In a statement today, Bank Negara Malaysia said official reserves assets as at August 31, 2020 stood at US$104.41 billion. — Reuters pic
KUALA LUMPUR, Sept 30 ― Bank Negara Malaysia's (BNM) official reserves assets as at August 31, 2020 stood at US$104.41 billion (RM434 billion), in accordance with the International Monetary Fund’s Special Data Dissemination Standard (IMF SDDS) format.
In a statement today, Bank Negara Malaysia (BNM) said other foreign currency assets amounted to US$1.61 billion as at end-August 2020.
“For the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include, among others, scheduled repayment of external borrowings by the government and repayment arising from the maturity of foreign currency Bank Negara Interbank Bills, amounted to US$8.72 billion,” it said.
The central bank said the short forward positions amounted to US$8.37 billion while long forward positions amounted to US$1.58 billion as at end-August 2020, reflecting the management of ringgit liquidity in the money market.
“In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans,” it said.
According to BNM, projected foreign currency inflows amount to US$2.31 billion in the next 12 months, and the only contingent short-term net drain on foreign currency assets are government guarantees of foreign currency debt due within one year, amounting to US$277.1 million.
“There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions.
“Bank Negara Malaysia also does not engage in foreign currency options vis-a-vis ringgit,” it said. ― Bernama
PARIS/WASHINGTON: The World Trade Organization has authorised the European Union to impose tariffs on U.S. goods worth $4 billion to retaliate against subsidies for U.S. planemaker Boeing Co, people familiar with the matter said.
The delayed award provides a fresh source of potential trade friction weeks before the U.S. presidential election, after Washington last year began imposing tariffs on $7.5 billion worth of European Union goods over state support for Boeing rival Airbus.
The two sides have been locked in a 16-year-old dispute at the Geneva-based WTO over aid to their aircraft industries in a pair of cases that together represent the world’s largest-ever corporate trade dispute.
They were informed of the decision by WTO arbitrators last Friday and the award is expected to be published within weeks.
The U.S. Trade Representative and the EU’s Washington office did not immediately answer requests for comment.
Boeing declined comment on the confidential WTO report but accused Airbus of ignoring its recent decision to forego tax breaks in Washington state to try to resolve the dispute.
Airbus, which recently announced its own concessions on funding in France and Spain, was not immediately available.
Sources on both sides said EU tariffs on products such as Boeing jets, which must still be adopted formally by the WTO, were unlikely to be imposed before the Nov. 3 presidential election as Brussels seeks to avoid inflaming a bitter campaign.
Both sides are expected to claim victory, however, with U.S. sources pointing to the higher core tariffs in favour of Boeing.
European sources said the latest award does not include some $4.2 billion of tariffs against the United States left over from an earlier case, giving the EU $8.2 billion in total firepower.
The United States says that previous award granting the EU tariffs over special tax treatment for U.S. exporters, which it never implemented, is no longer valid because a law creating the disputed system was repealed in 2006.
The WTO has refused to be drawn into the controversy over unused tariffs, saying it has nothing to add to previous rulings on the former system of U.S. Foreign Sales Corporations. -Reuters
WASHINGTON: World Bank President David Malpass said on Tuesday he is seeking board approval for a $12 billion coronavirus vaccine financing plan to help poor and developing countries secure a sufficient share of vaccine doses when they become available in the coming months.
Malpass told Reuters in an exclusive interview that the initiative, part of $160 billion in coronavirus aid financing pledged by the multilateral lender, is aimed at helping countries procure and distribute vaccines early to healthcare and other essential workers and expand global production. He said the board was expected to consider the plan in early October.
Global competition for early coronavirus vaccine doses is already fierce, months ahead of any approvals, as wealthy countries move to secure supplies.
The U.S. government has pledged over $3 billion to secure hundreds of millions of doses of vaccines under development by Britain’s AstraZeneca Plc and by U.S. drug giant Pfizer Inc and Germany’s BioNTech SE.
Malpass said the World Bank plan aimed to put poor and middle-income countries, where the virus is spreading most rapidly, on the same footing as richer countries by ensuring they have financing to secure supplies and a system for distribution, which will encourage drugmakers to meet their demand.
Without early doses that can bring outbreaks under control, many of these countries risk economic collapse that will push hundreds of millions of people back into poverty.
“Our goal is to alter the course of the pandemic for the low- and middle-income developing countries,“ Malpass said. “This is a market signal to the manufacturers that there will be financing available for the developing countries and there will be demand. We will begin asking the manufacturers to begin creating allocations for these countries.”
Malpass said the World Bank also was asking wealthy countries that have “over-reserved” more doses than they will ultimately need to release those doses to poorer countries.
He added that he is working to persuade countries that equitable distribution of vaccines “is important to the world and will give a better outcome for the world.”
Separately, Brent McIntosh, U.S. Treasury undersecretary for international affairs, told a Foreign Policy magazine forum on Tuesday that wealthy countries were working on broad vaccine availability.
“There have been intense conversations among various developed countries on ensuring that there are vaccines available in the developing world and those conversations are ongoing at the highest levels,“ said McIntosh, who oversees U.S. involvement in the World Bank and the International Monetary Fund.
The World Bank program will disburse grant or loan funding to countries, and will be able to select any vaccine that meets safety criteria, including approval from multiple “highly respected, stringent regulatory agencies,“ such as those in the United States, Canada, Japan and several European countries, Malpass said.
The World Bank’s private-sector arm, the International Financing Corp, in July launched a $4 billion financing platform to boost investment in developing country production of vaccines and other critical health products. -Reuters
At 11.20am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) rose 6.44 points to 1,510.34 from yesterday’s close of 1,503.90. — AFP pic
KUALA LUMPUR, Sept 30 ― Bursa Malaysia remained higher at mid-morning, cushioned by bargain hunting in financial-linked counters led by Maybank, Public Bank and RHB.
At 11.20am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) rose 6.44 points to 1,510.34 from yesterday’s close of 1,503.90.
The index opened 1.87 points higher at 1,505.77.
However, on the broader market, losers fared slightly above gainers 504 to 277, while 749 counters were unchanged, 580 untraded and 43 others suspended.
Total volume stood at 3.01 billion units worth RM925.37 million.
Among the heavyweights, healthcare-linked companies, namely Maybank rose six sen to RM7.16, Public Bank gained increased 16 sen to RM15.74, Top Glove shed seven sen to RM8.40, and Hartalega was 24 sen weaker at RM16.76.
As for the actives, XOX fell 1.5 sen to 13.5 sen, Kanger International slipped two sen to 19 sen and Lambo and Trive Property were flat at three sen and 1.5 sen, respectively.
On the index board, the FBM Emas Index advanced 31.69 points to 10,870.66, the FBM Emas Shariah Index appreciated 19.73 points to 12,957.75.
The FBM 70 added 0.21 point to 14,173.10, the FBMT 100 Index edged up 34.08 points to 10,698.34, but the FBM ACE declined 135.12 points to 9,760.22.
Sector-wise, the Financial Services Index rose 83.74 points to 12,490.91, the Plantation Index bagged 6.56 points to 7,069.08, and the Industrial Products and Services Index was 1.32 points better at 136.55. ― Bernama
SINGAPORE: Singapore state investor Temasek Holdings (Private) Ltd raised $2.75 billion from a clutch of long-dated dollar bonds, including its longest tenor of 50 years, as part of its $25 billion guaranteed global medium-term note programme.
Temasek’s move is part of a growing trend of companies in Asia selling longer-dated tenures, driven by demand from pension funds and others looking for assets that match their far-distant liabilities. Globally, record-low interest rates have reduced the cost for companies carrying out the deals.
“There was strong support for the bonds from high-quality institutional, accredited and/or other specified investors globally,“ Temasek said in a statement on Wednesday.
Temasek Financial (I) Ltd, Temasek’s wholly owned subsidiary, had launched the three tranche offering comprising a 10-year, a 30.5-year and a 50-year bond on Tuesday.
The final order book was nearly $5 billion from about 285 accounts, according to a term sheet.
Temasek raised $750 million in 10-year debt, $1 billion in the 30.5-year debt and $1 billion in the 50-year bonds. The 10-year bonds will pay a coupon of 1%, the 30.5-year bonds 2.25% and the 50-year debt 2.5%.
Asian investors were the largest purchasers of the 10- and 50-year bonds while U.S. investors picked up most of the 30.5-year paper, the term sheet showed.
Barclays, Citigroup, DBS, HSBC and Morgan Stanley were the jointbookrunners on the deal.
Ranked among the world’s biggest investors, Temasek’s net portfolio value fell 2.2% to S$306 billion ($223.6 billion) in the year ended March 2020, the first drop in four years.
Temasek last sold bonds in November 2019.
In July, Thailand’s largest energy company PTT raised $700 million from the sale of a 50-year bond in Asia’s longest dollar corporate debt deal. -Reuters
SINGAPORE: Singaporean conglomerate Keppel Corp said it had identified assets worth S$17.5 billion ($12.8 billion) for monetisation, including through sales, and started a review of its lossmaking offshore and marine (O&M) business.
Its shares, which have been languishing near a decade low, rose as much as 6.5% in early trade.
The plans unveiled on Tuesday are part of Keppel’s 10-year strategy flagged earlier this year to refocus its portfolio on energy and environment, urban development, connectivity and asset management.
Keppel said it was exploring options including strategic mergers and disposals for its offshore and marine business, which builds oil rigs and has been battered by falling energy prices.
Keppel said the assets, such as some of its landbank and investment properties, it has identified to potentially monetise over time have a total value of about S$17.5 billion.
“Over the next three years, we plan to monetise about S$3-S$5 billion of the assets from this substantial S$17.5 billion base to seize new opportunities that can help us achieve our desired returns,“ CEO Loh Chin Hua said.
The conglomerate, whose businesses range from telecommunications to property development, was also moving “to eliminate the gap between our share price and the sum of the parts valuation”, he said.
Its shares have fallen more than 17% since August when state investor Temasek Holdings abandoned its $3 billion offer to raise its stake in Keppel to a majority holding after the company reported weak results.
Analysts have long hoped for a consolidation in the rig-building sector through a deal between Keppel’s O&M business and smaller rival Sembcorp Marine, also backed by Temasek. Keppel’s plans failed to impress some analysts.
“Details remain scarce at this point with a strategic review outcome some distance away (estimated to be within a year), while volatile market conditions provide an uncertain backdrop for asset monetisation moves,“ said Citi analyst Kwok Wei Chang, maintaining a ‘sell’ rating on Keppel.
“In the meantime, near-term fundamentals remain challenging, particularly for O&M,“ he said. -Reuters
PETALING JAYA: With the six-month loan moratorium ending today, Maybank branches nationwide (excluding those in red zones) will continue to remain open until 7pm to provide customers added convenience to enquire and apply for repayment assistance.
In a statement, the group said it wished to remind customers who are impacted by the pandemic to contact the bank immediately should they wish to apply for repayment assistance for their loan/financing.
“The bank also wishes to clarify that the CCRIS status of borrowers who take the repayment assistance will not change,” it added.
Besides the extended operating hours, the bank continues to offer 3 easy channels to apply for repayment assistance, as follows: applying online via Maybank2u (for individual & Business Hire Purchase customers), applying via email for individual or SME customers, or calling any of its branches, SME centres or auto finance centres.
“Maybank wishes to assure those who have applied for repayment assistance but have yet to receive a response that their applications are currently being processed and they will be advised soonest possible on their loan repayment for October onwards,” it said.
Meanwhile, customers who did not apply for the repayment assistance are reminded that they will have to resume payment for their loan/financing starting October 2020.
Maybank highlighted that those who anticipate difficulties in servicing their monthly instalments post-moratorium can still get in touch with the bank to discuss repayment packages to suit their current financial needs, however, these customers are advised to apply for repayment assistance before their October installment is due to ensure their credit status is maintained.
An employee works at a factory of Renesas Semiconductor Co following the outbreak of Covid-19, in Beijing May 14, 2020. — Reuters pic
BEIJING, Sept 30 ― Factory activity in China improved slightly in September, according to official data published today, showing a small rebound in the economy ahead of the week-long National Day public holiday.
The closely watched Purchasing Managers' Index (PMI) is a key gauge of manufacturing activity in the world's second-largest economy, which has largely bounced back after plunging in February because of tough coronavirus measures.
In September, the PMI figure increased slightly to 51.5 after slipping to 51.0 in the previous month. Any figure above the 50-point mark represents growth while below it signals a contraction.
Zhao Qinghe, a senior statistician at the National Bureau of Statistics (NBS), said that this month's figures, with increases in several key indices, demonstrated a “steady recovery” and a pre-holiday consumption boom.
But Zhao also noted that some industries, such as apparel, textile and wood processing, reported insufficient market demand.
“We also see that, although overall manufacturing demand has increased, industrial recovery is uneven... the global pandemic has not been fully and effectively controlled, and there are still uncertain factors in China's imports and exports,” he said.
In February, the index plunged to 35.7 points after the coronavirus brought much of China to a standstill.
Non-manufacturing PMI came in at 55.9 points ― an increase of 0.7 percentage points from August, showing further signs of an economic rebound.
This month's new export order index and import index were both positive for the first time, at 50.8 per cent and 50.4 per cent respectively ― a rise of 1.7 and 1.4 percentage points from August.
Chinese business media group Caixin noted that “new business expanded at the strongest rate since January 2011” and employment stabilised in the manufacturing sector, while the easing of lockdown measures contributed to the momentum of recovery.
But the Caixin manufacturing PMI edged down from 53.1 last month to 53.0 in September.
The Caixin PMI mainly surveys SMEs, and is seen by some as a more accurate reflection of the economic situation than the official government figure, which more closely reflects the condition of large state groups.
“The latest PMIs show that economic activity continued to accelerate in September on the back of a broad-based improvement in both services and manufacturing,” wrote Julian Evans-Pritchard, senior China economist at Capital Economics, in a note.
“In the near term, we think fiscal support and improving foreign demand will keep activity in industry and construction strong, which in turn should shore up consumer sentiment and household spending.”
Business indices in the official measure for industries including railway transportation, air transport, catering and telecommunications were at 60 percent or above. ― AFP
BEIJING: China's factory activity expanded at a faster pace in September thanks to a return to exports growth after several months of shrinking sales, bolstering a steady recovery for the economy as it rebounds from the coronavirus shock.
The official manufacturing Purchasing Manager's Index (PMI) rose to 51.5 in September from 51.0 in August, data from the National Bureau of Statistics (NBS) showed on Wednesday, and remained above the 50-point mark that separates growth from contraction.
Analysts had expected it to pick up slightly to 51.2.
China's vast industrial sector is steadily returning to the levels seen before the pandemic paralysed huge swathes of the economy, as pent-up demand, stimulus-driven infrastructure expansion and surprisingly resilient exports propel a recovery.
The official PMI, which largely focuses on big and state-owned firms, also showed the sub-index for new export orders stood at 50.8 in September, improving from 49.1 a month earlier and snapping eight months of declines, suggesting stronger overseas demand.
A sub-index for employment improved slightly but remained in contractionary territory, standing at 49.6 in September from 49.4 the month before.
Recently, economic indicators ranging from trade to producer prices have all suggested a further pick up in the industrial sector. Profits at China's industrial firms extended robust growth in August to the fourth month, official data showed on Sunday.
Domestic demand also shows signs of broadening, with industrial output accelerating the most in eight months in August and retail sales growing for the first time this year.
The economy, which grew 3.2% in the second quarter year-on-year, is set to expand 2.2% this year - the weakest in over three decades.
China's state planner said last week that it would boost investment in strategic industries including core tech sectors such as 5G, artificial intelligence and chips.
The official PMI also showed activity in China's services sector expanded at a faster pace in September, as demand across the economy continues to recover from the coronavirus-induced slump.
Yet, even as China emerges from the pandemic in fairly stable shape, many expect the road ahead to be bumpy.
A growing rift between China and the United States over trade, technology and a range of other issues have analysts warning about risks to the outlook. Tensions between the two countries are expected to escalate further ahead of the U.S. Presidential election in November, which some China observers say could undercut the recovery. - Reuters
At 9.09am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) stood at 1,504.78, up by 0.88 of-a-point from yesterday close of 1,503.90. — Reuters pic
KUALA LUMPUR, Sept 30 ― Bursa Malaysia opened flat today, tracking the retreated US stock markets prior to the presidential debate, whilst the prospects for any additional stimulus appear to be dimming.
At 9.09am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) stood at 1,504.78, up by 0.88 of-a-point from yesterday close of 1,503.90.
The index opened 1.87 points higher at 1,505.77.
On the broader market however, losers slightly overpowered gainers 200 to 169, while 1,097 counters were unchanged, 644 untraded and 43 others suspended.
Total volume stood at 985.39 million units worth RM429.54 million.
Malacca Securities Sdn Bhd said the FBM KLCI succumbed to another round of selling pressure on Tuesday as investors were quick to lock in their gains on the dour economic outlook presented by the World Bank.
The World Bank yesterday revised down its 2020 gross domestic product (GDP) forecast for Malaysia to a contraction of 4.9 per cent from the previous estimated 3.1 per cent decline and this dragged down the index by 0.5 per cent at close on choppy trading.
“We continue to think that significant upsides will be difficult to come by as the tepid economy recovery remains beset by the unabated new cases of Covid-19.
“In the meantime, the lower liners are also in a choppy mode as valuations have turned less unappealing at current juncture,” the brokerage said in a note today.
Malacca Securities said on the sector focus, the technology counters remain and buying support (for the counter) remains prevalent amid the solid demand over time.
Meanwhile, the REIT sector may return to favour on the back of the unabated volatility.
Among the heavyweights, Maybank gained four sen to RM7.20, Public Bank rose six sen to RM15.64, Top Glove declined seven sen to RM8.40 and Hartalega depreciated 28 sen to RM16.72.
Of the actives, INIX Technologies shed half-a-sen to 33 sen, Kanger International edged up half-a-sen to 21.5 sen, while Pegasus Heights and its warrants were flat at 2.5 sen and 1.5 sen, respectively.
On the index board, the FBM Emas Index improved 7.2 points to 10,846.17 and the FBMT 100 Index went up 4.43 points to 10,668.69.
The FBM Emas Shariah Index slipped 7.14 points to 12,930.88, the FBM 70 inched down 1.06 points to 14,171.83 and the FBM ACE was 8.97 points weaker at 9,886.37.
Sector-wise, the Financial Services Index gained 46.52 points to 12,453.69, the Plantation Index added 3.69 points to 7,066.21 and the Industrial Products and Services Index edged up 0.11 of-a-point to 135.34. ― Bernama
Since March, airlines have been grounding planes and delaying jet deliveries to try to limit the cash-burn as the worldwide coronavirus pandemic effectively paralysed travel for months. — AFP pic
WASHINGTON, Sept 30 ― The US Treasury yesterday announced it had reached a deal with seven major US airlines including American and United to offer them loans in a bid to stave off job cuts amid the coronavirus crisis.
But the Treasury statement does not say if these agreements are going to be enough to allow those two airlines to cancel recently announced plans to proceed with job cuts.
Since March, airlines have been grounding planes and delaying jet deliveries to try to limit the cash-burn as the worldwide coronavirus pandemic effectively paralysed travel for months.
As the US economy gradually reopens, airlines have struggled to convince wary passengers to return to the skies, and international routes have been drastically reduced because of various travel restrictions in effect.
Beyond American and United, the other airlines that signed loan agreements with the administration of President Donald Trump are Alaska Airlines, Frontier Airlines, JetBlue, Hawaiian Airlines and SkyWest Airlines.
Delta and Southwest were ― unsurprisingly ― not part of the agreements, having already said they would not participate.
“We are pleased to conclude loans that will support this critical industry while ensuring appropriate taxpayer compensation,” Treasury Secretary Steven Mnuchin said in the statement.
Mnuchin called on Congress to extend its aid programmes to support jobs across the air travel industry.
The US$25 billion (RM103.9 billion) in loans have been granted under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act ― the US$2.2 trillion coronavirus stimulus package passed by Congress in March.
Airlines had been in talks with the Treasury since July. Certain conditions will apply, such as maintaining a certain number of jobs and salary ceilings.
The Treasury said the amount of the initial loans could be increased “as a result of some major airlines determining not to move forward” with the process.
“The reallocation of funds will be subject to a loan concentration limit of US$7.5 billion per passenger air carrier, or 30 per cent of the US$25 billion available for passenger air carriers,” it said.
Airlines have struck agreements with unions to spread out work among employees. Tens of thousands of employees have also accepted unpaid leave or early retirement packages to avert the need for involuntary terminations.
Before Tuesday's announcement, American Airlines had said it expected to cut as many as 19,000 jobs.
United Airlines on Monday reached an agreement with its pilots union to avert furloughs of 2,850 pilots, but was still on track to furlough as many as 13,000 other workers as soon as October 1, including flight attendants and airport operations staff. ― AFP
The benchmark Nikkei 225 index was down 0.34 per cent or 79.06 points at 23,460.04 in early trade, while the broader Topix index slipped 0.51 per cent or 8.49 points at 1,649.61. — Reuters pic
TOKYO, Sept 30 ― Tokyo stocks opened lower today, tracking falls on Wall Street as investors awaited the first US presidential debate for fresh trading cues.
The benchmark Nikkei 225 index was down 0.34 per cent or 79.06 points at 23,460.04 in early trade, while the broader Topix index slipped 0.51 per cent or 8.49 points at 1,649.61.
“Japanese shares today are seen moving, with investors' eyes on the US presidential debate,” Okasan Online Securities said in a note.
The overall mood in the Japanese market is positive, partly due to expectations for reforms under new Prime Minister Yoshihide Suga, a day after telecom operator NTT announced a takeover of its mobile phone unit, it added.
NTT is proposing a price of ¥3,900 (RM153.33) per remaining share ― a 40 per cent premium on Monday's closing price ― to buy out the whole of its subsidiary NTT Docomo, it said on Tuesday after the market close.
“With a 40 per cent premium set... it's almost certain that the takeover will be successful,” Masayuki Kubota, chief strategist at Rakuten Securities, said in a commentary.
NTT was down 2.77 per cent at 2,168.5 on concerns the deal could have negative impact on NTT's financial conditions.
NTT Docomo climbed 21.07 per cent to ¥3,890, near the TOB price of ¥3,900.
Docomo's smaller rival and wireless newcomer Rakuten was up 1.06 per cent at ¥1.134.
Among other major shares, Toyota was down 0.75 per cent at ¥7,060, Uniqlo casual wear operator Fast Retailing was down 0.41 per cent at ¥65,830, and Sony was down 0.67 per cent at ¥8,145.
The dollar fetched ¥105.61 in early Asian trade, against ¥105.68 in New York late yesterday.
On Wall Street, the Dow ended down 0.5 per cent at 27,452.66. ― AFP
At 9.06am, the ringgit was traded at 4.1540/1590 versus the greenback compared with 4.1540/1590 yesterday. — Picture by Saw Siow Feng
KUALA LUMPUR, Sept 30 ― The ringgit is holding on to yesterday's gains as demand for the local unit continued to push towards uptrend amid a defensive US dollar.
At 9.06am, the local currency was traded at 4.1540/1590 versus the greenback compared with 4.1540/1590 yesterday.
AxiCorp chief global market strategist Stephen Innes said the local unit saw an uptick in long positions as trader quickly put the World Government Bond Index (WGBI) watch list and political concerns on the back burner as ringgit interest followed the US dollar, which traded weaker overnight.
“Malaysian Government Securities (MGS) in real returns continue to look attractive.
“And with the currency still playing catch-up to regional peers, it attracted some favourable attention,” he told Bernama.
However, Innes said the fall in oil prices could cloud today's view as could the post-debate polling results, as a strong showing for the incumbent (President Donald Trump) could trigger a more robust US dollar response.
The oil prices remain under pressure amid a build in gasoline inventories.
The American Petroleum Institute (API) yesterday reported a climb in gasoline inventories of 1.62 million barrels for the week ended Sept 25, while crude oil inventories saw a draw of 831,000 barrels.
The ringgit was also traded mixed against other major currencies.
It appreciated against the yen to 3.9272/9340 from 3.9333/9388 at yesterday's close and was stronger versus the British pound to 5.3379/3464 from 5.3420/3501.
The local currency was lower against the Singapore dollar to 3.0349/0395 from yesterday's close of 3.0323/0367 and against the euro at 4.8760/8847 from 4.8569/8640. ― Bernama
The dollar index against a basket of currencies fell 0.32 per cent to 93.858, after hitting a two-month high last week. — Reuters pic
TOKYO, Sept 30 ― The dollar edged down in Asian trade today as investors counted down to the first US presidential debate between President Donald Trump and Democratic challenger Joe Biden.
The 90-minute presidential debate at 0100 GMT will be closely tracked by financial markets with some political analysts seeing it as Trump's best chance to get on top of a race he has consistently lagged in opinion polls.
“There is no consensus in the market on how either candidate's victory will move the dollar,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
“If, for example, the debate turns out to be a perceived victory by Trump, it's going to be interesting to see how the markets move ― particularly the dollar, US stocks futures and 10-year Treasury yields,” he said.
The dollar index against a basket of currencies fell 0.32 per cent to 93.858, after hitting a two-month high last week.
Also weighing on the greenback were month- and quarter-end currency flows, while better-than-expected US economic data also dented its perceived safe-haven bid.
US consumer confidence rebounded more than expected in September as households' views of the labour market improved.
The euro was steady at US$1.1742 (RM4.87), having hit a one-week high of US$1.1746 overnight. Against the yen, the single currency changed hands at ¥124.04, hovering near a two-week high of ¥124.11.
The dollar was little changed against the Swiss franc at 0.9195 franc, after falling as low as 0.9191 franc overnight .
Against the yen, the greenback weakened slightly to ¥105.67, a fraction below a two-week high of 105.74 it marked overnight.
Markets also remain focussed on progress made around a US fiscal stimulus packaged to cushion the coronavirus blow.
US House Speaker Nancy Pelosi said yesterday she hoped to have a coronavirus aid deal with the White House this week, after speaking with Treasury Secretary Steve Mnuchin and making plans for further talks today.
Pelosi said on Monday Democratic lawmakers unveiled a new US$2.2 trillion fiscal stimulus bill, but in an interview with CNBC, White House economic adviser Larry Kudlow made clear that the White House still views the updated figure as too high.
“We believe it is unlikely the stimulus bill progress in its current form. The House Democrats stimulus bill is more than US$1 trillion above what key Republican policymakers are willing to consider,” said Commonwealth Bank of Australia currency analyst Kim Mundy in a note.
“The US economic recovery is at risk without more fiscal stimulus and as a result, USD is vulnerable to additional upside in the short term.”
On the data front, China releases both official and private manufacturing PMIs for September later in the morning.
A Reuters poll on Monday showed China’s factory activity likely expanded at a slightly faster pace in September, as the economy extends a steady recovery from the coronavirus crisis.
Sterling was steady at US$1.2864 against the dollar. The British pound initially gained overnight on hopes for a Brexit deal, but retreated after the Bank of England's governor kept the door open for using sub-zero interest rates if needed.
The dollar stepped back against commodity currencies such as the Australian and New Zealand dollars. The Aussie edged 0.18 per cent higher to last sit at US$0.7148, while the kiwi firmed against the dollar, last fetching US$0.6599. ― Reuters
PETALING JAYA: Fitch Solutions has projected the ringgit to be at RM4.25 and RM4.15 against the US dollar for 2020 and 2021 respectively, on the back of a still-low incidence of new Covid-19 cases and the reopening of the economy.
Since June, the local currency has seen a broad rally with the year-to-date (ytd) average exchange rate strengthening to RM4.236/US$ from RM4.248/US$ previously.
“We expect the ringgit to give up some of its gains in the short term against the dollar, as the greenback appears oversold and poised for a short term rebound,” said the research arm of Fitch Ratings.
In light of these factors, it has revised its 2020 average exchange rate forecast to RM4.250/US$, from RM4.300/US$ previously.
From a technical perspective, the research arm noted that the ringgit has bucked its expectations for the key support level at RM4.200/US$ to hold and has remained below this level since Aug 5.
However, it does not expect the unit to remain consistently below this level over the short term, given that from a technical perspective, the dollar is poised for a near-term, intermediate rebound.
“Furthermore, rising risk aversion due to the resurgence of the Covid-19 outbreak in several places across both developed and emerging markets, and the likelihood of a disputed US presidential election later in the year could see safe havens outperform at the expense of riskier assets such as EM currencies,” said Fitch Solutions.
However, oil prices are expected to remain steady given the correlation to ringgit which would provide support against a steep depreciation over the short term.
The research arm has forecast Brent crude prices to average at US$44 per barrel (pb) for 2020 and US$51 pb for 2021, which suggests some limited upside from the current ytd average of US$42.61 pb as of Sept 23.
It also noted that a relatively tighter monetary policy is likely to curb further depreciation in the ringgit over the remainder of 2020, as it expects Bank Negara Malaysia to remain on hold and build policy buffers before hiking next year, following its decision to hold the benchmark Overnight Policy Rate at 1.75%.
“Over the long term, we expect the ringgit to be on a slightly stronger footing and trade around the mid-point of its long term trading range between RM3.800/US$ and RM4.500/US$,” Fitch said.
“We see prospects for a stabilisation of the unit in 2021, in line with our view for the global economy to begin recovering in late Q4’20. Also, medium-term prospects for the US dollar are more bearish in our view due to loose fiscal and monetary policy.”
For the medium term, the research arm has adopted a more bearish prospects for the greenback due to loose fiscal and monetary policy and subsequently revised its 2021 average ringgit forecast to RM4.150/US$ from RM4.200/US$ previously.
It also highlighted that the local currency remains materially undervalued in real effective exchange rate (REER) terms, the spot REER came in 8.6% below the 10-year moving average in August, compared to 10.9% in May. Therefore, the ringgit will remain attractive valuation-wise, providing support to the currency over the long term.
29/09/2020 11:32:29
Since June, the local currency has seen a broad rally against the dollar. – AFPPIX
A man walks past the London Stock Exchange in the city of London. The blue-chip FTSE 100 index dropped 0.5 per cent. — Reuters pic
LONDON, Sept 30 ― The FTSE 100 fell yesterday on worries about a stalling economic recovery and surging Covid-19 cases, with pub owners sliding on the prospect of further curbs as another round of Brexit negotiations began.
European Union negotiators signalled they were willing to begin work on a joint legal text of a trade deal with Britain, the Times reported, as the three days of talks got under way.
The global mood was also subdued ahead of today's US presidential debate between incumbent Donald Trump and Democrat challenger Joe Biden.
The blue-chip FTSE 100 index dropped 0.5 per cent. The mid-cap index slipped 1.1 per cent and was on track to record its worst month since March.
Banks and oil stocks were among the biggest decliners, while defensive play such as utilities and industrials rose.
A raft of stimulus measures had led a FTSE 100 rally from March lows, but the index was on course for its second monthly decline in five as fresh coronavirus-linked restrictions and Brexit uncertainties dulled sentiment.
Among bright spots, plumbing parts distributor Ferguson rose 6 per cent after it restored its dividend as cost-reduction measures helped it report a 4.1 per cent rise in annual profit.
Retailer B&M European Value Retail rose as brokerages cheered a strong first half. “The latest update ...confirms it is well-positioned for tougher economic times,” said Russ Mould, investment director at AJ Bell, also tipping it as a prime merger candidate for British supermarket retailer Asda.
Baker Greggs lost 8 per cent after saying it expects trading to remain below normal for the foreseeable future due to the pandemic.
Pub owners JD Wetherspoon, Marston's, Mitchells & Butlers and Restaurant Group all slumped more than 5 per cent after a junior minister said Britain's nightclubs may have to stay shut until a Covid-19 vaccine is developed. ― Reuters
A photographer takes pictures of the German share price index (DAX) board at the stock exchange in Frankfurt, Germany. — Reuters pic
FRANKFURT, Sept 30 ― European stocks slipped yesterday after solid gains in the previous session, with banks, energy and insurance sectors sliding as coronavirus cases mounted globally.
Investors were mostly in a wait-and-see mode as US Democratic presidential nominee Joe Biden and President Donald Trump prepared for their first debate, five weeks before the presidential election.
The 90-minute showdown will begin at 0100 GMT today, with investors seeking hints on policy outlook.
The pan-European STOXX 600 closed down 0.5 per cent, in line with tepid moves across global markets also watching for progress in talks on more US fiscal stimulus.
Banks handed back some of the previous session's 5.6 per cent gain, while other economically sensitive sectors like insurers and energy fell more than 1.5 per cent as the global Covid-19 death toll crossed 1 million, a Reuters tally showed.
Still, many investors counted on continued stimulus from central banks and governments to prop up the global economy reeling from the health crisis.
“Our stance on equities is still constructive in the medium-term, even if it's bumpy ride due to risks including Brexit, US-China trade friction and uncertainty around the US election,” said Michele Morganti, equity strategist at Generali Insurance Asset Management.
“We feel that recovery is still in place and cyclicals will continue to find favour, and that will help the undervalued regions like Europe versus US.”
Solid gains for European markets on Monday helped the STOXX 600 turn positive for the third quarter, while the benchmark is on course to end September with a more than 1 per cent drop, its biggest since a near 15 per cent decline in March, when pandemic fears hit a peak.
Sensor specialist AMS jumped 6.6 per cent to the top of STOXX 600, with traders pointing to supportive news about lighting group Osram, which it recently took over.
British plumbing parts distributor Ferguson gained 6.0 per cent as it restored its dividend after a series of cost-reduction measures and resilience in its main US business helped it report a 4.1 per cent rise in annual profit.
British baker Greggs slid 8.1 per cent as it cautioned that the outlook was uncertain because of the pandemic and it would have to cut staff jobs and hours.
Finnish valves maker Neles gained 2.2 per cent after Valmet approached the company with a merger proposal, challenging a US$2 billion (RM8.3 billion) bid that Neles' board recommended from Swedish engineering group Alfa Laval. Valmet shares dropped 4.9 per cent. ― Reuters
Data analytics company Palantir Technologies and workplace software maker Asana Inc are set to debut on the US stock market today bypassing an initial public offering (IPO). — Reuters pic
NEW YORK, Sept 30 ― There have only been two direct listings on the New York Stock Exchange in the last two years. There are about to be two more in a single day.
Data analytics company Palantir Technologies and workplace software maker Asana Inc are set to debut on the US stock market today bypassing an initial public offering (IPO).
The last direct listing was workplace messaging platform Slack Technologies Inc's debut in 2019, which came a year after music-streaming service Spotify Technology SA went public without an IPO.
It is a seminal moment for some investors and corporate executives who have been pushing to shed investment banks as their middlemen. For years, they have criticised IPOs as chummy deals that allowed bankers to allocate the most shares to their top clients.
“Ever since the IPO process has existed, entrepreneurs and their investors have believed that bankers have sub-optimised and taken too much for themselves,” said Ben Narasin, a partner at US venture capital firm New Enterprise Associates.
“If Palantir and Asana are successful, which they should be, more and more companies will return to looking seriously at direct listings,” Narasin added.
IPOs have been on a tear this year, as companies rode the stock market rally that followed the coronavirus-induced slump. Companies have launched almost US$50 billion (RM207.7 billion) in US IPOs so far in 2020, excluding special purpose acquisition company (SPAC) IPOs. This has already outpaced the haul for all of 2019 and is on track to be the busiest since 2014 and second biggest since 2000.
In 2020, the price of a newly listed company's shares has risen by an average of 38 per cent on the first day of trading, according to IPOScoop data and Reuters calculations.
This has fuelled renewed criticism among investors snubbed by the investment banks underwriting the IPOs, as well as suspicion among some companies that bankers are leaving money on the table in their IPO to help create a first-day trading “pop”.
Phil Hellmuth, an angel tech investor and poker player with over US$20 million in career winnings, said in an interview that he tried to buy US$500,000 worth of shares in data warehouse company Snowflake Inc during its US$3.36 billion IPO earlier this month.
Hellmuth knocked on the door of four hedge funds, acquaintances in Silicon Valley, mutual fund Fidelity, and one of the banks underwriting the Snowflake listing, but had no success getting into what has been this year's largest IPO. As a result, he missed out when Snowflake's shares more than doubled in its debut.
“If I can't get a piece, the average investor has no chance to get a piece,” said Hellmuth.
Snowflake CEO Frank Slootman told Reuters he had no regrets with how the company's IPO went.
Fidelity said it was not possible to ascertain why an investor was unable to participate in an IPO without knowing the customer's details.
In a direct listing, no shares are sold in advance, as is the case with IPOs. The company's share price in its market debut is determined by orders coming into the stock exchange.
The downside is that the companies involved cannot raise money, though both NYSE and Nasdaq have requested US regulators allow them to change their rules to allow companies to sell new stock in a direct listing.
This inability to raise funds has so far curbed the enthusiasm for direct listings of many cash-hungry companies, especially during the economic downturn brought about by the pandemic.
“I think we were going to see more direct listings this year but for Covid-19. Many companies that were thinking about a direct listing switched to an IPO for the capital raise aspect,” said Ran Ben-Tzur, a capital markets lawyer at Fenwick & West LLP.
No money raised
Palantir and Asana are two technology companies defying the coronavirus downturn.
Palantir will also be the first direct listing where the majority of shares will be restricted from being sold until after the company reports 2020 earnings early next year. Such lock-up agreements are standard in IPOs but have so far been absent from direct listings and can result in a company achieving a higher valuation.
“Banks have done the math on the impact of not having lock-up agreements in a traditional IPO and believe that without a lock-up structure a company will not able to raise at as high of a valuation because there's no scarcity of shares,” Ben-Tzur said.
For Asana, whose investors will not be subject to any lock-up restrictions, one reason the company was attracted to a direct listing was the desire for a fairer way to price the shares, according to a person familiar with the matter.
Asana declined to comment.
Kevin Hartz, who took the event-ticketing company he co-founded, Eventbrite Inc, public through an IPO two years ago, said in an interview that more companies are considering alternative ways to go public including direct listings in search of a better price-discovery process.
“It's still a very broken process for new issuances like the Snowflake IPO. By underpricing, this brought significant dilution. That is not an optimal outcome for the company nor existing investors,” said Hartz.
Both Palantir and Asana hired banks to provide financial advice for their direct listings. On the direct listings done to date, a smaller group of banks have shared a smaller pot of fees.
For its 2019 listing, Slack, which was worth around US$23 billion when it started trading, expected to pay US$22.1 million in fees to three financial advisers. By comparison, 26 banks earned US$85 million in commissions from the 2017 IPO of Snap Inc , which was worth about US$31 billion at the time of its public listing. ― Reuters
Apple CEO Tim Cook delivers the keynote address during the 2020 Apple Worldwide Developers Conference at Steve Jobs Theatre in Cupertino, California June 22, 2020. — Picture by Brooks Kraft/Apple Inc/Handout via Reuters
SAN FRANCISCO, Sept 30 ― Apple Inc yesterday granted CEO Tim Cook 333,987 restricted stock units, with a possibility to earn as many as 667,974 more if he hits performance targets, in the executive's first stock grant since 2011.
“Tim has brought unparalleled innovation and focus to his role as CEO and demonstrated what it means to lead with values and integrity,” Apple's board of directors said in a statement.
“For the first time in nearly a decade, we are awarding Tim a new stock grant that will vest over time in recognition of his outstanding leadership and with great optimism for Apple’s future as he carries these efforts forward.”
Cook is in the ninth year of his 10-year grant from 2011. Each restricted stock unit conveys the right to one common share when it vests.
Apple's stock closed at US$114.09 (RM474) yesterday, which puts the value of the units at US$38.1 million at yesterday's price. But they will be more valuable if Apple's stock price rises by the time they vest. One-third of the units will vest on April 1, 2023 with another third vesting in 2024 and the final third in 2025.
In October 2023, Cook will also be eligible to receive additional units based on performance. The target amount is 333,987 units, but the total could vary between none and double that amount based on Apple's relative total shareholder return from fiscal years 2021 through 2023, according to a regulatory filing.
Apple's move brings Cook's compensation timeline into line with other executives at the company. Apple yesterday also awarded a similar grant to Chief Operating Office Jeff Williams, who will receive 89,064 restricted stock units on the same terms as Cook, including the possibility of performance-based units.
Cook told Fortune magazine in 2015 that he plans to donate his wealth to charity. ― Reuters
Australian S&P/ASX 200 futures were down 0.94 per cent in early trading, while Japan's Nikkei 225 futures were up 0.02 per cent. — Reuters pic
SYDNEY, Sept 30 ― Asian shares were poised for a mixed opening ahead of the first US presidential debate and ongoing stimulus talks in Washington.
Australian S&P/ASX 200 futures were down 0.94 per cent in early trading, while Japan's Nikkei 225 futures were up 0.02 per cent. Hong Kong's Hang Seng index futures were up 0.72 per cent.
E-mini futures for the S&P 500 were up 0.04 per cent.
The first debate between former Vice President Joe Biden and President Donald Trump, set to begin at 9pm EDT (0100 GMT), is seen by some political analysts as Trump's best chance to upend a race where he has consistently lagged in opinion polls.
“Following the exuberant start to the week, a sober tone descended on risk markets ahead of the first US presidential debate, with caution about the outlook prevailing,” wrote Australia and New Zealand Banking Group in an analyst note.
Also looming over markets is lingering hopes the US could adopt further economic stimulus. US House of Representatives Speaker Nancy Pelosi unveiled a new, US$2.2 trillion (RM9.14 trillion) compromise relief Bill in a bid to give new life to flagging negotiations with the White House.
There were optimistic signs yesterday when US consumer confidence saw its biggest rebound in 17 years.
The economic impact of the coronavirus pandemic was underlined later yesterday, when Disney announced plans to lay off roughly 28,000 US employees from its theme parks division.
Investors will also be looking at today's ADP National Employment report, a precursor to official US employment figures out Friday. China is also set to publish fresh manufacturing data.
The Asian markets opened after US equities fell slightly hours before, ending a three-day rally as investors held tight before the debate. The Dow Jones Industrial Average fell 0.48 per cent, the S&P 500 lost 0.48 per cent, and the Nasdaq Composite dropped 0.29 per cent.
MSCI's gauge of stocks across the globe shed 0.24 per cent following broad declines in Europe and Asia. US Treasury yields traded within a tight range as investors avoided large moves, settling down slightly.
The US dollar was also down slightly in advance of the debate, hitting one-week lows against the euro and Swiss franc. The dollar index fell 0.3 per cent.
Spot gold gained 0.9 per cent to US$1,896.96 per ounce, while US gold futures settled up 1.1 per cent at US$1,903.20.
Oil prices were also down on caution ahead of the debate and looming coronavirus concerns. US crude fell 4.01 per cent to US$38.97 per barrel and Brent was at US$40.83, down 3.77 per cent on the day. ― Reuters
Economists say Britons would be happy to pay higher taxes for a fairer, more caring and gender-equal society as the Covid-19 pandemic transforms people's views about the world they want to live in. — Reuters pic
LONDON, Sept 30 ― Britons would be happy to pay higher taxes for a fairer, more caring and gender-equal society as the coronavirus pandemic transforms people's views about the world they want to live in, economists said today.
In a major report to be presented to parliamentarians, regional governments and business leaders, they laid out a radical roadmap for building a “caring economy” that puts people and the planet first.
“This is an idea whose time has come,” said Mary-Ann Stephenson, director of feminist think-tank the Women's Budget Group which published the report.
“People don't want to return to business as usual. We're calling for a fundamental change in the way we approach the economy. It's about a vision for doing things differently,” she told the Thomson Reuters Foundation.
At the heart of the new economy is a recognition of society's reliance on paid and unpaid care work ― most of which is done by women ― and the need to distribute this equally.
Proposals include introducing free social care, free childcare, equal sharing of parental leave, a fairer minimum wage, a universal basic income for retired people and reducing the working week to about 30 hours.
Stephenson said the pandemic could be a catalyst for reform in the same way as Britain's welfare system was introduced after World War Two.
The transformation could be funded by major changes to the taxation system and borrowing, she added.
Stephenson said the pandemic had brought into stark relief the importance of care work to the economy ― both paid and unpaid.
Women do 60 per cent more unpaid work than men, reducing their time for paid employment, impacting their earnings and leaving them poorer in old age, she said.
A poll published by the Women's Budget Group showed men, as well as women, overwhelmingly agreed a better balance was needed between paid work, caring responsibilities, and free time.
Three quarters of respondents thought economic equality between women and men was the mark of a good society.
Four in five respondents ― including three quarters of men ― agreed women and men should equally share caring for children, older and disabled relatives, with most saying the government should financially support men to provide more care.
“The way things work at the moment they don't work for women, but they don't work for men either,” Stephenson said. “Just as women need some time free from care, men need time to care.”
The survey of more than 2,000 people also showed a significant majority would be willing to pay more tax to support secure jobs for everyone, a pay rise for key workers, green transport and affordable housing. ― Thomson Reuters Foundation
In a reversal from Monday, market leaders Apple Inc, Microsoft Corp and Amazon.com weighed heaviest on the S&P 500 and the Nasdaq. — Reuters pic
NEW YORK, Sept 30 ― Wall Street closed lower yesterday, snapping a three-day winning streak as investors took money off the table hours before the first US presidential debate.
All three major US stock indexes lost ground. In a reversal from Monday, market leaders Apple Inc, Microsoft Corp and Amazon.com weighed heaviest on the S&P 500 and the Nasdaq.
“Tonight's presidential debate has the potential to move markets and investors are unlikely to take a large position in front of that,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “Right now, markets are clearly driven by events in Washington, be it fiscal stimulus or the presidential election.”
Market participants eyed the first head-to-head showdown between Republican President Donald Trump and Democratic challenger Joe Biden in a debate expected to air from Cleveland Tuesday evening.
The latest poll shows Biden leading nationally and in a number of battleground states.
While the election has implications for different sectors, notably healthcare, green energy and beneficiaries of Trump's corporate tax cuts, Goldman Sachs analysts expected a Democratic sweep of the White House and both chambers of Congress would be beneficial to S&P 500 profits through 2024.
“We think markets can do fine with either Trump or Biden, but they need to know who the winner is,” Carter added. “But concern is rising about having a clear election winner in November due partly to so many mail-in ballots, which will take time to count.”
In the closing days of September and the third quarter, the major indexes were on track for their first monthly declines since March, when mandated shutdowns slammed the economy.
Despite September's expected loss, the S&P and the Nasdaq were on course for their best two-quarter winning streaks since 2009 and 2000, respectively.
US House of Representatives Speaker Nancy Pelosi unveiled a new, US$2.2 trillion (RM9.14 trillion) coronavirus relief bill proposed by House Democrats, a sign of potential progress in the partisan tug-of-war over the new aid package nearly two months after emergency unemployment benefits expired for millions.
Stocks were given a brief boost early in the session by data from the Conference Board, which showed consumer confidence surging past expectations this month with the largest point gain in 17 years.
The Dow Jones Industrial Average fell 131.4 points, or 0.48 per cent, to 27,452.66, the S&P 500 lost 16.13 points, or 0.48 per cent, to 3,335.47 and the Nasdaq Composite dropped 32.28 points, or 0.29 per cent, to 11,085.25.
Among 11 major sectors in the S&P 500, all but communication services closed in the red, with energy and financials suffering the largest percentage losses.
Sorrento Therapeutics jumped 14.3 per cent after the company's Covid-19 antibody candidates showed promise in a study.
Fitbit Inc advanced 5.8 per cent after Reuters reported Alphabet Inc was poised to win EU approval for its US$2.1 billion acquisition of the fitness tracker maker.
Declining issues outnumbered advancing ones on the NYSE by a 1.53-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favoured decliners.
The S&P 500 posted 7 new 52-week highs and no new lows; the Nasdaq Composite recorded 63 new highs and 32 new lows.
Volume on US exchanges was 8.31 billion shares, compared with the 9.99 billion average over the last 20 trading days. ― Reuters
According to sources, the World Trade Organisation has authorised the European Union to slap tariffs on US goods worth US$4 billion (RM16.6 billion) to retaliate against subsidies for US planemaker Boeing Co. — Reuters pic
WASHINGTON, Sept 30 ― The World Trade Organisation (WTO) has authorised the European Union to slap tariffs on US goods worth US$4 billion (RM16.6 billion) to retaliate against subsidies for US planemaker Boeing Co, people familiar with the matter said.
The move echoes last year's decision to allow the United States to penalise US$7.5 billion of EU goods over support for Airbus, though the EU is expected to argue it has total firepower of US$8.2 billion because of separate unused tariffs.
The decision by WTO arbitrators will be published in coming weeks, the people said, asking not to be identified.
The US Trade Representative and the EU's Washington office did not respond to requests for comment. Boeing declined comment on the confidential WTO decision and Airbus was not immediately available for comment. ― Reuters
A LVMH luxury group logo is seen prior to the announcement of their 2019 results in Paris, France, January 28, 2020. — Reuters pic
PARIS, Sept 29 — French behemoth LVMH said today that it had filed a countersuit against the American jewellery brand Tiffany, setting up an unusual legal fight after the collapse of one of the biggest luxury takeover bids in decades.
LVMH walked away from its US$16.2 billion (RM67.54 billion) offer this month after claiming a series of poor decisions by Tiffany's board since the deal was unveiled late last year.
It also cited a letter from the French foreign ministry that purportedly asked for a delay to the tie-up because of political uncertainties caused by the long-running trade war between the EU and Washington.
Tiffany rubbished the claims and sued to force LVMH to go through with its bid, and a US court in Delaware, where many US firms are incorporated, approved a fast-track trial set to begin in January.
The court also urged the two sides to try to work out a settlement, but an escalating war of words makes that prospect unlikely.
“LVMH continues to have full confidence in its position that the conditions necessary to close the acquisition of Tiffany have not been met and that the spurious arguments put forward by Tiffany are completely unfounded,” the French firm, by far the world's largest luxury conglomerate, said today.
It again accused Tiffany of “mismanagement” by paying high dividends, investing when it should have been conserving cash because of the Covid-19 pandemic, and taking on too much debt.
Tiffany refused to comment when contacted by AFP in New York yesterday, after a report of LVMH's countersuit was published by Bloomberg News. — AFP
The logo of NTT (Nippon Telegraph and Telephone Corporation) is displayed at the company office in Tokyo, Japan September 29, 2020. — Reuters pic
TOKYO, Sept 29 — Japan's biggest mobile carrier NTT Docomo will be taken over by its parent company, government-backed Nippon Telegraph & Telephone, in a tender offer worth US$40 billion (RM166.76 billion), the two firms said today.
The move comes with Docomo and other Japanese telecoms firms under government pressure to cut the price of mobile phone services, and is expected to help the company boost investment in 5G tech.
“Today we decided to make Docomo a wholly owned company,” NTT's Chief Executive Jun Sawada told reporters, adding that the move would boost the carrier's “competitiveness and growth.”
NTT, which currently holds more than 60 per cent of NTT Docomo's shares, is proposing a price of 3,900 yen (RM153.93) per share to buy out the whole subsidiary, it said.
That represents a 40 per cent premium today's closing price and values the purchase at around 4.25 trillion yen.
Japan's new Prime Minister Yoshihide Suga has repeatedly said the country's mobile rates should be reduced, as they are relatively high compared to prices abroad.
By taking full control of the carrier, NTT may be able to push down prices quickly, and force competitors to follow suit.
But the heads of both companies denied that pressure over pricing was behind the deal.
“We are not doing this because of cutting service fees,” Sawada said.
But, he added, “Docomo will get stronger with the move, which would strengthen its financial foundation and room to cut prices.”
Docomo's CEO Kazuhiro Yoshizawa said the move was about responding to a changing business environment, including the coronavirus pandemic.
“The background of the move is that our market environment is facing a big change... and competition is intensifying.”
Competition in the telecoms market is also hotting up with the advent of next-generation 5G networks, which promise radically quicker transfers of data. — AFP
The logo of French oil giant Total is pictured at the entrance of the CSTJF Total Research Centre in Pau, southwestern France April 5, 2016. — Reuters pic
PARIS, Sept 29 — French oil giant Total said today it has agreed to buy London's largest electric vehicle charging network from French group Bollore.
Total said that under the deal, it would take over management and operation of the network of more than 1,600 on-street charge points.
Total expects the transaction to be closed by the end of the year. — Reuters
Sina Corp, parent company of China's vast Weibo platform, plans to delist its US shares and go private. — AFP pic
BEIJING, Sept 29 — Chinese internet giant Sina Corp, the parent company of the country's vast Twitter-like Weibo platform, plans to delist its US shares and go private, making it the latest mainland firm to withdraw from Wall Street as relations between Beijing and Washington sour.
Sina will cease trading on the tech-rich Nasdaq exchange — where it has traded since 2000 — after its board agreed to a merger with a group run by its chief executive that values the firm at US$2.59 billion (RM10.8 billion).
The move comes as a growing number of Chinese companies have delisted from the US or opted for secondary, domestic listings as the world's two superpowers butt heads over a number of issues including technology, Hong Kong and the virus.
The US is considering plans to impose stricter rules on firms listed in the country to open up their audit papers to US accountants, which could lead to Chinese companies forced out.
That could push them towards Hong Kong or Shanghai.
E-commerce giants Alibaba and JD.com, which are traded in New York, have already launched huge offerings in Hong Kong in the past year, while Alibaba's financial arm is planning a mega dual IPO in the two cities.
China's leading chipmaker SMIC, meanwhile, delisted in June. This week the US slapped new export restrictions on the beleaguered manufacturer, battering its Hong Kong stocks.
US President Donald Trump has already limited the amount of business US firms can do with telecoms titan Huawei, while he has insisted that the Chinese parent company of popular video app TikTok sell its US operations to an American company, citing security concerns.
The Sina agreement will see it merge with New Wave MMXV Ltd, a Cayman Islands-registered company controlled by Sina CEO Charles Chao, according to a statement posted yesterday.
The deal sees New Wave pay $43.30 per share, an improvement on the US$41 offered in June.
The merger is expected to close during the first quarter of 2021, the company said. —AFP
People play with ice floats at a pond in the compound of an apartment complex in Zhengzhou, Henan province, China February 20, 2019. — Reuters pic
BEIJING, Sept 29 — China's home prices are expected to rise slightly more this year than expected, though at a slower pace than last year, as Beijing shifts to de-leverage the sector amid an economic recovery, a Reuters poll showed.
The pick-up could offer much-needed support to the country as it emerges from a coronavirus-induced economic slump. But policymakers are conscious of a property bubble risk, with new restrictions rolled out recently to prevent sharp price rises and control financing activity by developers.
Average residential property prices are estimated to rise 4.8 per cent in 2020, according to 13 analysts and economists surveyed from Sept. 21-29.
The forecast was firmer than a 3.75 per cent gain found in a June survey, but down from 6.6 per cent growth in 2019. Home prices are seen slowing to 3 per cent in the first half of 2021.
Daniel Yao, head of research for China at JLL, a commercial property services provider, said the relaxation on price ceilings and urban-residency permits in larger Chinese cities have supported the modest increase in overall home prices, while the improving land market and higher transaction premiums also helped buoy expectations on housing prices.
Property transactions are expected to be flat relative to last year, compared with a 4.5 per cent drop in previous poll, and versus a 0.1 per cent drop in 2019.
Investments are estimated to rise 6 per cent this year, against 5 per cent growth projected in the previous poll.
Since the second quarter, the real estate market has been the main driver behind China's post-coronavirus recovery, analysts say. Growth of property investment, which accounts for about 20 per cent of total investment, has been well outstripping manufacturing and infrastructure investments.
Many top-tier cities, including Shenzhen, Hangzhou and Ningbo have seen upswings in local housing markets after reopening from lockdowns.
But as China's recovery is getting on firmer footing, the government is likely to remain aware of the spilling-over effect of high home prices on the rest of the economy.
Since July, more than 20 cities have imposed new rules to prevent sharp price rises. Regulators last month also vowed to outline stringent rules to contain property developers' debt levels to tackle unbridled borrowing in the sector.
“The tightening financing rules will likely push some developers to scale back their land purchase in order to lower leverage, thus would help lower the land auction premiums and lead to softer home prices growth,” said senior property analyst Zhao Ke of China Merchants Securities.
Most survey respondents say the government will further guide the sector into a narrower growth band and may slightly ease restrictions in smaller cities, which saw home prices drop to prevent a burst of the bubble.
Asked to rate the affordability of Chinese housing on a scale, with 1 being the cheapest and 10 the most expensive, analysts' median answer was 7, in line with the last poll. — Reuters
Profit taking push Bursa Malaysia into the red at the end of morning trade. — Picture Ahmad Zamzahuri
KUALA LUMPUR, Sept 29 — Bursa Malaysia erased earlier gains to end the morning session in the red on profit taking, especially in healthcare-linked stocks.
Top Glove declined 36 sen to RM8.41, while Hartalega lost 42 sen to RM17.
On the broader market, losers beat gainers 490 to 408, while 417 counters were unchanged, 794 untraded and 43 others suspended.
Total volume stood at 2.73 billion shares worth about RM1.7 billion.
However, an analyst ssid the losses were capped by buying in banking stocks, following the end of the automatic six-month moratorium tomorrow and the start of the targeted moratorium approach, which would put gross impaired loans ratio at a manageable level.
“Furthermore, it is the end of third quarter, so many portfolio managers are taking the opportunity to buy quite resilient stocks, including finance and banking stocks,” he said.
At 12.30 pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) slipped 1.32 points to 1,510.34 from yesterday’s close of 1,511.66.
It moved between 1,500.52 and 1,517.33 throughout the morning trading session, after opening 1.09 points higher at 1,512.75.
The analyst added that the new fiscal stimulus proposed by the United States’ (US) politicians as well as the stronger Chinese economic report have boosted investors’ sentiment and supported the equity markets.
“But they (investors) are closely monitoring the first US presidential debate scheduled today,” he added.
Among the heavyweights, both Maybank and Tenaga rose 10 sen to RM7.20 and RM10.72, respectively, while IHH and Petronas Chemicals slipped one sen each to RM5.25 and RM5.50, respectively.
Of the actives, XOX shed 2.5 sen to 15 sen, Ikhmas Jaya was down 1.5 sen to 16.5 sen, Kanger International added one sen to 21.5 sen, while Priceworth was flat at three sen.
On the index board, the FBM Emas Index lost 11.10 points to 10,876.18 and the FBM Emas Shariah Index dropped 72.85 points to 12,972.20.
The FBM 70 weakened 19.39 points to 14,183.21, the FBMT 100 Index was 10.71 points lower at 10,700.27 and the FBM ACE gave up 73.71 points to 9,980.14.
Sector-wise, the Financial Services Index jumped 134.29 points to 12,461.75, the Plantation Index went up 17.48 points to 7,081.06 and the Industrial Products and Services Index inched up 0.30 of-a-point to 136.07. — Bernama
Canada's Minister of Small Business, Export Promotion and International Trade Mary Ng speaks in the House of Commons on Parliament Hill in Ottawa, Ontario Canada December 12, 2019. — Reuters pic
GENEVA, Sept 29 — The United States said yesterday it had appealed a World Trade Organisation ruling that favoured Canada in a longstanding battle over lumber imports, describing the decision as “deeply flawed.”
Ottawa said it was “disappointed” by the US move, its trade minister Mary Ng saying in a statement that the US duties have caused “unjustified harm” to Canada's forestry sector and US consumers, and “are impeding economic recovery on both sides of the border.”
The WTO's dispute settlement body (DSB) — long a target of attacks by Washington — agreed last month with Canada's complaints that Washington had violated trade rules when imposing duties on lumber widely used in construction.
US Trade Representative (USTR) Robert Lighthizer had immediately slammed the decision as “erroneous” and said they “prevent the United States from taking legitimate action in response to Canada's pervasive subsidies for its softwood lumber industry.”
And yesterday, the US notified the body of its decision to appeal the panel report, according of a written version of comments made to a DSB meeting.
Filing an appeal before the WTO is tricky, however: the DSB's appellate branch, sometimes called the supreme court of world trade, stopped functioning last December after years of relentless US opposition.
Washington accuses the court of major overreach and has blocked appointments of new judges, leaving it without the quorum needed to hear cases.
By filing an appeal with nowhere for the appeal to be heard, Washington has in effect blocked Canada's ability to move forward and request financial compensation for the US activities deemed illegal by the DSB.
“We are open to discussions with Canada on the way forward in this dispute,” a US representative told yesterday's meeting.
Ng vowed to defend Canada's forestry sector, noting that “US duties on Canadian softwood lumber have time and again been found to be unfair and unwarranted.”
“We will keep challenging these duties through all available avenues,” she said, including through the new USMCA continental trade pact with the US and Mexico.
The DSB report last month upheld most of Ottawa's complaints against the US, saying Washington's claims the government was providing illegal subsidies to lumber producers were based on miscalculated prices and transactions like purchase of electricity that did not qualify as subsidies.
It was the ninth complaint filed by Ottawa over Washington's use of anti-dumping and countervailing duty measures — long the subject of anger from American trading partners.
In the latest battle in the 40-year-old dispute, the US in 2017 imposed import duties of 18 per cent on Canadian softwood lumber imports to compensate for what it said was “dumping” of the product, meaning it was sold below market prices and received government subsidies, thereby hurting US producers.
USTR said imports of softwood lumber products from Canada in 2016 totalled US$5.78 billion (RM24.1 billion). — AFP
A general view of Suria KLCC in Kuala Lumpur as the movement control order kicks in on March 18, 2020. — Picture by Firdaus Latif
KUALA LUMPUR, Sept 29 — Following a sharper than expected contraction in the second quarter of 2020 (2Q20), the World Bank has lowered Malaysia’s economic growth forecast this year to a contraction of 4.9 per cent, down from an early estimate of -3.1 per cent.
In a statement today, the World Bank said the change in the forecast reflected the heightened uncertainty surrounding the start and speed of global economic recovery, which would weigh on investment decisions and external demand.
In addition, the elevated unemployment rate and other weaknesses in the labour market would continue to weigh on private consumption, it added.
Following the economy-wide temporary closures and reduced business operations, the World Bank said the labour market was significantly impacted, with unemployment rising to 5.1 per cent in the second quarter of 2020, its highest rate in thirty years.
Labour force participation declined to 68.1 per cent in the second quarter from 68.8 per cent in the first quarter and many workers faced reduced hours and pay.
“Reflecting these developments, most demand components, such as net exports, private consumption and private investment are expected to contract in 2020,” the World Bank said following the launch of its Economic Update report for East Asia and the Pacific.
Malaysia’s economy is severely affected by the Covid-19 pandemic, leading to a double-digit contraction of 17.1 percent in the second quarter of 2020, mainly driven by a decline in domestic demand due to the imposition of the movement control order to stem its spread, as well as weak external conditions.
Government expenditure is expected to increase, mainly due to stimulus spending, noted the bank.
Meanwhile, poverty at the US$5.50 (about RM23) per day (2011 Purchasing Power Parity dollars) upper-middle-income poverty line is projected to increase slightly to 0.9 per cent from 0.8 per cent in 2020.
The World Bank said the increase was due to higher unemployment, reduced work hours, and slower business for small and medium enterprises (SMEs), although these contractionary effects were offset to some degree by government relief and recovery measures that cushion the impacts on private consumption.
“The US$5.50 per day 2011 PPP poverty rate is projected to decline to 0.6 per cent in 2021 and 0.5 per cent in 2022. — Bernama
.jpg "A general view of Suria KLCC in Kuala Lumpur as the movement control order kicks in on March 18, 2020. — Picture by Firdaus Latif")
