Tuesday, December 12th, 2017
NEW YORK, Dec 12 — The Dow rose from record peaks early today, lifted by a Boeing dividend boost and as investors prepared for a likely Federal Reserve interest rate increase. Aerospace giant Boeing surged 3.2 per cent after announcing it…
KUALA LUMPUR (Dec 12): Based on corporate announcements and news flow today, stocks in focus on Wednesday (Dec 13) may include: Rhone Ma Holdings Bhd,…
PETALING JAYA: The Association of Banks in Malaysia (ABM) said the oil and gas (O&G) industry’s risks to the banking system remained limited as it only accounted for about 6.5% of total exposure.
The association said in a statement today that the delinquent loans ratio for the O&G sector stood at 0.1% while impaired loans ratio increased to 5% in the third quarter of 2017, due mainly to cash flow issues observed in service providers in certain upstream segments.
“Corresponding figures for the second quarter of 2017 were 0.2% and 4.5%.”
The association was responding to an article in a business weekly entitled “ Oil and Gas Conundrum” published over the weekend, which highlighted financing issues faced by oil and gas corporations here.
Nonetheless, ABM said its members have remained supportive and will continue to provide access to financing for viable businesses including O&G sector.
“All O&G cases have been given due consideration by the banks. Credit evaluation is conducted on O&G companies similar to loan applications by any other industries.”
ABM highlighted that feasibility studies such as stress test analyses, due diligence and credit evaluation are conducted as part of the standard assessment procedure to determine the eligibility and viability.
“Common reasons for loan rejection beyond ineligibility include incomplete loan documentation and inadequate supplementary information required to support banks’ assessment of cash flows and financial buffers of companies.”
ABM said the banking industry together with Bank Negara Malaysia have been engaging with the Malaysian Petroleum Resources Corporation to better understand developments in the O&G sector and also to disseminate information on avenues for assistance available for financially distressed companies.
“Viable corporate borrowers with multiple financial creditors can approach the Corporate Debt Restructuring Committee for assistance to work out feasible and market-driven debt resolutions through mediation.”
The association added that viable small and medium enterprises (SMEs) which are facing financial difficulties, can seek assistance from the Small Debt Resolution Scheme.
“Assistance offered include restructuring or rescheduling of financing facilities and provision of financing (where appropriate) to stabilise business cashflow whilst SMEs implement business turnaround plan.”
ABM comprises of 27 commercial banks in Malaysia.
PETALING JAYA: There will be only one rate hike, of 25 basis points, in January next year, according to Nomura Research’s Southeast Asia economist Brian Tan.
“The rate hike is to avert the build up of financial imbalances, but we don’t expect anymore rate hikes after that as we believe the elections will be called between March and May,” he said in a conference call titled “Asia in 2018: Stretching The Sweet Spot” today.
Tan said the recent strong gross domestic product (GDP) growth has likely opened a window for Bank Negara to normalise its accommodative monetary policy stance.
He added that it is unlikely to see any more rate hikes after January as the government will be forced to tighten its fiscal stance to meet the 2018 fiscal deficit target of 2.8% of GDP.
Tan foresees Malaysia continuing to register strong economic growth despite an expected moderation in GDP growth to 5.5% in 2018 from 5.8% in 2017, driven by both the domestic and external front as well as robust exports and rising oil prices.
Over in the Asian region, Nomura Research’s head of emerging markets economics Rob Subbaraman views that the Asian economy will generally remain in a sweet spot on the back of solid exports growth, strong capital inflows and low inflation, which justifies Asian central banks keeping policy rates at low levels.
He explained that the bond buying exercise by the European Central Bank and the Bank of Japan will more than offset the US Fed’s quantitative tightening, hence sustaining capital inflows into the region.
“The Asia market will also be supported by upswing in the technology segment and business capital expenditure.”
Rob noted that the fiscal and monetary policies in Asia remain accommodative and supportive of domestic demand.
Nomura Research sees India, Indonesia and the Philippines as Asia’s new rising stars in the next two to five years, dubbed Asia’s “tiger cubs”, replacing Northeast Asia’s ageing and debt burdened tigers as core of the region’s economic dynamism.
“All three have kept prudent monetary policy and implemented major tax reforms to increase fiscal space for infrastructure spending”, Rob said.
Nonetheless, he stressed that US trade protectionism remains one of the major downside risks to the Asian economy going forward.
SINGAPORE: Malaysian cities, namely Kuala Lumpur, Johor Baru and George Town are ranked among the world’s cheapest locations for expatriates.
This was one of the findings of the latest cost of living research published by ECA International, the world’s leading provider of knowledge, information and software for the management and assignment of employees around the world. They joined Ulaanbaatar, Mongolia, which claims the status as Asia’s cheapest location.
“This highlights the curiosity of managing the movement of people in Asia for many companies and their Human Resource departments,” said regional director – Asia, ECA International, Lee Quane in a statement.
“Asia is home to some of the world’s most expensive locations, as well as its cheapest. This level of variety is only matched in Africa, which is home to both the world’s most expensive location and its cheapest,” he said.
The four cities together with Yangon and Karachi make up the cheapest locations in Asia, with all these locations falling in ECA’s global rankings over the past 12 months. Tokyo remains the most expensive location for expatriates in the Asia-Pacific region.
Meanwhile, Malaysia’s southern neighbour, Singapore, has dropped out of the top 20 most expensive locations in the world for expatriates, ranking 21st out of over 260 cities, the lowest it has featured since 2014.
Singapore has dropped five places since 2016, having been overtaken in the rankings by cities such as Tel Aviv and Copenhagen.
“European currencies have performed very strongly over the past 12 months, outpacing many other currencies in the world, including the Singapore dollar.
“This has resulted in Singapore slipping down the rankings slightly, with some of the more expensive European cities rising above it in the table,” said Quane. ECA International has been conducting research into cost of living for over 45 years.
It carries out two cost of living surveys per year to help companies calculate cost of living allowances so that their employees’ spending power is not compromised while on international assignment.
The surveys compare a basket of like-for-like consumer goods and services commonly purchased by assignees in 470 locations worldwide.
Data for these costs are collected separately and are not included in ECA’s cost of living basket. – Bernama
KUALA LUMPUR: Prime Minister Datuk Seri Najib Abdul Razak today launched the pay-for-impact Social Impact Exchange (SIX) to further strengthen the innovation culture in the country.
He said SIX was Malaysia’s first pay-for-impact exchange to channel untapped corporate resources into high performing social-purpose organisations (SPOs).
He said the exchange was designed to parallel a traditional stock exchange and would be the focal point of funding SPOs and their intervention projects.
“This initiative will be jointly implemented by Malaysia Innovation Agency and the Malaysian Global Innovation and Creativity Centre (MaGIC), under the National Blue Ocean Strategy ambit,” he said at the Global Entrepreneurship Community Summit 2017 today.
At the event, Najib also announced the placement of Southeast Asia’s first United Nations Technology Innovation Laboratory at the Futurise Centre.
He said the proposed centre, announced in the 2018 Budget, would also house the region’s first entrepreneurship internet radio station, eFM, which would be driven by the Global Entrepreneurship Movement.
Najib said this was in tandem with the aspiration of creating the centre, aimed at stimulating and accelerating innovation, capacity building and the commercialisation of products and inventions of the future.
“This centre, led by Cyberview with MaGIC as its strategic partner, will bring government, corporations, academia and entrepreneurs together to address issues on future technologies like smart city development, robotics and artificial intelligence,” he said.
The prime minister said both initiatives were part of the government’s efforts to emphasise the importance of innovation in the country’s future economic development.
“We now live in uncertain times. Innovation is disrupting traditional thinking and shifting services and products to a new and more competitive level.
“But I am optimistic about our future and the central role that knowledge, science and entrepreneurship will play in it,” said Najib, adding that innovation was not purely for start-ups and the private sector but must also be embraced by everyone.
The premier also said that innovation would also play an integral part in the nation’s preparation for the advent of the fourth industrial revolution, which would bring a range of new and disruptive technologies, impacting all disciplines, economies and industries. – Bernama
PETALING JAYA: Magni-Tech Industries Bhd’s net profit for the second quarter ended Oct 31, 2017 fell 28% to RM20.5 million from RM28.52 million a year ago mainly due to the packaging segment that saw higher raw material costs and operating expenses, and lower revenue.
Its revenue for the quarter under review decreased by 9.8% to RM252.32 million compared with RM279.79 million in the corresponding quarter in 2016.
On its prospects, Magni-Tech said the manufacturing and sale of garments will still be the group’s major revenue contributor.
The group’s operating environment for the remaining quarters of the current financial year is expected to be challenging amid persisting global economic uncertainties.
For the six-month period, the group’s net profit dropped 23% to RM40.09 million from RM52.05 million a year ago, mainly because of the packaging segment; while revenue decreased slightly by 0.9% to RM546.03 million compared with RM551.18 million in the previous year’s corresponding period.
KUALA LUMPUR: Plantation company, Harn Len Corporation Bhd today announced that it has engaged legal counsel to submit the relevant documents to protest the compensation awarded to its unit, Nusantara Daya Sdn Bhd (NDSB), for a plot of land in Johor Baru.
In a filing to Bursa Malaysia, Harn Len said NDSB had received a letter from the Johor Baru Land Office on Dec 10, 2017, confirming that its lot was being compulsorily acquired for the purpose of construction of a sewage treatment plant in the upstream area of Sungai Segget in Mukim Bandar Johor Baru.
The Johor Baru Land Office made an order for compensation of the land at RM16.52 million, at a rate of RM3,700 per 1m².
“As the award was deemed to be below the market value, it was accepted under protest. As such, NDSB has engaged Messrs Clarence Edwin Law Offices as its legal counsel to submit the relevant documents to protest the compensation awarded to NDSB,” it said.
Further development of the above matter will be announced to Bursa Malaysia Securities in due course, it added. — Bernama
STRASBOURG, Dec 12 — The EU will harden its position on Brexit trade talks after London said it would only pay its divorce bill if it got a deal, leading European parliamentarians said today. Guy Verhofstadt, the European Parliament’s Brexit…
PETALING JAYA: Malaysian Rating Corp Bhd (MARC) said the ringgit’s rebound in November, which appreciated by 3.47% month-on-month, has fuelled a rally in Malaysian Government Securities (MGS).
In a report today, MARC chief economist Nor Zahidi Alias said with foreign buying interest reignited, foreign holdings of MGS surged 4.6% month-on-month (m-o-m) to RM160.3 billion (October 2017: RM153.2 billion), equivalent to 44.3% of total outstanding (October 2017: 42.7%).
“Not surprisingly, the bullish sentiment also spilled over into the primary market,” he added.
The ringgit ended the month at RM4.0910 against the US dollar, its strongest level year-to-date, and the highest monthly close since August 2016 at RM4.0675.
Nor Zahidi said the ringgit has shown a bullish momentum throughout the month as investors priced in the possible Overnight Policy Rate hike by Bank Negara Malaysia (BNM) next year, and was further supported by the upbeat Q3 2017 gross domestic product growth data, which recorded a positive growth of 6.2% year-on-year (y-o-y).
However, MARC said the sustainability of the rally will depend on several headwinds, noting factors on the external front include the hawkish tendency of the new US Federal Reserve chair and developments related to the US tax reform bill.
Domestically, it said BNM’s monetary policy stance will figure most prominently, noting the central bank’s statement following the November monetary policy meeting that it may consider reviewing the current degree of monetary accommodation had triggered a temporary sell-off.
Furthermore, MARC said there will also likely be impact from political developments in the run-up to the 14th general election.
Nonetheless, it said in any case, MARC does not expect the rising prospects of monetary tightening to lead to a significant rise in bond yields.
“Barring unforeseen circumstances, it is highly unlikely that monetary tightening will, for example, cause the 10-year MGS yield to surpass its highest level attained during the post-US election in November 2016.
“In the local corporate bond scene, gross issuance year-to-date (January 2017 – November 2017) surged 28.6% y-o-y to RM109.2 billion, the highest since 2012 on support from improving economic prospects and low interest rates. It remains to be seen whether 2017’s full-year gross issuance will surpass that of 2012 (RM123.8 billion).”
MARC expects corporate bond issuances to normalise in 2018, given among other things, prospects of higher borrowing costs as monetary tightening proceeds. It said it expects total corporate bond issuances next year to come in at between RM85 billion to RM95 billion.