Report: Italy has verbal agreement with EU on 2019 budget

ROME, Dec 19 ― Italy’s government has reached a verbal agreement with the EU on the country’s disputed 2019 budget following discussions with senior officials in Brussels, according to sources close to the government cited by Italian media…

EPF’s total investment income rises to 12.82pc to RM14.61b in Q3

KUALA LUMPUR, Dec 19 ― The Employees Provident Fund’s (EPF) total investment income for the third quarter ended September 30, 2018 (Q3) rose 12.82 per cent to RM14.61 billion from RM12.95 billion recorded during the same period last year. Deputy…

EPF posts 12.82% rise in Q3 investment income to RM14.61b

PETALING JAYA: The Employees Provident Fund (EPF) reported a 12.82% growth in investment income to RM14.61 billion for the third quarter ended September 30, 2018 compared with the RM12.95 billion it made in the same period last year.

“Q3 2018 saw us navigating a volatile market condition, which has been fuelled by the trade tensions between China and the United States. However, we have been able to record an improvement in income as Malaysia and Asean equities recovered in Q3 2018 from the market downturn experienced in previous quarters, while developed market equities continued to record positive growth from previous quarter,” said EPF deputy CEO (Investment) Mohamad Nasir Ab Latif in a statement.

“Volatility is increasingly felt across the region, in which we saw a decline in regional equity markets in the fourth quarter of 2018. This will certainly pose a huge challenge to the EPF to sustain the same income momentum for the fourth quarter,” he added.

Mohamad Nasir said the EPF remains cautious of he uncertain external environment such as the continued US-China trade tensions, weaker commodity prices and the US interest rate hike as well as the challenging domestic equities market.

“Meanwhile, we are grateful for the support of the Ministry of Finance and Bank Negara Malaysia towards the EPF’s long-term global diversification efforts, which will greatly assist the EPF towards delivering its strategic targets of at least 2.5% nominal dividend and 2% real dividend on a rolling three-year basis.”

A total of RM1.33 billion out of the RM14.61 billion gross investment income, was generated for Simpanan Shariah and RM13.28 billion for Simpanan Konvensional.

The EPF said equities, which made up 40.67% of the pension fund’s total investment assets, continued to be the main revenue driver, contributing RM8.89 billion, which is equivalent to 60.81% of total investment income.

A total of 50.72% of EPF’s investment assets were in fixed income instruments, which continue to provide consistent and stable income, reduce overall risk and protect against volatility of the EPF’s portfolio.

Fixed income investments recorded an income of RM4.73 billion, equivalent to 32.40% of the quarterly investment income.

Income from Malaysian government securities (MGS) & equivalent increased to RM2.5 billion, while loans and bonds generated an investment income of RM2.24 billion.

Real estate & infrastructure’s investment income jumped to M726.23 million on the back of higher dividend income.

Investments in money market instruments, which represent 3.92% of the total investment assets, contributed RM265.39 million to the investment income.

In accordance with the implementation of the Malaysian Financial Reporting Standards 9 (MFRS 9), which came into effect beginning 1 January 2018, the EPF noted that capital gains on disposal of equity amounting to RM5.17 billion for the Q3 2018 will flow directly to retained earnings from the statement of other comprehensive income, instead of the statement of profit and loss as under the previous MFRS 139.

Under MFRS 9, the EPF would also no longer recognise any impairment on its equity holdings.

Top Glove’s outlook anchored by capacity-led expansions

KUCHING: Top Glove Corporation Bhd’s (Top Glove) outlook is expected to continue being underpinned by stable and steady growth in demand of disposable medical glove, with earnings to be anchored by capacity-led expansions. The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) viewed that the group’s outlook will continue to be underpinned by […]

Trump attacks Fed on eve of policy meeting

WASHINGTON: US president Donald Trump again lashed out at the Federal Reserve for considering raising interest rates, on the eve of a meeting at which policymakers are widely expected to do so. The latest Twitter outburst renewed the president’s rock throwing at the central bank, which he accuses of undermining his economic agenda of tax […]

Slim chance of window dressing on Bursa next week

PETALING JAYA: The FBM KLCI is expected to end the year at circa 1,630 points with a slim chance of any window dressing, said Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew.

He does not expect local funds to do any window dressing, which would require a lot of money and may not be successful.

“If there is any window dressing at all, it would only happen in the last few days of the year, maybe one or two days before the year ends. It will be very last minute,” he told SunBiz.

Earlier in May, Pong said that the KLCI could end the year at 1,630 points if stock market earnings performance hold to a growth of about 6%.

“Today we are already at that level. If the earnings growth is worse, it will fall below 1,630 points. Looking at the way things are going, I believe it is likely to go below 1,630 points,” he added.

He said earnings growth are likely to fall below 6% based on third quarter data and growth since then, combined with the likelihood of a sharp drop in the next few days. Based on signals from the market, he expects earnings growth to come in around 4%.

Today, the FBM KLCI opened 13.15 points weaker at 1,628.47 and ended 6.31 points lower at 1,635.31 from yesterday’s close of 1,641.62.

For 2019, Pong said economic performance could be worse than 2018, depending on the government’s spending.

“If the government doesn’t spend because of poor oil prices or poor revenue from taxes or other reasons, things could spiral downwards and negatively affect corporate earnings. The government frequently takes the lead in spending and initiatives for infrastructure. If the government doesn’t spend for development expenditures, the momentum would not be there,” he said.

He said economic growth has to be at least 4% in order to be “healthy”, as a 3-4% growth would mean that there are parts of the economy that are stagnant or contracting.

Meanwhile, Areca Capital Sdn Bhd CEO Danny Wong declined to comment on window dressing activities at end-2018, saying that the short-term outlook is very sentiment-driven.

“Earnings for 2019 may not be as robust as 2018, especially in the second half of 2019,” he said.

However, he noted that Asia is still an engine of growth and maintained his positive outlook on economic growth and corporate earnings for next year.

“Earlier, I expected the third and fourth quarters this year to be better than the first and second quarters but it turned out to be worse. I still maintain my outlook but perhaps it has been delayed till 2019,” he said.

On foreign funds, which saw a large outflow so far this year, Wong expects foreign funds to return next year, for both equities and bonds, driven by 4-5% gross domestic product growth, the attractiveness of the ringgit and low valuations.

“Investors will watch out for countries with twin deficit but fortunately, Malaysia has a current account surplus, which will continue as the government has put on hold mega projects,” he said.

He said the rating agencies are still on hold on Malaysia due to the strong economy, with potential for a rating upgrade next year.

No legal action against The Guardian, says Top Glove

KUALA LUMPUR: Top Glove Corporation Bhd will not take any legal action against UK-based newspaper The Guardian, which alleged the glove maker had used forced labour.

Executive chairman Tan Sri Lim Wee Chai said: “We are not in the business of suing people. At the moment, we are not taking (legal) action because we don’t want to spend unnecessary resources, time and energy on an unproductive event.

“We are looking forward to do more business rather than fighting with people (The Guardian).”

He was speaking to reporters during a conference call today.

The Guardian had made allegations that Top Glove oppressed thousands of workers, including forcing them to exceed the maximum overtime limit of 104 hours as stipulated in the Employment Act 1955, as well as debt bondage and the confiscation of the workers’ passports.

Lim said Top Glove among others, complied fully with the Malaysian minimum wage policy, while overtime pay is calculated based on labour law and will adhere to the maximum 104 hours of overtime a month.

Recently, Top Glove was named the winner of Malaysia’s Healthiest Workplace Award for the large organisation, by leading insurer AIA Bhd, at the Malaysia’s Healthiest Workplace Summit 2018.

Corporate bond issuance likely to surpass RM100b this year

PETALING JAYA: Total gross corporate bond issuance will more than likely surpass RM100 billion this year, according to RAM Ratings.

RAM said last month, the gross corporate bond issuance had already surpassed the lower limit of its RM90-RM100 billion forecast for 2018.

“As at end of November, this number had almost reached the upper limit of our projection, following an additional RM8.8 billion of corporate issuance that brought year-to-date (YTD) issuance to RM99.5 billion,” it said in a statement.

However, the rating agency said it anticipates that gross corporate issuance to moderate to RM70-RM80 billion in 2019.

“One of the clear trends in this post-GE14 era is that quasi-government debt papers will no longer be able to prop up corporate bond issuance in 2019; the market is already experiencing a slowdown in such issuance,” RAM said.

Compared to the YTD gross issuance in 2017, RAM said the current lower issuance value is attributable to more subdued quasi-government issuance this year.

“We also observe a clear moderation in the issuance of infrastructure-related debt securities. We expect this trend to continue as the government maintains its stance on rationalising the country’s debts through more stringent management of project costs and timelines,” it added.

Meanwhile, RAM said it was not surprised by RM5.2 billion of foreign bond outflows in November after recording RM7.8 billion of inflows as a result of a readjustment of the bond composition of the JPM GBI-EM Index.

This was given the myriad developments during the month, which had prompted foreign investors to park their funds elsewhere.

“If not for some portfolio rebalancing by index-based investors, the scales would be tipped towards even greater outflow pressure going forward. Lingering global uncertainties over the US-China trade spat and Brexit outcome still take centre stage, fuelling global risk aversion,” RAM’s head of research Kristina Fong said.

From Jakarta to Buenos Aires, the world feels Fed's sting

JAKARTA, Dec 18 ― When the US Federal Reserve kept lifting interest rates this year, a world away in Jakarta profits dropped to next to nothing at Andy Kurniawan's shop selling collectible action figures. The Fed's decisions lifted the dollar and…

RAM Ratings: Foreign bonds reverses in Nov to RM5.2b

KUALA LUMPUR, Dec 18 ― The foreign bond flows reversed in November to RM5.2 billion, leading to a month-on-month decline compared with RM7.8 billion in October, says RAM Rating Services Bhd. Head of Research Kristina Fong said this was not…