Tuesday, April 2nd, 2019

 

Businesses remain cautious in 2019

KUALA LUMPUR: As business conditions deteriorated in the second half of 2018 (2H18), the Malaysian Chinese business community turned cautious about the economic outlook in the first half of 2019 (1H19), but they expect conditions to likely improve in 2H19 relative to 1H19.

According to the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) Malaysia’s Business and Economic Conditions Survey Report for 2H18 and 1H19 forecast released today, 48% of respondents indicated that business conditions have deteriorated in 2H18. About 32.5% of respondents reported “satisfactory” business performance while 19.5% have expanded their business.

Faced with the softening of global growth, still considerable external headwinds amid weak domestic sentiment, businesses in Malaysia are generally cautious about the economic outlook in 1H19 with 50.2% of respondents being “neutral” and 37.5% pessimistic. Only 12.3% of total respondents were optimistic.

ACCCIM president Tan Sri Ter Leong Yap (pix) said on balance, businesses are of the view that the Malaysian economy would remain challenging in 2019 as there are higher percentage of respondents (32.6%) who are “pessimistic” relative to being “optimistic” (15.3%).

Businesses’ guardedness about economic conditions will likely to improve in 2H19 as lower percentage of respondents (29.6% in 2H19 vs 37.5% in 1H19) have pessimistic views while those with optimistic views improved to 17.8% from 12.3% in 1H19.

“The respondents are cautiously optimistic about the economy in 2020 (25.7% vs 15.3% in 2019) probably premised on a more stable domestic policy landscape as well as the expected improvement of the federal government’s fiscal balance sheet in 2020 after rationalisation and debt consolidation,” Ter said at the ACCCIM press conference today.

Of notable observation is that cash flows conditions are expected to remain tight as indicated by 46.3% of respondents in 1H19 (41.3% in 2H18) while the number of respondents indicated satisfactory dropped to 46.6% from 50% in 2H18. A higher percentage of businesses (44.6%) expect debtors’ conditions to worsen in 1H19 from 38.2% in 2H18.

By sector, manufacturing showed improvement in business prospects in 2H19 with a higher percentage of respondents (72.4%) indicating between neutral and optimistic outlook compared to 59.4% in 1H19.

The construction sector recorded the highest percentage of respondents (44.3% in 1H19 and 40.5% in 2H19) with pessimistic views about business conditions, inflicted largely by the review of several mega projects as well as the consolidation of residential and non-residential projects.

“The top five factors cited by companies influencing their business operations and domestic business conditions are competitive pressures in the domestic market; lower domestic demand; government policies; increase in prices of raw materials; and ringgit fluctuations,” said Ter.


Business conditions remain tough in near term: Analyst

PETALING JAYA: Malaysia’s business conditions are expected to remain tough in the near term as both output and new orders are still weak based on anecdotal evidence, according to AmBank Research.

The Nikkei Manufacturing Purchasing Managers’ Index (PMI) deteriorated to a three-month low in March at 47.2, down from 49.6 in February.

It turned out to be the lowest since December 2018’s reading of 46.8 and is the sixth straight month of contraction since October 2018.

“It clearly showed that member companies under the PMI are struggling to lift their production owing to harsher demand conditions, especially those depending on the export market,” AmBank Research chief economist Dr Anthony Dass said in a note today.

“Besides, manufacturers are being cautious on the inventory levels, with both pre- and post-production stocks falling. Although holdings of finished items depleted as firms stepped up efforts to ship orders in a timely fashion, buying remained low,” he said.

Dass said the research house found that Malaysia’s business conditions contradicted that of Asean neighbours like Vietnam and Myanmar where their business environment improved for the first time in 2019.

The Nikkei Asean Manufacturing PMI rose to 50.3 in March as manufacturers expanded their output on the back of a slight rebound in new orders.


EU hits Britain over illegal tax break to multinationals

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Pound drops as Brexit impasse drags

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Matrade eyes up to RM600m potential sales from INSP

KUALA LUMPUR: The Malaysia External Trade Development Corporation (Matrade) expects up to RM600 million in potential sales to be generated from the International Sourcing Programme (INSP) this year from RM602.45 million recorded in 2018.

Deputy CEO Mohd Mustafa Abdul Aziz said this year, the INSP would focus on local SMEs in the halal industry.

“The local companies at the INSP come from states such as Selangor, Johor, Penang and Perak, as well as Kuala Lumpur, while among the countries involved are China, India, Saudi Arabia, Japan, Indonesia, South Korea, Thailand and Singapore, just to name a few.

“Matrade will be coordinating around 1,928 business meetings between the local and foreign companies,” he said today.

Organised in conjunction with the 16th Malaysia International Halal Showcase (MIHAS) 2019, the one-day INSP which took place today will match more than 500 Malaysian companies with 200 foreign buyers from 43 countries.

Mohd Mustafa said the global business matching helps SMEs introduce their halal products or services to high-potential buyers scouted through Matrade’s 46 global trade offices extensive buyers database.

He said that the business matching provides opportunities for local companies to meet high-potential foreign buyers at home, saving them travelling costs.

“The INSP is a very effective platform for Malaysian companies, especially small and medium enterprises, to meet global buyers.

“Since the inception of MIHAS, we have successfully turned this annual gathering of Malaysian sellers and foreign buyers into an important meeting point for them to expand their business horizon in the global arena,” he said.

Mohd Mustafa said the food and beverage sector contributed the largest amount to the RM602.45 million sales generated by last year’s INSP.

The top export destinations from the 2018 INSP were China (RM310.46 million in sales), India (RM75.61 million), Poland (RM71.34 million), Thailand (RM21.70 million) and the United States (RM20.13 million).


Global tensions to force trade slowdown in 2019, says WTO

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PetChem executes first phase loan repayment

PETALING JAYA: Petronas Chemicals Group Bhd’s (PetChem) wholly owned unit Pengerang Petrochemical Company Sdn Bhd (PPC) has executed the first phase of project financing for repayment of a bridge loan agreement of US$1 billion (RM4.08 billion) from external lenders.

In a Bursa Malaysia filing, the group said PPC has procured the first phase of the project financing amounting to US$400 million from various Export Credit Agencies (ECAs) and commercial banks.

The financing document for the US$200 million was executed on April 1 and the subsequent financing document for the remaining US$200 million is expected to be executed by end of this month.

PetChem said the remaining financing of US$600 million under phase 2 is expected to be executed by June, bringing the total project financing amount to US$1 billion with a tenure of 15.5 years.

PetChem said the ECAs and commercial banks have requested Petronas and Saudi Aramco, being the holding companies of PCG and Aramco Overseas Company BV (AOC) respectively, to provide completion guarantees on several and not joint basis, as security. PetChem and AOC are the shareholders of PPC with each owning 50% of the share capital.

“In view of the corporate guarantee provided by Petronas, PCG has entered into a back-to-back guarantee arrangement through a binding letter of undertaking issued to Petronas. PetChem is also required to provide share charge over its shares in PPC as part of common security feature for the project financing throughout the tenure of the financing,” it added.


Persistent buying lifts Bursa Malaysia at the close

KUALA LUMPUR: Persistent buying in selected heavyweights, spurred by data showing a rebound in China’s manufacturing sector, lifted Bursa Malaysia at Tuesday’s close.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) ended at 1,632.83, up 4.17 points from yesterday’s close of 1,628.66.

The index opened 5.17 points higher at 1,633.83 and moved between 1,630.98 and 1,639.32 throughout the day.

Market breadth was positive with gainers outnumbering decliners 433 to 363, while 444 counters remained unchanged, 616 were untraded and 29 others were suspended.

Volume increased to 2.76 billion units worth RM1.97 billion from 2.63 billion units also worth RM1.97 billion.

A dealer said the local bourse erased yesterday’s losses following the encouraging data that showed China’s manufacturing activity had returned to growth after three months of contraction.

“In fact, purchasing managers’ indices across Asia are showing improved numbers. This, coupled with the uptrend in the US stock market and higher crude oil prices, also influenced the (stock) markets,” he said.

Among others, the finance-related counters received strong buying interests today, pushing up the index.

Public Bank jumped 22 sen to RM22.70, CIMB gained four sen to RM5.12, Hong Leong increased eight sen to RM20.60 and Maybank added five sen to RM9.25. They contributed 3.41 points to the composite index.

The higher crude oil price, which is trading at US$69.42 per barrel (up by 0.59%), also provided support to the oil and gas-linked companies on the exchange.

As for other heavyweights, PetChem fell two sen to RM9.10, Tenaga shed four sen to RM12.58 and IHH lost 1.5 sen to RM5.42, but Maxis was 16 sen higher at RM5.53.

Among actives, Sapura Energy and Hibiscus Petroleum rose one sen each to 35.3 sen and RM1.10, respectively, while Perdana Petroleum added 1.5 sen to 28.5 sen and Dynaciate inched up half-a-sen to nine sen.

The FBM Emas Index rose 30.64 points to 11,511.04, the FBM Emas Shariah Index added 5.92 points to 11,678.86, and FBMT 100 increased 29.68 points to 11,357.98.

The FBM Ace Index grew 13.17 points to 4,837.11 and the FBM 70 was 39.88 points higher at 14,254.75.

Sector-wise, the Industrial Products and Services Index was 0.14 point weaker at 168.61, the Plantation Index was 6.10 points easier at 7,182.04 while Financial Services Index advanced 84.27 points to 16,821.64.

Main Market volume increased to 2 billion shares worth RM1.80 billion from 1.93 billion shares worth RM1.82 billion.

Warrants slipped to 407.85 million units valued at RM88.01 million versus 413.77 million units valued at RM87.86 million.

Volume on the ACE Market expanded to 354.18 million shares worth RM82.89 million compared with 277.44 million shares worth RM58.07 million.

Consumer products and services accounted for 244.91 million shares traded on the Main Market, industrial products and services (323.98 million), construction (141.63 million), technology (112.61 million), SPAC (nil), financial services (40.84 million), property (143.50 million), plantation (38.08 million), REITs (13.05 million), closed/fund (16,100), energy (805.03 million), healthcare (38.41 million), telecommunications and media (33.13 million), transportation and logistics (40.70 million), and utilities (16.87 million). — Bernama


Bursa closes higher on persistent buying

KUALA LUMPUR, April 2 — Persistent buying in selected heavyweights, spurred by data showing a rebound in China's manufacturing sector, lifted Bursa Malaysia at Tuesday’s close. The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI)…


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