KUALA LUMPUR, Feb 20 — Steady crude oil prices, positive market sentiment in Malaysia and optimism over US-China trade talks pushed the ringgit to finish at its highest level in more than six months. At 5pm, the local note surged 140…
HONG KONG: Growing optimism that China and the United States will reach a trade deal lifted most Asian equities Wednesday while the positive sentiment also provided support to regional currencies against the safe-bet dollar.
The yuan was among the big gainers following a report that the US has called on China to stabilise the unit as part of any agreement between the world’s top economic powers.
Wall Street returned from a long weekend to provide a healthy lead as US President Donald Trump said trade talks – which resumed in Washington Tuesday – were “going very well” but are “very complex”.
He also indicated he could put back the March 1 deadline for talks to be concluded – when US tariffs on Chinese goods are due to more than double – saying it is “not a magical date”.
Observers say that while there are no details about the negotiations the fact they are still talking and China appeared responsive to the call for yuan stability was good news.
Hong Kong led gains, rising 1.2% while Shanghai added 0.2% and Tokyo ended the morning session 0.7% higher.
Seoul climbed more than 1%, Singapore put on 0.6%, Taipei added 0.9% and Wellington 0.3%. Manila piled on 1% but Sydney slipped 0.3%.
The upbeat mood on trading floors gave investors confidence to buy higher-risk currencies, pushing the South African rand more than 1% higher and Australia’s dollar up 0.8%. The yuan climbed 0.7%.
Hopes that Prime Minister Theresa May could win changes to her Brexit deal with the European Union as she heads to Brussels Wednesday boosted the pound more than one percent.
While EU leaders have said they are not willing to bend on the agreement, analysts say there could be some movement that would help her push it through parliament and avoid a messy divorce that could hammer the British economy.
“The EU is showing some possible concessions about the timing of the exit, as (European Commission chief) Jean-Claude Juncker has said a delay beyond the European parliamentary elections in May would not be opposed, but the UK has to request it, which they have not done,“ said Alfonso Esparza, senior market analyst at OANDA. — AFP
SINGAPORE: Oil prices were around 2019 highs on Wednesday, propped up by supply cuts led by producer club OPEC and by U.S. sanctions on Iran and Venezuela.
But soaring U.S. production and expectations of an economic slowdown look set to cap prices, analysts said.
U.S. West Texas Intermediate (WTI) crude oil futures hit 2019 highs of $56.39 per barrel shortly after 0300 GMT on Wednesday, up 30 cents, or 0.5 percent, from their last settlement.
International Brent crude futures were at $66.58 per barrel, up 13 cents, or 0.2 percent, from their last close and not far off their 2019 high of $66.83 per barrel from Monday.
Oil prices have been supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).
OPEC-member and top crude exporter Saudi Arabia is expected to reduce shipments of light crude oil to Asia in March as part of the effort to tighten markets.
OPEC as well as some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from swelling.
“We have lowered Saudi crude oil output in line with announcements … (and) are now assuming that Saudi Arabia will produce in the first three quarters of 2019 less than the 10.31 million bpd target it agreed to at the Dec. 7 OPEC, non-OPEC meeting,” French bank BNP Paribas said in a note.
Because of the cuts, BNP said it expected oil prices “to rally through Q3 2019”, with Brent to average $73 per barrel by then and WTI to average $66.
Another key oil price driver has been U.S. sanctions on oil exporters Iran and Venezuela.
Despite the sanctions, Iran’s crude exports were higher than expected in January, averaging around 1.25 million bpd, according to Refinitiv ship tracking data. Many analysts had expected Iran oil exports to drop below 1 million bpd after the imposition of U.S. sanctions last November.
SHALE BOOM, WEAKER ECONOMY
Standing against the supply cuts and sanctions is U.S. crude output , which soared by more than 2 million bpd in 2018 to a record 11.9 million bpd, thanks to booming shale oil production, which the Energy Information Administration on Tuesday said was expected to keep rising.
BNP Paribas said surging U.S. output would feed into lower oil prices towards the end of the year, with Brent to dip to an average of $67 a barrel by the fourth quarter and WTI to average $61.
“U.S. oil production growth, driven by shale, will be increasingly exported in greater volumes to international markets while the global economy is expected to witness a synchronised slowdown in growth,” the bank said.
Singapore developers want cooling measures eased, minister says ‘bitter medicine’ unavoidable at times
SINGAPORE, Feb 20 — As Singapore developers urged the government to review certain property cooling measures, Finance Minister Heng Swee Keat said yesterday that “bitter medicine” for the sector is unavoidable at times. Speaking at the Chinese…
KUALA LUMPUR: The ringgit extended yesterday’s uptrend to opened higher against the US dollar this morning as demand for the greenback was fragile amid uncertainty about the US-China trade talks, dealers said.
At 9 am, the ringgit was quoted at 4.0700/0740 compared to Tuesday’s close of 4.0780/0830.
He said the greenback was under pressure as the next round of trade talks between the United States and China took place Tuesday (last night local time) in Washington, with the White House urged Beijing to keep the value of the yuan stable as part of trade negotiations between the world’s two largest economies.
The move was aimed at neutralising any effort by the Chinese to devalue its currency to counter American tariffs.
Meanwhile, the ringgit was traded mostly lower against other major currencies.
It fell against the Singapore dollar to 3.0081/0115 from 3.0052/0093 yesterday, weakened against the British pound to 5.3154/3223 from 5.2680/2761, and contracted versus the euro to 4.6182/6236 from 4.6085/6158.
The local note, however, appreciated vis-a-vis to the Japanese yen to 3.6753/6796 from 3.6812/6867 previously. — Bernama
SINGAPORE: Singapore announced extra healthcare spending for the elderly and a raft of other handouts in its annual budget as speculation mounts elections may be held this year. Polls must be held by 2021 but analysts suggest they could take place later this year, as the country’s founding family prepares to hand over leadership to […]
KUCHING: The Sarawak construction sector is behind on Building Information Modelling (BIM), as seen in the latest round of training in Building Information Modelling (BIM) in January. This follows the state’s first and only myBIM Satellite Centre, set up in conjunction with the Construction Industry Development Board (CIDB) in June last year. In this round, […]
PARIS, Feb 19 — As Britain’s March 29 departure from the European Union looms, several major companies have announced they are downsizing their operations in the UK or completely shipping out. A panorama: Industry hit hard Amid Brexit jitters as…
PETALING JAYA: Boustead Holdings Bhd is disposing of the Royale Chulan Bukit Bintang Hotel (pix) and its business in Kuala Lumpur to Singapore’s Hotel Royal Ltd for RM197 million.
The conglomerate told Bursa Malaysia that its wholly owned subsidiary Boustead Hotel & Resorts Sdn Bhd (BHR) had on Feb 19 accepted an offer from Hotel Royal via its letter dated Feb 15 for the deal.
Hotel Royal is listed on the Main Board of Singapore Exchange Securities Trading Ltd (SGX).
Royale Chulan Bukit Bintang is a four-star hotel with 400 rooms. It is one of the eight hotels under the group’s hotel portfolio.
“There are currently two Royale Chulan hotels in Kuala Lumpur – Royale Chulan Bukit Bintang and Royale Chulan Kuala Lumpur, which are both within close proximity and competing with each other. As such, the Group has decided to consolidate and focus on one hotel, namely Royale Chulan Kuala Lumpur, to better capture the Kuala Lumpur market,” said Boustead.
“Royale Chulan Bukit Bintang offers good prospects, given its strategic location in one of the prime tourist areas and hotel belts of Kuala Lumpur’s city centre. With this attractive offer price, we are of the view that this is the right time to dispose of this hotel,” it added.
The letter of offer is subject to, amongst others, Hotel Royal being granted an exclusivity period of one month commencing from Feb 19 to conduct a due diligence exercise on the hotel; BHR shall refrain from responding to (other than to reject) any enquiry, discussion, proposal or offer for or to continue, propose to, negotiate or hold discussions, and/or enter into any agreements, arrangements or understanding with any other parties during the exclusivity period.
It is also subject to the execution of a conditional sale and purchase agreement (SPA) by the parties within the exclusivity period; and the conditions precedent for the proposed disposal will include, inter alia, the statutory and regulatory approvals required under the Malaysian law and the SGX.
Boustead said Hotel Royal had paid a sum of RM3.94 million, being the 2% earnest deposit of the disposal consideration, as part of the terms of the letter of offer.
“In the event that the SPA is not executed for any reason whatsoever, the earnest deposit shall be refunded in full to the purchaser within 14 days from the date of the purchaser‘s written demand to BHR.”
Boustead said it will make the necessary announcements upon further development of the proposed disposal.
PETALING JAYA: Malaysian Rating Corp Bhd (MARC) has affirmed its “AAA” rating on Petronas Dagangan Bhd’s (PDB) Islamic commercial papers (ICP) and Islamic medium-term notes (IMTN) programme of up to RM2 billion, with a stable outlook.
The rating agency said in a statement today that the ratings affirmation reflects PDB’s strong financial metrics, characterised by its sound liquidity and strong leverage position.
PDB’s ratings also incorporate high parental support from Petroliam Nasional Bhd (Petronas) on which MARC maintains a public information rating of “AAA” with a stable outlook.
The stable outlook on the ratings reflects MARC’s expectation that PDB will continue to maintain its current credit profile, it added.
PDB is a leading domestic player of downstream petroleum products, benefitting from an extensive network of more than 1,000 petrol stations across the country, with a strong market position, underpinned by well-established Petronas brand.
Its businesses are divided into four core segments, namely retail (mainly motor gasoline and diesel), commercial (mainly airline fuel), liquefied petroleum gas (LPG) and lubricants.
It retains a healthy market share in the retail and commercial segments, contributing about 50.7% and 49.3% to group revenue of RM22.2 billion for the nine month period of 2018 (9M2018).
The total group revenue rose by 9.4% year-on-year, largely due to higher average selling prices on higher Mean of Platts Singapore (MOPS) prices, the benchmark prices for refined products.
MARC noted that changes in pump prices have had no impact on PDB’s pricing mechanism as it adheres to the automated pricing mechanism under which it is assured of a fixed profit rate that affords earnings stability in the retail segment.
However, MARC said the operating performance of its commercial segment will continue to be susceptible to fluctuations in oil prices and economic cycles.
During 9M2018, PDB incurred higher capex of RM187.3 million, largely due to expenditure for the renovation and upgrading of petrol stations.
The lower cash flow from operations, higher capex and higher dividend payment of RM774.9 million resulted in negative free cash flow of RM484.1 million (9M2017: RM485.5 million).
Nevertheless, MARC noted that PDB has strong liquidity as reflected by cash balances of RM2.9 billion as at end-September 2018.
“The leverage level remained low with a debt-to-equity ratio of 0.01 times. There is currently no outstanding amount under the rated programme,” MARC added.