Wednesday, July 3rd, 2019


UK regulator investigates role of Facebook, Google in ad market

LONDON, July 3 — Britain’s competition regulator has launched an investigation into the power wielded by Facebook and Google in digital advertising markets, including the ownership of data. The Competition and Markets Authority said it would…

Climate campaigners 'greatest threat' to oil sector, says Opec

VIENNA, July 3 — Opec’s secretary-general has complained of what he called “unscientific” attacks on the oil industry by climate change campaigners, calling them “perhaps the greatest threat to our industry going forward”. Speaking in…

Canada posts rare trade surplus in May

OTTAWA, July 3 — Canada posted a surprise trade surplus in May thanks to record exports to the United States, its main trading partner, the government reported today. The surplus of C$762 million (RM2.4 billion) was only the second such…

S&P 500 opens at record high on rising rate cut hopes

NEW YORK, July 3 — The S&P 500 index hit a record high at the open today, boosted by healthcare stocks, as bets of an interest rate cut were spurred by fears of a slowing global economy due to simmering trade tensions. This is the second time…

Litrak, Sprint Holdings agree to MOF Inc’s takeover offer

KUALA LUMPUR, July 3 — Lingkaran Trans Kota Holdings Bhd (Litrak) and Litrak’s associate company Sistem Penyuraian Trafik KL Barat Holdings Sdn Bhd (Sprint Holdings) have resolved to accept the government’s offer to take over Damansara-Puchong…

Moody’s affirms Sime Darby Plantation’s Baa1 ratings, outlook stable

SINGAPORE, July 3 — Moody’s Investors Service (Moody’s) has affirmed the Baa1 issuer rating of Sime Darby Plantation Bhd (SDP) with a stable outlook. The outlook is maintained at stable, reflecting Moody’s expectation that SDP would…

No signs of pick-up for Malaysian banking sector

PETALING JAYA: Conditions for the local banking sector are expected to remain challenging in the next six months as there are no signs of pick-up, according to Hong Leong Investment Bank Research (HLIB Research).

The research house sees a moderation in sector earnings growth to 2.6% in 2019 from 7.0% in 2018.

HLIB Research said with the US Federal Reserve sounding even more dovish in recent weeks, Bank Negara Malaysia may follow suit and lower the Overnight Policy Rate (OPR) again.

“On a full-year basis, we estimate that every 25 basis points (bps) reduction in OPR would see sector NIM (net interest margin) slipping 3-4bps and our profit forecast falling by 2-3%; from our sensitivity analysis, Alliance and BIMB would lose most if interest rate falls while Affin and AMMB are least affected.”

Despite that, the research house draws comfort from the sector’s strong asset quality and capital position, thus it advised long-term investors who strongly favour sector exposure to be selective.

“Our preferred pick is Maybank for its above-average dividend yield and low foreign shareholding level versus larger domestic peers. Other ‘buy’ ratings are RHB and Alliance.”

HLIB Research warned that the market has not priced in another OPR cut which, therefore, makes banking stocks susceptible to fresh sell-downs. “Thus, this presents a short-term underperformance risk.”

It said the Financial Services Index clocked gains of 3% in the first two months of 2019 but it was quickly erased in the following three to four months, due to the OPR cut, potential removal from FTSE World Government Bond Index and broad negative impact from escalating US-China trade angst.

“However, there were positive outliers like BIMB and RHB which saw their share prices rise by 28% and 8% in 1H19 respectively; the former saw strong showing at its takaful operations while the latter was lifted by good fundamentals and higher dividend payouts.”

The research house said banks were off to a humble start (whereby first quarter 2019 sector pre-provision profit was down 2% year on year) and the second quarter is expected to be challenging as the OPR was cut by 25 basis points in early May, putting strain on short-term net interest margin.

It also sees tapering loan growth and lacklustre non-interest income, considering the softer macro climate today.

HLIB Research expects the sector’s return on equity to drop by 20 bps to 10%, dragged down by the faster uptick in net credit cost of 24bps in 2019 (17bps in 2018).

RAM ratings expects Malaysia’s may trade growth to accelerate

KUALA LUMPUR, July 3 — RAM Ratings expects Malaysia’s trade growth to have increased its momentum in May 2019, despite the escalated import tariffs between the United States (US) and China that same month. The ratings agency said the healthier…

AirAsia files appeal against court’s decision

PETALING JAYA: AirAsia Bhd and AirAsia X Bhd have filed a notice of appeal against the Kuala Lumpur High Court’s dismissal of the airline group’s judicial review leave application against the Malaysian Aviation Commission (Mavcom).

In a filing with Bursa Malaysia, AirAsia Group Bhd said its wholly owned subsidiary AirAsia and affiliate AirAsia X filed the notice of appeal on Tuesday and will make further updates on any material development on the matter.

Last week, the High Court dismissed the judicial review leave application filed by the airline group. Malaysia Airports Holdings Bhd’s wholly owned subsidiary Malaysia Airports (Sepang) Sdn Bhd was named as a respondent in the judicial review application filed on May 14.

The judicial review application was inter alia for an Order of Mandamus to compel Mavcom to commence on a decision on the disputes between the airline group and Malaysia Airports Sepang.

The airline group had sought a certiorari order to quash Mavcom’s refusal to decide on the former’s dispute with the airport operator as well as the Order of Mandamus to compel Mavcom to make a decision.

The AirAsia group and MAHB have been embroiled in a dispute over uncollected passenger service charges (PSC) which the airline refused to collect, citing subpar airport services that it claims do not justify the PSC rates.

AAB and AAX had said under the Mavcom Act, Mavcom has a statutory duty to commence to decide on the said disputes once mediation between the parties have failed, or is deemed to have failed.

Ekovest takes Samling to arbitration

PETALING JAYA: Ekovest Bhd has commenced arbitration proceedings against Samling Resources Sdn Bhd (SRSB) via its wholly owned subsidiary Ekovest Construction Sdn Bhd (ECSB).

In its Bursa filing, Ekovest said the arbitration proceedings relate to the wrongful termination of joint venture and shareholders agreement dated Jan 6, 2017 entered by both parties to undertake the development and upgrading of the Pan Borneo Highway Phase 1 WPC-02 work package contract in Sarawak.

The group claimed that there was a misrepresentation by SRSB in order to induce ECSB into performing SRSB’s task and responsibilities relating to the project before the tender submission and procurement of the project from project delivery partner, Lebuhraya Borneo Utara Sdn Bhd (LBUSB).

Ekovest also alleged that SRSB had failed to make the necessary applications for the approval from the project delivery partner for the sub-contract of the project to its joint venture company, Samling – Ekovest JV Sdn Bhd.

The group added that SRSB failed to take any steps to compel LBUSB to consent to the sub-contract of the works to the JV company, which should not have been unreasonably withheld.”