Wednesday, March 21st, 2018


China Is said to push Qualcomm for more remedies in NXP deal

SAN FRANCISCO, March 21 — In the latest complication for Qualcomm Inc, China’s regulators are seeking more protections for local companies before approving the US chipmaker’s proposed purchase of NXP Semiconductors NV, according to people…

US existing home sales bounce back after two months of declines

WASHINGTON, March 21 — Sales of existing homes bounced back in February after two months of declines, boosted by big gains in the South and West, according to US industry figures released today. The National Association of Realtors said the…

Stocks In Focus (22-3-2018)

KUALA LUMPUR (March 21): Based on corporate announcements and news flow today, companies in focus on Thursday (March 22) may include: Sapura Energy Bhd, IOI…

1MDB bonds pose no risk to Malaysia’s fiscal strength: Moody’s

KUALA LUMPUR: The 1 Malaysia Development Bhd (1MDB) bonds guaranteed by the government are not a risk to Malaysia’s fiscal strength at the moment as the probability of debt crystallisation is low, according to Moody’s Investors Service.

“As far as 1MDB is concerned, we think that the debt consolidation plan has sort of proceeded as normal. We don’t have a rating on 1MDB so I can’t comment on that. What we do look at is the stock of guaranteed debt and the implications that would have for the sovereign,” said Moody’s assistant vice-president/analyst for sovereign risk group Anushka Shah (pix).

She said there is currently a RM5.3 billion bond outstanding by 1MDB that is guaranteed by the government and a US$1.75 billion (RM6.8 billion) bond that has a letter of support from the government.

“Those are the risks that we would take into consideration but at this point the probability of debt crystallisation is low so we do not view it as a risk to the sovereign’s fiscal strength,” she told reporters at a briefing today.

Anushka said for all sovereigns, Moody’s looks at the off-balance sheet items as to whether they present contingent liability risks to the government and in Malaysia’s case it believes that the risks that come from contingent liability are low.

Anushka said the government provides letters of guarantee to some government-linked companies and that stock of guarantee has been increasing at a very rapid pace. The stock of liabilities is currently about 16.6% of gross domestic product (GDP).

“However we find that they’ve adopted quite rigorous selection criteria when they grant these guarantees so they are granted to companies that are relatively healthy and have strong balance sheets thus the probability of debt crystallisation at this stage is quite low,” she said.

Anushka said the government uses these guarantees as a tool to leverage on its ability to raise finances without actually taking debt on its own books.

She added that this helps the government to optimise its expenditure profile while at the same time minimise risks associated with that spending.

Meanwhile, Moody’s views the upcoming 14th General Election as a low source of vulnerability to Malaysia’s fundamentals.

“One reason for that is that through electoral cycles in the past we’ve seen that the government has maintained its fiscal deficit reduction path and in general has been committed to a broader policy reform agenda and that’s irrespective of what’s happening on the domestic political front. So the reform agenda appears to be going ahead despite political events,” said Anushka.

While Moody’s does not take specific events like elections into consideration, she said it will look at the implications that any change in government or political surprises have on policies in the event that the ruling party loses the elections.

“We would specifically be looking at the new government’s stance on fiscal policies because the fiscal position is currently an important part of the rating,” she said.

“We don’t take specific events like elections into consideration but we look at broader political risks. Not just domestic politics but geopolitics as well and that is an explicit factor in our rating assessment for every sovereign,” she added.

US stocks dip ahead of Fed announcement

NEW YORK, March 21 — Wall Street stocks dipped early today ahead of a Federal Reserve policy decision that will signal whether the US central bank plans to accelerate its pace of interest rate hikes. About 15 minutes into trading, the Dow…

Bank Negara: Surcharges on payments via credit, debit cards are not allowed

PETALING JAYA: Retailers are not permitted to impose surcharges for payments made with debit and credit cards under the Payment Card Reform Framework, according to Bank Negara Malaysia (BNM).

The central bank also clarified that the response provided by Deputy Finance Minister Datuk Othman Aziz in the Dewan Rakyat was with reference to the interest imposed by credit card issuers on cardholders for outstanding credit card balances that are overdue, and not on surcharges imposed by retailers on transactions paid with credit or debit cards.

BNM said in a statement today that the surcharge prohibition is applied on payments via credit cards under the rules of international card schemes such as Visa and MasterCard.

“The prohibition on surcharges is monitored and enforced by banks that provide e-payment facilities to merchants (acquiring banks). Consumers who encounter merchants that impose surcharges are advised to lodge a complaint with their respective banks or payment card issuers.”

This was in response to the Consumers Association of Subang and Shah Alam, Selangor’s call to abolish surcharges on debit and credit card transactions.

The central bank explained that one of the reasons retailers impose a surcharge is to recover the cost incurred when accepting payments made via cards.

“Retailers are typically charged a transaction fee, also known as the Merchant Discount Rate (MDR). In general, the MDR for credit card is higher than the MDR for debit card.”

BNM said retailers are encouraged to accept the more cost-effective payment methods, i.e. debit cards and mobile payments (instant fund transfers) in order to benefit from lower operational cost.

“Retailers who cannot afford to pay the higher MDR for credit card are encouraged to liaise with their respective acquiring bank to accept only debit card payments.”

In Malaysia, the central bank has introduced measures such as the Payment Card Reform Framework and the Interoperable Credit Transfer Framework to lower the cost to retailers when accepting cost-effective electronic payment methods, which would in turn lessen the pressure for retailers to impose surcharges on customers.

BNM said globally, countries have adopted different approaches in dealing with the issue of surcharges imposed by retailers for card payments.

“In the European Union and the UK, retailers are prohibited from imposing a surcharge on consumers for credit and debit card transactions.

“In Australia, retailers have the right to impose surcharge on customers who pay using the more expensive payment cards such as the credit card. The rationale of such approach is to send the correct price signal to encourage consumers to pay using the more cost-effective debit card,” the central bank explained.

US spending bill tackles border, election security, says source

WASHINGTON, March 21 — A federal government spending deal being worked out in the US Congress includes additional funding to boost border security, protect the upcoming elections in November and rebuild aging infrastructure, a source familiar…

Dropbox raises price range ahead of stock debut

NEW YORK, March 21 — Cloud data service Dropbox defied recent volatility among technology shares and raised its expected stock price range ahead of this week’s initial public offering, suggesting strong appetite among investors. Dropbox now…

Tencent to invest more in video, payment after profit beats estimates

HONG KONG, March 21 — Chinese internet giant Tencent Holdings will step up investments in areas such as video, payment and artificial intelligence, it said after reporting better than expected quarterly net profit thanks to a string of…

EU floats digital tax amid heightened scrutiny of tech firms

BRUSSELS, March 21 — Large digital companies operating in the European Union, such as Alphabet Inc and Twitter Inc, could face a 3 per cent tax on their gross revenue based on users’ locations, according to a plan by the European Commission….