SE Asia Stocks-Most fall on global growth slowdown worries; Indonesia worst hit

Indonesia led losses as most Southeast Asian stock markets fell on Friday, as worries of a global growth slowdown continued to hamper investor sentiment, while Vietnam continued to rise for the fifth straight session.

Investors are also exercising caution amid trade talks between the U.S. and China with the tit-for-tat tariffs between the world’s two largest economic powers having already disrupted international trade and slowed the global economy since the trade war started several months ago.

“Slowing global growth is underway, evidenced by falling exports growth in trade-sensitive countries… An improved US-China relation may not provide an immediate boost to demand against the backdrop of peaking trade growth,” said Zhu Huani, an economist at Mizuho Bank said in a note.

The Indonesian benchmark dropped 0.7 percent, leading losses in the region, following the central bank’s decision to hold key rate on Thursday. But for the week, the index is set to snap two straight weeks of losses.

Indonesia’s central bank kept interest rates on hold on Thursday and said it was looking at ways to boost loan growth.

Financial and consumer stocks dragged the index with Telekom Indonesia and Bank Negara Indonesia falling 1 percent and 2 percent respectively.

Malaysian stocks fell 0.6 percent, ahead of the country’s January inflation data to be released later today. The index is, however, set to post its third consecutive weekly gain.

Malaysia’s consumer prices are expected to fall in January, the first decline in nearly a decade, amid a drop in domestic fuel prices, a Reuters poll showed on Wednesday.

The central bank however, said last week that the country was not at risk of deflationary pressure. The index was dragged by losses in healthcare and telecom stocks, with IHH Healthcare Bhd and Maxis Bhd shedding as much as 1.7 percent and 3.4 percent, respectively.

Singapore’s index shed 0.5 percent after the country’s second-biggest listed lender Oversea-Chinese Banking Corp Ltd posted disappointing quarterly financial earnings.

OCBC missed market estimates with a 10 percent drop in quarterly profit, due to a weak performance in its insurance business.

Shares of OCBC dropped as much as 2.2 percent, while those of its peer United Overseas Bank Ltd dipped as much 2.2 percent.

The Vietnam index continued to surge for the fifth straight day and rose 0.4 percent, with gains concentrated in financial stocks. Joint Stock Commercial Bank for Foreign Trade of Vietnam rose 2.8 percent.

Meanwhile, Philippine stocks edged marginally higher.

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KUALA LUMPUR: The offer by a Chinese bank to issue Panda bonds in China for Malaysia is a positive sign that foreign countries and foreign investors are confident with the new government under the leadership of Prime Minister Tun Dr Mahathir Mohamad. Finance Minister Lim Guan Eng said the level of interest and confidence shown […]

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Top Glove prices US$200m maiden exchangeable bonds

PETALING JAYA: Top Glove Corp Bhd has priced its maiden exchangeable bonds in the principal amount of US$200 million (RM814 million) on Wednesday, via its subsidiary Top Glove Labuan Ltd.

The bonds have a tenure of five years and will mature on March 1, 2024. The bonds include an exchange option which enables bondholders to exchange their bonds for the company’s shares at an initial exchange price of RM6.20 per share.

The bonds, which were priced at an exchange premium of 20% with a coupon of 2% per annum, is the company’s inaugural offering in the international capital markets and marks the first exchangeable conventional bonds priced out of Malaysia, after almost a decade.

“Raising funds via the issuance of exchangeable bonds will enable us to refinance existing loans at a lower annual interest rate. This in turn, helps us to enhance our working capital and strengthen our financial position,” said executive chairman Tan Sri Dr Lim Wee Chai.

“Exchangeable bonds also enable investors to participate in the equity of our company upon exchange and allow them to benefit from an appreciation in the future share price,” he said in a statement today.

Top Glove said benefits of the bonds include lower funding costs due to the equity optionality embedded in the instrument; mitigation of exposure to fluctuating interest rates due to the fixed nature of the coupon under the bonds, resulting in a more efficient cashflow management; and diversification of funding sources.

The bonds also allow the group to naturally hedge its US dollar denominated funding instrument against the group’s revenue from its export business, which is mainly denominated in US dollar.

Govt in talks with China on Panda bonds: Guan Eng

KUALA LUMPUR: Finance Minister Lim Guan Eng today confirmed that Malaysia has received an offer for the issuance of Panda bonds from China and said the relevant parties are currently in discussions.

Speaking to reporters at the 12th Malaysian Property Summit, Lim said the offer from China Construction Bank has been communicated to the Prime Minister and the Cabinet.

“But we are still at the discussion stage. Unlike the Samurai bond for which the working paper has been presented to and approved by the Cabinet, and both countries have agreed on it. This one is still at the discussion stage,” he said.

Earlier this week, China’s ambassador to Malaysia, Bai Tian, said China Construction Bank is proposing to issue Panda bonds in China to Malaysia to help alleviate financial stress.

“I see this as a positive sign from other countries and foreign investors, who are confident about the administration of the new government led by Prime Minister Tun Dr Mahathir Mohamad. Because they are confident, they are willing to extend a loan, just like Japan with their Samurai bond. This is something that is being done for the first time since the 80s,” said Lim.

He said such offers from Japan and China reflect the interest of foreign investors in Malaysia and their confidence in the new government, which was not seen before.

He noted the Samurai bond’s coupon rate of 0.65% is below market rate compared with the coupon rate of a Goldman Sachs bond issuance under the previous government which was 100 basis points above the market rate.

The ¥200 billion (RM7.34 billion) 10-year Samurai bond, guaranteed by the Japanese government, will be issued next month, at a coupon rate not exceeding 0.65%. The Samurai bond was initiated by Mahathir, who requested his Japanese counterpart Shinzo Abe for yen-denominated credit in June last year.

The Samurai bond will be used to reduce debt accumulated by the previous government. The Samurai bond sale will be Malaysia’s first in three decades, having last raised such debt in 1989.

Meanwhile, Lim said the government hopes to conclude talks on the East Coast Rail Link (ECRL) but noted the challenge of ensuring that the cost is something that the country can afford while at the same time maintaining good relations with China.

“We still maintain the best of hopes that this matter can be resolved and that they can meet our request for the price reduction. Otherwise we would not be able to afford it,” he said.

Lim said the ECRL is one of the remaining projects to be concluded while most of the other projects that were being reviewed have been finalised.

As for the proposed Airport Real Estate Investment Trust (REIT), which was announced in Budget 2019, he said it is working towards appointing a REIT manager but it has not been finalised yet.

In his keynote address, Lim said the cost of living is still high although consumer price index (CPI) was at 1% in December, which is the lowest inflation rate in nine years.

He said the government is looking at how to ensure the low CPI can be filtered down and allow the public to benefit from the low inflation rate.

He said the CPI is sometimes used as a benchmark for wage increases, which is not so accurate thus the government is looking at another index that can better reflect the cost of living, so that wage rises reflect the actual situation.

AMMB’s Q3 profit surges 59.8% on higher lending, recoveries

KUALA LUMPUR: AMMB Holdings Bhd’s net profit for the third quarter ended Dec 31, 2018 jumped 59.8% to RM349.88 million from RM218.98 million a year ago, propelled by higher lending volume, lower cost base and increase in recoveries.

Its revenue rose 6.5% to RM2.30 billion compared with RM2.16 billion in the previous year’s corresponding quarter.

For the nine-month (9M FY19) period, the group’s net profit grew 19% to RM1.05 billion from RM878.72 million a year ago, while revenue for the year jumped 6.6% to RM6.79 million from RM6.37 million in the previous year.

AMMB told Bursa Malaysia that its total income expanded 2% for 9M FY19. Net interest income grew 5.9% to RM1.95 billion, supported by a consistent expansion of its loan base.

Non-interest income dropped 4.7% to RM1.02 billion due to markets volatility and weaker sentiments, resulted in lower contributions from markets, funds management and investment banking. This was partially cushioned by higher fee income from corporate banking and business banking, coupled with better outcomes from general and life insurance businesses.

The group recorded a net recovery of RM33.4 million in 9MFY19 against an impairment charge of

RM32.9 million in the same period last year, aided by several large corporate recoveries. Gross impaired loans ratio improved 8 basis points to 1.62% and loan loss cover rose to 116.8%.

AMMB’s gross loans growth rose 4.2% to RM100.4 billion for 9M FY19, while customer deposits grew 11.4% to RM106.8 billion.

As at end-December 2018, the group’s financial holding companies common equity tier 1 ratio and total capital ratio stood at 12% and 15.7%, respectively.

“We have also achieved a few large corporate recoveries, providing additional boost to our earnings. Our return of equity (ROE) has improved to 8.2% (9MFY18: 7.2%), and I believe we are well on track to achieve our FY19 ROE target of 8.5%,” AmBank group CEO Datuk Sulaiman Mohd Tahir said in a statement.

He noted that the positive outlook for Malaysia will underpin a loans growth of about 4.9% for the banking industry in 2019.

“Our loans and customer deposits growth has been particularly encouraging and we remain committed in propelling growth in our target segments. Our costs have been well contained as we continue to invest for growth. We have increased our liquidity buffers and strengthen our capital positions.”

He said the group is also targeting to conclude the sale of retail non-performing loans by March 31, 2019, which it has announced earlier. This is part of AMMB’s initiatives to improve its capital position and focus its resources on newer vintage delinquent loans.

At 2.40pm, AMMB’s share price was trading 14 sen or 3.1% higher at RM4.59 on 969,500 shares done.

Guan Eng: Govt in talks with China Construction Bank on Panda bond offer

KUALA LUMPUR: The Finance Ministry has received the offer for issuance of a Panda bond from China and the parties are currently in discussions.

Finance Minister Lim Guan Eng (pix) said discussions are ongoing and the offer from China Construction Bank is a positive sign from foreign investors.

Speaking to reporters at the 12th Malaysian Property Summit today, he said foreign investors’ willingness to extend loans to the government reflects their interest and confidence in the Malaysian government.

Earlier this week, China’s ambassador to Malaysia Bai Tian said that the China Construction Bank is proposing to issue Panda bonds in China to Malaysia to help alleviate financial stress.

Public Bank proposes 37 sen dividend for Q4

PETALING JAYA: Public Bank Bhd has proposed to declare a second interim dividend of 37 sen for the fourth quarter ended Dec 31, 2018 despite its net profit declining 5.4% to RM1.41 billion against RM1.49 billion in the previous corresponding period.

Revenue for the quarter, however, grew 5.3% to RM5.63 billion from RM5.35 billion.

Together with the first interim dividend of 32 sen per share, the bank’s full-year dividend for 2018 amounts to 69 sen or a total dividend payout of RM2.7 billion, representing 47.9% of its net profit for 2018.

Public Bank’s full-year net profit rose 2.2% to RM5.59 billion from RM5.47 billion a year ago on the back of a 5.7% increase in revenue to RM22.04 billion from RM20.86 billion.

“2018 was marked by a more moderate economic growth, with increased head-winds on both global and domestic fronts and banks were faced with a more challenging business climate. Against this backdrop, the Public Bank group was able to sustain stable profitability due to its continuous efforts to drive its loans and deposits business, coupled with the group’s strong asset quality and prudent cost management,” said Public Bank founder Tan Sri Teh Hong Piow (pix).

The bank achieved 4.2% loan growth in 2018 and its lending strategy remained focused on consumer financing for the purchase of residential properties and passenger vehicles, as well as extension of credit to small and medium enterprises for purchase of commercial properties and working capital.

Its total customer deposits achieved growth of 6.2% to RM339.2 billion in 2018. The deposit growth contributed to the group’s strong funding position, as reflected in its gross loan to fund and equity ratio of 79.0% as at the end of 2018.

Public Bank continued to maintain a low gross impaired loans ratio of 0.5%, well below the domestic banking system’s gross impaired loans ratio of 1.5%.

“Further, the Public Bank group’s loan loss coverage ratio stood high at 126.0% as at the end of 2018. Including the RM1.8 billion regulatory reserves that the group had set aside, the group’s loan loss coverage ratio would be 237.5%. This has provided the group a strong buffer to weather any uncertainties ahead,” said Teh.

After the payment of the second interim dividend, the group’s common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio will stand at 13.1%, 13.7% and 16.3% respectively.

In 2018, Public Bank’s overseas operations contributed 9.7% to the group’s overall pre-tax profit, largely contributed by Public Financial Holdings td Group in Hong Kong and Cambodian Public Bank Plc.

Looking ahead, Public Bank expects the overall outlook for the domestic banking sector to remain stable underpinned by resilient private sector activity.

“There will be continued growth opportunities for the domestic banking industry underscored by ongoing demand for affordable housing and the growing small and medium enterprises,” said Teh.

Public Bank’s share price gained 6 sen or 0.24% to close at RM25.06 today on 4,402,500 shares done.

CIMB Niaga posts 16.9% net profit growth in 2018

PETALING JAYA: CIMB Group Holdings Bhd’s 92.5%-owned T Bank CIMB Niaga Tbk reported an audited consolidated net profit of 3.5 trillion rupiah (RM1 billion) for the financial year ended Dec 1, 2018 a 16.9% growth compared with a year ago.

The bank said the improved net profit came on the back of a 13.8% increase in on-interest income to 3.8 trillion rupiah and a 63 basis-point improvement in credit charges from 2.26% to 1.63% as provisions declined 25.7%.

CIMB Niaga’s loan loss coverage remains comfortable at 105.86%.

“We aim to maintain a targeted growth trajectory while keeping asset quality as a priority,” said CIMB Niaga president director Tigor M. Siahan.

Total loans grew by 1.8% to 188.5 trillion rupiah mainly from growth in mortgages of 11.2% to 30 trillion rupiah, small- and medium enterprise loans of 8.5% to 29.6 trillion rupiah and credit card of 5.5% to 8.6 trillion rupiah.

With total assets of 266.8 trillion rupiah as at Dec 31, 2018, CIMB Niaga maintained its position as Indonesia’s second largest private owned bank by assets.

Its capital adequacy ratio stood at 19.66% as at end-December 2018, representing a 106 basis-point increase from the previous year.

“Going forward, we will continue to focus on expanding our consumer and SME businesses, building our CASA (current account savings account) franchise and strengthening our Sharia business proposition and Sharia-compliant product offerings,” Tigor added.