Thursday, September 21st, 2017

 

Mardi expects agricultral sector to grow by 15pc this year

KUALA LUMPUR, Sept 21 — Malaysian Agricultural Research and Development Institute (MARDI) expects the production level growth trajectory for the agricultural sector to continue at a comfortable 15 per cent this year, with new technology and…


Wall Street slips from record levels as Apple, Fed view weigh

NEW YORK, Sept 21 — US stocks slipped from their all-time highs today, weighed down by Apple and the hawkish stance of the Federal Reserve, which hinted at raising interest rates for a third time this year despite low inflation. Shares of…


China’s debt downgraded by second ratings agency

BEIJING, Sept 21 —Standard & Poor’s slashed China’s credit rating today over warnings that its ballooning debt had raised “economic and financial risks”, marking the country’s second downgrade this year. The decision by S&P, which…


Baidu announces US$1.5b fund for autonomous driving

BEIJING, Sept 21 — Chinese internet giant Baidu today announced a US$1.5 billion (RM6.3 billion) investment in autonomous driving projects over the next three years, as it seeks to diversify its portfolio and compete with rivals such as Google….


Fed decision unlikely to affect OPR, ringgit

PETALING JAYA: The US Federal Reserve’s decision to maintain the federal funds rate at a range of 1.00%-1.25% is unlikely to affect Malaysia’s Overnight Policy Rate (OPR) with a short-term impact on the ringgit.

“While we recognise that external policy moves may prompt market stabilisation measures, on the part of Bank Negara Malaysia (BNM), we believe that this will not significantly influence the OPR trajectory. Instead, the OPR will likely be influenced by prevailing domestic inflation and growth considerations,” Kenanga Research said in its report today.

Despite an uptick in August inflation to 3.7% (July 3.2%) from supply-side factors, it expects inflation to remain manageable at the prevailing 3% OPR. At the same time, it opined that the current OPR is likewise accommodative of Malaysia’s growth agenda.

According to Kenanga Research, the Fed’s mildly hawkish tones suggests that the ringgit may lose some ground against the US dollar in the near term and expects the immediate impact to be somewhat muted, as it doubts that the September meeting was significant in quelling speculations of a pause in monetary policy tightening.

“Nevertheless, expect the ringgit to be tested above the USD/MYR 4.20 mark in the short term but likely to bounce back to our year-end USD/MYR target of 4.15 as markets settle. However, in the broader context of the ringgit against its major trading partners, we expect the ringgit to remain broadly stable, albeit losing some ground against the euro on a more hawkish ECB (European Central Bank) overtone of late.

“Relative to other advanced market economies though, the strength of the ringgit will hinge on the escalation of tensions (or the lack thereof) arising from US-North Korea sabre-rattling, possibly triggering a risk-off mode for the Asian region as a whole,” it said.

The Fed’s Federal Open Market Committee (FOMC) voted at its sixth monetary policy meeting for 2017 to keep the federal funds rate range at 1.00%-1.25%, following the 25-basis-point increase in June. It continues to see a total of three rate increases for 2017 and in 2018 with a more sanguine economic outlook factored in.

Note that the FOMC revised its inflation targets and will start shrinking the Fed’s US$4.5 trillion (RM19 trillion) balance sheet by October, in line with its July statement of portfolio normalisation.

“With the October-November meeting traditionally associated with lower odds of policy rate changes, all eyes are now centred on the possibility of a December rate hike. The implied probability for a December rate hike have since edged above the 50% threshold to 63.8% as at Sept 20; the probability has been consistently under the 50% mark from mid-July to mid-September,” said Kenanga Research.

It retained its house view for two rate increases this year, despite the FOMC’s September statement adding more fuel to the projections of a three rate hike scenario. This is because it is not seeing any pickup in wage growth in the horizon despite labour market strength and a more optimistic economic outlook.

“However, with the possibility of economic growth progressing at a faster clip than even the revised estimates of 2.4% and significant pass through effect of improved economy to wage growth, we can see a case for a third rate hike in December,” it said.

It said the odds for a third rate hike are only modest, at best, based on the belief that a delayed increase will be more prudent in light of US domestic uncertainties and the risk of removing accommodation prior to wage growth picking up.


Malaysia Airlines reiterates firm order for 25 Boeing 737 aircraft

PETALING JAYA: Malaysia Airlines Bhd (MAB) reiterated yesterday it has a firm order of 25 Boeing 737 aircraft “with everything else being optional”.

This comes as Boeing and MAB signed a memorandum of understanding (MoU) to acquire 16 aircraft, consisting of eight 787 Dreamliners and eight 737 MAXs, in Washington last week.

“The options, as well as a variety of other arrangements including the recent MoU with Boeing, will allow us to have some flexibility in deciding which aircraft suits our operational environment best,” MAB said in a statement today.

MAB CEO Peter Bellew had said that it will not finance and own 16 new Boeing aircraft bought from the US aviation company. It was reported that large global leasing firms and lenders will instead purchase the aircraft and then lease the planes to MAB on an operating sale and leaseback agreement.

MAB has been questioned on buying more planes amid its restructuring after the prime minister announced the plan to buy additional planes for the airline during his recent working visit to the US.

The airline said yesterday it will continue to carefully evaluate all options available to ensure its purchases make both business and operational sense, which is necessary and in line with the ongoing prudent fleet management and cost containment efforts across the group.

It noted that funding for all aircraft is planned on a sale-and-operating leaseback or simple operational lease.

MAB currently has 54 aircraft in its fleet of 737-800 with 48 actually operating, as six of these aircraft are being handed back to lessors in December 2017 and are currently going through a lease return maintenance programme.

In 2018, it will operate 44 737-800 aircraft daily, with three in maintenance and one available spare. The 48 operating aircraft in the 737-800 fleet start reaching end of lease from early 2019.

“In 2016, we made 25 firm orders for the 737-MAX8 aircraft and 25 options. The aircraft were ordered as pure replacements for existing planes, due for replacement beginning 2019.

“In June 2017, we entered into a new agreement with Boeing to allow us to choose their new larger 737-MAX10 aircraft for 10 out of the previous firm order of 25 737-MAX8. With this agreement, MAB can decide to take either the MAX8 or MAX10. The MAX10 aircraft are expected to commence delivery in early 2021.”

The airline also said it has been exploring various options for widebody aircraft, for possible delivery in 2018 and 2019, to address the rapid growth in international sales which requires additional widebody aircraft.

“The recent MoU to potentially add eight of the widebody Boeing 787-9 Dreamliner aircraft to our fleet from the third quarter in 2019 is to add capacity to the airline’s widebody fleet and provide a high level of quality on its most lucrative routes,” it noted.

MAB said the list price for the eight Boeing 787-9 Dreamliner aircraft is some US$2.5 billion (RM10.5 billion) and it will negotiate extensively to ensure the best value on confirmation of order.


MDEC, ISACA in partnership to develop cyber security talent

PETALING JAYA: Oldtown Bhd has reported an explosion at the central food processing centre of its wholly owned subsidiary, Emperor’s Kitchen Sdn Bhd.

In a filing with Bursa Malaysia today, the company said the incident occurred at about 8am today, affecting only the production floor of the centre in Subang Jaya. The adjacent areas occupied by other operating units and administration offices were not affected.

“As a result of the explosion, several employees were injured and the management is closely monitoring their condition in the hospital. The company and the management are committed to provide full support and assistance to the injured employees,” it said.

Oldtown said the fire department and the police, as well as the management, are conducting investigations to ascertain the cause of the explosion.

Food processing operations at the plant have temporarily ceased and are expected to re-commence via auxiliary means in the shortest time possible in order to mitigate any supply disruption to chain outlets.

Oldtown said the incident has no impact on the coffee and beverage manufacturing and warehousing facilities.

“At this juncture, the board is unable to finalise the financial impact to Emperor’s Kitchen, but believes that the damages are adequately insured pending the insurance company’s assessment.”

The company will make an announcement once normal operations resume and losses are ascertained.

Oldtown’s share price fell 3.35% to close at RM2.60 with 4.61 million shares traded today. Its market capitalisation stood at RM1.20 billion.


IMF says Macron reforms crucial for French growth

PARIS, Sept 21 —The government of French President Emmanuel Macron needs to make good on its reform promises if it wants a shot at boosting growth durably, the International Monetary Fund said today. As the French economy picks up after a long…


Oldtown reports explosion at unit’s food processing centre


Oldtown confirms explosion at unit’s food processing centre

PETALING JAYA: Oldtown Bhd has reported an explosion at the central food processing centre of its wholly owned subsidiary, Emperor’s Kitchen Sdn Bhd.

In a filing with Bursa Malaysia today, the company said the incident occurred at about 8am today, affecting only the production floor of the centre in Subang Jaya. The adjacent areas occupied by other operating units and administration offices were not affected.

“As a result of the explosion, several employees were injured and the management is closely monitoring their condition in the hospital. The company and the management are committed to provide full support and assistance to the injured employees,” it said.

Oldtown said the fire department and the police, as well as the management, are conducting investigations to ascertain the cause of the explosion.

Food processing operations at the plant have temporarily ceased and are expected to re-commence via auxiliary means in the shortest time possible in order to mitigate any supply disruption to chain outlets.

Oldtown said the incident has no impact on the coffee and beverage manufacturing and warehousing facilities.

“At this juncture, the board is unable to finalise the financial impact to Emperor’s Kitchen, but believes that the damages are adequately insured pending the insurance company’s assessment.”

The company will make an announcement once normal operations resume and losses are ascertained.

Oldtown’s share price fell 3.35% to close at RM2.60 with 4.61 million shares traded today. Its market capitalisation stood at RM1.20 billion.