Wednesday, May 29th, 2019


EU takes Italy to task over high debt

BRUSSELS, May 29 — The EU warned Italy over its soaring debt today, putting Brussels on a collision course with Italy’s far-right coalition government. In a letter seen by AFP, the European Commission said that the Italian government was in…

Canada central bank maintains key lending rate at 1.75pc

OTTAWA, May 29 — Canada’s central bank today maintained its key lending rate at 1.75 per cent, saying it expects the local economy to pick up after a recent slowdown despite heightened uncertainty over trade with China. The move was in line with…

IATA head: Boeing 737 MAX may not return to service until August

SEOUL, May 29 — Boeing Co’s 737 MAX is unlikely to return to service before August, the head of the International Air Transport Association (IATA) said today, adding that the final say on the timing rested with regulators. The 737 MAX was…

SME entrepreneurs need to capitalise on social media to grow their businesses, says minister

MELAKA, May 29 — Small and medium enterprises (SMEs) entrepreneurs need to capitalise on social media as a medium to grow their businesses and products faster and penetrate the global market. Entrepreneur Development Minister Datuk Seri Mohd…

Wall St set to open sharply lower as trade tensions escalate

NEW YORK, May 29 — Wall Street was set to open at its lowest level in at least two months today after China signaled readiness to escalate the trade war with the United States, with investors fearing that the dispute could be long drawn and weigh…

Report: Fraud probe targets top Porsche bosses

FRANKFURT, May 29 — Three top executives at Volkswagen subsidiary Porsche including chief Oliver Blume are under investigation over alleged excessive payments to a former works council leader, according to today’s media report. Prosecutors had…

Malaysia not a currency manipulator, says Bank Negara

“Malaysia adopts a floating exchange rate regime. The ringgit exchange rate is market-determined and is not relied upon for exports competitiveness,” the central bank said in a statement today, noting that it supports free and fair trade.

Malaysia’s inclusion in the monitoring list comes after US Treasury Secretary Steven Mnuchin lowered the threshold for qualification. This, however, comes with no immediate penalties.

Under the new threshold, countries with a current account surplus equivalent to 2% of gross domestic product (GDP) are now eligible for inclusion in the list, down from 3%.

The other two criteria are persistent intervention in markets for a nation’s currency, and a trade surplus with the US of at least US$20 billion (RM83.8 billion).

Countries that meet two of the three criteria are placed on the watch list.

Malaysia meets two of the three criteria – it has a trade surplus of US$27 billion with the US and a material current account surplus equivalent to 2.1% of GDP. It is among the nine countries in the monitoring list, alongside China, Germany, Italy, Ireland, Japan, South Korea, Singapore and Vietnam.

On the US Treasury Department’s claim that BNM has intervened in both directions in foreign exchange markets in the last few years, the central bank said any intervention is limited to ensuring an orderly market and avoiding excessive volatility of the exchange rate that may affect macroeconomic stability.

“The fact that the ringgit has over the years faced multiple episodes of significant appreciation and depreciation points to the flexibility of the exchange rate,“ it said.

BNM also explained that as a small and highly open economy, the current account of Malaysia’s balance of payments is affected by both internal and external developments, including cyclical and structural factors.

About half of Malaysia’s trade surplus is driven by commodity exports, which is largely influenced by global demand and supply, as opposed to the exchange rate.

“On the other hand, manufactured surplus is partly driven by the long-standing presence of large export-oriented multinational corporations in Malaysia, including from the US. The current account surplus is thus a reflection of the diversified nature of the Malaysian economy.”

The central bank reiterated that there are no consequences for the Malaysian economy from its inclusion in the US Treasury monitoring list.

“The Malaysian economy remains resilient, underpinned by strong economic fundamentals, including the flexibility accorded by a floating exchange rate and strong external balance.”

The ringgit weakened by 0.2% to 4.1965 against US dollar as at 5pm today.

Bank Negara says that Malaysia adopts a floating exchange rate regime and the ringgit’s exchange rate is market-determined. – REUTERSPIX

Huawei asks US court to throw out federal ban

SHENZHEN: Chinese telecom giant Huawei stepped up its legal battle today to overturn US legislation barring American federal agencies from buying its products amid an escalating high-tech dispute.

Huawei filed suit against the US bill in March, calling it “unconstitutional” and saying the US Congress had failed to provide evidence to support its restrictions on Huawei products.

The company filed a motion for summary judgment today (Tuesday in the United States), seeking a quick determination by US courts on whether the case has merit to proceed.

“The US government has provided no evidence to show that Huawei is a security threat. There is no gun, no smoke. Only speculation,” Huawei’s chief legal officer Song Liuping told reporters.

Speaking at Huawei headquarters in the southern Chinese city of Shenzhen, Song added that US politicians “want to put us out of business”.

The firm also faces a broader US executive order preventing the use of its equipment in the United States as well as the more damaging inclusion this month on an “entity list” that cuts it off from critical American-made components for its products, though a 90-day reprieve was issued.

Huawei, the world’s biggest supplier of telecommunications networking equipment and number-two smartphone manufacturer, has emerged as a central bone of contention in the worsening China-US trade rivalry.

Washington fears Huawei systems could be manipulated by Beijing to spy on other countries and disrupt critical communications, and is urging nations to shun the company in 5G networks.

Chinese state media today suggested that Beijing could fight back in the trade war by cutting exports of rare earths to the United States, depriving US companies of a key material to make everything from smartphones to televisions and cameras.

Huawei’s case against the US was filed in a US District Court in Plano, Texas, challenging what it called an “unconstitutional” National Defence Authorisation Act (NDAA) preventing government agencies from buying its equipment, services, or working with third parties that are Huawei customers.

The firm has argued that the bill violates US law by “singling out Huawei for punishment”.

Song said the US campaign against the company violates market norms and will bring harm to US consumers as well as 3.1 billion customers around the world that Song said rely on Huawei products and services.

But he brushed away warnings by industry observers that the ban on buying US-made components puts the company’s survival at risk.

Song said Huawei has prepared for years for unforeseen “extremities” in the market.

Company founder Ren Zhengfei has said recently those preparations have included stockpiling semiconductors to see it through potential disruptions to its supplies of US and other foreign components.

“We have the capability to continue to provide our major products to customers including sales and services,” Song said. “Our major products will not be affected these actions.”

A similar previous action against Chinese telecom company ZTE nearly put it out of business, before it accepted a massive fine to resolve the situation.

Asked whether Huawei, like ZTE, would be willing to accept a US fine to be removed from the entity list, Song did not rule it out.

He said Huawei would explore various options open to it under the framework of the US action, including “legal reviews and appeals”.

“As for (whether Huawei would accept) a fine, ultimately that has to be based on facts or evidence. We cannot equate ourselves to any other company,” he said.

Huawei said a hearing on its move for summary judgement has been set for Sept 19.

The firm’s proactive battles in US courts signal it is willing to use all means, including national courts, to prevent exclusion from a race to the 5G market – the future of high-speed telecommunications. – AFP

Axiata, Telenor to conduct due diligence on proposed merger

KUALA LUMPUR: Axiata Group Bhd and Norwegian multinational telecommunications company, Telenor ASA, will be conducting a due diligence exercise for their proposed merger, also known as MergedCo.

President and group CEO Tan Sri Jamaludin Ibrahim said the due diligence process includes looking into the balance sheet and legal issues, adding that the process is expected to be concluded within three to six months.

“We will have to agree on the management team of primarily MergedCo and at least a few people in (its subsidiary) MalaysiaCo.

“As for the rest of the operating companies on their side and our side, there is no intention to change the management,“ he told reporters after the group’s annual general meeting today.

MergedCo will have about 67% stake in MalaysiaCo – a planned merger between Celcom Axiata and Digi.Com.

Alliance Bank’s Q4 profit flat, to pay 8.2 sen dividend

PETALING JAYA: Alliance Bank Bhd posted a flat net profit RM111. 77 million for the fourth quarter ended March 31, 2019 against RM112.87 million in the previous corresponding period.

Its revenue also remained stable at RM403.44 million against RM403.53 million previously.

It has proposed a second interim dividend of 8.2 sen per share for the quarter under review.

Alliance Bank’s full-year net profit grew 9% to RM537.59 million from RM493.23 million reported in the previous year, with revenue rising 3.2% to RM1.62 billion from RM1.57 billion.

On the whole, the group attributed its financial performance to the 8.9% growth for its net interest income, driven by stronger loans growth and improved loan mix from better risk adjusted return loans.

Alliance Bank’s total loans grew 6% to RM42.7 billion, outpacing the industry loan growth rate of 4.9%. Its net interest margin (NIM) gained 10 basis points to 2.5%, mainly due to the positive impact of the overnight policy rate hike in January 2018 and improved margins from better risk adjusted return loans.

Its NIM is expected to stabilise around 2.4% in FY2020.