Sunday, August 12th, 2018


Saudi fund in talks to invest in Tesla buyout deal

DUBAI, Aug 12 — Saudi Arabia’s sovereign wealth fund is in talks that could see it becoming a significant investor in Tesla as part of Elon Musk’s plan to take the electric car maker private, according to a person with direct knowledge of the…

Erdogan defiant while Turkey slips toward financial crisis

ISTANBUL, Aug 12 — Turkish President Recep Tayyip Erdogan is showing no signs of backing down in a standoff with the US that rattled markets. As investors worry about Turkey sliding toward a full-blown financial crisis, the big question now is how…

RIA: Russia says will ditch US securities amid sanctions

MOSCOW, Aug 12 — Russia will further decrease its holdings of US securities in response to new sanctions against Moscow but has no plans to shut down US companies in Russia, Finance Minister Anton Siluanov said on state TV today, RIA news agency…

Trump backs boycott of Harley Davidson in steel tariff dispute

WASHINGTON, Aug 12 — President Donald Trump backed boycotting American motorcycle manufacturer Harley Davidson Inc today, the latest salvo in a dispute between the company and Trump over tariffs on steel. The Wisconsin-based motorcycle…

Germany says Trump’s tariffs, sanctions destroy jobs and growth

BERLIN, Aug 12 — German Economy Minister Peter Altmaier has sharply criticised US President Donald Trump’s tariffs and sanctions policies, saying such measures were destroying jobs and growth and that Europe would not bow to US pressure…

Euro traders await more signs of Turkey pain with banks at risk

LONDON, Aug 12 — There is little sign that the euro is about to turn around its rough patch against the dollar as concerns over the exposure of the region’s banks to Turkey ratchet up and bund yields slide back toward the lower end of their…

US-Iran sanctions give China lead in world’s top gas field

TEHRAN, Aug 12 — China National Petroleum Corp is expected to take the lead on a US$5 billion (RM20.4 billion) project to develop Iran’s share of the world’s biggest gas deposit, taking over from France’s Total SA, which halted operations…

Finance Minister to propose open inquiry into ‘missing’ RM18b for GST refunds

PETALING JAYA: In an intensifying he-said-she-said situation, Finance Minister Lim Guan Eng said he will propose an open inquiry headed by independent professionals into RM18 billion in goods and services tax (GST) refunds owing to businesses, after former prime minister and finance minister Datuk Seri Najib Abdul Razak stated that the money could have been spent by the new government.

The proposal will be put forward to Prime Minister Tun Mahathir Mohamad and the Cabinet once Treasury Secretary-General Datuk Seri Ismail Bakar completes an internal inquiry into the matter.

“The Ministry of Finance will also cooperate with any authorities investigating this matter,” Lim said in a statement issued on Saturday.

Najib's statement came after Royal Malaysian Customs Director-General Datuk Seri Subromaniam Tholasy said last Friday that only RM63.5 billion of the RM82.9 billion claims made by taxpayers over the period from April 1, 2015 to May 31, 2018 had been deposited into the GST Refund Trust Account, set up for refund purposes, from the Consolidated Revenue Account despite requests made by Customs for the funds at monthly trust account meetings.

He reiterated that the fund is short of the RM19.4 billion, it needs to make refunds for claims made.

According to Lim, the RM19.4 billion owing consists of RM9.2 billion claimed from 2016, RM6.8 billion from 2017, RM2.8 billion from 2016 and RM600 million from 2015.

According to him, provisions under the Financial Procedure Act 1957 allow only the Finance Minister to authorise the payment of all or part of the monies of the fund into the Consolidated Revenue Account in the Federal Consolidated Fund.

“Did Najib give authority to Tan Sri Dr Mohd Irwan Serigar Abdullah not to transfer RM18 billion into the GST Refunds trust account? Like his former boss, the former Treasury secretary-general has also not been completely truthful with the facts when he claimed that all GST payments are made into the Consolidated Revenue Account, but did not explain why he refused to transfer RM18 billion into the GST Refund Trust Account,” he said in the statement.

Separately, the Federation of Malaysian Manufacturers (FMM) urged the government to review and close cases related to the refunds before the new sales and services tax (SST) comes on board on Sept 1. According to the body, 100 companies FMM surveyed in July said the outstanding amount of refunds they were yet to receive stood at over RM220 million.

Considering its member base of over 3,00 companies, the amount of refunds overdue could be bigger, FMM said in a statement on Friday.

FMM said delays in refunds have caused serious cash flow issues to its members, especially among small and medium enterprises, while also continuing to hurt exporters.

“While we appreciate the Minister of Finance's candid and transparent announcement that the government owes businesses RM19.4 billion in GST refunds, FMM hopes for the approved refunds to be channelled back to members soonest possible.

“We would also like to urge the government to ensure that all pending cases on special sales tax refunds dating back to the GST era since 2015 are reviewed and closed before the SST 2.0 is implemented. We urge the Ministry of Finance to have a dialogue with stakeholders affected by the outstanding GST-related refunds to determine practical solutions to resolve this critical issue.

“We also require the government's assurance that there will be no offset of GST credit for future SST payments,” it added.

Nomura cautious on Malaysian stocks

KUALA LUMPUR: Nomura, which has set an end-2018 target of 1,830 points for the FBM KLCI, remains neutral on Malaysia’s stock market, citing macro risks and regime change possibly weighing on Bursa Malaysia’s performance this year.

The research house previously cut its FBM KLCI target from 1,920 points, due to possible key policy changes by the government and the ongoing US-China trade actions.

Nevertheless, its head of Malaysia equity research Tushar Mohata said at a media briefing last Friday that potential upside would be premised upon the government’s fast progression with its agenda, domestic investor base support that appears reasonably strong, as well as rising current account surplus due to the strong export numbers.

He said stronger consumer confidence due to goods and services tax (GST) removal and associated perception of disinflation is also likely to benefit sectors including banking, consumer, healthcare as well as transport.

“However, other sectors such as utilities, plantations and telcos are still not able to show a turnaround in earnings and these sectors might be dragging the stock market index down,” Tushar said.

He expects business sentiment to remain volatile as businesses are uncertain of likely policy changes by the government and their impact on them.

In particular, Tsuhar singled out potential increase in cost of doing business if the government takes a stricter approach on foreign workers.

“Coupled with Pakatan Harapan’s manifesto promise of raising minimum wage and standardising minimum wage across Peninsular and East Malaysia, businesses are likely to suffer from wage inflation and margin compression.”

Nonetheless, Tushar pointed that the government’s attempt to look for higher revenues and lower spending to cover up for the revenue shortfall from the GST and reduce the country’s debt could potentially pose an upside risk to government-linked companies’ (GLCs) dividends.

“In the past three years, cash holdings of KLCI members have been rising and gearing has been decreasing, meaning that decreasing consensus implied dividend payouts seem too bearish to us,” he said.

GLCs make up the majority of the 30 constituents of the FBM KLCI.

On the outflow of foreign funds, Tushar reiterated that it is actually happening across Asean and it has largely matched previous years’ trends.

“That is why now we are seeing a degree of stabilisation in the equity markets, where outflows are also slowing down,” he said, noting that the foreign funds trend going forward will be very much dependant on US Treasury yields.

Tushar said given that Malaysia is among the potential beneficiaries of the US-China trade war, it could possibly see the return of some of the outflows.

Nomura’s sector picks for 2018 are gaming, hotels and leisure, consumer, oil and gas, financials as well as healthcare.

Tushar cautioned investors to be wary of sectors with regulatory risks that might change in favour of consumers. His top picks are Malaysia Airports Holdings, Malayan Banking, Petronas Chemicals, IHH Healthcare and Muhibbah Engineering.

China rolls out 10 measures to curb rising P2P risks

BEIJING: Chinese authorities are rolling out 10 measures to curb rising risks caused by the troubled peer-to-peer (P2P) lending sector that has led to several protests in recent weeks, the official Xinhua News Agency reported today.

A central government work group tasked with cracking down on online finance risks has held a meeting on the P2P industry to protect social and financial stability, the report said.

Since June, 243 online lending platforms have gone bust amid an intensifying crackdown on shadow banking, part of a broader campaign to reduce risks in the financial system. Many investors across the country hit the street to protest, demanding the government help them recover investments lost on failed platforms.

P2P platforms gather funds from retail investors and loan
the money to small corporate and individual borrowers, promising high returns. They started flourishing nearly unregulated in China in 2011. At the peak in 2015, there were about 3,500 such businesses.

The new measures proposed by the central government include asking local governments to set up “communications windows” to respond to requests by P2P investors and conducting compliance inspections on P2P companies, Xinhua reported.

Local authorities are “strictly banned” from allowing the set-up of any new P2P companies or online finance platforms, it said.
Borrowers who try to avoid P2P loan repayments will be put on a blacklist in China's social credit ratings system.

Among other measures, Beijing said it will seek a variety of ways to resolve P2P liquidity risks and protect the legal rights of investors. The government will also strengthen investor education to help increase public awareness of the risks, the report said.

The size of China's P2P industry is far larger than in the rest of the world combined, with outstanding loans of 1.49 trillion yuan (RM888 billion), according to data tracker, run by the Shenzhen Qiancheng Internet Finance Research Institute. – Reuters