Thursday, February 8th, 2018


Bank of England warns of early interest rate rises

LONDON, Feb 8 — The Bank of England froze today its key interest rate at 0.5 per cent but cautioned that it could rise more quickly than expected to help bring down inflation. The BoE also ramped up its outlook for the British economy, despite…

Dow, S&P 500 dip amid volatility in US stocks

NEW YORK, Feb 8 — Wall Street stocks mostly fell early today despite a batch of strong earnings from Twitter and others as markets struggled to shrug off the volatility of the last week. About five minutes into trading, the Dow Jones…

Coal buyers spooked by Indonesia’s new shipping rules

JAKARTA: Buyers of Indonesian coal are holding back orders of the fuel after the government issued new shipping rules for coal and crude palm oil that would restrict
exports to Indonesian vessels, an industry association said today.

Jakarta issued rules in October requiring coal and palm oil exporters to use Indonesian-flagged vessels and Indonesian insurance companies, to boost the role of the archipelago's shipping industry in its export market.

However, guidelines on implementing the rules and possible exemptions have not been released, raising concerns among shippers in Indonesia, the world's top thermal coal exporter and palm oil producer.

The regulation will take effect at the end of April.

“There was some information, several potential buyers from abroad put on hold making any new contracts,” Hendra Sinadia, executive director of the Indonesia Coal Mining Association, told reporters.

Describing the new rules as “dangerous”, Sinadia said they could affect export volumes and state revenues if shipping contracts had to be renegotiated to shift to so-called cost,
insurance and freight (CIF) contracts from free-on-board (FOB) contracts.

Under CIF contracts, the seller is responsible for the shipping arrangements and must buy insurance to protect the cargo against losses during the voyage. Under FOB contracts, the buyer procures the vessel and is responsible for all shipping costs.

The industry is worried that time is running out to make adjustments before the rules come into effect, Sinadia said, noting that it would be difficult to do so without the

Indonesia Palm Oil Association secretary-general Togar Sitanggang said in an interview on Jan 24 that there were several problems with the new rules, noting there were not enough Indonesian-flagged food-grade tankers, and that Indonesian insurers may lack capacity.

“If we're selling CPO (crude palm oil), free-on-board at Belawan port, does this mean our buyer has to use Indonesian vessel? That is ridiculous.”

The palm oil industry is awaiting guidance on when foreign vessels can be used if local vessels are unavailable, he said. “There should be no obstacles, but if we must do this and that, it could hold up exports.”

The new rules could add to freight costs, Sitanggang said, if shipping companies were unable to find cargo for their return trips to Asia. “If their ships are empty, of course they'll ask for a higher price from us.”

According to Oke Nurwan, director-general of foreign trade at the Ministry of Trade, while most domestic shipping uses Indonesian-flagged vessels very little is exported on Indonesian ships.

“It can't be like that any more,” Nurwan said on Jan 25, adding that the government wanted the domestic shipping sector to compete more with multinationals.

“If (the government) didn't intervene there would be no trigger, so we made it mandatory,” he added. – Reuters

Stocks In Focus (09-02-2018)

KUALA LUMPUR (Feb 8): Based on corporate announcements and newsflow today, companies in the spotlight on Friday (Feb 9) may include: Westports Holdings Bhd, Maxis…

Thailand approves law for US$45b Eastern Economic Corridor

BANGKOK, Feb 8 — Thailand’s parliament today approved legislation geared towards attracting more investment in an ambitious US$45 billion (RM177 billion) project in the country’s industrial east, which the ruling junta hopes will help lift…

UDA to develop Malay reserve land

KUALA LUMPUR: UDA Holdings Bhd is in the midst of its plan to develop about 1.62 million hectares of Malay reserve land nationwide following its success in developing idle land in the country.

Its chairman Datuk Seri Dr Mohd Shafei Abdullah said UDA has been surveying Malay reserved land with development potentials in Selangor and Johor to increase their values, which were much lower compared to freehold land.

He said most of them were classified as agricultural land and were left idle as there were no demand for them.

As such, he said UDA was ready to become a pioneer in the development of Malay reserve land, especially those outside of Kuala Lumpur.

“In fact, our board has made the decision to go to all these states outside Kuala Lumpur to identify land that we can develop, as most of these land are located outside the city and would be valuable in the future.

“Right now these areas are not as big as Kuala Lumpur, but I believe they can be transformed into towns,” he told reporters after delivering a talk on Prospects of Bumiputera Properties Development today.

Mohd Shafei also proposed that the government re-evaluate Malay reserve land so that it could increase in value.

“I’m also proposing to split the lots which have been reserved for agriculture, as an acre of agricultural land can be divided and would have many owners.

“The problem arises when there are more than one owners for one lot, as it makes it difficult for the authorities to develop the land as they would need to obtain the approval from the lot owners before it can be developed,” he said.

Mohd Shafei said the problem could be resolved by relaxing the regulations on ownership to allow the land to be developed much faster, thus becoming more valuable.

He also suggested for the government allow the land to be leased to non-bumiputras to increase the land’s marketability and attract interest from banks to provide loans to the landowners.

On the development of waqf land, he said, UDA has identified 2.02ha and 4.05ha of waqf land to be developed in Sabah and Sarawak respectively.

Currently, he said, the company was actively developing waqf land in Penang and has also started to develop 10.93ha in Alor Setar as well as 0.77ha and 16.19ha in Ipoh and Meru respectively. – Bernama

QES to raise RM28.8m from IPO

PETALING JAYA: QES Group Bhd, which is tentatively set to be listed on the ACE Market of Bursa Malaysia on March 8, plans to raise RM28.82 million from its initial public offering (IPO) exercise.

QES is principally involved in the distribution of inspection, test and measurement equipment, materials and engineering solutions. It also manufactures optical inspection equipment and automated handling equipment.

As part of the IPO, QES will be issuing 151.66 million new shares at 19 sen each, representing approximately 20% of its enlarged share capital. Upon listing, the group’s total market capitalisation will be RM144 million.

Of the IPO proceeds, RM10.7 million will be used for capital expenditure, RM7 million for repayment of bank borrowings and RM4.85 million for product development. The remaining RM3.25 million will be allocated for working capital and the balance of RM3 million for estimated listing expenses.

The IPO involved issuance of 37.91 million shares to the Malaysian public, 9.26 million shares to the eligible directors and employees and 104.48 million shares to selected investors.

There will also be an offer for sale of 75.83 million existing shares which will be placed out to identified bumiputra investors approved by the Ministry of International Trade and Industry.

In a statement today in conjunction with its prospectus launch, its managing director/president Chew Ne Weng said the IPO proceeds would allow the group to develop three key products under its manufacturing division, expand its recurring income segment, diversify its market and product line-up in the distribution division.

QES said the development of three key products namely FAVIS (Fully Automated Vision Inspection System), AWPS (Automatic Wafer Packing System) and AWID (Automatic Wafer ID) will form the pillars of growth for the company’s manufacturing division and increase revenue for the group.

It said the FAVIS, AWPS and AWID are expected to be fully developed and ready for commercial sale within the next 12 to 24 months after the group’s listing.

“These new products will be source of revenue growth while enabling our customers to automate their inspection and handling processes,” Chew added.

Application for its shares are open until Feb 23, 2018.

Daya Materials inks MoU with PNG Kumul Petroleum

PETALING JAYA: Daya Materials Bhd has entered into a memorandum of understanding (MoU) with Kumul Petroleum Holdings Ltd (KPHL) for the provision of services and products to KPHL for oil and gas projects in Papua New Guinea (PNG).

KPHL is Papua New Guinea’s national oil and gas company, operating with commercial interest in the participation of the country’s liquefied natural gas (LNG) project.

In a filing with Bursa Malaysia today, Daya Materials said the MoU intends to reflect the intentions of both parties to participate in oil and gas project(s) in Papua New Guinea as a joint venture.

The MoU is valid for a period of 12 months period from Feb 8, 2018, unless terminated by mutual consent, it noted.

Daya Materials is involved in polymer, technical services and oil and gas (O&G) industries. It mainly offers a range of products and services to both the upstream and downstream of the O&G industry.

The group also has significant non-oil and gas interests in engineering and construction, heating, ventilation & air-conditioning and specialised polymers.

The O&G business, however, did not contribute positively to Daya Material as the segment reported a widened net loss of RM204.04 million in 2016 compared with RM15.22 million in 2015.

Daya Materials share price closed unchanged at eight sen today with 1.8 million shares traded.

Gabungan AQRS net earnings more than double

PETALING JAYA: Gabungan AQRS Bhd’s net profit more than doubled to RM15.23 million for the fourth quarter ended Dec 31, 2017 from RM7.45 million in the same quarter a year ago, driven by higher work progress from its various construction projects.

Revenue jumped 74.5% from RM86.07 million to RM150.21 million.

The construction and property firm said in a filing with the stock exchange that it anticipates a better performance this year as the construction progress for its ongoing construction jobs picks up pace.

“We also expect a turnaround in the property development division as we plan to increase our marketing efforts for ‘The Peak’ and also begin launching our ‘One Jesselton Waterfront’ development in Kota Kinabalu.”

Looking ahead, Gabungan AQRS is looking to increase its construction order book by additional RM1.5 billion by the first half of FY18, which will continue to contribute positively to the group’s revenue and profit up to 2021.

Its full-year net profit also doubled from RM22.63 million to RM48.04 million. Revenue came in at RM469.44 million, 42.2% higher than the RM330.06 million made a year ago.

The counter gained 11 sen or 6.3% to close at RM1.87 on some 3.24 million shares done.

China ‘worried’ about trade ties with US even as surplus narrows

BEIJING: China expressed concern today over the US ramping up trade investigations as official data showed its surplus with America narrowed in January after reaching record levels last year.

This week China announced an investigation into imports of a US agricultural product after President Donald Trump's administration launched a spate of new trade tariffs and probes into Chinese goods.

The Trump administration has shown no signs of letting up, with major decisions looming on Chinese aluminium, steel and intellectual property practices.

The tensions are raising the spectre of a tit-for-tat trade war between the world's two largest economies.

“There has been an upward trend in US investigative organs looking into China's products and launching trade relief cases,” said Ministry of Commerce spokesman Gao Feng during a press conference.

“China is worried about this.”

The US imposed new tariffs on Chinese-made solar panels and washing machines this year after hitting aluminium foil and plywood last year.

China has so far held off from retaliating by adding new tariffs on US imports, but Beijing has indicated it may not show such restraint for much longer.

This week China initiated an anti-dumping investigation into sorghum imports from the US, worth almost US$1 billion (RM3.92 billion) last year.

That was a sliver of the US$14 billion in US soybean imports, which China hinted could be in its crosshairs as well. It was America's largest export to China last year.

Gao did not deny reports Chinese authorities were looking into soybean and cotton imports, after a journalist from state news agency Xinhua asked about reported meetings regarding the two items over anti-dumping and anti-subsidy issues.

“Recently we did hold a symposium with enterprises that import and export agricultural products,” Gao said, noting it was to “understand the operation of foreign trade in agriculture”.

Though Gao denied it was connected to “Sino-US trade frictions”, he said “related agricultural companies did indeed mention issues in the Sino-US agricultural product trade” with some producers “expressing concerns about the impact of imported agricultural products”.

Official data released by China's General Administration of Customs may relieve some pressure generated by its vast trade surplus with the US. It reached record highs during Trump's first year in office – US$375.2 billion by US counting, or US$275.8 billion according to Chinese data.

In January, China's trade surplus with the US dropped to US$21.9 billion, from US$25.6 billion in December. The figure is roughly equal to the surplus China posted with the US in January 2017.

Still, analysts worry the persisting deficit will compound sensitive trade relations between the two countries.

“The uncertainty surrounding Sino-US trade ties remains a key potential downside risk in the near term,” said Betty Wang, senior China economist at ANZ bank.

There is a large gulf between the two sides on how they view the massive deficit.

“Generally Sino-US trade interests are relatively balanced,” Gao said, after explaining the gap shrinks when considered on a value-added basis.

Beyond the risks in the US-China trade relationship, official data today showed China's imports soared and exports remained strong in January.

Imports for the month surged 36.9% year-on-year, pointing to robust demand in the world's number two economy to start the year.

China's continued economic strength flies in the face of the authorities' campaign to limit credit growth and reduce winter pollution by cutting industrial production.

The wave of imports – buoyed by rising commodity prices – greatly surpassed analyst estimates of 10.6% growth for the period, according to Bloomberg News.

Analysts attributed part of the rise to the Chinese New Year holiday falling in February this year, as opposed to January last year.

Even so, the “outturn exceeded expectations”, wrote Julian Evans-Pritchard, China economist at Capital Economics.

China's exports remained strong as well, posting 11.1% growth for the month, beating analyst expectations of 10.7%.

The humming global economy continues to eat up China's products, giving its leaders more time to achieve their goal of transitioning the economy from one driven by exports and investment to a more stable model propelled by domestic consumption. – i>AFP