Thursday, July 11th, 2019


Ringgit hits 3-month high against dollar after Fed primes markets for rate cut

PETALING JAYA: The ringgit hit a three-month high of 4.1145 against the US dollar today after US Federal Reserve chairman Jerome Powell supported market expectations of an interest rate cut later this month.

Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said Powell’s has been very cautious in his assessment of the state of the global economy, especially in the context of trade conflict, which is highly fluid.

“In that sense, the case for lowering interest rates is valid and the question now is by how much the Fed is willing to cut the federal funds rate this year. This will support the ringgit as foreign funds would flow into emerging markets in search for higher yielding assets. This could benefit the ringgit in the immediate term,” he told SunBiz.

Emerging Asian currencies strengthened against a weaker dollar yesterday and stocks rose amid the prospects of monetary policy support from the Fed.

FXTM market analyst Han Tan said should US monetary policy be eased by a wider-than-expected margin later this month, investors may question the strength of US economic growth momentum.

“Such concerns would encourage a softer dollar environment, presenting Asian assets with more potential upside, while safe havens such as gold and the Japanese yen could also advance further,” said Tan.

Still, potential gains in Asian assets remain capped by the lingering uncertainties surrounding US-China trade tensions. Risk appetite will likely be reined in, until both countries break the impasse and reach a deal that alleviates the global growth outlook.

Market sentiment surrounding the strength of the global economy could be further influenced by China’s economic data releases due over the coming days.

On Bursa Malaysia, the FBM KLCI edged up 0.29 point to close at 1,679.26 today. The market traded within a high of 1,681.78 and a low of 1,674.70 during the day.

Malacca Securities said with the Fed adopting a more dovish tone, there should be some near-term reprieve for Malaysian equities as it sees the positivity on Wall Street also permeating to the local stock market.

It said while the strongest hint of an interest rate cut is set to buoy near-term sentiments, it also underlines the increasing severity of the weakness in the US economy that could spread globally, given its position as the largest in the world.

“Although we think there could be some near-term positivity on Bursa Malaysia, we think that substantive upsides could still be elusive as valuations remain toppish. Hence, we see the 1,680-1,687 levels serving as the near-term resistances with the 1,700 resistance level becoming a significant hurdle. The supports, on the other hand, are at 1,670-1,672 levels, followed by the 1,660 level,” said Malacca Securities.

Schroder Investment Management (Singapore) Ltd chief economist & strategist Keith Wade expects a 25 basis point move at the next Fed meeting at the end of the month and. given its outlook for a sluggish economy, another move in September.

“Both are likely to be presented as ‘insurance’ against the downside risks facing the US economy. Our view is that more will eventually be needed given the headwinds facing the economy,” Wade said.

Magna Prima, PowerChina eye EPC works from PNB

PETALING JAYA: Magna Prima Bhd is collaborating with PowerChina Construction Group Ltd to bid for engineering, procurement and construction (EPC) works from Permodalan Nasional Bhd (PNB).

In filing with Bursa Malaysia, the company said it has entered into a memorandum of understanding (MoU) with PowerChina Construction to establish a consortium to collaborate and bid for the EPC contract.

The activities include all tasks required of the parties with respect to or in connection with the EPC contract for the project and including the negotiation of and entering into related arrangements, documentation and agreements with PNB.

Under the MoU, PowerChina Construction will be the lead member of the consortium in preparing the bid proposal for the EPC contract and provide funding for expenses incurred from the date of signing the MoU till the award of the EPC contract.

The budget will be mutually agreed between Magna Prima and PowerChina Construction.

PowerChina Construction will also appoint its member company, Sinohydro Corp (M) Sdn Bhd and local EPC contractor Magna Prima, to be members of the consortium. Sinohydro and Magna Prima will be appointed to execute and manage the EPC contract.

As the local EPC contractor, Magna Prima will coordinate with relevant local authorities and Sinohydro during the preparation of the bid proposal, provide the necessary technical and commercial documents related to the bidding, and facilitate the project’s compliance with local relevant regulations.

It will also appoint local subcontractors and suppliers to the consortium for the execution of the project.

Boustead scraps RM172m deal to buy land from LTAT

PETALING JAYA: Boustead Holdings Bhd’s RM172.78 million land purchase from Lembaga Tabung Angkatan Tentera (LTAT) has been aborted.

In a filing with Bursa Malaysia, Boustead said its wholly owned subsidiary Boustead Construction Sdn Bhd and LTAT have mutually agreed to terminate the sale and purchase agreement (SPA) and LTAT has refunded the deposit paid by under the SPA.

The group said the termination will not have any material effect on the net asset, net asset per share, gearing, earnings and earnings per share of the group for the financial year ending Dec 31.

To recap, Boustead Construction had proposed to acquire two plots of land held by LTAT in Bukit Jalil for RM172.78 million cash in December 2016. The land measures a total of 10.74 acres.

Under a development order obtained in May 2016, the land was earmarked for a mixed development comprising commercial plots, car park, shop offices and other ancillary structures.

Malakoff pays US$70m for Desaru Investments

PETALING JAYA: Malakoff Corp Bhd is acquiring the entire stake in Desaru Investments (Cayman Isl.) Lte (DIL) from Khazanah Nasional Bhd for US$70 million (RM289 million).

“This will provide immediate earnings accretion to the company as well as increase in cashflows, derived from the remaining contract periods of approximately ten years under both Shuaibah Water & Electricity Co Ltd’s (SWEC) power and water purchase agreement (PWPA) for Shuaibah 3 independent water and power plant (SIWPP) and Shuaibah Expansion Project Company’s (SEPCO) water purchase agreement for Shuaibah 3 expansion in-dependent water plant (SEIWP),” said its CEO Datuk Ahmad Fuaad Kenali in a statement.

The proposed acquisition will also increase and consolidate Malakoff’s total effective generation capacity for power and water to 6,708 MW and 544,375 m3 /day respectively, from the existing 6,600 MW and 420,925 m3 /day respectively.

UWC shares continue to rise after strong debut

PETALING JAYA: Shares of UWC Bhd continued to climb today, rising as much as 9.29% or 13 sen to an intraday high of RM1.53.

Today, the stock closed its second trading day 2.14% or 3 sen higher, with 87.54 million shares traded, making it the fifth most actively traded stock on the bourse.

The integrated engineering service provider made a strong debut on Wednesday with an opening price of RM1.10, representing a 34% premium to its initial public offering (IPO) price of 82 sen.

The stock closed its first trading day at an intraday high of RM1.40, a 70% premium to its IPO price.

UWC is listed on the Main Market of Bursa Malaysia and is the top performer so far among the new listings this year and third best performer over the past 12 months, in terms of first day trading performance.

Of the 27 new listings on the bourse since July last year, UWC is the third best performer after Radiant Globaltech Bhd and Securemetric Bhd, whose share prices achieved 130.43% and 114% premiums respectively to their IPO prices.

UWC is also the second listing on the Main Market so far this year, after HPMT Holdings Bhd’s listing on June 12.

Malakoff’s indirect unit to acquire Khazanah’s stake in Desaru Investment Ltd

KUALA LUMPUR, July 11 — Malakoff Corporation Bhd’s (Malakoff) indirect wholly-owned subsidiary, Malakoff Gulf Ltd (MGL) has entered into a share sale agreement with Khazanah Nasional Bhd to acquire the latter’s entire equity interest in Desaru…

FGV divests its 100pc equity interest in FGVCO

KUALA LUMPUR, July 11 — FGV Holdings Bhd (FGV) yesterday inked an Equity Transfer Agreement with Grand Industrial Holding Co, Ltd (GIH) for the divestment of its 100 per cent stake in FGV China Oils Ltd (FGVCO) for RM100 million. GIH is a…

Airbnb cedes to EU pressure on price offers

BRUSSELS, July 11 — Airbnb has successfully fended off Brussels regulators in time for the summer holidays by agreeing to change how it presents rental prices to consumers, the EU said yesterday. “For these summer holidays, Europeans will simply…

Bank of England boss dodges IMF speculation

LONDON, July 11 — Bank of England governor Mark Carney today gave outgoing IMF chief Christine Lagarde his warm support as she heads to the European Central Bank, but evaded questions about whether he wants to succeed her. The Canadian is due to…

Bintai Kinden wins RM2.08m TNB contract

PETALING JAYA: Bintai Kinden Corp Bhd has been awarded a RM2.08 million contract from Tenaga Nasional Bhd (TNB).

According the its filing with Bursa Malaysia, the non-renewable contract is for the proposed 132kV single circuit underground cable from PMU Galloway to PMU KLCC2 and it is expected to be completed within 180 days from the commencement date.

The group expects the contract to contribute positively to its revenue and earnings for the financial year ending March 31, 2020.