Thursday, February 7th, 2019


Fresh fraud allegations buffet Wirecard

FRANKFURT AM MAIN, Feb 7 — Shares in German payments processing group Wirecard plunged for the third time in little more than a week today, as the Financial Times alleged senior executives knew of accounting fraud. Stock in the star “fintech”…

France splits from Germany over Nord Stream 2 pipeline

PARIS, Feb 7 — France said today it will support EU oversight of new offshore energy pipelines in a move that could cripple a controversial new link between Russia and Germany. The move puts Paris at odds with Berlin which has championed the…

Tech leads Wall St lower as global growth worries resurface

NEW YORK, Feb 7 — US stocks fell today weighed down by the technology sector, as fears of a global slowdown were rekindled after the European Union cut its economic growth forecasts, while a slew of dismal quarterly reports also added to woes. The…

US banks BB&T and SunTrust announce US$66b merger

WASHINGTON, Feb 7 — BB&T and SunTrust announced today they are to merge in a US$66 billion deal that will create the sixth largest bank in the United States. The companies said in a statement that both boards had approved the all-stock tie-up,…

European stocks sink fast as Wall Street falters

LONDON, Feb 7 — Losses in eurozone stock markets accelerated today as a pessimistic economic growth outlook dampened sentiment and US markets opened firmly in the red. “Yet more bad news reinforces the impression that the eurozone is headed…

Limited rent increase for residential ‘hot spots’ this year: Speedrent CEO

PETALING JAYA: Landlords in “hot spots” are advised to retain their original tenant and average rent this year in order to reduce potential losses, according to home rental platform Speedrent.

“I believe that whether it is sale or rental of the residential industry, the market for buying or renting a house, if the location of the property bought by the owner is not so strategic, in order to reduce losses, the owner has to consider lowering the rent,” its CEO Wong Whei Meng (pix) said in a statement today.

Wong stressed that the monthly rent of a non-landed residential unit, if it is located in a low demand area, should not exceed RM1,200, while it should not exceed RM1,800 for landed property.

“As for hot spots, this year’s rent increase is limited. So it’s advised that you retain your original tenant and average rent according to the rental market. Rental benchmarks are easily found on major rental platforms,” he noted.

According to Speedrent, the sales performance of the residential market has been sluggish in the past year and the performance of the rental market has been mixed.

In 2018, Wong said, Speedrent compiled up to 150,000 worth of search data and listed out the top five and top worst rental inquiries, adding that it has up to 38,000 unique website visitors and more than 150,000 search inquiries.

He said the results reveal that the most popular areas searched by tenants are Damansara Damai, Ara Damansara, USJ, Ampang and Puchong.

He said the areas where tenants have high inquiries have some common points, mainly, close to office buildings, good traffic connectivity, rent in line with market prices and improved living functions.

“Close to Petaling, Damansara Damai has become the area with the highest demand for the platform. Compared with the rent of apartments in Petaling, the rent is 20% to 30% cheaper.

“According to the data, tenants are less likely to inquire about Bangi, Semenyih, Serdang and Puncak Alam. Most of the areas searched are more remote and in the southern part of Klang Valley,” Wong added.

Speedrent connects landlords and tenants directly. With more than 30,000 properties across Malaysia, it aims to improve the rental process with a ‘No Deposit’ scheme for tenants and RM26,000 property insurance provided by Allianz for landlords.

Rising commodity prices boost ringgit’s performance

PETALING JAYA: The ringgit extended its gains today, strengthening to a six-month high of 4.0710 against the US dollar on the first trading day in the Year of the Boar after the Chinese New Year break.

Data from Bloomberg showed the ringgit traded in a day range of 4.0710 to 4.1025. According to Bank Negara Malaysia, the ringgit opened at a middle rate of 4.0995 and closed at 4.0725 today.

Last week, the greenback weakened as much as 0.5% to 4.0870 as crude prices extended gains and signals of a prolonged pause in further tightening from the US Federal Reserve.

FXTM global head of currency strategy and market research Jameel Ahmad said the ringgit, which was also stronger against its Asian peers today, appears to be supported by rising commodity prices, with Brent crude oil futures surging more than 1% overnight.

“In addition, foreign fund inflows into Malaysian equities also serve as a boost for the ringgit, with the foreign buying still evident after domestic markets reopened following the Chinese New Year break,” he told SunBiz.

Year to date, the ringgit has gained 1.5% against the US dollar.

Jameel said the dovish tone recently communicated by the US Federal Reserve hints at limited gains for the US dollar, which may help bolster emerging market currencies and the ringgit may continue its climb should commodity prices continue at current trajectories.

“The ringgit is also finding support from Malaysia’s strong domestic fundamentals, given expectations for respectable growth, subdued inflation and resilient domestic consumption.

“From a technical perspective, should USD/MYR remain below its 300-day moving average of 4.082 for a sustained period, this could open a path to 4.050 – a level not seen since July 2018,” he added.

However, Jameel noted that risk appetite remains exposed to global risks, such as moderating global growth as well as ongoing US-China trade tensions, and until investors see signs of positive resolutions, these factors may still weigh on the ringgit moving forward.

“We note that the month of March holds deadlines for Brexit and the end of the 90-day truce window on US-China trade tariffs. Hence, the coming weeks may yield key events or developments that could significantly sway global risk sentiment and fund flows into riskier assets,” he said.

OANDA senior market analyst Jeffrey Halley, however, opined that the ringgit’s gain today was reactive and speculative with an expectation that the momentum may wane quickly.

“The nature of the price action, i.e. it fell a long way in a compressed time, suggests the move is reactive and speculative. As such I would expect momentum to wane rather quickly with a strong possibility that USD/MYR will make back quite a bit of that loss.

“Attention will increasingly turn to the US-China trade talks resuming next week and the impending, or not, US government shutdown part two that is scheduled for Friday (Feb 15). These external drivers will set the tone for EM (emerging markets) in the medium term,” he explained.

Halley said the Lunar New Year holidays are definitely affecting trading levels across the region and expects USD/MYR volumes to remain subdued this week.

“Geopolitical factors aside, the rapid dovish turns by world central banks (India cut today), should be supportive of EM in general. I would expect the USD/MYR to drift lower towards the 4.0700 region over the coming week,” he added.

Meanwhile, Bursa Malaysia closed 9.78 points or 0.58% higher at 1,693.39 today, driven mainly by buying interest in heavyweight counters such as MISC, Tenaga Nasional and Genting. The FBM KLCI traded within a range of 7.82 points, between an intra-day high of 1693.48 and a low of 1685.66. Market breadth was positive with winners beating losers 443 to 261.

MRO players to gain from rising O&G activities

PETALING JAYA: More of Malaysia’s oil and gas services and equipment (OGSE) companies are expected to set their sights on the downstream sector mainly in the maintenance, repair and overhaul (MRO) segment with the completion of Petronas’ Pengerang Integrated Complex (PIC) in southern Johor said Malaysia Petroleum Resources Corp (MPRC).

According to its “Top 100 OGSE Companies in Malaysia FY2017” report, while volatility of the oil price is expected to persist in 2019 global oil and gas development activities are expected to increase in the coming years, with operators aiming to move forward to develop new offshore fields, particularly those located in deep waters.

“This development brings about significant opportunities for OGSE companies, in particular subsea, drilling, and MRO players,” it said.

On the domestic front, MPRC noted that activities are projected to pick up in 2019, as seen in the Petronas Activity Outlook Report for 2019-2021.

It also highlighted that Malaysia has a considerable number of assets that have been operating beyond 40 years representing growth opportunities for OGSE players in the year ahead.

Meanwhile, local OGSE companies were urged to be more diversified to remain competitive given signs of greater market volatility this year.

While oil prices have risen since the beginning of the year, concerns about a supply glut and weakness in the global economy will keep prices on a tight leash, as evident from the general cautiousness of global oil companies and their continuous push for cost efficiencies.

“Even as the industry is seeing a gradual recovery in activities, the oil price uncertainty is a clear reminder to OGSE players to stay focused and become more competitive,” noted MPRC deputy CEO Mohd Yazid Ja’afar.

“Companies that turn to innovation, hone niche technologies to gain economic advantages, employ and retain skilled talent, and embrace diversification in particular to the downstream segment are in a better position to undertake new growth ventures in Malaysia and beyond,” he added.

The companies’ ability to navigate the uncertainties is also reflected in the latest MPRC100, a list of Top 100 OGES companies in Malaysia that are ranked based on their annual revenues. MISC Bhd topped the FY2017 ranking, followed by Sapura Energy Bhd and Dialog Group Bhd.

The list also saw several rank climbers compared to the previous edition, including Nam Cheong Dockyard Sdn Bhd ranked 29 (up from 55th spot in FY16), Yokogawa Kontrol (Malaysia) Sdn Bhd at 31 (from 57) and T7 Global Bhd at 47 (from 98), among others. Joining the FY2017 top100 ranking for the first time include Chiyoda Malaysia Sdn Bhd, Ice Petroleum Engineering Sdn Bhd, and Helios Petroleum Sdn Bhd, due to higher turnover.

“The annual MPRC100 initiative is part of MPRC’s commitment to advance information transparency in the OGSE sector,” Yazid said, adding that the list also allows for OGSE companies to gain clarity on their performance against their industry peers.

Overall, the Malaysian OGSE sector recorded a total of RM68.1 billion in revenue for FY17 against FY16’s RM68.8 billion, a marginal drop of 1.1%.

Profit before tax fell 48.1% to RM9.4 million from RM18.1 million, largely due to asset impairment charges undertaken by asset-heavy companies.

The FY2017 findings also demonstrated that Malaysian OGSE companies fared better than their regional counterparts in the back of ongoing domestic activities in the upstream and downstream segments.

In a 2017 comparison with the top 20 OGSE companies in Southeast Asia, Malaysian OGSE firms registered an average revenue growth of 12% while other regional players showed an average revenue decline of 14%.

Moving forward, MPRC said it will continue to work with all relevant government agencies and stakeholders, Petronas, industry trade associations and OGSE firms to spearhead economic growth and nurture long-term resilience among Malaysian OGSE players.

Tropicana aborts deal to sell Johor land for RM570m

PETALING JAYA: Tropicana Corp Bhd has called off its proposed disposal of 251.59 acres freehold land in Gelang Patah, Johor, for RM569.87 million.

In a filing with Bursa Malaysia today, the property developer said the sale and purchase agreement (SPA) has lapsed on Feb 1 and shall be rendered null and void.

The group said the conditions precedent (CP) have not been fulfilled on Feb 1. Therefore it said the parties have mutually agreed not to extend the first extended CP period and accordingly the timeframe to fulfil such conditions have lapsed.

However, Tropicana said the expiry of the SPA is not expected to have material financial impact on the earnings per share and net assets per share of the company for the financial year ending Dec 31.

The agreement was inked in July 2016 by the group’s unit Tropicana Desa Mentari Sdn Bhd with Tiarn Oversea Group Sdn Bhd, in which Tropicana expected to realise a gain on disposal of about RM55.5 million.

Tiarn intended to undertake a two-phase development on the land, with Phase 1 comprising 60 acres and the remainder 191.6 acres constituting the second phase.

The land disposal was expected to complete in the second half of 2022.

Tropicana’s share price was down 1.14% or one sen today to 87 sen with 27,000 shares changing hands.

MARC affirms rating on ANIH’s RM2.5b sukuk

PETALING JAYA: Malaysian Rating Corp Bhd (MARC) has affirmed its “AA” rating on ANIH Bhd’s RM2.5 billion Senior Sukuk Musharakah Programme with an outlook revision to “stable” from “negative” previously.

ANIH is the concessionaire of Kuala Lumpur-Karak Highway (KL-Karak) and Phase 1 of East Coast Expressway (ECE1) until 2032. Its toll concession for Kuala Lumpur-Seremban Expressway (KL-Seremban) ended on May 31, 2018.

MARC said in a statement today that the outlook revision to “stable” reflects the steady traffic growth on KL-Karak and ECE1 that would remain supportive of the company’s cash flow generation to meet the concessionaire’s finance service obligations.

The rating agency anticipates that ANIH will be in a better position than other similar toll concessionaires to weather any shifts in the prevailing regulatory environment for the domestic toll industry in the intermediate term.

“While the government recently announced compensation in lieu of deferred toll hikes in 2019, MARC views this as an interim measure,” it said.

It expects ANIH would continue to demonstrate a commendable liquidity profile by maintaining healthy cash balance levels. The rating also benefits from the subordinated and equity-like features of ANIH’s RM620 million junior bonds that allow it to withstand moderate operational underperformance.

However, MARC pointed out that the expiry of the KL-Seremban concession in May 2018 has had some impact on ANIH’s cash flows given that the toll contribution from this highway had averaged 10.4% of total tolling revenue for the past five years.

ANIH’s toll revenue rose 2.6% y-o-y to RM431.8 million for the financial year ended March 31, 2018 (FY2018) in line with overall traffic volume growth. However, due to the realisation of lower government compensation amounting to RM33.1 million vis-à-vis RM45.8 million in FY2017, overall revenue was lower.

For the first eight months of the financial year ending March 31, 2019, ANIH’s toll revenue declined 11.7% to RM294.2 million attributed to revenue losses arising from the expiry of the KL-Seremban concession.

The rating agency estimates that the revenue growth on KL-Karak Highway and ECE1 would make up for the lost revenue over the medium term.

Meanwhile, MARC said ANIH’s borrowings have reduced during the year, aided by debt repayment amounting to RM100 million in November 2018.