Monday, December 3rd, 2018

 

Euro, yuan lead surge after US-China trade war truce

LONDON: The euro and Australian dollar led the rally against the US dollar yesterday after Washington and Beijing’s agreement for a ceasefire in their trade war encouraged investors to sell the greenback and buy into riskier assets.

Emerging market currencies also surged higher, with China’s offshore yuan gaining more than 1%.

US President Donald Trump and China’s President Xi Jinping have agreed a 90-day cease-fire in their trade dispute during which they will try to bridge their differences.

“Even though it’s a 90-day truce and both US and China still need to sort out multiple issues in this period, from markets’ perspective getting past the event risk with a positive outcome and de-escalation of tensions is clearly positive for risk sentiment,“ said Mayank Mishra, global macro strategist at Standard Chartered.

Currencies hit hard during the trade dispute amid fears of the potential damage to the global economy recovered sharply. The Australian dollar rocketed 1% to US$0.7386.

China is the biggest buyer of Australian exports and the worry has been that any hit to Chinese demand would hurt international trade.

The Canadian dollar rose 0.9% to C$1.3162, while the Norwegian crown added 1% helped by the improved market sentiment and soaring oil prices.

The euro also capitalised on the dollar weakness, adding more than half a percent to US$1.1379. That takes the euro further away from its 2018 low hit last month of US$1.1216.

The dollar index, which measures the greenback against a basket of major peers, fell 0.6% to a day’s low of 96.719.

Trade tensions have been one of the biggest drivers of dollar strength in 2018.

“The reduction in global trade tensions has delivered a second successive blow for the US dollar. It follows hot on the heels of the recent dovish shift in Fed communication,“ MUFG analysts said, referring to recent comments from Federal Reserve officials that suggested the current interest rate hiking cycle may end sooner than expected.

The offshore yuan gained more than 1% to 6.8790, although analysts said with China’s economy on less steady ground than a year ago relief for the yuan may be temporary.

Other emerging market currencies jumped. The South African rand added 2%, while the Mexican peso was 1.8% higher. The Russian rouble added 1.1%. The Japanese yen slipped slightly to 113.48.


Cycle & Carriage sells stake in Mercedes-Benz Malaysia

PETALING JAYA: Cycle & Carriage Bintang Bhd is disposing its 49% stake in Mercedes-Benz Malaysia Sdn Bhd (MBM) for RM66 million, following Daimler AG’s (DAG) decision to exercise its call option.

In a filing with Bursa Malaysia, Cycle & Carriage said it received a notice from DAG that it is exercising its call option over 66 million shares of MBM, currently held by Cycle & Carriage.

Cycle & Carriage is required to sell the shares to DAG, after which it will cease to hold shares in MBM and will no longer be entitled to the annual dividend of about RM11.2 million.

The company said the disposal will not directly impact any of its trading operations, trading performance or its support of customers and it will continue to be a Mercedes-Benz dealer group in Malaysia with 13 sales and after-sales facilities across Malaysia to serve Mercedes-Benz customers.

“Cycle & Carriage would like to assure all our customers that the recent decision by DAG to exercise their call option will not impact our commitment or ability to continue delivering exceptional experiences to our customers in Malaysia,” said Cycle & Carriage CEO Wilfrid Foo.

“All dealerships will continue to provide you with quality sales and after-sales services in accordance with the strictest Mercedes-Benz quality standards supported by MBM,” he said in a statement.

The call option is pursuant to the agreement on the restructuring of the distribution of Mercedes-Benz products in Malaysia dated Dec 9, 2002. The disposal is expected to take place on Nov 30, 2019, which is the expiry of 12 months from the date of the notice from DAG.

Cycle & Carriage is not expected to have any gain or loss from the proposed disposal. Its original cost of investment in MBM shares was RM66 million, with the date of investment being Jan 10, 2003.


China drives stunning growth in global trademark applications, UN says

GENEVA, Dec 3 — China was the driving force by a 30 per cent leap in global trademark applications in 2017 as innovation turns into the main battleground among competing world economies, the UN World Intellectual Property Organization said today….


Bumi Armada: Fall in shares could be due to internal memo

PETALING JAYA: Bumi Armada Bhd, which was slapped with an unusual market activity (UMA) query on Friday, said the sharp fall in its share price could be attributed to recent announcements, in particular an internal memorandum which highlighted the group’s need to reduce cash outflow and limit efforts to pursue new work.

Between Nov 16 and last Friday, Bumi Armada’s share price fell 52.4% or 18 sen. Yesterday however, the group share price closed 3.5 sen or almost 22% higher at 19.5 sen, with some 318 million shares traded, making it the most actively traded stock of the day.

Bumi Armada said an internal memorandum issued by the group’s CEO to employees on Nov 27 where the CEO stated, among other things, despite the group’s concerted efforts to fundamentally improve its financial situation, the group has not made substantial progress with the financial parties involved resulting in it being forced to drastically reduce the group’s cash outflow and limit the group’s efforts to pursue new work.

Bumi Armada also highlighted the group was focusing on strengthening its overall balance sheet and working with lenders to put in place a refinancing of the group’s US$500m (RM2.1 billion) debt.


Manufacturing PMI deteriorates in November

PETALING JAYA: The Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) headline index which is a composite single-figure indicator of manufacturing performance-deteriorated to a six month low in November to 48.2 from 49.2 in October.

The latest monthly contraction in Malaysia’s manufacturing sector was due to weaker demand pressures as new orders decreased significantly in six months.

Survey data highlighted strong cost pressures, causing firms to raise output charges as part of efforts to alleviate margin erosion.

The pick-up in export sales compared to the previous month, indicated that the soft patch in order book volumes stemmed from domestic clients.

Nonetheless, the rise in new business from overseas was only marginal.

The weaker demand also led to a softer lengthening of input delivery times.

On the price front, cost pressures reportedly stemmed from the depreciation of the ringgit and higher raw material costs in the month under review.

“Growth prospects for the fourth quarter took a turn for the worse in November, as the headline PMI indicated a second successive monthly decline in the manufacturing sector. Key forward-looking gauges of macroeconomic health also depicted downside risks, as overall demand fell sharply, leading firms to be less willing to hold stock,” said IHS Markit economist Joe Hayes.

“Following the introduction of the sales and services tax in September, panelists have mentioned weaker demand pressures in Q4 so far. Survey data also pointed to slowing order growth from overseas clients in November, following some relative strength in October,” he added.

Despite the downward trend in current output volumes, Malaysian manufacturers expect production to pick up over the next 12 months.

The optimistic forecasts is underpinned by improved demand and planned new product introductions.


EcoWorld London inks RM2.1b deal

KUALA LUMPUR: Eco World International Bhd’s 70% owned joint-venture EcoWorld London has signed contracts for a deal worth £389 million RM2.1 billion) through which real estate investment manager Invesco Real Estate, will acquire over 1,000 build-to-rent (BTR) homes in London representing the entire BTR component of two sites, namely Kew Bridge and Barking Wharf.

This is pursuant to the heads of terms earlier announced on Aug 29 by EcoWorld International and it remains one of the most significant BTR deals ever undertaken in the UK. This transaction follows less than six months from the date EcoWorld London completed its acquisition of 70% of the Willmott Dixon residential development business for £84 million, covering eight sites.

The apartments are to be specifically developed at Kew Bridge in West London and Barking in East London for long-term rental on behalf of one of Invesco Real Estate’s international separate account clients. Construction work has commenced on both sites and the new homes will be available to rent from late 2020.

Apart from being one of the biggest single commitments into London’s emerging BR sector, Invesco Real Estate’s client, on whose behalf the investment has been made, is a leading global real estate investor making its first residential investment in the UK.

As part of the agreement, EcoWorld London will let and manage the rental homes on behalf of the investor under a long-term contract. Each site forms the first phase of a wider development being undertaken by EcoWorld London.

This deal forms the first step in EcoWorld International’s strategy to become a leading provider of rented homes in London within the next five years. Based on its existing portfolio of projects, EcoWorld London has already identified other similar sites on which it will be able to deliver more of these BR homes for future institutional investor partners.

EcoWorld London CEO Heng Leong Cheong sees a mismatch between the homes that Londoners need, and those available in the market, in particular homes catered specifically for the rental demographic, and it is determined to correct this.

“At present, each of the leading BTR companies in London has less than 5,000 homes under management. Through EcoWorld London our ambition is to secure a pipeline of over 10,000 homes in the next five years to become a BTR market leader. We will do this through the launch of a new operating company focusing solely on rented homes, which will be led by our EcoWorld London team.

“Our confidence in the long-term prospects of the UK property market, reinforced by this deal with Invesco Real Estate, fuels our commitment to supporting the UK’s efforts to address the housing shortage across London and the Southeast of England.”

EcoWorld International executive vice-chairman Tan Sri Liew Kee Sin said BTR is the most resilient and fastest growing property sector in London today due to the chronic undersupply of affordable homes available for rent.

“Apart from the huge potential for growth, BTR, with its forward funding model, also requires minimal upfront funding to be sought from lenders and shareholders. It is therefore immensely scalable as we can undertake numerous such projects concurrently without overextending our balance sheet,” said Liew.


Trade truce, Italy budget compromise hopes send Italian yields tumbling

LONDON, Dec 3 — Italy’s borrowing costs tumbled to their lowest level in just over two months today after two newspapers reported that Rome was negotiating with the EU to reduce its 2019 target for the budget deficit to 2.0 per cent of GDP or…


Maxwell International suspension continues

PETALING JAYA: Suspension in trading of shares in sports shoes manufacturer Maxwell International Holdings Bhd will continue as the company failed to submit its quarterly report for the financial period ended Sept 30, 2018 within the timeframe stipulated by Bursa Securities.

Trading in its shares had been suspended since May 10, 2018, and the trading suspension would continue until further notice,” the company said in the stock exchange filing yesterday.

Pursuant to the listing requirements, a company faces trading suspension if it fails to issue the outstanding financial statements within five market days after the expiry of the relevant time frame.

The delisting process will begin if it fails to issue the outstanding financial statements within six months from the expiry of the relevant time frame under the Listing Requirements.


Trump says US-China ties make ‘BIG leap forward’

WASHINGTON, Dec 3 — US President Donald Trump boasted today that US relations have taken a “BIG leap forward” with his meeting in Argentina with President Xi Jinping. “Very good things will happen. We are dealing from great strength, but…


Emico Holdings to raise up to RM1.73m via private placement

PETALING JAYA: Emico Holdings Bhd proposes to undertake a private placement exercise to raise up to RM1.73 million for the group’s working capital.

The group said in a stock exchange filing that based on an illustrative issue price of 18 sen per placement share and the issuance of up to 9.59 million placement shares, the proposed private placement is expected to raise gross proceeds of up to RM1.73 million.

The placement shares will be placed out to third party investors to be identified later, it added.

The proposed private placement is expected to contribute positively to its future earnings and be completed by the second quarter of 2019.