global economic

 
 

Ringgit likely to be bearish next week

KUALA LUMPUR: The ringgit is likely to be on a downtrend against the US dollar next week as negative global growth sentiment weigh the currency’s performance, said Oanda Head of Trading Asia Pacific, Stephen Innes.

He said the ringgit would be traded at around 4.17 to 4.20 to the dollar while the oil market would also act as a determinant in the currency’s movement.

“Waning global growth sentiment continues to drag equity markets into the tank after a double whammy of major economic data misses has sent investors scurrying for cover.

“Weak growth in both China and the Eurozone are also providing the critical fundamental reasons to be underweight on equities, which will weigh on ringgit sentiment next week as investors flock to US treasuries and support the dollar on haven appeal,“ he told Bernama.

Meanwhile, FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad said the market had widely expected that the US Federal Reserve (Fed) will raise US interest rates for the fourth time this year, and essentially, this had already been mostly priced into the ringgit.

“But the next risk for the ringgit depends on the path of interest rate increases for 2019,“ he added.

Jameel said that doubts were starting to creep in that the Fed would raise interest rates as often as four times next year, which is seen as a significant risk of weakness for the greenback moving forward.

“As one of the emerging markets that is known for being sensitive to US interest rate speculation, guidance that the Fed will not be as active with interest rate policy next year would be digested as positive news for the ringgit in 2019,“ he explained.

For the week just-ended, the ringgit closed mostly lower against the US dollar with the market sentiment moved by oil prices, the US-China trade negotiation outcome and investor worries on global economic outlook.

On a Friday-to-Friday basis, the local note weakened to 4.1830/1880 from 4.1640/1680 against the greenback from the previous week.

The ringgit traded mixed against a basket of major currencies throughout the week.

It depreciated against the Singapore dollar to 3.0393/0434 from 3.0385/0434 and appreciated against the British pound to 5.2635/2710 from 5.3116/3184.

Vis-a-vis the Japanese yen, the ringgit went up to 3.6842/6895 from 3.6899/6937 and strengthened against the euro to 4.7239/7299 from 4.7320/7373. — Bernama


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BAuto’s net profit surges more than threefold in Q2

PETALING JAYA: Bermaz Auto Bhd’s (BAuto) net profit for the second quarter ended Oct 31 more than tripled to RM73.92 million from RM22.2 million a year ago due to higher revenue and gross profit margin from domestic operations.

In a filing with Bursa Malaysia, the group said its higher earnings were also due to significantly higher share of profit contribution from its associate company, Mazda Malaysia Sdn Bhd.

“The improvement in gross profit margin was mainly attributed to favourable sales mix and a stronger Malaysian ringgit against the Japanese yen, while the higher share of profit contribution from Mazda Malaysia arose from the increase in production volume for the new CX-5 model to cater for both the domestic and export markets,” it said.

“This was slightly dampened by a lower profit contribution from the Philippine operations, in line with the decrease in their sales volume,” it added.

Revenue for the quarter rose 46.34% to RM690.32 million from RM471.71 million a year ago due to a surge in sales volume from its domestic operations as a result of the zerorisation of the Goods and Services Tax (GST) from June till August this year.

BAuto has recommended a second interim dividend of 3.75 sen per share in respect of the financial period ended Oct 31, payable on Jan 25, 2019. The entitlement date has been fixed on Dec 31.

The group’s decision to absorb the sales tax for bookings received before Sept 1 but with vehicle delivery after the introduction of the Sales and Service Tax (SST) boosted customers’ demand especially for the new CX-5 model.

“This was partly offset by weaker sales from the Philippine operations as the automotive industry of the country is still struggling with the impact of the Tax Reform for Acceleration and Inclusion (TRAIN) law that was implemented in January this year,” said BAuto.

The group said that the TRAIN law has caused an increase in excise tax and consequently, car prices have also increased, thus affecting the demand for motor vehicles in the Philippines.

For six months ended Oct 31, BAuto’s net profit almost tripled to RM124.2 million from RM42.41 million a year ago while revenue rose 36.25% to RM1.18 billion from RM862.94 million a year ago.

Mazda’s sales volume improved by 59% year-on-year, in line with the country’s total industry volume (TIV) for passenger cars which grew 5.7% year-on-year for the first 10 months of 2018. The full year TIV is projected to hit 585,000 units.

BAuto said trading conditions of the automotive segment is expected to remain challenging following the end of the tax holiday period, competitive trading environment, weakening of the ringgit and cautious consumer sentiment due to local and global economic uncertainties.

Despite the challenging conditions, BAuto’s Malaysian operations is in a competitive advantage position due to the huge back orders collected during the GST tax holiday as a result of the group’s absorption of the SST. The bookings collected since the implementation of the SST on Sept 1 remains encouraging due to the upcoming festive seasons.

In the Philippines, Bermaz Auto Philippines Inc seeks to mitigate the downturn impact and sustain its sales volume through more aggressive marketing and support to its dealer network. It also plans to expand its dealerships from 18 at the beginning of FY18 to 21 dealerships at end of FY19.


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Ringgit to trade in positive mood next week

KUALA LUMPUR: The ringgit is expected to trade in a positive mood next week following a great week for local bonds, said Oanda Head of Trading Asia Pacific, Stephen Innes.

He said the market traded below 4.15 following the US and China 90-day truce to resolve their differences over trade.

At the recent G20 summit in Buenos Aires, both US President Donald Trump and his Chinese counterpart Xi Jinping, reached an agreement to hold off on slapping additional tariffs on each other’s goods after Jan 1, 2019, as talks continued between both countries.

“However, traders need to remember that the ringgit is directly affected by fluctuation of oil prices. Lower oil prices will affect the ringgit’s performance,“ he told Bernama.

Innes said that a weaker US dollar was expected as traders were anticipating a number of interest rate increases by the US Federal Reserve next year.

“This would cause the US dollar to weaken further amid weakening economic data and heightened market volatility,“ he said.

Meanwhile, FXTM Global Head of Currency Strategy and Market Research Jameel Ahmad said the ringgit, as well as other emerging market currencies, would require further positive trade truce developments for them to push forward.

“The ringgit had previously benefited in a similar way from the development of the trade truce,“ he said.

He added that if the financial markets panicked if the 90-day truce were broken by either side, as this would like trigger a very sudden downturn of risk appetite – a potential to encourage the ringgit to fall towards 4.20 before year-end.

“If the positive scenario unfolds, this can lead to the ringgit advancing all the way to at least RM4.10 against the US dollar,“ he said.

For the week just ended, the ringgit closed mostly mixed against the US dollar with the market sentiment moved by oil prices, the US-China trade negotiation outcome, profit-taking on the ringgit, and investor worries on global economic outlook.

On a Friday-to-Friday basis, the local note strengthened to 4.1640/1680 against the greenback from 4.1820/1870 in the previous week.

The ringgit traded mostly higher against a basket of major currencies.

It appreciated against the Singapore dollar to 3.0385/0434 from 3.0499/0546 but vis-a-vis the Japanese yen, it eased to 3.6899/6937 from 3.6843/6903.

However, the local unit improved against the British pound to 5.3116/3184 from 5.3375/3443 and strengthened against the euro to 4.7320/7373 from 4.7545/7619. — Bernama


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