Tuesday, October 1st, 2019


WTO slashes global trade growth forecast as conflicts mount

BRUSSELS/BERLIN: The World Trade Organization (WTO) cut its forecast for growth in global trade this year by more than half today and said further rounds of tariffs and retaliation, a slowing economy and a disorderly Brexit could squeeze it even more.

The WTO said it now expected global merchandise trade to increase by 1.2% this year, compared with its April estimate of 2.6%. That growth was 3.0% in 2018. For 2020, growth 2.7% is forecast, down from a previous estimate of 3.0%.

“The darkening outlook for trade is discouraging, but not unexpected,” WTO Director-General Roberto Azevedo said in a statement, urging WTO members to resolve trade disagreements and cooperate to reform the WTO.

The Geneva-based body said its reduced forecasts reflected estimates for slower expansion of the global economy, partly due to trade tensions, but also because of cyclical and structural factors and, in Europe, Brexit-related uncertainty.

The WTO gave a forecast range for trade growth this year of 0.5% to 1.6% and for 2020 of 1.7% to 3.7%, with the upper end of the ranges reachable if trade tensions eased.

“Risks to the forecast are heavily weighted to the downside and dominated by trade policy,” the WTO said.

The United States and China have been locked in a trade war for over a year. They have levied punitive duties on hundreds of billions of dollars of each other’s goods, roiling financial markets and threatening global growth.

US President Donald Trump has also imposed tariffs on products from other countries, notably on steel and aluminium, in a bid to cut the trade deficit of the world’s largest economy. The WTO figures implied he had had limited success.

The WTO said today that North America showed the fastest growth of exports of any region in the first half of the year, at 1.4%, although the rise of imports into North America were also greater than elsewhere, at 1.8%. – Reuters

Nestle partners local authorities to promote coffee farming

KUALA LUMPUR: Nestle Malaysia, together with the Kedah State Department of Agriculture (KSDA), Kedah Economic Development Authority, Federal Land Development Authority, Malaysian Agricultural Research and Development Institute and Pertubuhan Kami Anak Felda have joined forces to revive the coffee farming sector.

Nestle (Malaysia) Bhd CEO Juan Aranols said the Grown Respectfully programme is part of the company’s initiative to provide business for coffee planters, especially those in the northern region.

“We aim to train and educate 200 farmers under the pilot phase, and together with the KSDA, we will be producing 50,000 Robusta seedlings to be planted by mid-2020,“ he told a press conference after the launch of the programme today.

He added that Nestle currently has two factories producing its coffee product, Nescafe, in Malaysia, and the multinational food and beverage conglomerate is looking forward to use the locally grown coffee for its production.

“We currently import 17,000 tonnes of coffee from coffee producing nations and we are looking forward to integrate the coffee produced here into our value chain,“ he said.

Aranols did not discount the possibility of expanding the programme to other states, adding that the company had formed a committee to ensure the success of the current programme.

“We need to ensure that we have the right type of coffee to suit the climate as well as the soil.

“Under this project, Nestle will provide planting materials and agronomical support through training sessions and field demonstrations,“ he added. – Bernama

MGB bags RM53m flyover construction award

PETALING JAYA: MITC Engineering Sdn Bhd, a wholly owned unit of MGB Bhd, has been awarded a RM53 million contract for the development of a flyover in Bandar Saujana Putra, by Strength Square (M) Sdn Bhd, on behalf of Seribu Baiduri Sdn Bhd.

Construction will start in October this year, and is expected to be completed in September 2021.

“The contract will have no effect on the issued share capital of the company but it is expected to contribute positively to the earnings and net assets per share of the company and the group over the duration of the contract,” said MGB in a filing with Bursa Malaysia.

With the contract in hand, the group’s current outstanding order book is approximately RM1.57 billion.

MNRB reshuffles board to comply with BNM requirements

PETALING JAYA: MNRB Holdings Bhd unveiled a new composition for its board effective today to ensure compliance with Bank Negara Malaysia’s requirement that limits the number of common directors allowed to serve on the board of a company and its subsidiary.

MNRB told Bursa Malaysia that it also undertook review to further strengthen the composition of the board of MNRB’s subsidiary companies.

With that, MNRB have appointed three new independent non-executive directors namely Khalid Sufat, Zaida Khalida Shaari and Junaidah Mohd Said.

Consequently, four existing independent non-executive directors who are common directors on other boards within the MNRB group, namely Mustaffa Ahmad, Arul Sothy Mylvaganam, Rosinah Mohd Salleh as well as two other directors Hijah Arifakh Othman and Noor Rida Hamzah have also resigned.

The group said the resigning directors will remain or be appointed as board members of MNRB’s subsidiaries.

“With their breadth of experience and expertise, the board of MNRB is confident that they will be able to provide good counsel and direction to steer the subsidiaries towards further growth and success, in line with the aspiration of MNRB.”

It is confident that the appointment of the new directors will certainly set the tone towards strengthening MNRB group’s prospects moving forward.

Bioalpha boosts presence in China with new products

PETALING JAYA: Bioalpha Holdings Bhd strengthened its foothold in China, having launched seven new food products to the local market last month.

The products were launched by the company’s partner Jinrui Yandetang Co Ltd and promote various health functions ranging from men’s and women’s health, as well as improving immunity and gut function.

“This is the maiden order, and we look forward to receiving more orders in the near future, given Jinrui’s extensive network reach of more than 50,000 distributors in China.

“We expect to see contribution from Jinrui in the fourth quarter of 2019. Jinrui is responsible for marketing and distribution of the products, while we develop formulations catered to the local taste buds in China,” said Bioalpha’s managing director William Hon in a statement today.

Jinrui is an investment operator of China’s health industry, where it pools together specialists and experts in various fields of traditional Chinese medicine, with the aim of improving public health.

Separately, Bioalpha’s wholly owned subsidiary Bioalpha (HK) Ltd has received the first tranche of a grant from Hong Kong’s Innovation and Technology Commission for the development of next-generation anti-inflammatory and antitussive herbal products in Hong Kong.

“We believe this grant will certainly help accelerate our progress and growth. This marks another step forward for us in our quest to penetrate the Chinese and Hong Kong markets.”

Bioalpha will partner with the Hong Kong University of Science and Technology, to jointly undertake collaborative research towards identifying two herbal formulations for the treatment of inflammatory and respiratory problems.

The new offerings will be marketed and commercialised in China, Hong Kong, as well as Southeast Asian countries.

The project is expected to commence by March 2020, with an estimated duration of 15 months.

KNM bags two Indonesian contracts worth RM56m

PETALING JAYA: KNM Group Bhd has clinched two contracts with a total value of US$13.285 million (RM55.62 million).

The group told Bursa Malaysia that its wholly owned subsidiary KNM Process Systems Sdn Bhd had entered into two contract agreements dated Sept 23 with SK Engineering & Construction Co Ltd for the design, engineering and supply of Column-I (SK) and Column-II (SK) respectively for the RDMP RU-V Balikpapan project in Balikpapan, Indonesia as operated by PT Pertamina (Persero).

The supply and delivery duration of the transaction would be for a combined targeted total period no later than March 24, 2021.

SK is an engineering, procurement, construction and maintenance services company.

KNM said the transaction is expected to contribute positively to the group’s earnings for the financial year ending Dec 31, 2019, 2020 and 2021.

Mixed outlook for banks

PETALING JAYA: There are mixed prospects for the banking industry going forward, but Maybank IB Research said that due to a slowdown in loan application growth, the outlook is subdued at this stage.

“Loan applications contracted across all major consumer segments and even mortgage applications saw growth drop to just 2.7% year-on-year (yoy) in August 2019 after having expanded at a rapid double-digit pace over the past three months,” the research house said in a note today.

Loan growth for August was stable at 3.9% yoy. Household loan growth was 4.6%, while non-household loan growth was 2.9%. Annualised loan growth was 2.9% in August 2019.

Overall deposit growth continued to slow down largely due to a slower pace of deposits from business enterprises. Industry deposit growth slowed down further to 4.6% yoy from 4.9% yoy in the previous month.

The loan-to-deposit ratio for the sector was 87.9%. Industry current account, savings account (CASA) expanded by 5.2% yoy, marginally lower than the 5.3% yoy registered in the previous month. CASA ratio remained stable at 25.7%.

The industry’s gross impaired loans (GIL) ratio was slightly higher at 1.61% in August versus 1.6% in July. On an absolute basis, GILs rose RM337 million month-on-month, mainly due to an increase in manufacturing GILs.

Maybank is retaining a neutral outlook on the sector, with a buy call on the smaller to mid-cap banks such as RHB Bank Bhd, AMMB Holdings Bhd, Hong Leong Financial Group Bhd, Alliance Bank Malaysia Bhd and BIMB Holdings Bhd.

CIMB Research is keeping its neutral call on the sector on concerns over margin contraction, due to the cut in the OPR, and an expected uptick in credit cost in 2019.

“On the flip side, banks’ dividend yields are attractive at 4.3% for CY19F. RHB Bank remains our top pick for the sector.”

Meanwhile, AmBank Research said it is maintaining its loan growth assumption for the sector at 4-5%, as well as its expectation of another Overnight Policy Rate (OPR) cut of 25 basis points in the second half of the year, which will be supportive of economic growth.

“Meanwhile, should Budget 2020 turn out to be mildly expansionary in line with market expectations, this will be positive on loan growth as well as mitigating the downside risk on the sector’s asset quality.”

AmBank is maintaining its overweight call on the sector as valuation and dividend yields of banks remain compelling. Its top picks remain as Malayan Banking Bhd (Maybank) and RHB Bank Bhd.

MIDF Research is also keeping a positive outlook on the sector as it thinks banking stocks are currently undervalued.

“The impact of the OPR cut will normalise and there are still positives for banks such as the low credit cost which should be able to alleviate any weakness in income.

“However, we also remain cautious due to prevalent uncertainties coming from external events such as the ongoing trade tension between the US and China,” it said.

MIDF’s picks for the sector are Maybank, CIMB Group Holdings Bhd and Public Bank Bhd.

Straits Inter Logistics expands bunkering services to Lumut Port

PETALING JAYA: Straits Inter Logistics Bhd expanded its bunkering services into Lumut Port, following an agreement signed between its 55%-owned unit Tumpuan Megah Development Sdn Bhd and the port’s operator, Lumut Maritime Sdn Bhd today.

The agreement has a contract period of one year from Oct 1, 2019 with the option to renew for not more than one year, upon mutual agreement.

A bunkering anchorage area namely Pit-Stop Bunker Hub @ Lumut will be set up for the business venture.

Under the agreement, Tumpuan Megah will have the exclusive right to operate, manage and provide bunkering services located at or within Lumut Port limit including but not limited to jetties/wharfs, anchorage area and the designated Pit-stop Bunker area.

Straits group managing director Datuk Sri Ho Kam Choy said the tie-up with Lumut Maritime was part of the company’s overall strategy to establish a collaboration with strategic ports in Malaysia to bunker for vessels within their port limits.

“We believe that the opportunity to collaborate with Lumut Maritime will bring forth new dimensions to both parties’ infrastructures which will allow both parties to tap the vast potential in the bunkering industry.

“The tie-up with Lumut Maritime definitely marks an important milestone for Straits for its expansion in the bunkering business,” he said.

Currently, Tumpuan Megah operates in eight ports in Malaysia, including Pasir Gudang Port, Tanjung Pelepas Port, Johor Baru Port, Kuantan Port, Kemaman Port, Kuala Terengganu Port, Labuan Port and Miri Port.

To recap, Straits had completed its acquisition of a 55% stake in Tumpuan Megah in September 2018 in an effort to expand its business footprint. The acquisition of Tumpuan Megah enlarged Straits’ fleet from two vessels to nine, with a total capacity of 12 million litres.

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