Wednesday, October 10th, 2018


Brexit deal next week ‘within reach’, says Barnier

BRUSSELS, Oct 10 — A Brexit deal is “within reach” next week, EU negotiator Michel Barnier said today, even as he rammed home his insistence that Britain must accept possible checks on trade between its mainland and Northern Ireland. “An…

Italy says it won’t budge over budget

MILAN, Oct 10 — The Italian government insisted today it would stick to budget forecasts despite a jump in borrowing costs sparked by nervous bond investors, and concerns over the numbers underlying the spending plan. Late yesterday, the…

Affordable homes pipeline expands, deals in property market flat

PETALING JAYA: Malaysian property developers are launching more residential units that are priced RM500,000 and below, but judging from the Real Estate and Housing Developers' Association Malaysia's (Rehda) Property Industry Survey 1H 2018, it has done little to move transaction numbers.

The survey revealed that 65% of residential units launched in 1H 2018 were priced at RM500,000 and below, which is a steady increase from 52% in 2H 2017 and 44% in 1H 2017.

For the property market as a whole, however, transactions for the period hardly budged despite fewer units on offer, with only 6,764 units sold, compared with 6,760 units in 2H 2017. Some 13,233 units (residential and commercial) were launched in the first half of the year, compared with 15,082 units in 2H 2017.

Of the 6,764 units sold, two- and three-storey terraces were the most popular with 2,858 units sold compared with 2,779 units sold in 2H 2017. The second most popular type of property sold was apartment/condominium with 2,047 units sold in 1H 2018, compared with 753 units sold in 2H 2017.

Rehda president Datuk Soam Heng Choon said the 12,522 units of homes launched in 1H 2018 were priced from RM100,001 to RM700,000, as developers are adjusting the type of properties they plan to launch.

“We hope the worst is over. If you look at the government's call for us to launch affordable houses, you can see that the units going up are below RM500,000. We are aligning our business to what the buyer wants and what they can afford,” Soam told reporters at a briefing today.

According to the survey, 47% of the 152 respondents had affordable housing (houses priced between RM100,000 and RM500,000) components in their developments in 1H 2018 while the bulk of future launches in 2H 2018 were priced at RM500,000 and below, with launches priced up to RM700,000 in Penang and Selangor.

For 2H 2018, 47% of respondents plan to launch 15,852 units comprising 8,991 strata units, 6,433 landed homes and 428 commercial units. About 66% of respondents anticipate take-up rates of 50% or less, for the first six months after launching.

Meanwhile on the overhang in the market, the survey revealed that in 1H 2018, 75% of respondents reported having unsold stock, with the majority having up to 30% unsold stock.

Soam said the unsold units are a result of loan rejection, buyers being offered lower margin of financing and unreleased bumiputra units.

“For unsold bumiputra units, Penang and Selangor have an auto-release mechanism. We appeal to all other states to seriously look at this,” he said, adding that the condition of unsold units will deteriorate over time, making them harder to sell later.

Soam said compliance cost, which can be 15% to 20% of total cost, remained a significant factor affecting developers' cash flow. He said lower compliance cost would directly reduce house prices.

Soam said lower compliance cost would have a much bigger impact on house prices than the sales and service tax exemption on construction services.

Rehda members said the top three incentives to encourage provision of affordable housing are lower development charges, lower land conversion premium and exemption of capital contribution.

On Maybank Kim Eng Research senior economist Chua Hak Bin's suggestion to raise property stamp duty on foreigners, Soam questioned the impact of such a move as they make up only 3% of property buyers in Malaysia.

Top Glove open to further M&As, undeterred by troubled Asdion deal

SHAH ALAM: Top Glove Corp Bhd remains open to further merger and acquisition (M&A) opportunities despite the company's troubled RM1.3 billion acquisition of Aspion Sdn Bhd from Singapore's Adventa Capital Pte Ltd.

Speaking to reporters after its EGM today, Top Glove founder and executive chairman Tan Sri Lim Wee Chai (pix) said the company is always on the lookout for a good opportunity, noting there are still a lot of good companies in the industry.

“We will continue to look out for good company. We will learn from this (the Aspion deal) and be more careful in acquiring things,” Lim added.

After three hours of deliberations at its much awaited EGM today, Lim said the shareholders approved the removal of Low Chin Guan, Adventa Capital's representative, as a director of the company with immediate effect, following the company's lawsuit against Adventa Capital.

“We are very happy for the support from the shareholders,” Lim said.

It is learnt that Low did not attend the meeting but sent a written representation instead, claiming that the action to remove him from Top Glove board of directors is unlawful and breached the sale and purchase agreement as he had not engaged in any fraudulent conduct.

Low noted that the company and its wholly owned subsidiary Top Care Sdn Bhd will be responsible for any losses he and Adventa Capital may suffer as a result of the litigation.

He also said Adventa Capital no longer considers itself obligated to guarantee the core profit after tax shortfall based on a clause in the sale and purchase agreement for Aspion.

The litigation, which seeks a sum of RM714.9 million from Adventa Capital, comes three months after Top Glove completed the acquisition, upon the latter discovering financial irregularities in Aspion's balance sheet.

Although a due diligence was done before the acquisition took place, Lim said, it was not easy to discover the irregularities as “they were very good at manipulating the financial statements”.

“Even the accountant could not find out but it took us about three months to find out,” he added, noting that the litigation process is ongoing and the group is confident of reclaiming the amount.

At its EGM earlier, Top Glove shareholders also approved a proposal to undertake a bonus issue on the basis of one bonus share for every one existing share held by shareholders. The exercise will see up to 1.28 billion bonus shares issued to shareholders of the company.

On Bursa Malaysia today, Top Glove closed unchanged at RM10.50 on volume of 5.88 million shares.

Gamuda, MMC shares continue to weaken after scathing letter from Pua

PETALING JAYA: Gamuda Bhd and MMC Corp Bhd shares continued their losing streak today, after Finance Minister Lim Guan Eng's political secretary Tony Pua wrote a scathing letter admonishing the MMC-Gamuda Joint Venture for implying that the decision to terminate its Mass Rapid Transit 2 (MRT2) underground works contract was hasty and ill-conceived, along with a campaign “to paint yourself as an innocent victim of an unjust Harapan government”.

Gamuda hit a 52-week low of RM2.03 before closing at 13.03% down at RM2.07 with some 153.21 million shares traded, while MMC Corp fell to a low of RM1.11 before closing 3.45% or four sen weaker to RM1.12. Gamuda was the most actively traded stock of the day.

In a statement issued this evening, MMC-Gamuda called for calm among stakeholders, especially staff, subcontractors and suppliers, pending a review of the cancellation by Prime Minister Tun Dr Mahathir Mohamad.

While expressing hope that the government would invite them back to the negotiating table as part of the review process, MMC-Gamuda said: “We shall adopt an open book approach with the appointment of an international engineering consulting firm that possesses the necessary experience and track record in assessing tunnelling works around the world and, as such, be in the best position to re-examine where savings can be derived.

“Our request in return for the open-book approach is that our Intellectual Property rights and commercially sensitive information are duly respected as such, by the said reviewing consultant and all reviewing parties, during the review process,” MMC-Gamuda added in its statement.

AirAsia India names Tata Steel executive Bhaskaran as new CEO

NEW DELHI, Oct 10 — India’s Tata Steel Vice-President of Corporate Services Sunil Bhaskaran will be AirAsia India new Chief Executive Officer and Managing Director, replacing Amar Abrol who stepped down in May. Bhaskaran will assume his new role…

US stocks open lower on interest rate angst

NEW YORK, Oct 10 — Wall Street stocks fell early today on persistent worries about rising US interest rates and increased inflation. About 20 minutes into trading, the Dow Jones Industrial Average stood at 26,316.49, down 0.4 per cent. The…

Global regulators say crypto currencies need vigilant monitoring

LONDON, Oct 10 — Crypto assets such as bitcoin do not pose a threat to financial stability but monitoring is needed along with possible action to protect consumers, the global Financial Stability Board said today. While price increases in crypto…

Malaysia’s FD market least volatile: Aberdeen

KUALA LUMPUR: Malaysia’s fixed deposit (FD) market is the least volatile and is very conducive for fund managers to construct multi-assets portfolio, said global investment company, Aberdeen Standard Investments.

Aberdeen Asset Management Asia Ltd investment director Dongyue Zhang said many portfolios described as ‘diversified’ or ‘multi-asset’ were in fact restricted to a traditional mix of bonds, equities and/or real estate.

“Malaysia’s FDs have low volatility and would generate good returns over the long-run,” he told a panel discussion on the sidelines of the Investment Conference 2018 today.

Zhang said constructing the right portfolio entailed mixing fixed deposits and fixed income on a tactical basis, and “this is something that Aberdeen is looking at now among other multi-assets.

“There are multi-asset opportunities as we are trying to get access to the widest range of potential opportunities as possible,” he added.

Zhang also said if a client or investor wants to look at multi-asset investment opportunities, they would want to look at investment opportunities that are more global in nature.

As for Asia, he said investment companies such as Aberdeen Standard Investment were experiencing more demand and opportunities in multi-assets basis.

He said the ‘’Belt and Road’’ initiative by China was interesting as it tried to project China’s economic impact along six different routes, one actually extending to Southeast Asia and Malaysia.

“Through that initiative, whether we’re talking about hard or soft infrastructure, consumption upgrade or Industry 4.0, it will project a halo effect on the local FD and bond market,” said Zhang.

Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments.

Themed, “Diversification: Redefining Perspectives”, the half-day conference discussed opportunities in the current climate across a suite of asset classes. – Bernama

Senai Airport City wants industrial park up and running by 2025

SENAI: Senai Airport City (SAC) is looking to have its industrial park fully developed and operational by 2025, with logistics and food players being main targets to set up base there.

The 2,718-acre industrial park currently has occupants such as Ecoworld, Hershey’s and AME Development’s I-Park.

The entire industrial park is being developed in five phases. Currently the first phase which comprises 1,200 acres of land has seen 50% take up.

General manager of SAC, the industrial park’s master developer, Gan Seng Keong said they have set their sights on multinational companies which are looking to set up a regional distribution hub, or Johor based companies which are looking to relocate out of other industrial parks or expand.

In addition to logistics and food, he said, the targeted industries are hi-tech and green manufacturing, electrical and electronics and aerospace manufacturing and maintenance, repair and overhaul (MRO).

Gan noted that given the limited MRO market in Malaysia, the portion allotted for that segment might be reviewed and reallocated to a different industry, such as food. SAC has allotted 400 acres for MRO industries.

Industrial land at the park comes with ready common infrastructure and utilities.

According to Gan, RM500 million has been invested to develop infrastructure such as water supply, electricity and others in the park.

“When investors come they won’t have issues. For example, if they go to a piece of standalone land they have to convert the land to agricultural or industrial use. So they will have to construct the utilities. Over here everything is provided. That is the value proposition to the investors. Everything is ready,” he said.

SAC is currently in talks with 12 companies comprising MNCs and manufacturing companies to set up a base there. SAC is a subsidiary of MMC Group.