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Malaysia stock market and companies daily report (October 11, 2012)

Contributed by Shares Investment

Ringgit Declines As European Crisis Deters Riskier Assets
Malaysia’s Ringgit hit a two- week low over concerns that debt crisis at the Eurozone will further dampen demand for riskier assets. The International Monetary Fund had warned of a renewed global crisis if policy makers fail to implement fiscal tightening or establish a single supervisory system. The news affected the MSCI Asia Pacific Index of stocks, which declined for a third day straight. According to Bloomberg, it is believed that a government report today may show the country’s industrial production contracted 2 percent in August from a year earlier based on median estimate of 20 economists in a Bloomberg News survey. This would be the first drop since July 2011. A Singapore based economist at Mizuho Bank stated that the weak factory output data tomorrow maybe cause further sell-offs on the Ringgit. In a report, the IMF further stated that European banks may need to sell as much as US$4.5 trillion in assets through 2013 if policy makers fall short of pledges to stem the fiscal crisis.
Significance: The IMF had cut its global growth forecasts and warned of even slower expansion should the European officials fail to contain the crisis. This may signal slower exports for the country in the near term pulling the currency lower.

AirAsia Founders Sets 3 IPOs In 2013
The founders of Malaysia’s AirAsia Tan Sri Tony Fernandes and Datuk Kamarudin Meranun are prepared to launch an initial public offering spree in 2013 with three listings worth more than US$500 million. Malaysia’s Tune Group, owned by the two founders, is expected to launch a US$65 million IPO of its insurance arm, Tune Insurance, no later than the first quarter of next year according to two sources familiar to the deal. Meanwhile, AirAsia’s long-haul arm, AirAsia X, is targeting for a US$250 million IPO early next year. The group is also looking to list its Indonesia operations, Indonesia AirAsia around the same period next year in a deal that could raise up to US$200 millon. The listing plans also come at a time when Fernandes has relieved his position as chief executive officer of the Malaysian-listed airline to focus on regional growth through Indonesia.
Significance: The plan fits well into a favourable period where privatisation schemes and economic growth have positioned Malaysia as Asia’s top destination for IPOs, accounting for US$7.9 billion of the US$30 billion worth of new listings in Asia-Pacific this year based on Thomson Reuters data.

Pharmaniaga Soars Over Potential Acquisition Catalyst
Pharmaniaga shares climbed 5.43 percent on 10 October following a report from HwangDBS Vickers Research that the materialisation of its Indonesian brownfield manufacturing facility would be a major catalyst for the stock. The pharmaceutical group led the top gainers list on the local bourse, up 39 sen to RM8.12 with 306,000 shares done at afternoon trade on 10 October. Pharmaniaga is currently in the final stages for the acquisition of a brown field manufacturing facility and soon be able to manufacture pharmaceutical products in Indonesia as well as import its Malaysian-made products to be sold there. The acquisition would act as a catalyst for the stock given the massive population in Indonesia market, where the pharmaceutical company has already established a distribution network. The research house opines that Pharmaniaga is greatly undervalued given the rising investor appetites towards the booming healthcare industry.
Significance: Pharmaniaga serves as a strong proxy to Malaysia’s growing healthcare industry. It is expected to ride on the projected 9.5 percent compounded annual growth rate of the pharmaceutical products market from 2009 to 2014.