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Sunday, October 25, 2020

Bank Negara: Targeted assistance to help banks retain resilience amid third wave of Covid-19

Ringgit notes are seen in this photo taken in Kuala Lumpur August 4, 2019. — Picture by Ahmad Zamzahuri
Ringgit notes are seen in this photo taken in Kuala Lumpur August 4, 2019. — Picture by Ahmad Zamzahuri

KUALA LUMPUR, Oct 25 — Targeted assistance will enable banks to assess the unprecedented situation brought about by the Covid-19 pandemic and channel funds to much-needed sectors and aid economic recovery.

Various measures including the Special Relief Facility (SRF) amounting to RM10 billion have been rolled out to provide temporary relief to businesses, Bank Negara Malaysia's Deputy Governor, Jessica Chew said.

Besides SRF, which has been fully taken up, other funds such as Penjana SME Financing (PSF), SME Digitalisation Matching Grant and Smart Automation Grant (SAG) are still available to provide support to businesses in their resumption and recovery.

The Penjana Tourism Financing (PTF) of RM1 billion is still available for businesses in the tourism sector. This fund is to enable the sector to adjust to the new norm, allowing businesses to revive and recover more quickly.

However, for businesses to sustain their recovery and households to have continued access to financing, the banking sector must itself be sound. 

The resilience of the banking sector is important and targeted assistance is the right way forward, Chew told Bernama in an interview.

“Targeted assistance helps people get back on track and reduces their overall debt. Available information on a borrower’s repayment history also encourages banks to lend.

“Conversely, the absence of repayment data resulting from a blanket moratorium will impair the financial system’s ability to mobilise new loans that are critical for economic recovery,” she asserted.

Malaysia’s household debt is at a high 87 per cent of the country’s gross domestic product (GDP), hence maintaining a healthy credit culture is important to ensure continued intermediation activity. Borrowers who can afford to resume loan repayments are advised to do so. 

For borrowers who have the financial capacity, resuming repayment is the preferred option as it is not in their interest to unnecessarily roll over their loans and incur higher borrowing costs.

As at August 2020, the total value of loan repayments has reached 70 per cent of pre-moratorium levels.

"People were coming forward, especially during the RMCO (recovery movement control order) when people felt that they were in a better position. They were starting to repay their loans even before the moratorium ended," noted Chew.

Banks continue to assist borrowers through repayment assistance arrangements which are tailored to mitigate the latter’s financial predicament.

Asked on the varying tenures of repayment, Chew said if borrowers could maintain their original monthly payment with some adjustments because of the accrued interest, their tenure would not change much.

However, if their monthly payment is substantially reduced and restructured due to their current financial circumstances then the tenure may need to be lengthened further, she explained.

Besides, it is also vital to preserving the resilience of the banking and financial sector in the country, said Chew when asked if a blanket moratorium is not possible as the banking sector appears to be on solid footing.

"The banking system is on solid footing from years of observing sound lending standards and building up of capital buffers.

"(However), there remains considerable uncertainty until a vaccine is widely available," she said, adding that the banking and financial sector buffers will be important for banks to support the economy throughout the current period of uncertainty and ensure that resources are directed to those who need help.

The BNM deputy governor assured borrowers that every effort had been made to simplify the repayment assistance application process.

Multiple channels of support are provided for borrowers in dilemma, such as BNMTELELINK and Credit Counselling and Debt Management Agency (AKPK). The central bank also holds regular engagements with SMEs to address any issues they face.

Borrowers can contact BNMTELELINK at 1-300-88-5465 or AKPK at 03 2616 7766. — Bernama




Source: Malay Mail

Saturday, October 24, 2020

S&P affirms Britain’s debt ratings at AA

Moody’s last week cut Britain’s debt grade a notch to Aa3, citing a weakening economy 'exacerbated' by Brexit. — Reuters pic
Moody’s last week cut Britain’s debt grade a notch to Aa3, citing a weakening economy 'exacerbated' by Brexit. — Reuters pic

WASHINGTON, Oct 24 — S&P Global Ratings yesterday held Britain’s debt rating steady at AA with a stable outlook noting steps London has taken to mitigate the impact of the Covid-19 pandemic.

But the ratings agency cited “uncertainty regarding the UK’s future relationship with the EU.”

“In our opinion, this will have important implications for the UK economy, the country’s ability to attract inflows of capital and labour over time, and its public and external finances,” S&P said in a statement.

“The agency expects the British economy to contract by 9.7 next year and we do not expect the economy to recover to its 2019 level until 2022.”

Moody’s last week cut Britain’s debt grade a notch to Aa3, citing a weakening economy “exacerbated” by Brexit.  —  AFP




Source: Malay Mail

US claims China meeting trade deal targets

Washington and Beijing engaged in a months-long trade war starting in 2018 until the deal reached in January marking a partial truce, which obligated Beijing to import an additional US$200 billion in American products over two years, ranging from cars and machinery to oil and farm products. — Reuters pic
Washington and Beijing engaged in a months-long trade war starting in 2018 until the deal reached in January marking a partial truce, which obligated Beijing to import an additional US$200 billion in American products over two years, ranging from cars and machinery to oil and farm products. — Reuters pic

WASHINGTON, Oct 24 — The US Trade Representative and Department of Agriculture yesterday said China had made progress towards meeting key parts of the “phase one” deal signed earlier this year to calm their trade war.

Washington and Beijing engaged in a months-long trade war starting in 2018 until the deal reached in January marking a partial truce, which obligated Beijing to import an additional US$200 billion (RM831.5 billion) in American products over two years, ranging from cars and machinery to oil and farm products.

Data earlier in the year showed those purchases lagging amid a global slowdown in trade as the coronavirus pandemic hit the global economy and US President Donald Trump blamed China for the virus.

In its statement, the government said China had already bought 71 per cent of its target for agricultural purchases under the deal, amounting to US$23 billion.

“Since the agreement entered into force eight months ago, we have seen remarkable improvements in our agricultural trade relationship with China, which will benefit our farmers and ranchers for years to come,” US Trade Representative Robert Lighthizer said.

The statement said corn sales had hit a record high of 8.7 million tonnes, soybean sales for the 2021 market year were double the levels of 2017, pork exports hit a record level in the first five months of the year and beef sales through August are triple those of 2017.

The government also expects record or near-record sales in pet food, alfalfa hay, pecans, peanuts and prepared foods. — AFP




Source: Malay Mail

Knee-jerk reaction may drag down Bursa Malaysia next week

For the trading week just ended, the local bourse mostly moved in the red zone, dominated by the rising political unease and global resurgence of Covid-19 cases. — Malay Mail pic
For the trading week just ended, the local bourse mostly moved in the red zone, dominated by the rising political unease and global resurgence of Covid-19 cases. — Malay Mail pic

KUALA LUMPUR, Oct 24 — Bursa Malaysia is likely to see some knee-jerk reaction next week, pushing the FTSE Bursa Malaysia KLCI (FBM KLCI) downward and keeping it below the 1,500-point mark.

The barometre index, according to Bank Islam Malaysia Bhd, is expected to move in the range of 1,400 and 1,500 points as political uncertainty remains a concern among investors.

“Overall sentiment is expected to be weak with market participants cautiously awaiting the outcome of the meeting between Prime Minister Tan Sri Muhyiddin Yassin and the Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah on Friday,” economist Adam Mohamed Rahim told Bernama.

Earlier yesterday, Muhyiddin chaired a special Cabinet meeting in Perdana Putra, Putrajaya, to discuss current issues and government affairs.

Meanwhile, on the external front, the US presidential election on Nov 3 is another factor that will influence markets as the winner will have his own set of policies that will determine how will Malaysia trade with the United States.

For the trading week just ended, the local bourse mostly moved in the red zone, dominated by the rising political unease and global resurgence of Covid-19 cases.

The local bourse was also tracking its Asian peers’ movement over the past week and influenced by Wall Street’s overnight performance, which was driven by the yet-to-be-finalised stimulus package.

Rakuten Trade, in a note, said hopes for the stimulus had yo-yoed over the past few weeks with the latest update being that an agreement would be finalised soon.

Meanwhile, CGS-CIMB Futures Sdn Bhd said as the Klang Valley entered the second week of conditional movement control order, retail investors were diving into the stock market and this was also due to the prevailing low interest rate, which was expected to be cut further in November.

“The four trading days this week up until Thursday recorded a volume of 35.75 billion, which was already 5.21 per cent higher than last week’s volume of 33.98 billion,” it said.

On a Friday-to-Friday basis, the FBM KLCI ended 9.20 points lower at 1,494.64 compared to 1,503.84 previously.

On the scoreboard, the FBM Emas Index shrank 110.84 points to 10,827.23, the FBMT 100 Index contracted 108.59 points to 10,631.63 and the FBM Emas Shariah Index weakened 186.50 points to 12,954.11.

The FBM 70 shed 313.37 points to 14,258.34 and the FBM ACE lost 365.11 points to 10,606.77.

Sector-wise, the Financial Services Index declined 50.51 points to 12,359.16 and the Plantation Index eased 3.51 points to 6,855.00 but the Industrial Products and Services Index inched up 0.76 point to 144.36.

The Technology Index went up 32.37 points to 60.78 while the Healthcare Index gained 68.43 points to 4,021.86.

Weekly turnover expanded to 42.67 billion units worth RM25.89 billion from last week’s 33.97 billion units worth RM23.47 billion.

Main Market volume widened to 23.18 billion shares valued at RM20.43 billion versus 19.81 billion shares valued at RM17.91 billion previously.

Warrants turnover was higher at 4.82 billion units worth RM1.24 billion compared to 4.06 billion units worth RM988.80 million in the preceding week.

The ACE Market volume also grew to 14.66 billion shares valued at RM4.22 billion from 10.08 billion shares valued at RM4.57 billion. — Bernama




Source: Malay Mail

Ringgit expected to be range-bound next week

On a Friday-to-Friday basis, the ringgit eased against the US dollar to 4.1500/1600 from 4.1470/1520 in the previous week. — Reuters pic
On a Friday-to-Friday basis, the ringgit eased against the US dollar to 4.1500/1600 from 4.1470/1520 in the previous week. — Reuters pic

KUALA LUMPUR, Oct 24 — The ringgit is projected to trade within a tight range next week with a bias towards on the weaker side as the US dollar is likely to strengthen further.

Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid said the greenback had gained strength following the heightened uncertainty over the US fiscal stimulus bill, which was likely to be passed only after the presidential election on Nov 3; and perhaps the process might drag until early next year.

Concurrently, the US Dollar Index has risen from as low as 92.611 as of Oct 21 to around 93.031 currently.

Domestically, he said, the political landscape was also “quite colourful” with talks of possible cabinet reshuffle and a potential declaration of a state of emergency ahead of Budget 2021 announcement.

“Therefore, the ringgit should linger between RM4.14 and RM4.15 next week,” he told Bernama.

FXTM market analyst Han Tan said should investors continue to stay true to expectations that the next US fiscal stimulus package could be agreed to in the remaining days before the elections, it could exert more downward pressure on the greenback.

“However, should risk aversion pick up steam leading up to Nov 3, that might see the greenback unwind its recent losses,” he said.

In addition, the market will also be closely monitoring major economic releases out of some of the world’s largest economies over the coming days, such as the third-quarter Gross Domestic Product figures for the United States and European Union, as well as China’s September industrial profits, which may colour some of the market decisions.

Locally, Malaysia’s September exports data, to be released soon, was set to show a year-on-year (y-o-y) gain of 3.8 per cent, which would mark a return to expansion after the 2.91 per cent y-o-y contraction in August, Tan said.

On a Friday-to-Friday basis, the ringgit eased against the US dollar to 4.1500/1600 from 4.1470/1520 in the previous week.

The ringgit depreciated against the Singapore dollar to 3.0593/0678 from 3.0517/0556 on Friday last week and fell versus the yen to 3.9664/9771 from 3.9409/9460.

The local unit weakened vis-a-vis the British pound to 5.4286/4434 from 5.3654/3735 a week earlier and traded lower against the euro at 4.9153/9288 from 4.8553/8628 previously. — Bernama




Source: Malay Mail

S&P downgrades Azerbaijan debt outlook to negative

Cars drive on a street in the breakaway Nagorny Karabakh’s main city of Stepanakert on October 2, 2020, during the ongoing fighting between Armenia and Azerbaijan over the disputed region. — AFP pic
Cars drive on a street in the breakaway Nagorny Karabakh’s main city of Stepanakert on October 2, 2020, during the ongoing fighting between Armenia and Azerbaijan over the disputed region. — AFP pic

WASHINGTON, Oct 24 — S&P Global Ratings downgraded the outlook on Azerbaijan’s debt to negative, even while holding the credit rating stable at BB+ amid the rising risks from the conflicted ignited in September with neighbouring Armenia.

“The military confrontation could exacerbate Azerbaijan’s economic, external, and fiscal vulnerabilities at a time when the economy has been weakened by Covid-19 and the collapse in oil prices,” S&P said in a statement.

The conflict will weigh on the nation’s economy and finances as it “may take quite some time to resolve.”

Hundreds have already been killed in the latest flare-up of fighting over Karabakh, a region of Azerbaijan long controlled by ethnic Armenian separatists.

Efforts by world governments to broker a peace have so far failed. — AFP




Source: Malay Mail

Investors left hanging as stimulus talks drag on

The Dow Jones Industrial Average closed down 28.09 points, or 0.1 per cent, at 28,335.57, the S&P 500 settled up 11.90 points, or 0.3 per cent, at 3,465.39. The Nasdaq Composite closed up 42.28 points, or 0.4 per cent, at 11,548.28. — Reuters pic
The Dow Jones Industrial Average closed down 28.09 points, or 0.1 per cent, at 28,335.57, the S&P 500 settled up 11.90 points, or 0.3 per cent, at 3,465.39. The Nasdaq Composite closed up 42.28 points, or 0.4 per cent, at 11,548.28. — Reuters pic

NEW YORK, Oct 24 — Global stocks treaded water and the dollar fell yesterday as investors were left hanging, waiting to see if a long-awaited agreement on a fresh US coronavirus relief package will finally be reached.

US House of Representatives Speaker Nancy Pelosi said it still was possible to get another round of Covid-19 aid before the election, but that it was up to Republican President Donald Trump to act, including talking to reluctant Senate Republicans, if he wants it.

But Treasury Secretary Steven Mnuchin warned a deal would only be possible if Pelosi was willing to compromise.

“There’s been a waiting game for a stimulus package,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “We keep getting teased by reports of supposed progress and then those hopes get dashed.”

The Dow Jones Industrial Average closed down 28.09 points, or 0.1 per cent, at 28,335.57, the S&P 500 settled up 11.90 points, or 0.3 per cent, at 3,465.39. The Nasdaq Composite closed up 42.28 points, or 0.4 per cent, at 11,548.28.

For the week, the Dow was down 0.9 per cent, with the S&P 500 0.5 per cent lower and the Nasdaq down 1.1 per cent.

The biggest weight on the three indexes yesterday was a 10.6 per cent slump in chipmaker Intel Corp after it reported a drop in margins as consumers bought cheaper laptops and pandemic-stricken businesses and governments clamped down on data centre spending.

The dollar was 0.2 per cent lower against a basket of currencies , leaving it just shy of a seven-week low and set to decline about 1 per cent on the week, with uncertainty ahead of the November 3 election weighing on the greenback.

Trump trails Democratic former vice president Joe Biden in national opinion polls, but the contest is much tighter in some battleground states where the election will likely be decided.

The final debate between Trump and Biden on Thursday offered few surprises and little new direction.

European stocks fared better, boosted by positive earnings updates from Barclays and a surge in Airbus, but nagging worries about the economic impact of surging Covid-19 cases saw markets post their biggest weekly decline in a month.

Breaking a four-day losing streak, the pan-European STOXX 600 index advanced 0.6 per cent, with London’s FTSE 100 outperforming its European peers after Barclays jumped 7 per cent on strong results.

In the Asia-Pacific region, MSCI’s broadest index of the region’s shares outside Japan was flat, while Japan’s Nikkei ticked up 0.2 per cent and the CSI300 index of mainland China shed 1.3 per cent.

The MSCI world equity index, which follows shares in nearly 50 countries, was up 0.3 per cent, but set for its biggest weekly fall in a month.

The pound fell against the dollar and euro yesterday after the UK Purchasing Managers’ Index (PMI) fell to a four-month low, but was still set to end the week up, after a new phase of intense Brexit talks restarted.

The chief negotiators for Britain and the European Union met yesterday for talks on a last-gasp trade deal to avert a tumultuous finale to the five-year Brexit crisis.

The pound was down 0.4 per cent at US$1.3031 (RM5.42) on the day but up 0.9 per cent on a weekly basis. The euro ticked up 0.3 per cent against the dollar.

The Chinese yuan also held its ground against the dollar after an official at China’s foreign exchange regulator said it has been more stable than expected, suggesting authorities are not too worried about its recent rise.

Oil prices fell on concerns about rising Libyan crude supply and demand concerns caused by surging coronavirus cases in the United States and Europe. Brent futures settled at US$41.77 per barrel, down 69 cents, or 1.63 per cent. US crude futures settled at US$39.85 per barrel, down 79 cents.

Gold eased as the dollar recouped some losses, but uncertainty going into the US elections limited bullion’s losses.

Spot gold XAU= fell 0.1 per cent to US$1,903.07 per ounce by 2.06pm EDT (1806 GMT). US gold futures settled unchanged at US$1,905.20. — Reuters




Source: Malay Mail

Friday, October 23, 2020

Bursa Malaysia ends morning trading on positive note, investors nibble on beaten stocks

Bursa Malaysia ended its morning trading on a positive note. ― Picture by Hari Anggara
Bursa Malaysia ended its morning trading on a positive note. ― Picture by Hari Anggara

KUALA LUMPUR, Oct 23 — Bursa Malaysia ended its morning trading on a positive note, with investors nibbling on beaten down stocks.

However, on the broader market, the prevailing negative sentiment still deterred investors from taking large positions.

At 12.30pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) added 1.49 points to 1,500.29, from 1,498.80 at yesterday’s close.

The market barometer opened 0.96 of-a-point higher at 1,499.76 and moved between 1,496.73 and 1,502.67 throughout the morning trading session.

On the scoreboard, gainers edged past losers 481 to 445, while 451 counters were unchanged, 790 untraded and 21 others suspended.

Total volume stood at 2.83 billion units worth RM1.75 billion.

Malacca Securities Sdn Bhd noted that the local bourse may attempt to find stability, with investors taking on beaten down stocks.

“Although the prevailing negative market sentiment is deterring investors to take large positions, the lower liners may continue to see rotational play, boosted by the higher-than-historical-average trading activities,” the brokerage firm said in a note.

Sector-wise, it said the technology sector will remain in a prime position to march higher ahead of the upcoming batch of corporate earnings releases next month.

The plantation sector would likely see improvements too, riding on three consecutive sessions of higher crude palm oil price, which saw it rising to RM2,900 per tonne.

Of the heavyweights, Maybank rose five sen to RM7.11, Public Bank added 30 sen to RM15.86, while Top Glove slipped three sen to RM8.87 and Hartalega was eight sen lower at RM17.72.

Of the actives, Iris inched down one sen to 29.5 sen, Diversified improved 1.5 sen to 20 sen and Daya Materials was half-a-sen better at 1.5 sen.

On the index board, the FBM Emas Index rose 13.38 points to 10,899.49, the FBMT 100 Index went up 15.20 points to 10,692.72 and the FBM Emas Shariah Index fell 26.70 points to 13,051.18.

The FBM 70 advanced 38.26 points to 14,421.40 and the FBM ACE appreciated 102.71 points to 11,053.91.

The Financial Services Index expanded 86.57 points to 12,390.62, the Industrial Products and Services Index inched up 0.93 of-a-point to 145.74, while the Plantation Index shrank 62.35 points to 6,858.10. — Bernama




Source: Malay Mail

Parlo sees potential RM420m in revenue from new business activity

Malay Mail Social Logo

KUALA LUMPUR, Oct 23 — Parlo Bhd’s expansion into foreign workforce management services sees the company potentially raking in RM420 million in revenue next year.

This is as the company recently entered into an agreement to provide a range of migrant workforce-related services for 160,000 Myanmar migrant workers. 

Newly-appointed executive director Ti Lian Seng said Parlo, whose core activity is related to corporate and leisure travel arrangements, has been affected due to the Covid-19 pandemic.

“Our nature of business is in tourism, and similar to other businesses such as airlines, the impact of the pandemic is inevitable. Therefore, we decided to expand into the new business, and simultaneously leverage existing relationships that Parlo has with its partners globally, such as in Japan and Thailand. 

“For example, we have partnered with dormitory and hostel operators before, and with this new business expansion, we would utilise our existing networks,” he told Bernama in a virtual interview.

Ti also explained that the agreement inked with Myanmar-based Diamond Palace Group of Companies Limited would allow Parlo to venture into other projects, whereby Parlo is expected to generate a digital identity document (e-ID) for 360,000 Myanmar workers.

Under the definitive agreement between Parlo and Diamond Palace, Parlo would provide services, including travel, logistics and dormitory arrangements, medical examinations, vocational training, as well as ID solutions for migrant workers.

Diamond Palace has an exclusive right to a 30-year concession with the Myanmar government to supply workers from the country.

“We are providing services for Myanmar workers and it is also not limited to the Myanmar workforce in Malaysia, but also include workers in Japan and Thailand. This e-ID would have several features, including for security purposes and ID authentication, that would create efficiency from the initial stages where one applies to work abroad and when they start remitting money (back).

“However, we are still working out the details of the ID project, but we certainly hope to introduce in it mid-2021,” he said, adding that the company estimated a RM50 million working capital to develop the digital platform.

The working capital would be either from the internal fund, bank borrowings or private placements, Ti said.

To a question on travel restrictions, Ti said that the business is different from tourism, whereby the demand for migrant workers is high and not affected by travel restrictions, as it requires special approval.

Citing the palm oil industry, Ti explained the Covid-19 pandemic has actually worsened the supply of migrant workers.

The oil palm industry is grappling with labour issues due to the freeze on new intake of workers and difficulties to recruit new workers.

Ti emphasised that Parlo is looking forward to making a profit next year following the new business venture. — Bernama

For the first half of this year, Parlo’s losses widened to RM4.04 million compared with RM346,000 a year earlier on the back of an 80 per cent plunge in revenue to RM14.92 million from RM77.95 million previously. — Bernama




Source: Malay Mail

Tech stocks top gainers at noon, tracking Huawei 5G plans

Technology-linked stocks emerged as the top three gainers at noon today. ― Picture by Hari Anggara
Technology-linked stocks emerged as the top three gainers at noon today. ― Picture by Hari Anggara

KUALA LUMPUR, Oct 23 — Technology-linked stocks emerged as the top three gainers at noon today, after news that Chinese technology giant, Huawei Technologies Co Ltd, had quietly spent months racing to stockpile critical radio chips ahead of United States President Trump’s sanctions, ensuring it can deliver its 5G orders for next year.

Bursa Malaysia Technology Index rose 1.77 per cent to 61.97 on Friday, boosted by gains among index constituents.

Vitrox Corp, JF Technology and MI Technovation jumped 3.87 per cent, 11.59 per cent and 7.46 per cent to RM14.48, RM5.10 and RM4.75, respectively.

JF Technology, a company involved in high performance test socket manufacturing, became associated with Huawei in July last year.

Other tech-linked stocks which also recorded gains were UWC, which rose 16 sen to RM6.96, and Pentamaster Corp, which added 10 sen to RM5.50. — Bernama




Source: Malay Mail

PLNG2 issues RM1.7b sukuk, oversubscribed by 3 times

PETALING JAYA: Petronas Gas Bhd’s (PetGas) 65% owned subsidiary Pengerang LNG (Two) Sdn Bhd (PLNG2) has concluded the issuance of a 20-year multi-tranche sukuk murabahah amounting to RM1.7 billion under its Islamic Medium Term Note Programme.

The oversubscription of just over three times reflects the market’s confidence in the company’s credit strength which has been assigned a rating of AAA by the Malaysian Rating Corp Bhd.

“We are pleased with the overwhelming response and demand from the investors, underpinned by our robust and sustainable business model despite the current global challenges,” said PetGas managing director and CEO Kamal Bahrin Ahmad.

The issuance is in line with continued efforts in driving efficient capital management across PetGas group, added Kamal Bahrin, who is also the chairman of PLNG2.

The proceeds will be utilised by PLNG2 for syariah-compliant purposes, primarily to repay its outstanding US dollar shareholders’ loans in full, hence there will be no change in the group’s consolidated borrowings.

Based on PGB’s consolidated statement of financial position as at June 30, 2020, there will be no material change in PetGas group’s consolidated gearing. In addition, the issuance will not have a material impact on the earnings, earnings per share and net assets per share of the group for the current financial year.

PLNG2 operates the Liquefied Natural Gas (LNG) Regasification Terminal Pengerang (RGTP) in Johor, and PetGas’s second regasification facility after RGT Sungai Udang located in Malacca. PLNG2’s other shareholders include Dialog LNG Sdn Bhd (25%) and Permodalan Darul Ta’zim Sdn Bhd (10%).



Source: The Sun Daily

Indonesia to extend loan restructuring incentives for banks to March 2022

JAKARTA: Indonesia's Financial Services Authority (OJK) will extend loan restructuring incentives for some banks until March 2022, it said on Friday, to prevent a spike in bad loans as a result of economic fallout from the coronavirus pandemic.

Such an extension allows banks to avoid making provisions for souring loans for a year longer than originally set, among other measures to help the industry, which saw loan growth of 0.12% in September, Indonesia's weakest in more than a decade.

The incentives have helped keep non-performing loan (NPL) ratios below the regulator's healthy threshold of 5%.

It said loan restructuring had reached 904.3 trillion rupiah ($62 billion) for 7.5 million debtors by Sept. 28, with NPL levels at 3.15% by the end of September, a slight drop from a month earlier.

"The extension is an anticipation measure to buffer a decline in the quality of debts under restructuring," the regulator's chairman, Wimboh Santoso, said.

"But the extension of restructuring policy would be handed out selectively based on assessment of banks to prevent moral hazard," he added in a statement, saying he also wanted to encourage debtors to "adapt" to the pandemic.

The regulator did not elaborate, but said it was finalising a regulation to back up the extension, and would also extend a relaxation of capital conservation buffer rules while delaying adoption of Basel-III regulations.

The move was "really helpful" for the banking industry, said Jahja Setiaatmadja, chief executive of Bank Central Asia , Indonesia's largest lender by market value.

Loan restructuring requests have plateaued, but the pandemic's economic woes persist, said Aquarius Rudianto, director of retail banking at state lender Bank Mandiri, who welcomed the move.

Aquarius added, however, that his bank's internal strategy was to continue building up provisions to be prudent.

Without the extension, NPL could shoot up to 4% as weak economic activity could still pressure business, said Josua Pardede, chief economist at Bank Permata.

"The hope is, with the extension, NPL could decline further, credit growth could pick up," Josua added. - REUTERS



Source: The Sun Daily

SC receives high queries on investment scams, establishes task force

KUALA LUMPUR: The Securities Commission Malaysia (SC) has received 370 queries and complaints on illegal investment schemes as at end-September 2020 compared with 317 for the whole of last year.

Chairman Datuk Syed Zaid Albar said of late, there has been a rise of “clone firm scams” where the fraudster would impersonate a legitimate licensed entity to dupe investors into believing that they are investing with a legitimate entity.

He said based on SC’s findings, the promotion of such scams were commonly carried out via social media channels -- with the use of WhatsApp and Facebook being the most prevalent channels.

“Investors who received offers of investment opportunities through WhatsApp messaging or Facebook channels should exercise caution.

“I would like to advice investors to always verify the individual and entity’s status with the SC before investing their monies in any investment schemes,” he said in his welcome remarks at the SC virtual InvestSmart Fest 2020 (Virtual ISF 2020) here today.

Syed Zaid said for the first six months of this year alone, Malaysians were reported to have lost RM914 million to scams.

He said investors’ vulnerability to scams might be caused in part by their unrealistic expectation of returns from investments.

In an SC survey earlier this year, it showed that a majority of investors in Malaysia have an unrealistic expectation of 24 per cent to 30 per cent returns per annum on their investments, he said.

Today, investors’ vulnerability is also compounded by their search for yield in this low interest rate environment, he added.

“Given the rapid increase of illegal investment scams, the SC has recently established an internal Task Force to focus on investigating and taking enforcement action against the perpetrators.

“We urge investors to also play their part by coming forward to provide information to the SC if they have been approached by any person offering these schemes,” he said.

The Virtual ISF 2020 is an annual flagship investor education event, running for three days starting today.

The event features a strong line-up of industry experts sharing insights on investment opportunities, financial management, retirement planning, and how digitisation affects investment decisions, while reminding the public to stay vigilant when investing.

This year’s edition, which was held virtually for the first time, has so far attracted more than 5,000 participants. - BERNAMA



Source: The Sun Daily

HK brokers ready war chest for mom-and-pop bidding frenzy in Ant’s mega IPO

Employees are seen at the reception desk of Ant Financial Services Group, Alibaba's financial affiliate, at its headquarters in Hangzhou, China January 24, 2018. — Reuters pic
Employees are seen at the reception desk of Ant Financial Services Group, Alibaba's financial affiliate, at its headquarters in Hangzhou, China January 24, 2018. — Reuters pic

HONG KONG, Oct 23 — Hong Kong’s brokerages are readying billions of margin-lending dollars to tap an expected surge in retail demand for China’s fintec giant Ant Group’s likely US$35 billion (RM145 billion) dual-listing in Hong Kong and Shanghai in the next few weeks, industry officials said.

Margin lending, or the amount brokers can lend to individual investors to purchase shares, has been a big business in Hong Kong in recent years with a large number of equity floats luring retail buyers.

Hong Kong had 851,157 margin lending accounts with total loan volume of HK$161.8 billion (RM86.6 billion) in the first half of 2020, according to the city’s Securities and Futures Commission (SFC), up sharply from 601,842 at the same time last year.

The expected surge in demand for margin financing for the Hong Kong tranche of Ant’s initial public offering (IPO), poised to be the world’s largest ever, underscores robust retail interest in the deal due to be launched next week.

Ant, which operates China’s biggest mobile payments platform Alipay, is backed by Chinese e-commerce group Alibaba Group Holding.

Bright Smart Securities, one of the city’s largest brokerages, said it would lend up to HK$50 billion — one of the firm’s largest offerings — for the Ant IPO despite looming markets uncertainty due to the approaching US election.

“We will make sure our interest rate will be the lowest among our peers,” chief executive Edward Hui told Reuters, adding retail investors would only have to put up 5 per cent as a deposit to take on a margin loan to buy Ant shares.

Another Hong Kong brokerage UOB Kay Hian has earmarked HK$20 billion for Ant IPO margin financing, a spokeswoman said.

Retail investors in Hong Kong — from taxi drivers to junior professionals — borrow heavily as larger bids boost the chances of IPO share allocation, and they look to benefit from a first-day pop.

The lending could be for 6-7 days and is lucrative for the brokerages as they earn commission on executing trades as well as interest income from margin financing.

“We see in Hong Kong that retail investors are always keen to buy into IPOs, it’s almost a form of gambling and there is a strong trend for them to only hold on to them for a day or two,” the Hong Kong Institute of Investors’ chairman Ricky Tam said.

Pressure on rates

Retail brokers said the margin interest rates would be set closer to the IPO’s launch date. The strong demand could raise the short-term Hong Kong Interbank Offered Rate (HIBOR).

The two-week Hong Kong Interbank Offered Rate rose for a fourth straight session yesterday to its highest in more than seven weeks.

The retail bidding frenzy poses some risks for the brokerages and their clients, especially on any heightened market volatility in an economy already badly hit by the pandemic as well as last year’s anti-governments protests.

“The risk for subscribers is that they are paying a lot in commissions to try and get allocations, they are paying interest and it’s likely the shares will be priced at the top of the range,” GEO Securities chief executive Francis Lun said.

“That could leave very little room for profit.” — Bernama




Source: Malay Mail

KL shares crawl into positive territory at mid-morning

Shares on Bursa Malaysia crawled into positive territory at mid-morning. ― Picture by Hari Anggara
Shares on Bursa Malaysia crawled into positive territory at mid-morning. ― Picture by Hari Anggara

KUALA LUMPUR, Oct 23 — Shares on Bursa Malaysia crawled into positive territory at mid-morning on bargain-hunting in selected heavyweights led by Petronas Chemicals, Public Bank, MISC and Maybank.

Altogether, they contributed 5.90 points to the composite index.

On the broader market, advancers led decliners 437 to 402, while 427 counters were unchanged, 901 untraded and 21 others suspended.

At 11.02am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) inched up 0.92 point to 1,499.72 from 1,498.80 at yesterday’s close.

The market barometer opened 0.96 point better at 1,499.76.

Total volume stood at 2.05 billion units worth RM1.21 billion.

Of the heavyweights, Maybank rose five sen to RM7.11, Hartalega increased 12 sen to RM17.92, Top Glove eased three sen to RM8.87, while Tenaga was six sen lower at RM10.02.

Of the actives, Iris slipped 1.5 sen to 29 sen, Diversified Gateway added half-a-sen to 19 sen, ES Ceramics improved three sen to 76 sen, while Mlabs was flat at 2.5 sen.

Top losers included Nestle, which gave up RM3 to RM141.50, Petronas Dagangan declined 62 sen to RM17.50 and Genting Plantation was 28 sen weaker at RM10.

Technology-linked counters emerged as the top gainers with JF Technology increased 42 sen to RM4.99, MI Technovation up 33 sen to RM4.75 and Vitrox Corp was 30 sen higher at RM14.24.

Among major indices, the technology index registered 1.09 points, or 1.79 per cent, to 61.98 and it is the only index that recorded more than one per cent contribution to the indices.

This came after Chinese tech giant Huawei Tech Co was set to fulfill its 5G orders for next year, with JF Technology, which is in the business of high-performance test socket manufacturing, became associated with Huawei in July last year.

On the index board, the FBM Emas Index rose 7.89 points to 10,894.00, the FBMT 100 Index gained 9.29 points to 10,686.81 but the FBM Emas Shariah Index decreased 19.07 points to 13,058.81.

The FBM 70 improved 23.15 points to 14,406.29 and the FBM ACE advanced 61.10 points to 11,012.30.

The Financial Services Index rose 73.40 points to 12,377.45, the Industrial Products and Services Index was 0.69 point better at 145.50, but the Plantation Index fell 40.52 points to 6,879.93. — Bernama




Source: Malay Mail

Organisations in Malaysia invest in hybrid cloud for transformation

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KUALA LUMPUR, Oct 23 — Business executives in Malaysia are planning to invest in hybrid multi-cloud platform strategies and capabilities to drive business transformation and to unlock value, according to the IBM Institute for Business Value (IBV) survey.

About 19 per cent of their IT expenditure is allocated for cloud computing, and many plan to increase the share of expenditure on hybrid cloud from the current 36 per cent to 46 per cent by 2023.

“Enterprises in Malaysia need an application development platform that can run on any cloud, workloads that can execute seamlessly across multiple clouds, and a comprehensive orchestration capability that spans across clouds,” IBM Malaysia said in a statement today.

Most industries globally will exhibit growth in the number of clouds they will deploy — which can go up to 11 clouds per organisation, particularly in sectors such as insurance, telecommunications, retail, banking and consumer products, as these industries continue to expand multiple cloud deployments in the next three years.

Over 6000 global executives across industries took part in the survey, including 100 executives from Malaysia.

The survey aimed to gain an in-depth understanding of organisations’ use of hybrid cloud, multi-cloud and their approach to multi-cloud management, and the findings were revealed in IBM’s report, ”The Hybrid Cloud Platform Advantage: A Guiding Star To Enterprise Transformation In Malaysia”.

“Furthermore, the study confirmed the return on investment (ROI) of a platform approach as respondents said that the value derived from a full hybrid, multi-cloud platform technology and operating model at scale is 2.5 times the value derived from a single platform, single cloud vendor approach.

“In fact, the platform approach is cited as accelerating value with scale,” it said.

IBM Malaysia managing director Catherine Lian said IBM has witnessed an acceleration in cloud adoption in Malaysia as businesses leverage the power of cloud to stay competitive in the market.

She said the adoption of cloud has been a central feature in developing new, digitally-driven business models.

“Interestingly, the findings show that hybrid multi-cloud is the fundamental enabler of an organisation’s operating model, helping them to embark on a journey to become a cognitive enterprise.

“This is proven in the instance of leading businesses that have successfully achieved demonstrable competitive advantage through robust hybrid cloud management and governance platform, and we are betting big on hybrid cloud, which is secure, interoperable, open and free from vendor lock-in,” she added. — Bernama




Source: Malay Mail

Chinese low-cost carrier Spring soars amid Covid downturn

An employee of Spring Airlines stands next to an Airbus A320 aircraft at Hongqiao Airport in Shanghai in this July 6, 2012 file photo. — Reuters pic
An employee of Spring Airlines stands next to an Airbus A320 aircraft at Hongqiao Airport in Shanghai in this July 6, 2012 file photo. — Reuters pic

BEIJING, Oct 23 — Chinese budget carrier Spring Airlines is leveraging its low-cost position to attract customers with cheap fares as the country’s domestic aviation market recovers, pursuing an aggressive expansion strategy that could soon turn profitable.

Domestic capacity at Shanghai-based Spring rose over 50 per cent in September compared with a year earlier, while passenger traffic was up 47 per cent and the airline’s load factor, or percentage of seats filled, neared 90 per cent as it redirected planes from closed international markets. Spring’s market share has doubled from 2 per cent a year ago to 4 per cent, according to broker Jefferies.

The private airline’s success in the Chinese market, traditionally dominated by full-service state-owned carriers, could herald a wider global trend.

Investors expect low-cost, domestic-focused carriers will be the first to recover from the pandemic as leisure travellers focus on value and corporate travel takes longer to recover.

Japan Airlines Co Ltd has said it plans to bolster its low-cost operations, including its Japanese joint venture with Spring, while sources said ANA Holdings Inc is weighing whether to use budget carrier Peach for more flights.

“We do see low-cost carriers (LCCs) rebounding the fastest out of all airlines across most regions, not just China,” BOCOM International analyst Luya You said. “The reasons are that LCCs can offer lower prices due to lower costs as well as fill their planes more efficiently than full-service carriers.”

Low-cost carriers held just a 10 per cent market share in the domestic Chinese market, and 17 per cent in Japan in 2018, compared with a majority share in South Korea, India, Malaysia and Vietnam, according to CAPA Centre for Aviation data.

During the Covid-related downturn, Chinese budget operators like Spring and Air China Ltd subsidiary Shenzhen Airlines have been expanding relative to rivals.

Spring’s shares have rebounded to pre-Covid levels, compared with declines of up to 25 per cent at the state-owned big three airlines, as investors bet on China’s only listed budget carrier.

“Full-service carriers will mimic the low-cost carrier model over the next few years, which could pressure established low-cost carriers like Spring over time,” BOCOM’s You said. “But right now their clear advantage is still solid.”

Spring in its step

Spring charges customers for extras like priority check-in, meals and using airport lounges, allowing it to offer fares as much as 30 per cent below rivals on some routes while still taking aim at price-conscious business travellers.

“We can see Spring’s offerings for a lot of their domestic routes are even lower than fares on high-speed railway trains,” Chinese aviation expert Li Xiaojin said. “Flying with them is faster and cheaper, which helped bring in a lot of customers.”

Since May, Spring has added more than 60 domestic routes, and will add another 20 in the winter/spring flight season, saving on costs by having a single-type fleet of 103 Airbus SE A320 family narrowbodies.

The aggressive expansion has helped Spring outperform its peers, with fares on some domestic routes almost reaching last year’s levels, Spring Airlines Chairman Wang Yu told Reuters.

Chinese brokerage CICC expects Spring to swing to a profit of 150 million yuan (RM93.06 million) in the third quarter, barring an one-off capital injection into its Japanese joint venture.

Spring, which mostly focuses on Asian markets, is also well-positioned to recover in a post-Covid global aviation world, given travel bubbles between nations are likely before a full reopening of international travel.

“Compared with Europe and the United States, Asia-Pacific countries have largely managed to keep Covid under control, and are gradually easing travel restrictions. This is a good trend,” Wang said.

“Possibly, the Asia-Pacific region will recover first and we’ll first restore capacity supply to these target markets and resume flights as soon as possible.”

Spring received its first A321neo in September as part of plans to introduce seven planes in the second half of the year, Wang said, adding that the company had ruled out the purchase of widebodies.

In contrast, the state-owned carriers are pushing back deliveries. — Reuters




Source: Malay Mail

Huawei’s nine-month revenue growth slows as US restrictions bite

CHINA's Huawei Technologies Co Ltd reported a 9.9% rise in nine-month revenue on Friday, as U.S. export restrictions and the global COVID-19 pandemic weakened sales growth in products such as smartphones and telecoms equipment.

Revenue reached 671.3 billion yuan ($100.44 billion) over January-September, it said in a statement, without providing a segment breakdown. Revenue grew 13% in the January-June period.

Net profit margin for the nine months was 8.0%, versus 8.7% over the same period a year earlier.

Consumer Business Group Chief Executive Richard Yu earlier this year said Huawei would soon stop making high-end Kirin chips as U.S. restrictions on supplying the firm take effect. Analysts expect its stockpile of the chips to run out next year.

Domestically, consumers have rushed to buy Huawei smartphones on concerns over the availability of newer models.

Overseas, however, Huawei has faced sluggish sales, due in part to its lack of access to Alphabet Inc's Google Mobile Services.

Last week, Reuters reported that Huawei is in talks with Digital China Group Co Ltd and others to sell parts of its Honor budget brand smartphone business in a deal that could fetch up to 25 billion yuan.

Huawei also faces pressure abroad in its telecommunications infrastructure business. This week, Sweden said it would restrict Huawei and Chinese rival ZTE Corp from servicing its upcoming fifth-generation (5G) network. - REUTERS



Source: The Sun Daily

Manufacturing companies set to increase production localisation

KUALA LUMPUR: Around 30 per cent of manufacturing companies plan to increase production localisation efforts over the next six months to better shield from future risks, according to global market research company Euromonitor International.

The production localisation progress would make global supply and logistics chains shorter and provide new growth opportunities for North American and European suppliers, said in a statement.

In addition, changing economic conditions and consumer preferences will impact the manufacturing sector, which will have to adapt to the ‘new normal’.

The future of the global manufacturing industry will be defined by five key trends by 2025 including transition towards demand-driven supply chain; embracing digital solutions and automation; greater flexibility of supply chains; and, repurposing manufacturing capabilities.

Manufacturing companies are expected to invest more in a demand-driven supply chain model and greater flexibility in their facilities.

Meanwhile, around 50 per cent of companies plan to reshape their digital strategies and invest into e-commerce, while one-third of respondents from Euromonitor’s Voice of the Industry survey 2020 will accelerate investments into automation tools.

It is also stated that the manufacturing sector is predicted to transform supply chains in the next two to three years, by making them more localised and flexible, while companies will also look for new ways to utilise manufacturing capabilities outside of their primary industry. - BERNAMA



Source: The Sun Daily

Covid-19, FBM KLCI constituent review beneficiaries on investors’ radar

PETALING JAYA: Institutional investors are positioning for potential changes in FBM KLCI constituents, with foreign institutional investors going for stocks with potential corporate exercise and thematics; while local retail investors are placing increasing bets on laggards and Covid-19 recovery plays.

CGS-CIMB said glove makers like Top Glove Corp Bhd, Supermax Corp Bhd and Hartalega Holdings Bhd were among the biggest beneficiaries of net inflow of funds from institutional investors – possibly in anticipation of their potential inclusion and higher weightage in the FBM KLCI, the benchmark index of Bursa Malaysia.

“Institutional investors continue to sell Genting Bhd and Genting Malaysia Bhd potentially on worries over their possible exclusion from the KLCI as they were the two lowest ranking market cap stocks among the current KLCI constituents,” CGS-CIMB said in its inaugural report on fund flows.

On foreign institutional investors going for stocks with potential corporate exercise and thematics, the research house said PPB Group Bhd, Lotte Chemical Titan Holding Bhd and Supermax saw strongest net inflows from foreign investors last week.

“It would appear that foreign investors were potentially positioning for short-term trade on the listing of Wilmar’s China subsidiary, YKA in Chinext last week via PPB group. The net buying in Supermax could be a trade on its possible inclusion in the KLCI.”

It added that Genting, Hartalega and Tenaga Nasional Bhd (TNB) saw the highest selling by foreign investors last week. Year to date until Oct 16, 2020, the top five casualties of foreign net selling were Public Bank Bhd, TNB, CIMB Group Holdings Bhd, Malayan Banking Bhd and Top Glove.

On local retail investors, it said last week’s flows suggest that retail investors may be favouring laggard plays and were taking profits on gloves.

Genting, TNB and CIMB – among the laggards in FBM KLCI constituents – saw the highest inflow of funds from retail investors last week.

“We saw retail investors taking profit in Top Glove, Supermax and VS Industry Bhd last week – which are ranked among the biggest gainers year to date.”

The research house noted that last week daily turnover volumes and values on Bursa Malaysia rose following conditional movement control order (CMCO) in the Klang Valley, with retail investors recording the biggest gain in participation.

Average daily turnover volume and value rose 11% and 29% week on week respectively to 6.9 billion units and RM4.8 billion last week. Retail investors formed the largest share of the total trading value at 34.7%, followed by institutional investors at 24.9%, proprietary trade at 23.8% and nominees at 16.6%.

Year to date, retail investors make up 33.3% of the total trading value, institutional investors 31.5%, proprietary 18.1%, and nominees 17.1%.

Meanwhile, foreign selling picked up the pace last week, possibly due to concerns relating to the ongoing power struggle in Malaysia and potential earnings disappointment due to the CMCO.

Foreign investors were net sellers of RM237.1 million of equities last week, and from Jan 2 to Oct 16, foreign investors sold RM33.7 billion of Malaysian equities but this was offset by net buys from local institutional investors (RM16.3 billion), local retail (RM14.2 billion), and local nominees (RM3.1 billion).

A worker inspects disposable gloves in a Top Glove factory in Shah Alam. CGS-CIMB says glove makers like Top Glove, Supermax and Hartalega Holdings have been among among the biggest beneficiaries of net inflow of funds from institutional investors. – AFPPIX



Source: The Sun Daily

Bursa Malaysia could post record earnings again in Q3: CGS-CIMB

PETALING JAYA: Bursa Malaysia, which is slated to release its quarterly financial performance on Oct 27, is expected to post a record net profit of RM128.2 million for third-quarter 2020 (3Q’20), representing growth rates of 172.1% year on year (yoy), and 48.7% quarter on quarter (qoq) against a 2Q’20 net profit of RM86.2 million, the previous all-time high.

In a note, CGS CIMB Research said its net profit estimate is based on the key assumptions that equity and derivative income expanded 200% yoy and 13.9% yoy respectively, and a 15% y-o-y increase in operating costs.

The key earnings driver will likely be the robust average daily trading value (ADTV) of the equity market, which spiked 200% yoy to an all-time high of RM5.8 billion in 3Q’20.

“This was 50% higher qoq vs. the previous record high of RM3.9 billion in 2Q’20. In addition, the average daily contracts (ADC) for the derivative market also increased by a strong 13.9% yoy in 3Q20, in our estimate,” it said.

The ADTV of the equity market declined from RM5.8 billion in 3Q’20 to RM4.3 billion in the first 14 trading days of October. However, the ADTV within this period was still above the ADTV of RM3.9 billion in 2Q’20.

The research house said it is retaining its earnings per share forecasts pending the results release. Valuation wise, it is continuing to peg its target CY21 price to earnings (PE) ratio for Bursa to two standard deviations (sd) above its five-year average but update the multiple to 31.7x from 30x previously.

With that, it has raised its target price to RM9.10, from RM8.60, and also upgraded its reduce call to a hold due to a strong 3Q’20 net profit and improvement in the equity market’s ADTV.

CGS CIMB said despite its 15.8% decline from a high of RM10.60 on Aug 8, its current valuation at CY21 PE of 31.4x is still 2 sd above its five-year historical average of 22.9x. On a regional comparison however, Bursa’s valuation is not attractive, as its CY21 PE is significantly above Singapore Exchange’s 23.3x, though lower than Hong Kong Exchange’s 34.7x.



Source: The Sun Daily

AirAsia shares up 3.6pc on positive capital raising plans

AirAsia planes are seen parked at Kuala Lumpur International Airport 2, during the movement control order due to the outbreak of the coronavirus disease (Covid-19), in Sepang, Malaysia April 14, 2020. — Reuters pic
AirAsia planes are seen parked at Kuala Lumpur International Airport 2, during the movement control order due to the outbreak of the coronavirus disease (Covid-19), in Sepang, Malaysia April 14, 2020. — Reuters pic

KUALA LUMPUR, Oct 23 — Shares of AirAsia Group Bhd were higher during the morning trading session after the low-cost carrier had reportedly secured a loan to support its ongoing capital raising plans.

Citing a source, Reuters reported that the RM300 million loan issued by the Sabah Development Bank Bhd would help to tide the airline over for two months, financing local operations.

This is in light of the rising number of Covid-19 infections that would keep air travel muted for a longer period.

Riad Asmat, chief executive officer of the group’s Malaysian unit, AirAsia Bhd, said that the loan is part of the group’s capital raising exercise.

“We are pleased with the progress,” he said.

At 10.57am, shares of AirAsia rose two sen or 3.60 per cent to 57.5 sen with 9.48 million shares transacted. — Bernama




Source: Malay Mail

Huawei revenue growth wilts under 'intense pressure'

A Huawei company logo is seen at the Shenzhen International Airport in Shenzhen in Shenzhen, Guangdong province, China June 17, 2019. — Reuters pic
A Huawei company logo is seen at the Shenzhen International Airport in Shenzhen in Shenzhen, Guangdong province, China June 17, 2019. — Reuters pic

SHANGHAI, Oct 23 — Huawei’s revenue growth slowed significantly in the first nine months of 2020, the Chinese telecom giant said today, citing "intense pressure" on operations during the coronavirus and as the US moves to cut off its access to vital components.

Huawei, the leading global supplier of telecoms networking equipment and a top smartphone producer, grossed 671.3 billion yuan (RM416.4 billion) in revenue in January-September, up 9.9 per cent year-on-year, compared with 24.4 per cent growth last year, the company said.

That’s down from 24.4 per cent growth over the same period last year. Its profit margin was 8.0 per cent, down from 8.7 per cent last year.

Washington views Huawei, founded in 1987 by former People’s Liberation Army engineer Ren Zhengfei, as a Chinese espionage threat and has lobbied allies to shun its gear while attempting to block its access to global semiconductor supplies.

“As the world grapples with Covid-19, Huawei’s global supply chain was put under intense pressure and its production and operations saw increasing difficulties,” the company said.

It vowed to “do its best to find solutions, to survive and forge ahead”. 

The brief announcement made no direct reference to the US pressure, nor did it include a performance breakdown for its various segments, such as smartphone sales. Privately held Huawei provides such details only for half-year and full-year earnings. — AFP




Source: Malay Mail

Asian markets mostly up but held back by stimulus uncertainty

A security guard stands at the Shanghai Stock Exchange building at the Pudong financial district in Shanghai, China, as the country is hit by an outbreak of a new coronavirus, February 3, 2020. — Reuters pic
A security guard stands at the Shanghai Stock Exchange building at the Pudong financial district in Shanghai, China, as the country is hit by an outbreak of a new coronavirus, February 3, 2020. — Reuters pic

HONG KONG, Oct 23 — Asian markets mostly rose today but gains were limited as US lawmakers struggled to hammer out a fresh economic rescue package, while there was little initial reaction to the last presidential debate before next month’s election.

Equities have swung back and forth over the past week as the will-they-won’t-they saga of the stimulus discussions keeps traders on their toes, though observers believe a bill is increasingly unlikely to be passed before the November 3 vote.

House Speaker Nancy Pelosi said both parties “continue to be engaged in negotiations, and I am hopeful we will be able to reach an agreement” but she warned that opposition to a massive spending plan from Senate Republicans posed a huge hurdle.

“Both sides remain at the stimulus negotiating table as neither benefits from pulling away,” said Axi strategist Stephen Innes. But he said Republicans were “unwilling to compromise on the thorniest issues of financial aid to states and liability protections, and Pelosi is unlikely to hand (Donald) Trump a victory this late in the game.

“So, unless a surprise occurs before Friday sundown at the Last Chance Saloon, neither side may be negotiating in good faith.”

With talks still grinding along on Capitol Hill, the focus in early Asian trade was the stand-off between Donald Trump and Joe Biden, with analysts saying the president needed a big win to overturn his Democratic challenger’s lead in national and crucial state polls.

Innes added: “The... debate was less chaotic than the first but offered little new information to inform the result for markets. Meanwhile, discussion relevant to the post-election economic outlook was limited, particularly from President Trump.”

Bets on a Biden win and a Democratic sweep of both houses of Congress have risen recently, with the general consensus being that such an outcome would see the passage of an even bigger stimulus than the one of around US$2 trillion (RM8.3 trillion) being discussed now.

Tokyo, Hong Kong, Shanghai, Seoul, Singapore and Jakarta were all up in early trade, while Sydney and Taipei slipped slightly.

The need for a spending bill was highlighted once again yesterday by the release of data showing 787,000 Americans had signed on for jobless benefits last week, a drop from the previous week and better than expected but still a massive number.

While fresh stimulus would be welcomed, a surge in new coronavirus cases across the US and Europe is fuelling concerns that the already stuttering economic recovery could be knocked off course.

A second wave with record new cases has already forced major economies including Britain, France and Germany to impose partial lockdown measures, leading businesses to warn of massive job losses.

Key figures around 0230 GMT

Tokyo - Nikkei 225: UP 0.2 per cent at 23,523.95 (break)

Hong Kong - Hang Seng: UP 0.1 per cent at 24,800.02

Shanghai - Composite: UP 0.2 per cent at 3,319.06

Euro/dollar: DOWN at US$1.1801 from US$1.1818 at 2100 GMT

Dollar/yen: DOWN at ¥104.77 from ¥104.90

Pound/dollar: DOWN at US$1.3069 from US$1.3083

Euro/pound: UP at 90.30 pence from 90.03 pence

West Texas Intermediate: UP 0.1 per cent at US$40.67 per barrel

Brent North Sea crude: UP 0.1 per cent at US$42.50 per barrel

New York - Dow Jones: UP 0.5 per cent at 28,363.66 (close)

London - FTSE 100: UP 0.2 per cent at 5,785.65 (close) — AFP




Source: Malay Mail

Britain inks post-Brexit trade deal with Japan

Britain and Japan are set to sign a trade deal today at a ceremony in Tokyo, marking London’s first major post-Brexit agreement. — AFP pic
Britain and Japan are set to sign a trade deal today at a ceremony in Tokyo, marking London’s first major post-Brexit agreement. — AFP pic

TOKYO, Oct 23 — Britain and Japan are set to sign a trade deal today at a ceremony in Tokyo, marking London’s first major post-Brexit agreement as it holds an intense round of negotiations with the European Union.

The deal covers sectors from food to textiles and tech and largely replicates the existing EU-Japan arrangement, which will no longer apply to Britain at the end of this year.

The British government has touted it as a chance to boost trade between the two countries by £15.2 billion (RM82.4 billion). 

It is due to take effect on January 1 — the end of a transition period in which London and Brussels are trying to thrash out the terms of their new relationship.

Britain and the European Union resumed their fraught talks yesterday after the UK ended a week of threats to abandon the long-running negotiations.

EU chief negotiator Michel Barnier arrived in London with negotiators vowing to work around the clock to salvage a trade deal and avert potential economic chaos at the end of the year — although key sticking points still remain.

Britain’s International Trade Minister Liz Truss is in Tokyo to sign the deal with Japanese Foreign Minister Toshimitsu Motegi, after it was agreed in principle by the pair last month during a video call.

Truss said in a statement that today’s signing was “a landmark moment for Britain” that “strengthens ties with a like-minded democracy, key ally and major investor”.

“It secures major wins that would be impossible as part of the EU and brings together two of the world’s most technologically advanced nations,” her ministry added in a statement.

The UK-Japan Comprehensive Economic Partnership Agreement has been trumpeted by London as a sign to Brexit opponents that agreements can be struck elsewhere.

Japan’s parliament will still need to ratify the deal by the end of the year for it to come into effect.

UK-Japanese trade was worth more than £30 billion last year, according to the British government, and their agreement has a particular focus on the food and drink, finance and tech sectors.

Britain formally left the EU in January this year, following a 2016 seismic referendum that saw voters opt to end five decades of European integration.

But under the terms of its divorce, the country will only be free of EU structures from 2021. — AFP




Source: Malay Mail

Bursa Malaysia flat amid mixed regional markets at opening

Bursa Malaysia opened flat today amid mixed regional markets. — Picture by Firdaus Latif
Bursa Malaysia opened flat today amid mixed regional markets. — Picture by Firdaus Latif

KUALA LUMPUR, Oct 23 — Bursa Malaysia opened flat today amid mixed regional markets with volatility on Wall Street continued to be dominated by the unfinalised stimulus package.

At 9.05am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) inched down 0.36 of-a-point to 1,498.44 from 1,498.80 at yesterday’s close.

The market barometer opened 0.96 of-a-point better at 1,499.76.

On the scoreboard, however, gainers led losers 237 to 148, while 286 counters were unchanged, 1,496 untraded and 21 others suspended.

Total volume stood at 256.69 million units worth RM147.53 million.

Rakuten Trade, in a note, said hopes for the stimuli has yo-yoed over the past few weeks with the latest update that an agreement should be finalised soon.

As such, the DJI Average added 153 points to inch towards the 28,400 level from the day’s low of around the 28,000 mark.

“We reckon regional markets to see slight improvements following a weak performance yesterday, while on the local front, we believe the FBM KLCI breaches the 1,500 level with 1,510 being the immediate resistance today, buoyed by glove counters on the back of the surging Covid-19 cases globally of late,” it said.

CGS-CIMB Futures Sdn Bhd said as the Klang Valley enters the second week of conditional movement control order (CMCO), retail investors are diving into the stock market and this is also due to the prevailing low interest rate, which is expected to see another cut in November.

“The four trading days this week up until yesterday recorded a volume of 35.75 billion, which was already 5.21 per cent higher than last week’s volume of 33.98 billion,” it said.

Of the heavyweights, Maybank rose three sen to RM7.09, Hartalega increased 10 sen to RM17.90, Top Glove slipped six sen to RM8.84, and Tenaga was four sen lower at RM10.04.

The most active counters were led by Iris, which was flat at 30.5 sen, AirAsia X up one sen to 4.5 sen, Datasonic warrants inched up half-a-sen to 26.5 sen and Excel Force was three sen higher at 50 sen.

Top gainers included Vitrox Corp, which increased 34 sen to RM14.28, British American jumped 17 sen to RM9.97 and JF Technology was 12 sen higher at RM4.69.

Top losers were Nestle, PPB Group and Malaysian Pacific which lost RM1.80, 32 sen and 30 sen to RM142.70, RM18.78 and RM20.30, respectively.

On the index board, the FBM Emas Index rose 10.62 points to 10,896.73, the FBMT 100 Index improved 9.58 points to 10,687.10 and the FBM Emas Shariah Index added 3.28 points to 13,081.16.

The FBM 70 advanced 59.99 points to 14,443.13 and the FBM ACE soared 158.63 points to 11,109.83.

The Financial Services Index appreciated 33.19 points to 12,337.24, the Industrial Products and Services Index edged up 0.11 point to 144.92 and the Plantation Index was 3.97 points higher at 6,924.42. — Bernama




Source: Malay Mail

Ringgit opens flat against US dollar

The ringgit opened flat versus the US dollar today. — Reuters pic
The ringgit opened flat versus the US dollar today. — Reuters pic

KUALA LUMPUR, Oct 23 — The ringgit opened flat versus the US dollar today on lack of new catalysts, as the greenback regained its traction due to the possibility of risk aversion returning to the markets.

The stalling of extra stimulus negotiations in past hours had given the greenback enough reason to reclaim lost ground after testing fresh multi-week lows, dealers said.

At 9am, the local currency stood at 4.1440/1490 versus the greenback, compared with 4.1440/1480 at yesterday’s close.

Bank Islam chief economist Mohd Afzanizam Abdul Rashid said the US dollar index (DXY) gained momentum last night to 93.055 amidst uncertainty over the US fiscal stimulus bill which seemed likely to be passed after the US presidential election on November 3 or into early next year.

Nonetheless, he said the initial jobless claims for the week ended October 17 fell by 55,000 to 787,000, suggesting that the labour market is still healing from the pandemic shocks.

“Major currencies such as the euro and British pound were weakened against the dollar while Japanese yen was flat.

“As such, the ringgit would continue its present trajectory of between RM4.14 and RM4.15 against US dollar in light of the lack of catalysts globally.

“Domestically, investors are looking at the upcoming Bank Negara Malaysia’s Monetary Policy Committee (MPC) meeting and the tabling of Budget 2021 in early November for more clues in order to form their opinion on the prospects of the economy and its association to the ringgit and financial markets,” he told Bernama.

Meanwhile, the ringgit was traded higher against other major currencies at the opening today.

It rose against the Singapore dollar to 3.0527/0575 from yesterday’s close of 3.0531/0567 and increased against the British pound to 5.4162/4236 from 5.4274/4331 yesterday.

The local currency improved versus the yen to 3.9561/9612 from 3.9565/9610 and advanced against the euro to 4.8895/8958 from 4.9028/9092. — Bernama




Source: Malay Mail

Qantas says Australia virus travel curbs cost it US$71m in quarterly profit

Qantas planes are seen at Kingsford Smith International Airport, following the coronavirus outbreak, in Sydney, Australia, March 18, 2020. — Reuters pic
Qantas planes are seen at Kingsford Smith International Airport, following the coronavirus outbreak, in Sydney, Australia, March 18, 2020. — Reuters pic

SYDNEY, Oct 23 — Qantas Airways Ltd said today that Australian state border closures due to the coronavirus pandemic had cost it A$100 million (RM295 million) in earnings in the first quarter and would have a negative impact in the second quarter as well.

The airline is running less than 30 per cent of its normal domestic capacity due to border closures, having earlier expected to be operating around 60 per cent at this time, Qantas Chief Executive Alan Joyce said in a speech at the airline’s annual meeting of shareholders.

“Essentially, this is a timing issue,” he said. “We know the upswing will materialise — just later than planned.”

Joyce said if Queensland opened its borders to the country’s most populous state, New South Wales, domestic capacity could reach up to 50 per cent by Christmas.

In New Zealand, where there are no such domestic border restrictions, Air New Zealand Ltd is operating nearly 85 per cent of its pre-pandemic capacity.

Qantas has grounded almost all of its international flights and said today around 18,000 employees remain stood down receiving government benefits rather than their usual pay.

Chairman Richard Goyder said there were some positive signs around “travel bubbles”, starting with New Zealand, that could result in it flying to destinations it did not serve before Covid-19, such as South Korea, Taiwan and various Pacific islands.

The airline is on track to meet its target of A$1 billion a year of ongoing annual cost savings from the 2023 financial year, Joyce said, with A$600 million of that to be unlocked this financial year, ending June 30, 2021.

“Progress has been strong, with the FY21 programme about halfway through, and expected to be 90 per cent complete by the end of December 2020,” he said.

The carrier has previously announced plans to cut 8,500 jobs, or nearly 30 per cent of its pre-pandemic workforce. — Reuters




Source: Malay Mail

Japan’s unorthodox household goods champion rides a pandemic boom

The logo of Iris Ohyama, a household goods and electronics maker, is seen at the company's office in Kakuda, Miyagi prefecture, Japan, September 3, 2020. — Reuters pic
The logo of Iris Ohyama, a household goods and electronics maker, is seen at the company's office in Kakuda, Miyagi prefecture, Japan, September 3, 2020. — Reuters pic

MIYAGI, Oct 23 — Iris Ohyama, whose goods are ubiquitous in Japanese homes, has relied on its usual offbeat methods during the Covid-19 pandemic and US-China trade tensions to ride the teleworking wave and bring production back from China.

Family-run, unlisted and based in the provincial city of Sendai, the quick-iterating manufacturer of everything from rice to rice cookers has become the most high-profile firm to sign up for government incentives to bring production back home.

With newly labelled “made in Japan” face masks flying off shelves alongside its other diverse products, such as office furniture and air conditioners, Iris predicts annual revenues of ¥700 billion (RM27.7 billion), compared with ¥500 billion a year earlier.

Although pandemic-driven demand is propelling Japanese sales this year, the company sees overseas markets growing to provide most of its revenue, compared with about 30 per cent now, its president Akihiro Ohyama said in an interview.

That change is made possible by advances in factory automation and the growth of e-commerce, opening up markets such as the United States, where Iris is expanding production of “made in USA” items, including electronics and masks.

The shift also provides a hedge against US-China trade tensions. Corporate Japan is deeply dependent on Chinese supply chains, making it all the more important to ensure production is insulated from disruptions there.

Iris, for instance, may increase production in Japan beyond plastic items and LED lighting.

“Unfortunately many parts for items like washing machines and refrigerators can’t be sourced domestically,” Ohyama said during an interview in rural Miyagi prefecture, where factory space is being converted to face mask production.

Three quarters of the cost of building the mask line is covered by government subsidies — part of a ¥60 billion programme covering about 60 companies.

Iris is also applying for further subsidies as the government expands payouts under new Prime Minister Yoshihide Suga.

The company said it remains committed to China both as a production site and a market, with a new factory under construction in Tianjin.

But analysts say lower barriers to entry in the electronics market mean Iris could be vulnerable to fresh competition.

“Iris Ohyama is still not such a big brand, and if cheaper, attractive products appear, it risks being squeezed,” said Hideki Yasuda, an analyst at Ace Research Institute.

Electric dreams

Little-known outside its home country, Iris Ohyama got its break with plastic products before moving into mass market electronics in 2009.

To hire engineers from manufacturers like Panasonic and Sharp, who were shedding staff in the face of Chinese and South Korean competition, Iris shifted research and development to Osaka, in Japan’s industrial heartland, where those workers lived.

Product proposals at the company receive on-the-spot approval or rejection at Monday meetings. It’s a seat-of-the-pants approach that industry insiders say the firm’s unlisted status — and lack of investor pressure — makes possible.

Iris launches more than 1,000 new products a year, which make up more than half of total sales.

The firm’s emphasis on simple design and reasonable prices has also proved a winning formula for companies such as furniture maker Nitori Holdings and Uniqlo parent Fast Retailing.

Although the total Japan market for lines such as storage items has peaked, the company will continue to grow by expanding its product range, Ohyama said, adding that online shopping would help sales.

Japanese manufacturing has a reputation for quality but also overengineering. New products often include more and more features and foreign competition has left players competing at the top end for items like televisions.

“The number of high-end brands will decrease over time,” Ohyama said, who took up the position of president in 2018 from his father, Kentaro, the company’s leader for more than half a century.

Competitors say they lean toward more expensive materials and work in larger teams than Iris, which has attracted engineers by giving them the chance to directly design products.

“Iris fixes a product price target and rigorously builds to stick to it, whereas we tend to overrun,” said an executive at a rival electronics maker.

The firm, which employs about 13,000 people, plans to recruit a record 640 more next year.

Industry insiders point to the difficulties of attracting engineers amid competition from larger peers and Chinese companies offering higher pay.

“Lack of people is the biggest problem; the company is growing but staff numbers haven’t kept up,” Ohyama said.

Iris sees annual sales hitting by ¥1 trillion by 2022, a milestone that would elevate it into an elite group of companies that have prospered by taking aim at Japan’s thrifty consumers.

“Our brand image is improving,” Ohyama said. — Reuters




Source: Malay Mail

Sources: Japan's Mitsubishi Heavy to freeze development of SpaceJet regional jet

The logo of Mitsubishi Heavy Industries is seen at the company's Sagamihara plant in Sagamihara, Japan, July 4, 2016. — Reuters pic
The logo of Mitsubishi Heavy Industries is seen at the company's Sagamihara plant in Sagamihara, Japan, July 4, 2016. — Reuters pic

TOKYO, Oct 23 — Mitsubishi Heavy Industries will freeze development of its SpaceJet regional jet as the Covid-19 pandemic squeezes finances and erodes prospects for Japan's first passenger aircraft in half a century, two sources said.

The sources with knowledge of the decision told Reuters that the plan would be announced along with a medium-term business plan on October 30. They declined to be identified because the plan is not yet public.

Mitsubishi Heavy said in a statement it was considering various options for the SpaceJet but that it had not decided to freeze development. It will announce plans for the SpaceJet along with its group business plan on October 30, the company said.

Shares of Mitsubishi Heavy rose more than 4 per cent in early trade today.

Coronavirus travel curbs around the world have forced airlines to shrink operations to survive. The industry crisis means carriers have little money to buy planes that they may have to keep on the ground until the pandemic ends and demand revives.

The regional jet's launch customer, ANA Holdings is borrowing heavily and cutting costs in a bid to weather the crisis. While it has seen some rebound in domestic demand helped by government travel subsidies, international travel is still a fraction of what it was before the outbreak.

Japan's biggest carrier will likely post a ¥500 billion (RM19.8 billion) net loss in the year ending March 31, a source told Reuters on Wednesday.

MHI's pullback from the SpaceJet programme comes after Japan's biggest aerospace company in March halved its annual budget for its development and suspended plans for a possible variant seen as key to winning orders from US airlines.

A key supplier to commercial aircraft makers Boeing Co, and Airbus SE, MHI, with Japanese government encouragement, started the SpaceJet programme in a bid to establish itself as a global commercial plane maker. The development, however, was plagued by technical problems that forced it to delay its first delivery to ANA six times from 2013 to the end of March 2022. — Reuters




Source: Malay Mail

Thursday, October 22, 2020

HSBC survey: Sustainability is key to resilience for Malaysian businesses

The emphasis on sustainability has either remained consistent or increased for nearly two-thirds or 65 per cent of businesses in Malaysia based on the first half of 2020, the bank said. — Reuters pic
The emphasis on sustainability has either remained consistent or increased for nearly two-thirds or 65 per cent of businesses in Malaysia based on the first half of 2020, the bank said. — Reuters pic

KUALA LUMPUR, Oct 22 — Malaysian businesses say that sustainability is a key component of their future business strategy, especially when re-assessing their operations to embed firmer environmental foundation amid the Covid-19 pandemic, according to the findings of a survey by HSBC.

The emphasis on sustainability has either remained consistent or increased for nearly two-thirds or 65 per cent of businesses in Malaysia based on the first half of 2020, the bank said.

“Thirty per cent of Malaysian businesses feel that sustainability is as important as before compared to all other markets (23 per cent), and more than one out of three businesses (35 per cent) feel it is more important than before,” HSBC said in a statement today

The HSBC Navigator “Resilience: Building Back Better” poll covered 2,604 companies across 14 markets globally, including 200 firms from Malaysia. Conducted between April 28 and May 12, it measures the pulse of businesses as they adapt to current challenges, and highlights steps taken to be resilient in the future.

It also said more than three out of five (61 per cent) businesses felt regulatory measures, comprising government (42 per cent) and industry regulations (32 per cent), would be among top three sources of pressure for more sustainable business along with pressures from customers (52 per cent) in the next one to two years.

HSBC Malaysia chief executive officer Stuart Milne said there was a near-unanimous commitment among business decision-makers to build back better.

More than nine out of 10 Malaysian business (94 per cent versus 91 per cent across all markets) agreed that the need to re-assess or review their operations would enable them to rebuild their business on firmer environmental foundations, he said.

“Sustainability helps Malaysian businesses build resilience and positions them well for growth. As such, the financial services sector has a critical role to play in supporting sustainable business activities,” he said.

On the finding that the greatest pressure came from regulatory measures, the bank said it suggested that businesses would need to take necessary time and steps to understand regulation around sustainability and to take action and adapt accordingly.

HSBC said it was ramping up its support to enable our customers to develop more sustainable ways of doing business.

“We believe we have the scale and global reach to play a leading role in advising them on their journey towards net zero (carbon emissions) through our climate ambition of providing between US$750 billion (RM3.1 trillion) and US$1 trillion of finance and investment by 2030,” it added. — Bernama




Source: Malay Mail