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British companies buckle up as Brexit deadline nears

LONDON, Oct 18 — British Prime Minister Boris Johnson is trumpeting a newly minted Brexit deal with EU leaders but now needs backing from the UK’s divided parliament in a vote set for tomorrow. Three years after Britons voted to leave the EU,…


Alitalia rescue hopes rise as Lufthansa looks set to step in

BERLIN, Oct 18 — Alitalia's rescue hopes received a boost yesterday with signs that Lufthansa could take a stake in the Italian carrier, while Rome agreed to a €350 million (RM1.62 billion) bridging loan to ease immediate cash worries….


Perak Corp unit defaults on RM25.7m loan

PETALING JAYA: Perak Corp Bhd’s indirect 51%-owned subsidiary Animation Theme Park Sdn Bhd (ATP) has defaulted on payment to Affin Hwang Investment Bank Bhd amounting to RM25.7 million.

This is part of the repayment of principal in respect of its syndicated term loan facility of up to RM280 million granted by Affin Hwang, Affin Bank Bhd, Bank Pembangunan Malaysia Bhd and Malaysia Debt Ventures Bhd.

ATP is the developer, owner and operator of Movie Animation Park Studios (MAPS) located in Ipoh, Perak.

According to Perak Corp’s Bursa disclosure, its wholly owned subsidiary PCB Development Sdn Bhd is actively seeking to dispose of its 51% stake in ATP and its immediate holding corporation Perbadanan Kemajuan Negeri Perak (PKNP) has shown interest to takeover.

Perak Corp revealed that PKNP had written a letter to the group on February 21, 2019 to confirm its intent to take of MAPS.

Perak Corp said ATP had on Sept 24, 2019 requested indulgence of time of up to three months for PKNP to arrange funding for the instalment repayment of principal as part of its purchase price to takeover the theme park.

Subsequently, Affin Hwang had on Oct 3 rejected the request and declared a default on Oct 16 with a 14-day notice from the date of letter to effect the payment of RM25.7 million, failing which all the secured obligation due from ATP will become immediately due and payable.

Perak Corp said it is continuously in discussions with Affin Hwang to regularise the outstanding payment of the syndicated term loan.


Saudi Arabia plans bumper Aramco IPO, relying on easy loans and rich locals

RIYADH, Oct 17 — Saudi Arabia is setting the stage for a blockbuster listing of state oil giant Saudi Aramco in Riyadh, relying on easy credit for retail investors and pushing rich locals to invest with cash held abroad to achieve a US$2 trillion…


Hong Kong banks to rollout support measure to small businesses, says central bank

HONG KONG, Oct 16 — Nine major banks in Hong Kong have agreed to adopt a number of measures to support small and medium enterprises in Hong Kong, the central bank said today, as four months of anti-government protests start taking its toll on…


US banks report mixed earnings amid Fed rate shifts, trade uncertainty

NEW YORK: Large US banks reported mixed quarterly results on Tuesday, challenged by a shifting interest rate landscape and uncertainty about global trade but bolstered in some cases by strong consumer activity.

The biggest US bank by assets, JPMorgan Chase, scored higher profits due to robust consumer lending even as Chief Executive Jamie Dimon offered a subdued outlook on the US economy, due in part to lingering worries about an economic slowdown due to the trade war.

Earnings also rose at Citigroup but profits fell sharply at Goldman Sachs amid a drop in key advisory services and at Wells Fargo, which was hit by higher legal costs as it continues to try to pivot from a series of scandals and regulatory issues.

Executives said the United States continues to enjoy a strong employment picture but that some clients are holding back investments in light of uncertainty over trade.

Other big international wildcards include the grinding Brexit negotiations and ongoing civil unrest in Hong Kong.

“There’s a fair amount of uncertainty on trade and a host of other issues,” said Citigroup Chief Financial Officer Mark Mason.

Mason said last week’s partial trade deal between the United States and China was “an important step” but that the two sides need to keep negotiating “so that the cautious sentiment can ease a bit.”

JPMorgan reported profits of $9.1 billion, up 8.4 percent from the year-ago period. Revenues were $29.3 billion, up 7.3 percent.

The increase in profits comes as large banks manage a shift in monetary policy by the US Federal Reserve that has dampened the industry’s profit outlook somewhat.

Lower interest rates typically weigh on earnings at banks, which earn profits from the margin between their loans and deposits.

On the upside, JPMorgan scored higher revenues in home lending as mortgage costs for consumers eased. The company also reported another increase in credit cards and auto lending.

US economic growth has “slowed slightly,” Dimon said.

“The consumer remains healthy, with growth in wages and spending combined with strong balance sheets and low unemployment levels,” Dimon added.

“This is being offset by weakening business sentiment and capital expenditures mostly driven by increasingly complex geopolitical risks, including tensions in global trade.”

Goldman’s 1MDB charge rises

At Goldman Sachs, third-quarter profits were $1.8 billion, down 26.9 percent from the year-ago period.

Revenues were $8.3 billion, down 5.6 percent.

The investment bank suffered a drop in financial advisory and equity and debt underwriting revenues but won an increase in trading businesses that have been a headwind in recent quarters.

Analysts pressed Goldman executives for evidence the company’s investments in its consumer lending business will pay off.

Since launching its Marcus consumer banking business three years ago, Goldman has amassed $55 billion in consumer deposits. Executives said they were pleased with the August launch of a credit card with Apple but said it was too soon to release details.

“We’re focused on proving ourselves over time,” said Goldman Chief Executive David Solomon, who likened the gradual build-out of consumer lending to earlier ventures.

Goldman has also begun talks with US authorities to settle probes involving 1MDB, a scandal-plagued Malaysia sovereign wealth fund.

The bank has increased its estimate of the potential liability in the case by $300 million to $2.9 billion, according to Chief Financial Officer Stephen Scherr.

Wells Fargo also suffered a significant drop in profits, which came in at $4.6 billion, down 23.3 percent.

Revenues edged up slightly to $22 billion.

Results were dented by $1.6 billion in litigation costs connected to a fake accounts scandal that has weighed on the bank since late 2016.

Wells Fargo announced late last month that it named Charles Scharf as its new chief executive to begin later this month.

At Citigroup, net income was up 6.3 percent at $4.9 billion on a one percent rise in revenues to $18.6 billion.

Shares of JPMorgan surged 3.0 percent to $119.96, while Goldman Sachs edged up 0.3 percent to $206.46. Citigroup gained 1.4 percent to $71.22 and Wells Fargo climbed 1.7 percent to $50.11. – AFP


Trade pressure seen denting China’s 2019 growth to 29-year low at 6.2%, 5.9% in 2020

BEIJING: China’s economic growth is expected to slow to a near 30-year low of 6.2% this year and cool further to 5.9% in 2020, a Reuters poll showed, underlining the stiff challenge faced by Beijing even as it steps up stimulus amid a bruising Sino-U.S. trade war.

The median forecast for 2019 growth is near the lower end of the government’s target range of 6-6.5%, and would be the weakest expansion for the world’s second-biggest economy since 1990.

The poll of 83 analysts also forecast third-quarter growth at 6.1% year-on-year, lower from 6.2% in the last survey done in July and a touch below the 6.2% pace in the second quarter.

On the whole, it would mark a further slowdown from growth of 6.6% in 2018 and 6.8% in 2017, highlighting the intensifying global and domestic pressures on the Asian powerhouse.

China will release its third-quarter gross domestic product (GDP) data on Oct 18.

Growth in 2020 will likely cool further to 5.9%, the poll showed, below the 6.0% forecast in the previous survey.

A raft of downbeat data in recent months has highlighted weaker demand at home and abroad, fanning market expectations that Beijing will need to unveil more stimulus steps to ward off a sharper slowdown and prevent more job losses.

“Should labor market deteriorate sharply in late 2019 and early 2020, policy support may intensify in March next year,” Tao Wang, China economist at UBS, said in a note.

“As policy measures strengthen and take effect, and as the shock of higher tariffs peaks in Q1 2020, we see China’s GDP growth rebounding from Q2 2020 onwards.”

Beijing has been relying on a combination of fiscal stimulus and monetary easing to weather the current slowdown, but analysts say the room for aggressive policy action has been limited by worries over debt and housing risks.

Chinese central bank governor Yi Gang said late in September there was no urgent need to implement large interest rate cuts following Beijing’s reiteration that it would not use “flood-like” stimulus measures.

MORE POLICY SUPPORT EXPECTED

The outlook is unlikely to change for the better anytime soon even as tensions in the protracted trade war between Beijing and Washington have eased somewhat. U.S. President Donald Trump said on Friday the two sides had reached agreement on the first phase of a deal and suspended a tariff hike, but officials said much work still needed to be done.

Analysts in the latest Reuters poll expect the People’s Bank of China (PBOC) would ease policy further by cutting banks’ reserve retirement ratios (RRR) and the one-year loan prime rate (LPR), its new benchmark lending rate.

The PBOC has already cut RRR seven times since early 2018, in addition to two modest reductions in the one-year LPR since August.

Analysts expect the PBOC to deliver another 50 basis-point RRR cut in the fourth quarter, and two more RRR reductions in the first half of 2020, according to the poll.

The central bank is also forecast to slash the one-year LPR to 4.00% by the end of 2019, down by 20 basis point from its current level.

However, they do not expect it to cut its previous benchmark lending rate, which remains in place but will be replaced by the new benchmark lending rate over time.

Economists expect the central bank to keep its benchmark rate unchanged at 4.35 percent through at least the end of 2020.

The poll also predicted annual consumer inflation will pick up to 2.5% in 2019, quickening from 2.3% estimate in the July survey, but below the government target of around 3%.

Data earlier in the day showed China’s factory gate prices declined at their fastest pace in more than three years in September.

Consumer inflation accelerated to 3% in September – the highest since October 2013, but analysts attributed this to the supply-side impact of rising food costs, driven by surging pork prices as African swine fever diminishes hog supplies.

Separate data, also released on Tuesday, showed China’s banks extended more new yuan loans than expected in September, highlighting policymakers’ ongoing efforts to boost credit growth in the face of cooling demand and U.S. trade pressures. – Reuters


Bursa reprimands, fines five Industronics directors

PETALING JAYA: Bursa Malaysia Securities Bhd has publicly reprimanded and/or fined five directors of Industronics Bhd for breaching the Main Market listing requirements.

Independent chairman Jacob Leung Kwok Kuen and executive director Amy Liu Wing Yee both received a public reprimand and a fine of RM200,000 each.

Independent directors Tsui Kwok Ho and Lu Zhi Qin have been publicly reprimanded and fined RM50,000 each, while audit committee chairman and independent director Fung Ling Yip received a public reprimand.

Leung and Tsui resigned from the company on Jan 23, 2018, while Fung resigned on July 26, 2018.

In a statement, the market regulator said Liu, Leung, Tsui and Lu had failed to ensure that a deposit agreement entered into with Singapore-based Vashion Group Ltd was “fair and reasonable to Industronics and not to the detriment of the company and its shareholders”.

“Fung…fail[ed] to ensure that the continuing advances to Vashion by virtue of the extensions of the deposit agreement until June 20, 2016 via supplemental agreements…were fair and reasonable and not to the detriment of the company and its shareholders,” it said.

According to the statement, despite the materiality of the deposit, there was no evidence of any proper enquiry, assessment, analysis or justification undertaken by the directors before entering into the agreement and payment of the deposit.

“The directors had proceeded to approve the deposit agreement merely via a Directors Circular Resolution (DCR) dated July 2, 2014 after teleconferences on July 2, 4 and 9, 2014 where the directors had only discussed the idea and material terms of the draft deposit agreement.

“The directors had also via the DCRs dated Oct 10, 2014, Dec 31, 2014, March 31, 2015, June 30, 2015, Sept 30, 2015 and/or June 1, 2018 approved the supplemental deposit agreements which essentially allowed the continuing advances to Vashion/deferred the refund of the deposit…without any evidence of discussion with Vashion on the proposed subscription until December 2015,” it said.

To recap, on July 9, 2014, Industronics entered into a deposit agreement with Catalist-listed Vashion for the proposed subscription of shares in Vashion by way of private placement.

Industronics had paid the deposit to Vashion on July 9 and July 16, 2014, which represented 11.7% of the company’s net assets and 26.3% of the cash and bank balances as at June 30, 2014.

The deposit agreement was initially valid until Sept 30, 2014 but was subsequently extended every three months until June 30, 2016 via supplemental deposit agreements.

Vashion subsequently made partial repayments of the deposit on Feb 5, 2016 and Feb 25, 2016.

On Aug 26, 2016, the balance of the refundable deposit of approximately S$1 million (RM3.1 million) was converted into a loan with interest at 3% per month to be paid by Vashion within 3 months from July 1, 2016 which was subsequently extended to Dec 31, 2016.

The loan together with interest was fully repaid by Vashion on Dec 22, 2016.


Education – a cornerstone for financial planning

PETALING JAYA: Education is the cornerstone for financial planning, especially with rise of fintech that offers more new financial instruments, said Financial Planning Association of Malaysia (FPAM) CEO Linnet Lee (pix).

She observed that the young investors are more open to financial tools such as equity crowdfunding and peer-to-peer lending.

However, she stressed that like any other instruments, prospective investors should know what they are in for and be aware of the risk involved.

In an interview with SunBiz recently, Lee said financial planning is one of the tools to keep an individual more informed in investing.

“Part of financial planning is setting the goals for an investment, assessing how much has a person put aside to reach that goal and how much more is needed to achieve those goals as well as the risk they’re willing to take.”

“In turn, this will determine what kind of investments that a person should make.”

Lee highlighted that financial planning is about managing finances, balancing between income and expenses and coping with leakages stemming from debts and loans.

Apart from that, she pointed out that a person should also leverage on his/her tax rebate to generate extra savings which could translate into more investments.

When it comes to investing, she said the investors should exercise caution by checking the regulatory bodies’ watch lists, including Bank Negara Malaysia and the Securities Commission Malaysia as well as the respective regulators in which the investment originates from.

Despite the current low-yield market environment, Lee sees opportunities in the equity market.

“For those who has the money, intention and the time frame to invest, this is the right time as what goes down will come up, although this might not be suitable for those looking to cash out within one or two years.”

She shared that she’s not worried if there is another recession, as it would be her third boom-bust cycle.

Lee stressed the importance for the people to have a rainy day fund for emergencies to avoid dipping into their investments.

The SC is hosting its investor education fair “InvestSmart Fest 2019” this Friday to Sunday at the Mid Valley Exhibition Centre, Kuala Lumpur. The public can sign up for free financial planning assessments at the #FinPlan4U booth.


Former Thomas Cook boss defends record, pay after firm’s collapse

LONDON, Oct 15 — The former chief executive of bankrupt travel firm Thomas Cook said today he understood public anger over his pay but defended his record, saying he had worked tirelessly to try to save the company. Thomas Cook, the world’s…