Tuesday, February 19th, 2019


China to expand agriculture reforms to bolster rural economy

BEIJING, Feb 19 — China will deepen reforms of its agriculture sector to promote its rural economy, the government said in its first policy statement of 2019, as it seeks to bolster growth and offset trade challenges. Beijing’s statement,…

US stocks flat ahead of China talks, Fed minutes

NEW YORK, Feb 19 — Wall Street stocks were flat early today, pausing from the early 2019 equity rally ahead of the latest round of US-China trade talks. About 30 minutes into trading, the Dow Jones Industrial Average was at 25,874.92 in the first…

Companies moving out as Brexit looms

PARIS, Feb 19 — As Britain’s March 29 departure from the European Union looms, several major companies have announced they are downsizing their operations in the UK or completely shipping out. A panorama: Industry hit hard Amid Brexit jitters as…

Office sector to remain flat this year: Rahim & Co

KUALA LUMPUR: The office sector, which saw a 20% decline in asking rents last year, is expected to remain flat for more than a year due to pressure from incoming supply, said Rahim & Co International Sdn Bhd.

Director of research Sulaiman Akhmady Mohd Saheh said asking rents fell 20% last year while effective rents fell 8-10%, resulting in yield compression whereby some office buildings are now getting yields of less than 5%.

“There was a big gap in terms of landlords’ expectations compared with what tenants are willing to pay. It is that asking price that has seen the huge drop. But actual market transactions especially for KLCC and established areas, did also see some drop because of vacancy rates – that’s one pressure – and the prolonged rent-free period,” he told reporters at a briefing on the Malaysian property market yesterday.

However, he said the decline will plateau off as tenants weigh the costs of relocating although they will still negotiate for lower rents.

“In terms of market movement, the rental drop is seen more in Grade B1 and Grade A, newer office buildings. But the older, established, better-than-average buildings, rentals for those buildings are actually holding up. It’s an economics of alternative,” he added.

Sulaiman said the office market will take more than a year to pick up due to incoming supply and the global economic situation. At present, there are 18 million sq ft of incoming office space of which 12 million sq ft are being constructed.

Based on historical average take-up rate of office space of 3 million sq ft per year, it would take about three to four years for the market to absorb the 12 million sq ft of incoming supply.

Rahim & Co executive chairman Tan Sri Abdul Rahim Abdul Rahman said the overall property market is expected to remain flat this year as the government continues to implement changes to the property market.

“2019 will also continue to be a buyer’s market as not only is there an abundance of readily available properties but also a wider range of financial aid and schemes that are geared for housing ownership. Though it seems to be getting further out of reach, the dream to own a home is still attainable but a smarter strategy and planning is required in this day and age,” he said.

Sulaiman said the residential market will remain slow for another one to two years due to affordability issues, which means transactions would depend on effective income growth.

However, Abdul Rahim believes it will start to pick up in one year, as the downtrend has already slowed and trade tensions should be resolved by then. “The trade war between the US and China is being negotiated. I’m sure both China and the US want it to be settled and I think it will be settled … I think both China and the US are responsible countries,” he said.

“On the national side, the government has to be given time to settle down and I think by that time, they should settle down. In fact, government has introduced policies and so on, including property policies that are logical. They have just formed the National Housing Policy and if everybody cooperates including developers, GLCs and so on, there’s no reason that these policies shouldn’t work. I think 12 months is a logical period for us to expect the new government to function,” he added.

Warehousing, logistics will keep industrial property sector busy: Expert

KUALA LUMPUR: The industrial sector will continue to perform well this year, driven by increased warehousing activities supported by the e-commerce wave, said Rahim & Co International Sdn Bhd director of estate agency Robert Ang.

“Generally the industrial sector has always been the best performer in terms of yields. If you look at the various sectors, for residential in prime areas, yields have gone down to 3-4%. That’s what we call yield compression over the years.

“If you look at commercial, which is office and retail, you’re looking at 5-6%. Industrial has always been giving the highest yield, you could get as high as 6-7%,” he told reporters at a briefing on the Malaysian property market today.

He said as a manufacturing nation, Malaysia’s gross domestic product has been driven by the manufacturing sector but, lately, this has been on a decline and the slack has been picked up by logistics and warehousing.

“Malaysia has become a regional centre for a lot of MNCs so there’s a lot more activities in the industrial sector at the moment. But we are a country blessed with a lot of good infrastructure. Because of that, a lot of land are available now for such activity. There are several major players coming into the market,” he added.

Ang said with such players coming into logistics, including foreign players like Mapletree and Mitsui, Malaysia could face oversupply of space and facilities in the segment in the coming years.

In terms of hotspots for industrial properties, Ang said the traditional areas would be Shah Alam, which is serviced by a good highway network, and those that are closer to ports while current hotspots include KLIA and Banting, which is serviced by the West Coast Expressway.

Rahim & Co director of research Sulaiman Akhmady Mohd Saheh said the Digital Free Trade Zone, although it has not kicked off in a big way yet, has a lot of potential especially due to its proximity to KLIA. “KLIA’s masterplan for its repositioning exercise is going to give positive impact to the logistics market.”

Executive chairman Tan Sri Abdul Rahim Abdul Rahman (pix) said the property market will remain flat across the board this year, except for warehousing, which has been giving steady returns of 6-7%.

Germany, France push to create industrial ‘European champions’

BERLIN, Feb 19 — Germany and France agreed today on a strategy to create European industrial “champions” and to seek changes in EU competition rules that now prevent blockbuster mergers of homegrown groups. The push for a common industrial…

Wall St set to open lower as US-China trade talks resume

NEW YORK, Feb 19 (Reuters) — US stocks were set to dip at the open today after rallying strongly last week, as investors focused on the latest round of trade talks between the United States and China. Hopes that the two countries will hammer out a…

Estonia shuts Danske Bank branch at heart of money laundering saga

LONDON, Feb 19 — Estonia ordered Danske Bank to close its local branch within months today, as Estonian and Danish regulators faced an EU inquiry into their efforts to prevent one of the largest-ever money laundering scandals. The Baltic state has…

Hibiscus Q2 net profit up fourfold

PETALING JAYA: Hibiscus Petroleum Bhd’s net profit for the second quarter ended Dec 31, 2018 surged over four fold to RM50.11 million from RM11.04 million a year ago mainly thanks to its Anasuria segment.

The group’s revenue doubled to RM165.16 million compared with RM76.06 million in the previous year’s corresponding quarter.

For the six-month period, Hibiscus’ net profit jumped over six times to RM150.11 million from RM21.83 million a year ago, while revenue more than tripled to RM525.11 million from RM134.3 million.

On its prospects, Hibiscus said its immediate focus as a group is the achievement of its 2021 mission.

The delivery of its 2021 mission entails the achievement of an average daily net production of 20,000 bbls of oil per day (bopd); as well as the securing of net proven and probable reserves/entitlement of 100 million bbls of oil.

As joint operator of the Anasuria Cluster and the North Sabah oilfields, Hibiscus said the group continuously focuses on optimising asset performance, but noted that its performance is impacted by external macroeconomic factors.

While all of its activities and acquisitions to-date have been funded with equity and internally generated funds, Hibiscus anticipates that the group will undertake certain fundraising activities in the next six months to ensure that its projects are executed smoothly.

“The group currently has no debt. Therefore, we are in a position to gear up to a conservative level if we need to, based on our forward looking plans. We are currently considering various debt options that are on offer, bearing in mind factors such as long-term capital requirements, benefits to the group to maintain a certain level of agility and financial flexibility, overall weighted average cost of capital, etc. We shall make the relevant disclosures as our plans mature.”

Asia Brands scraps private placement

PETALING JAYA: Asia Brands Bhd (ABB) has aborted its private placement exercise to issue up to 46.53 million new shares, representing up to 20% of its enlarged issued shares.

This is because it had achieved its objective to raise funds from its rights issue exercise for the repayment of the Islamic medium term notes (Tranche 1, Series 3) of RM40 million due on March 18, it told the stock exchange today.

The rights issue exercise, which involves an issuance of up to 116.32 million new shares at an issue price of 35 sen per rights share on the basis of one right share for every one share held, was aimed to raise gross proceeds of between RM30.15 million and RM40.71 million.

ABB said the private placement was proposed to be implemented to facilitate the group to comply with the public shareholding spread requirement under Paragraph 8.02(1) of the Listing Requirements of Bursa Securities in the event ABB’s public shareholding spread falls below 25% following the implementation of the rights issue.

“As the public shareholding spread of ABB after the implementation of the rights issue remains above 25%, ABB has decided not to proceed with the implementation of the private placement,” it added.

Based on an indicative issue price of 50 sen per placement share, the private placement was previously expected to raise gross proceeds of up to RM23.26 million.