Friday, May 31st, 2019

 

Bursa Malaysia closes higher, gains 0.87%

KUALA LUMPUR: Bursa Malaysia closed the last trading day of the month 0.87% higher and what was the fifth straight day of gains, supported by favourable corporate earnings, alongside volatility amongst global peers.

At 5pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) jumped 14.26 points to 1,650.76 after opening 3.26 points higher at 1,639.76.

The index moved between 1,634.14 and 1,650.76 throughout the day.

Market breadth was positive as losers beat gainers 468 to 392 with 380 counters unchanged, 685 untraded and 69 others suspended.

Turnover, however, slipped to 2.22 billion units worth RM2.56 billion from Thursday’s 2.47 billion units worth RM2.67 billion.

Regionally, the Singapore Straits Times Index declined 0.9% to 3,114.77, Japan’s Nikkei was down 1.63% to 20,601.19 and Hong Kong’s Hang Seng declined 0.79% to 26,901.09.

Asian stocks fell on Friday after Beijing announced it was ready to restrict the sale of rare-earth minerals to the United States, and this, coupled with potential new tariffs to be imposed on Mexican products contirbuted negatively to the market sentiment.

Phillip Capital Management, Asia-Pacific, Senior Vice President (Investment) Datuk Dr Nazri Khan Adam Khan said he believed the local bourse was oversold and undervalued, hence, the market rebound.

“It has been oversold and undervalued for so long. I believe the downside is limited for now, not to mention decent corporate earnings are a silver lining, which will help Bursa Malaysia sustain its uptrend,” he told Bernama.

Among other heavyweights, TNB jumped 30 sen higher to RM12.70, CIMB gained six sen to RM5.27, Sime Darby Plantation bagged 10 sen to RM4.66 and Hong Leong Bank gained 28 sen to RM19.

Of the actively-traded stocks, TM advanced 15 sen to RM3.61, Lambo was flat at six sen, while Dayang lost 6.5 sen to 97.5 sen and Ekovest fell 2.5 sen to 77 sen.

The FBM Emas Index added 100.89 points to 11,588.37 and the FBMT 100 was 107.39 points higher at 11,450.50.

The FBM Emas Shariah Index rose 124.40 points to 11,795.77 and the FBM 70 bagged 168.07 points to 14,240.53, but the FBM Ace Index fell 6.86 points to 4,299.42.

Sector-wise, the Financial Services Index firmed up 80.59 points to 16,848.04, the Plantation Index gained 111.62 points to 6,922.86 and the Industrial Products and Services Index was 0.76 of-a-point better at 160.05.

Main Market volume declined to 1.39 billion shares worth RM2.37 billion from 1.69 billion shares worth RM2.51 billion on Thursday.

Warrants turnover increased to 607.25 million units worth RM154 million from 518.84 million units worth RM112.50 million.

Volume on the ACE Market declined to 231.87 million shares valued at RM37.81 million from 257.14 million shares valued at RM46.97 million.

Consumer products and services accounted for 249.63 million shares traded on the Main Market, industrial products and services (151.55 million), construction (176.8 million), technology (111.22 million), SPAC (nil), financial services (65.13 million), property (126.86 million), plantation (21.57 million), REITs (5.83 million), closed/fund (63,000), energy (273.20 million), healthcare (25.71 million), telecommunications and media (94.89 million), transportation and logistics (63.44 million) and utilities (33.60 million). – Bernama


Bursa closes higher on positive corporate earnings

KUALA LUMPUR, May 31 — Bursa Malaysia closed the last trading day of the month 0.87 per cent higher and what was the fifth straight day of gains, supported by favourable corporate earnings, alongside volatility amongst…


Sime Darby Plantation hit by CPO price plunge

PETALING JAYA: Sime Darby Plantation Bhd posted a net profit of RM74 million for the first quarter ended March 31, 2019 in the face of lower average crude palm oil (CPO) and palm kernel (PK) price.

Revenue for the quarter stood at RM3 billion. There was no year-on-year (y-o-y) comparison as the group had changed its financial year end from June 30 to Dec 31.

During the quarter, realised CPO price declined by 18% y-o-y from RM2,452 per MT to RM2,012 per MT and average realised PK price dropped by 42.5% y-o-y to RM1,204 per MT from RM2,094 per MT.

However, the group recorded an 8% gain for fresh fruit bunch production (FFB) and an improved oil extraction rate (OER) of 21.41% from 21.03%, although it was not sufficient to compensate for the adverse impact from the price plunge.

Its managing director and executive deputy chairman Tan Sri Mohd Bakke Salleh (pix) said that the business environment for the industry is challenging with the prevailing low CPO and PK prices, along with the volatile external environment influenced by the US-China trade war which has continued to impact the industry’s performance.

“However, we remain encouraged by higher FFB production and OER recorded from our upstream segment as well as continuing profitability of Sime Darby Oils during the quarter under review,” he said in a statement today.

“Moving forward, we believe the decision to rebrand our downstream business would augur well with our strategy for a more balanced profit contribution from our upstream and downstream segments,” he added.

During the first three months of 2018, the group reported a non-recurring net gain of RM28 million on sale of land in Malacca, which offset the impairment of a rubber development in Indonesia and a write-down of an investment in the US.


Sime Darby Plantation affected by CPO price plunge

PETALING JAYA: Sime Darby Plantation Bhd posted a net profit of RM74 million for the first quarter ended March 31, 2019 in the face of lower average crude palm oil (CPO) and palm kernel (PK) price.

Revenue for the quarter stood at RM3 billion. There was no year-on-year (y-o-y) comparison as the group had changed its financial year end from June 30 to Dec 31.

During the quarter, realised CPO price declined by 18% y-o-y from RM2,452 per MT to RM2,012 per MT and average realised PK price dropped by 42.5% y-o-y to RM1,204 per MT from RM2,094 per MT.

However, the group recorded an 8% gain for fresh fruit bunch production (FFB) and an improved oil extraction rate (OER) of 21.41% from 21.03%, although it was not sufficient to compensate for the adverse impact from the price plunge.

Its managing director and executive deputy chairman Tan Sri Mohd Bakke Salleh (pix) said that the business environment for the industry is challenging with the prevailing low CPO and PK prices, along with the volatile external environment influenced by the US-China trade war which has continued to impact the industry’s performance.

“However, we remain encouraged by higher FFB production and OER recorded from our upstream segment as well as continuing profitability of Sime Darby Oils during the quarter under review,” he said in a statement today.

“Moving forward, we believe the decision to rebrand our downstream business would augur well with our strategy for a more balanced profit contribution from our upstream and downstream segments,” he added.

During the first three months of 2018, the group reported a non-recurring net gain of RM28 million on sale of land in Malacca, which offset the impairment of a rubber development in Indonesia and a write-down of an investment in the US.


S&P boosts Indonesia’s credit rating after Widodo re-election

JAKARTA, May 31 — Ratings agency S&P lifted Indonesia’s credit rating today, citing strong prospects for Southeast Asia’s biggest economy after the re-election of president Joko Widodo. The upgrade comes after the elections commission this…


China says US ‘lies’ about effect of tariffs on its economy

BEIJING, May 31 — China today accused the United States of repeatedly lying after President Donald Trump said trade war tariffs were having a “devastating effect” on the Asian country’s economy. “The US side has said such lies not just…



Bank Negara: Banks’ asset quality robust

KUALA LUMPUR, May 31 — Banks’ asset quality remains sound with overall net impaired loans ratio remaining stable at 1.0 per cent, said Bank Negara Malaysia (BNM) in its “Monthly Highlights — April 2019” released today. …


Trade tensions weigh on banking sector profitability, says S&P

PETALING JAYA: Major Malaysian banks’ performance for the first quarter of the year point towards a weakening trend in profitability amid escalating trade tensions, according to S&P Global Ratings.

“We believe banks operating in the local Malaysian market will see visible margin compression, accompanied by slower loan growth and higher non-interest income volatility for the rest of 2019,” it said in a press release today.

However, asset quality will likely hold, despite downward pressure.

The credit risk research firm indicates that all five Malaysian banking groups under its coverage reported a year-on-year (y-o-y) margin decline for 1Q FY19, ranging from nine basis points (bps) by Maybank and CIMB to 26bps for AmBank.

It also reported that three out of the five banks have shown quarterly margin deterioration on a sequential basis of 8bps for Maybank, 4bps for RHB and 10bps for AmBank.

On the other hand, the remaining two saw modest improvement of 1bps for Public Bank and 3bps for CIMB. However, these improvements are either unsustainable or masked by their overseas operations’ net interest margin recovery, in the case of Indonesia for CIMB.

“All these factors contribute to our negative view on Malaysian banks’ profitability trend this year, especially when we believe there is limited room for further cost cutting,” said S&P’s credit analyst Nancy Duan.

She said that a big chunk of investments made by banks nowadays are more structural and strategic, such as technological investments, which should not be called off easily.

“All in all, we are likely to see a disappointing 2019 in terms of bottomline earnings,” she added.

On the bright side, the firm did note that it continues to see resilience in Malaysian banks’ asset quality profile at this uncertain time, despite downward pressure.

“We are of the opinion that the banks’ domestic portfolio will remain sound in general, supported by healthy private consumption and the revival of previously suspended infrastructure projects,” said the firm.

It pointed out that small and midsize enterprises as well as low-income households are more vulnerable in a slowing economy, but the lower interest rates could help cushion the impact.


EPF records a 25% dip in investment income for Q1

PETALING JAYA: The Employees Provident Fund (EPF) reported a lower investment income for the first quarter of the year of RM9.66 billion against RM12.88 billion recorded a year ago, driven by the contribution of equities revenue totalling RM4.16 billion or 43% of its total invest income from a share of 39% of its total investment asset.

“Given the current global and domestic economic and market environment, the results were indeed commendable,” said its deputy CEO (investment) Datuk Mohamad Nasir Ab Latif in a statement today.

He said that the volatility of the equities asset class and its impact on earnings was cushioned by the pension fund’s other more stable asset groups, such as fixed income.

“Despite its volatile nature, this asset class has higher long-term expected returns. Equities will continue to play a pivotal role in enhancing returns and ensuring that we are able to declare dividends of at least 2% above inflation,” he added.

Currently, 50% of its investment assets are in fixed income instruments, which continue to provide consistent and stable income.

The first quarter saw fixed income investments returning RM4.85 billion, equivalent to 50% of the quarterly investment income. Income from Malaysian Government Securities (MGS) & Equivalent in 1Q FY19 generated RM2.52 billion while loans and bonds contributed RM2.33 billion to investment income.

On the other hand, real estate and infrastructure recorded RM171.60 million in investment income while money market instruments investments, which represent 6% of total investment assets, contributed RM469.86 million.

According to EPF, investment in such asset class, which includes fixed and time deposits, is vital in meeting its short-term liquidity needs.

It also said that RM900 million from the RM9.66 billion gross investment income was generated for Shariah savings which derives its income solely from the Shariah portfolio. The remaining RM8.76 billion is generated for conventional savings, from conventional and Shariah portfolios.

“Moving forward, we expect the global market to remain volatile in view of sentiments that are largely dominated by the ongoing US-China trade war, which seems to be reheating,” said Mohamad Nasir.

He noted that rising geopolitical risks and uncertainty over the policy direction of major central banks will likely add further sustained pressure on the global economy in the coming months.

The pension fund, which will be affected by these global risks, will focus on meeting the 10% allocation for real estate and infrastructure as part of its diversification plan along with more cash deployment into alternate assets to maximise returns and manage global risks.

Meanwhile, Mohamad Nasir sees the central bank’s decision to cut the Overnight Policy Rate to have a positive impact on the economy and help offset any economic downside.

“We are optimistic of delivering a real dividend of at least 2% over a rolling three-year basis. Market downturns do have an advantage as during these times, we will take the opportunity to purchase fundamentally strong stocks at attractive prices.”