Monday, January 8th, 2018


World stocks rally starts slowing

LONDON, Jan 8 — A global 2018 stock market rally showed signs of losing momentum today as New York and London stocks stalled, but Asia and eurozone markets powered on. Asian equities mostly advanced following yet more records on Wall Street,…

Ringgit likely to soften after strong rebound

PETALING JAYA: Despite the ringgit continuing with its upward trend after breaking the psychological barrier 4.0 level last Friday, economists cautioned that the local currency might take a breather in view of the US Fed tightening cycle and a boost for the dollar, from the US tax reform.

The ringgit has joined a basket of other regional currencies in an appreciating trend against the US dollar mainly due to the weakness in the dollar.

In its note today, Kenanga Research said that while the ringgit may test the 3.95 level in the first quarter of 2018, it may retrace back to around 4.10.

Fundamentally, Socio-Economic Research Centre (SERC) executive director Lee Heng Guie said, the ringgit should be worth 3.6 to 3.7 against the greenback.

“However, it does not mean that the ringgit will hit this level this year as it will be affected by other domestic and external factors,” he told SunBiz.

Over the short term, Lee believes the ringgit will stay at the current level with a projection of 3.90 by year-end.

The ringgit strengthened as much as 0.3% to 3.9865 today. As at 5pm, it traded at 3.9955 against the greenback. The local currency has risen 1.3% since the start of the year after a 10.4% gain last year.

Kenanga Research said the ringgit is expected to experience volatility in the face of widely expected US Fed tightening of at least three 25-basis-point rate hike for the year.

Furthermore, it said the current weaknesses in US dollar might dissipate as the new US tax reform proceeds and provides a boost to its economy and currency, therefore implying a softer ringgit against the dollar.

“As a result we might see the ringgit, at times, under some pressure to weaken though it is partly supported by strong fundamentals and positive sentiment.”

FXTM chief market strategist Hussein Sayed highlighted that the dollar index fell to a three-and-a-half-month low to trade below 92, leaving many traders wondering whether this year will be another devastating one for the greenback.

“When looking at the Commitment of Traders report, speculators are not showing interest in buying the US dollar yet, and the latest group of data did nothing to support the dollar.”

Given that the major US economic releases are four days away, he said many traders will focus on whether any technical breakouts will occur.

Besides weak US dollar, Lee noted that the ringgit strength is also supported by positive sentiment in the run-up to the 14th general election and rising oil prices.

“The US is entering into the weak cycle trend, the market needs more confirmation on what the US Fed wants to do as well as the impact from the tax reform.”

The US Fed has set three rate hikes this year, while the first Federal Open Market Committee meeting is scheduled for Jan 30 and 31.

Domestically, Lee said the catalysts for the ringgit include a continued trade surplus, albeit smaller at RM9.9 billion in November against RM10.4 billion in October, as well as the consolidation of fiscal budget and the government debt remains below 55% of the gross domestic product.

Despite the positive sentiment towards the general election, Lee also cautioned that there will be some degree of uncertainty when the Parliament is dissolved soon.

Meanwhile, AmBank Research expects the US dollar/ringgit to remain on a strong note with end-2018 projection of 3.95 and 3.76, being the base case and best case scenario.

“Our full-year average outlook for the US dollar/ringgit is 4.00–4.02 as our base case and best case at the 3.80–3.82 levels.”

Touch ’n Go gets BNM approval for mobile e-wallet

KUALA LUMPUR: Touch ’n Go Sdn Bhd has obtained approval from Bank Negara Malaysia (BNM) to operate and offer mobile e-wallet services in Malaysia via TNG Digital Sdn Bhd, its joint venture company with Ant Financial Group.

The new mobile e-wallet will facilitate payments in a cashless and cardless environment by leveraging on Ant Financial’s Alipay technology platform, the world’s leading digital financial services provider. Alipay supports over 450 million users in China alone via its Alipay payments system.

The new mobile e-wallet will enable Malaysians to experience a secure, convenient and seamless payment ecosystem by using Quick Response (QR) codes to perform, among others, online shopping, bill payment, retail payments, as well as point-to-point fund transfers.

Touch ’n Go also expects its users, who are predominantly toll, transit and parking users, to quickly sign on to enjoy these expanded services.

“In support of the government’s aspiration to accelerate the creation of a robust and secure digital payment ecosystem, we are excited to have obtained approval for this new e-wallet through our joint venture with Alipay. Today, Touch ’n Go is already the number one player in micropayments and we see this offering as an add-on as we strengthen our value proposition, moving the country and our customers further into the realm of digital payments,” said Touch ’n Go CEO Syahrunizam Samsudin.

GDB Holdings set for listing on ACE Market

PETALING JAYA: Construction services firm GDB Holdings Bhd has received approval from Bursa Malaysia Securities Bhd to list on the ACE Market, targeted for the first quarter of 2018.

Established since 2013, GDB has completed construction works for several projects in Kuala Lumpur, namely KL Eco City (Parcel B) and One Central Park. The group is working on several high value projects such as Westside III, Etiqa Office Tower, AIRA Residence and Menara Hap Seng 3.

GDB holds a Grade G7 License from the Construction Industry Development Board of Malaysia, which allows it to tender for projects with unlimited value, as well as Sijil Perolehan Kerja Kerajaan that enables it to participate in tenders for government jobs.

It is involved in the implementation of large-scale construction projects, with strong emphasis on environment, quality, and safety.

It has multiple certifications such as ISO 9001:2015 Quality Management System, ISO 14001:2015 Environmental Management System, and OHSAS 18001:2007 Occupational Health and Safety Management System.

GDB has also obtained the QLASSIC, CONQUAS, BQUAS, SHASSIC, and Green 5-S programme certifications for various projects.

Alliance Investment Bank Bhd is the principal adviser, sponsor, sole underwriter, and placement agent for the initial public offer exercise.

Saudi Telecom gets RM1.5b Islamic loan

SYDNEY: Saudi Telecom Co (STC) has obtained a RM1.51 billion Islamic loan through its Malaysian subsidiary, according to a document from arranging banks.

Saudi Telecom, the Gulf’s largest telecommunications operator by market value, will use the Islamic loan to refinance existing debt originally used to acquire a stake in telco firm Maxis.

STC, through its subsidiary STC Malaysia Holdings, owns a 25% stake in Binariang GSM Holdings, which in turn holds a controlling stake in Maxis, according to the company’s financial statements.

STC Malaysia Holdings hired Bank of Tokyo-Mitsubishi UFJ (Malaysia), HSBC Amanah Malaysia and Standard Chartered Bank Saadiq to arrange the deal.

The syndicated financing uses a syariah-compliant structure known as commodity murabaha, where one party agrees to purchase merchandise from a counterparty, which promises to buy it back at an agreed mark-up at a later date.

Bank of Tokyo-Mitsubishi UFJ (Malaysia) will act as the investment agent to manage the cash flows of the facility and to execute the commodity murabaha transactions.

Malaysia is one of the largest markets for Islamic finance, which follows religious principles such as bans on interest and monetary speculation. – Reuters

pitchIN platform to raise up to RM25m for 20 issuers

KUALA LUMPUR: Pitch Platforms Sdn Bhd, which runs the pitchIN equity crowdfunding platform, is looking to raise funds of between RM15 million and RM25 million for 20 issuers in the first half of 2018 (H1’2018).

Chief executive officer Sam Shafie said 20 companies, which are mostly technology-based entities, had so far signed agreements with pitchIN to utilise its platform to raise funds for their businesses.

“We expect to sign more agreements in the first half, but for now, we are already comfortable with the target (funds) of between RM15 million and RM25 million and 20 companies in our hands.

“Furthermore, the target is a good progress even though we believe we will achieve higher funds for 2018,” he told reporters after releasing the latest pitchIN Equity Crowdfunding Report 2017.

PitchIN had raised total funding of RM14.02 million for 12 issuers last year, commanding a 60% market share.

According to the report, out of the 12 issuers, which capitalised on the platform, less than five issuers were from the non-tech sector, while the remainder were tech companies.

Responding to this, Sam said the bigger percentage of tech companies was also due to investors’ appetite for investment.

“These investors, which constituted slightly above 50%, are millennials aged between 22 and 34 and they are inclined towards tech companies,” he added.

Meanwhile, the equity crowdfunding industry in Malaysia raised RM23.39 million last year and this avenue is viewed as a viable financing source for small and Medium enterprises and startups. A total of 22 crowdfunding campaigns were launched last year. – Bernama

Business sentiment seen rising in first quarter of 2018

PETALING JAYA: Business optimism among Malaysian companies hit a new peak in the first quarter (Q1) of 2018 as growth momentum continues to pick up, according to Dun & Bradstreet (D&B).

Overall Business Optimism Index (BOI) jumped from +5.52 percentage points in Q4’2017 to +7.25 percentage points in Q1’2018. On a year-on-year basis, BOI rose from +1.65 percentage points in Q4’2017 to +7.25 percentage points in Q1’2018.

According to D&B Malaysia, four of six indicators – volume of sales, selling price, inventory levels and employment levels rose on a quarter-on-quarter basis, except for net profit and new orders.

Compared with 2017, firms are more optimistic about investments in business expansion for 2018 as there is a significant rise in the number of firms expecting investments to increase from 8% in 2017 to 18% in 2018.

Meanwhile, the proportion of firms expecting investments to decrease fell from 21% in 2017 to 15% for 2018. Majority of local firms anticipated investments to remain unchanged at 67%.

Dun & Bradstreet (Malaysia) Sdn Bhd CEO Audrey Chia noted that the overall positive outlook bodes well for the business community in Malaysia for Q1’2018.

“Both services and transportation sectors have benefited from strong private consumption and government spending in public infrastructure. We expect the manufacturing sector to be boosted by sustained global demand for semiconductors and stronger export growth.”

She foresees local businesses becoming more optimistic about investments in business expansion in 2018.

Nonetheless, Chia said besides global economic uncertainties and rising business costs, increased competition is one new area that has been identified as a key challenge for Malaysian companies.

D&B Malaysia conducts latest Business Expectations Surveys every quarter. For each quarter, 200 business owners and senior executives representing major industry sectors across Malaysia are asked if they expect increases, decreases or no changes in their upcoming quarterly sales, profits, employment, new orders, inventories and selling prices.

First IPO for the year a hit with investors

PETALING JAYA: The country’s first initial public offering (IPO) for the year, Binasat Communications Berhad made a strong debut, closing 28% higher than its issue price of 46 sen.

The provider of telecommunication supporting services for satellite; mobile and fibre optic telecommunications networks, started trading on the ACE Market of Bursa Malaysia today at 60 sen some 14 sen higher than its issue price. It closed the day at 59 sen with some 72.6 million shares changing hands. The stock, however, was not among the top most active counters for the day, a departure from the norm for IPOs.

“Today marks the realisation of hours and months of hard work invested by our dedicated management team and diligent staff as well as the guidance and support of our adviser and relevant authorities towards making this IPO a success,” managing director Na Boon Aik said in a statement.

Rakuten Trade has a “buy” call on Binasat with a target price of 65 sen, which is 13 times price-to-earnings ratio as per FBM KLCI Small Cap Index. It is expected to outperform the FBM KLCI Index by more than 10% over the next six to 12 months period. Year-to-date the index has gained 1.83%.

Rakuten Trade likes the recurring income from Binasat’s operation and maintenance services, which accounts for 48% of total revenue providing sustainable and stable earnings visibility. It opined that revenue has been growing steadily for the past four years and is anticipated to remain robust with double-digit growth and earnings per share growth 12.8% FY18 and 13.6% for FY19.

Binasat’s two major clients are Maxis (12 years) and Huawei (six years), contributing a combined 75% to their revenue.

Rakuten Trade noted that while the company’s dependence on two clients does bring with it concentration risks, its 13 year track record of serving customers in the information technology industry, including all major telcos in Malaysia (direct and indirectly through equipment suppliers), should provide support.

‘Airport scrutiny should have begun earlier’

SEPANG: The Malaysian Aviation Commission (Mavcom), which is rolling out the Airports Quality of Service framework in stages starting the third quarter this year, should have looked into scrutinising airports right in the beginning instead of an afterthought, said AirAsia incoming deputy group CEO, digital, transformation, corporate services Aireen Omar.

She said Mavcom should have looked at the industry as a whole from the beginning and how it could help to bring in more tourists and growth.

Aireen added airports should have been part of the process and not slotted in as an afterthought later.

She said checks on airports should have started from the beginning to see how they were facilitating traffic growth for the country, including how fairly they charged airport taxes, depending on the services and facilities provided.

“They need to start a benchmark to see whether the services provided at each airport is of the standards that we should try to aim before they start thinking of increasing any charges. Right now as it is, if you increase the charges, it is on what basis? Have we seen any improvement in any of the services or so to the users of the airports, including passengers and airlines? You don’t see any differences or changes.”

Aireen had previously opposed Mavcom’s move to standardise the passenger service charge at KLIA and klia2, justifying that both were two vastly different airport terminals providing different levels of services and facilities.

Last month, Mavcom said it intended to penalise airport operators if they do not meet the service indicators stipulated in the new Airports Quality of Service framework. The penalty, which varies according to the service quality category and type of airport, could be up to 5% of the airport’s aeronautical revenue.

“Whether the formula that they’re using now is the right way, I don’t know. There’s a lot of thought that needs to be put into it and it has to be a fair representative of all users as well.”

Ringgit finishes flat against US dollar

KUALA LUMPUR: The ringgit took a breather from its rally this morning to finish flat against the US dollar today amid firmer crude oil prices and positive investment sentiment in the local market.

At 6pm, the local note ended at 3.9950/9990 against the greenback from 3.9950/9000 on Friday.

Oanda Corp Head of Trading for Asia Pacific, Stephen Innes, told Bernama the firming crude oil prices appeared to have been enough for the local note to break its 4.0 psychologically level against the greenback.

“Rising crude oil prices also bode well for Bursa Malaysia, given that oil and gas constituents play a vital role in the local bourse and have provided some decent fund inflows,” he said.

The recent crude oil supply disruption and escalating tensions in West Asia had boosted the benchmark Brent crude oil price to US$67.60 (US$1 = RM3.99) per barrel on Monday.

He said while the ringgit was expected to continue strengthening on a benevolent US Federal Reserve outlook amid energy price rally, Innes said, the local market had most likely sufficiently priced in anticipation of Bank Negara Malaysia's January rate increase.

“We may see the pace of appreciation to slow down and profit-taking is expected to set in ahead of this month's rate decision,” he said.

At the close, the ringgit was traded mostly higher against a basket of major currencies, especially the Singapore dollar and the euro.

The local unit rose against the Singapore dollar to 3.0008/0043 from last Friday's close of 3.0081/0123 after hitting a 14-month high of 2.9962/9002 against the currency as at 1pm today, touching the highest level last seen in October 2016.

Vis-a-vis the euro, the ringgit appreciated to another new high of 4.7896/7952 from yesterday's close of 4.8116/8192, a level last registered on June 23, 2017 which saw the local note closed at 4.7880/7918 versus the currency.

Against the British pound, the ringgit advanced to 5.4036/4106 from 5.4048/4132 previously.

However, against the yen, it fell to 3.5298/5342 from 3.5279/5333 last Friday. — Bernama