Wednesday, May 30th, 2018

 

Gulf source: Opec, non-Opec sticking to oil pact but may raise output if needed

DUBAI, May 30 — Saudi Arabia, other Opec states and non-Opec allies aim to stick to a global pact on cutting oil supplies until the end of 2018 but are ready to make gradual adjustments to offset any supply shortage, a Gulf source familiar with…


Chinese e-commerce firm Suning.Com sells US$1.5b of Alibaba shares

BEIJING, May 30 — Chinese e-commerce company Suning.Com Co Ltd has sold US$1.5 billion (RM5.9 billion) worth of shares in Alibaba Group Holding Ltd, cutting its stake in the tech giant to 0.51 per cent. Suning.Com is expected to make a net profit…


RBS finance chief in surprise exit ahead of British stake sale

EDINBURGH, May 30 — Royal Bank of Scotland’s finance chief quit unexpectedly today and cast doubt on the timing of a possible sale of some of the British government’s controlling stake. Former investment banker Ewen Stevenson declined to say…


Goldman Sachs cuts euro, dollar forecasts, citing Italian instability

LONDON, May 30 — US investment bank Goldman Sachs said today it had cut its euro/dollar forecast for the next 3, 6 and 12-months because of uncertainty stemming from Italy’s political crisis, while HSBC said the dollar’s recent rally had…


Bursa Malaysia skids to 5-month low amid global sell-off

PETALING JAYA: Fears over a looming US-China trade war and a political crisis in Italy jolted global financial markets today, with the Malaysian bourse tumbling as much as 66.33 points or 3.74% at one point, exacerbated by uncertainty on the domestic front amid the review and revocation of several mega projects.

The FBM KLCI slumped to an intraday low of 1,709.51 points in the afternoon session after Prime Minister Tun Mahathir Mohamad announced the scrapping of the MRT3 project.

At the close of trading on Bursa Malaysia, the key index was down by 56.56 points or 3.18% to 1,719.28 points, the lowest level in the past five months. Losers outnumbered gainers 995 to 148 with some 3.6 billion shares traded valued at RM4.46 billion.

Of the other indicators, the construction index saw the sharpest decline of 8.52 points or 3.79% to 216.04 points, followed by the properties and the finance indices, which fell 4.75% and 3.09% to 1,009.87 points and 17,188.82 points, respectively.

The top losers were led by banking stocks such as Public Bank, Malayan Banking and Hong Leong Bank, which slid 3.7%, 4.3% and 1.8% to RM23.98, RM9.57 and RM18.60, respectively.

Other big-cap stocks like Tenaga Nasional, Petronas Chemicals and Gamuda tumbled 4.3%, 3.9% and 23% to RM14.14, RM7.99 and RM3.18.

Meanwhile, the ringgit weakened as much as 0.29% to 3.9952 against the US dollar before paring losses to 3.9895 as at 5pm today, a 0.15% drop from Monday's close at 3.9835.

Across the region, China's and Singapore's markets declined over 2% each today after US stocks posted their biggest drop in a month on Tuesday, with the Dow Jones Industrial Average Index slipping close to 400 points or 1.58% to settle at 24,361.45 amid trade war fears and political uncertainty in Italy. Two-year Italian government bonds soared over 180 basis points.

The White House said on Tuesday that planned trade sanctions against China announced in March were still in the works, and would be announced next month, according to news reports. The planned sanctions include curbs on Chinese investment, export controls and 25% tariffs on as much as US$50 billion (RM200 billion) of Chinese tech exports. The list of Chinese imports covered by the tariffs will be announced on June 15, and the other sanctions two weeks after that.

Areca Capital Sdn Bhd CEO Danny Wong Teck Meng said the US-China trade row and the Italian political turmoil sparked fears in global markets.

Wong opined that the sell-off in Malaysia was more to do with the external factors, but cautioned that the broader market will continue to be uncertain in the next two to three months before stabilising after greater clarity on the new government's policies emerges.

As for the construction stocks, he said volatility is expected to persist in the next two months. “No matter what news comes out, construction stocks will see selling pressure,” he told SunBiz.

On the currency front, FXTM's global head of currency strategy & market research Jameel Ahmad does not rule out the possibility that the ringgit could weaken back below 4.00 to the greenback over the coming trading sessions.

“A host of different emerging market currencies are falling against the US dollar due to the negative environment of different political risks that is impacting investor appetite towards riskier assets, and the ringgit is at risk to falling as a result of less attraction towards emerging market currencies,” he said in an email reply to SunBiz.

He added that the worst-case scenario would be that investor appetite for emerging market assets, including the ringgit, continues to weaken, pressured by less buying momentum.


Petronas’ Q1 net profit up 26%

PETALING JAYA: Petroliam Nasional Bhd's (Petronas) net profit for the first quarter ended March 31 grew 26% year on year to RM13 billion on the back of higher revenue and net write-back on impairment.

The state-owned oil and gas group said in a statement today that the higher net profit was supported by its ongoing focus on overall business improvement initiatives and operational excellence, coupled with recovery in commodity prices.

Revenue for the quarter rose to RM57.9 billion from RM56.5 billion a year ago due mainly to higher average realised prices recorded across all products, partially offset by the effect of the strengthening of the ringgit against the US dollar.

Earnings before interest, tax, depreciation and amortisation (ebitda) grew 2% to RM25 billion from RM24.6 billion a year ago while cash flow from operations rose 22% to RM21.9 billion from RM18 billion a year ago.

Petronas' total assets fell to RM592.8 billion as at March 31 from RM599.8 billion as at Dec 31, 2017 due to the strengthening of the ringgit against the US dollar.

Shareholders' equity stood at RM390.7 billion as at March 31 compared with RM389.8 billion as at Dec 31, 2017 due largely to profit generated during the period. This was partially offset by the movements in foreign currency translation reserves.

Gearing ratio of 16.2% as at March 31 was slightly higher than 16.1% as at Dec 31, 2017 while return on average capital employed rose to 10.4% from 9.8% previously, in line with the higher profit.

The group's capital investment during the quarter was RM12 billion, mainly attributable to the Refinery and Petrochemical Integrated Development (Rapid) Project in Johor.

Petronas' upstream business recorded higher net profit of RM10.2 billion during the quarter compared with RM5.1 billion a year ago. Revenue was also higher, at RM37.2 billion compared with RM34.6 billion a year ago.

In the downstream segment, Petronas achieved a net profit of RM2 billion mainly due to the solid performance of the petrochemical business, which partially offsets the lower domestic refining margin and the effect of the strengthening of the ringgit.

The Pengerang Integrated Complex achieved overall progress of 90% as at end-April and is on track to achieve ready for start-up status in 2019 while the Highly Reactive Polyisobutene plant in Gebeng, Pahang, came on stream in January.

Petronas expects its overall year-end performance to be satisfactory subject to volatility of oil prices and foreign exchange rates.


Govt may get RM8b-RM9b more from Petronas this year: Ong

KUALA LUMPUR: Malaysia may collect RM8 billion to RM9 billion more in revenue from Petroliam Nasional Bhd (Petronas) this year compared to last year, a finance ministry official told Reuters.

Ong Kian Ming, a special officer to the finance minister, said the increase in revenue will come through corporate taxes and dividends, and that discussions on the matter are ongoing.

With rising oil prices, Malaysia is looking to Petronas to contribute more to government coffers this year to help narrow the revenue shortfall from effectively scrapping a consumption tax, Ong told BFM radio station earlier today.

Petronas did not immediately respond to a request for comment.


Wall St bounces back after selloff driven by Italy turmoil

NEW YORK, May 30 — Wall Street rose today, with gains in energy and banking stocks fueling the recovery from a steep selloff driven by Italy’s political crisis. A renewed attempt to form a coalition government in Rome by the two…


AirAsia says charges against Indian unit ‘trumped up’ as shares tumble

PETALING JAYA: AirAsia Group Bhd, which saw its share price fall as much as 10% on news of investigations into its Indian unit, completely denies all accusations and contentions, calling the “trumped up” accusations baseless and motivated by considerations that as yet remain unknown.

The group’s share price closed 23 sen or almost 7% to RM3.08 today, with some 41 million shares traded.

“Allegations concerning indirect foreign control of AirAsia India Limited have been fully investigated and the director-general of civil aviation had effectively ruled that the operations and management of AirAsia India Limited (AAIL) was in accordance with Foreign Exchange Management Act as well as Foreign Direct Investment regulations,” it said in response to a query by Bursa Malaysia Securities Bhd.

The group went further to state that it will vigorously defend itself against the accusations to the fullest extent of law.

“Legal action to protect AirAsia and its interests against these allegations will be taken against any person who is known to have maliciously and frivolously instigated, and or smeared the good reputation of individuals and shareholders of AAIL,” it added.

Reports out of India state that the Central Bureau of Investigation said on Tuesday it was probing allegations that Tan Sri Tony Fernandes illicitly lobbied Indian officials for favourable treatment for his Malaysian-based carrier.

Besides Tony, investigators reportedly also named an AirAsia director, an aviation consultant and unidentified Indian government officials in its preliminary case.


MRCB’s Q1 net profit more than doubles

PETALING JAYA: Malaysian Resources Corp Bhd’s (MRCB) net profit attributable to owners of the group for the first quarter ended March 31 more than doubled to RM21.52 million from the RM8.63 million reported a year ago, on the back of lower finance cost, positive share of results from associates and higher profit share from joint ventures.

Revenue however was 17.74% lower to RM427.59 million from RM519.84 million in the absence of construction revenue for the National Sport Complex project, which was completed in July 2017, recognised in the preceding year’s corresponding quarter.

“The group remains confident that its long-term prospects are positive given the sound strategies from both its property development & investment and engineering, construction and environment divisions. However, in the near term, the engineering, construction & environment division is likely to contribute a larger share of revenue and profits. The completion of the de-gearing initiatives in the last quarter of 2017 has significantly strengthened the group’s balance sheet, and it is now well positioned to fund its growth and overcome future challenges,” its board of directors said on prospects.

The division’s external client order book stood at RM6.2 billion while unbilled order book stood at RM4.9 billion, as at March 31.

As for its property development and investment division, it will continue to focus on marketing efforts for residential development projects.

Revenue and operating profits for the division are also expected to be bright given the construction progress of VIVO (9 Seputeh) and the 2 en-bloc office towers sold in PJ Sentral Garden City and Menara MRCB in Putrajaya, in 2018.

“Overall, the group had total cumulative unbilled sales in its property development & investment division which are expected to deliver RM1.6 billion in revenue to be booked over the development lifespan of its projects, approximately 80% of which are residential and 20% commercial,” its board of directors said for the property development and investment segment.

The group’s share price fell 16.79% to 57 sen with 52.49 million shares done.