Monday, September 2nd, 2019


Pound dives as UK election speculation mounts before Brexit showdown

LONDON, Sept 2 — Sterling fell sharply today as Boris Johnson summoned his ministers for an emergency meeting, fuelling expectations the prime minister was preparing to call a snap election should lawmakers this week vote to delay Brexit….

Continental weighs full spin-off for powertrain business

FRANKFURT AM MAIN, Sept 2 — German car components giant Continental said today it was considering spinning off completely its powertrain division, alongside the already-mooted option of a partial market flotation. The board “decided to consider…

Dubai in push to rebalance bloated property market

DUBAI, Sept 2 — Dubai’s ruler announced today the creation of a panel to address a glut in the property market, a key part of the economy but in decline for the past five years. The committee charged with rebalancing the industry will be headed…

Deutsche CEO to invest 15pc of monthly net pay in bank’s shares

FRANKFURT, Sept 2 — Deutsche Bank’s chief executive Christian Sewing will spend 15 per cent of his monthly net salary buying the German lender’s shares starting in September, a regulatory filing showed today. The filing makes official a pledge…

Malaysian Q2 corporate earnings ‘uninspiring and not very encouraging’

PETALING JAYA: Malaysia’s corporate earnings for the second quarter have been described as “uninspiring and not very encouraging” by analysts amid pressure from the US-China trade war and low commodity prices.

Public Investment Bank head of research Ching Weng Jin commented that corporate earnings have not been very encouraging so far.

He identified the plantation and aviation sectors as those that underperformed in the second quarter as well as some weaknesses in the property sector.

“By and large, the banks have been doing okay with a few surprises,” Ching told SunBiz.

For the second quarter of 2019, Malaysia posted gross domestic product (GDP) growth of 4.9%, higher than market expectations of 4.7%.

Despite that, Ching said, there is a mismatch as there has been a slowdown in business activity and consumer spending due to lack of confidence stemming from the ongoing trade tensions between the world’s two largest economies.

To boost market sentiment, he said, Budget 2020 could be one of the drivers, especially with the introduction of expansionary measures.

Since the US-China trade war broke out a year ago, there have been no signs of a resolution between the two economic powerhouses; instead, tit-for-tat retaliation has escalated the tensions.

“If there is no progress on the external uncertainties, it is likely to be business as usual, a similar path to what we saw in the equity market in the first half of 2019,” said Ching.

JF Apex Securities head of research Lee Chung Cheng offered a similar view, stating that he expects the equity market to be subdued despite Malaysia’s strong economic performance in the second quarter.

“Corporate earnings for this quarter have been uninspiring, as most come in within or under market expectations,” he said.

He pointed out even the banks failed to beat market expectations, while the poor performance from the plantation sector was within expectations.

Meanwhile, the manufacturing sector performed below the research house’s expectations due to the ongoing US-China trade dispute.

Lee noted that Malaysian equities are trading at a premium compared with their counterparts in neighbouring countries.

“Malaysia’s earnings per share growth is behind some of the markets in the region. Indonesia and the Philippines have a better corporate growth for the year,” he said.

The FBM KLCI has declined 4.6% year to date. Bursa Malaysia’s benchmark closed at 1,612.14 points last Friday, down from 1,690.58 points at the end of last year.

During the same period, the Finance Index has dropped 10.1% to 15,550.02 points from 17,296.47 points, while the Plantation Index has slipped 0.2% to 6,889.48 points from 6,902.96 points.

Return to capital controls sends Argentina assets tumbling

BUENOS AIRES, Sept 2 — Argentina’s international dollar and euro-denominated bonds fell to record lows today while its financial stocks tumbled and risk premiums shot up after President Mauricio Macri reimposed capital controls yesterday as the…

Euro slides to 16-month lows on gloomy outlook; yuan weak

LONDON, Sept 2 — The euro plunged to a 16-month low today as the impact of Washington and Beijing’s trade war on the European economy dominated investor sentiment. Germany’s export-dependent manufacturing sector remained in contraction in…

Investment – a woman’s secret weapon

THERE is a perception that investing is a man’s world and that women lack confidence and tend to stay away. This isn’t true. Various studies have proven that women are better investors. According to Louanne Lofton’s book Warren Buffet Invests Like A Girl, women have all the skills to achieve long-term success in the market.

John Coates, a former Wall Street trader, found evidence of a connection between testosterone, risk taking and irrational exuberance. The increased risk-taking is not based on superior knowledge or skill but rather a chemical reaction to testosterone.

Coates argues that as women have lower testosterone levels, they are less prone to the irrational exuberance associated with stock market bubbles. Generally, women will fare better because they will take less risk, worry more about losses and earn more.

Today’s women have greater earning capacity, disposable income and purchasing power. According to UOB Malaysia, credit card spending amongst Malaysian women grew 129% from 2011 to 2016. But still, some women are not keen on investing. Instead, they aim to grow their savings accounts. It’s a practical wealth preservation approach, but it’s not enough to counter inflation and achieve true financial independence.

The most common reasons heard (amongst others) are that investing is risky, they have no time to learn how and “Is investing Shariah-compliant?” Let’s look at overcoming these limiting beliefs.

To invest well, take calculated risks.

Good investors do not risk doing something unless they know what they are getting into. Adequate research is the first crucial step to knowing if you are buying a good stock.

You don’t need a lot of money to start investing.

Let’s say you want to buy a share on Bursa Malaysia; the minimum trade is 100 shares. If the cost per share is RM1, then you only need RM100. Imagine if you invested in Nestle Malaysia 10 years ago with RM3,000, when the share price was about RM30 per share. Today, with a share price of RM150 per share, that RM3,000 would now be RM15,000, excluding dividends.

You don’t have to look at the market every day.

Learn the concept of “Value Investing.” It’s a long-term strategy to acquire fundamentally strong stocks that are undervalued or trading at less than their intrinsic value. According to Pauline Teoh, Director of 8VIC Global Pte Limited and a successful investor, value investing is a helpful method for women who lead a busy life as a wife, mother and career woman.

Value investing is also used by famous investors such as Warren Buffet, Charlie Munger, Walter Schloss and Sir John Templeton. It focuses on three key things – a great business model, good management and a good price. Investing in the stock market is not just about buying a share; you are investing into a business – so pick a great business.

Teoh adds, “A great business continuously makes good money and their earnings can grow. Beyond the business and management team, buy in at a good price; ideally, you would buy the stock at an undervalued price.”

About 76% of securities on Bursa Malaysia are syariah-compliant.

Bursa Malaysia has a diverse range of syariah-compliant products – for peace of mind when choosing your investment. There are many good opportunities for Muslims to invest in great businesses on Bursa Malaysia.

Helping more women invest.

While these general guidelines are a good start, Bursa Malaysia also has various initiatives and avenues from webinars and investment fairs to educate, increase awareness and help all investors navigate and succeed in the world of investment.

Take the first step, and visit to fill in a lead form and choose your preferred broker, who will initiate contact within three days. Women can be successful at investing, and we are proud to help.

Part of a series of articles by Bursa Malaysia to educate, develop and empower everyday investors.

S&P maintains stable outlook on Malaysian banks, flags fintech effect

KUALA LUMPUR: S&P Global Ratings is maintaining a stable outlook on all Malaysian banks but flags external challenges and the financial technology (fintech) effect that could radically disrupt their industry.

Malaysia’s banks are battling on multiple fronts namely a trade war, a China-led regional economic slowdown, dampened domestic business sentiment, and continuously soft commodities prices.

“Moreover, the lenders need to contend with the possibility that financial technology may radically disrupt their industry, just as they are shaving costs,” said S&P Global Ratings analyst Rujun Duan.

“While such factors don’t yet affect our ratings – we maintain a stable outlook on all the Malaysian banks we rate – we believe it’s critical to flag the issues,” she said in a report titled “Malaysian Banking Outlook: Incumbents Feel The Squeeze”.

Malaysia’s incumbent lenders are facing cyclical and secular pressures that may slowly erode their financial standing if not addressed.

She said S&P projects Malaysian bank loans to grow 3-5% in 2019, about half the growth achieved in 2015.

“We also expect the industry’s net interest margin will contract 5-10 basis points in the year, following cuts to the policy rate and heated domestic competition for deposits,” she said.

Malaysian households have been deleveraging for the past three years. Most recently, the trade war and volatile capital markets have weighed on consumer sentiment and discouraged business investment.

Given that Malaysian banks do over half (58%) of all lending to households, any indicator suggesting softness in household borrowing bodes poorly for lenders.

Bank Negara Malaysia trimmed the policy interest rate by 25 basis points in May, and one more interest rate reduction is expected this year. The US Federal Reserve’s more accommodative monetary policy has given room for regional central banks to ease policy, weighing on banks’ net interest margin.

Competition for cheap, sticky retail deposits flares up repeatedly as banks vie for high-quality, liquid assets. All of this pressures margins, worsening banks’ profit outlook.

Seeing few growth areas, Malaysian banks have responded by trimming operational costs, closing branches, and retrenching staff. The cost-to-income ratio in the sector has stayed at around 47-48% over the past two years.

“While banks have been striving to improve this ratio, we believe that is unlikely without better support from earnings,” Duan noted.

Malaysian banks have also diversified to countries such as Singapore and Indonesia. Generally, this is a good strategy as the net interest margin is higher in these markets.

“But when times are bad, Malaysian banks’ overseas operations tend to drag down group profit, as seen in recent years’ losses in the Singapore offshore oil and gas sector, and the Indonesian mining and commodities sectors,” she said.

Singapore, being a highly open economy, is likely to feel the full effect of macro-headwinds over the next 12-18 months, limiting the profit upside for banks.

Notably, the Singapore economy grew by just 0.1% year-on-year in the second quarter, a marked slowdown from the 1.1% growth logged in the previous quarter, said Duan.

In this climate of cost-cutting and strained profit arrives digital banking. Malaysian regulators are expected to hand out the country’s first digital banking licences in the next 12-24 months.

This will allow local tech and telecoms groups such as Grab Holdings Inc and Axiata Group Bhd to compete directly with banks in lending and deposits-taking, without the encumbrance of an expensive branch network.

International leading technology giants such as Alibaba Group and Tencent Holdings, which already have a meaningful share of Malaysia’s digital payments market, could challenge the Malaysian lenders. Both have proved highly competitive in digitalised financial services in China.

“Tech groups have the potential to compete with traditional lenders on almost all fronts in retail banking. To manage this threat, incumbent banks will need to invest heavily in technology,“ she added. – Bernama

Stocks slip as new US-China tariffs sour global outlook

LONDON, Sept 2 — Global stocks dipped today after the United States and China imposed new tariffs on each other’s goods, reinforcing investors’ worries over slowing global growth, with no clear end in sight for the trade war. MSCI’s…