Tuesday, July 2nd, 2019


Second-quarter GDP growth expected to exceed 4.5%

PETALING JAYA: Malaysia’s gross domestic product (GDP) growth is expected to be higher than 4.5% in the second quarter (2Q) buoyed by a positive business outlook despite the decline in the Purchasing Managers’ Index (PMI).

“We anticipate that the economy will grow better in 2Q19 onwards. In tandem, the latest PMI indicates that the 2Q19 growth would remain below 5% hence there is still room for it to grow higher than 4.5% in the 1Q19. We foresee the full year 2019 GDP growth at 4.9%,” said MIDF Research in a report today.

The research house said the challenging environments is expected to be short-lived as businesses became more optimistic towards the future. The latest PMI data in June indicated that outlook sentiment reached its highest since October 2013.

The optimism is also supported by positive developments in the US-China trade row.

Meanwhile, AmResearch believes the overall economic growth will still be above 4% based on historical comparison.

“Looking at the 1Q19 average (PMI) reading of 47.6, 1Q2019 GDP grew 4.5%. And given that the 2Q19 average PMI is higher at 48.7, we can logically expect 2Q2019 GDP to possibly expand between 4.5% and 5%.”

Malaysia’s Manufacturing PMI eased further in the month of June to 47.8 from 48.8 in May.

AmResearch said the current PMI data suggests that the business operating environment remains a challenge, especially on the export market segment, but businesses are beginning to show positive forward-looking outlook.

Despite the ongoing global uncertainties, especially on trade tensions, we concur with the PMI findings that there are a growing number of firms stepping up their marketing and sales efforts. Firms are also adopting a more stable approach on the employment front.”

France casts doubt on giant Mercosur trade deal

PARIS, July 2 — France said today it was “not ready” to ratify a huge trade deal agreed by the European Union and four South American countries, as farmers and environmentalists step up their resistance to the accord. The deal announced Friday…

Minor fire at Mieco’s Kuala Lipis plant

PETALING JAYA: Mieco Chipboard Bhd said a minor fire broke out at one of its chipboard manufacturing plants in Kuala Lipis, Pahang belonging to its wholly owned subsidiary Mieco Manufacturing Sdn Bhd.

According to the group’s filing with the stock exchange, the fire started at about 12.45am today and was put out in under an hour.

“The damages sustained from the fire incident are restricted to the conti-roll press section. Other sections of the machinery and building were not affected,” it said.

Preliminary indications are that the repairs will take up to approximately two weeks during which the production line are expected to be affected.

Currently, the financial impact from the incident has yet to be fully ascertained, said Mieco.

“However any financial losses arising from this incident are expected to be fully covered as adequate insurance policies have been taken up.”

Germany’s export-dependent industry feels pain of trade conflicts

BERLIN, July 2 — Three German industry groups slashed their production forecasts for this year today, citing trade conflicts that have plunged Germany’s export-dependent manufacturers into a recession that is hindering growth in Europe’s…

High-yielding theme to continue in H2

PETALING JAYA: With uncertainties continuing into the second half of the year (2H19) along with lingering dovish sentiments, HLIB Research believes that high-yielding plays will remain in flavour.

“In this regard, we like Malayan Banking Bhd (large cap liquid yield) and Axis Real Estate Investment Trust (syariah REIT). We also see signs of a resuscitation of pump priming via the revival of several mega projects and favour pure construction plays like Sunway Construction Group Bhd,“ HLIB said in a report today.

It said the impending commissioning of Rapid by end-2019 should be beneficial for Chemical Company of Malaysia Bhd (supply of caustic soda) and Dialog Group Bhd (entrenched Pengerang beneficiary).

“We are positive on the growing trend of cashless payment in which we highlight Revenue Group Bhd (main market transfer is another catalyst). Lastly, we reckon that the turnaround of Proton is real and sustainable, with DRB-Hicom Bhd as the direct beneficiary. Our other top picks include AirAsia Group Bhd, Bursa Malaysia Bhd and Sunway Bhd,“ added HLIB.

The research house said key uncertainties stemming from the US-China trade war, Brexit and Malaysia’s potential removal from the World Government Bond Index will likely persist into 2H19.

“We project flattish earnings for 2019 (+0.7%) and 4.6% for 2020, below its post-global financial crisis compound annual growth rate of 5%. Our KLCI target of 1,700 is based on 15.6 times price-to-earnings.”

Meanwhile, Kenanga Research said it prefers to adopt a “buy on weakness” approach within the index range of 1,635 to 1,595 points.

“Based on our investment strategy, we have selected Alliance Bank Malaysia Bhd, CIMB Group Holdings Bhd, D&O Green Technologies Bhd, Hartalega Holdings Bhd, Kossan Rubber Industries Bhd, MBM Resources Bhd, Mynews Holdings Bhd, Pantech Group Holdings Bhd, Power Root Bhd and Sapura Energy Bhd as our 3Q19 top picks.”

The research house said fundamentally, the FY19/FY20 earnings growth rates for FBMKLCI remain uninspiring at 14.7%/3.6% (from 17.6%/2.4% in the previous quarter).

“Post results and housekeeping in our earnings numbers and target prices, we have fine-tuned our end-2019 index target to 1,745 points (from 1,750 points previously), representing FY19/FY20 price-to-earnings ratio of 19 times/18 times.”

HLIB Research maintained its 2019 growth domestic product growth forecast of 4.5%, which is expected to be supported by increase in the commodity sector (agriculture and mining) due to the low base effect, but will be offset by moderation across manufacturing and services due to global slowdown and domestic constraints.

“While Bank Negara Malaysia is expected to maintain the overnight policy rate at 3% for the rest of the year, we do not preclude a possibility of a rate cut should the global scene deteriorate further, in an environment of low inflation and high risk aversion.”

It downgraded its inflation forecast to 1% (from +1.5% year-on-year) following delay in implementation of petrol price subsidy and weak food prices.

“In our view, Malaysia remains in a tough spot during its transition phase, as it walks a tight rope, balancing between growth and fiscal prudence against an uncertain external backdrop,“ said HLIB.

Proton achieves best market share in 47 months as industry volume shrinks

KUALA LUMPUR: Perusahaan Otomobil Nasional Sdn Bhd (Proton) captured an 18.1% share of the local total industry volume (TIV) last month, its highest share figure since July 2015.

In a statement today, the car maker said it sold 7,615 units car for June, a month when the TIV for the Malaysian automotive market is estimated to have shrunk by 30.8% to 42,090 units.

“As is traditional for Malaysia automotive sales, there is a precipitous drop in numbers for the month following a festive period.

“Proton, however, bucked the trend as sales grew by 23% compared to June last year, helping us finish second in the sales table for the third consecutive month,“ it said.

This brings Proton’s year-to-date market share to 14.7%, an improvement over the 2018 full-year figure of 10.8%.

Proton X70 model continues to be one of Proton’s star products with 15,175 units of the sport utility vehicle delivered in the first half (H1) of the year.

Sales of the Proton Saga continued to grow with 2,541 units delivered in June, contributing to a volume growth of 27% in H1, while other models, now updated with intelligent features, are performing equally well with bookings for the 2019 Proton Persona, Iriz and Exora increasing by an average of 108%, 180% and 135%, respectively, compared to their pre-update booking numbers.

Chief executive officer Dr Li Chunrong said for the second half of the year, Proton would concentrate on continuing to excite the market further by introducing new and updated models as promised at the beginning of the year.

Rev Asia’s MoU with Catcha lapses

PETALING JAYA: Rev Asia Bhd said its memorandum of understanding (MoU) MoU with Catcha Group Pte Ltd to acquire a majority interest in a foreign-owned group of company has lapsed.

“During the course of performing the due diligence exercise, the company and Catcha could not come to a mutual understanding on the final terms of the definitive agreement. Subsequently, both parties had mutually agreed not to extend the MoU and hence the MoU is considered lapsed on June 27, 2019,” Rev Asia said in a filing with Bursa Malaysia.

The proposed acquisition was part of Rev Asia’s regularisation plan to maintain its listing status after having affected by Guidance Note 2 (GN2) in accordance to Bursa Malaysia regulations.

The GN2 was triggered in August 2017 after Bursa Malaysia found that Rev Asia was considered as a cash company pursuant to Rule 8.03 and GN2 of listing requirements, which requires the group to acquire new core business that would be substantially comprehensive and increase shareholders’ value.

Bursa Malaysia closes at nearly four-month high

KUALA LUMPUR: Bursa Malaysia breached the 1,690 resistance level to close at nearly a four-month high, thanks to lingering trade optimism contributed by the US-China trade truce as well as crude oil output cuts by Russia and Saudi Arabia.

At 5pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) jumped 7.38 points, or 0.44%, to finish at 1,691.0, the highest level since March 4, 2019, when the index ended at 1,693.99.

However, Malacca Securities Sdn Bhd senior analyst Kenneth Leong said quick profit-taking activities took place in lower liners, making the market breadth turn slightly negative today with 450 losers against 440 gainers.

The index opened 2.16 points higher at 1,685.78 compared to Monday’s close of 1,683.62, and moved between 1,684.06 and 1,694.55 throughout the day.

Today’s trading saw 386 counters unchanged, 562 untraded and 19 others suspended.

Turnover fell to 2.82 billion units worth RM2.56 billion from 3.31 billion units worth RM2.18 billion on Monday.

When contacted by Bernama today, Leong said he expected the rally to continue although a new round of tariffs on the European Union’s (EU) imports was proposed by the US government early today.

“The new tariffs would not have an immediate impact on Bursa Malaysia, but the impact would probably kick in at end of the month,“ he said.

Reuters reported that the US government has proposed an additional US$4 billion (US$1=RM4.14) in tariffs on EU goods to pressure the EU to fold in a 15-year dispute over aircraft subsidies.

Among heavyweights, Tenaga rose 26 sen to RM14.22, Maybank and Dialog bagged seven sen each to RM8.98 and RM3.34, Maxis increased 10 sen to RM5.67 while Axiata perked up five sen to RM5.20.

Of actives, KNM inched up half-a-sen to 30 sen while its warrant added three sen to 13 sen.

Bumi Armada and Compugates lost half-a-sen each to 22 sen and two sen, respectively, while Ekovest was one sen lower at 87.5 sen.

BLD Plantation topped the gainers list, putting on 43 sen to RM6.78, followed by Nestle, which rose 40 sen to RM148.80, G3 Global gained 25 sen to RM1.75, while Petronas Dagangan and Sungei Bagan Rubber increased 22 sen each to RM25.60 and RM3.03, respectively.

The FBM Emas Index gained 55.60 points to 11,940.76, the FBMT 100 Index increased 56.50 points to 11,784.07 and the FBM Emas Syariah Index was 52.68 points better at 12,318.76.

The FBM 70 jumped 92.22 points to 14,877.14 but the FBM Ace fell 14.94 points to 4,522.89.

Sector-wise, the Financial Services Index added 76.40 points to 16,849.31, while the Industrial Products and Services Index eased 0.51 of-a-point to 163.01 and the Plantation Index shed 37.41 points to 6,940.87.

Main Market volume narrowed to 2.03 billion shares worth RM2.38 billion from 2.59 billion shares worth RM2.02 billion on Monday.

Warrants turnover, however, advanced to 423.88 million units valued at RM77.01 million compared with 302.71 million units valued at 43.23 million.

Volume on the ACE Market shrank to 358.50 million shares worth RM103.32 million versus 416.62 million shares worth RM117.97 million.

Consumer products and services accounted for 239.28 million shares traded on the Main Market, industrial products and services (248.75 million), construction (201.61 million), technology (152.42 million), SPAC (nil), financial services (96.87 million), property (171.10 million), plantation (13.33 million), REITs (10.16 million), closed/fund (10,000), energy (734.86 million), healthcare (27.36 million), telecommunications and media (96.55 million), transportation and logistics (32.79 million) and utilities (12.85 million).

The physical price of gold as at 5pm stood at RM179.22 per gramme, up 56 sen from RM178.66 at 5pm yesterday. — Bernama

German car sales fall back in June

FRANKFURT, July 2 — New car registrations in Germany, Europe’s top economy, retreated in June, industry data showed today, partially wiping out a rebound seen the previous month.  Some 325,200 new cars hit the road last month, the VDA…

Budweiser, Stella maker eyes US$10b Hong Kong IPO

HONG KONG, July 2 — The company that makes Stella Artois and Budweiser hopes to raise almost US$10 billion (RM41.4 billion) by listing on the Hong Kong stock exchange, marking what would be the world’s biggest initial public offering this year,…