Wednesday, September 11th, 2019

 

Sterling near six-week high as no-deal Brexit risks recede

LONDON, Sept 11 — Sterling was steady today, lingering below a six-week high against the dollar reached on Monday, as investors assessed the chances Prime Minister Boris Johnson can strike a Brexit deal with the European Union before October 31….


Trade optimism, Apple push Wall Street slightly higher

NEW YORK, Sept 11 — US stocks rose slightly today as China’s move to ease trade tensions with the United States soothed investor nerves, while shares of Apple gained a day after the launch of its latest iPhones. Apple Inc rose 1.79 per cent and…


How does negative rate policy work?

NEW YORK, Sept 11 — US President Donald Trump has suggested that the US Federal Reserve drive interest rates into negative territory. He says his motivation was to refinance the US government’s US$22 trillion (RM91.8 trillion) in outstanding…


Hong Kong Exchange makes surprise £31.6 billion bid for London Stock Exchange

LONDON: The Hong Kong Stock Exchange has bid almost £32 billion (RM165 billion) for its London rival in a shock move today to bring together two of the world’s largest financial hubs in Asia and Europe.

The blockbuster proposal including debt, worth US$40 billion or €36 billion, is dependent on the London Stock Exchange Group (LSEG) scrapping a proposed US$27 billion takeover of US financial data provider Refinitiv.

In reaction, LSEG said it would “consider the proposal” but stressed that it “remains committed” to buying Refinitiv.

“Hong Kong Exchanges and Clearing Limited (HKEX) today announces that it has made a proposal to the board of LSEG to combine the two companies,” it said in a statement.

The cash-and-shares offer is worth £31.6 billion including £2.0 billion of debt, HKEX added.

The Hong Kong company said a deal would create a combined group “ideally positioned to benefit from the evolving global macroeconomic landscape, connecting the established financial markets in the West with the emerging financial markets in the East, particularly in China”.

HKEX chairman Laura Cha said a deal represented a “compelling” opportunity.

She added: “We believe a combination of HKEX and LSEG represents a highly compelling strategic opportunity to create a global market infrastructure group, bringing together the largest and most significant financial centres in Asia and Europe.

“Following early engagement with LSEG, we look forward to working in detail with the LSEG board to demonstrate that this transaction is in the best interests of all stakeholders, investors and both businesses.”

The gigantic takeover comes just one month after the LSEG embarked upon a huge deal to acquire Refinitiv, a move that would create a market information giant to rival US titan Bloomberg.

The HKSE deal is subject to approval by both sets of shareholders, as well as the termination of the Refinitiv deal.

“The proposed offer would be totemic in terms of East-West relations,” said Richard Hunter, head of markets at online broker Interactive Investor.

But he also noted that the share price has shed half of its initial gains and remains far below the bid level.

“The proposal is a fascinating prospect but far from a done deal,” Hunter said.

“The fact that the LSE share price has already retreated from the initial 10% spike on release of the news may reflect some initial scepticism around the likelihood of the deal going through.”

The Refinitiv takeover had marked a major change of LSE strategy and comes two years after its failed £21 billion merger with Germany’s Deutsche Boerse.

That gigantic deal – the third failed attempt at a tie-up between the British and German stock exchange operators – was blocked by the European Commission on fears it would undercut competition. – AFP


Malaysian furniture sector a winner amid US-China trade war

PETALING JAYA: The Malaysian furniture sector appears to be emerging as a clear winner of the trade diversion arising from the US-China trade war, but share prices of furniture stocks remain lacklustre.

According to AmInvestment Bank Research (AmResearch), it is understandable as such players generally have small market capitalisation and share liquidity. In addition, the sector is under-researched and lack investor relations initiatives.

The research house said as furniture exports from Malaysia are spared from the tariff spat, it translates into a tremendous price advantage for Malaysian furniture exporters over their Chinese peers in the US market.

“We gathered from furniture companies we met up with recently that they have indeed benefited from the trade diversion from the ongoing US-China trade war.”

AmResearch observed that the furniture exporters have seen increased orders in their operations in Malaysia and some players have also seen a similar trajectory for their expanded operations in Vietnam.

“Poh Huat Resources for instance, has guided for its sales to the US from its Malaysian operations to increase by another 30% in October 2019, after surging by a third in FY18,” it said.

The company has spent close to RM20 million in capex for its Malaysian operations over the last 24 months, a four fold increase from the amount spent in 2016-2017.

A similar trajectory can be seen in Homeritz, a relative newcomer to the US market, as it has signed eight new customers so far in 2019.

The company is embarking on an expansion plan that will come onstream over the next three to five years, subject to the demand from its customers.

AmResearch projected furniture exports from Malaysia to grow 6.1% to US$2.7 billion (RM11.3 billion) in 2019, a 3.1% growth against 2018 .

Worth to mention is that key Malaysian furniture players already have a significant presence in Vietnam.

However, the research house is mindful of the risk that the US Department of Commerce could impose duties on Vietnamese goods to stamp out the rerouting of Chinese goods to the US.

“This could completely erase the price advantage of Malaysian players in Vietnam over Chinese players,” it said.

AmResearch highlighted that Malaysian furniture manufacturers could capitalise on the situation by entering into a genuine joint venture model with Chinese parties, aside from the usual “rerouting” model.

It explained that in such partnerships, the Malaysian partner could provide land and buildings, labour and local knowledge including the supply chain.

The Chinese partner could bring in scale, additional capital, new technology and a more extensive international clientele.

The research house noted that Vietnam has been the top choice for relocation from China given its low wages, a sizeable workforce and domestic market.

However, the influx of foreign investments has pushed up land prices and labour costs, created bottlenecks along the supply chain and choked the public infrastructure.

“This brings foreign investors’ attention to the alternatives such as Malaysia, Thailand, Indonesia and South Asia.”

On another note, AmResearch is mindful of the potential competition posed by foreign players (particularly the Chinese) if they decide to set up their manufacturing plants in Malaysia.

“In the case of wood-based furniture under the blue-sky scenario, it takes a foreign player only about 18 months to build the factory, train the workers and commence production. Armed with capital and efficiency (driven by scale and technology, particularly automation), they will surely give the local players a run for their money,” it said.

AmResearch believes the only way the local players can defend their turf is to boost efficiency (including investment in auto-mation to counter the ever-rising labour cost), step up product innovation and offering and expand their global market reach.


European automakers tell governments they must help sell electric cars

FRANKFURT, Sept 11 — Europe’s carmakers are telling governments they must help build electric car charging points and provide consumer subsidies to boost sales of battery-powered vehicles and assist the industry in meeting stringent new…


Ex-MMM deputy exec chairman jailed, fined for insider trading

PETALING JAYA: The Kuala Lumpur Sessions Court has sentenced former deputy executive chairman of Malaysian Merchant Marine Bhd (MMM) Datuk R. Ramesh to a five-year jail term and fined him RM9 million for insider trading offences.

This comes after a full trial with 24 witnesses having testified for both the prosecution and the defence.

Ramesh, 55, was found to have disposed of 10.2 million of MMM shares while in possession of material non-public information in relation to the proposed downgrade by the Malaysian Rating Corp Bhd (MARC) on the credit rating of MMM’s Al-Bai Bithaman Ajil Islamic Debt Securities, which was made public by MARC on Feb 4, 2010.

Ramesh was also found to be in possession of material non-public information relating to the classification of MMM as a PN17 company. The disposals of MMM shares were made on Jan 11, 2010, Feb 19, 2010 and Feb 22, 2010.

Insider trading is an offence under section 188(2)(a) of the Capital Markets and Services Act 2007 and carries a punishment of an imprisonment term not exceeding 10 years and a fine of not less than RM1 million.

Judge Azman Ahmad con-victed Ramesh on all charges but had allowed a stay of the jail sentence, pending Ramesh’s appeal.

The judge, however, ordered for the total fine of RM9 million to be paid by end of today, failing which Ramesh is to serve the default jail term of nine years.


Ex-MMM deputy exec chairman jailed, fined for insider trading

PETALING JAYA: The Kuala Lumpur Sessions Court has sentenced former deputy executive chairman of Malaysian Merchant Marine Bhd (MMM) Datuk R. Ramesh to a five-year jail term and fined him RM9 million for insider trading offences.

This comes after a full trial with 24 witnesses having testified for both the prosecution and the defence.

Ramesh, 55, was found to have disposed of 10.2 million of MMM shares while in possession of material non-public information in relation to the proposed downgrade by the Malaysian Rating Corp Bhd (MARC) on the credit rating of MMM’s Al-Bai Bithaman Ajil Islamic Debt Securities, which was made public by MARC on Feb 4, 2010.

Ramesh was also found to be in possession of material non-public information relating to the classification of MMM as a PN17 company. The disposals of MMM shares were made on Jan 11, 2010, Feb 19, 2010 and Feb 22, 2010.

Insider trading is an offence under section 188(2)(a) of the Capital Markets and Services Act 2007 and carries a punishment of an imprisonment term not exceeding 10 years and a fine of not less than RM1 million.

Judge Azman Ahmad con-victed Ramesh on all charges but had allowed a stay of the jail sentence, pending Ramesh’s appeal.

The judge, however, ordered for the total fine of RM9 million to be paid by end of today, failing which Ramesh is to serve the default jail term of nine years.


Tadmax’s power plant project gets govt go-ahead

PETALING JAYA: Tadmax Resources Bhd has received the government’s nod to proceed with its power plant project in Pulau Indah, Selangor.

Its wholly owned subsidiary Tadmax Indah Power Sdn Bhd today received a letter from the Energy Commission (EC) notifying that the government had agreed to proceed with the development of the 1000–1200MW combined cycle gas and turbine power plant.

Trading of Tadmax’s shares was halted from 4.36pm today due to the announcement and will resume tomorrow. It was last traded at 31 sen, up 3 or 10.7% with 13.3 million shares changing hands.

In February, speculation of Tadmax’s RM3.5 billion power plant project being terminated surfaced after four independent power producer contracts were scrapped by the Pakatan Harapan government in the middle of last year in its review of projects.

The project was scheduled to be commissioned by early 2023.

Recall that Tadmax had in August 2016 received the conditional award for the power plant project from the Energy Commission on a direct negotiation basis. Tenaga Nasional Bhd was invited to participate in the project but later decided to pull out from the partnership.

Tadmax then entered into a memorandum of understanding on July 27, 2018 with Worldwide Holdings Bhd, with the latter taking up a 30% stake in the project. Korea Electric Power Corp (Kepco) was also roped in for a 25% stake.

There have been market concerns over Tadmax’s capability in undertaking the power plant project as it does not have the relevant experience in the power industry.


Tadmax’s power plant project gets govt go-ahead

PETALING JAYA: Tadmax Resources Bhd has received the government’s nod to proceed with its power plant project in Pulau Indah, Selangor.

Its wholly owned subsidiary Tadmax Indah Power Sdn Bhd today received a letter from the Energy Commission (EC) notifying that the government had agreed to proceed with the development of the 1000–1200MW combined cycle gas and turbine power plant.

Trading of Tadmax’s shares was halted from 4.36pm today due to the announcement and will resume tomorrow. It was last traded at 31 sen, up 3 or 10.7% with 13.3 million shares changing hands.

In February, speculation of Tadmax’s RM3.5 billion power plant project being terminated surfaced after four independent power producer contracts were scrapped by the Pakatan Harapan government in the middle of last year in its review of projects.

The project was scheduled to be commissioned by early 2023.

Recall that Tadmax had in August 2016 received the conditional award for the power plant project from the Energy Commission on a direct negotiation basis. Tenaga Nasional Bhd was invited to participate in the project but later decided to pull out from the partnership.

Tadmax then entered into a memorandum of understanding on July 27, 2018 with Worldwide Holdings Bhd, with the latter taking up a 30% stake in the project. Korea Electric Power Corp (Kepco) was also roped in for a 25% stake.

There have been market concerns over Tadmax’s capability in undertaking the power plant project as it does not have the relevant experience in the power industry.