Thursday, May 9th, 2019

 

Takaful Malaysia aims to maintain strong profit growth

KUALA LUMPUR: Syarikat Takaful Malaysia Keluarga Bhd (STMKB) aims to maintain its profit growth this year, going by its strong performance in the first quarter of 2019.

Group CEO Datuk Seri Mohamed Hassan Kamil said the company expects to continue the strong growth momentum in its Family and Takaful businesses.

“Right now, we see our credit-related products to be the main contributor and growth driver for the company, and will continue to grow as Islamic financing business prospers.

“The others will be the Fire, General Takaful and Motor businesses from our digital platform, which continue to provide good numbers,“ he said after the company’s annual general meeting today.

In 2018, the company’s net profit jumped 43% to RM294.9 million from RM206.7 million in 2017, on the back of higher revenue of RM2.64 billion recorded.

For first quarter ended March 3, the company’s net profit grew 38% to RM96.44 million from RM69.98 million in the same quarter a year ago.

Revenue rose 23% to RM918.2 million from RM746.2 million.

Mohamed Hassan said the company will continue to outperform the market average.

“We have always outperformed the industry average for many years. As you can see, we grew by about 30% and 20% in our Family and General business segments respectively, whereas, the industry had been growing at a very low single digit,“ Mohamed Hassan said.

Overall, he said the Takaful industry had been growing at a rate of between 11% and 12%, exceeding the conventional insurance growth which was flat over the past few years.

STMKB currently has more than one million policy holders.

“Looking at the previous years’ performance with growth at between 20-35%, we should be able to report some good numbers this year, barring any unforeseen circumstances,“ he said, adding, there was also a possibility of STMKB issuing bonus shares this year.

“It would improve liquidity in the market as share prices adjust downward and thus be more affordable. Perhaps that is something that we can look at for this year,” he said.


Jaks’ Q1 earnings jump 60.4%

PETALING JAYA: Jaks Resources Bhd’s net profit for the first quarter ended March 31 surged 60.4% to RM28.62 million from RM17.84 million a year ago, driven by higher progress billings and profit recognised from the Vietnam engineering, procurement and construction (EPC) works.

In a filing with Bursa Malaysia, the group said its construction division’s pre-tax profit more than doubled to RM58.3 million from RM27.09 million.

The property development and investment division’s pre-tax loss narrowed to RM14.48 million from RM14.84 million.

Jaks’ first-quarter revenue rose 41.7% to RM297.8 million from RM210.2 million a year ago.

During the quarter, the Vietnam EPC construction work contributed revenue of RM255.8 million compared with RM93 million a year ago.

Jaks said the construction works for Vietnam EPC is expected to meet its schedule in the current year and is expected to contribute positively to the group.

Although the local construction division’s outlook remain challenging, the overall performance of the construction division is expected to perform satisfactorily this year with the contribution from the Vietnam EPC contract.

However, the performance of the property development and investment division will remain challenging due to the key issues of affordability and the overhang in the property market.

“Delivery of some of the developed properties are delayed and this division would be affected by the liquidated ascertained damages charges. As for our investment property, Evolve Mall, the cost saving initiatives and new leasing strategies taken have had some positive impact,” it said.


Foreign funds outflow from Malaysia in April heaviest in 10 months: UOB Research

PETALING JAYA: Malaysia recorded the highest portfolio outflows in 10 months in April at RM11.2 billion, bucking the trend of portfolio flows into emerging markets (EMs), according to UOB Research.

Foreigners sold RM9.8 billion of Malaysian debt securities and RM1.4 billion of equities last month.

This came amid market concerns surrounding news of Norwegian funds reducing their bond holdings from 10 EMs including Malaysia, and FTSE Russell’s surprise announcement that they may remove Malaysia from its world government bond index.

The local bourse continued to see heavy selling pressure today, declining 15.02 points or 0.92% to 1,618.53 points, in line with the regional trend due to heightened tensions from the US-China trade spat.

Market breadth was negative with 246 gainers and 610 losers on 2.14 billion shares traded valued at RM2.02 billion.

On the currency front. the ringgit weakened 0.12% to 4.1535 against the greenback as at 5pm today.

UOB Research said Malaysian debt securities saw the biggest outflow in April since May 2018, bringing foreign holdings of government bonds (MGS & GII) down significantly to RM162.3 billion or 21.9% of total outstanding, the lowest holdings level since January 2011.

Malaysian Government Securities (MGS) and Government Investment Issues (GII) suffered the largest foreign selloff by RM3.5 billion each last month.

Overseas investors also sold off RM1.2 billion of Treasury bills last month and RM56.6 million of private debt securities.

UOB said foreign funds remained net sellers of Malaysian equities for the third straight month by RM1.4 billion last month, bringing the year-to-date foreign equity outflow to RM2.8 billion.

Despite the portfolio outflows, the research house noted that foreign reserves remained stable after rising US$400 million (RM1.66 billion) month-on-month to US$103.4 billion as at end-April which is equivalent to 7.4 months of retained imports and is 1.0 time short-term external debt.

“Foreign reserves remain supported by sustained merchandise trade surplus and foreign direct investment flows.”

UOB Research said another positive development is that Bank Negara Malaysia’s short position in foreign exchange swaps narrowed further to US$14.2 billion in March from US$18.4 billion in February.

“This is equivalent to 13.8% of total foreign reserves in March, the lowest level since May 2018.”

“A sudden turn in US-China trade talks elevates uncertainty for growth prospects. BNM became the second central bank in the region after India to lower rates this year. We expect Philippines and Indonesia to follow with policy rate cuts this year,” said UOB Research.


Asian stocks sink again ahead of crucial US-China trade talks

HONG KONG: Asian markets once again fell into the red today as investors anxiously await the start of high-stakes trade talks between China and the United States.

After several rounds of negotiations, the two-day meeting in Washington, which kicked off later in the day, has taken on huge significance after Donald Trump threatened to ramp up tariffs on Chinese goods from Friday blaming backsliding by Beijing.

The US president’s remarks on Sunday battered global equities and fuelled fears the economic superpowers – who appeared just last week to be nearing a deal – could become entangled in a brutal trade war with worldwide consequences.

While Trump has looked to soothe concerns – telling a rally on Wednesday that “whatever happens, don’t worry about it. It will work out. It always does” – investors are on edge.

China, for its part, said an escalation was “not in the interests of the two countries’ people” but warned it would impose “necessary countermeasures” if the tariffs on US$200 billion (RM830 billion) of goods were more than doubled tomorrow.

Today it denied backtracking on the talks and said it had “kept promises”.

Commenting on the visit to Washington of China’s top negotiator, Neil Wilson, chief market analyst at Markets.com, said: “So is Liu He really coming to do a deal? I think probably it’s (a) case of gaining a reprieve in order to avert the rise in tariffs.

“It looks like we are yet a wee bit away from a comprehensive trade deal. But the Vice Premier’s visit and the prospect of tariffs being hiked is all a bit of an unknown right now and the market positioning is defensive as a result.”

Hong Kong stocks were hammered more than 2% while Shanghai ended 1.5% lower and Tokyo sank 0.9%.

Seoul plunged more than 3%, while Singapore, Taipei, Jakarta, Mumbai and Manila were also sharply lower. But Sydney and Wellington gained 0.4% each.

In Europe at midday, London’s benchmark FTSE 100 index was down 0.3%. Frankfurt’s DAX 30 slid 0.7%, while the Paris CAC 40 shed 1.1%.

OANDA senior market analyst Jeffrey Halley said that markets “could move sharply, either way, depending on the news flows, with equities and oil the most vulnerable to the outcome of the trade talks”.

The uncertainty flowing through trading floors weighed on currency markets with higher-yielding, riskier units such as the Australian dollar, South Korean won and Indonesian rupiah all down against the greenback.

China’s yuan also extended losses and is sitting at a four-month low.

On oil markets both main contracts resumed their downward spiral with the trade war fears overshadowing a drop in US inventories, which had helped spark a pick-up in the market on Wednesday.

However, there are expectations that prices will recover.

“As (the) trade war simmers, Asia’s unquenching demand for oil supply stands tall, suggesting much stronger market conditions than initially thought,“ Stephen Innes of SPI Asset Management said in a note.

“From a fundamental point of view, Opec supply discipline (in capping output) is still in check, and US supplies show tighter markets than expected,


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