Monday, March 5th, 2018
WASHINGTON: US President Donald Trump on Sunday signalled his intent to move forward with controversial tariffs on steel and aluminium imports that have sparked fears of a trade war.
“We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the US for many years. Our steel and aluminium industries are dead. Sorry, it’s time for a change!” he wrote on Twitter.
Earlier in the day, two Trump administration officials said the tariffs – 25% on steel and 10% on aluminium – would likely not include exemptions for allies.
“I know he’s had conversations with a number of world leaders,” Commerce Secretary Wilbur Ross said on ABC’s This Week. “The decision, obviously, is his. But as of the moment, as far as I know, he’s talking about a fairly broad brush.”
In a subsequent interview on NBC’s Meet the Press, Ross allowed for the possibility that Trump may yet change his mind, as he has on other issues.
“We shall see. We shall see. I know a lot of ministers from a lot of countries have been talking with the president. They have been talking with me. They have been talking with others. We’ll see. The president makes the decisions,” he said.
Trump ignited fears of a trade war and an outcry from US trading partners when he abruptly announced plans for the tariffs.
British Prime Minister Theresa May said she raised her “deep concern” over the tariffs in a phone call with Trump on Sunday, her office said.
The European Union has said it is drawing up measures against leading US brands like Harley-Davidson and Levi’s jeans, while China warned it “won’t sit idly by” if its interests are hurt.
Canada, which has the most to lose as the top source of US steel and aluminium imports, has called the tariffs “unacceptable.”
Canada accounts for 40% of US aluminium imports and 16% of its steel imports, making it far and away the biggest US supplier. – AFP
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PETALING JAYA: AmInvestment Bank does not foresee a major boost to Malaysian offshore operators given Petronas’ focus on the downstream and alternative energy in the oil and gas (O&G) sector.
Petronas president and CEO Tan Sri Wan Zulkiflee Wan Ariffin said the group is eyeing investments in further downstream operations such as specialty chemicals and renewable energy solutions, including solar.
“While companies operating in the Pengerang development such as Dialog Group and MMHE could secure fabrication jobs or off-take storage tankers contracts, the overall potential boost to the majority of the country’s domestic offshore operators will be minimal,” AmInvestment Bank said in a research note today.
However, it is keeping an “overweight” recommendation on O&G sector, given the stabilising crude oil prices above US$60 per barrel notwithstanding Petronas’ cautious capital expenditure (capex) strategy.
Petronas is targeting a 24% capex escalation to RM55 billion for 2018 after its core net profit increased 27% to RM46.6 billion in 2017 on higher crude oil prices and cost reduction initiatives.
However, with Q4 FY17 capex decreasing 14% quarter-on-quarter and 26% year-on-year to RM11 billion, the research house highlighted that the overall exploration and development spending trend is likely to be proportionately lower than for Rapid, which remains Petronas’ priority as its completion is scheduled in Q1 2019.
AmInvestment Bank maintained its 2018-2019 Brent crude oil projection at US$60 to US$65 per barrel versus West Texas Intermediate (WTI) crude oil prices of US$58 per barrel and Petronas’ internal target of US$52 per barrel for 2018.
“The Opec production quotas that were initiated in the beginning of last year appears to have suppressed US oil inventories, which have fallen by 21% from March 2017 to 423.5 million barrels, despite US daily oil production reaching above 10 million barrels, and expected to reach 11 million barrels by the end of this year,” it noted.
AmInvestment also pointed out multiple risks for the sector including the continuation of US crude inventory expansion, slower-than-expected global economic growth, accelerated adoption of fuel-efficient-cum-electric vehicles that could reduce consumption and lead to “peak oil demand”, as well as non-compliance by Opec members to their agreed quotas, which will again lead to aggressive measures to regain market shares.
The research house said its top picks are companies with stable and recurring earnings such as Dialog Group Bhd and Yinson Holdings Bhd.
“We also have ‘buys’ for Malaysia Marine and Heavy Engineering, Sapura Energy and Bumi Armada, which are trading below their intrinsic values.
“We maintain a ‘sell’ for Petronas Gas due to the Energy Commission’s upcoming announcement of the transportation tariff setting mechanism next month, which we expect to be value-eroding due to an expected lower targeted rate of return on asset values,” it added.
PETALING JAYA: The foreign tide into Bursa continued for the third uninterrupted week last week, with a total of RM160.9 million net, acquired by foreign investors, slightly lower than the RM190.9 million bought the week before.
According to MIDF Research, foreign investors were net buyers on Monday and Tuesday last week.
“The net inflow on Monday was marginal at only RM29.9 million but foreign buying later spiked to RM206.6 million net on Tuesday,” it said in its fund flow report today.
It said that the heavy foreign buying was in tandem with the rally of banking stocks, which pushed the FBM KLCI to settle at 1,871 points, the highest closing since 2014.
On Wednesday, foreigners reduced their exposure in local stocks, disposing RM26.1 million net after Federal Reserve chair Jerome Powell’s testimony revived fears on more rate hikes in 2018.
“The spike in foreign selling on Tuesday was in conformity with other Southeast Asian peers namely Thailand, Indonesia and the Philippines,” said MIDF Research.
Foreign investors continued to sell stocks on Bursa amounting to US$25.3 million (RM98.7 million) net on Friday, as concerns over a more hawkish Fed and the timing of the ending for Japan’s monetary stimulus were compounded by the US President Donald Trump’s protectionism woes.
However, it noted that Malaysia is the only beneficiary of foreign inflows last week, among the seven Asian exchanges that it tracks.
An outflow of RM1.12 billion net was recorded in the month of February, which is the first monthly outflow since November 2017. Year-to-date, Malaysia has attracted RM2.21 billion worth of foreign funds compared with RM1.57 billion recorded in the same period last year.
The foreign average daily trade value (ADTV) stood above the RM1 billion mark for the ninth straight week at RM1.51 billion, resembling active foreign participation. The retail market also remained vibrant with a weekly ADTV of RM1.18 billion.