Thursday, September 6th, 2018


Survey: US service sector growth up in August despite trade concerns

NEW YORK, Sept 6 — Growth in the vital US services sector accelerated in August as businesses activity remained strong despite higher costs due to trade disputes, according to an industry survey today. The Institute for Supply Management said its…

IMF: Talks on stronger Argentina crisis loan ‘very active’

WASHINGTON, Sept 6 — Talks with Argentinian officials to strengthen and accelerate a crisis loan package for the country’s battered economy are “very active,” a spokesman for the International Monetary Fund said today. Officials are working…

Tech weakness, trade jitters hit S&P, Nasdaq

NEW YORK, Sept 6 — The S&P 500 and the Nasdaq dropped today, as internet stocks faltered for a second day on concerns about increased regulation, while Micron led a decline in chip stocks. Declines in technology stocks come after Facebook and…

Bitcoin extends slump on Goldman Sachs report

LONDON, Sept 6 — Bitcoin sank further today, extending the previous day’s slump sparked by reports US investment banking giant Goldman Sachs has pulled back from immediate plans to open a trading desk for the virtual currency. Bitcoin has dived…

FMM, Margma take minimum wage hike in their stride

PETALING JAYA: The Federation of Malaysian Manufacturers (FMM) and the Malaysian Rubber Glove Manufacturers Association (Margma) are taking the increase in minimum wage in their stride, with FMM expressing hope that the government will step in to help mitigate the 14% increase in wage cost in Sabah and Sarawak.

The Prime Minister's Department in a statement today said that the minimum wage would be increased by RM50 for Peninsular Malaysia and RM130 for Sabah and Sarawak in an effort to standardise salaries across the country in 2019.

It said following recommendations from the National Wage Consultative Council, minimum wage would be set at at RM1,050 a month from Jan 1, 2019.

In the same statement, the Prime Minister's Department said it would not subsidise employers due to the current financial constraints faced by the government, as earlier promised in Pakatan Harapan's election manifesto.

In calling the increase painful for Sabah and Sarawak manufacturers but reasonable, FMM said the four-month lead time before implementation would allow the industry to make necessary budgetary adjustments. They include addressing knock-on effects whereby salaries of staff that are at and near the minimum wage level are adjusted to maintain wage differentials between grades and seniority.

“However, we expect adjustments this time around to be less extensive in Peninsular Malaysia,” it added.

FMM said it hopes the government will continue to consult closely with the industry in deploying its phased increase approach. “Early consultation will reinforce goodwill as well as give greater certainty and clarity on the mechanism to help businesses in planning their operations and strategies,” it said.

FMM represents more than 10,000 member companies from the manufacturing supply chain.

Meanwhile, MIDF Research sees positive impact from a gradual rise in the national minimum wage on Malaysia's economic activities, but noted that it is negative news for the glove industry.

Based on latest data, the median salary for Malaysian was RM2,016 per month with an increment of 4.2% (inflation-adjusted) in 2017.

The research house concurs with the decision to equalise wages between Peninsular Malaysia and Sabah & Sarawak to RM1,050 a month as it could reduce the income gap between the two regions.

“For instance, in 2017, average median salary for Peninsular Malaysia was RM2,015 while for Sabah & Sarawak it was RM1,782.”

MIDF Research expects overall wage for 2018 to grow by 5.3%.
Commenting on the minimum wage rise's impact on the glove sector, MIDF Research sees minimal impact on the glove manufacturers' earnings considering that most of the employees in the sector are already earning more than RM1,050 a month.

“For employees who fall below the minimum wage requirements, which we estimate to be less than 10% of total employees, our calculation shows that the impact on earnings of glove manufacturers will be less than 1%.”

The research house said aside from a minimal impact of less than 1% on the earnings of glove manufacturers, the impact of the new minimum wage on them is also negligible as they will be transferring the increase in production costs to their customers, which has been the industry-wide practice all this while.

In general, labour cost constitutes of 12% of the total glove production cost for the manufacturers.

MIDF Research is maintaining a “neutral” call on the glove sector in view of the capacity constraint due to most manufacturers already operating at a sold-out capacity position at this juncture.

“Furthermore, potential earnings growth of these producers might be capped due to closure of some production lines for upgrades and revamps. Additionally, the sector remains unexciting due to lack of strong re-rating catalyst.”

Meanwhile, Margma president Denis Low Jau Foo in a separate statement said the rubber glove industry will take the wage increase in its stride.

“The government is striving for an equitable and balanced solution for both employees and businesses. We will manage and do the necessary cost adjustments,” he said in a statement today.

Ex-CEO of Bursa Malaysia Yusli appointed to FGV board

PETALING JAYA: FGV Holdings Bhd, which announced recently that several board members and management executives, both past and present, were being investigated, has appointed former Bursa Malaysia Bhd CEO Datuk Yusli Mohamed Yusoff and Datin Hoi Lai Ping as independent and non-executive directors.

Yusli, 59, was also appointed chairman of FGV's nomination committee.

Hoi, 57, was appointed a member of the audit committee. She has been a board member of Zurich Life Insurance Malaysia Bhd since 2013.

Meanwhile, Datuk Yahaya Abd Jabar, 65, has been redesignated as independent and non-executive director and has resigned from the audit committee.

Yahaya, who was chairman of the nomination committee, has also been redesignated as a member of the nomination committee. He was Malaysia's ambassador to the United Arab Emirates from 2008 till 2011.

With the changes, which are effective immediately, the nomination committee now comprises two members, namely Yahaya and independent non-executive director Datuk Mohamed Suffian Awang, with Yusli as the chairman.

The audit committee, headed by independent non-executive director Datuk Mohd Anwar Yahya, also has two members, namely Hoi and non-independent non-executive director Datuk Siti Zauyah Md Desa.

On Monday, FGV chairman Datuk Wira Azhar Abdul Hamid said several members of the board and management are being investigated as part of its probe into transaction and investment decisions and business practices.
Azhar said the group is waiting for its lawyers to finalise their opinion and advise them on the next step.

On Tuesday, Reuters reported that three top executives, namely,COO of plantations Palaniappan Swaminathan, chief human resources officer Mohd Najib Yahya and chief procurement officer Abdul Razak Yunus, resigned at the end of August. FGV is yet to address the issue.

EU clears Apple plan to buy music app Shazam

BRUSSELS, Sept 6 — The EU today approved US tech giant Apple’s plan to buy leading song-recognition app Shazam, saying the move would not reduce choice for music streaming consumers. The bloc launched a detailed probe into the deal with…

Public Bank to fully redeem RM1b subordinated notes early

PETALING JAYA:Public Bank Bhd announced that it will fully redeem its RM1 billion subordinated notes due Sept 25, 2023 on Sept 25 this year.

“Public Bank wishes to announce that notice of early redemption has been given to the noteholders that Public Bank will fully redeem the RM1 billion 4.80% subordinated notes together with accrued interest on Sept 25, 2018,” the bank said in a filing with the stock exchange today.

The notes were issued on Sept 35, 2013 at a coupon rate of 4.80% per annum.

US, China dig in as Trump prepares to impose fresh tariffs

BEIJING/WASHINGTON: With US President Donald Trump gearing up to impose tariffs on US$200 billion (RM828 billion) on Chinese goods and Beijing certain to retaliate against any measures, the world's two biggest economies are locked in an escalating trade war, with no resolution in sight.

The United States is negotiating with Canada this week to try and finalise a deal to modernise the North American Free Trade Agreement (Nafta), an outcome some in the White House say will allow Washington to turn up the heat on Beijing.

“The hope is that this (Nafta) puts a lot of pressure on the Chinas of the world to help us negotiate better reciprocal trade deals,” Kevin Hassett, chair of the White House Council of Economic Advisers, told Reuters.

The world's two largest economies have already applied tariffs to US$50 billion of each other's goods. Talks aimed at easing tensions ended last month without major breakthroughs, and Washington appears emboldened by a sell-off in Chinese markets and a weakening economy.

China is planning two choreographed celebrations of free
trade – a major import fair in November and the 40th anniversary in late December of its move towards market reforms. However, Chinese government advisers are tamping down expectations either occasion will yield measures that could defuse tensions.

“China seems unable or unwilling to announce major
liberalisations that could be termed 'confidence building
measures' or 'down payments' on expected near-term reforms,” Craig Allen, president of the Washington-based US-China Business Council, said in a letter to members over the weekend.

“We know that the President has received reports that the
Chinese economy is struggling – reports that we believe are
overstated – and thus he may believe that additional pressure
might be effective in the short-term,” Allen said.

Washington is demanding Beijing improve market access and intellectual property protections for US companies, cut
industrial subsidies and slash a US$375 billion trade gap.

The Trump administration is ready to move ahead with a next round of tariffs after a public comment period ends at midnight in Washington on Thursday (Friday afternoon Malaysian time), but the timing is uncertain, people familiar with the administration's plans told Reuters.

The new duties will start to hit consumer products directly, including furniture, lighting products, tyres, bicycles and car seats for babies.

Trump said he was not prepared to make a deal with China “that they'd like to make”.

“We'll continue to talk to China,” he said at the White House on Wednesday. “But right now we just can't make that deal. In the meantime, we're taking in billions of dollars of taxes coming in from China, with the potential of billions and billions of dollars more taxes coming in.”

Given the smaller amount of goods China imports from the
US on which it could slap duties, Beijing has vowed to hit back with unspecified “qualitative” and “quantitative” measures, actions perceived within the US business community as likely to be increased customs and regulatory scrutiny.

Beijing appears to be bracing for a long fight.

Official Chinese media is asserting that Trump's trade war is aimed at containing China's rise, a perception solidifying Beijing's resolve not to buckle under US demands.

In light of such a US agenda, China should “maintain
strategic determination” and “take care of our own matters”,
Long Guoqiang, vice-president of the State Council's Development Research Centre, wrote in the People's Daily.

“The Soviet Union was pulled into an arms race in the Cold
War. Japan's economy became a bubble in a trade war. These
profound lessons are close at hand,” Long said.

While US businesses in China do not yet appear to face
widespread retaliation, some company officials have told Reuters they are bracing for blowback. Some are shifting supply chains to avoid tariffs. – Reuters

US factory orders fall in July on weak aircraft demand

WASHINGTON, Sept 6 — New orders for US-made goods fell slightly more than expected in July, weighed down by weak demand for aircraft, but signs of a pickup in business spending suggested that the manufacturing sector remained on solid ground….