Asia stocks cautious before Fed, oil on defensive

TOKYO, June 18 — Investor caution ahead of the Federal Reserve’s interest rate meeting capped Asian stocks today, while crude oil prices retreated as global growth worries overshadowed supply concerns stemming from recent Middle East tensions….

Bah humbug! Trump’s plan for more China tariffs to hit festive shoppers

WASHINGTON, June 18 — This year’s holiday season could be tighter for many Americans if the US government imposes tariffs on another US$300 billion (RM1.25 trillion) worth of Chinese imports — because that will include tech products, game…

From sushi robots to farm drones: Japan Inc innovation thwarts BOJ’s efforts

TOKYO, June 17 — Bakeries in Japan deploy cash registers that ring up pastries by reading their shape and colour, construction robots scurry to lay out the next day’s building materials in the dead of night and machines churn out sushi rice…

UBS loses role in bond deal for Chinese firm on outcry over pig comment

BEIJING, June 17 — UBS has lost a lead role on a US dollar bond deal for state-backed China Railway Construction Corp, just days after a Chinese outcry over a senior UBS economist’s use of “pig” in connection with Chinese food price…

Fed likely to resist pressure to cut US rates this week

WASHINGTON, June 17 — The US Federal Reserve, facing fresh demands by President Donald Trump to cut interest rates, is expected to leave borrowing costs unchanged at a policy meeting this week but possibly lay the groundwork for a rate cut later…

BOJ to stand pat even as trade war, dovish Fed cloud outlook

TOKYO: The Bank of Japan is expected to maintain its massive stimulus programme on Thursday and signal its readiness to ramp up monetary support if growing risks such as the escalating U.S.-China trade war threaten the economy’s modest expansion.

Many BOJ policymakers are wary of using their dwindling policy ammunition any time soon as years of ultra-low interest rates strain financial institutions’ profits, say sources with knowledge of the central bank’s thinking.

But the darkening outlook is also forcing them to brace for the likelihood of another economic downturn and brainstorm ideas on how to respond, they say.

Adding to the uncertainty are heightening market expectations the U.S. Federal Reserve will start to cut interest rates to fend off the damage from the trade war with China.

While such rate cut expectations have kept a floor on stock prices so far, an actual cut by the Fed could push down the dollar and trigger an unwelcome yen spike that hurts Japan’s export-reliant economy, some analysts say.

“There may be no immediate need for action,” one of the sources said. “But with uncertainty over the outlook so high, the BOJ would need to think about how to respond if a shock hits the economy.”

At the two-day rate review ending on Thursday, the BOJ is widely expected to keep its short-term rate target at -0.1% and a pledge to guide the 10-year government bond yield around zero percent. The Fed meets this Tuesday and Wednesday.

The BOJ board is likely to maintain its view Japan’s economy continues to expand moderately as a trend, but debate whether its projection of a rebound in overseas growth later this year remains valid, the sources say.

At a post-meeting news conference, BOJ Governor Haruhiko Kuroda is likely reinforce his view the central bank is ready to deploy additional stimulus if the economy loses momentum to hit its 2% inflation target.

Japan’s economy expanded an annualised 2.1% in January-March but many analysts predict growth to slow in coming quarters as the U.S.-China trade row hurts global trade. A scheduled domestic sales tax hike in October may also cool consumption, they warn.

Many in the BOJ prefer to wait for more data, such as the central bank’s “tankan” quarterly business sentiment survey due July 1, to see how deeply the trade tensions could hurt domestic demand, the sources say.

“Domestic demand, including capital expenditure, is still firm. The key is to see whether this will remain the case,” a second source said.

Japan’s annual core consumer inflation hit 0.9% in April, remaining distant from the BOJ’s target, despite years of heavy money printing by the central bank.

Many analysts say the BOJ has very little tools left to fight the next recession, with its negative rate policy hurting financial institutions’ margins and long-term yields already hovering below zero. – Reuters

Challenging environment clouds EPF dividend outlook

PETALING JAYA: The 25% drop in the Employees Provident Fund’s (EPF) investment income in the first quarter (Q1) of the year is a surprise to many. As the EPF dividend payout is dependent on its financial performance, the pension fund’s commitment to declare dividends of at least 2% above the inflation rate is being closely monitored.

The fund declared a dividend of 6.15% last year. In the past 10 years, the highest dividends declared were 6.9% in 2017, 6.75% in 2014 and 6.4% in 2015 while the lowest dividend declared was 4.5% in 2008.

Given the lower contribution from equities, EPF’s total investment income came in at only RM9.66 billion in Q1 this year against the RM12.88 billion recorded in the same period a year ago.

During the quarter, equities continued to be the main revenue driver, contributing RM4.16 billion or 43% of total investment income. Equities made up 39% of EPF’s total investment assets.

Perhaps an analysis of EPF’s top 30 equity holdings could give some hints on how the pension fund would fare in Q2.

The analysis shows a mixed bag of performance in terms of share price movement from end of March to date, with 17 stocks recording growth and 12 stocks posting declines while one was unchanged.

Among the 30 stocks, Gamuda Bhd was the top performer with a 21.53% jump in its share price from RM2.88 as at end-May to RM3.50 at last Thursday’s close. EPF holds a 11.95% stake in Gamuda as at end-March.

Earlier in February, the stock took a hit when the government started talks on the proposed takeover of highway concessions but the revival of infrastructure projects such as the East Coast Rail Link (ECRL) has given a boost to the construction sector.

In March, the company clinched a contract worth NT$3.95 billion (RM521.75 million) from CPC Corp to construct a marine bridge and related works in Taiwan. CPC is Taiwan’s state-owned energy company

Following Gamuda is Telekom Malaysia Bhd (TM) which saw its share price rise 19.06% during the period. Axiata Group Bhd was the third best performer with a 13.25% rise in its share price. EPF holds 17.53% and 16.29% stakes in TM and Axiata respectively.

The telco sector, which struggled amid heightened competition last year, finally saw some excitement when Axiata began negotiations with Telenor ASA for a possible merger of its Asian assets. Telenor is Digi.Com Bhd’s largest shareholder with 49%.

Immediately after the announcement, shares of Axiata and Digi rallied as much as 18.3% and 11.5% respectively. Digi’s share price climbed 7.25% from RM4.55 at end-March to RM4.88 last Thursday. EPF has a 14.13% stake in Digi.

The worst performer was Media Prima Bhd, whose share price plunged 20.83%, followed by Sime Darby Plantation Bhd which fell 7.57% and Alliance Bank Malaysia Bhd which shed 7.82%.

Media Prima reported a net loss of RM40.41 million in the first quarter ended March 31, 2019, which worsened from the net loss of RM21.83 million a year ago..

EPF has the highest weightage in Malaysia Building Society Bhd (MBSB) with a 63.77% stake. MBSB’s share price increased slightly over the past two months.

Of the 30 stocks shown, 11 are constituents of the FBM KLCI.

Against the backdrop of the challenging economic environment, fund outflows from the emerging markets and ongoing US-China trade war, the local bourse is expected to remain lacklustre this year.

The FBM KLCI, which ended 2018 at 1,690.58 points, opened lower at 1,668.11 this year and climbed to 1,692.74 on Feb 18 before spiking up to a year-to-date high of 1,730.68 on Feb 21. The benchmark index, , however, gradually declined over the next few months to settle at 1,598.32 on May 24 before rebounding to 1,655.31 on June 3. It stood at 1,638.63 points at last Friday’s close.

Ringgit opens lower against US dollar amidst heightened trade tension

Ringgit opens lower against US dollar amidst heightened trade tension

KUALA LUMPUR: The ringgit opened lower against the US dollar today as investors stayed on the sidelines due to uncertainty surrounding the global economy and heightened trade tension involving the United States.

At 9am, the ringgit was at 4.1750/1780 against the greenback from 4.1650/1690 at Friday’s close.

MIDF Research in its economic brief said the heightened trade tension between US and China has weakened the US consumers’ sentiment with long-term inflation expectations dropped to the lowest on record as the outlook for the economy dimmed amid President Donald Trump’s stepped-up trade war.

The trade war has also caused China’s industrial output growth in May to be at the weakest level since the beginning of 2002 at 5% year-on-year.

“The pressure from US-China trade war which shows tariffs increased on China imports has affected major industrial production of China,“ it said.

Meanwhile, a dealer said the trade tension between the US and China was not the only reason causing the investors to be wary, but tariff hike involving a trade dispute between India and the United States has also inflicted additional damage to the global economy.

“The negative pressure on trade is not good for the global economy,“ he said.

Yesterday, India reportedly announced a retaliatory tariff on US goods such as apples, which will be hit with a 70% tariff, as well as almonds, lentils and several chemical products.

Meanwhile, the ringgit traded mostly higher against a basket of major currencies.

It appreciated against the Singapore dollar to 3.0448/0481 from 3.0457/0491 from Friday’s close, higher at 5.2572/2618 from 5.2691/2759 against the pound and improved versus the euro to 4.6835/6873 from 4.6940/6989.

The local currency also inched up against the yen at 3.8430/8461 from 3.8490/8534. — Bernama

Ringgit opens lower against US dollar amidst heighten trade tension

KUALA LUMPUR, June 17 — The ringgit opened lower against the US dollar today as investors stayed on the sidelines due to uncertainty surrounding the global economy and heightened trade tension involving the United States.   At 9am,…