Sunday, August 20th, 2017

 

Shell said to load oil in Libya for first time in five years

LONDON, Aug 20 — Royal Dutch Shell Plc, the world’s largest oil trader, is said to have loaded its first crude from Libya in five years over the weekend, adding to evidence of the Opec nation’s comeback. The cargo yesterday is for 600,000…


Pound vulnerable as UK prepares to provide Brexit plan details

LONDON, Aug 20 — Brexit may dominate factors influencing the pound’s fortunes again this week, with the UK set to lay out its position in at least three areas of negotiation with the European Union. Uncertainty about the next round of…


How to find out if the euro is giving Draghi sleepless nights

FRANKFURT, Aug 20 — A Deutsche Bank economist has found a way to gauge how concerned Mario Draghi might be about the euro. As Mark Wall points out, the ECB president has commented rather sparingly on the currency swings since he took office in…


FMM: Review low threshold of SMEs’ eligibility for audit exemptions

PETALING JAYA: The Federation of Malaysian Manufacturers (FMM) is seeking a review of the threshold of eligibility for audit exemptions for small and medium enterprises (SMEs), after the Companies Commission of Malaysia (SSM) allowed audit exemption for dormant and zero-revenue companies, and those earning less than RM100,000 revenue and holding at most RM300,000 worth of assets.

A dormant company is one which has been inactive for at least two years; a zero-revenue company is one which has not been generating revenue for the last three years and has no more than RM300,000 in assets for the last two years; and a threshold company is one which generates less than RM100,000 in revenue for the last thee years and has total assets of RM300,000 in the last two years.

FMM said setting the qualifying limit too low makes the exemption inaccessible to the more capable SMEs, especially those in the manufacturing sector which should be supported in the reduction of the cost of doing business.

“This issue is important for small companies. Mandatory audits for those companies serve no purpose, resulting in unnecessary additional costs. It would be good if SSM could compare and share percentages of SMEs manufacturers who are among the estimated 50,000 companies eligible for the exemption and those qualified because of their tighter thresholds.

SSM should review and raise these thresholds, or at least maintain at the Practice Directive 1/2017 levels so that more SME could qualify,” FMM said in a statement on Friday.

A previous directive had set the threshold at an annual revenue of not more than RM300,000 and total assets below RM500,000.

FMM also hopes that Section 77a of the Income Tax Act, which requires submission of company tax returns based on audited accounts, has been synchronised to facilitate SSM’s audit exemption.

Meanwhile, SSM, in justifying its move to go ahead with the much debated audit exemption for selected companies, said in a separate statement that it came to the decision based on a combination of both economic structure and size of leading jurisdictions which have successfully implemented an audit exemption policy, in addition to the consultation conducted by SSM for four months, ending on Feb 28, 2017.

Feedback from stakeholders comprising 61% audit/accounting/related professional firms and 39% from the public, showed that more than 65% of the respondents agreed with the audit exemption proposal.

SMEs have been exempted from mandatory audits in places such as Hong Kong, Singapore, the United Kingdom, Australia, New Zealand and the United States.

Additionally, SSM said the criteria adopted by it are coupled with safeguards of allowing shareholders holding not less than 5% of the total voting shares to require the company to have its accounts audited, and for SSM to have the power to direct companies to have their accounts audited.

SSM said while it understands the importance of auditing company accounts in promoting accountability, accuracy and transparency, there is also a need to revisit the value and necessity of an audit towards balancing between the needs of the company and that of its stakeholders.

SSM said it is an undeniable fact that the majority of small companies are “owner-managed” or “family-run” businesses where the shareholders and directors are typically the same individuals. For these small firms, due to the unique structure of their business model, the cost for a conventional audit mandated by law which provides negligible value added to their business may not be justifiable, it explained.


China cracks down on foreign spending sprees

BEIJING: China is to restrict foreign investments in sports clubs, real estate and entertainment and is banning investment in pornography and “unauthorised” military technology.

The new rules were announced on Friday by the government which had previously encouraged overseas spending sprees, but then warned late last year of “irrational” acquisitions amid fears that powerful conglomerates were racking up dangerous debt levels.

The announcement came days after British football club Southampton said it had entered into a partnership with Chinese businessman Gao Jisheng, with press reports saying he and his family had paid £200 million (RM1.1 billion) for an 80% stake.

“Foreign investments that do not conform to China's efforts towards peaceful development, mutually beneficial cooperation and to macroeconomic regulation are subject to restriction,” said the government, adding it wanted to “prevent risks”.

Chinese firms will no longer be able to invest in conflict zones and places that do not have diplomatic ties with China.

The rules also ban investments that could harm the country's interests and security.

High-profile Chinese deals in recent years have grabbed the limelight including Fosun's takeover of Club Med, HNA's stakes in Deutsche Bank and Hilton hotels, Anbang's purchase of New York's historic Waldorf Astoria, and Wanda's control of Hollywood studio Legendary Entertainment and 20% of the Atletico Madrid football club.

But authorities now appear to be concerned about the influence of these conglomerates, their mazes of subsidiaries and debt, and their capacity to trip up the Chinese economy.

There have been indications since July of mounting government pressure.

Wanda has announced the sale of 77 of its hotels and 13 tourism projects to Chinese real estate developers Sunac and R&F properties for a whopping US$9.3 billion (RM40 billion).

Beijing has also ordered Anbang to sell all of its overseas assets, according to Bloomberg.

The entire private sector has suffered the consequences.

The only companies still permitted to make overseas investments are firms “supporting the real economy” or working with new technologies.

As a result, Chinese non-financial sector overseas investment plummeted 46% in the first half of 2017. – AFP


Malaysia bond market weekly update 20 August 2017

In the Ringgit Bond market, solid buying interest was seen across the MGS yield curve with yields eased between one bp to 12bps from three-year curve point onwards. As a result, the Thomson Reuters BPAM All Bond Index posted gains of 0.169 per cent to close at 154.050 points from 153.790 points last week. On […]


Offshore trading of ringgit illegal, Bank Negara reminds Malaysians

PETALING JAYA: Bank Negara Malaysia (BNM) has clarified that Malaysian market participants are not allowed to engage in any offshore trading of the ringgit outside Malaysia.

Governor Datuk Muhammad Ibrahim said the statement issued by the central bank objecting the introduction of the ringgit futures on the Singapore Stock Exchange was meant for Malaysians.

“We want to remind them (Malaysians) that any trading of dollar-ringgit outside Malaysia is illegal and not allowed. If they’re found engaging in illegal activities, we will certainly take action. It’s adequately provided under the law,” he said at a press conference last Friday after announcing Malaysia’s Q2 GDP.

BNM had reminded all market participants to observe the existing foreign exchange administration (FEA) rules. It said contravention of the FEA is an offence under the Financial Services Act 2013 and Islamic Financial Services Act 2013. Appropriate action under the law will be taken against any person who does not comply with prevailing rules and regulations.

“These are not new policies. We’re just highlighting that the ringgit is a non-internationalised currency and should not be traded outside Kuala Lumpur.

“If residents, including individuals and banks operating here, engage in any illegal activities that contravenes with the Financial Services Act, we will take action,” stressed Muhammad.

Meanwhile, he said there has been a decoupling between the ringgit exchange rate and global crude oil prices in the recent period. Increasingly, investors have begun recognising Malaysia’s lower dependence on oil revenue. He said the ringgit’s strengthening reflects the strength of the economy.

Based on a survey that BNM conducted early this year, it found that the exchange rate depreciation has limited impact on export volume.

“Ultimately, prospects for sustained external performance will be driven by product quality and better access to foreign markets. Producers that rely on exchange rate for competitiveness is an unsafe business strategy,” said Muhammad.


BNM’s reminder to Malaysians

PETALING JAYA: Bank Negara Malaysia (BNM) has clarified that Malaysian market participants are not allowed to engage in any offshore trading of the ringgit outside Malaysia.

Governor Datuk Muhammad Ibrahim said the statement issued by the central bank objecting the introduction of the ringgit futures on the Singapore Stock Exchange was meant for Malaysians.

“We want to remind them (Malaysians) that any trading of dollar-ringgit outside Malaysia is illegal and not allowed. If they’re found engaging in illegal activities, we will certainly take action. It’s adequately provided under the law,” he said at a press conference last Friday after announcing Malaysia’s Q2 GDP.

BNM had reminded all market participants to observe the existing foreign exchange administration (FEA) rules. It said contravention of the FEA is an offence under the Financial Services Act 2013 and Islamic Financial Services Act 2013. Appropriate action under the law will be taken against any person who does not comply with prevailing rules and regulations.

“These are not new policies. We’re just highlighting that the ringgit is a non-internationalised currency and should not be traded outside Kuala Lumpur.

“If residents, including individuals and banks operating here, engage in any illegal activities that contravenes with the Financial Services Act, we will take action,” stressed Muhammad.

Meanwhile, he said there has been a decoupling between the ringgit exchange rate and global crude oil prices in the recent period. Increasingly, investors have begun recognising Malaysia’s lower dependence on oil revenue. He said the ringgit’s strengthening reflects the strength of the economy.

Based on a survey that BNM conducted early this year, it found that the exchange rate depreciation has limited impact on export volume.

“Ultimately, prospects for sustained external performance will be driven by product quality and better access to foreign markets. Producers that rely on exchange rate for competitiveness is an unsafe business strategy,” said Muhammad.


Global Equities Weekly Update

Escalating tensions between the US and North Korea weighed heavily on investment sentiment, as the MSCI AC World Index erased its gains from the previous week to end the week down by 1.24 per cent. The US and European equity markets, represented by the S&P 500 Index and the Stoxx 600 Index respectively, tumbled 1.05 […]


Crude Palm Oil Weekly Update – 19 August 2017

Malaysian palm oil futures reversed last week gains and traded slightly lower as India import tax hike hits sentiment, despite supported by expectation of rising demand and stronger performances by rival edible oils on Chicago Board of Trade (CBOT). The benchmark crude palm oil futures (FCPO) contract down 0.07 per cent to 2,682 ringgit on […]