Wednesday, January 9th, 2019


Saudi Arabia announces rise in oil reserves after external audit

RIYADH, Jan 9 —Top oil exporter Saudi Arabia announced a slight rise in its crude oil reserves today after they were independently audited, providing more detail about the size of deposits shrouded in secrecy for decades. Saudi Arabia's reserves…

China pledges to buy 'substantial amount' of US goods, says USTR

WASHINGTON, Jan 9 — China has pledged to purchase "a substantial amount" of agricultural, energy and manufactured goods and services from the United States, the US Trade Representative's office said today after US-China trade talks wrapped up in…

Tanzania's Magufuli wants central bank to buy gold as part of its reserves

DAR ES SALAAM, Jan 9 — Tanzanian President John Magufuli said today the central bank should start buying the country's gold to curb smuggling and build reserves to stabilise the currency. Yesterday, Tanzania named its third mining minister since…

Fed official warns of recession risk if rates go much higher

WASHINGTON, Jan 9 — The US economy is in good shape but could be pushed into recession if the central bank goes "too far" in raising interest rates, a senior Federal Reserve official said today. It was yet another dovish signal from one of the…

Nomura downgrades Malaysian equities

PETALING JAYA: Nomura Global Markets Research has downgraded Malaysian equities to “underweight” from “neutral” due to poor fundamentals and lack of major expansionary reforms.

Nomura, which downgraded Malaysia to “neutral” after the elections last year, has held a “neutral” on Malaysian equities since May 2018 based on the thesis that reforms prospects could keep the multiples elevated despite micros and macros not being very supportive.

“However, with the new government more than six months in power already, while there have been efforts to fix fiscal leakages, there has not been a significant reform push which can potentially lead to expansionary economic activity,” it said in its Asean Strategy report today.

Nomura said it was hoping for more progress in areas to improve government efficiency, reduce corruption and crony capitalism and potentially roll back or ease the government’s presence in some areas but has only seen some “easier” initiatives such as closing of several government agencies while some agencies have been put under direct parliamentary supervision.

While Budget 2019 included some long-term reform measures, labour or tax reforms or much needed reforms to ease property market bottlenecks are lacking.

Amidst a background where macro and micros continue to deteriorate, Nomura said the other major issue for Malaysia is that oil prices are no longer high (above US$70 per barrel) and have declined significantly recently, which could lead to further issues for Malaysia to plug the fiscal gap.

“Our economists believe there is a high risk of fiscal slippage and the possibility of a sovereign ratings downgrade that could trigger more capital outflows,” it said.

Nomura expects Malaysia’s 2019 gross domestic product (GDP) growth to be 4%, marking a sharper decline from 4.7% in 2018, and is below consensus forecasts of 4.6% largely due to a weak export sector. It also expects Malaysia to post a fiscal deficit of 3.9% in 2018 and 3.7% in 2019.

Nomura said Malaysia will continue to be a stock-pickers’ market and prefers select defensive banks, value plays like Gamuda Bhd, and thematic plays like Malaysia Airports Holdings Bhd and Vitrox Corp Bhd.

“We believe sustainable dividend yielding plays could be attractive, as well in an environment where local rates are expected to be cut; and the government’s fiscal constraints may lead to higher dividends from government-linked companies,” it added.

2018 a record-breaking year for Mercedes Malaysia

KUALA LUMPUR: Mercedes-Benz Malaysia (MBM), the distributor of Mercedes-Benz marque in Malaysia, posted a record-breaking performance in 2018 spurred by the consumption tax holiday and customer-centric strategy.

President and CEO Dr Claus Weidner (pix) said vehicle sales grew 9% to 13,079 units from 12,045 units recorded in the previous year, lifting the company’s market share to 2.4% from 2.3%, previously.

“Our efforts to invigorate the brand experience for our increasingly diverse fans have been fruitful and we are happy to retain our position as the number one premium brand in Malaysia,“ he told reporters at the company’s briefing on the 2018 full-year performance and outlook for 2019 today.

In June last year, the first month of the tax holiday period following the government’s move to abolish the goods and services tax, MBM posted the highest monthly sales in the company’s history at 1,750 units.

Weidner said other areas of business also showed improvement with total vehicles serviced last year growing by 16% from the previous year to 148,800 units and in-house financing increasing by 23% year-on-year to RM2.7 billion.

“Four out of every 10 cars sold were financed by our in-house financing,“ he said.

Five out of every 10 cars sold, meanwhile, were insured by its in-house service.

A total of 20 new and facelift models were launched last year to further complement the company’s extensive product line-up, he said.

Going forward, Weidner said MBM was confident of surpassing last year’s performance driven by demand for compact and premium sport utility vehicles as well as the company’s holistic approach and customer-centric strategy.

“We will also continue to rejuvenate our models portfolio to continue making it desirable to customers,“ he said.

On the number of launches for this year, he said it would be around last year’s figure.

Weidner disclosed that the company planned to restructure its plant in Pekan, Pahang to increase the localisation of components and upgrade the technology to improve efficiency and quality.

However, he did not disclose the amount of investment for the plant restructuring.

Asian stocks rise again on US-China trade talks optimism

HONG KONG: Increasing optimism that China and the United States will be able to hammer out a deal to help ease their trade war provided the impetus for more gains across Asian markets today.

After taking a battering in December and suffering a shaky start to 2019, confidence is slowly returning to equity trading floors, though dealers remain on edge.

Federal Reserve boss Jerome Powell provided the platform for a rally last week when he said the central bank had no “preset” plan for lifting interest rates and was “listening” to markets, signalling that the pace of hikes could slow this year.

Fear of higher borrowing rates was a major cause of last year’s stocks losses.

The mood among dealers held this week as officials from China and the US hunkered down for trade negotiations in Beijing that have extended into a third day. US President Donald Trump on Tuesday described them as going “very well”.

Bloomberg also reported White House sources as saying Trump is keen to get a deal done in order to boost stock markets, which he regards as a gauge of his success.

And The Wall Street Journal said the two were moving in the right direction, with China ready to buy more US goods and services, while further talks at cabinet level were being lined up next week.

The progress in talks “is fuelling investor optimism suggesting there might be a light at the end of the trade war tumultuous tunnel”, said Stephen Innes, head of Asia-Pacific trade at OANDA.

Hong Kong rose 2.3% – a fourth straight gain that has seen the index put on around 5% – and Shanghai ended up 0.75%, while Tokyo closed 1.15% higher. Sydney jumped 1% with Singapore, while Taipei and Wellington were each more than 1% higher. Manila surged more than 2% and there were also gains in Mumbai and Jakarta.

Seoul added 2% as North Korean leader Kim Jong Un visited Beijing with speculation swirling that he will meet Trump for a second summit later this year.

The gains also come after a strong reading on US jobs creation Friday, which soothed worries that the American economy was slowing down.

“When the dust settles, if it ever does, the fear of recession will prove to be premature,“ Bob Doll, an analyst at Nuveen Asset Management, told Bloomberg TV.

“We will have growth, yes, slowed from the 2018 pace and we will have… earnings, yes, slowed from the 2018 pace, but acceptable for investors and that will allow equity markets to move higher.”

Maybank bags ‘The Banker’s Bank’ award

KUALA LUMPUR: Malayan Banking Bhd (Maybank) clinched The Banker’s Bank of the Year 2018 in Malaysia award with its fresh thinking on how to provide the best service quality to previously underserved consumers.

In a statement, The Banker Editorial said Maybank launched HouzKEY, an innovative rent-to-own product, the first of its kind in Malaysia, recognising a gap in the market to provide services to Islamic banking customers.

“With a growing demand for affordable homes in the country, Maybank created this alternative solution, which allows for home ownership through a leasing scheme that does not require a deposit.

“Customers have a flat rate rental payment for five years, and at the end of that time, have the option to purchase the property at a price agreed at the start of the contract, continue to rent with a 2% annual rent increase, or to terminate the contract with no obligation,” it said.

The scheme is Shariah-compliant, being based on the Ijarah principle of leasing.

Maybank president/CEO Datuk Abdul Farid Alias said the bedrock of its success is predicated on the bank’s mission of humanising financial services, which drives it to innovate and offer financial solutions that enrich the lives of customers.

World Bank sees slower global economic growth of 2.9% this year

BENGALURU: The growth of the global economy is expected to slow to 2.9% in 2019 compared with 3% in 2018, the World Bank said on Tuesday, citing elevated trade tensions and international trade moderation.

“At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead,“ World Bank CEO Kristalina Georgieva said in the semi-annual Global Economic Prospects report.

The World Bank outlook comes as the United States and China have been engaged in a bitter trade dispute, which has jolted financial markets across the world for months. The two economies have imposed tit-for-tat duties on each other’s goods, although there have been signs of progress.

Growth in the US is likely to slow to 2.5% this year from 2.9% in 2018, while China is expected to grow at 6.2% in the year compared with 6.5% in 2018, according to the World Bank.

Emerging market economies are expected to grow at 4.2% this year, with advanced economies expected to grow at 2%, the World Bank said.

Gunung Capital teams up with Jendala Padu to improve asset yield

PETALING JAYA: Gunung Capital Bhd is collaborating with food supply trader and palm oil-related company Jendala Padu Sdn Bhd to improve the yield of biological assets at the Pandan Land Bintulu Palm Oil Estate.

In a filing with Bursa Malaysia, Gunung Capital said its 100% owned subsidiary Gunung Resources Sdn Bhd has entered into a memorandum of understanding (MoU) with Jendala Padu to develop quantitative and qualitative strategies for the project.

“The conclusions and solutions derived from the MoU shall provide the basis for a project management contract to manage the Pandan Land Bintulu Palm Oil Estate on a long term basis,” it said.

The group said it is seeking to apply its existing project management experience and resources from its management of land transportation asset revenue-contracts, and small hydropower development in Perak, to other industries with long term income stream prospects.

Under the MoU, the two parties will develop a functional working relationship in which both will share information related to the project and lend their respective expertise. The strategies developed may also include commodity hedging strategies and other financial instruments to protect yields against commodity price fluctuations.

Coordination between Gunung Resources and Jendala Padu will be conducted between the Jendala Padu site office and Gunung Resources project management team allocated to the project.

Jendala Padu is a general trader in food supply and cultivation, milling, operation, harvesting, sale and other ancillary activities relating to palm oil plantation.

IThe MoU will expire within three months from the date of signing.