Monday, August 14th, 2017
HONG KONG, Aug 14 — Alibaba and Tencent can count themselves among the world’s costliest technology companies after a stellar run. To justify those lofty valuations, China’s two largest corporations have to deliver on some of the riskiest…
NEW YORK, Aug 14 — Wall Street opened higher today, with broad gains across sectors, as investor sentiment was lifted by easing tensions in the Korean peninsula after key US officials played down the risk of an imminent war with North Korea….
LONDON, Aug 14 — Barclays plans to close around 54 branches by the end of the year in an effort to cut costs, further reducing access to banking services for customers in parts of the UK. The bank, along with other British lenders, is cutting…
WASHINGTON, Aug 14 — With US Congress members focused during their August recess on finding ways to lower the corporate tax rate, industry groups and other sectors of society are gearing up to fight proposed changes to the personal income tax….
WASHINGTON, Aug 14 — The Trump administration has set a collision course with the auto industry as it launches renegotiations of the 23-year-old Nafta trade pact this week, aiming to shrink a growing trade deficit with Mexico and tighten the…
PETALING JAYA: Foreign funds may continue to flow out from Malaysian government securities (MGS) in the coming months due to the US Fed’s stance of increasing interest rates, according to Kenanga Research.
This follows the RM2.3 billion outflows in July, which could have been triggered by investors’ concern of 1Malaysia Development Bhd’s (1MDB) inability to meet its large debt repayment obligation to its creditor, after smaller outflows of RM300 million in June due to the US Fed rate hike. The worst outflows were recorded in March at RM26.2 billion.
“The market is watching closely if 1MDB would be able to meet the Aug 31 extension deadline, in which a default would likely erode investor’s confidence towards Malaysian government securities and exacerbate the risks of capital outflow from Malaysia,” it said in a note yesterday.
However, Kenanga Research opined that foreign fund flows are likely to remain stable and manageable, premised on 1MDB’s ability to fully settle its debt obligation to its major creditors.
“Only then, we believe that foreign investors will return to focus on Malaysia’s strong fundamentals.”
The research house said although for now there seemed to be no imminent threat to major foreign funds outflow given that 1MDB had managed partial settlement of the debt, the market would be extra vigilant and sensitive to any domestic developments related to 1MDB.
Nonetheless, it noted that foreign reserves and the ringgit seemed to remain unfazed by bond outflows due to the market reaction on the 1MDB debt repayment issue. As at end-July, Malaysia’s foreign reserves rose US$500 million (RM2.1 billion) to US$99.4 billion (RM426.7 billion).
The ringgit has been relatively stable with the US dollar/ringgit trading within a narrow range of 4.26 to 4.30 since end-May. Year-to-date, the ringgit has appreciated 4.3% against the greenback.
“This is indicative of the resilience of the financial market despite some concerns of risks of capital outflows. We believe the ringgit strength is increasingly leaning on improving fundamentals. Going forward, this would help support the ringgit to gradually appreciate,” it said, noting that the year-end target for US dollar/ringgit is 4.15.
Kenanga Research also pointed out that the recent capital outflows from Malaysian government securities may turn out to be a blessing in disguise, as a high proportion of foreign holdings can pose a threat to the market in the event of a major reversal of foreign funds.
However, Bank Negara had said it does not expect much outflows for the rest of the year, with a more sustainable level for foreign shareholding in MGS at between 15% and 20%. Foreign holdings stood at 40.1% as at July 2017.
“Thus we believe the mild capital outflows in the past two months (or in the near term) would actually lead to a more balanced composition of holders for Malaysian government securities with more local institutions’ participation,” it added.
PETALING JAYA: Felda Global Ventures Holdings Bhd (FGV) is keen to participate in the development of the East Coast Rail Link (ECRL) project by offering its expertise in providing integrated logistics services with parties involved in the project.
FGV’s officer-in-charge Datuk Khairil Anuar Aziz said it has the advantage to provide logistics services for the project as its facilities are either in or close to Kuantan Port while ECRL’s construction would be based in Kuantan before being expanded to Kelantan and Selangor.
“We are looking to support the project in terms of providing transport services to carry equipment and building materials along the entire stretch of the ECRL. We can be amongst the one-stop logistic centres for the project.
“FGV has the experience and a proven track record in its ability to provide integrated logistics services such as for the Mass Rapid Transit and other mega infrastructure projects,” he said in a statement yesterday.
About 10% of the seven-year construction period of the ECRL project is estimated to involve logistics support. The government has also expressed its commitment to provide opportunities for local companies and local contractors in the construction of the 688km rail track.
Khairil said the plantation and sugar sectors will remain as core businesses for the group while the expansion in the logistics and others (LO) sector will provide a good supplementary income to the group.
“There is great potential for FGV’s logistics business to expand both locally and overseas and one of them is through strategic collaboration with leading companies in the related industry. This will generate more stable income to FGV and reduce dependency especially on the Plantation Sector and indirectly provide sustainable returns to shareholders,” he added.
Earlier this year, FGV structured its business into three main sectors namely plantation, sugar and LO to streamline the management process and increase accountability, aimed at improving operational and management focus, and enhancing clarity and reporting accountability.
The new structure is also expected to drive greater synergies by grouping like businesses under a fully integrated value chain.
FGV’s logistics businesses include multi-modal transport operations, freight forwarding, cargo transport, bulk storage tank, warehousing and handling of liquid terminal operations at the port.
In terms of logistics assets, FGV has nearly 500 trucks, 15 transport hubs, two warehouses, two jetty and nine bulking facilities with a total capacity of over 900,000 MT.
“At the global front, FGV’s joint venture with the Westbury Group, Pakistan to expand an additional 38,000 MT storage tank capacity in Port Qasim is on track with some 15,000 MT completed in May,” said Khairil.
He said the entire project will be completed by year-end. At the same time, it is also looking at opportunities for such collaborations in Indonesia.
PETALING JAYA: Foreign investors sold off RM63.1 million last week, in line with the weekly outflow seen by regional peers including Korea, Indonesia and Taiwan, said MIDF Research.
“After four weeks of meandering, foreign funds took a breather as ratcheting political tensions hurt their risk appetite,” it said in its fund flow report yesterday.
Foreign funds were net sellers in three out of five trading days last week, with foreign selling peaking on Friday as foreigners disposed of RM93.5 million net, the highest in a day since July 5.
It said the attrition on Friday coincided with the KLCI dropping below the 1,770 points at close and the ringgit hitting a one-month low.
Note that the KLCI declined by 0.43% for the week to settle at 1,767 points, ending its three-week winning streak while the ringgit followed suit, depreciating 0.40% against the dollar to USD/RM 4.2952.
“So far, foreign investors have only been net sellers for six weeks this year compared with last year’s 27 weeks. Despite last week’s foreign withdrawal, the cumulative year-to-date inflow was slightly unchanged at RM10.7 billion net compared with RM10.8 billion net in the preceding week,” said MIDF Research.
Foreign participation rate turned sluggish as the foreign average daily trade value (ADTV) declined 31% from RM895 million in the prior week to RM615 million, the lowest since the first week of 2017.
Retail participation remained vibrant, as ADTV remained above the RM800 million mark, decreasing by 0.5% only from RM887 million to above RM882 million last week.
KUALA LUMPUR, Aug 14 — Media Prima Bhd’s posted a pre-tax loss of RM135.6 million in the second quarter ended June 30, 2017 against a pre-tax profit of RM29.84 million in the same quarter a year ago. Revenue eased to RM328.77 million from…
PETALING JAYA: Practice Note 17 (PN 17) company YFG Bhd has bagged a RM235 million contract for the construction of apartments in Kajang, Selangor, but got its RM245 million sub-contract works for the PR1MA homes in Pedas, Rembau, Negri Sembilan terminated.
The electrical and mechanical engineering firm said in a filing with the stock exchange that its wholly owned subsidiary YFG Engineering Sdn Bhd had on Aug 14 received a letter of award from Pierre Suite (M) Sdn Bhd for the contract.
The project involves the building, and infrastructure and landscaping works of the proposed development of Eco Parkcity apartments. Its completion period is 36 months.
YFG expects the project to contribute positively to its revenue and earnings for the financial year ending Sept 30, 2018 and beyond.
Meanwhile, the group said in a separate filing that it had received a notice of termination from Wearegold Sdn Bhd (WRG) for the RM245 million contract awarded on Feb 16, as WRG is unable to participate in YFG’s proposed regularisation plan due to unforeseen reasons.
“In view of the foregoing, YFG and WRG hereby mutually agree to terminate the contract with immediate effect,” it noted.
YFG has been a PN 17 company since September 2015.
The stock closed unchanged at 5 sen yesterday, with some 620,700 shares changing hands. It has a market capitalisation of RM30.45 million.