Sunday, February 4th, 2018


Ho Wah Genting (USA) invites investors to co-own a hotel room in KL

PETALING JAYA: Believe it or not, now you can co-own a hotel room through a “hotel sharing” concept without having to fork out a huge amount of money for the investment.

Ho Wah Genting (USA) Ltd’s Goldmen Suites hotel project, located on its most prized parcel of land on Jalan Imbi in Kuala Lumpur, has gained attention with its unique “crowdfunding” strategy.

According to a sales executive, the 61-storey Goldmen Suites project will be managed by the company upon completion in 2021 with a guaranteed return of 5% per annum for a period of 10 years.

The project consists of about 600 hotel rooms with a built-up size of 500 square feet each. There are three different packages offered – RM125,000, RM135,000 and RM145,000 per investor – depending on the unit level.

A hotel room will be shared by 12 buyers on a pooling basis. Buyers have the option to sell back their interest to the developer 10 years later at the initial investment price. This means that with an investment of RM125,000, an investor would have an interest in a unit worth RM1.5 million.

The total gross development value of the project is more than RM900 million.

Construction work is expected to start soon after land clearance. The buyers have to pay a downpayment of RM5,000 and the balance is to be settled within 24 months.

The sales executive said the project has garnered a take-up rate of about 20% so far.

Ho Wah Genting (USA) is part of Ho Wah Genting Group, but is not parked under the listed Ho Wah Genting Bhd (HWGB).

Its website shows that Ho Wah Genting Group (USA) is an investment holding company engaged in promoting entertainment membership, junket operating services, online entertainment gaming, investing and marketing of real estate property.

When contacted, the group declined to comment, but stressed that the project has nothing to do with HWGB.

Zerin Properties CEO Previn Singhe said it is good to see new initiatives in real estate investments, but he highlighted that a good mirror to crowdfunding is REITs, which are regulated and safer when one wants to participate in big-ticket real estate deals with smaller capital base.

“While it provides cheaper access to bigger ticket properties via co-sharing, it is not liquid in terms of exit strategy and it is not regulated,” he told SunBiz.

CBRE-WTW Foo Gee Jen said while the scheme might have its attractions, such as not having to worry about getting a tenant as is the case in a guaranteed rental return scheme, he cautioned on the underlying risks.

He said those looking to invest would need to be mindful of the fact that they are just owning a “piece” of a unit and therefore may not be accorded privileges of a “whole” unit owner.

For example, property owners have to sign hotel management agreements with hotel operators and will these “piece” owners be looped in on this?

Besides Goldmen Suites, there have been a few all-suite hotel projects in Malaysia, including the Best Western Premier Dua Sentral on Jalan Tun Sambanthan. Listings on the property websites show that a few units are available for sale, with prices ranging from RM780,000 to RM980,000.

AirAsia to shift Melbourne operations to Avalon Airport under 10-year deal

PETALING JAYA: AirAsia Group announced today that it will move its Melbourne, Australia, operations to Avalon Airport from Tullamarine Airport later this year under a 10-year agreement.

The low-cost carrier said in a statement that AirAsia flights will continue to operate from Tullamarine Airport until flights from Avalon Airport are operational.

AirAsia X Malaysia will operate twice-daily flights as the first international carrier at the airport, making long-haul flying affordable for Melbourne and the Victoria region, and improving access to more than 130 destinations in Asia and beyond.

In the first year of operation, a total of 500,000 international passengers are projected to move through Avalon Airport, which is just 50 minutes to the Melbourne Central Business District and the closest international airport to Great Ocean Road, a tourist attraction linking the Victorian cities of Torquay and Allansford.

Since its inaugural flight in 2007, AirAsia X has flown over 30 million guests, including 6.1 million Australians, AirAsia Group CEO and AirAsia X Co-Group CEO Tony Fernandes said.

“We are proud to renew our commitment to making air travel affordable for Australians with this move to Avalon, which will help us maintain our cost edge and allow us to continue offering low fares to Asean, Asia and beyond,” he said.

“This is a 10-year agreement structured to accommodate AirAsia X’s significant growth. It is the first such deal in Australia, and provides a unique low-cost opportunity for people and businesses to access over 130 destinations throughout Asia,” noted Avalon Airport CEO Justin Giddings.

Linfox Airports executive chairman David Fox expects around half a million international passengers to use Avalon Airport, which is owned by Linfox Group, in the first year of operation.

Powell takes the helm at the US Federal Reserve

WASHINGTON: Jerome “Jay” Powell, the Republican former investment banker tapped by President Donald Trump to lead the US Federal Reserve, will take the reins of monetary policy starting tomorrow.

Perhaps the wealthiest Fed chair ever, Powell – who turned 65 today – succeeds Janet Yellen, who ends the first and only term held by a woman.

He takes over at a remarkably quiet time following a decade of economic turmoil that forced the central bank into uncharted policy waters to try to recover from the global financial crisis.

Nevertheless, Powell, one of the rare non-economists to fill the role, could soon face difficult policy decisions that will put him at the centre of debate over how fast to raise interest rates.

Wages in January posted the biggest annual increase in nearly 10 years, with the growing US economy adding jobs at a solid pace, and while business and consumer confidence remains high just as a massive corporate tax reform is starting to take effect.

This comes at a time when all major global economies are growing simultaneously, an unusual and happy coincidence, but one that begins to raise concerns about when the recovery will end. And how.

“His biggest challenge will be leading the further calibration of interest rates when the US economy is late cycle amid a synchronised global economic upswing and fiscal stimulus is on its way,” Kathy Bostjancic of Oxford Economics told AFP.

As Yellen departs, the only Fed chair in nearly 40 years not to be reappointed for a second term, she leaves an economy with unemployment at a 17-year low of 4.1% – half the rate when she became chair – quiet inflation and nearly four years of uninterrupted growth.

In addition, she steered the Fed out of its massive bond buying programme and began the process of “normalisation,” or reducing the size of investment holdings, without upsetting the skittish financial markets.

Yellen prevailed in the debate to raise interest rates only gradually to ensure the economic recovery was on solid footing. The Fed has raised the key lending rate five times in her tenure, including three times last year.

“Yellen hands the incoming chair Jerome Powell a more 'normalised' economic and monetary policy environment,” Bostjancic said.

The Fed in December raised the benchmark lending rate for the third time last year, and indicated that another three hikes were likely this year.

But the minutes of the meeting show there was heated debate among the policymakers about how quickly they would need to move this year based on differing outlooks for inflation and the impact of the tax cuts.

Inflation has remained stubbornly below the Fed's 2% target, but the policy statement last week said the central bank expects prices to move up in the near term.

The first rate increase of 2018 is widely expected to come in March, which also will feature the first press conference by Powell, who has served on the Fed board since 2012.

Deadline looming for Boeing to decide on Canada fighter jet bid

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Current tight glove supply may ease as capacity expands

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Aramco’s oil pricing in Asia unchanged in sign of slower demand

DUBAI, Feb 4 — Saudi Arabia kept pricing for its main crude grade to Asia unchanged for a second month as the world’s largest crude exporter responds to slower seasonal demand. State-owned Saudi Arabian Oil Co, known as Saudi Aramco, set the…

Kenanga slashes MBSB’s FY18 earnings forecast

PETALING JAYA: Kenanga Research has slashed Malaysia Building Society Bhd (MBSB) FY18 by 17% to RM481million despite registering a strong growth in FY17.

It said in a research note last Friday that the cut earnings forecast is in anticipation of a slower loans growth of about 3%, higher credit charge of 1.3% and lower return on equity (ROE) of less than 6%.

Nonetheless, Kenanga Research is maintaining an “outperform” call on MBSB due to undemanding valuations with a higher price target of RM1.35 after its FY17 earnings exceeded expectations. Its core net profit surged 107% year-on-year to RM417 million, which accounted for 125% of the research house’s full-year estimates and 113% of market estimates.

This stellar performance is attributable to lower impairment allowances, which were lower by 8%, and lower cost of funds at 0.41%.

The research house noted that despite improved earnings and top line growth of 5% on the back of stronger fund based income, MBSB’s loans declined by 3.1%.

While the group’s new Islamic banking entity is set to begin operations on March 30, 2018, its loans are expected to see sombre growth at around 3%-4%, which will be mainly driven by corporates and mortgages.

“Personal financing will still be the core of its loans/financing but likely to be selective on asset risk concerns. Moderate loans, higher operational expenditure (due to the new merged entity and digitisation) and higher-than-expected credit costs, management guided for a moderate ROE of less than 6%,” Kenanga said.

However, the research house noted that MBSB’s net interest margin will still be strong at about 3.4% with no material impact from the Overnight Policy Rate (OPR) hike as 99% of its deposits are fixed deposit-based.

MBSB’s earnings are expected to edge higher moving into FY19 at RM514 million supported by higher loan growth (+4%), lower credit charge (1.2%) and higher ROE (6.7%).

It added that the potential risk that MBSB is facing include higher-than-expected margin squeeze, lower-than-expected loans and deposits, and worse-than-expected deterioration in asset quality.

Last month, MBSB received its shareholders’ approval for the acquisition of Asian Finance Bank Bhd (AFB). It is on track for its asset & liability conversion, which is expected to be completed by March 2018.

In improving its asset quality, RM1.5 billion worth of non-performing loans will be disposed of. Some RM104 million worth of non-core assets has been disposed of since 2017 with the balance of RM109 million within three years’ time.

As of December 2017, MBSB has met the regulatory requirements with leverage ratio, liquid asset ratio and loan/financing-to-deposit base ratio at 14%, 32% and 92% respectively (against Bank Negara requirements of 12.5%, 25% and 100% respectively).

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