief operating officer Ashwin Rajgopal and Uber Malaysia general manager Leon Foong.

The panel discussion was moderated by Leaderonomics chief executive officer Roshan Thiran.



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VW to explore new China venture with JAC Motor

Volkswagen AG is exploring a potential joint venture with Chinese automaker Anhui Jianghuai Automobile (JAC Motor), Chinese media reported on Wednesday.

JAC said in a statement on the Shanghai stock exchange late Tuesday that it was halting trading in its shares because it planned to sign a cooperative memorandum of understanding but gave no further details.

State-owned newspaper China Daily reported, citing sources, that VW and JAC likely aim to build a new joint venture together. Independent financial news outlet Caixin also reported that VW was the unnamed potential partner mentioned in JAC's filing.

According to Caixin, the joint venture would be aimed at making electric cars, with sales in the so-called "new energy vehicle" segment having more than quadrupled in China last year thanks to a raft of government incentives and targets.

An official in JAC's media office declined to comment in advance of a public announcement.

A VW spokesman said the company would release a statement later on Wednesday when contacted about the matter. He did not elaborate.

VW is locked in a dead heat with US automaker General Motors for the title of largest automaker in China, the world's biggest auto market, with GM's primary joint ventures slightly edging out VW's to sell the most cars in the market last year, according to automaker association data.

Global auto brands are only allowed to manufacture cars domestically in China through joint ventures with local partners, with automakers typically limited to two JV partners.

VW already has joint ventures with SAIC Motor and China FAW Group.

JAC Motor is the ninth largest automaker in China by group sales, according to the China Association of Automobile Manufacturers.


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India to focus reforms on tax, banks, infrastructure

India will press ahead with tax reforms, repairing the banking system and getting stalled infrastructure projects moving to drive growth, Finance Minister Arun Jaitley said on Wednesday, but it is not yet ready to sell off its state banks.

Asked what his top economic policy priorities were, Jaitley told a conference he was determined to stick to a "very stiff" schedule that foresees passing critical enabling legislation for a new goods and services tax (GST) this autumn.

Jaitley said the new GST, once implemented, would have a "transformational" impact by creating a common market in India for the first time, while also acting as a transfer mechanism that would aid poorer federal states.

The goal of the federal and state governments would be for the tax to be revenue-neutral and, as the tax becomes established, for its rate to come down over time, Jaitley said.

A revenue-neutral tax changes a country's tax structure but is not intended to increase the overall amount of tax levied.

Jaitley did not say what rate he preferred but the government's economic adviser has pegged a revenue-neutral rate at about 18%.

Jaitley said it was vital to revive the banking sector, but ruled out selling controlling stakes in public-sector banks that control 70% of assets in the financial system and hold the lion's share of India's US$120 billion in bad loans.

"I don't think that public or political opinion has converged to the point where we can think of privatisation in the banking sector," Jaitley told The Economist India Summit in New Delhi.

The government is consolidating some of the public sector banks to strengthen them, but does not plan to reduce the state's share below a threshold of 52%, Jaitley said.

India currently owns stakes of between 60% and 86% in nearly two dozen state-run banks.

Getting stalled infrastructure projects moving would help drive growth and provide development benefits for the 1.3 billion people living in India, the economy of which continues to perform below potential, he said.

The latest gross domestic figures showed that growth in Asia's third-largest economy slowed to 7.1% in the three months to June, from 7.9% previously.

"We are still far below our best," Jaitley said in a podium interview, adding that as India looks to key state elections next year and a general election in 2019, economic reforms should bring growth benefits to voters, but the government must also "blend" them with social programmes.


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Judge halts North Dakota pipeline over tribal protests

A federal judge said Tuesday that construction would temporarily halt on a portion of a $3.8 billion oil pipeline in North Dakota where tensions have flared between Native American protesters and law enforcement.

U.S. District Judge James Boasberg said work would stop at an area near Lake Oahe, which the Standing Rock Sioux tribe has said contains sacred and culturally significant sites. Protests led by the tribe and others have grown more aggressive in recent weeks, with some protesters chaining themselves to equipment and several people getting injured over the weekend, according to the Morton County Sheriff’s Department.



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The pound looks ripe for a selloff

Investors have cheered the recent rally in the pound. But one popular technical indicator suggests that the bears could soon retake control of the U.K. currency, which touched a 31-year low after the U.K. voted to leave the European Union on June 23.

The nine-day relative strength index (commonly referred to as the RSI) has reached levels that have, in the past, been associated with short-term peaks in the pound GBPUSD, -0.2158% according to Kit Juckes, chief currency strategist at Société Générale, in a Tuesday research note.

“Once they roll over, bears have the green light,” Juckes said.

The RSI is used by technical analysts to measure the momentum behind an asset or currency. Over the past year, readings of 70 or greater in the nine-day RSI have preceded selloffs in the pound-dollar pair.

In the latest sign that the economic fallout from the Brexit vote hasn’t been as severe as feared, the U.K. services purchasing managers index bounced back to 52.9 in August, compared with 47.4 the previous month. Readings above 50 indicate growth.

Investors are now turning their attention to Prime Minister Theresa May, who is preparing to begin negotiations with European Union leaders over the terms of the U.K.’s exit from the trading bloc.

A key issue for investors is whether Britain can retain access to the single market—the EU’s free trade area.

“Any sign that the UK is considering a ‘hard Brexit’ instead of keeping EMU market access would likely terminate the GBP rally abruptly,” said Hans Redeker, head of global currency strategy at Morgan Stanley, in a note to clients published late last week.

The pound traded at $1.3405 on Tuesday, up 0.8% from its late-Monday level, as a weak reading on U.S. services-sector activity weighed down the dollar against a broad swath of rivals.





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U.S. stocks are in danger of rolling over

For the past three weeks, the S&P 500 has shifted from a short-term uptrend to a sideways movement. Key market indicators currently register not even one bullish signal. If this continues, the market will not only top out, but could roll over.

Take a look at the technical and sentiment indicators from Friday’s close:

Technical indicators

S&P 500 SPX, +0.30% is above its moving averages but moving sideways = Neutral

MACD (S&P 500; 19,39,9) is above the zero line but pointing down = Neutral

MACD (S&P 500; 19,39,9) is below its signal line = Bearish

S&P 500 is near support @ 2,170 = Neutral (2,150 next support level)

Sentiment indicators

II survey: (Aug. 30) 55.9% Bulls; 20.6% Bears = Bearish

AAII survey: (Aug. 31): 28.6% Bulls; 31.5% Bears = Neutral

VIX: @ 11.98 = Bearish

RSI: (S&P 500) @ 55.25 = Neutral

On the sentiment side, while many investors are leery of this market, most pros are all-in and bullish. In fact, bullish sentiment and complacency are at extremes. On the technical side, MACD is giving out a long-term sell signal as the market stalls out at these elevated levels. It was a red flag when the S&P hit its all time-high of 2,193 but failed to break through to the other side. Once again, it retreated.

On the other hand, if the S&P 500 can’t break below 2,170 or 2,165, it will likely remain in no-man’s land. Nevertheless, most bearish investors are too timid to bet against this market, and who can blame them? According to Lance Roberts at Real Investment Advice, inverse ETF volume is at its second-lowest level in five years. This tells me that bearish investors who don’t trust this market are not willing to put their money where their mouths are.

Another red flag is that margin debt is once again reaching extreme levels (although less extreme than in January). “Most importantly,” Roberts writes, “the amount of leverage investors are taking on is further confirmation of “greed” and “lack of fear.” He says that when greed turns to fear, that’s when margin debt really matters.




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Russia, Saudi Arabia are all talk, no action when it comes to oil-output freeze

When the world’s top two largest oil producers speak, traders listen. But it will take solid action in the form of a production ceiling for the market to see any lasting impact.

Saudi Arabia, the world’s largest oil exporter, and Russia, the world’s top oil producer, agreed Monday to cooperate on a bid to stabilize the struggling energy market, by setting up a working group to monitor the market and come up with ways to promote stability.

“There are a lot of statements that appear to support higher prices through a production ceiling,” said James Williams, energy economist at WTRG Economics. “However, when examined closely they fall short of a full commitment. An agreement for a cap in production is still up for grabs.”




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KLSE Comex Stocks Recommendations : Epic Research Malaysia

INTERNATIONAL COMMODITY NEWS

• Gold prices held near a more than one-week high during European hours on Tuesday, as investors awaited fresh signals
  about the timing of a possible U.S. interest rate increase this year.The U.S. Institute of Supply Management is to release data on August service sector activity at 10:00AM ET (14:00GMT) on Tuesday.
• Brent crude prices edged lower during Europe’s session on Tuesday, as optimism surrounding an agreement between Saudi Arabia and Russia to stabilize the oil market began to fade.On the ICE Futures Exchange in London, Brent oil For November delivery declined 35 cents, or 0.7%, to trade at $47.28 a barrel by 4:15AM ET (08:15GMT).
• Natural gas futures fell during noon trade in the domestic market on Tuesday as investors and speculators exit positions in the energy commodity amid speculation that peak summer demand for the power plant fuel which is used to fire up air conditioners in the US may be coming to an end.

ECONOMY NEWS

• A top Federal Reserve official on Tuesday repeated his call for gradual interest rate hikes, evidently unfazed by a slow down in U.S. job gains and sluggishness in the services sector that now has traders betting against any rate hike at all this year.It “makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later,” San Francisco Fed President John Williams said in remarks prepared for delivery to the Hayek Group.
• The yen gained on Wednesday after downbeat U.S. economic data made a U.S. interest rate increase this month unlikely, prompting investors to trim their dollar bets and triggering stop-loss orders in early Asian trade.The dollar was down 0.5 percent at 101.50 yen after dipping as low as 101.245 earlier, its lowest since Aug. 26 and well below last Friday’s high of 104.32 yen. It tumbled more than 1 percent against its Japanese counterpart on Tuesday.
• Top British bankers will tell finance minister Philip Hammond on Wednesday to give them a clearer idea of what thecountry’s divorce from the European Union will mean for them when they hold their first meeting since the Brexit vote.Hammond is to meet with executives from major banks and insurers, including Barclays(L:BARC), HSBC (L:HSBA), Standard Life (L:SL) Santander UK, the British arm of Spain’sBanco Santander (MC:SAN), according to sources.

TRADING STRATEGY :

• BUY GOLD ABOVE 1350 TGT 1355 1360 SL 1345.
• SELL GOLD BELOW 1347 TGT 1342 1337 SL 1352.

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KLSE IForex Stocks Recommendations : Epic Research Malaysia

INTERNATIONAL CURRENCY BUZZ

• Forex – Aussie and kiwi move higher, RBA holds rates.
• Forex – Dollar little changed in rangebound trade.
• Forex – USD/CAD pares losses as oil prices turn lower.

EUR/USD

Service sector activity in the U.S. grew for the 79th consecutive month in August, but at a slower pace than expected, industry data showed on Tuesday.n a report, the Institute of Supply Management (ISM) said its non-manufacturing purchasing manager’s index (PMI) fell to 51.4 last month from 55.5 in July. Analysts had expected the index to drop to 55.0.On the index, a reading above 50.0 indicates the non manufacturing sector economy is generally expanding, below 50.0 indicates the sector is contracting.In an immediate reaction, the dollar weakened. EUR/USD was trading at 1.1213 from around 1.1159 ahead of the release of the data, GBP/USD was at 1.3404 from 1.3367 earlier, while USD/JPY was at 102.48 from 103.35 earlier.The US dollar index, which tracks the greenback against a basket of six major rivals, traded at 95.17 compared to 95.62 prior to the release.

GBP/USD

The pound rose to a one-month high against the U.S. dollar on Monday, boosted by data showing that activity in the U.K. service sector returned to expansionary territory in August, while the greenback remained broadly under pressure.GBP/USD 1.3367 during European morning trade, the pair’s highest since August 3; the pair subsequently consolidated at 1.3367, climbing 0.54%.Cable was likely to find support at 1.3123, the low from September 1 and resistance at 1.3480, the high of July 14.Research group Markit said its U.K. services purchasing managers’ index rose to 52.9 last month from a reading of 47.4 in July. Analysts had expected the index to rise to 50.0.The upbeat data added to current optimism over the strength of the economy and Britain’s ability to overcome any post-Brexit hurdles.

RECOMMENDATION :

• BUY GBP/USD ABOVE 1.3445 TGT 1.3465 1.3495 SL 1.3415.
• SELL GBP/USD BELOW 1.3280 TGT 1.3260 1.3230 SL 1.3310.

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KLSE Stocks Recommendations : Epic Research Malaysia

Malaysia Stock Market:

• The FBM KLCI index gained 11.84 points or 0.71% on Tuesday. The Finance Index increased 0.53% to 14512.94 points, the Properties Index up 0.40% to 1198.87 points and the Plantation Index rose 0.86% to 7911.79 points. The market traded within a range of 16.82 points between an intr-day high of 1689.92 and a low of 1673.10 during the session.

• Actively traded stocks include SANICHI, M3TECH-WA, IRIS, M3TECH, BORNOIL, AAX, REACH-WA,SANICHI-WD, MYCRON and YKGI-WB. Trading volume increased to 1733.30 mil shares worth RM1570.06 mil as compared to Monday’s 1555.51 mil shares worth RM1396.64 mil.

• Leading Movers were BAT (+140 sen to RM51.12), GENTING (+18 sen to RM8.00), WPRTS (+9 sen to RM4.50), CIMB (+9 sen to RM4.83) and AMMB (+8 sen to RM4.40). Lagging Movers were MAYBANK (-2 sen to RM7.87), MAXIS (-1 sen to RM6.24), TENAGA (-0 sen to RM14.68), PETDAG (-2 sen to RM23.36) and HAPSENG (-1 sen to RM7.77). Market breadth was positive with 412 gainers as compared to 341 losers.

• The KLCI closed higher with last minute spike before the closing bell at 1689.92 points amid overnight positive performance in Europe market. The performance of our local bourse was lifted by buying interest in heavy weight counters such as Getting, Westsports Holdings and CIMB.

STOCK RECOMMENDATION :

• BUY AEMULUS ABOVE 0.285 TGT 0.300 0.310 SL 0.265.

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Asian Market Update : Epic Research Malaysia

The US dollar took a tumble and Asian stocks rose to one-year highs on Wednesday after surprisingly weak US services sector activity put paid to already slim chances of an interest rate hike by the Federal Reserve as early as this month.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 per cent, extending its chunky gains of 2.7 per cent over the last two days, to claim a level last seen in July last year.

"When people think there's no immediate rate hike from the Fed, then Asia and emerging markets are the place to go to, as investors seek yields," said Toru Nishihama, senior economist at Dai-ichi Life Research.

Japan's Nikkei slid 0.7 per cent, however, as the yen gained sharply versus the US dollar, putting more pressure on exporters in the world's third-largest economy.


The Institute for Supply Management's index of non-manufacturing activity fell to 51.4, its lowest level since Feb 2010, from 55.5 the month before and well shy of the 55 estimate.

Given the strength in the service sector has been making up for softness in the manufacturing in the past year or so, the data was a blow to the case for the Fed to raise interest rates as soon as this month.

"The Fed now looks certain to keep rates on hold this month," said Shuji Shirota, head of macro economics strategy group at HSBC in Tokyo.

Comments from several Fed officials in recent weeks had boosted bets on a rate hike in coming months, but investors have had to scale back their expectations since Friday's weaker-than-expected US payrolls report.

San Francisco Fed president John Williams, speaking after the ISM data, also said he expects the Fed will raise rates gradually over the next few years.

"Recent hawkish comments from Fed officials were probably intended to warn markets against being too complacent about the chance of a rate hike, rather than to make markets fully price in a rate hike," Mr Shirota said.

US bond yields fell, with policy-sensitive two-year notes yield falling to 0.730 per cent, its lowest since Aug 19, down from 0.853 per cent marked on Aug 29.

US interest rate futures price gained to indicate only about 15 per cent chance of a rate hike this month and just over 50 per cent even by December, compared to above 20 and 60 per cent, respectively, before the data were released.

Declining US yields undermined the US dollar against other currencies and precious metals.

The US dollar, which had slumped 1.38 per cent on the yen on Tuesday, shed another 0.5 per cent to 101.48 yen.

The yen gained additional support from a media report that the Bank of Japan's board is struggling to agree on a common front in its planned policy review.

The euro maintained Tuesday's 0.96 per cent rise against the US dollar, the biggest daily gain in three months on Tuesday and last stood at US$1.1247.

A resurgent British pound rose to near eight-week high of US$1.3445 on Tuesday and held firm at US$1.3416.

Gold rallied to US$1,352.4 per ounce to near three-week highs on Tuesday, and last stood at US$1,350.

The Australian dollar took a breather. It was last down 0.2 per cent at US$0.7668 after GDP data largely met expectations, with Australia's annual growth clocking its fastest pace in four years last quarter, clinching a remarkable run of 25 years without recession.

Oil prices kept some distance from three-week lows touched last week, maintaining a part of gains made after Saudi Arabia and Russia agreed on Monday to cooperate in world oil markets, saying they will not act immediately but could limit output in the future.

Brent crude futures stood at US$47.49 per barrel, up 0.5 per cent on the day and above its low last week of US$45.32.

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Opening Market Update : Epic Research Malaysia

MALAYSIA share prices opened lower on Wednesday with the FTSE Bursa Malaysia Kuala Lumpur Composite Index down 9.420 points to 1,680.350.
Volume was 40.024 million lots worth RM39.73 million.
Gainers outnumbered losers 92 to 70.


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Companies Bill 2015 to take effect next year

The Companies Bill 2015, which will replace the Companies Act 1965, will be implemented in stages from next year.

Companies Commission of Malaysia (SSM) chief executive officer Datuk Zahrah Abd Wahab Fenner said that companies would see some changes in the enforcement as early as in the first quarter.

"Right now the Bill is awaiting the consent of the Yang di-Pertuan Agong Tuanku Abdul Halim Mu'adzam Shah.

"Once we obtain the nod, SSM will enforce it in stages. We are currently working out the details, including the fee structure," she told reporters at the SSM National Conference 2016 in Kuala Lumpur on Tuesday.

The Companies Bill 2015, which is said to be a more modern set of legislation, places emphasis on better governance and internal controls in business operations.

Zahrah said under the new legislation, companies would have to comply with, among others, new rules for better business reporting and improved auditing and acounting.

The Companies Bill 2015 was passed by Parliament on April 28, 2016.

She said the new legislation would encourage more young entrepreneurs to start their own businesses as starting a business would be made simpler, with the removal of multiple forms and the introduction of a super-form.

"Under the 2015 Bill, new set-ups will not be required to have the Memorandum and Articles of Association and common seal at the point of registration.

"A flat incorporation fee will be introduced, depending on the type of companies registered. This will translate into lower cost in starting a business," she said.

Zahrah urged young entrepreneurs, especially those operating via online, to also register their businesses.

They will be fined RM50,000, or face a two-year jail or both, if they fail to do so, she said. - Bernama


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