Wednesday, January 23rd, 2019

 

Malaysia may feel bite of China economic slowdown

PETALING JAYA: The slowdown in China may impact Malaysia more given the strong trade linkage with China, according to PublicInvest Research.

“China is not only our biggest trade partner in 2018 (YTD 2018: 16.7%) but also our largest export market (YTD 2018: 13.9%) and our second biggest import source after Singapore (YTD 2018:19.8%). This could bring negative ramifications not only to Malaysia but also to other peers like Singapore, Thailand, Indonesia and the Philippines and hence, the growth prospects of Asean-5,“ the research house said in a report today.

In fact, it said, the simmering trade stress has caused noticeable dent to export momentum in November with Singapore, Thailand and Indonesia suffering a contraction in exports. This could be repeated in December.

PublicInvest Research said unfavourable outcomes to the trade negotiation may see longer times taken for growth to normalise due to demand deficiencies which are always more damaging than supply shocks.

“Other than this, the pullback in global financial and commodity markets arising from pockets of stress mentioned above can hurt Malaysia as well due to contagion effects. This can bring down the ringgit in addition to putting a cap in the prices of our key commodity exports like crude oil, crude palm oil and rubber,“ it explained.

The slowdown in China is particularly alarming and shows signs of worsening following the release of its 2018 growth of 6.6% (2017: 6.8%), the slowest since 1990.

“We don’t see negative surprises in this as it is within the People’s Bank of China’s estimates,“ it said, adding that the International Monetary Fund (IMF) expects China’s slowdown to continue, forecast to ease to 6.2% in 2019 amid firmed commitment to reforms and rebalancing on the back of the trade collision with the US.

PublicInvest Research said the slew of IMF downgrades could result in negative ramifications not only to global financial markets but also commodities. Risk aversion could heighten, pushing investors to take less risks which may be precursor to elevating demand for safe haven assets particularly bonds.

“Among all the growth risks mentioned by IMF, we are particularly concerned over China given its extensive trade network and huge economy.”

PublicInvest Research said unfavourable trade negotiations could be harmful not only to China’s outlook but also emerging economies, particularly Asean, given their strong interdependence on trade. This could lead to inexorable downturns to Asean economies, particularly those that depend on China’s exports (intermediate goods).

“Over and above all, we think that China still has sufficient tools to support growth should trade negotiations turn unfavourable although the impact could still be there.”


FOX files US$46.4m counterclaim against Genting Malaysia

PETALING JAYA: The legal dispute between Genting Malaysia Bhd (GENM) and Fox Entertainment Group LLC, Twentieth Century Fox Film Corp and FoxNext LLC (collectively known as FOX) intensified as FOX filed a counterclaim seeking US$46.4 million (RM191.7 million) from GENM.

GENM told the Malaysian stock exchange today that FOX and The Walt Disney Company on Jan 22 filed answers to its lawsuit, but at the same time filed a counterclaim alleging breach of the implied covenant of good faith and fair dealing.

In addition to that, FOX is claiming a sum of RM191.7 million in respect of annual licence fees, guarantee amounts/royalties and travel reimbursements pursuant to the memorandum of agreement (MoA) dated June 1, 2013, as amended, as well as consequential damages, reasonable costs and other relief under applicable law.

The counterclaim was filed at the United States District Court, Central District of California, which is also the same court in which GENM had filed its lawsuit.

“GENM is in the process of reviewing the above with its legal counsel and intends to file a timely response. GENM will make any necessary announcements in relation to the above matter when appropriate or once there is further material development,” it said.

To recap, GENM is suing FOX and The Walt Disney Company for more than US$1 billion (RM4.13 billion) for terminating their contract to develop a Fox-branded theme park at Resorts World Genting in Malaysia.

The Fox theme park is a key selling point of the Malaysian casino resort group’s multi-billion-ringgit Genting Integrated Tourism Plan.

The MoA was amended on June 10, 2014 and June 9, 2017. Genting Malaysia was granted a licence to use certain intellectual property rights associated with Fox theatrical motion pictures in connection with the design, development, construction and operation of what was to be called the Twentieth-Century Fox World Theme Park.

On Bursa Malaysia today, GENM ended down 2 sen or 0.61% to RM3.26 on volume of 12.4 million shares.


Malaysia’s GDP growth likely to return to 4.6-5.0% range in 2020: UBS economist

KUALA LUMPUR: Malaysia’s real gross domestic product (GDP) growth is likely to return to the 4.6-5% trend range in 2020 as economic drag diminishes, said UBS Investment Bank economist Edward Teather.

He said the impact of the trade war and the government’s institutional reforms should go from drags on growth to net positive contributions to the country’s economy this year.

“Pakatan Harapan’s institutional reforms and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) membership would improve prospects in 2020.

“Malaysia is also a key potential beneficiary of the CPTPP trade deal,” he said during a conference call on global and Asian 2019 outlook today.


chinaslowdown

PETALING JAYA: The slowdown in China may impact Malaysia more given the strong trade linkage with China, according to PublicInvest Research.

“China is not only our biggest trade partner in 2018 (YTD 2018: 16.7%) but also our largest export market (YTD 2018: 13.9%) and our second biggest import source after Singapore (YTD 2018:19.8%). This could bring negative ramifications not only to Malaysia but also to other peers like Singapore, Thailand, Indonesia and the Philippines and hence, the growth prospects of Asean-5,“ the research house said in a report today.

In fact, it said, the simmering trade stress has caused noticeable dent to export momentum in November with Singapore, Thailand and Indonesia suffering a contraction in exports. This could be repeated in December.

PublicInvest Research said unfavourable outcomes to the trade negotiation may see longer times taken for growth to normalise due to demand deficiencies which are always more damaging than supply shocks.

“Other than this, the pullback in global financial and commodity markets arising from pockets of stress mentioned above can hurt Malaysia as well due to contagion effects. This can bring down the ringgit in addition to putting a cap in the prices of our key commodity exports like crude oil, crude palm oil and rubber,“ it explained.

The slowdown in China is particularly alarming and shows signs of worsening following the release of its 2018 growth of 6.6% (2017: 6.8%), the slowest since 1990.

“We don’t see negative surprises in this as it is within the People’s Bank of China’s estimates,“ it said, adding that the International Monetary Fund (IMF) expects China’s slowdown to continue, forecast to ease to 6.2% in 2019 amid firmed commitment to reforms and rebalancing on the back of the trade collision with the US.

PublicInvest Research said the slew of IMF downgrades could result in negative ramifications not only to global financial markets but also commodities. Risk aversion could heighten, pushing investors to take less risks which may be precursor to elevating demand for safe haven assets particularly bonds.

“Among all the growth risks mentioned by IMF, we are particularly concerned over China given its extensive trade network and huge economy.”

PublicInvest Research said unfavourable trade negotiations could be harmful not only to China’s outlook but also emerging economies, particularly Asean, given their strong interdependence on trade. This could lead to inexorable downturns to Asean economies, particularly those that depend on China’s exports (intermediate goods).

“Over and above all, we think that China still has sufficient tools to support growth should trade negotiations turn unfavourable although the impact could still be there.”


AirAsia, AirAsia X in RM400m counterclaim against MAHB

PETALING JAYA: AirAsia Group Bhd and its affiliate AirAsia X Bhd are seeking over RM400 million in counterclaims against Malaysia Airport Holdings Bhd (MAHB) in relation to the suit filed against them over the passenger service charges (PSC) collection.

AirAsia and AirAsia X told Bursa Malaysia that they had filed a statement of defence against Malaysia Airports (Sepang) Sdn Bhd (MASSB), a wholly-owned subsidiary of Malaysia Airport Holdings Bhd (MAHB).

“In the statement of defence, AirAsia Bhd (AAB) contended, amongst others, that the claim by MASSB is misconceived, invalid and/or premature as MASSB has not complied with and/or availed itself of the statutory provisions for dispute resolution within the Malaysian Aviation Commission Act 2015 (Mavcom Act). Accordingly, AAB has filed an application to strike out the suit on the above grounds,“ said AirAsia.

“Further, AAB together with its affiliate AirAsia X Bhd (AAX), will be availing themselves of the statutory provisions for dispute resolution within the Mavcom Act to seek more than RM400 million in counter-claims against MASSB and/or MAHB for losses and damages experienced by AAB and AAX due to operational disruptions at klia2,” it added.

Last month, AirAsia was being sued for refusing to collect the additional RM23 PSC per passenger at klia2.

AAB was served with an unsealed copy of a writ of summons in the sum of RM9.4 million by MASSB pertaining to PSC that AAB has not collected and refuses to collect from traveling passengers. Meanwhile, AAX was served with an unsealed copy of a writ of summons in the sum of RM26.7 million for alleged PSC arrears.

AirAsia today closed up 1.33% to RM3.05 with 5.17 million shares done; while AAX closed 1.72% lower at 28.5 sen with 12.17 million shares traded. MAHB was up 0.25% at RM8.12 with 3.33 million shares changing hands.


Perodua aims to increase sales by 4% to 230,000 units this year

KUALA LUMPUR: Perusahaan Otomobil Kedua Sdn Bhd (Perodua), which recorded its best-ever sales performance of 227,243 units in 2018, aims to better that figure by 4% to 231,000 units by end-2019, underpinned by the Myvi and the recent introduction of the Aruz.

The Myvi was Perodua’s best-selling model in 2018, with 82,122 registered out of 117,844 booked in that year alone. From its November 2017 launch to date, the Myvi’s numbers have exceeded 91,500 registrations and 147,000 bookings.

The Axia, Bezza and Alza are still at the top of their respective segments with 70,821, 49,911 and 24,389 units sold respectively in 2018.

“Perodua’s aim to boost its sales by 4% this year will not only strengthen the brand but offer some relief to the Malaysian car industry, which is forecast to grow very minimally this year,” Perodua president and CEO Datuk Zainal Abidin Ahmad said in a statement.

The Malaysian Automotive Association expects an incremental 0.21% total industry volume (TIV) growth to 600,000 units this year from 598,714 units last year.

“For Perodua, the Myvi is expected to remain popular this year, and since we started order-taking for the Aruz on Jan 3, we have collected nearly 5,700 bookings to date. Given that our sales target is 2,500 units monthly, the figure is very encouraging indeed,” said Zainal.

Perodua also expects to increase its component purchases by 20% from RM5 billion last year to RM6 billion this year. This is in line with the demand expected in 2019 and will directly benefit local automotive suppliers.


F&N allocates RM30m as capex for FY19

KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N) has allocated RM30 million as capital expenditure (capex) for the 2019 financial year (FY19).

In a filing with the stock exchange, the group said the investment will also go into new production lines and add-ons to expand the capacity and capability of existing lines to facilitate its extension into new offerings and packaging formats.

“These latest initiatives complements F&N’s continuous drive to improve its efficiency, expand its capacity and capability while leveraging the latest technology to meet consumers’ evolving demand,” it noted.

On another note, F&N CEO Lim Yew Hoe said the group supports the authorities move to promote the health and wellbeing of Malaysians through the introduction of the sugar sweetened beverages excise tax.

The group will focus on bringing the sugar content for most of its products to be below 5%.

“We are prioritising our efforts by focusing on product categories according to the significance of impact to our group. Hence, we are investing RM30 million this year at our beverage plant this year to ramp up our capability in new product offerings and packaging formats,” he added.


‘GDP growth to return to 4.6-5.0% in 2020’

KUALA LUMPUR: Malaysia’s real gross domestic product (GDP) growth is likely to return to the 4.6-5% trend range in 2020 as economic drag diminishes, said UBS Investment Bank economist Edward Teather.

He said the impact of the trade war and the government’s institutional reforms should go from drags on growth to net positive contributions to the country’s economy this year.

“Pakatan Harapan’s institutional reforms and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) membership would improve prospects in 2020.

“Malaysia is also a key potential beneficiary of the CPTPP trade deal,” he said during a conference call on global and Asian 2019 outlook today.


Tesco finance director fraud case dropped

LONDON, Jan 23 — Tesco’s former UK finance director was cleared today over a fraud and false accounting scandal at Britain’s biggest retailer after the case against him was dropped. The acquittal of Carl Rogberg means neither the world’s…