Thursday, August 16th, 2018


Walton family’s wealth surges US$11.6b as Walmart rallies

LONDON, Aug 16 — The world’s wealthiest family just got US$11.6 billion richer. Walmart Inc reported its strongest sales in more than a decade today, sending the retailer’s shares soaring as much 11 per cent and boosting the fortunes of Walton…

Wall Street stocks lifted by US-China talks, Walmart

NEW YORK, Aug 16 — Wall Street stocks rose early today following news US and Chinese officials will hold trade talks, and as Walmart surged on strong earnings. About 25 minutes into trading, the Dow Jones Industrial Average was up 1.3 per cent at…

Turkey will emerge stronger from lira crisis, finance minister tells investors

ISTANBUL, Aug 16 — Finance Minister Berat Albayrak assured international investors today that Turkey would emerge stronger from its currency crisis, insisting that the country’s banks were healthy. In a conference call with thousands of…

Move past kitchen-sinking and provide clarity on policies to promote growth, govt told

PETALING JAYA: The government needs to be pro-growth as the risks of high debt and a narrower revenue base subside significantly with gross domestic product gaining momentum.

Affin Hwang Asset Management director of equity strategies and advisory Gan Eng Peng said in a note today that the key concern of the market now is whether the country can continue to grow amid all the “kitchen-sinking”.

“Investors are very clear about what's wrong with the country; the 1MDB scandal, high debt levels, and the fiscal deficit. Where there is less clarity now, are policies the government has to promote growth.

“For this, we are waiting for the 100-day Government of Malaysia Symposium which will be held for the first time in September and Budget 2019 that will be tabled on Nov 2,” he said.

Gan pointed that in order to allay the concerns on high debts and narrower revenue base, the government needs to show clear evidence of curbing wastage and leakages.

“We need to start to see this being reflected in better expense/capital expenditure control for government departments and government-linked companies (GLCs).

“If GLCs can demonstrate more efficient capex and strong expense/operating expenditure control, we think this would send a strong signal that Malaysia 2.0 is certainly different from Malaysia 1.0,” he noted.

Meanwhile, Gan said the country may see some slowdown in fourth quarter growth after the tax holiday expires, but overall growth in 2018 should be intact.

He said the concern is more for 2019 as it remains to be seen if government expenditure can be cut without affecting growth, of which the consumer and export sectors need to fill the gap.

While the weakening of the ringgit does help to boost exports, he said, this sector is dependent on foreign labour, which makes it vulnerable to increases in minimum wages or a foreign worker clampdown.

“The other important issue for the market is earnings. Prior to 2017, the market experienced three years of contracting earnings. The recent results season was tepid and many analysts have been revising down their numbers.

“We could end the year with only 2% to 3% growth versus 7% to 8% expected at the beginning of the year,” Gan said.

Takeover of toll concessionaires may cost less than RM400 billion, says Pua

KUALA LUMPUR: The toll concessions takeover may cost less than the RM400 billion projected by the previous government, said Ministry of Finance special officer Tony Pua.

“The RM400 billion figure was being tossed around by the previous government by taking into account the compensation to be paid to the toll concessionaires which includes future gains,” he told reporters at Parliament lobby today.

Pua, who is also Member of Parliament for Damansara, said that if the Pakatan Harapan government were to take over the toll concessions, even though it had yet to be planned, it would only pay the compensation based on the rates in the contract.

“We will only pay the compensation based on the contract rate, that is the construction cost of the highways. We have to do the calculation again, and it will not include future profits,” he said. – Bernama

Turkey will emerge stronger from currency crisis: Finance Minister

ISTANBUL: Finance Minister Berat Albayrak assured international investors today that Turkey would emerge stronger from its currency crisis, insisting that the country's banks were healthy and strong.

In a conference call with thousands of investors and economists, Albayrak – who is President Tayyip Erdogan's son-in-law – said Turkey fully understood and recognised all its domestic challenges but was dealing with what he described as a market anomaly.

The Turkish lira hit a record low of 7.24 to the dollar this week, down 40% this year, as investors fretted over Erdogan's influence over monetary policy and a bitter dispute with the United States.

Facing Turkey's gravest currency crisis since 2001 in his first month in the job, Albayrak has the daunting task of reassuring the investors that the economy is not hostage to political interference.

Albayrak, a 40-year-old former company executive with a doctorate in finance, said Turkey would not hesitate to provide support to the banking sector. The banks were capable of managing the volatility, and there had been no major flow of cash out of deposits lately, he added.

Before he spoke, the Turkish lira strengthened more than 3%, despite signs that a rift with the US is as wide as ever.

However, the currency market's reaction to his conference call – in which he also said Turkey had no plans to seek help from the International Monetary Fund or impose capital controls to stop money from flowing abroad – was measured.

After he finished speaking, the lira was little changed from beforehand, meaning it remains down around 34% against the dollar this year.

Earlier in the day, the currency had shrugged off US comments ruling out the removal of steel tariffs on Turkey even if it frees an American pastor who lies at the centre of the complex feud between Washington and Ankara.

The currency gained some support from the announcement late on Wednesday of a Qatari pledge to invest US$15 billion (RM60 billion) in Turkey.

The White House said on Wednesday that it would not remove steel tariffs on Turkey, appearing to give Ankara little incentive to work for the release of Andrew Brunson, a pastor on trial in Turkey on terrorism charges.

Washington wants the evangelical Christian freed but Turkish officials say the case is a matter for the courts. – Reuters

Indonesian president sets higher economic growth target for 2019

JAKARTA: Indonesia's president unveiled today a higher 2019 growth target for Southeast Asia's biggest economy and said the government had reacted quickly to maintain stability after turbulence in emerging markets.

In his annual budget speech to parliament, President Joko Widodo set a 5.3% economic growth target for 2019, down a notch from 2018's originally-set goal of 5.4% but above the 5.2% the government now expects for this year.

He said the rupiah currency was expected to average 14,400 a dollar next year, against the current 14,600 level. Widodo had targeted a 13,500 average rate for 2018 in his budget speech last year.

The rupiah has been one of the worst performing currencies among emerging markets in Asia this year, losing about 7% of its value amid pressure from rising US interest rates, global trade tensions and contagion risk from Turkey's crisis.

Bank Indonesia has increased interest rates four times, including at a meeting on Wednesday, to defend the rupiah and analysts warn this could constrain growth into next year.

Finance Minister Sri Mulyani Indrawati said the 2019 gross domestic product (GDP) growth target took account of recent stabilisation measures.

Widodo said the government “has quickly reacted to maintain economic stability and resilience” amid global volatility, including by seeking to control imports.

The 2019 budget proposal is 10% bigger than the government's budget for 2018, at 2,439.7 trillion rupiah (RM685.55 billion), Widodo said. This included an allocation for infrastructure at 420.5 trillion rupiah, slightly above this year, and despite plans to delay some projects requiring high imports.

The president set the 2019 fiscal deficit target at 1.84% of GDP, below the 2.12% expected this year. He said this proved the government was maintaining its finances “prudently and responsibly”.

David Sumual, Bank Central Asia's chief economist, said that overall the assumptions for 2018 are realistic.

“It looks like the strategy remains the same: conservatism. Probably because of the external challenges,” he said.

ADB Institute researcher Eric Sugandi said the budget appeared to have been designed carefully, taking into account global trade woes and setting a “not too ambitious” growth target

Widodo, who is seeking a second five-term term in an election next April, had pledged to lift annual GDP growth to 7% when campaigning in 2014.

In his speech, he highlighted challenges including fluctuations in commodity prices as well as US trade and interest rate policies, noting how some emerging markets had been sucked into crises by mismanaging factors they can control.

Frederico Gil Sander, the World Bank's lead Indonesia economist, told Reuters Widodo's pledge to reduce the fiscal deficit and a conservative fiscal policy “even though we're going into election year, is sending a strong signal that stability is important”.

The budget proposal needs parliamentary approval. – Reuters

Spooked investors yanked US$1.3b from emerging market stocks over the last week: IIF

LONDON: Investors rattled by events in Turkey, China and South Africa have pulled US$1.3 billion (RM5.3 billion) out of emerging market stocks in the last week and US$100 million from bonds, according to the Institute of International Finance (IIF), which tracks financial flows.

An emerging market selloff has picked up pace over the last week as concerns about Turkey and others have compounded longer-term worries about a global trade war, a strong dollar and rising borrowing and energy costs.

The Washington-based IIF said the exodus of investment money this week has largely been concentrated in South Africa and China, amounting to US$600 million and US$500 billion, respectively.

However, India has also turned negative this week as debt flows reversed, and Malaysia, Indonesia, Korea, the Philippines, Korea and Vietnam have all seen money leave, albeit at moderate pace.

“Turbulence, amid heightened tensions between the US and Turkey, has clearly weighed on investor appetitive for emerging market assets,” the IIF said in a new report.

South Africa's reliance on portfolio debt and equity flows to finance its large and widening current account deficit has amplified its moves, it added.

Nearly 80% of foreign investor flows to South Africa since 2015 have been in the form of portfolio investment – buying assets like bonds or shares. Direct investment, such as building a factory, accounted for less than 10% of total

“The impact of market strains is likely to be most acute for countries with relatively large external financing needs,” the IIF said.

Thailand, Qatar and Brazil were the only countries in its sample group that saw money come into their asset markets over the last week, while the wider selloff had not been as severe as when US-China trade tensions first erupted, it added. – Reuters

Matrix Concepts lines up RM1.6b worth of launches in FY19

PETALING JAYA: Matrix Concepts Holdings Bhd aims to launch RM1.6 billion worth of new properties in the financial year ending March 31, 2019 (FY19) on the back of resilient demand from home buyers.

The property developer said in a statement today the target is 27.2% higher than the RM1. 2 billion worth of launches in FY18.

The new launches planned for FY19 are located mainly within its township developments namely, Bandar Sri Sendayan in Negri Sembilan and Bandar Seri Impian in Johor.

“We are positive on demand for homes in Bandar Sri Sendayan, especially with the growing number of Klang Valley buyers for our launches. This is attributed to the township's vast appeal in terms of affordability, pricing, and locality, which are highly important qualities to a successful development,” said its chairman, Datuk Mohamad Haslah Mohamad Amin.

“Our optimism is also guided by the strong interest received for most of our recent launches, underpinning our confidence to a higher launch target for FY19,” he said.

The group will also be launching its first high-rise serviced apartment in Kuala Lumpur, Chambers Kuala Lumpur, in the second half of 2018.
In FY18, Matrix Concepts achieved record revenue and net profit of RM818.5 million and RM213.3 million respectively, its best performance since listing in 2012.

As at March 31, 2018, the group had RM2.6 billion worth of ongoing developments, significantly higher from RM1.8 billion last year.
Unbilled sales climbed to RM1.1 billion as at March 31, 2018 from RM859.5 million previously, to be recognised until 2020.

Rehda: Lack of incentives for green building projects

CYBERJAYA: The Real Estate and Housing Developers' Association Malaysia (Rehda) highlighted that there is a lack of incentives to encourage developers to embark on green building development, in particular financial incentives, which do not mitigate the high upfront cost of green buildings.

Its immediate past president Datuk Seri Fateh Iskandar (pix) said developers face financial risks, including 15%-20% higher capital upfront or initial costs, for green buildings. Extra costs involved include new technology and innovative technology methods or techniques, green rating assessment fees, design fees, professional fees, procurement of new technology or materials as well as longer planning period.

“However in the long run, when you look at maintaining the building and property, you will have a considerable amount of savings,” Fateh said in in his keynote at the Sustainable Housing Futures Conference here today.

He said developers also face demand risk, where developers construct and supply products in accordance to buyers' demands and preferences, however do not receive direct benefits from the energy-efficient investment. Instead, developers bear the extra cost of the new technologies involved. This is later passed on to house buyers in the form of higher selling price.

“If we're serious about moving forward, incentives must be given. Then more contractors will design something more sustainable and green,” said Fateh, urging the country to emulate Singapore where incentives have been given in the past five years.

He also pointed out the undersupply of green building technology and materials, which have to be imported.

“In Singapore, when multinational tenants want to rent a green building, you have to pay 20%-30% higher premium from the normal office rental. Unfortunately in Malaysia, this does not happen. Whether we build a standard building, MSC-status building or green building, the rental is the same. We have to educate our tenants,” said Fateh.

There is also a lack of enforcement, including the lack of legislative framework for green technology and lack of building codes and regulations.

“Tweak or relegislate certain framework for green technology. We've many building codes and regulations, but none for green technology,” said Fateh.

He said one of Rehda's flagship initiatives on the green front is GreenRE, a building rating tool launched in 2013 that provides certification of environmentally responsible and resource-efficient building in the residential and non-residential sectors, in addition to advice on sustainable property design and construction.