Tuesday, October 8th, 2019


Protect global trade against Trump ‘policy delusions’, says economist

GENEVA, Oct 8 — A prominent US economist called today on countries to save the multilateral global trading system which he said was facing deliberate attack by Washington as part of US President Donald Trump’s “fantasy world”. “The trading…

New IMF chief Georgieva says world suffering ‘synchronised slowdown’

WASHINGTON, Oct 8 — Grinding trade disputes are undermining the global economy, which is set to see its slowest growth in nearly a decade, the new IMF chief said today. Research shows the impact of the trade conflict is widespread and countries…

US stocks fall on market gloom over China trade talks

NEW YORK, Oct 8 — Wall Street stocks tumbled early today after fresh US sanctions on Chinese companies dimmed expectations for a breakthrough in this week’s trade talks. Analysts cited the Commerce Department’s announcement late yesterday…

Fuel subsidy could have adverse impact on aggregate consumption, says research house

PETALING JAYA: The government’s announcement of a petrol subsidy targeted at the B40 community is welcomed, but there could still be an adverse impact on aggregate consumption, said Public Research.

“While the policy is positive to clamp down leakages in the economy and fairer distribution of resources, we must also be cognisant of its potentially adverse impact on aggregate consumption as what we witnessed in 2017.

“Measures to reduce the cost of living to offset the blow to aggregate consumption must be taken and Budget 2020 provides the best avenue to address that. Our 2020 inflation projection and aggregate consumption projections remain status quo until the tabling of Budget 2020 this Friday,” the research house said in a note today.

On Monday, Domestic Trade and Consumer Affairs Minister Datuk Seri Saifuddin Nasution announced a monthly petrol subsidy of RM30 for owners of cars below 1,600cc and cars more than 10 years old that are above that capacity, and RM12 for motorcycle owners beginning next year.

The eligibility criteria for the new subsidy, which the government estimates will benefit 2.9 million vehicle owners, is more stringent than those guided by Budget 2019, which projected 6.6 million beneficiaries.

The total cost of the targeted fuel subsidy is estimated at RM65.4 million a month or RM784 million a year.

The refloating of the RON95 price is only applicable to Peninsular Malaysia while Sabah, Sarawak and Labuan will see a capping of the price of RON95 at RM2.08 per litre in view of the high usage of diesel there, the minister said when announcing the subsidy.

The price of RON95 will be refloated in stages in early 2020 before eventually being priced according to global benchmarks. No subsidy will be given should oil prices and the consequent petrol prices stay below RM2.08 per litre.

The RON95 price has been kept steady since February 2019 and has played a pivotal role in keeping inflation low, reflected by the average rate of only 0.3% for 2019 to date.

To that effect, CIMB Research said that following clarity on the timing of the targeted fuel subsidy mechanism, it will be revise its 2020 forecast inflation forecast higher to 1.9% from 1.1%.

“While we expect slight upward pressure to core inflation due to second-order effects, underlying price movements are poised to remain below levels consistent with medium-term price stability.

“We retain our expectations for a 25 basis point (bp) Overnight Policy Rate (OPR) cut in November 2019. However, implications of the tweaked inflation forecasts have led us to delay our call for a follow-up 25bp reduction from 1H20 to 2H20,” it said.

Malaysia sweetens tax incentives for companies to set up regional/global hubs

KUALA LUMPUR: Malaysia said today it would expand tax incentives for companies that use the country as a base for conducting their regional or global business.

Effective this year, companies eligible for the government’s Principal Hub (PH) incentive will be able to enjoy a 10% tax rate for their operations instead of the wider corporate tax rate of 24%, the Malaysian Investment Development Authority (Mida) said.

Earlier companies eligible for the PH incentive could opt for the 10% tax rate only on income over and above the money they made the year before joining the programme, according to a Mida official.

Companies that have yet to establish a presence in Malaysia can apply for tax rates of 0% and 5% for 10 years based on their investments and job-creation commitments. Previously the tax rates for such companies were 0%, 5% and 10%.

“This enhancement of the PH tax incentive is timely as Malaysia continues to innovate its policies and strategies to attract investments so that the country will be strongly integrated into the region as well as other markets,” Mida said in a statement. – Reuters

White House eyes ways to limit capital flows to China, reports Bloomberg

WASHINGTON, Oct 8 — The Trump administration is moving ahead with discussions around possible restrictions on capital flows into China, with a focus on investments made by US government pension funds, Bloomberg reported today, citing people…

Sterling tumbles after reports of Brexit talks close to breakdown

LONDON, Oct 8 — Sterling touched a one-month low against the euro today as investors took fright at reports that Brexit talks between Britain and the European Union were close to breaking down. With 23 days before the United Kingdom is due to…

IMF to postpone planned quota increase due to US resistance, says source

TOKYO, Oct 8 — The International Monetary Fund is set to postpone its plan to raise its funding quotas, or voting shares, that would see China replace Japan as the second-most-influential voice at the body, a Japanese official with knowledge of…

UK debt burden to rocket under no-deal Brexit, says think-tank

LONDON, Oct 8 — Britain’s debt burden would jump to its highest level in 50 years if it leaves the EU without a deal, a leading think-tank warned today. The Institute for Fiscal Studies (IFS) said that due to Prime Minister Boris Johnson’s…

Petronas Dagangan ends up as top loser on Bursa

PETALING JAYA: Petronas Dagangan Bhd (PetDag) was the top loser on Bursa Malaysia today following the news that a targeted price subsidy programme for RON95 petrol would be introduced.

This is in contrast with analysts’ expectations that the company would face minimal impact from the new subsidy programme.

The stock tumbled as much as 62 sen or 2.6% to RM23.06 before closing 50 sen or 2.1% lower at RM23.18, with 418,200 shares changing hands.

In a report, MIDF Research said it was maintaining its ‘buy’ call on PetDag with an unchanged target price of RM28.35.

“While we note that the decision to float RON95 in Peninsular Malaysia will have an impact on the sales volume of PetDag due to consumers potentially switching from driving to taking public transportation, we opine that the impact will be negated by the extensive network of 1,100 stations that PetDag has nationwide.

“ Furthermore, it is noted that the newly refurbished stations have shown an average of 3-4% increase in sales volume from the recent refurbishment exercises which we opine will also help to mitigate the impact from the refloating of RON95,” it said in a note today.

According to PetDag’s management, its app SETEL has been gaining traction among customers, resulting in unprecedented redemption of points for various purchases within the PetDag system, be it petrol or goods from the Mesra convenience store in the petrol station.

The research house added that with the refloating of the RON95 price, the receivables for PetDag are expected to improve, given that spot prices and selling prices are now equal, which will assist in mitigating discrepancies in the purchase price to the actual sale price.