Sunday, January 13th, 2019

 

US warns German firms of possible sanctions over Russia pipeline

BERLIN, Jan 13 — The US ambassador to Germany has warned companies involved in the construction of the Russian-led Nord Stream 2 gas pipeline that they could face sanctions if they stick to the project, a senior US official said today. US…


China to reduce curbs on foreign investment

SHANGHAI/BEIJING: China will reduce restrictions on foreign investment and address difficulties facing foreign companies investing in the country, the commerce minister said, according to a transcript of an interview he gave to state media.

Commerce Minister Zhong Shan said China would allow full foreign ownership of companies in more areas of the economy and would reduce the number of industries in which foreign investment was restricted or barred, according to the transcript posted on the Ministry of Commerce’s website today.

The comments appeared to be largely reiterations of past pledges by Chinese officials for further market opening.

Foreign direct investment (FDI) into China rose by 3% year on year to US$135 billion (RM554.8 billion)in 2018, Zhong said.

That would mark a slowdown from growth of 7.9% in 2017 and 4.1% in 2016.

But Zhong said China had maintained stable FDI growth “against a gloomy global climate,“ noting that total FDI around the world had slumped by 41% in the first half of last year.

China has been pushing to broaden opportunities for private firms and foreign investors to stimulate an economy that is slowing on the back of weakening domestic demand and a trade war with the US.

Zhong said “properly handling” trade frictions with the United States was a major task for the ministry in 2019.

The ministry would “conscientiously implement” the consensus to work toward a resolution of the trade row reached by Chinese President Xi Jinping and U.S. counterpart Donald Trump in Argentina late last year, he added.

The two sides held three days of trade talks at a vice-ministerial level in Beijing last week.

Zhong said the Commerce Ministry would push for the introduction of a foreign investment law as soon as possible, improve the handling of complaints from foreign firms, and encourage foreign investment in manufacturing and high tech.

The ministry would also encourage foreigners to invest in central and western China, he said.

Separately, the official Xinhua news agency reported today, citing the country’s human resources ministry, that China will roll out a series of measures to maintain stable employment this year.

China is grappling with the impact of a slowing economy amid a damaging trade dispute with the US, its largest trading partner, and sources have said it plans to set a lower economic growth target of 6.0% to 6.5% in 2019, compared with “around” 6.5% in 2018.

In order to ensure employment, the Chinese government will reduce the burden on companies, officials from the Ministry of Human Resources and Social Security said, according to Xinhua, adding that research on plans to cut their social insurance premium rate would be accelerated.

“Enterprises with fewer or zero layoffs can take half of the previous year’s unemployment insurance premium back,” Xinhua quoted an unnamed senior ministry official as saying, reiterating a policy that was flagged by the State Council, China’s cabinet, in December.

Xinhua said China’s urban unemployment rate was 3.8% by the end of 2018, with 13.61 million new jobs created in urban areas last year, up 100,000 from 2017.

In comments published on Saturday, Chinese Premier Li Keqiang said planned tax cuts targeting smaller companies would help support employment and economic stability.

“For 2019, China still faces large employment pressure, with more than 15 million newly-added job-seekers in urban areas, including a record number of 8.34 million college graduates expected,” the human resources ministry official added.

College graduates, migrant rural workers and veterans should be given targeted assistance in finding jobs, the official said, adding that more skills training channels should be opened for the unemployed.


No bear cycle on the horizon for local bourse: Analysts

KUALA LUMPUR: While stock market experts are not entirely bullish about the FBM KLCI’s performance, they have ruled out that a full-fledged bear cycle is imminent in 2019.

Kenanga Investment Bank’s head of research, Chan Ken Yew, said at the “Market Outlook Symposium 2018: Smart Investing or Dare Betting” last Saturday that while the volatility seen last December caught many by surprise, the KLCI has been holding up to its uptrend cycle since 1998, save for a dip during the 2008 global financial crisis.

He said the downward revision to the KLCI to end at 1,775 points from the initial projection of 1,805 points was made due to cuts in target prices of some stocks.

However, Chan opined that the KLCI is likely to trend sideways at around 1,600 points and the trend could only be broken with major news as the previously concern-invoking events have somewhat toned down, with the US and China back to the negotiating table on their trade dispute and the US Federal Reserve has now taken a more dovish stance, which could lead to the weakening of the greenback.

At last Friday close of 1,683.22 points, the KLCI has dropped 0.44% year to date after declining 5.91% last year.

Overweight sectors include aviation, gaming and power utility, while building materials, healthcare and gloves were rated as underweight sectors.

With the expected goods and services tax and income tax refunds, CHK Consultancy CEO Dr Ch’ng Huck Khoon said more than RM30 billion could be be potentially be ploughed into the stock market.

He is of the view that the stock market will be “okay” under the leadership of Prime Minister Tun Dr Mahathir Mohamad, given his track record.

With “all bad news” being factored in by the market, MRR Consulting managing partner Ooi Kok Hwa believes stock prices have bottomed out and he advised investors to look out for small-cap stocks given the higher index levels compared to the list of 30 component stocks of the KLCI, of which some are overvalued.

“Five years ago, in 2013-2014, there was one full-year of small cap rally. Yes, it will happen this year,” he said.

On a global front, Timing & You Pte Ltd founder Derick Tan cautioned that the bear cycle may be “around the corner” following the recent 20% contraction in the US market.

“The current situation is high in risk and it is a good time for profit-taking while gold could be a good investment option.”


chinainvestment

SHANGHAI/BEIJING: China will reduce restrictions on foreign investment and address difficulties facing foreign companies investing in the country, the commerce minister said, according to a transcript of an interview he gave to state media.

Commerce Minister Zhong Shan said China would allow full foreign ownership of companies in more areas of the economy and would reduce the number of industries in which foreign investment was restricted or barred, according to the transcript posted on the Ministry of Commerce’s website today.

The comments appeared to be largely reiterations of past pledges by Chinese officials for further market opening.

Foreign direct investment (FDI) into China rose by 3% year on year to US$135 billion (RM554.8 billion)in 2018, Zhong said.

That would mark a slowdown from growth of 7.9% in 2017 and 4.1% in 2016.

But Zhong said China had maintained stable FDI growth “against a gloomy global climate,“ noting that total FDI around the world had slumped by 41% in the first half of last year.

China has been pushing to broaden opportunities for private firms and foreign investors to stimulate an economy that is slowing on the back of weakening domestic demand and a trade war with the US.

Zhong said “properly handling” trade frictions with the United States was a major task for the ministry in 2019.

The ministry would “conscientiously implement” the consensus to work toward a resolution of the trade row reached by Chinese President Xi Jinping and U.S. counterpart Donald Trump in Argentina late last year, he added.

The two sides held three days of trade talks at a vice-ministerial level in Beijing last week.

Zhong said the Commerce Ministry would push for the introduction of a foreign investment law as soon as possible, improve the handling of complaints from foreign firms, and encourage foreign investment in manufacturing and high tech.

The ministry would also encourage foreigners to invest in central and western China, he said.

Separately, the official Xinhua news agency reported today, citing the country’s human resources ministry, that China will roll out a series of measures to maintain stable employment this year.

China is grappling with the impact of a slowing economy amid a damaging trade dispute with the US, its largest trading partner, and sources have said it plans to set a lower economic growth target of 6.0% to 6.5% in 2019, compared with “around” 6.5% in 2018.

In order to ensure employment, the Chinese government will reduce the burden on companies, officials from the Ministry of Human Resources and Social Security said, according to Xinhua, adding that research on plans to cut their social insurance premium rate would be accelerated.

“Enterprises with fewer or zero layoffs can take half of the previous year’s unemployment insurance premium back,” Xinhua quoted an unnamed senior ministry official as saying, reiterating a policy that was flagged by the State Council, China’s cabinet, in December.

Xinhua said China’s urban unemployment rate was 3.8% by the end of 2018, with 13.61 million new jobs created in urban areas last year, up 100,000 from 2017.

In comments published on Saturday, Chinese Premier Li Keqiang said planned tax cuts targeting smaller companies would help support employment and economic stability.

“For 2019, China still faces large employment pressure, with more than 15 million newly-added job-seekers in urban areas, including a record number of 8.34 million college graduates expected,” the human resources ministry official added.

College graduates, migrant rural workers and veterans should be given targeted assistance in finding jobs, the official said, adding that more skills training channels should be opened for the unemployed.


SMEs: It’s tough to maintain sales, profit margins

PETALING JAYA: Maintaining sales and profit margins are the primary concerns faced by the small and medium enterprises (SMEs), according to a recent nationwide survey by CTOS on its SME customers.

CTOS Data Systems group CEO Dennis Martin said with 37.1% of Malaysia’s gross domestic product coming from SMEs, the issues that affect them will undoubtably affect Malaysia as a whole.

“We are seeing that issues such as pricing and competition are factored much lower down the list, this may mean that the SME sector is looking at consolidating positions in 2019, rather than looking towards expansion,” he said in a statement last Friday.

Using a sample of SME respondents from a diverse geographical range, a focus on sales and profit margins, rather than a focus on new customers and competition, shows that SMEs are shoring up their existing customer base and finding ways to be more productive and therefore profitable in an uncertain environment.

Meanwhile, cash flow is the second largest concern as 37% of respondents claimed that it is a major problem, giving further credence to the theory that SMEs are feeling the financial pinch as larger organisations may be struggling to meet commitments to SMEs.

At the other end of the spectrum are government policies, of which only one fifth of SMEs are concerned about.

“The lack of concern over government policies in comparison to financial drivers such as profit margins and cash flow issues can be taken as a generally positive note,” said Martin.

The recent 2019 budget allocated RM17.94 billion for SME development in 2019 under the Third Focus: To Foster an Entrepreneurial Economy. Among the key initiatives include financing, Industry 4.0, export, tourism, agriculture, entrepreneurship, human capital development and incentives.

Martin said with support on a national level, SMEs are finding that they are able to concentrate on doing business regardless of the effects of potential governmental or regulatory issues, which correlates with its survey findings.


Ideas raises concerns over potential govt-led market distortions in housing market

KUALA LUMPUR: The Institute for Democracy and Economic Affairs (Ideas) has warned the government to be careful of not intervening the housing market directly and creating distortions.

As the National Affordable Housing Council (MPMMN) plans to build one million affordable homes in the next 10 years, Ideas senior fellow Dr Carmelo Ferlito’s (pix) concern is not rooted in the targeted numbers of houses per se, but pointed out that the government’s involvement in the industry may hurt the industry in the long run.

He said market information is by nature dispersed into individual minds and therefore not collectable by a single central planner. It is also dynamically created, and modified, through billions of market interactions.

“Therefore, while a central planner can possess the necessary technical knowledge in order to build one million affordable houses, what is impossible to be gathered is the entrepreneurial knowledge about the actual market needs (including the conditions of time and place). This is what makes impossible for the government to know what the market truly needs. It is best to leave the market to the entrepreneurs since they are the players who are continuously engaged with the market process,” said Ferlito in a statement last Friday.

He added that development plans need not only to be implemented but also timely revised because of new information acquired via market interactions.

“A central plan would suffer from rigidity and would lack the necessary interaction with market forces in order to discover if it needs to be revised; this would bring about losses which, in the case of government enterprises, fall on taxpayer’s shoulders.”

The government had previously signalled its intention to conduct an open tender to engage the private sectors in providing affordable homes, which Ferlito believed that this could be a move in the right direction (although not optimal), rather than building houses directly through government-linked companies or ministry agencies.

“I believe there is demand for affordable houses and I also believe that only private entrepreneurs can elaborate sound plans in line with the real market needs. This does not necessarily have to be focused on home ownership, but also toward new rental schemes,” said Ferlito.

He also opined that it is quite an ambitious plan to build one million houses by 2028, considering that the entire private sector was only able to provide an average of 200,000 new launches across all price ranges per year during the best years of the property market.

The MPMMN has agreed to set up the One Million Affordable Homes 2018-2028 Implementation Monitoring Steering Committee chaired by Housing and Local Government Minister. MPMMN also agreed to utilise Wakaf land as part of the solution to build more affordable homes in Malaysia.


Xinhua: China to roll out measures to maintain stable employment

BEIJING, Jan 13 — China will roll out a series of measures to maintain stable employment this year, the official Xinhua news agency reported today, citing the country’s human resources ministry. China is grappling with the impact of a slowing…


Wall St Week Ahead: Slashed profit expectations may set stage for gains

NEW YORK, Jan 13 — There could well be a silver lining in all the caution around the stock market as the earnings season approaches: Shares do way better when profit expectations have fallen, and lately, they’ve been falling like a rock. By at…


Qatar Investment Authority aims to reach US$45b in US investments, says CEO

DOHA, Jan 13 — Qatar Investment Authority aims to raise investments in the United States to US$45 billion (RM184.2 billion) in the next two years as it rebalances its portfolio of assets away from Europe, its chief executive said today. The…


Analysts: Malaysian equity, currency markets to continue uptrend next week

KUALA LUMPUR, Jan 13 — Malaysia’s equity and foreign exchange markets have begun their uptrend, albeit at a slow pace, tracking the positive sentiment, globally, and the trend is likely to continue next week, according to economists. The FBM…