Breakfast briefing: Friday, February 12

Market wrap: Bank shares dragged Wall Street lower on Thursday on concerns the slowing global economy will continue to pressure interest rates, while energy shares helped pare losses late in the session. Volume was high as the S&P 500 touched its lowest in two years at its session low but shaved half its loss by the close after the Wall Street Journal reported Opec was ready to cooperate on crude oil production cuts. - Reuters

The DJIA fell 254.56 points, or 1.6%, to 15,660.18, the S&P 500 lost 22.78 points, or 1.23%, to 1,829.08 and the Nasdaq dropped 16.76 points, or 0.39%, to 4,266.84.

Forex summary

*The ringgit rises 0.06% to 4.1430 per US$

*It jumps 0.17% to 4.6823 per euro

*Down 0.15% to 5.9943 to the pound sterling

*0.06% higher to 2.9802 per Singapore dollar

*1.22% lower to 2.9447 per Aussie

*Up 0.25% to 3.6775 per 100 yen

Energy

US crude slid on Thursday, hitting 12-year lows as domestic stockpiles grew, Goldman Sachs called for depressed prices until the second half of the year and investors fled from equities and other risky assets into safe havens such as gold. Prices came off session lows in post-settlement trade after the Wall Street Journal quoted UAE's energy minister as saying Opec was ready to cooperate on production cuts. Most traders were sceptical, noting that Venezuela and Russia recently called in vain for Opec and other major oil producers to cut output. Brent LCOc1 settled down 78 cents, or 2.5%, at US$30.06 per barrel. It fell as low as US$29.92. - Reuters

Top foreign stories

Fed's Yellen sticks to her guns as global market rout worsens: Testifying for a second day before US lawmakers, Federal Reserve chair Janet Yellen again stressed that the US central bank was not on a "pre-set" path to return policy to "normal" given a worsening meltdown in global stock markets. Yellen said she still expects the Fed will gradually raise interest rates this year, given a strong US labour market and steady economic growth. - Reuters

AIG strikes deal with Icahn: American International Group Inc (AIG) capitulated in its boardroom fight with activist investor Carl Icahn, nominating both his representative and billionaire John Paulson to its board, as it unveiled a bigger-than-expected quarterly loss. AIG reported an after-tax operating loss attributable to the company of US$1.35 billion, or $1.10 per share, for the fourth quarter ended Dec 31, hurt by weak underwriting and lower returns on investments in a turbulent market. Analysts on average had estimated a loss of 93 cents per share. - Reuters

JPMorgan's Dimon buys more than US$25m of company stock: Jamie Dimon, chief executive officer of JPMorgan Chase & Co, on Thursday bought 500,000 shares of the company's stock for more than US$25 million, according to a filing with the US Securities and Exchange Commission. Dimon's purchase totalled US$26.59 million and brought his total beneficial ownership to 7.79 million shares worth US$413 million at Thursday's closing price. - Reuters

Top local stories

Sime's RM3bil perpetual bond issue hinges on its standalone rating: Sime Darby Bhd's group corporate rating will determine if the conglomerate will go ahead with its proposed RM3bil perpetual bond issue to improve liquidity and meet upcoming debt obligations. Officials familiar with the deal said the management might look at other options if there was any downgrade in Sime’s AAA standalone corporate rating. - StarBiz

Growth in fourth quarter 2015 likely to be slower: Economic growth in the fourth quarter is expected to slow to 4.2% from 4.7% in the third quarter, but Citi Research sees Bank Negara holding interest rate steady unless the downside risk worsens. It noted that a slowdown in external demand would moderate growth in manufacturing exports, including electrical and electronics, although cushioned by the weak ringgit and US demand.

* December industrial production index (IPI) rebounded to 2.7% year-on-year against November’s 1.8%, above consensus and Citi’s expectations of 1% and 2.3%, respectively. 

* Citi Research says liquefied natural gas prices may continue falling through the first half of 2016, which could drag on mining.

* The agro sector remained sluggish on weaker crude palm oil production, while weaker loan volumes added a toll on financial services, despite a rebound in capital market activities in the fourth quarter. - StarBiz

Total trade expected to expand at faster rate: The Government expects the country’s total trade to expand 2% this year, faster than the 1.2% to RM1.47 trillion posted in 2015. International Trade and Industry Minister Datuk Seri Mustapa Mohamed said he expects rising trade with Asean countries to more than offset the projected drop with China. - StarBiz

Kulim buys 4 Indonesian firms: Kulim (M) Bhd, via a 74%-owned subsidiary, is buying four Indonesian companies for RM509.35mil cash in a plan to expand its plantation landbank, even as its minority shareholders weigh a takeover offer by Johor Corp Bhd (JCorp). PT Wisesa Inspirasi Nusantara will pay a total of RM242.89mil for a 95% stake in each of the four target companies, as well as RM266.46mil to settle outstanding shareholders debts and loans taken by the companies. - StarBiz

Felda to re-attempt Indonesian deal with unlisted unit: Felda Holdings will use an unlisted unit, instead of Felda Global Ventures Holdings Bhd, to buy into Indonesia's debt-burdened Rajawali Group, sources said, seeking to avoid heavy investor criticism that scuttled an attempted deal last year. It is also seeking to cut the price by as much as 30%, the sources said. - Reuters

SunCon seen winning RM5.6bil in contracts: Sunway Construction Group Bhd stands to secure up to RM5.6bil worth of new jobs this year, says Maybank IB Research. The research house said the company's job replenishment prospect this year remains robust with potential job wins from railway, bus rapid transit, highways and building projects. - StarBiz

IILM to sell RM5.5bil worth of islamic notes: International Islamic Liquidity Management Corp (IILM), which counts nine central banks as its shareholders, plans to sell US$1.34bil (RM5.54bil) of three- month bills, its biggest offering since being set up in 2010 to support syariah-compliant financial activity. The Kuala Lumpur-based institution said it will auction the Islamic notes on Feb 18. - Bloomberg

Maxwell urged to do investigative audit: The management of Sports shoe maker Maxwell International Holdings Bhd has been urged to conduct an investigative audit on the issues raised by external auditors Baker Tilly Monteiro Heng. Maxwell said one of the issues was the advertising expenses incurred in the retail business during the third quarter ended Sept 30, 2015, which led to the significant net losses of RM46.253mil during the quarter. - StarBiz

Construction works worth RM30b completed in Q4 2015: The value of construction works completed in the fourth quarter of 2015 was up 11.2% to RM30.1 billion versus a year earlier. The Statistics Department said the growth was mainly driven by the civil engineering sub-sector. - StarBiz

TM boosts stake in P1 via RM410.3mil subscription: Telekom Malaysia Bhd (TM), through unit Mobikom Sdn Bhd, has boosted its shareholding in wireless broadband provider Packet One Networks Sdn Bhd (P1) from 55.3% to 72.9%. TM said Mobikom received 10.675 million new P1 shares following the early conversion of RM410.3mil of medium-term notes. - StarBiz

Possible massive shareholding dilution in Stone Master: Stone Master Corp Bhd will experience a massive shareholding dilution should shareholders approve the board’s proposal to issue some 7.6 billion shares for RM1.33 billion worth of building fixtures’ supply from China. The new shares to be issued are equivalent to almost 85 times their current issued share capital of 89.9 million shares. - Edge FD

AGMs/EGMs

Mulpha International Bhd

Time: 2.30pm

Venue: Level 11, Menara Mudajaya, Mutiara Damansara, Petaling Jaya, Selangor

Mulpha seeks shareholder approval for:

* Two call rights issue on a 1-for-2 basis at an indicative price of 50 sen at.

* Exemption for Yong Pit Chin, Mount Glory Investments Ltd and persons acting in concert with from having to make a mandatory takeover offer for Mulpha shares not already owned by them after the rights issue.

Events calendar (US): Friday, February 12

* Release of revised producer price index 

* Month-on-month retail sales advance data for January

* December business inventory figures

* University of Michigan expectations for February