Thursday, August 8th, 2019


StanChart cuts Malaysia’s growth outlook

PETALING JAYA: Standard Chartered Global Research (StanChart) has lowered its 2019 gross domestic product (GDP) growth forecast for Malaysia to 4.6% from 4.9%, due to impact from a poor external environment.

“While resilient private consumption should buffer the economy against external uncertainty, growth is not immune to the poor external environment. Also, the domestic mining sector has failed to recover as expected this year,” it said in its economic outlook report for the third quarter of the year (3Q19).

The revised GDP forecast is within Bank Negara Malaysia’s growth projection range of 4.3-4.8%.

The research house highlighted that private consumption rose 7.6% year-on-year (yoy) for 1Q19, contributing 96% to Malaysia’s 1Q19 4.5% GDP growth. On the other hand, investment fell 3.5% yoy amid soft public-sector spending and mining contracted 1% year-to-date (ytd) as supply disruptions continued.

Stanchart said ongoing tax refunds would also provide support for consumption. As of end-April, about RM17.1 billion of goods and services tax and income tax refunds have been paid out.

That said, it expects private consumption to moderate from last year’s pace of nearly 8% given the high base and signs of moderation in the labour market, as employment eased to 2% yoy in April and vacancies to job seekers ratio fell to 1.6 times.

“We estimate that wage growth slowed to 4.9% yoy in April,” it said.

According to StanChart, Malaysia’s small size and open nature with a trade-to-GDP ratio of 128% means it is exposed to global trade weakness. Note that total trade in GDP terms fell 0.6% yoy in 1Q19, the biggest drop since September 2016.

Although it is outperforming regional peers in some export categories, overall export performance is still weaker than in 2018.

In addition, the construction sector is also slowing, with the construction of residential buildings contracting for a fifth consecutive quarter in 1Q19 and residential property inventory still at a multi-year high of 28 months.

“The resumption of large infrastructure projects, such as the East Coast Rail Link, may help. But given the poor economic outlook, we expect investment growth to remain soft,” it said.

For 2019, the research house maintained its average consumer price index inflation forecast of 1%. It expects inflation to pick up in the second half of the year as the net deflationary impact of last year’s tax changes begin fading from June 2019.

“Sales and service tax pass-through in the coming months may also provide support, although pass-through has been subdued so far,” it said.

It said that lower global oil prices would post a downside risk to its inflation forecasts while the government’s decision to cap prices for RON95 fuel at lower levels should also put a lid on inflation.

Meanwhile, Bank Negara Malaysia is expected to remain neutral and watchful for now, after cutting the overnight policy rate in May.

“While downside risks to growth remain, we think the May cut was pre-emptive, and we expect the central bank to stay on hold. The July monetary policy statement suggests a neutral stance for now,” said StanChart.

Although external challenges have kept growth sentiment cautious, it expects Malaysia’s economy to remain healthy in 2019, on the back of a robust labour market which would support domestic growth momentum while stable core inflation suggests a limited need for a rate cut.

“Meanwhile, our Monetary Conditions Index for Malaysia points to looser conditions following the policy rate cut and an improvement in money supply growth.”

It maintained its neutral short- and medium-term weighting on the ringgit and its forecasts of 4.15 and 4.20 for end-2019 and mid-2020.

SC reorganises senior management, announces new appointments

KUALA LUMPUR: The Securities Commission Malaysia (SC) has announced a reorganisation and several senior management appointments.

SC deputy chief executive Datuk Zainal Izlan Zainal Abidin will now have direct oversight over supervision and surveillance functions as well as the enlarged corporate resources business group, which will now include the technology department and the people and organisation development department.

Nadiah Abdullah has been appointed as the SC’s new executive director of corporate resources effective Aug 5, 2019. She takes over from Tengku Zarina Tengku Chik, who will move to a new role as the CEO of Securities Industry Development Corp (SIDC) effective Sept 1, 2019.

“The development and Islamic markets business group will be separated to facilitate a more pronounced focus on the longer term development of the broader capital market and Islamic capital market,” SC said.

Salmah Bee Mohd Mydin, who has served the SC for 25 years in various roles including enforcement, supervision and licensing, was promoted to the role of executive director of market development business group effective Aug 1, 2019.

The market development business group will steer the SC’s overall corporate planning and strategy. This will be led by Dr Wong Huei Ching, who has been promoted to the position of director.

Sharifatul Hanizah Said Ali, the current CEO of the SIDC, will join the SC as executive director to head the Islamic capital market development business group effective Aug 10, 2019. She will be tasked to identify new areas of growth for the Islamic capital market towards a future-ready global positioning.

The restructured digital strategy and innovation business group will consolidate the SC’s efforts in promoting innovative market-based financing models and monitoring the evolving cyber risk landscape.

More people buying Chinese yuan at money changers in Singapore as currency weakens

SINGAPORE, Aug 8 — As the Chinese yuan drops to a six-year low against the Singapore dollar, some money changers here are seeing more people who want to buy the currency. A check with some of them yesterday showed that they are also seeing an…

Singapore to stimulate economy if necessary, says PM Lee

SINGAPORE, Aug 8 — Singapore will stimulate its economy should it become necessary in the face of an economic slowdown, according to Prime Minister Lee Hsien Loong. “This year, our economy has slowed down. Global demand and international trade…

Abdul Razib Dawood appointed as new Energy Commission CEO

PUTRAJAYA, Aug 8 — The Energy Commission (ST) has appointed Abdul Razib Dawood as its new chief executive officer (CEO) effective August 1, to replace Azhar Omar who retired on April 1. Abdul Razib, who graduated from the University of Warwick,…

Singtel’s quarterly profits fall 35pc

SINGAPORE, Aug 8 — Singtel’s profits slumped by 35 per cent year-on-year in the quarter ending on June 30, with losses from its Indian subsidiary Bharti Airtel dragging down the group’s overall earnings, the telco announced today. The profits…

Trade wars take toll as Philippine growth slows to four-year-low

MANILA, Aug 8 — Philippine economic growth slowed to 5.5 per cent in the three months to June, its slowest pace in more than four years, as trade wars took their toll, the government said today. “As we have anticipated, these have been…

More Hong Kong companies say business impacted by mass protests

HONG KONG, Aug 8 — Conglomerate Swire Pacific became the latest major Hong Kong company to voice concern about the impact of protests in the city on business activity, saying they are having direct and indirect impact on demand on a number of its…

Bank of China sues Khee San, subsidiary

PETALING JAYA: Khee San Bhd (KSB) and its wholly owned subsidiary Khee San Food Industries Sdn Bhd (KSFI) have been served a legal suit by Bank Of China (Malaysia) Bhd (BOC) for a default in loan repayment amounting to RM14.62 million.

BOC’s claims against KSFI and Khee San are RM14.62 million as at July 30, 2019; interest on the sum of RM14.62 milion at the rate of 1.25% per annum; costs against KSFI on a solicitor and client basis; costs against Khee San on a full indemnity basis; and such further or other relief.

However, the company said in a stock exchange filing that BOC has committed breach of conduct, as Khee San and KSFI are in the midst of talks with bankers, including BOC, on a proposed financial exercise.

Khee San had in July received two notices of demand (NOD) respectively through BOC’s solicitors Messrs Skrine & Co as the corporate guarantor for payment owing by KSFI for RM11.7 million.

“However, upon receiving the above NODs, Khee San has immediately engaged with BOC through active dialogue sessions and direct meetings with BOC officials. The management of Khee San has also been actively negotiating with BOC on the terms of repayment and the possibility of converting the facilities owing to BOC into term loan. There have been legal correspondences between KSB’s solicitors and BOC and its solicitors in June and July 2019,“ said Khee San.

The company will file a memorandum of appearance on Aug 13 and case management has been fixed on Aug 15 for further directions from the court.

Khee San said it intends to reschedule the facilities by terming out the short-term obligations to ease the repayment for the company and has been in discussions with the bankers on a proposed financial exercise.

“Both Khee San and KSFI have engaged with BOC as well as other lenders with the last meeting on Aug 2, 2019 where parties discussed the terms of repayment and possibly to reschedule these facilities from short term to long term. It was agreed that a follow-up meeting will ensue to term out the facilities subject to the cash flows of the Khee San and KSFI.”

The meeting concluded with all parties, including BOC representatives, agreeing to a follow-up meeting to reach an amicable solution and to finalise detailed terms of repayments. Khee San was to come up with a cash flow projection to meet the repayment obligations of the proposed rescheduling of the facilities.

“It’s the opinion of the company that BOC should not have proceeded with legal proceedings against KSFI and Khee San to recover the outstanding amounts. The writ of summons (filed on Aug 1, 2019) was in fact filed prior to the meeting held with the bankers (on Aug 2, 2019) while BOC kept silent on the filing of the writ throughout the meeting, and in fact misled Khee San and KSFI,“ Khee San said.

KSFI and Khee San have appointed solicitors to deal with the matter prior to the default, who were also present at the meeting, and a formal letter describing this has been sent by the company’s lawyers to Skrine & Co stating the grounds of this mala fide conduct and a breach of the rules governing bankers’ fiduciary responsibilities to their customers, KSFI and Khee San included.

“It is the opinion of the company’s lawyer that the company has a good defence and has advised the company to take all measures including lodgement of necessary complaints to the banking authorities on the breach of conduct of BOC.”

KSFI and Khee San are actively engaging all its bankers and will submit a comprehensive proposal to reschedule the loan facilities in due course. It does not expect any significant impact from the default in payment.

Bursa Malaysia ends broadly higher, CI up 0.71%

KUALA LUMPUR: Bursa Malaysia ended broadly higher in line with regional peers and amid an announcement of better-than-expected Chinese trade data for July.

At close, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) jumped 0.71% or 11.32 points to end at 1,616.02 from Wednesday’s close of 1,604.7.

The key index, which opened 2.48 points higher at 1,607.18, moved between 1,605.84 and 1,620.65 throughout the day.

On the broader market, gainers outmuscled losers 508 to 296, while 401 counters remained unchanged, 699 untraded and 18 others suspended.

Turnover decreasing to 2.12 billion units worth RM1.52 billion against 2.57 billion units worth RM2.56 billion on Wednesday.

China’s exports increased by 3.3% year-on-year, the fastest since March, but imports fell 5.6%.

Regionally, Hong Kong’s Hang Seng Index went up 0.48% to 26,120.77, Japan’s Nikkei 225 advanced 0.37% to 20,593.35 and Singapore’s Straits Times Index fell 0.47% to 3,169.86.

On Bursa, for the heavyweights, Maybank added two sen to RM8.62, Public Bank advanced 14 sen to RM21.42, Petronas Chemicals gained one sen to RM7.30, while TNB, IHH Healthcare and CIMB were flat at RM13.84, RM5.75 and RM5.06, respectively.

As for the actives, Datasonic rose 7.5 sen to 80 sen, Genting Malaysia rose five sen to RM3.23, SMTrack increased one sen to 20 sen, KNM and Iris Corp were flat at 39.5 sen and 16 sen respectively, while Eduspec eased one sen to 5.6 sen and Netx inched down half-a-sen to 1.5 sen.

The FBM Emas Index bagged 80.67 points to 11,440.07, the FBMT 100 Index went up 77.79 points to 11,273.4, while the FBM Emas Shariah Index improved 91.85 points to 11,928.01.

The FBM 70 was 93.64 points higher at 14,279.49 and the FBM Ace expanded 73.93 points to 4,652.07.

Sector-wise, the Financial Services Index accelerated 76.21 points to 15,857.32, the Plantation Index advanced 127.89 points to 6,757.21 and the Industrial Products and Services Index inched up 0.71 point to 151.61.

Main Market volume declined to 1.14 billion shares valued at RM1.35 billion versus Wednesday’s 1.58 billion shares valued at RM2.39 billion.

Warrants turnover fell to 409.73 million units worth RM100.12 million from 506.23 million units worth RM110.52 million yesterday.

Volume on the ACE Market rose to 569.73 million shares valued at RM64.81 million against 482.21 million shares valued at RM50.46 million.

Consumer products and services accounted for 199.55 million shares traded on the Main Market, industrial products and services (134.39 million), construction (91.58 million), technology (168.25 million), SPAC (nil), financial services (34.72 million), property (62.06 million), plantations (8.32 million), REITs (11.83 million), closed/fund (9,100), energy (252.34 million), healthcare (29.12 million), telecommunications and media (104.55 million), transportation and logistics (25.81 million) and utilities (15.23 million). — Bernama