Saturday, January 6th, 2018

 

VW US sales chief quits amid falling deliveries

BERLIN, Jan 6 — A senior US sales manager has quit Volkswagen’s North America operations, Automotive News reported, just as the carmaker’s deliveries in the world’s second-largest auto market fall steeply. Ron Stach, senior vice…


Saudi boosts citizen benefits as taxes bite

RIYADH, Jan 6 — Saudi Arabia announced today it had boosted stipends and benefits for citizens to cushion the impact of economic reforms including the kingdom’s first ever taxes after an oil price slump. Most working Saudi Arabians are…


Minimum wage hikes not enough to boost broader US salaries

WASHINGTON: Hikes in the minimum wage take effect this week in about 40 US states and municipalities but they will not be enough to boost US salaries more broadly, economists say.

Congress has not approved a federal minimum wage hike since 2009, and it was not indexed to inflation, so state and local governments stepped in to help workers on the lowest end of the pay scale make up some lost ground.

Washington state's minimum wage will rise to US$11.50 (RM45.97) an hour, the highest in any state, while some are phasing in increases to get to a “living wage” of US$15 (RM59.96), compared with the federal minimum of US$7.25 (RM28.98).

In all,18 states and nearly two dozen municipalities are raising their base salaries, but economists say the move affects a relatively small segment of the American labor force.

They say policies that could have a broader impact on wages include direct employment programs, like infrastructure projects, especially in regions of the country that have not yet recovered from the recession.

An expanded earned-income tax credit which would boost earnings for higher-wage workers could also help, they say.

Other policies unrelated to wages include standardizing state licensing criteria for professions like hair dressers. This would allow professionals to move to areas with more vibrant economies without having to pay to fulfill new licensing requirements.

Another more technical change would be to clamp down on the use of non-compete clauses which firms increasingly include in employment contracts. Such clauses keep workers from moving to competitors or starting their own businesses.

Perplexing

Even with the US economy in its eighth year of recovery, and with solid hiring pushing the unemployment rate to a 17-year low of 4.1%, wage gains have been far more sluggish than economists and policymakers expected.

The gains have not been widely shared, either.

The US final employment report for 2017 released Friday showed average hourly earnings increased 2.5% to US$25.63, just ahead of consumer price increases.

Nominal wage growth since late 2009 has been just above two percent which is a little faster than inflation, but slower than the increases of more than three percent in previous recoveries.

“That's the big open question … why haven't we seen more wage growth?” said Roberto Pinheiro, senior research economist at the Cleveland Federal Reserve Bank.

And recent gains have been marked by “rising inequality” with much of the growth “concentrated at the top,” according to a study led by Jay Shambaugh at the Brookings Institution.

From 1979 to 2016, wages in the top fifth grew 27%, compared to a gain of just 12% in the next quintile, and a one percent drop for the bottom group, the study shows.

Pinheiro attributed the low wage growth mostly to slow improvement in labor productivity in the wake of the Great Recession that followed the 2008 financial crisis.

In other words, “firms are not getting more in output per hour from workers,” so “the pie is not growing,” he told AFP.

He and other economists agree there are many factors behind this, and as a result there is no easy solution.

Some of the slow wage gains are due to demographics in an aging American workforce: older, higher-paid workers are retiring — the so called baby boomers — replaced by younger, lower-paid “millennials,” which drags down average wages.

Some areas, mostly near major cities, are booming, and companies say they had to boost wages and offer more attractive working conditions to fill open positions.

Policy changes

But Jared Bernstein of the Center on Budget and Policy Priorities, who served as chief economic adviser to former Vice President Joe Biden, noted the US economy still has “pockets of geographic weakness.”

Those areas could benefit most from infrastructure projects to create jobs directly and help them catch up to more prosperous regions.

Bernstein also said companies “have seriously gotten out of the habit” of raising wages, and executives have used holding down labor costs as a way to boost profits amid slow revenue growth.

Shambaugh agreed, telling AFP firms will need to “retrain themselves to offer above-market wages to steal people because there isn't a deep bench.”

The economists called for policies to address declining innovation, in part caused by increasing concentration of industries; and the erosion of workers' ability to negotiate higher pay, due to sharp declines in union membership, and the rise of non-compete clauses.

While the divisive current US political environment makes it hard to push such measures, Shambaugh said one issue could have bipartisan support: keeping the economy firing on all cylinders, and even allowing inflation to rise until wage gains spread throughout the economy.

Most economists expect to see the unemployment rate fall much lower this year, and to see wages accelerate. — AFP


Pharmaceutical stirs outrage over price hike for brain tumor drug

MIAMI: A little known pharmaceutical company in Florida has found itself in the eye of a storm following disclosures it raised the price of an old drug used to fight brain tumors by 1,400%, from US$50 (RM199.88) a pill to more than US$700 (RM2,798).

NextSource Biotechnology in 2013 bought the license for the drug Lomustine from Bristol-Myers Squibb, which sold a 100 milligram pill of the substance for nearly US$50 apiece.

Since then, according to The Wall Street Journal, it raised the price of the same pill to US$768, marketing it in the United States under the name Gleostine.

The patent for Lomustine, which also is known as CeeNU or CCNU, has expired but there is no generic equivalent.

It was developed more than 40 years ago as a chemotherapy treatment for glioblastoma, an aggressive brain tumor.

The Wall Street Journal story set off angry reactions among readers, a wave of accusations on social media of “corporate greed” and an open letter from an association of Democratic activists in Miami-Dade county demanding that NextSource be investigated for “gouging and anti-competitive practices.”

Local politicians on Thursday gave their backing to the so-called People's Progressive Caucus of Miami-Dade, which is organizing a protest Saturday outside NextSource's office in downtown Miami.

“More than anything, we'd like to get NextSource to roll back some of their prices,” William Bryant, the group's spokesman, told AFP. “But we'd also like to try to secure commitments from our current and future Congress people to materially address the issue of out-of-control pharmaceutical prices.”

The website Canada Drugs lists the same drug, under the name CeeNU, at US$35 for a 100mg pill.

In an editorial in the September edition of The Cancer Letter, three oncologists and pharmacologists from the Duke University Health System in Durham, North Carolina denounced NextSource's practice of arbitrary price increases as “unconscionable.”

“This tactic of extreme price increases of life-saving medications is both repulsive and disheartening,” they said.

“In the process of prescribing standard-of-care treatments for our patients, we pose them with an impossible dilemma: either face financial hardship to take the medication or choose not to receive potentially life-saving therapy.”

Price gouging denied

NextSource's lawyer, Joseph DeMaria, contended that allegations made against the company and its CEO Robert DiCrisci were defamatory and that they might sue.

“This argument that my client is this greedy company and greedy person who is trying to gouge is a total falsehood,” he said.

He said NextSource, which only sells Lomustine, also produces lower priced doses of the substance averaging US$400 a pill.

The raw material used to make Lomustine, a “trade secret” DeMaria would not identify, has risen by 30%, he said, and the company also must pay the Food and Drug Administration US$2 million a year.

DeMaria said NextSource moreover has a program to provide the drug free to people who lack health insurance. The Duke specialists, however, said the program's “stringent criteria” limited its availability to only a small minority of patients.

Lomustine, which acts to interfere with the DNA of the cancer cells, is typically prescribed in doses of 110 mg/m2 every six weeks.

According to the American Brain Tumor Association, some 700,000 people in the United States suffer from a primary brain or spinal cord tumor.

Glioblastoma, in particular, accounts for 14.9% of all primary brain tumors. — AFP


Bursa M’sia bull run to continue next week

KUALA LUMPUR: Bursa Malaysia's bull run is expected to continue next week underpinned by the favourable outlook for global growth coupled with positive domestic catalysts.

Inter-Pacific Securities Sdn Bhd Research Head, Pong Teng Siew, said the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) would extend the upward trajectory, to reach the 1,826-level or even higher to 1,840- level.

“The composite index has strengthened and broke the 1,800 psychological level. So there is potential for further upside next week.

“On catalysts, there is strong talk that the election is coming soon, which provides strong impetus. This suggests buying cue for government linked companies and index-related stocks,” he told Bernama, adding the immediate support level is now located at 1,793-1,784.

Pong expects the rally would last for up to three months.

In addition, he believed 2018 would be a good year for the local bourse given the higher expectation that more companies were going for listing this year, including in the Leading Entrepreneur Accelerator Platform (Leap) Market.

Edra Power Holdings Sdn Bhd, Edotco Group Sdn Bhd and several other technology companies are expected to undertake their initial public offerings (IPO) this year.

“This year, IPO numbers may succeed last year's,” Pong added.

On a Friday-to-Friday comparison, the FBM KLCI performed better, gaining 21.16 points to end the week at 1,817.97.

Although Bursa started the year weaker, as a result of post-window dressing and profit-taking, the momentum recovered on the second trading day onwards, fuelled by the spillover effects from the stronger Wall Street performance, rising oil prices and a stronger ringgit versus the US dollar.

Sentiment remained bullish until the end of the week, buoyed by growing optimism over robust global growth for this year, following the upbeat major economic data, including those in the US, Europe and China.

The market bull run has influenced the composite index to breach the 1,800 level on Thursday morning, a level that was last seen in 2015, as investors returned for some follow-up buying in Malaysia's market, which has been badly hit in 2017 compared to its regional peers.

The persistent buying support pushed the key index to end Thursday firmer, at two-and-half-year high.

On the scoreboard, the FBM Emas Index surged 222.84 points to 13,165.41, the FBMT 100 Index soared 195.48 points to 12,809.68, the FBM Emas Shariah Index rose 307.82 points to 13,610.74, the FBM 70 jumped 407.07 points to 16,492.61, and the FBM Ace climbed 290.42 points to 6,893.97.

On a sectoral basis, the Finance Index advanced 224.9 points to 17,086.27, the Plantation Index bagged 101.39 points to 8,004.76, while the Industrial Index gained 111.48 points to 3,392.18.

In an active trading week, the total turnover swelled to 19.69 billion shares worth RM13.02 billion from 10.16 billion shares valued at RM8.46 billion billion last week.

Main Market volume to increased sharply to 12.12 billion shares worth RM11.77 billion from 5.89 billion shares valued at RM7.58 billion.

Warrants turnover ballooned to 2.99 billion units worth at RM441.37 million against last week's 999.13 million units valued at RM248.63 million.

The ACE Market widened to 4.54 billion shares worth RM786.69 million from 3.24 billion shares valued at RM615.99 transacted previously.

The market was closed on Monday for the New Year holiday.

Gold futures contract on Bursa Malaysia Derivatives is likely to trade cautiously next week as traders await the US non-farm payroll data, which will give an overview of the market direction as well as US economy, said a dealer.

Phillip Futures Sdn Bhd Dealer, Chang Hui Ying, said if the data are positive, it could expedite the US Federal Reserve's plan to hike interest rate.

“Thus would shun away the investors from the precious metal as they are more inclined to put their money in bond and equities,” she told Bernama.

On a Friday-to-Friday basis, January 2018 rose 22 ticks to RM170 a gramme, February 2018 gained 29 ticks to RM170.7 a gramme, March 2018 and April 2018 improved 27 ticks each to RM171.3 and RM172 a gramme respectively.

Weekly turnover rose to 22 lots worth RM374,835 from 20 lots worth RM338,725, while open interest on Friday narrowed to 74 contracts from 101 contracts.

The market was closed on Monday for the New Year holiday. – Bernama


Short-term rates to stay steady next week

KUALA LUMPUR, Jan 6 — Short-term rates are expected to remain stable next week with Bank Negara Malaysia (BNM) likely to intervene by offering tenders to absorb surplus liquidity from the system. For the week just-ended, the overnight rate was…


Bursa bull run to continue next week

KUALA LUMPUR, Jan 6 — Bursa Malaysia’s bull run is expected to continue next week underpinned by the favourable outlook for global growth coupled with positive domestic catalysts. Inter-Pacific Securities Sdn Bhd Research Head, Pong Teng…


Total trade rises to RM157.05 billion in November 2017

KUALA LUMPUR: Malaysia’s total trade in November 2017 surged by 14.8 per cent to RM157.05 billion compared with the corresponding month of last year, said the Ministry of International Trade and Industry (MITI). In a statement yesterday, MITI said the main contributor to the growth was trade with Asean, China, US, Hong Kong Special Administrative […]


RAM reaffirms Cahya Mata Sarawak’s IMTN rating

KUCHING: RAM Ratings has reaffirmed the AA3/Stable rating of Cahya Mata Sarawak Bad’s (CMS) RM2 billion Islamic Medium-Term Notes Programme (2017/2037) as well as the AA3/Stable/P1 corporate credit ratings of the group. The reaffirmation of the ratings is based on the firm’s opinion that CMS’s credit metrics will remain commensurate with the ratings going forward. […]


AirAsia-SATS JV to complement AirAsia’s expansion plans

KUCHING: The proposed joint venture partnership between AirAsia Bhd (AirAsia) with the chief ground-handling and in-flight catering service provider at Singapore Changi Airport, SATS Ltd (SATS) will complement AirAsia’s long-term expansion plans in Asean. In a corporate update, researchers with MIDF Amanah Investment Bank Bhd (MIDF Research) saw that both parties completed the share-swap agreement […]