Thursday, December 14th, 2017

 

Japan, UK eye post-Brexit mutual recognition of trade standards

LONDON, Dec 14 — Japan and Britain said today they hoped to achieve a swift deal on mutual recognition of each other’s standards for goods and services when Britain leaves the European Union. Japanese Foreign Minister Taro Kono said he…


US stocks add to records; Disney rises on Fox deal

NEW YORK, Dec 14 — Wall Street stocks rose early today, adding to records, following solid US retail sales data and as Disney advanced following a mammoth acquisition of key 21st Century Fox assets. Total US retail and food services sales last…


Lotte Chemical’s cracking reactor to resume operations on Saturday

PETALING JAYA: Lotte Chemical Titan Holding Bhd’s KBR Catalytic Olefins Technology catalytic cracking reactor (K-COT) will resume operations on Saturday following a stop-work order in early October.

The group said in a statement that K-COT within its TE3 project, now known as Fluidised Naphtha Cracker (FNC), will begin commercial operations on Saturday after successful test runs.

The Department of Environment issued a stop-work order on Lotte Chemical’s Pasir Gudang factory identified as the source of a stench, which had reached Singapore’s shores.

Lotte Chemical said it has constructed a stand-alone FNC, which is integrated to the existing Naphtha Cracker (NC) 2 plant pipeline in Pasir Gudang, Johor, but NC2 and FNC can operate independently.

“FNC is expected to increase the plant’s performance and efficiency, further improving ethylene and propylene production by utilising existing recycled products.”

With the increase in capacity, Lotte Chemical president and CEO Lee Dong Woo noted that the group will be able to deliver greater volume of ethylene to the Indonesian plants as feedstock, and the PP3 Project is undertaken to complement the additional propylene produced by FNC.

Lotte Chemical shares gained 13 sen or 2.8% to RM4.73 today, with 5.21 million shares traded.


Bank Negara says no move to regulate digital currencies, you invest at your own risk

PETALING JAYA: Bank Negara Malaysia (BNM) said today its move to impose reporting obligations on digital currency exchanges is not a move to regulate digital currencies and that investors are going into the market at their own risk.

BNM advised the public to carefully evaluate the risks associated with dealings in digital currencies, including risks arising from high volatility in prices, the lack of deep markets and vulnerabilities to cyber attack which can lead to significant losses.

“Users of digital currencies will also not be covered under established disputed resolution arrangements which exist for regulated financial institutions in the event of any dispute or losses.”

The central bank said it will continue to monitor and assess the risks posed to the financial system by such activities to ensure that the integrity of the financial system is not compromised.

The central bank highlighted that the reporting obligation on the exchanges is the first step towards making digital currency activities more transparent in Malaysia, but it does not in any way connote the authorisation, licensing, endorsement or validation by BNM of any entities involved in the provision of digital currency exchange services.

Last month, BNM governor Tan Sri Muhammad Ibrahim said the central bank will designate persons converting cryptocurrencies into fiat money currencies as reporting institutions under the Anti-Money Laundering Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) beginning next year, which was seen as the central bank’s move to regulate digital currencies.

However, BNM stressed in a statement today that digital currencies are not legal tender in Malaysia and that digital currency businesses are not covered by prudential and market conduct standards or arrangements that are applicable to financial institutions regulated by the central bank.

“This is consistent with reporting obligations currently invoked under the AMLA on other reporting institutions such as legal or accounting firms and real estate agents which do not fall under the bank’s purview.”

The central bank is to hold a media briefing tomorrow on digital currencies.

Meanwhile, BNM today issued for public consultation an exposure draft on the invocation of reporting obligations on digital currency exchange business as reporting institutions under AMLA, which aims to ensure that effective measures are in place against money laundering/terrorism financing risks associated with the use of digital currencies and to increase the transparency of digital currencies activities in Malaysia.

Failure to declare its details as reporting institutions or comply with the reporting obligations may subject the digital currency exchangers to the enforcement and non-compliance actions as provided under the AMLA as well as the potential termination or denial of use of financial services in Malaysia.

BNM is inviting written feedback on the specific requirements set out in the exposure draft on digital currencies, which must be submitted to the central bank by Jan 14, 2018.

In another development, World Bank Group lead financial sector specialist Jose De Luna Martinez said forming a framework to regulate cryptocurrencies could be a challenge for financial sector authorities.

“Our view is that the financial sector authorities have a challenge in terms of putting up a framework that can tell people to make a good choice,” he said at a panel discussion held in conjunction with the launch of the World Bank’s Malaysia Economic Monitor Report in Kuala Lumpur today.

He also noted that the major concern is consumer protection as it is crucial for investors to be well informed on the risk associated with digital currencies, which can be volatile.

Meanwhile, World Bank director for regional partnership Malaysia and Thailand Dr Ulrich Zachau opined that there is a need for cryptocurrencies to be regulated and it could actually be helpful to have more exchanges in the future.

Bitcoin began trading on the Chicago Board Option Exchange on Dec 10. As at 8pm today, bitcoin was trading at US$16,669 (RM68,000).


Bank Negara: No move to regulate digital currencies, you invest at your own risk

PETALING JAYA: Bank Negara Malaysia (BNM) said today its move to impose reporting obligations on digital currency exchanges is not a move to regulate the digital currency and that investors are going into the market at their own risk.

BNM advised the public to carefully evaluate the risks associated with dealings in digital currencies, including risks arising from high volatility in prices, the lack of deep markets and vulnerabilities to cyber attack which can lead to significant losses.

“Users of digital currencies will also not be covered under established disputed resolution arrangements which exists for regulated financial institutions in the event of any dispute or losses.”

The central bank said it will continue to monitor and assess the risks posed to the financial system by such activities to ensure that the integrity of the financial system is not compromised.

The central bank highlighted that the reporting obligation on the exchanges is the first step towards making digital currency activities more transparent in Malaysia, but it does not in any way connote the authorisation, licensing, endorsement or validation by BNM of any entities involved in the provision of digital currency exchange services.

Last month, BNM governor Tan Sri Muhammad Ibrahim said the central bank will designate persons converting cryptocurrencies into fiat money currencies as reporting institutions under the Anti-Money Laundering Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) beginning next year, which was seen as the central bank’s move to regulate digital currencies.

However, BNM stressed in a statement today that digital currencies are not legal tender in Malaysia and that digital currency businesses are not covered by prudential and market conduct standards or arrangements that are applicable to financial institutions regulated by the central bank.

“This is consistent with reporting obligations currently invoked under the AMLA on other reporting institutions such as legal or accounting firms and real estate agents which do not fall under the bank’s purview.”

The central bank is to hold a media briefing tomorrow on digital currencies.

Meanwhile, BNM today issued for public consultation an exposure draft on the invocation of reporting obligations on digital currency exchange business as reporting institutions under AMLA, which aims to ensure that effective measures are in place against money laundering/terrorism financing risks associated with the use of digital currencies and to increase the transparency of digital currencies activities in Malaysia.

Failure to declare its details as reporting institutions or comply with the reporting obligations may subject the digital currency exchangers to the enforcement and non-compliance actions as provided under the AMLA as well as the potential termination or denial of use of financial services in Malaysia.

BNM is inviting written feedback on the specific requirements set out in the exposure draft on digital currencies, which must be submitted to the central bank by Jan 14, 2018.

In another development, World Bank Group lead financial sector specialist Jose De Luna Martinez said forming a framework to regulate cryptocurrencies could be a challenge for financial sector authorities.

“Our view is that the financial sector authorities have a challenge in terms of putting up a framework that can tell people to make a good choice,” he said at a panel discussion held in conjunction with the launch of the World Bank’s Malaysia Economic Monitor Report in Kuala Lumpur today.

He also noted that the major concern is consumer protection as it is crucial for investors to be well informed on the risk associated with digital currencies, which can be volatile.

Meanwhile, World Bank director for regional partnership Malaysia and Thailand Dr Ulrich Zachau opined that there is a need for cryptocurrencies to be regulated and it could actually be helpful to have more exchanges in the future.

Bitcoin began trading on the Chicago Board Option Exchange on Dec 10. As at 8pm today, bitcoin was trading at US$16,669 (RM68,000).


After defeat at home, Britain’s May urges EU leaders to move on with Brexit

BRUSSELS, Dec 14 — British Prime Minister Theresa May will urge European Union leaders today to approve an agreement to move Brexit talks on to a second phase, hours after an embarrassing parliamentary defeat at home that weakens her hand. At…


BNM moves to make digital currencies transparent

KUALA LUMPUR: Bank Negara Malaysia (BNM) is moving to make digital currencies transparent in Malaysia with the issuance today for public consultation, an exposure draft on the invocation of reporting obligations on the digital currency exchange business as reporting institutions under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA).

The central bank in a statement today said it aims to ensure that effective measures are in place against money laundering/terrorism financing risks associated with the use of digital currencies and increase the transparency of digital currencies activities in Malaysia.

“The proposed policy sets out the legal obligations, requirements and standards that digital currency exchangers — which will be defined under the first schedule of the AMLA — must carry out as reporting institutions.

“This includes transparency obligations which are intended to provide relevant information for the public to better understand and evaluate risks associated with the use of digital currencies. Increased transparency will also serve to prevent the use of the digital currencies for criminal or unlawful activities,” it added.

A digital currency exchanger must also declare its details to BNM as a reporting institution.

Failure to do so or comply with the reporting obligations may subject the currency exchanger to enforcement and non-compliance actions as provided under the AMLA, as well as the potential termination or denial of use of financial services in Malaysia.

BNM said the invocation of reporting obligations on the digital currency exchange business does not in any way connote the authorisation, licensing, endorsement or validation by the bank of any entities involved in the provision of digital currency exchange services.

“The public is reminded that digital currencies are not legal tender in Malaysia. Accordingly, digital currency businesses are not covered by prudential and market conduct standards or arrangements applicable to financial institutions regulated by BNM.

“This is consistent with reporting obligations currently invoked under the AMLA on other reporting institutions such as legal or accounting firms and real estate agents which do not fall under the BNM's purview,” it added.

Members of the public are advised to carefully evaluate the risks associated with dealings in digital currencies, which includes those arising from high volatility in prices, the lack of deep markets and vulnerabilities to cyber-attack, which can lead to significant losses.

Users of digital currencies will also not be covered under established disputed resolution arrangements which exist for regulated financial institutions in the event of any dispute or losses.

The invocation of reporting obligations on digital currency exchangers is the first step towards making digital currency activities more transparent in Malaysia, said BNM.

It will continue to monitor and assess the risks posed to the financial system by such activities to ensure its integrity is not compromised.

BNM invites written feedback on the specific requirements set out in the exposure draft and responses.It must be submitted by Jan 14, 2018. — Bernama



Worst is over for Berjaya Food, says AmResearch

PETALING JAYA: AmResearch believes the worst is over for Berjaya Food Bhd (BFood) with Kenny Rogers Roasters’ (KRR) robust same store sales growth (SSSG) and the completed disposal of KRR Indonesia.

The research house said the company also benefits from a stronger ringgit.
AmResearch is maintaining a “buy” call on BFood with a fair value of RM1.91.
The valuations are pegged to a price-to-earnings ratio of 25 times FY19F, reflecting a 20% premium to its historical valuations.

“We think that it is justified as BFood has significantly enhanced earnings visibility following the disposal of KRR Indonesia, attractive growth off a low base and a stellar Starbucks brand.”

BFood reported a 15.5% rise in net profit to RM5.8 million in Q2, bringing first-half net profit 11.1% higher at RM11.2 million, in line with AmResearch and consensus estimates. The research house noted that Starbucks’ performed respectably with mid-teen growth.

“This was off sustained SSSG of 3% coupled with 9% more stores (2QFY18: 248). We expect 2HFY18 to make up for the seemingly shortfall in year to date store expansion amounting to nine stores (vs full-year addition of 25 stores).”

Meanwhile, KRR Malaysia registered a robust 8.7% SSSG for the quarter.

“Management’s turnaround efforts, specifically new marquee ‘OMG Unfried Fried Chicken’, streamlined menus and more affordable set lunches are coming to fruition.”

KRR Malaysia is expected to add three to five stores to its existing 81 stores by end-FY18.

“It has reached the tail end of its store rationalisation initiative.”

There was recognition of KRR Indonesia contribution despite disposing of the asset on Nov 24, 2017.

AmResearch is maintaining the earnings estimates for BFood as its profits have fallen in line with its expectations.


Malaysia’s GDP growth tipped to remain above 5% in 2018

KUALA LUMPUR: Economists believe Malaysia’s gross domestic product (GDP) growth will remain above the 5% mark in 2018, driven mainly by private and government sector spending.

UBS Investment Bank associate economist Alice Fulwood, who expects GDP growth to hit 5.5% next year, said the growth trend will be driven mainly by the government’s spending ahead of the general election that is expected to be called in March, as well as the major rail projects, including the East Coast Rail Line (ECRL) and the Kuala Lumpur-Singapore High Speed Rail (HSR).

“We expect the activities associated with the ECRL, in which construction is expected to start in early 2018, to add 0.3 to 0.5 percentage point to the GDP growth. We also expect the similar uplift from the HSR project in 2019,” she said during a conference call.

UBS Investment has GDP growth for 2017 at 6%. The ringgit is expected to hit 4.10 against the dollar by year-end and 3.9 by the end of 2018.

Fulwood added that Bank Negara Malaysia (BNM) is expected to increase interest rates twice in 2018, starting in January and in the second half of the year.

Asked whether Malaysia’s reserves are insufficient to pay the external long-term and short-term debt, she said it depends on the traditional metric on which one looks at, that affects the reserves.

“Yes, Malaysia does look 'a little under reserved' but if we look more holistically, actually Malaysia looks more solvent compared with other Southeast Asian counterparts,” she added, noting that Malaysia’s external assets exceeded its external liabilities.

World Bank director for regional partnership Malaysia and Thailand Dr Ulrich Zachau maintained that the pace of GDP growth will continue to be robust at 5.2% and will continue to be underpinned by high levels of private sector expenditure.

World Bank has again revised upwards its full-year forecast GDP growth for Malaysia from 5.2% to 5.8%, steered by strong domestic and external demand.

Zachau said the lift is attributable to economic growth chartered across several areas – in particular private consumption, private investments, and exports.

“Malaysia’s economic growth comes from all sources,” Zachau told reporters at the launch of the World Bank’s Malaysia Economic Monitor report today.

He opined that Malaysia could achieve its goal of becoming a high income nation sometime between 2020 and 2024, but there needs to be more inclusive economic growth in relation to the Bottom 40 group – which happens to be affected by inflation the most, as 70% of their income is spent on food and housing, the areas with the highest inflation increase.

“If the economic policies stay the course and with continued prudent sound economic macroeconomic management both on the fiscal and monetary side and continued strong reforms Malaysia will continue to enjoy robust growth,” Zachau added.