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

Foreign selling returns to Bursa

PETALING JAYA: Foreign selling returned to Bursa last week, with international investors dumping RM297.1 million net of Malaysian equities, the highest weekly attrition recorded in seven weeks.

“Foreign selling returned to Bursa at a rather intensified level compared with the amount disposed in the past six weeks that did not exceed RM100 million net,” MIDF Research said in its fund flow report today.

Foreign buyers exactly matched foreign sellers on Monday and a bout of acquisition took place on Tuesday where foreign investors bought RM181.3 million net, the highest net inflow in a day in almost five months despite the weak China industrial output data that coincided with the 0.22% dip in the FBM KLCI.

“However, foreign investors were back in selling mode thereafter until the week ended with Thursday recording the highest amount sold at US$282.1 million (RM1.17 billion) net. The heavy foreign buying on Thursday saw the FBM KLCI close at an eight-month low of 1,718 points ahead of the House of Representatives’ vote for a tax cut bill,” it said.

It noted that market sentiment improved later on Friday following the central bank’s announcement of a strong Q3’17 gross domestic product growth of 6.2%, which led to a 0.21% rebound in the FBM KLCI.

“Foreign selling still occurred on the same day but on a reduced level below RM100 million net,” it added.

Following the intense foreign selling last week, the cumulative year-to-date inflow has substantially decreased to RM9 billion from RM9.31 billion in the week before but the year-to-date inflow still offsets about 31% of the total net outflow from 2014 to 2016.

Foreign participation improved as the foreign average daily trade value (ADTV) surged by 27% to RM1.13 billion after three weeks of staying below the RM1 billion mark.

In contrast, the retail ADTV decreased by 8% to settle below the RM1 billion level at RM957 million.

Nexgram shares rise despite facing claims totalling RM2.83m

PETALING JAYA: Nexgram Holdings Bhd's share price rose 14.29% this morning despite news of its unit being served with 10 writ of summons and statement of claims for a total of RM2.83 million.

At 11.03am, its share price rose 14.29% or 0.5 sen to 4 sen with a total of 212,500 shares traded. The stock closed unchanged at 3.5 sen on Friday with a total of 105,000 shares traded.

Last Friday, Nexgram told Bursa Malaysia that its 70%-owned subsidiary Blue Hill Development Sdn Bhd (BHD) has been served with 10 writ of summons and statement of claims, with all the plaintiffs claiming for the long outstanding debts in respect of several causes of action including non-payment of building/construction materials sold and delivered, non-payment for leasing of plastering machinery and breach of credit guarantee.

The writs date as far back as Nov 1, 2016. Nexgram said it did not make any announcement before because individually, the writ of summons and statement of claim is below the materiality threshold of Nexgram in respect of its obligation to make immediate disclosure.

SP Setia’s shares fall 1.43% on additional income tax bill

PETALING JAYA: SP Setia Bhd’s share price fell 1.43% this morning after the group was slapped with an additional income tax and penalty totalling RM75.38 million by the Inland Revenue Board (IRB).

At 10.58am, its share price fell 1.43% or 5 sen to RM3.44 with a total of 1.07 million shares traded. The stock fell 5 sen or 1.4% to close at RM3.49 last Friday, with some 9.94 million shares changing hands.

The property developer’s wholly owned subsidiary Bandar Setia Alam Sdn Bhd (BSASB) was served by IRB with notices of additional assessment for the years of 2008, 2009, 2010, 2011 and 2013 dated Nov 13, 2017 for an additional income tax of RM51.99 million and a penalty of RM23.39 million totalling RM75.38 million.

According to the group, IRB has taken the view that the gains from the disposal of land and properties held under investment properties under BSASB are chargeable to income tax under the Income Tax Act 1967 instead of the Real Property Gains Tax Act 1976 (RPGTA).

BSASB’s tax solicitors believe that there are reasonable grounds to challenge the basis and validity of the disputed notices of additional assessment raised by the IRB and the penalty imposed. BSASB will challenge the said disputed notices of additional assessment.

Market Research, Monday

US Market : U.S. stocks fell on Friday as worries about tax reform lingered on Wall Street. Treasury Secretary Steven Mnuchin told CNBC’s “Squawk Box” that he expects a Republican tax reform bill to be sent to President Trump by Christmas. Expectations of tax reform have helped lift U.S. stocks to record levels this year. But the market has seen some turbulence recently, slipping from record highs, as concern remained about whether tax reform could be achieved by year-end. Europe Market : European shares failed to end Friday’s trading dayRead More

Kejuruteraan Asastera sees potential in mechanical sector business growth

KUALA LUMPUR: The newly Ace Market-listed Kejuruteraan Asastera Bhd (KAB) intends to grow its mechanical engineering (M&E) business to account for 50% of the group’s total revenue contribution in the next five years, from less than 10% currently.

KAB’s current core business, the electrical engineering services, which contributes almost 90% of its total revenue, involves the installation, testing and commissioning of electrical systems. Its M&E services include the installation, testing and commissioning of air-conditioning and mechanical ventilation systems.

KAB, which was the most active stock, closed at a premium of 20%, or 5 sen, over its issue price of 25 sen in its debut on the Ace Market of Bursa Malaysia last Friday.

Its shares opened at 33 sen, hit a low of 28 sen and high of 33 sen before ending its maiden day at 30 sen, with 159.92 million shares traded.

Speaking at a press conference after the group’s listing ceremony, its managing director Datuk Lai Keng Onn said going forward the company aims to expand and strengthen its M&E services capabilities, driven by positive outlook for the construction sector and by undertaking more affordable housing projects.

“Actually, the M&E contract value for affordable housing projects is higher. So we are aggressively tendering for it. That’s why if the market has a lot of affordable housing projects, it is an advantage for us. We also can see that currently there is huge potential for us to grow in the mechanical sector,” he said.

Lai said the group is also targeting to expand its geographical presence in Kuala Lumpur, Johor as well as Penang, noting it is in the process of finalising one or two affordable housing scheme projects in Johor.

Lai expects KAB’s current order book of RM210 million will keep the group busy until 2019, and is expected to hit RM250 million by year-end. The company is now awaiting the outcome of its bids worth RM250 million for contracts that include affordable housing and mixed-development projects.

Lai said the group is also keen to participate in tendering for infrastructure projects in the future, including the Mass Rapid Transit project.

For the third quarter ended Sept 30, 2017, KAB posted a net profit of RM2.12 million, on the back of RM30.18 million revenue. For the nine months period, it registered a net profit of RM5.35 million, with a revenue of RM83.23 million.

The group raised RM20 million from its initial public offering (IPO), which comprises a public issuance of 80 million new shares and offer for sale of up to 32 million existing shares. Of the proceeds raised, 58% will be used for working capital, 12.5% for capital expenditure, 9.1% for repayment of bank borrowings and 17% for listing expenses. About 3.4% will be used to set up a proposed new branch office in Johor Baru and an additional office in Kuala Lumpur.

Its public offer of RM16 million issue shares was oversubscribed by 57.33 times.

Philippines operations approval strengthens CIMB’s position as universal Asean bank

KUCHING: CIMB Bank Bhd (CIMB) has received approval from the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) to operate a branch in the Philippines and analysts believe that this will further strengthen the bank’s position as a universal Asean bank. According to CIMB’s press statement, the bank is the first Malaysian banking group […]

Bank Rakyat aims for 1.2 million Kelab Nuri members by October next year

KUCHING: Bank Rakyat aims to increase the number of Kelab Nuri Bank Rakyat members to up to 1.2 million in October 2018. The increase of 528,315 members is targeted following the introduction of brand new image of Kelab Nuri Bank Rakyat which offers various exclusive packages for its members. According to Bank Rakyat’s senior vice […]

Oil climbs as Saudi Arabia seeks to dispel doubts over Russia

LONDON, Nov 17 — Oil climbed, paring losses earlier this week, as Saudi Arabia moved to dispel doubts over Russia’s readiness to extend output curbs. Futures rose 1.5 per cent in New York, trimming the weekly decline to 1.4 per cent, after…

Fire incident at Heng Huat’s Gua Musang plant

PETALING JAYA: A fire broke out at Heng Huat Resources Group Bhd's production plant in Gua Musang, Kelantan at 1am on Thursday.

In a filing with Bursa Malaysia, the company said no one was injured in the incident and the production floor was not severely affected.

The company estimates that operations can fully resume within two weeks. It said that the assets are covered by insurance.

“The fire department and insurance representatives are still conducting investigation to ascertain the cause of the fire. As such, the company has yet to ascertain the full financial impact and consequences of the incident,” it said.

The production plant belongs to its wholly owned subsidiary HK Gua Musang Sdn Bhd.

Heng Huat's share price fell 1.85% to close at 26.5 sen on Friday, with a total of 1.05 million shares traded.