Wednesday, January 2nd, 2019

 

Qatar Airways buys 5pc stake in China Southern Airlines

DOHA, Jan 2 ― Qatar Airways said today that it had acquired a 5 per cent stake in China Southern Airlines, as it seeks to establish itself in the Asian aviation market. The state-owned airline said in a statement the deal was part of its…


US stocks open sharply lower in first session of 2019

NEW YORK, Jan 2 ― Wall Street opened 2019 with decisive losses today, continuing the downward spiral from December as weak Chinese manufacturing data underscored worries over slowing global growth. About 10 minutes into trading, the Dow Jones…


Ringgit may trend between RM4-4.20

PETALING JAYA: The ringgit, which weakened over 2% in 2018, is likely to trend between RM4 and RM4.20 against the US dollar this year.

Sunway University Business School Professor of Economics Prof Dr Yeah Kim Leng said the projection was based on the expectation of two more interest rate hikes by the US Federal Reserve, weaker oil and commodity prices.

Additionally, moderating growth in China and the global economy is expected to exert downward pressure on Malaysian exports and the currency.

However, he noted that these headwinds could be offset by stronger foreign capital inflows and business sentiments, if the US and China are able to reach a settlement on their trade dispute and a subdued impact arising from Brexit could cushion the weakening global growth momentum. The ringgit depreciated 0.05% to 4.1380 against the greenback at 5pm today.

Recapping the local currency’s performance last year, Yeah noted that the ringgit was among the best-performing emerging market currencies and fared better against trade-weighted basket of currencies.

“It weathered the emerging currency turmoil last year with a smaller depreciation of about 2.3% compared with year-on-year declines of 9.5% for the Indian rupee, 7.3% for the Indonesian rupiah, 5.6% for the Philippine peso, 5.2% for the Chinese yuan, 4.7% for the Korean won and 2.4% for the Singapore dollar.

“Likewise, against a trade-weighted basket of currencies, the ringgit appreciated about 5.4% compared with 4.1% for Thailand and 1.1% for Singapore while the weighted currency for Indonesia fell by 7.3%, the Philippines by 6% and India by 5.5%,” he added.

According to Yeah, the strengthening of the trade-weighted currency is a reflection of an underlying resilience of the real economy.

Meanwhile, FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad said the risk emanating from the slowdown in global economic growth is seen as a threat for emerging market currencies, which also indicates a potential weakening of the ringgit in the early part of 2019.

“Global market uncertainties will continue to direct the trend of emerging market currencies for a long time yet, meaning news flow regarding areas like trade tensions will remain a very sensitive topic for emerging markets.

“Away from US-China trade tensions, concerns over a global economic slowdown will be seen as another threat for emerging markets. This risk does suggest that the ringgit will continue to weaken during the early parts of 2019 at least,” he added.

Jameel noted that it will spell well for the ringgit if the Fed holds back from raising interest rates, which will translate as an opportunity for emerging currencies to gain as it also presents an opportunity for the US dollar to weaken.

“Whether this scenario will hold true will be clearer towards the end of the first quarter of 2019,” he said.


Lee Kok Chuan named as Bermaz Auto CEO

PETALING JAYA: Bermaz Auto Bhd (BAuto) has redesignated Datuk Lee Kok Chuan (pix) as CEO effective Jan 1, from executive director previously.

He is currently the chairman of Bermaz Auto Philippines Inc and a director of Berjaya Capital Bhd, Bermaz Motor Sdn Bhd, Bermaz Motor Trading Sdn Bhd, Mazda Malaysia Sdn Bhd and Inokom Corp Sdn Bhd. He also holds directorships in several other private limited companies in the Berjaya Corp group of companies.

Lee has over 10 years of working experience in the fields of accounting, auditing and corporate services with major international accounting firms including Messrs Ernst & Whinney (Kuala Lumpur) (now known as Ernst & Young), Messrs Arthur Young (Melbourne) and subsequently Messrs Ernst & Young (Melbourne).

He joined Berjaya Land Bhd as senior manager of internal audit in 1994 and was responsible for its internal audit functions. He was an executive director of Berjaya Group Bhd from January 2000 to September 2001. He was appointed as the CEO of Berjaya Food Bhd (BFood) in 2010 and resigned from BFood on June 1, 2017. Meanwhile, Datuk Seri Yeoh Choon San has been redesignated as executive chairman from CEO.

Currently, Yeoh is also a director of Bermaz Motor, Bermaz Motor Trading, Mazda Malaysia and Inokom Corp. He has over 40 years of experience in the automotive industry, encompassing the various fields of retail, distribution and manufacturing.

BAuto also redesignated Datuk Syed Ariff Fadzillah Syed Awalludin as independent director from chairman previously.


Rubberex to exit operations in China

PETALING JAYA: Rubberex Corp (M) Bhd has proposed to dispose of its manufacturing operations in China for HK$135.0 million cash (RM71.6 million) as the business is no longer viable following new regulations by the government there.

The company entered into a conditional share sale agreement (SSA) on Dec 31, 2018 with Nutraceutical Biotech Global Holdings Limited (NBG) to dispose of its entire equity interest in two subsidiaries, which are Pioneer Vantage Ltd and Lifestyle Investment (Hong Kong) Ltd.

Rubberex said as the Huizhou municipal people’s government had prohibited the consumption of high pollution fuels such as coal in the Huizhou municipality, LPL and LSP would be required to invest in new boilers, which are to be fuelled by other types of fuel sources such as natural gas and other clean energy sources to continue operating in the same location.

“Such investment in new boilers is not viable as alternative fuels are too expensive and would reduce the margin of business operations.

“Furthermore, having considered the low margin of the vinyl disposable glove (the type of glove manufactured by LPL and LSP) for the past three financial years, the age of the plant and machinery, the fact that the glove manufacturing plants are prone to breakdown, the downward trend of the average selling price of the vinyl disposable glove for the past three years, the board is of the view that it is not viable for Rubberex Group to continue its manufacturing operations in China,“ the group said in a stock exchange filing.

In this regard, it is in the best interest of Rubberex to exit the manufacturing operations in China and focus its resources in Malaysia, particularly in improving its existing nitrile disposable glove manufacturing plant, which has higher margin.


Palm hits high as India cuts import tax

KUALA LUMPUR: Palm oil futures rose to their highest in nearly two weeks at the midday break of the first trading day of 2019, after the world’s largest edible oil importer India announced import tax cuts, amid expectations of a fall in production.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange was up 1.7% at RM2,156 ringgit a tonne at the midday break.

It earlier rose as much as 1.8% to RM2,159, its strongest levels since Dec 21. Trading volumes stood at 14,848 lots of 25 tonnes each at noon today.

“Palm is higher today on India’s import tax cut and production, which is expected to be down for the whole month also,“ said a futures trader in Singapore.

Palm oil output in Malaysia, the second largest producer of the vegetable oil, seasonally declines in the first few months of the year after peaking in the previous quarter. November production had slid 6.09% from the previous month to 1.85 million tonnes, according to industry regulator data.

India said late on Monday it would lower the duty on crude palm oil imports to 40% from 44%, while a tax on refined oils was cut to 50% from 54%.

Malaysian shipments of refined palm oil, however, will be taxed at 45% compared with 54% earlier.

Despite the tax cuts, traders expect market gains to be short-lived as palm inventory levels in Southeast Asia remain high. – Reuters


MAHB’s bid to sell stake in GHIAL called off

PETALING JAYA: Malaysia Airports Holdings Bhd’s (MAHB) bid to sell its entire 11% stake in GMR Hyderabad International Airport Ltd (GHIAL) was to no avail, after the purchaser failed to fulfill the obligation within the stipulated time frame to seal the deal.

The group told the stock exchange that this comes as the purchaser GMR Airports Ltd failed to complete the obligation for the RM295.34 million deal, in accordance to the terms of the sale and purchase agreement within the stipulated dateline of Dec 31, 2018.

With this, MAHB and its wholly owned subsidiary MAHB (Mauritius) Private Ltd will remain as shareholders of GHIAL.

Earlier last year, MAHB announced its intention to sell its 11% stake or 41.58 million shares to GMR Airports, which owns a 63% stake in GHIAL. The Airports Authority of India and the state of Telangana hold 13% equity interest, each.

The deal was supposed to be concluded on Dec 1, 2018, but later MAHB decided to extend the long stop date until Dec 31, 2018.

The principal activities of GHIAL are the designing, building, operating and managing the Rajiv Gandhi International Airport in Hyderabad, India for a concession period of 30 years until March 23, 2038, with an option to extend the term for an additional 30 years, which GHIAL has already exercised.

MAHB’s shares fell 0.6% to close at RM8.33 with 815,300 shares done.


Bursa down 1.33% on first trading day

PETALING JAYA: The local bourse, which ended 2018 on a weak note, tumbled as much as 24.51 points or 1.45% to 1,666.07 points on the first trading day of 2019 amid weak manufacturing activity in the region.

After failing to touch the 1,700-point level on the final trading day of 2018, the KLCI saw heavy selling pressure today and closed the day 22.47 points or 1.33% lower at 1,668.11 points.

Losers led gainers by 532 to 256. A total of 1.68 billion shares were traded valued at RM951.04 million.

The key index ended 2018 by 106.23 points or 5.91% lower to 1,690.58 points, the worst performance in the recent years due to continuous sell-off by foreign funds.

Worth noting is that the stock market began 2018 on quite an optimistic note, hitting an all-time high of 1895.18 points on April 19 ahead of the May 9 general election. Nonetheless, the buying momentum had since been slowing down after the general election, which saw the former ruling coalition Barisan Nasional being swept out of Putrajaya by Pakatan Harapan’s stunning two-third win.

The first shock from the Pakatan Harapan’s win was the cancellation and review of major construction and mega projects which sent construction stock nose dive including Gamuda Bhd, Malaysian Resources Corp Bhd and MMC Corp Bhd.

Among all indices, the construction index saw the steepest decline of 50.15% last year.

Another big hit in the local scene was the leadership reshuffle in government-linked companies.

On the international front, there was the trade war between the US and China, which caused US stocks to slump, raising concerns over another financial crisis after 10 years of bull market run. Amid global market uncertainty, the KLCI fell to a low of 1,635.31 points on Dec 18.

Inter-Pacific head of Research Pong Teng Siew told SunBiz that it is most likely to see investors holding on to investments in the wake of the current weak market.

Nonetheless, he opined that there is a chance for recovery if global developments recover as the domestic market remains stable.

Kenanga Research expects the local stock market to perform well in Q1’19 as Q4 and Q1 are normally the stronger quarters in terms of market performance in contrast to Q2 and Q3.

“Chart wise, the KLCI is still supported above its long-term (since end-1998) uptrend line. It is believed that the FBMKLCI could still swing above the 1,800-psychological resistance should the uptrend support line (1,630 and rising) and the crucial 1,600-psychological support remain intact. The index is likely to trade sideways (between 1,600 and 1,900) if no major negative surprise emerges.”

The research house said foreign outflow could become more manageable going forward on the back of the potential slower pace of US interest hike.

“Moreover, as the ringgit is relatively cheap and traded near its two-decade lows against many Asian currencies, this makes Malaysian equity market increasingly more competitive. As such, market could have bottomed at 1,626.93 points following the sell-down post the recently uninspiring corporate results season along with some rating downgrades.“


XingHe buys Sabah prawn farm for RM100m

PETALING JAYA: China-based XingHe Holdings Bhd is expanding its presence in Malaysia through the proposed purchase of a prawn farm and farm assets in Tawau, Sabah for RM100 million, as its business in China has been affected by the campaigns against environmental pollution in the smog-prone region.

XingHe told Bursa Malaysia that its wholly owned subsidiary company XW Aquaculture Sdn Bhd (formerly XJ Marine Sdn Bhd) had on Dec 31, 2018 entered into a sale and purchase agreement and an assets sale and purchase agreement with Pegagau Aquaculture Sdn Bhd for the exercise.

The acquisition was for a 97.9 ha farm land at a price of RM12.5 million; as well as all ponds, other land improvements, buildings, plant and machinery, equipment, motor vehicles, livestock and consumables for RM87.5 million.

The purchase consideration is to be funded via internally generated funds and/or borrowings and/or debt to be raised from fund raising exercises.

XingHe’s existing revenue is solely generated from its production, blending and marketing of peanut oil and other edible vegetable oil, all of which are based in China.

“Due to directives by the local authorities in China to industrial plants including the group’s plant to restrict production so as to improve air quality, the group’s plant had been unable to run its production for a reasonable amount of time to fulfill sales orders. These production curbs have resulted in the group not being able to accept new orders for its products and, consequently, the group’s revenue has been on a downtrend since August 2016.”

“These have caused the group’s financial performance to deteriorate with its profit before tax declining from RM125.1 million in the financial year ended Dec 31, 2015 (FY15) to RM8.9 million for the FY17. For the current financial year to Sept 30, 2018, the group has incurred losses for two out of three financial quarters announced to-date (exception being the financial quarter ended March 31, 2018 where there was a profit before tax of RM2.8 million) and as of Sept 30, 2018, the group’s loss for the year to-date amounted to RM14.5 million,” it noted.

XingHe said the proposed acquisition will enable the group to expand its business and strengthen its financial performance by having a new Malaysian-based resilient business to supplement its existing edible oil operations in China.


Oil falls to US$53 on economic worries, surging supply

LONDON, Jan 2 ― Oil fell to about US$53 a barrel today, under pressure from rising output in major Opec and non-Opec producers and due to concerns about an economic slowdown that could weaken demand. Russian production hit a post-Soviet record in…