FBM30 1636.66
+8.82 points (+0.54%) Volume
994mil Value 1,800mil
1) KLCI continued to rally ahead of Budget 2013
announcement as key heavyweights led by Banks and Telcos were firmer on
expectations of favorable and expansionary budget. Regionals were also firmer
after Spain made commitments to cut spending to meet its budget deficits. Market breadth was positive with gainers outpacing
decliners 411:301. Futures closed 1633.5pts (3 points discount).
2) Heavyweights: CIMB+2.46% RM7.50, AXIATA+1.72% RM6.50,
GENM+3.86% RM3.50, GENTING+1.40% RM8.71, YTL-0.58% RM1.72, TM+1.64% RM6.19, PETDAG+3.5% RM22.50, AIRASIA+2.37% RM3.02
3) DBT: SUNWAY 16.4mil @ RM2.27, BPPLAS 4.5mil @ RM0.60,
INTEGRA 4.4mil @ RM1.40
4) Situationals:
CRESBLD+3.96% RM1.05: Share price rose after the ex-date
for its bonus new warrants on the basis of 3 warrants B for every 10
existing shares has been set at 16 Oct 2012. The exercise price of the Warrants
B is RM1.00 per Warrant B.
5) BUDGET 2013
BUDGET 2013 was in line with most expectations of an
Election Budget with few surprises.
ECONOMIC NUMBERS
In 2013 GDP is forecast at between 4.5% and 5.5%. The
higher growth is supported by private investment and consumption at 13.3% and
5.7%, respectively. The construction sector is expected to increase 11.2%
followed by the services sector at 5.6%.
The 2013 Budget will allocate RM251.6 billion for the
implementation of development projects, programmes and measures, with focus on
the well-being of the rakyat and national development. Of this amount, RM201.9 billion is for Operating Expenditure while RM49.7
billion, for Development Expenditure.
Under Operating Expenditure, RM58.6 billion is allocated
for Emoluments and RM33.7 billion is allocated for Supplies and Services.
Meanwhile, RM107.3 billion is allocated for Fixed Charges and
Grants, while RM1.1 billion is provided for the Purchase of Assets. The
remaining RM1.2 billion is for Other Expenditures.
As for Development Expenditure, RM30 billion is allocated
to the economic sector for infrastructure, industrial, agriculture and rural
development. A total of RM11.1 billion is allocated to the social sector
including education and training, health, welfare, housing and community
development. In addition, RM4.6 billion is allocated for the development of the
Security Sector, RM2 billion for General Administration and RM2 billion for
Contingencies.
In 2013, the Federal Government revenue collection is
estimated at RM208.6 billion compared with RM207.2 billion in 2012.
Taking into account the estimated revenue and expenditure, the Federal
Government fiscal deficit will further decline to 4% of GDP in 2013 from 4.5%
in 2012.
SECTOR PLAYS ON O&G & INFRASTRUCTURE AND
RESTRUCTURING UNDER BUSINESS TRUST
To support the participation of private operators in the
development of the oil and gas industry, various special tax incentives and
non-tax incentives have been provided. These include the cost of land
acquisition and financial assistance as a tipping point for public-private
partnership projects, 100% income tax exemption for a period of ten years,
exemption of withholding tax and exemption of stamp duty.
To encourage major international financial institutions
to make Kuala Lumpur a preferred investment centre, income tax exemption for 10
years for TRX-status companies, stamp duty exemption, industrial building allowance
and accelerated capital allowance for TRX Marquee-status companies as well as
tax exemption for property developers are being provided. The development of
TRX is on schedule. Meanwhile, the realignment of existing utilities on the TRX
site is well underway and is expected to be completed in October 2012.
The Government proposes a business trust be given the
same tax treatment as a company. To encourage the development of business
trusts, it is proposed that the transfer of any business, asset and real
property to a business trust be given stamp duty exemption and real property
gains tax exemption at the early stage of the establishment of a business
trust.
HOUSING
As part of the Government's effort to make affordable
housing a continuous priority, it will allocate RM1.9 billion to build 123,000
affordable housing units in strategic locations in 2013. The initiative will be
implemented by PR1MA, Syarikat Perumahan Nasional Berhad (SPNB) and Jabatan
Perumahan Negara.
Proposes the real property gains tax (RPGT) from the
disposal of properties made within a period not exceeding 2 years from the date
of purchase will be taxed at the rate of
between 15% and 10% of disposal of property within a period of 2 to 5
years. For property disposed after
5 years from the date of acquisition, RPGT is not
applicable. In addition, gains from the disposal of one residential property
once in a lifetime and disposal of properties based on love and affection
between husband and wife, parents and children, grandparents and grandchildren
are exempted from RPGT.
SUBSIDIES
Propose to reduce the subsidy on sugar by RM0.20 per
kilogramme, effective from 29 September 2012 but is still subsidising RM0.34
per kilogramme on sugar involving an expenditure of RM278 million.
TAX
Proposes that individual income tax rate be reduced by 1
percentage point for each grouped annual income tax exceeding RM2,500 to
RM50,000.
The measure will remove 170,000 taxpayers from paying tax
as well as provide savings on their tax payment
Overall there were many "goodies" for the lower
income bracket and civil servants plus a token tax reduction of 1% for the
middle income pool as part of the preparation for a broad based Goods and
services tax which was had a glaring no mention. No major policy changes with
selected subsidy in sugar reduced. Infrastructure and tax incentives for the
O&G space will ensure these remain the pillars of growth in the immediate
future. Not surprising also the non mention of changes to gaming taxes which
has seen a sell off in this sector in a run up to Budget day.
Neutral overall
6) Market - With no major surprises contained in Budget
2013, the market will continue to be dictated by overseas factors and the
uncertainty that comes with the pending Elections hence a return to a defensive
tight trading range pattern.
