oil production

 
 

Heaviest selling of Malaysian bonds by foreign funds in five months

PETALING JAYA: Foreign investors returned as net sellers of Malaysia’s debt securities in November with total foreign holdings declining by RM5.2 billion, after a short-lived increase of RM7.8 billion in the previous month, according to Kenanga Research.

It marked a fall of 2.7% month on month, the quickest pace since June 2018.

Consequently, the share of total foreign holdings of Malaysia’s debt inched lower to 13.5% from 14% in October.

The bulk of November’s decline was accounted by a net decline of Malaysian Government Securities (MGS) by RM5.4 billion (Oct: +RM4.7 billion), pulling down foreign holdings share of total MGS to 38.8% (Oct: 40.7%), as well as by a net decline of private debt securities (PDS) by RM300 million (Oct: +RM1.4 billion), slightly tilting the foreign holdings share of total PDS down to 2.1% (Oct: 2.2%).

Year to date, total net foreign bond holdings fell by RM19.6 billion.

Kenanga Research expects the outflow of portfolio funds to persist going into next year as there is a total of US$11.1 billion debt maturity in Q4’18 compared with US$6.4 billion in Q3’18, and as risk-averse sentiments remain in relation to trade war uncertainties, despite the announcement of 90-day new-tariff ceasefire by US President Donald Trump, as investors await further concrete resolutions to be put forward.

It said the sell-off occurred against a backdrop of financial market turmoil amid trade war jitters, tumbling global oil prices and Federal Reserve interest rate increases, albeit likely to happen at a more gradual pace and less frequent going forward.

“Based on our observation, the bond portfolio flow trend largely correlates with Fedspeak or the language of the US Federal Reserve. Apart from economic indicators, namely the less convincing job creation numbers in November, dovish statements of key Fed officials, including chairman Jerome Powell’s remark that the current benchmark interest rate is ‘just below’ neutral, suggests less aggressive rate hikes by the Fed for next year.”

This, it said, puts into question the three indicative rate hikes for 2019 and one in 2020.

“Nevertheless, a rate hike in December remained within our expectation.”

The US 10-year Treasury note average yield was seen dropping by 7 basis points (bps) to 3.10% in October (Oct: +15 bps), while the benchmark 10-year MGS average yield decreased by 3 bps to 4.11% (Oct: +4 bps). Consequently, the MGS-US Treasury average yield spread widened to 102 bps (Oct: 98 bps).

Kenanga Research expects the ringgit to come under pressure for the rest of the year but Opec’s decision to cut oil production by 1.2 million barrels per day for the first six months of 2019 may provide some support to the currency.

“Hence, we maintain our USD/MYR end-of-year forecast at RM4.15.”

The ringgit weakened 0.16% to 4.1725 against the greenback as at 5pmtoday.

On monetary policy, the research house expects Bank Negara Malaysia to hold the Overnight Policy Rate (OPR) at 3.25%.

“As domestic economic growth is ex-pected to taper off and inflation is expected to remain subdued, we believe BNM will hold the OPR unchanged at 3.25% till year end and potentially next year, in ensuring price stability and to remain supportive of growth,” it said.


Foreign selling of Malaysian bonds picks up in November

PETALING JAYA: Foreign investors returned as net sellers of Malaysia’s debt securities in November with total foreign holdings declining by RM5.2 billion, after a short-lived increase of RM7.8 billion in the previous month, according to Kenanga Research.

It marked a fall of 2.7% month on month, the quickest pace since June 2018.

Consequently, the share of total foreign holdings of Malaysia’s debt inched lower to 13.5% from 14% in October.

The bulk of November’s decline was accounted by a net decline of Malaysian Government Securities (MGS) by RM5.4 billion (Oct: +RM4.7 billion), pulling down foreign holdings share of total MGS to 38.8% (Oct: 40.7%), as well as by a net decline of private debt securities (PDS) by RM300 million (Oct: +RM1.4 billion), slightly tilting the foreign holdings share of total PDS down to 2.1% (Oct: 2.2%).

Year to date, total net foreign bond holdings fell by RM19.6 billion.

Kenanga Research expects the outflow of portfolio funds to persist going into next year as there is a total of US$11.1 billion debt maturity in Q4’18 compared with US$6.4 billion in Q3’18, and as risk-averse sentiments remain in relation to trade war uncertainties, despite the announcement of 90-day new-tariff ceasefire by US President Donald Trump, as investors await further concrete resolutions to be put forward.

It said the sell-off occurred against a backdrop of financial market turmoil amid trade war jitters, tumbling global oil prices and Federal Reserve interest rate increases, albeit likely to happen at a more gradual pace and less frequent going forward.

“Based on our observation, the bond portfolio flow trend largely correlates with Fedspeak or the language of the US Federal Reserve. Apart from economic indicators, namely the less convincing job creation numbers in November, dovish statements of key Fed officials, including chairman Jerome Powell’s remark that the current benchmark interest rate is ‘just below’ neutral, suggests less aggressive rate hikes by the Fed for next year.”

This, it said, puts into question the three indicative rate hikes for 2019 and one in 2020.

“Nevertheless, a rate hike in December remained within our expectation.”

The US 10-year Treasury note average yield was seen dropping by 7 basis points (bps) to 3.10% in October (Oct: +15 bps), while the benchmark 10-year MGS average yield decreased by 3 bps to 4.11% (Oct: +4 bps). Consequently, the MGS-US Treasury average yield spread widened to 102 bps (Oct: 98 bps).

Kenanga Research expects the ringgit to come under pressure for the rest of the year but Opec’s decision to cut oil production by 1.2 million barrels per day for the first six months of 2019 may provide some support to the currency.

“Hence, we maintain our USD/MYR end-of-year forecast at RM4.15.”

The ringgit weakened 0.16% to 4.1725 against the greenback as at 5pmtoday.

On monetary policy, the research house expects Bank Negara Malaysia to hold the Overnight Policy Rate (OPR) at 3.25%.

“As domestic economic growth is ex-pected to taper off and inflation is expected to remain subdued, we believe BNM will hold the OPR unchanged at 3.25% till year end and potentially next year, in ensuring price stability and to remain supportive of growth,” it said.


OPEC agrees to cut production

Fundamental outlook DURING the Group of 20 (G20) meeting earlier this month, the long-awaited negotiation between US and China saw its President Donald Trump and leader Xi Jinping agreeing to a 90-day tariff truce. Both parties are willing to explore a solution on reducing the current trade imbalance. Soon after the G20 meeting, Huawei chief […]


Palm oil used in biofuel should be certified

KOTA KINABALU: Any palm oil that is used in biofuels should be certified as sustainable, according to head of European operations at the Roundtable on Sustainable Palm Oil, Inke van der Sluijs.

“RSPO’s view on biofuels is that if there is palm oil in biofuel, it should be certified sustainable. We do not necessarily promote the use of palm oil as a product. The EU requires that… there is regulations in place to ensure that vegetables oil used in biofuels is certified sustainable,” she said when asked to comment on the European Union’s move of phasing out the use of palm oil in transport fuels by 2030.

Malaysia, the world’s second largest palm oil producer, has been kept on its toes following the EU’s decision and the government in turn has been taking initiatives to engage with the European bloc on the matter.

van der Sluijs said there is still room to step up the uptake of RSPO certified sustainable palm oil in the market as it only makes up for 19% of total global palm oil production, of which only 50% is sold in the market as sustainable palm oil.

However, she said the 50% figure is highly debatable because there are plantations which have double certification from RSPO and other schemes, hence some might opt to use the other certifications to sell their products in the market.


Palm oil used in biofuel should be certified as sustainable

KOTA KINABALU: Any palm oil that is used in biofuels should be certified as sustainable, according to head of European operations at the Roundtable on Sustainable Palm Oil, Inke van der Sluijs.

“RSPO’s view on biofuels is that if there is palm oil in biofuel, it should be certified sustainable. We do not necessarily promote the use of palm oil as a product. The EU requires that… there is regulations in place to ensure that vegetables oil used in biofuels is certified sustainable,” she said when asked to comment on the European Union’s move of phasing out the use of palm oil in transport fuels by 2030.

Malaysia, the world’s second largest palm oil producer, has been kept on its toes following the EU’s decision and the government in turn has been taking initiatives to engage with the European bloc on the matter.

van der Sluijs said there is still room to step up the uptake of RSPO certified sustainable palm oil in the market as it only makes up for 19% of total global palm oil production, of which only 50% is sold in the market as sustainable palm oil.

However, she said the 50% figure is highly debatable because there are plantations which have double certification from RSPO and other schemes, hence some might opt to use the other certifications to sell their products in the market.


Ringgit ends marginally lower on concern of global slowdown

KUALA LUMPUR, Dec 7 — The ringgit ended its trading day for the week marginally lower against the US dollar as growing concerns among investors over global economic slowdown boosted demand for the greenback, dealers said.  At 6pm, the…


Opec and partners face steep challenge to reach oil cut deal

VIENNA, Dec 7 — Opec will meet with 10 partner countries, including Russia, today to try to thrash out an agreement on oil production cuts, a day after the group's members failed to reach a deal. The oil cartel had been expected to sign off on…


Bursa easier at opening on mild selling

KUALA LUMPUR, Dec 7 — Shares on Bursa Malaysia were easier at today's opening on mild selling, as the arrest of a senior Chinese executive at tech giant Huawei, escalated fears that it could impact the progress of the US-China trade discussions,…


Shares on Bursa Malaysia easier at opening on mild selling

KUALA LUMPUR: Shares on Bursa Malaysia were easier at Friday’s opening on mild selling, as the arrest of a senior Chinese executive at tech giant Huawei, escalated fears that it could impact the progress of the US-China trade discussions, dealers said.

At 9.03 am, the key FTSE Bursa Malaysia KLCI (FBM KLCI) eased 1.04 points to 1,682.30 from Thursday’s close of 1,683.34.

The index opened 1.97 weaker at 1,681.37.

On the broader market, gainers were slightly higher than losers at 91 to 77, with 113 counters unchanged, 1,588 untraded and 24 others suspended.

Volume stood at 157.47 million units valued at RM25.93 million.

Huawei chief financial officer Meng Wanzhou was arrested in Canada and faces extradition to the US for purported violations of sanctions on Iran.

Stephen Innes, Head of Trading at Oanda Singapore said the Huawei headline could not have come at a worse time, with the market reeling as confusion reigned over the Group of 20 (G20) fallout.

“But, when you laminate trade war issues with observed dovish shifts from major central banks, it merely adds a whole new level of unwanted confusion entering year-end,” he said.

Meanwhile, the Organisation of the Petroleum Exporting Countries, which ended talks yesterday without a deal to cut oil production (for the first time in almost five years), sent oil prices lower by 0.60 per cent to US$59.70 per barrel.

Among the heavyweights, Maybank was flat at RM9.44, Public Bank declined 14 sen RM24.74, Tenaga eased two sen to Rm13.74, while Petronas Chemicals was seven sen weaker at RM9.20.

Among other actives, Tatt Giap, Perak Transit and MyEG rose one sen each to 2.5 sen, 27 sen and RM1.16 respectively, while Hubline was flat at four sen.

The FBM Emas Shariah Index gained 1.06 points to 11,616.32, the FBM 70 added 32.99 points at 13,497.02 and the FBM Ace Index was 12.67 points stronger at 4,742.47.

The FBM Emas Index appreciated 3.61 points to 11,606.91 and the FBMT 100 Index improved 1.09 points to 11,484.01.

Sector-wise, the Plantation Index advanced 22.99 points to 6,860.77 and the Financial Services Index edged up 18.99 points to 17,470.66, but, the Industrial Products and Services Index was 0.60 of-a-point weaker at 168.80.

Gold futures contracts on Bursa Malaysia Derivatives were unchanged this morning on a lack of demand.

At 9.40 am, December 2018 and January 2019 were each pegged at RM165.60 a gramme, February 2019 stood at RM165.70 a gramme, while March 2019 was unchanged at RM165.80 a gramme.

Volume was nil, while open interest amounted to 27 contracts.

At 9.30 am, the price of physical gold was up 49 sen to RM160.49 per gramme. — Bernama


Petronas conducting feasibility study on energy supply in Silica Valley

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) is undertaking a feasibility study for the development of an energy supply and related infrastructure in the Terengganu Silica Valley in Marang.

President and CEO Tan Sri Wan Zulkiflee Wan Ariffin said the study, conducted together with state-owned company Terengganu Inc, would involve technical and commercial assessment to develop natural gas supply, power generation, supply of industrial gases and other related gas supply in the Silica Valley.

“We expect to complete the study within 18 months,“ he told reporters after witnessing the signing of a memorandum of understanding (MoU) between Petronas and Terengganu Inc today.

The MoU was signed by Petronas vice-president (Malaysia Petroleum Management) Muhammad Zamri Jusoh and Terengganu Inc Director Datuk A Rahman Yahya.

Terengganu Mentri Besar Dr Ahmad Shamsuri Mokhtar, who witnessed the ceremony, said the MoU also included a proposal to develop 32km of gas transmission and distribution pipeline to the project to allow supply of gas through the peninsular gas utilisation network from existing gas supply systems.

He said the Silica Valley development would be partly funded by the state government, but declined to disclose the amount, saying that the proposal was still at the preliminary stage.

With a gross development value of RM13 billion, the Silica Valley will be developed in two phases – 470ha in the first phase and 3,520ha in the second phase.

The project is scheduled for completion within 10 to 15 years and create 7,200 jobs.

On the outcome of the Organisation of the Petroleum Exporting Countries’ (Opec) meeting today, Wan Zulkiflee said Petronas’ plans were based on the continuance of the production cut.

“In the past, we have been complying with this 20,000 barrels production cut per day and we just have to see on the outcome of this meeting,“ he said.

The Opec meeting, scheduled to be held in Vienna today with the aim of reaching an accord over production levels for the next six months.

The cartel will then meet with allied non-Opec partners tomorrow, with markets widely-expecting the energy alliance to announce steep output reductions of around 1.2 million to 1.4 million barrels per day starting January.

Petronas had previously reduced its oil production by 20,000 barrels per day in line with efforts by Opec and its allies to solve the global supply glut.