Sunday, February 11th, 2018

 

US economy is at risk amid immigration curbs, says Maersk CEO

NEW YORK, Feb 11 — The chief executive officer of the world’s biggest shipping company says curbs on immigration backed by the administration of President Donald Trump risk hurting the US economy. “The US economy is running at full steam…


EPF’s 2017 investment income tops RM53b on improved market conditions

PETALING JAYA: The Employees Provident Fund (EPF) saw investment income hit RM53.14 billion in 2017, driven by improved market conditions across both global and domestic markets in 2017, leading it to declare a dividend rate of 6.9% for the conventional scheme, its highest since the 1990s, and 6.4% for its maiden payout under the syariah scheme.

Of the amount, a total of RM4.60 billion was attributed to the syariah scheme, proportionate to its share of total syariah assets while RM48.54 billion was attributed to the conventional scheme.

As at Dec 31 2017, total members savings amounted to RM768.51 billion, of which RM67.76 billion was under syariah and RM700.75 billion under conventional.

Captains of industry Malayan Banking Bhd group president and CEO Datuk Abdul Farid Alias and CIMB group chief executive Tengku Datuk Seri Zafrul Aziz both lauded the above-par performance by the EPF.

Farid said the performance was especially noteworthy considering that global interest rates are still below what is considered to be a “normal” interest rate environment. He also opined that the difference in dividend rate between the conventional and the syariah accounts will narrow with time and the availability of more syariah-compliant investment instruments.

During the year under review, equities, which made up 42.23% of the EPF’s total investment assets, remained the largest contributor to the investment income at RM31.47 billion, representing 59.23% of total income. This was mainly driven by the strong rally in the global listed equities, particularly in developed markets such as the US and North Asia. Non-syariah stocks, especially conventional banking stocks, delivered higher returns, driven by both major global and domestic banks, which have been the outperformers during the year.

Conversely, higher listed equity impairments from syariah-compliant stocks, particularly the oil and gas, and telecommunication counters, lowered the income of the EPF’s syariah portfolio. Impairment recognition is in accordance with the Malaysian Financial Reporting Standard (MFRS) 139 adopted since 2010.

The EPF’s equity portfolio has been delivering a one, three, and five-year annualised return on investment (ROI) of 11.46, 10.90, and 11.06% respectively. This is a premium of 6.77, 5.90 and 6.15% over other asset classes respectively, and has been one of the main factors that enable the EPF to continuously provide healthy spread towards the country’s inflation rate and over the market yield of fixed income instruments.

The EPF’s investments in fixed-income instruments, comprising Malaysian Government Securities and equivalent, and loans and bonds, in total contributed 32.84%, or RM17.45 billion, of the RM53.14 billion investment income for the year. Real estate and infrastructure contributed RM2.97 billion in investment income in 2017 with an annual growth of 19.62%, compared with 2016; while money market Instruments contributed RM1.24 billion.

The EPF said its prudent approach to managing expenses is indicated by the consistency in its key financial ratios, including the cost to asset under management (AUM). In 2017, the cost to AUM was at 0.26% (2016: 0.25%), cost to gross income of 2.53% (2016: 2.56%) and cost to total asset of 0.17% (2016: 0.16%).

The pension fund’s overseas investments, which made up about 28% of total investment assets as at Dec 31, 2017, contributed about 41.45% to its gross investment income for the year, thus enhancing the overall returns to the EPF’s investment portfolio by 1.22%.

The diversification into global assets in various countries and currencies has enabled the EPF to realise sizeable gains from different markets and asset classes, which help to boost overall performance. Its overseas portfolio has been recording a one, three and five-year annualised ROI of 10.83, 11.14, and 10.43% respectively.


Sharp swings in markets not worrying but reforms still needed: Lagarde

DUBAI: Sharp swings in global financial markets in the past few days are not worrying since economic growth is strong but reforms are still needed to avert future crises, the managing director of the International Monetary Fund
(IMF) said today.

Christine Lagarde, speaking at a conference on global business and social trends in Dubai, said economies were also supported by plenty of financing available.

“I'm reasonably optimistic because of the landscape we have at the moment. But we cannot sit back and wait for growth to continue as normal,” she said in her first public comments on market movements since the latest round of turmoil at the end of last week.

“I'm ringing not the alarm signal, but the strong encouragement and warning signal.”

Global stock markets were hit by wild fluctuations, with the US benchmark S&P 500 tumbling 5.2% last week, its biggest weekly percentage drop since January 2016. The volatility was fuelled by investor worries about rising interest rates and potential inflation.

Lagarde repeated an IMF forecast, originally issued last month, that the global economy would growth 3.9% this year and at the same pace in 2019, which she said was a good backdrop for needed reforms.

She did not give details of the reforms she wanted to see beyond saying authorities needed to move to regulation of activities, not entities.

“We need to anticipate where the next crisis will be. Will it be shadow banking? Will it be cryptocurrencies?” she said. – Reuters


Maxis likely to see lower earnings in FY18: Analysts

PETALING JAYA: Maxis Bhd is expected to see lower earnings in the financial year ended 2018 (FY18) due to intense competition in the prepaid market as well as progressive termination of 3G network services with U Mobile which will negatively impact the group’s postpaid service revenue, said analysts.

In a research report last Friday, PublicInvest Research said it forecasts 4.4% decline in the group’s FY18 net profit due to the impact of U Mobile’s termination of its 3G network sharing agreement with Maxis.

“We are also forecasting prepaid subscriber base to decline albeit at a slower rate compared to FY17,” it added.

Maxis’ prepaid service revenue declined 11.1% to RM904 million in Q4 FY17 dragged by the lower subscription base which was impacted by the continued SIM consolidation, migration to postpaid and intense competition.

Nevertheless, the research house said it revised its FY18-FY19 earnings estimates higher by about 8% to factor in a more resilient average revenue per user (ARPU) for the postpaid segment as well as lower direct and marketing costs.

In Q4 FY17, the group’s postpaid service revenue grew 6.5% to RM1.08 billion driven by the enhanced device ownership propositions which continued to register high ARPU.

In a separate note, MIDF Research said it also revised its FY18 earnings estimate slightly higher by 2.2% as it fine-tune its profit margin assumption upwards to better reflect the group’s financial performance thus far.

“Nonetheless, due to intense competition, the prepaid subscriber base continues to dwindle. We view that it would be difficult for Maxis to grow the prepaid revenue as we expect Webe to disrupt the prepaid market. Moreover, the group’s postpaid service revenue for FY18 will also be negatively impacted by the progressive termination of 3G network services with U Mobile,” MIDF Research said.

For FY17, Maxis’ net profit increased 8.9% to RM2.19 billion, the highest in the past four years, while revenue improved by 1%. For Q4 FY17, its net profit expanded 10.7% to RM559 million buoyed by lower operating and finance costs.

Analysts noted that the telco operator’s FY17 results was within the market expectations, accounting for 101.5% of the street’s full year estimates respectively.

Post the earnings revision, MIDF Research said it revised its target price to RM5.93 from RM5.80 previously premised on pegging target PER of 23 times, and keeping its “neutral” recommendation on the group unchanged.

Meanwhile, Kenanga Research reiterated its “market perform” call on the group with unchanged discounted cash flow-driven target price at RM6.10.

“We have reduced our FY18 profit after tax, amortisation and minority interest (patami) by 1.5% after some fine-tuning. Meanwhile, we also take this opportunity to introduce our FY19 numbers, where we expect the group’s net profit to stay flat despite a 2.4% growth in turnover,” it added.


EPF dividend rate above par performance, says Maybank

KUALA LUMPUR, Feb 11 — The dividend rate declared yesterday by the Employees Provident Fund (EPF) is an above par performance, especially considering that global interest rates are still below what is considered to be a “normal” interest…


CIMB: EPF among world’s most successful retirement funds

KUALA LUMPUR, Feb 11 — The Employees Provident Fund (EPF) has proven to be one of the most successful retirement funds globally, said CIMB Group. Its Group Chief Executive, Tengku Datuk Seri Zafrul Aziz said the commendable dividend rate is…


Oil majors strike it rich on rising crude prices

The world’s leading oil companies published a bumper crop in profits last year as rising crude prices helped turn their fortunes around, but they remain cautious and are unlikely to rush out on a new spending spree just yet. In a flourish of earnings reports over the past week, the picture painted by majors ranging […]


US stocks’ drop brings scrutiny of complex low-volatility bets

NEW YORK, Feb 11 ― Wall Street’s plunge this week has brought scrutiny to complex niche products to trade on volatility that market experts believe were poorly structured and exacerbated swings in stocks. Only days before markets began to go…


Australia’s big banks focus on job cuts as inquiry looms

SYDNEY, Feb 11 ― Australia’s big banks are responding to a revenue crunch by cutting jobs and other costs, prompting fears on the eve of an inquiry into their businesses that the industry’s tarnished reputation is about to take another hit….


Mayhoola, Fosun vie for control of French fashion label Lanvin, sources say

PARIS, Feb 11 ― Qatari investment fund Mayhoola, which owns Italian fashion house Valentino, and Chinese conglomerate Fosun, the company behind French tourism group Club Med, are vying to acquire a majority stake in struggling French fashion…