Wednesday, September 5th, 2018


Facebook, energy stocks bog down Wall Street, tariff woes loom

WASHINGTON, Sept 5 ― US stock indexes were lower today, weighed down by Facebook, energy stocks and concerns over the possibility of President Donald Trump going through with plans to slap new tariffs on Chinese goods as early as this week….

IMF chief warns of waning commitment to post-crisis regulation

WASHINGTON, Sept 5 ― Only 10 years out from the worst global financial crisis since the 1930s, commitment to regulation to avoid the next one, and to the cooperation that prevented a new depression, is waning, the IMF chief warned today. Failure…

Hengyuan to invest US$48m in clean air project

PETALING JAYA: The board of directors of Hengyuan Refining Company Bhd (HRC) has approved the US$48 million (RM199 million) investment for the Clean Air Regulation (CAR) project, to be executed within its refining complex in Port Dickson.

The CAR project is undertaken to ensure that the refinery’s emissions comply with the CAR requirements mandated by the Malaysian regulatory authorities via the installation of air pollution control systems at the Long Residue Catalytic Cracking Unit and Plat-2, and an emission monitoring system on HRC’s flue gas stacks.

The CAR currently requires compliance by June 2019. It will be financed using a mix of cash flow generated from operations and a further draw down from an existing term loan.

SC orders immediate halt to LaVida Coin promotion pending review

PETALING JAYA: The Securites Commission (SC) has instructed the promoters of LaVida Coin to cease all promotional activities with immediate effect, pending further review by the SC into the matter.

“DSV Crypto Club, LUX Galaxies and VI Profit Galaxy, who were found to be promoting LaVidacoin, were also added to the SC's Investor Alert List at,” it said in a statement today.

The SC advised investors to be cautious and exercise due diligence before participating in any investment schemes, in particular those involving cryptocurrencies and digital tokens.
The cease order came after the SC flagged the controversial coin last week.

VI Profit Galaxy (DSV Cryptoclub & LUX Galaxies) is also on Bank Negara Malaysia's Financial Consumer Alert List.

LaVida Coin, which is linked to cosmetics entrepreneur Datuk Seri Dr Hasmiza Othman, better known as Datuk Seri Vida, aims to raise US$1.5 billion (RM6.15 billion) from the coin issuance in a bid to finance three projects, including a new payment gateway named LaVida Pay (US$100 million).

The other two projects are an online entertainment channel with an entrepreneurial focus (US$1 billion) and a non-profit-making development to build a Muslim community hub, centred on a new mosque (US$400 million).

According to its white paper, LaVida Coin is currently in the “pre-mine stage” which runs for six months from August 2018 to February 2019. Once completed, the LaVida Coin blockchain will be open to cryptocurrency miners.

Pre-sale of LaVida Coin, which began on Aug 20, 2018, is in the first stage, whereby one LaVida Coin or LVC is valued at US$0.66. The first stage ends in 54 days (from Aug 27).
The second stage, which starts on Oct 20, 2018, will see the value increase to US$0.86 per LVC.

Based on a timeline published on the website, LaVida Pay will be released in October while the development of the entertainment channel will begin in December. The launch of the channel TV is expected in July 2019.

EPF’s investment income up 7.64% in second quarter

PETALING JAYA: The Employees Provident Fund (EPF), which posted a 7.64% increase in total investment income for the second quarter ended June 30, 2018, sees the domestic outlook turning favourable on the back of easing foreign outflows and clearer policy direction from the new government.

“The EPF remains focused in delivering above-inflation returns, with at least 2% above the inflation rate over a three-year rolling period, which will preserve and enhance the value of our members' retirement savings,” deputy CEO (investment) Datuk Mohamad Nasir Ab Latif said in a statement today.

Despite a higher investment income of RM12.39 billion for the April-June period, the value of EPF investment assets saw a marginal drop of 0.1% to RM813.18 billion compared with the RM814.38 billion in the first quarter of 2018 due to the drop in value of investments in equity markets.

The EPF stressed that its asset position remains healthy compared with members' savings balance of RM780.07 billion. Of the total investment assets, RM322.89 billion or 39.71% were in syariah-compliant investments and the rest conventional.

For the quarter under review, investment income from equities, which made up 40.61% of the EPF's total investment assets, rose 29.1% to RM7.98 billion versus the same quarter last year. Income from Malaysian Government Securities and equivalent increased 14.6% to RM2.4 billion.

Real estate and infrastructure, however, saw its income plunge 87.2% to RM91.73 million year on year, but it was an improvement compared with the RM107.38 million deficit in Q1 2018.

Loans and bonds contributed income of RM1.7 billion, down 22.8% from the same quarter last year, while money market instruments declined 29.1% to RM215.44 million.

Overall, EPF said, the investment income was achieved amid less favourable trading environment in the domestic market due to capital outflows from emerging markets, including Malaysia, as a result of the escalating US-China trade tensions and the US interest rate increases.

Mohamad Nasir cautioned that global market uncertainty continues to shroud the outlook for the rest of the year given the continued political and policy risks such as the impending changes to monetary policies, uncertainty over the outcome of Brexit and the ongoing trade tensions between major economies.

A total of RM1.09 billion, out of the RM12.39 billion gross investment income, was generated for Simpanan Shariah and RM11.30 billion for Simpanan Konvensional.

As at end-June 2018, the EPF's overseas investments, which accounted for 26.50% of its total investment asset, contributed 38.30% to total investment income in the second quarter.

AmInvestment keeps ‘hold’ call on Astro

PETALING JAYA: AmInvestment Bank Research maintained a “hold” call on Astro Malaysia Holdings Bhd, in the wake of the government announcing that it is open to more entrants into the paid television broadcasting services scene, on the belief that the competitive landscape is unlikely to change and Astro continuing to broadcast on a non-exclusive basis.

Deputy Minister Eddin Syazlee Shith told Dewan Negara recently that the ministry was ready to grant Content Application Service Provider (CASP) individual licences to interested companies, subject to certain conditions such companies being incorporated in Malaysia with a paid-up capital of RM500,000.

Maintaining the “hold” call at RM1.81 per share, the research house said there is unlikely to be a significant change in competitive landscape as Astro’s exclusive rights and privileges to broadcast live content through satellite services to the public since 1997, expired on Feb 28, 2017.

Following the expiration, Astro will still be able to broadcast via satellite on a non-exclusive basis as its licence under the Communications and Multimedia Act 1998 is valid until Feb 1, 2020.

As at June 30, 2018, the total companies which holds the CASP licence stood at 56, among which four – namely Ansa Broadcast Sdn Bhd, Jaringan Mega Sdn Bhd, Smart Digital International Sdn Bhd, and High End Net Sdn Bhd – were allowed to broadcast services via satellite, while 35 companies held licences to offer broadcasting services through various platforms.

“Astro’s household penetration rate stood at 75% for its residential Pay-TV and NJOI customers in 1QFY19. We believe this indicates that the Pay-TV segment is saturated and will continue its declining trend as consumers’ preferences shift towards streaming content through digital and over-the-top platform,” the research house noted.

Bank Negara Malaysia maintains benchmark rate, says trade tensions main downside risk

PETALING JAYA: Bank Negara Malaysia (BNM) maintained the Overnight Policy Rate (OPR) at 3.25% at its Monetary Policy Committee (MPC) meeting today, citing trade tensions as a key source of downside risk.

“Greater volatility in the international financial markets and monetary policy normalisation in the advanced economies could lead to further capital outflows and financial market adjustments in emerging economies,” the central bank said in a statement.

Despite persistent non-resident portfolio outflows due to ongoing global developments, BNM stressed that the domestic financial markets remain resilient with domestic monetary and financial conditions supportive of economic growth.

“The financial sector remains sound, with financial institutions continuing to operate with strong capital and liquidity buffers. In addition, the domestic economy maintains its underlying fundamental strength, with steady economic growth, low unemployment and current account surplus of the balance of payments.”

BNM said its monetary operations will continue to ensure sufficient liquidity to support the orderly functioning of money and foreign exchange markets and intermediation activity.

“At the current level of the OPR, the degree of monetary accommodativeness is consistent with the intended policy stance. The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation.”

Commenting on the domestic economy, BNM said supply disruptions in the mining and agriculture sectors led to more moderate growth in the second quarter of 2018, but on the demand side, growth remained supported by private sector activity with further impetus from net exports.

“Looking ahead, private consumption, which was boosted by the tax holiday, will continue to be driven by steady wage and employment growth. Investment activity is projected to be underpinned by continued capacity expansion in key sectors, particularly in the export-oriented industries, driven by favourable demand and efforts to enhance automation.”

However, it opined that public sector spending will weigh on growth as the government embarks on reprioritisation of expenditure.

The central bank said the external sector will continue to benefit from the sustained global growth momentum, but in the immediate term, the economy faces downside risks stemming from heightened trade tensions, prolonged weakness in the mining and agriculture sectors and some domestic policy uncertainty.

“On balance, the Malaysian economy is expected to remain on a steady growth path.”

Going forward and continuing into 2019, BNM expects headline inflation to edge upwards taking into consideration the impact of policy measures on domestic cost factors.

“The impact of the changes in the consumption tax policy on headline inflation will be transitory and lapse towards the end of 2019. Underlying inflation is nevertheless expected to remain relatively stable.”

July exports surge to record high of RM86.1 billion

PETALING JAYA: Malaysia's exports expanded 9.4% year on year to a record high of RM86.1 billion in July, driven by stronger growth in the electrical and electronics (E&E) and crude petroleum segments, according to the Department of Statistics.
Imports, too, were up 10.3% to an all-time high of RM77.8 billion, attributable to consumption goods and capital goods as intermediate goods fell.

Re-exports in July were valued at RM18.7 billion and accounted for 21.7% of total exports. Domestic exports expanded 1.1% to RM67.5 billion.  

Total trade stood at RM164.0 billion in July, 9.8% higher than the same month a year ago, and the trade surplus widened 1.7% to RM8.3 billion.

Among the major groups that recorded export increases were E&E (+23.6%), crude petroleum (+90.1%), natural rubber (+3.3%), and timber and timber-based products (+0.4%).

Declines were registered for liquefied natural gas (-38.4%), palm oil and palm oil-based products (-13.6%), and refined petroleum products (-12.3%).

Geographically, export growth was contributed by expansion in shipments to China (+RM3.5 billion), Hong Kong (+RM2.9 billion), Taiwan (+RM640.2 million), India (+RM499.9 million) and the US (+RM483.7 million).

On a month-on-month basis, exports and imports increased 9.6% and 7.2%, respectively.

For the period of January-July 2018, Malaysia's total trade surpassed RM1 trillion and came in at RM1.1 trillion, an increase of 6.1% compared with the same period last year. Exports and imports grew 7.3% and 4.8%, respectively.

MIDF Research anticipates Malaysia's exports to remain buoyant in the upcoming month on the back of the tax holiday period and stable retail fuel prices, but concerns over global trade tensions remain.

For 2018, it expects Malaysia's exports to grow 9.3%, underpinned by sanguine signs of key global indicators and gradual recovery in commodity prices. “We predict global trade activities in Q3 to remain on an upbeat momentum albeit at a moderating pace, in tandem with easing global manufacturing PMI (Purchasing Managers' Index).”

US trade deficit surges in July on record imports

WASHINGTON, Sept 5 ― The US trade deficit surged to US$50.1 billion (RM208 billion) in July on record imports that created burgeoning gaps with trading partners in the crosshairs of President Donald Trump’s aggressive policies, according to…

Currency storms rage on

LONDON: Emerging markets storms raged fiercely today, with South Africa’s rand at the centre of fresh currency tumult and losses since January for the world’s biggest EM stock index nearing US$1 trillion again (RM4.14 trillion).

It was another torrid session in both Asia and fragile EMEA markets. Indonesia’s stock market had suffered its worst day in over five years as its currency pains worsened while Chinese equities fell almost 2% in Shanghai.

The rand then slumped to a more than 2-year low in a fresh 1.5% drop as traders also dumped its bonds and the most globally traded EM currency, the Mexican peso, too.

The latest peg for the spreading angst had been another 3% overnight drop for Argentina’s peso after news that it was trying to engineer a rapid injection of support from the International Monetary Fund.

Trade war and general economic health worries were raw too, with investors wary of the threat of fresh US tariffs on another US$200 billion worth of Chinese goods that could take effect after a public comment period ends on Thursday.

“Given the magnitude of the move in Argentina, I think the focus is still on that and on possible contagion,” said North Asset Management EM portfolio manager Peter Kisler.

There was no evidence of wide-spread contagion yet he added, though what global stock markets do next could be crucial.

The day’s falls across markets left MSCI’s 24-country EM stocks index down for a sixth straight day and down almost 20% from late January, a move that has wiped over US$950 billion off its combined worth at the time.

The biggest individual move saw Indonesian stocks slump almost 5% at one point in the biggest fall since 2013 as the rupiah currency wobbled around its lowest levels since the Asian financial crisis in 1998.

The central bank said it had “decisively intervened” in FX and bond markets in morning trade.

“EM equities have really been underperforming developed markets. This will end sooner or later, but my feeling is that development markets will catch up to EM rather than that EM will bounce significantly.” – Reuters