Monday, March 25th, 2019

 

France to seal deals with China but will challenge on Belt and Road project

PARIS, March 25 — France and China will sign trade deals worth billions of euros today during a visit by Chinese President Xi Jinping but Paris will also take the opportunity to push back against Beijing’s “Belt and Road” infrastructure…


Bayer, J&J settle US Xarelto litigation for US$775m

NEW YORK, March 25 — Bayer AG and Johnson & Johnson have agreed to settle more than 25,000 US lawsuits over their blockbuster blood thinner Xarelto for a total of US$775 million (RM3.1 billion), court documents today showed. The amount will be…


Wall St falls on global economic slowdown fears

NEW YORK, March 25 — Wall Street’s main indexes fell today, dragged down by declines in high-growth technology shares, as fears of a global slowdown roiled the market for the second straight session. On Friday, weak factory data from the United…


Uber looks to pick up Careem in US$3b deal, say sources

DUBAI, March 25 — Uber Technologies Inc is set to offer over US$3 billion (RM12.2 billion) to buy Dubai-based rival Careem Networks FZ, two sources familiar with the deal told Reuters, in a deal that will strengthen its operations in the Middle…


Monetary policy easing looms as deflationary pressures linger?

PETALING JAYA: As Malaysia fell into deflation territory for the second month amid a slowdown in the economy, this could provide more support for a potential reduction in Bank Negara Malaysia’s (BNM) Overnight Policy Rate (OPR) soon, analysts say.

In a report, AmBank Research said the weak underlying inflationary pressure combined with the risk of a slower economic outlook provides the central bank with a strong case for monetary policy easing.

“The question is whether BNM will move ahead of the curve or otherwise,” it said.

BNM’s next Monetary Policy Committee meeting is scheduled to be held on May 7. The central bank has maintained the OPR at 3.25% since it was last revised upwards by 25 basis points in January 2018.

Last Friday, the Statistics Department announced that the consumer price index (CPI) fell 0.4% in February, compared with a decline of 0.7% in the previous month. Average inflation for the first two months fell 0.6% year on year .

“The economy remained in deflationary region for two consecutive months with headline inflation down 0.4% though core inflation inched up slightly to 0.3%.

Though we expect headline CPI to potentially move into the positive region, partly due to base effects, we believe the underlying inflation remains weak as indicated by the forward looking data,” said AmBank Research.

It expects the inflation number to improve gradually, partly supported by the low base, noting that key macro data that unveils current economic conditions and more importantly forward looking, are still exhibiting signs of weakness.

Meanwhile, Kenanga Research expects headline inflation growth to turn around and normalise, despite the two straight months of deflation, as the high base effect in the transport component subsides and the targeted fuel mechanism is introduced latest in July.

In February, overall consumer prices remained in negative territory due to a significant drop in the transport index, as average retail oil prices remained low.

“Of note, the average Brent crude oil price has recently gained strength on the back of the ongoing Opec’s supply cut. Hence, we foresee that the inflationary trend would gradually normalise in the coming months,” it said in its report.

However, it noted that any upside would be limited largely due to heightened risk on external factors namely cooling global growth arising mainly from growth slowdown in China and the European Union, the US-China trade tension and Brexit.

“Against this backdrop, we believe that inflation would likely hit the lower end of our forecast range of 1-1.5% in 2019. This would provide BNM a bigger leeway to cut its overnight policy rate. However, a rate cut may not be a conclusive solution yet, unless signs of slowing growth sharply deteriorate,” it added.

Kenanga Research expects Malaysia’s gross domestic product (GDP) to grow 4.4% in first-half 2019 and 4.5% in the second half, bringing the whole year’s GDP growth to 4.5%, which it deems decent by regional standards although it is lower than the 4.7% expansion last year.

“In the near term, we do not see the need for BNM to cut its policy rate lest it triggers a bigger capital outflow and sharply devalue the ringgit,” it added.


Asian stocks tumble as global growth fears take hold

HONG KONG: Asian stock markets plunged today after a sharp sell-off on Wall Street last Friday fuelled by concerns about the global economy and a possible recession in the United States.

There appeared to be very little reaction to news that an investigation found no evidence of collusion between US President Donald Trump’s election campaign and Russia, which observers said removed some uncertainty from markets.

After a broad-based rally since the start of the year built on hopes for China-US trade talks and a more dovish Federal Reserve, dealers have been spooked by signs of a worldwide slowdown.

US and European equities went into reverse Friday as the yield on 10-year Treasury bonds fell below those for three-month notes – the first time this had happened since before the global financial crisis in 2007.

This so-called inverted yield curve shows investors are more willing to buy long-term debt – usually considered higher risk – as they consider the short-term outlook more risky.

The yield curve is closely watched since it has inverted prior to recessions in recent decades.

The rush to the 10-year US bond market followed weak manufacturing data out of the US, eurozone giant Germany and France.

That came days after the Fed’s announcement that it was unlikely to lift interest rates this year owing to unease about the US and global economy.

“Realistically, the European data has generally been poor for most of the year anyway, so this in itself isn’t news,“ said OANDA senior market analyst Jeffrey Halley.

“The US data has been middling, but both confirm what everyone already knew, the global economy is slowing down after a 10-year quantitative-easing-induced bull run,“ he added, referring to the massive programme of post-crisis stimulus.

All three main indices on Wall Street ended sharply down Friday, while London and Frankfurt both finished 2% off.

The losses filtered through to Asia this week. Tokyo was hammered 3.0% as the yen, which is considered a safe haven in times of turmoil, held on to Friday’s advance against the dollar.

Hong Kong and Shanghai both closed 2% off, while Sydney shed 1.1%, Singapore dropped 1.4% and Seoul sank 1.9%.

There was also heavy selling in Wellington, Manila, Taipei and Jakarta.

In early European trade London fell 0.5%, Frankfurt lost 0.4% and Paris shed 0.9%.

“Investors should be prepared for a tough week as we close out March and the first quarter,“ warned Neil Wilson, chief market analyst at Markets.com.

“The bond market has been trying to speak for a while now but it’s been shouted down by the equity market rally – until now.”

Today, a survey by the National Association for Business Economics found US economists were growing increasingly concerned about the US outlook, cutting their growth forecasts and warning that the chances of recession were increasing.

On oil markets, the prospect of a global slowdown dug into prices, with both main contracts extending the losses of more than 1% suffered on Friday. The losses sent regional energy firms tumbling, with Hong Kong-listed CNOOC diving 4.1%, while Inpex in Tokyo was 3.8% lower and Sydney-based Woodside Petroleum 2.8% off.


Tokyo’s Nikkei closes down more than 3pc on slowdown fears

TOKYO, March 25 — Tokyo’s benchmark Nikkei index dived more than three per cent today, as fears grow over a global economic slowdown. The Nikkei 225 index lost 3.01 per cent, or 650.23 points, to close at 20,977.11, while the broader Topix index…


George Kent Q4 net profit weighed down by lower engineering contribution

PETALING JAYA: George Kent (Malaysia) Bhd (GKent) saw its net profit in the fourth quarter ended Jan 31 (Q4FY19) plunge 64.8% to RM18.25 million from RM51.85 million in the previous corresponding quarter mainly due to lower contribution from the engineering division.

Revenue for the quarter declined 33.8% to RM114.5 million from RM172.92 million.

GKent’s full year net profit decreased 31.7% to RM84.92 million against RM124.4 million a year ago, while revenue fell 30.2% to RM430.75 million from RM616.99 million previously.

The group has declared a third interim dividend of 3.5 sen per share for FY19, payable on April 30.

Commenting on the group’s performance, chairman Tan Sri Tan Kay Hock said the results for the financial year under review are credible, considering the suspension and deferment of LRT3 as the project is being renegotiated.

“Against this backdrop, the group is committed to delivering on our existing order book and is staying sure and steadfast about implementing its strategic plan to broaden its income base,” he said in a statement.

He said this entails substantial investment of resources into growing its metering and other water-related businesses and investments.

“We are looking to expand our production capacity to cater for demand growth from both the organic and M&A (merger and acquisition) fronts,” he added.

Going forward, the group said its strong order book will provide earnings visibility over the next few years.

The group added that it is on the lookout for opportunities in the regional railway space, leveraging on its expertise as rail systems specialist in domestic railway projects.


OCR, Permaju Industries to develop RM1 billion project in Kota Kinabalu

PETALING JAYA: OCR Group Bhd and Permaju Industries Bhd’s 70%-owned subsidiary Hardie Development Sdn Bhd will jointly develop a RM1 billion project in Kota Kinabalu, Sabah.

In a filing with Bursa Malaysia, OCR said its wholly owned subsidiary O&C Construction Sdn Bhd signed a memorandum of under-standing (MoU) with Hardie Development for the Princess Heights Project.

The project is located on 44.28ha of land belonging to Hardie Development.

O&C Construction and Hardie Development intend to jointly develop Stage 2 and Stage 3 of the Princess Heights Project on a 50:50 profit sharing basis.

Stage 2 of the project comprises Phase 1E (four-storey hypermarket) and Phase 1F (80 units of three-storey terraced shop/offices).

Meanwhile, Stage 3 of the project has been allocated for future development of commercial and residential properties, including e-commerce and lifestyle hub.

The gross development value of the project, excluding Phase 1E, is estimated at RM1 billion.

Upon completion of Phase 1E of the project, it will be leased to MYDIN Mohamed Holdings Bhd for a period of 20 years for the establishment and operation of its hypermarket and retail business. The total collectable rental is estimated at RM433 million.

Permaju Industries executive director Yvonne Chai Woon Yun the MoU is part of the group’s overall strategy to diversify into the property development.

“The Princess Heights project, will capitalise on the opportunities and benefits arising from the growth potential of Sabah’s property market. Going forward, we believe this project will further contribute to the company’s future earnings and improve its financial performance.”


Scomi bags jobs worth US$150m from Kuwait Oil

PETALING JAYA: Scomi Energy Services Bhd has been awarded contracts worth a total of US$150 million (about RM610 million) by Kuwait Oil Company (KOC).

In a filing with Bursa Malaysia, Scomi Energy said its wholly owned subsidiary Scomi Oiltools Sdn Bhd entered into two contracts for the provision of mud products and mud engineering services.

The two contracts, dated Jan 31 and Feb 4, are for deep drilling and development drilling respectively.

The contracts are for a period of five years and are expected to contribute positively to the company’s earnings over the period.