Thursday, May 2nd, 2019
PETALING JAYA: RAM Ratings expects Malaysia’s export and import growth to recover in March with increases of 2.5% and 2.9%, respectively.
This compares with declines of 5.3% and 9.4% in February.
Meanwhile, overall trade surplus is anticipated to come in at RM14.8 billion in March against RM11.1 billion in February.
The Department of Statistics is scheduled to release the March figures tomorrow.
The rating agency said trade activity had been more subdued in February amid the lunar new year festivities, compounded by an already short working month.
“That said, the pace of expansion is expected to remain lacklustre amid more muted industrial activity growth in key regional markets, coupled with businesses’ caution while awaiting further clarity on the direction of the US-China trade dispute.”
The US and China have been engaged in trade negotiations since the start of the year, in search of a solution to the protracted trade war between them. While details are scant at the moment, RAM Ratings said a deal will most certainly entail China’s commitment to increasing its purchases of American goods to narrow its trade surplus with the US.
“This may lead to another round of disruptions in trade flows as China’s demand for goods from existing regional suppliers is diverted away to US producers. Initial talks in January had led to China agreeing to raise its imports of American agricultural, energy and industrial/manufactured goods.”
RAM said according to its initial assumptions, the most significant impact on Malaysia would be the diversion of China’s demand for electrical and electronic goods to the US.
“This will be particularly so for electronic integrated circuits, which constitute 27.3% of Malaysia’s exports to China and 5.1% of our total exports,“ its head of research Kristina Fong noted.
The rating agency said if the trade agreement does not indicate the specific American goods that will be purchased by China, the direct impact of the trade diversion may be more muted for Malaysia, mainly because there is no significant overlap in the supply of goods in which both Malaysia and the US have a revealed comparative advantage (RCA).
“The greatest impact, if any, would be due to diverted demand from petroleum products, in which the US also has a competitive edge, as indicated by the RCA index.”
PETALING JAYA: Malaysia’s manufacturing Purchasing Managers’ Index (PMI) rose to seven-month high in April, driven by growth in export orders.
The headline Nikkei Malaysia Manufacturing PMI stood at 49.4 in April compared with 47.2 in March, the highest since September 2018.
IHS Markit, which compiles the survey, said the rise in the PMI is broadly indicative of gross domestic product (GDP) growth accelerating to just over 5% according to historical comparisons.
“Key to the upturn in the PMI was a renewed improvement in foreign demand in April, which had weakened business trends in prior months. New export orders rose for the first time in five months. Higher workloads from overseas sources were attributed to business wins in Europe, the US and countries in Asia such as Singapore and Japan.”
It said the increase in export sales helped drive the overall new orders index up by some 3.6 points to its highest since last September, its largest rise for ten months.
“Pressure on manufacturers to ease back on capacity expansion likewise moderated, with the output index jumping 1.9 points (its largest rise for almost one-and-a-half years), reaching its highest since last October.”
In line with the more positive outlook, IHS Markit noted that manufacturers stepped up their hiring, with employment increasing in April at the fastest pace in seven months.
“Investment into new machinery and plant expansions reportedly prompted greater recruitment.”
It added that business confidence for the year-ahead outlook rose to its highest for five-and-a-half years, supporting improved employment growth as firms stepped up expansion plans.
Inflationary pressures remained subdued, albeit with input costs lifting higher for the first time this year.
“April saw the picture of Malaysia’s manufacturing economy brighten considerably, fuelled by the first improvement in export demand since last November. The headline PMI showed its largest monthly rise for nearly one and a half years, suggesting manufacturing should help drive faster economic growth to just over 5% at the start of the second quarter, with the trade drag easing compared to prior months,” said IHS chief business economist Chris Williamson.
“The survey also brought signs that firms have an improved appetite to expand capacity, taking on staff in greater numbers as business confidence in the outlook jumped to its highest for over five years, adding to hopes that the slowdown has bottomed out. Much will, of course, depend on the external environment, and a sustained upswing will be contingent on improving global trade flows,” he added.
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PETALING JAYA: Tourism and property company Sanbumi Holdings Bhd has proposed to change its name to Iconic Worldwide Bhd for a better representation of its current nature of business.
“As the newly-appointed executive director and major shareholder of Sanbumi Holdings, the proposed name change reflects my determination to bring along my expertise in the property industry as founder of Iconic Group to duplicate our success as seen in our previous projects. In Iconic Group we completed property development projects worth approximately RM500 million in gross development value,” said executive director Datuk Tan Kean Tet (pix).
“A joint development project and hotel management agreement are already in the works for Sanbumi Holdings, and that will improve its earnings visibility. The change of name to Iconic Worldwide will be the first step of our rebranding exercise as we work towards turning the company profitable in the near future,” he said in a statement.
The group said in a filing with Bursa Malaysia that an EGM to obtain shareholders’ approval for the proposed name change will be held at a date to be announced later.
To recap, Sanbumi Holdings’ wholly owned subsidiary Sanbumi Sawmill Sdn Bhd had on April 2, 2019 signed a joint venture agreement with Iconic Group’s wholly owned subsidiary Iconic Development Sdn Bhd, to develop a freehold land in Penang.
Named Iconic Point, the mix development project worth about RM127.81 million will comprise 48 units of three-storey semi-detached shop office, one unit of three-storey detached shop office, a four-storey 48-room hotel and three units of drive-thru food and beverage outlets.
Sanbumi Holdings had also entered into a hotel management agreement on April 1, 2019 with Lucky 888 Sdn Bhd, an affiliated company to Iconic Group, for the provision of services to Iconic Hotel.
The contract will provide a stable recurring revenue and additional income stream to Sanbumi Holdings.
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