Tuesday, March 20th, 2018


Stocks in Focus (21-03-2018)

KUALA LUMPUR (March 20): Based on corporate announcements and news flow today, companies in focus on Wednesday (March 21) may include: Axiata, PUC, Mudajaya, Crest…

Noble Group sued by top investor as trader defaults on debt

SINGAPORE, March 20 — Noble Group Ltd is being sued by one of its top shareholders in a fresh blow to the embattled commodities trader as it defaults on debt obligations. Goldilocks Investment Co filed a lawsuit today in the Singapore High…

Federal Reserve set to raise rates as Powell era begins

WASHINGTON, March 20 — The Federal Reserve was set to begin its two-day policy meeting today which is expected to produce the first of at least three increases in the key interest rate this year. With economic forces gathering that are likely…

Amazon is said to squeeze suppliers to curb losses in price wars

SEATTLE, March 20 — Amazon.com Inc, locked in a margin-crushing price war, is offloading costs onto suppliers and limiting the number of single, low-priced items shoppers can purchase in an effort to offset rising shipping costs. In a marked…

US stocks rise ahead of Fed decision

NEW YORK, March 20 — Wall Street stocks bounced in early trading today, recovering some of the prior session’s losses ahead of a Federal Reserve announcement on interest rates. About 15 minutes into trading, the Dow Jones Industrial Average…

World stocks attempt recovery on eve of Fed

LONDON, March 20 — World stocks nudged slightly higher today, with gains capped by news of plunging German investor confidence and markets cautious on the eve of a US Federal Reserve decision, dealers said. Equities were still wobbly over a…

Oil rises to March high on Middle East tensions, Venezuela concerns

LONDON, March 20 — Oil rose today to its highest level so far this month, as tension in the Middle East and the possibility of further falls in Venezuelan output helped offset the negative impact of growing US crude production. Brent crude…

Supplementary budget won’t derail efforts to cut fiscal deficit: Economists

PETALING JAYA: The tabling of a supplementary budget bill is unlikely to hinder the government from achieving its fiscal deficit target of 2.8% of the gross domestic product (GDP) in 2018 given better revenue collection, say economists.

In a supplementary budget bill tabled in Parliament on Monday, Putrajaya sought approval for an additional RM7.12 billion under Budget 2017 for the purpose of covering “additional expenditure on services and expenses”.

In October 2016, Prime Minister Datuk Seri Najib Abdul Razak tabled a RM260.8 billion Budget 2017.

Economists are of the view that the supplementary budget will not affect the government’s target of reducing fiscal deficit to 2.8% this year.

Sunway University Business School Professor of Economics Dr Yeah Kim Leng and RHB Research Institute economist Vincent Loo Yeong Hong noted that higher revenue from crude oil due to recovery of crude oil prices and higher tax collection will ensure that the target is within reach.

“Given that the supplementary budget will be partly offset by higher revenue collection due to a more buoyant economy, the fiscal deficit target of 2.8% of GDP is likely to be met. Another key factor helping the government to achieve the deficit target is that the GDP denominator expanded strongly at 9.9% last year, thereby shrinking the debt-to-GDP ratio,” Yeah told SunBiz.

Adding that the budget deficit was at RM39.9 billion or 3% of the GDP in 2017, Loo said higher expenditure is covered from the higher-than-expected revenue from other sources.

He said the government, which has been tabling a supplementary budget since 2009, has a track record of staying within its deficit numbers since 2011.

Nonetheless, Yeah believes the need for a supplementary budget will be reduced this year on the back of the achievable total revenue target of RM240 billion with no spending surprises.

Institute of Democracy and Economic Affairs acting CEO Ali Salman pointed out that the supplementary budget has seen a downward trend.

“The supplementary budget this year is higher than last year’s, but the federal government has substantially reduced the supplementary budget from the range of RM16 billion to RM7.1 billion over last five years. This should be seen as a positive development in the backdrop of reducing fiscal deficit, which will help the government achieve its macroeconomic targets,” he said.

Last year, the government sought an extra RM3.1 billion under Budget 2016.

Klang Valley offices to see 25% vacancy till 2021-22: Savills

KUALA LUMPUR: Office space in he Klang Valley is expected to see a slight rise in vacancy rates this year and hover at 25% until 2021 or 2022, said Savills (Malaysia) Sdn Bhd executive chairman Datuk Christopher Boyd (pix).

“I think we are going to see a slight rise in vacancy rates and we’ll see a little bit more downward pressure on rentals before the market stabilises. Vacancy rates now, depending on which sector you are talking about, is between 20% and 25%. That’s not the worst I’ve seen in my lifetime but I think it will hover at around 25% or so until the surplus space is absorbed, which will probably be by 2021 or 2022,” he told reporters at the inaugural Savills Malaysia Breakfast Forum today.

Boyd said the total office space in the Klang Valley is about 120 million square feet (sq ft) currently with some five million sq ft being completed annually over the next three years while the absorption rate is two to three million sq ft a year.

Although the amount of office space being built is more than what the market requires in the short term, which has caused downward pressure on rents, Boyd said a temporary vacancy is not “life threatening” as developers build office buildings for the long term, for 50 years or 100 years.

“What is good is that the current modern new generation of office buildings is very much better than the older generation’s. They have bigger floor plates and they are better specified. They have more amenities for tenants in terms of canteens, gyms and so forth. Office workers demand these things these days. You have to look at it as an evolutionary process which will sort itself out in the medium term,” he added.

Boyd said rental rates for office space have been stable and resilient, noting that as rates are under pressure, tenants who are moving into better specified buildings are getting a great deal now.

Commenting on the impact of the co-working space trend on the Klang Valley office market, Boyd said such space will not reduce demand for “traditional” office space but may reposition it.

He said co-working spaces provide great flexibility as tenants can rent anything from a single desk to 100 desks, meeting rooms can be booked at very short notice and some may even operate like clubs whereby members can book space at any of their venues.

“So they aim to be not just in the Golden Triangle but out in the suburbs, in little satellite offices, in other cities like Penang, Kuantan, Johor Baru and so forth,” he added.

Boyd said large corporations may have both their core space and use co-working space as their swing space, which solves the issue of looking for more space as they expand.

“We’ve had tenants tell us, we want 50,000 sq ft now but we would like to have first option on another 20,000 sq ft which we think we may need in a year’s time. That problem is gone now because when they want extra space, they can just take it at short notice,” he said.

Meanwhile, the residential market is expected to pick up after the general election but there will not be any “price explosion” as developers still need to clear a backlog in unsold units, he added.

Pratt & Whitney to deliver spare A320neo engines soon to India’s IndiGo, says source

NEW DELHI, March 20 — Pratt & Whitney will soon begin deliveries of spare engines to India’s IndiGo airlines, which was forced to ground eight of its Airbus A320neo aircraft last week after engine problems, a source familiar with the matter…