Wednesday, May 8th, 2019


Stocks rebound on China trade deal indication, bonds fall

NEW YORK, May 8 — A gauge of world equity markets rose and safe-haven bond prices fell today after the White House said it had received an indication from China that it wanted to make a trade deal with the United States that had appeared on the…

US sanctions on Iranian oil risk stoking Opec tensions

LONDON, May 8 — Washington is counting on Middle East allies to help prevent its sanctions on Iran’s oil exports from sending oil prices skyrocketing, but analysts warn that this could further destabilise the already precarious balance within…

Miner BHP faces £5b claim over Brazil dam collapse

LONDON, May 8 — Global mining giant BHP Billiton faced today a £5.0 billion (RM26.9 billion) claim for damages over a Brazilian dam collapse that killed 19 people in late 2015, sources said. A lawyer for legal firm SPG, which represents 240,000…

Local bourse down 11.5% in past one year

PETALING JAYA: It has been a year since the Pakatan Harapan government came into power, but it has not been smooth sailing for the local bourse on the back of external and local headwinds.

Corporate earnings have not picked up momentum in line with the slowdown in the global economy as external demand weakens.

Risks to economic growth have increased, prompting a 25-basis-point cut in the Overnight Policy Rate (OPR) by Bank Negara Malaysia to spur economic growth.

The FBM KLCI fell 212.96 points or 11.5% in the past one year to close at 1,633.55 points today from 1,846.51 points on May 8, 2018.

Construction and property counters, in particular, have been under pressure over the past one year, as the Pakatan Harapan government put on hold various mega projects in a bid to rein in government expenditure.

Over the past year, the KL Construction Index has declined 71.69 points or 25.5% to 209.44 points today while the KL Property Index fell 151.01 points or 14.07% or to 921.91 points.

“The stock market has been pretty much in line with what we expected. The KLCI ended (last year) in line with our expectations, with the lows and highs also in line with our estimates. The ringgit also moved in line with our expectations. Things panned out the way we expected it to,” said Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew.

“This year, we expect things to change in the second half of the year. While things did not go so well during the first half, it will get better in the second half. I would say, the worst is over and things will improve, barring unexpected events such as an unforeseen global financial crash or other external factors,” he told SunBiz.

Pong noted that there has been less liquidity in the market as the government has been cleaning up institutions such as Lembaga Tabung Haji and Federal Land Development Authority.

While corporate earnings have been weak, Pong said it may improve very late in the year given that some of the fruits of government reforms come through in the third quarter onwards.

Moving forward, he said the government needs to move into higher gear and implement more projects.

“They are already doing this, as the East Coast Rail Link is now back in play. I think other projects will be brought in progressively, such as the Kulim airport,” he said.

Commenting on calls to reinvigorate the private sector, he said such endeavours would take a long time, as the country has been depending on the government to drive investments and projects.

“The private sector has been weak, as we have been using government-linked companies to spearhead the economy. We’re so used to the government driving projects and dishing out contracts that reinvigorating the private sector may take a whole generation to happen, because it is a structural issue that cannot be changed overnight,” he said.

Last year, the total foreign net outflow stood at RM11.65 million, the largest yearly foreign net outflow since 2015, which saw RM19.49 billion of equities pulled out. The foreign net outflow of RM11.65 billion offset the total foreign net inflow of RM10.33 billion recorded in 2017.

According to MIDF Research, foreign funds were selling stocks listed on Bursa Malaysia during the last eight weeks of the year. For the week ended Dec 28, 2018, foreign funds sold RM127.6 million net of local equities.

Last month, foreign net outflow stood at RM1.49 billion, marking the third consecutive month of foreign net selling, bringing the year-to-date foreign outflow from Malaysia to RM2.76 billion compared with a foreign net inflow of RM3.71 billion recorded during the same period last year.

Construction and property counters, in particular, have been under pressure over the past one year. BERNAMAPIX

US stocks edge higher amid trade talk uncertainty

NEW YORK, May 8 — After two straight declines spurred by trade war fears, Wall Street stocks were mildly positive early today on the eve of a key round of US-China talks. About 20 minutes into trading, the Dow Jones Industrial Average had edged up…

Government’s achievements clouded by external headwinds

PETALING JAYA: The current headwinds, including the US-China trade tensions and the recent cut in the Overnight Policy Rate (OPR), may pose challenges to the government’s economic reform agenda.

“Business and consumer sentiments have been soft but this is largely due to the knock-on effects of external issues, which have also clouded the Pakatan Harapan government’s achievements over the past one year,” said Professor of Economics in the Sunway University Business School Dr Yeah Kim Leng (pix).

“Overall, what the government has done in terms of cleaning up would receive very high marks, given the scandals that happened during the previous government’s administration. In terms of getting the country’s finances in order, restoring trust in the government and strengthening the integrity, transparency and accountability of public finances, they have done well,” he told SunBiz.

He said that the government has received much criticism in terms of institutional reforms, but noted that the government should be given more time, as some of these reforms are difficult to implement, particularly those that involve large scale changes.

“From an economic perspective, the visible progress is Pakatan Harapan’s anti-corruption drive, which they should continue with. I believe it has the right DNA to improve Malaysia’s level of governance, which is important in order to move towards developed nation status,” Yeah said.

In terms of economic management, he said the private sector has been relatively resilient while Malaysia’s rankings, such as transparency and ease of doing business, have continued to improve.

“Our sovereign credit quality also, has been successfully maintained despite the sizeable accumulation of liabilities,” he added.

Yeah said Malaysia now has a reliable and fairly accurate picture of its public finances, which will help allay concerns of investors, the impact of which can already be seen based on the approved foreign direct investments in the manufacturing sector.

Meanwhile, Yeah said the government faces constraints in terms of public sector spending, due to budgetary constraints and the drive to reduce government debt level.

“The government will face constraints thus, it has to shift to the private sector. The government needs to provide a stable political environment and clear policies to drive private sector investments, which is the key to Malaysia achieving a higher level of growth,” he said.

With a higher level of growth, he said the government can secure more revenue which would allow it to focus on B40 issues that are critical for the government to address, as well as some of the concerns of the M40 group such as the rising cost of living.

Moving forward, Yeah said it is important for the government to focus on the anticipated handover of leadership and policies to enhance national unity.

“In terms of the anticipated handover, a smooth transition in leadership would further enhance political stability and private sector confidence while boosting overall sentiments. Secondly, the government must focus on policies to enhance national unity, given that race and religion issues recently have been divisive,” he added.

Global stocks on the ropes after Trump trade war threat

LONDON, May 8 — Punch-drunk stock markets suffered through a third straight session of trade war fears today, trembling at the prospect of President Donald Trump unleashing a trade war on China. His threat to hike tariffs on US$200 billion of…

Facebook picks London for WhatsApp payment base

LONDON, May 8 — Facebook has chosen London as its base for a payment system on WhatsApp, its mobile messaging service confirmed today, highlighting the capital’s attractiveness as a fintech hub despite Brexit strains. The Financial Times said…

Trump says he would be happy to keep tariffs on Chinese imports in place

WASHINGTON, May 8 — US President Donald Trump said today he would be happy to keep tariffs on Chinese imports in place, adding that China is mistaken if it hopes to negotiate trade later with a Democratic presidential administration. “The reason…

More homes for M40: PR1MA

PETALING JAYA: Perbadanan PR1MA Malaysia (PR1MA) said it is undertaking a transformation exercise to better fulfill its mandate and adapt to market conditions to ensure that the organisation is better aligned with the government’s national housing agenda.

Currently, the government entity is undergoing a due diligence process that is expected to conclude in June this year.

PR1MA commended the government’s decision to continue with the housing programme, in achieving its main objective to build quality homes in urban and suburban areas and making them affordable to the rakyat particularly the middle-income (M40) group.

“As a government entity, PR1MA is committed to ensure that its obligation with stakeholders including homebuyers is honoured, while at the same time, we are also embarking on a transformation exercise that will enable PR1MA to maximize the effectiveness of the change effort that is taking place within the organisation to further improve our business and operations,” said its acting CEO Mohd Nazri Md Shariff said.

PR1MA said developments remains positive from potential home buyers.

“In fact, through the ongoing Home Ownership Campaign (HOC 2019), PR1MA has achieved sales bookings of around 10,200 homes with a sales value of RM2.56 billion, in less than three months of the launch of the HOC.”

Prior to the establishment of PR1MA, government-aided housing programmes were focused only on the lower-income group and this resulted in half of middle-income Malaysian households unable to afford a house in the key market centres.

“As such, PR1MA was formed with the primary objective to serve as a catalyst that provides fairly-priced quality homes for the M40 income group in the urban and sub-urban areas,” it said.