kuala lumpur


Luxury property freeze to affect market sentiment

PETALING JAYA: The freeze on luxury properties and the possible rate hike next year are expected to affect market sentiment, according to analysts.

Kenanga Research foresees some knee-jerk reaction to developers’ share prices over the next few days.

The Properties Index fell as much as 11.83 points or 1% to 1211.60 points yesterday, before closing 9.93 points or 0.81% lower at 1213.50 points.

SP Setia was the top loser among all property stocks with a drop of 10 sen or 2.9% to RM3.39, followed by Gamuda Bhd and Eastern & Oriental Bhd, which fell 7 sen and 6 sen to RM4.70 and RM1.41.

Kenanga Research said it was surprised by the government’s move to freeze luxury properties given that the property market has stabilised and most developers’ pipeline of launches are now focused on townships or affordable housing supply as demand for commercial spaces and luxury condominiums has been very weak over the last few years.

Among stocks under its coverage, UOA Development Bhd and Malaysian Resources Corp Bhd have the highest exposure to development in KL while other developers such as Eco World Development Group Bhd, Mah Sing Group Bhd, SP Setia Bhd and Sunway Bhd have moderate exposure. However, most of their projects have secured the necessary master plan approvals.

Nonetheless, Kenanga Research said the measure is good for Kuala Lumpur in the long run and may benefit developers with on-going commercial or luxury condominium projects.

The research firm noted that it could provide a window for developers with light balance sheet to acquire prime commercial land bank in view of less demand given the freeze, while taking a longer-term development view on the land.

Kenanga Research is maintaining a “neutral” call on the property sector pending Q3 reporting season.

On possible rate hikes next year, it said a 50-basis-point increase in average lending rates will result in a 5%-6% increase in monthly mortgage payments for those who have taken 90% margin of financing.

With that, housing affordability is likely to deteriorate further unless banks are willing to absorb further margin compression from lower lending rates, not to mention the cost-push inflation effect on property replacement costs.

The possible rate hike may also dampen the current demand momentum as some buyers may take a “wait-and-see” stance.

Meanwhile, PublicInvest Research is maintaining a “neutral” view on the property sector considering that it is still hobbled by the somewhat high household debt of 84.6% to GDP ratio amid weakened housing affordability and strict lending by banks.

The Real Estate and Housing Developers Association has yet to come out with a statement on the issue as at press time.

India’s biggest tax hike may cut palm oil imports

MUMBAI: India’s palm oil imports are likely to drop until the end of the year after the world’s largest edible oils buyer raised import taxes to the highest in more than a decade, importers and dealers said.

India announced late on Friday that it raised its import tax on crude palm oil to 30% from 15%, while the duty for refined palm oil has been raised to 40% from 25%.

Malaysian palm oil futures dropped more than 3% to a three-month low of RM2,626 a tonne today.

“Short term demand will see a major impact because it was such a steep price hike, but (India’s) local oilseed production is not enough to cover all its demand,” said David Ng, derivatives specialist at Phillip Futures in Kuala Lumpur.

The duty hike should lift India’s local oilseed prices, which may encourage farmers to sell oilseeds and increase supply for crushing, said Dinesh Shahra, managing director of Ruchi Soya.

Indian oilseed crushers had been struggling to compete with cheaper imports from Indonesia, Malaysia, Brazil and Argentina, reducing demand for local rapeseed and soybeans which have been trading below government-set prices in the physical market and angering farmers.

Indian soyoil and crude palm oil futures jumped by the daily maximum limit of 4% today.

“Importers will first clear earlier inventories. Then they will see at what level prices stabilise in the local market before deciding about December imports. December imports could be around 600,000 tonnes,” said a Mumbai-based dealer with a global trading firm.

While market participants were anticipating a duty hike, the extent of the increase surprised them.

“Many importers have sold palm oil in advance at the earlier duty rate. They will struggle in fulfilling commitments. Their entire margin has been wiped out,” the dealer said.

India’s palm oil imports in October stood at around 750,000 tonnes.

Edible oil imports for the full year, however, is expected to remain higher than last year.

“The overall import volumes are unlikely to change significantly for the entire marketing year as local oilseeds supplies are limited and there is huge demand,” said B.V. Mehta, executive director of the Solvent Extractors’ Association, a Mumbai-based trade body.

The South Asian country could import 15.5 million tonnes edible oils in the current year, down from an earlier estimate of 15.9 million tonnes, said Sandeep Bajoria, chief executive of the Sunvin group, a vegetable oil importer. – Reuters

Ringgit has greatly stabilised since November 2016: BNM

KUALA LUMPUR: The ringgit has seen significant developments since November last year when it was one of the most volatile currencies, but now it has not only strengthened but has greatly stabilised, said Bank Negara Malaysia (BNM) governor Tan Sri Muhammad Ibrahim.

“The implied volatility has declined from a peak of 9.7% to about 3.7% currently,” he said in his opening remarks at the Financial Markets Association of Malaysia’s annual dinner last Friday.

He said the influence of offshore market activities and its damaging spillovers to the ringgit exchange rate had subsided, consistent with the significant decline in transaction volume in the non-deliverable forward market.

“On the other hand, foreign exchange transaction volume in the onshore market has been sustained with improving transaction costs, facilitating business transactions for all market participants,” he said.

Muhammad said the ringgit did, to some extent, reflect Malaysia’s economic fundamentals, and the fact that its recent recovery coincided with strong domestic data releases suggested that.

“Nevertheless, in a global financial market that is driven by short-term developments, the ringgit exchange rate can veer in unexpected directions and reach levels that are far from reflecting economic realities,” he said.

“Unfortunately, most of these movements are not driven by facts, but perceptions and in ringgit’s case, I would call it misperceptions.

“We tend to, in some other instances, base our perception on prior evidence and situations that we are familiar with, rather than update our views with new information,” he said.

For many economists and analysts, Malaysia is an oil-dependent economy and when the oil price goes south, the Malaysian economy suffers.

“While this was true many years ago, these simple relationships are continuously assumed to be fixed and hold to perpetuity,” said Muhammad.

Despite the many structural changes leading to a more diversified Malaysian economy and reduced reliance on oil, this perception has persisted.

“For the uninitiated, the percentage of oil revenues to government revenues was 41.3% in 2009 compared to only 14.6% in 2016.

“This fact seems to elude many analysts,” he added. – Bernama

Petronas Dagangan upbeat on liquefied petroleum gas market

KUALA LUMPUR: Petronas Dagangan Bhd, which currently holds about 50% share of the domestic liquefied petroleum gas (LPG) market, remains positive on the LPG industry in the country.

“We have positive outlook on the industry as it is still growing in Malaysia. We plan to grow naturally with the market, depending on the market growth,” its head of LPG business division Ramzulhakim Ramli told reporters at a media briefing here today.

“The market growth last year was about 1.5%,” he added.

The principal domestic marketing arm of Petroliam Nasional Bhd (Petronas) had previously announced its plans to exit the LPG business in the Philippines, with the disposal of its entire stake in Petronas Energy Philippines Inc and 40% stake in Duta Inc for RM532.5 million.

Following that, the group had also sold its LPG bottling and distribution operations in Vietnam, citing the divestment was in line with its portfolio rationalisation.

Ringgit continues upward momentum to end higher

KUALA LUMPUR: The ringgit continued its upward momentum to end higher against the US dollar today on positive sentiment brought by expectations of Malaysia's stronger growth, dealers said.

At 6 pm, the local unit traded at 4.1480/1510 against the greenback from 4.1600/1630 last Friday.

A dealer said the ringgit continued to respond to the positive spillover from Malaysia's 6.2% economic growth recorded in the third quarter of this year as announced last Friday.

“The sentiment was also lifted by the recent hawkish monetary policy statement by Bank Negara Malaysia, as well as expectations of a stronger economic growth and a wider current account surplus.

“Looking forward, we expect the ringgit to recover gradually over time as the Malaysian economy is still expected to grow at a sustained pace,” he said.

The dealer said the strengthening of the ringgit was also contributed by the weaker US dollar due to uncertainty over the US tax reform plan.

It is noted that while the local note strengthened significantly, oil prices dipped three percent during the Nov 8-16 period, indicating that the ringgit remained disengaged with movements in global crude prices, he added.

The ringgit was traded higher against a basket of major currencies except for the Japanese yen.

It rose against the Singapore dollar to 3.0599/0623 from 3.0656/0685 and strengthened versus the euro to 4.8917/8961 from 4.9055/9103 on last Friday.

It increased against the British pound to 5.5073/5134 from 5.5120/5168 last Friday but weakened vis-a-vis the yen to 3.6993/7026 from 3.6961/6998 previously. – Bernama

Petronas Dagangan upbeat on LPG market

KUALA LUMPUR, Nov 20 — Petronas Dagangan Bhd, which aims to maintain its market leadership position in the liquefied petroleum gas (LPG) market in Malaysia, is upbeat on the sector’s outlook given the country’s growing population.  LPG…

Bank Negara governor says ringgit is not fairly valued

KUALA LUMPUR, Nov 20 — Malaysia’s ringgit currency is “far from reflecting its fair value,” the central bank governor said, signalling a desire for the exchange rate to build on its recovery from a sharp selloff last year. The ringgit is…

Malaysian ringgit up 0.1pc, highest for more than a year

KUALA LUMPUR, Nov 20 — Most Asian currencies were muted this morning in the face of political uncertainty in Germany and lingering doubts about the prospects for US tax reform, dimming sentiment. The dollar index, which measures the greenback…

Bursa opens higher on bullish sentiment

KUALA LUMPUR, Nov 20 — Bursa Malaysia opened higher today on bullish sentiment following the release of a stronger set of third quarter gross domestic product (GDP) data last week, a dealer said. At 9.17am, the benchmark FTSE Bursa Malaysia…

Bursa Malaysia opens higher on bullish sentiment

KUALA LUMPUR: Bursa Malaysia opened higher today on bullish sentiment following the release of a stronger set of third quarter gross domestic product (GDP) data last week, a dealer said.

At 9.17am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was 3.19 points firmer at 1,724.85 from Friday's close of 1,721.66.

The index opened 2.11 points stronger at 1,723.77 at 9am.

RHB Investment Bank said Malaysia's real GDP grew by a stronger 6.2%, year-on-year, in the third quarter on account of stronger external activities and overall domestic demand.

“Due to the stronger-than-expected growth in the third quarter, we lift our GDP forecast for 2017 to 5.6% from 5.3% previously,” it said in a research note.

Public Investment Bank, in a separate note, said the re-acceleration of global trade also gave the country a welcome boost as the third quarter net exports grew 1.7% year-on-year.

The bank also revised upwards its 2017 growth projection to 5.6% from 5.3%, previously.

On the scoreboard, the FBM Emas Index was 22.65 points firmer at 12,439.57, FBMT 100 Index advanced 22.319 points to 12,085.6, FBM Emas Syariah Index perked 27.96 points to 12,885.82 and FBM 70 climbed 28.08 points to 15,339.23.

The FBM Ace was 14.33 points better at 6,577.25.
Sector-wise, the Industrial Index was 14.18 points better at 3,152.15, the Finance Index improved 1.81 points to 16,053.18 but the Plantation Index lost 16.52 points to 7,892.01.

On the broader market, gainers led losers 158 to 139 while 223 counters remained unchanged with 1,356 untraded and 21 others were suspended.

Turnover stood at 291.63 million shares worth RM81.15 million.

Among heavyweights, Maybank eased one sen to RM9.21 while Public Bank was flat at RM20.38.
TNB added two sen to RM14.86, Sime Darby rose nine sen to RM9.06 and Petronas Chemicals gained four sen to RM7.33.

Among actives, Sumatec and Vivocom were flat at 5.5 sen and 13 sen, respectively.

Kejuruteraan Asastera lost one sen to 29 sen and Trive Property and DGB Asia slipped half-a-sen each to 7.5 sen and 13.5 sen, respectively.

The physical price of gold as at 9.30am stood at RM167.04 per gramme, up RM1.07 from RM165.97 at 5.00pm yesterday. — Bernama