India’s CPO import duty cut will boost palm oil demand, says Maybank Kim Eng

Maybank Kim Eng said most of the benefits will likely accrue to Indonesian origin as Malaysia’s CPO export duty exemption will expire on December 31, 2020. — Picture by Yusof Mat Isa

KUALA LUMPUR, Nov 30 — India’s cut in crude palm oil (CPO) import duty to 27.5 per cent will make CPO more attractive as the commodity is set to regain some of the market shares it lost to sunflower and soybean oils this year, says Maybank Kim Eng.

It said most of the benefits will likely accrue to Indonesian origin as Malaysia’s CPO export duty exemption will expire on December 31, 2020.

“We believe the main beneficiary will be Indonesian CPO origin. It will likely regain a bigger market share at the expense of Malaysian CPO origin once Malaysia’s CPO export duty exemption ends on December 31, 2020.

“Recall that Malaysia’s government had exempted the export duty of CPO and CPKO (crude palm kernel oil) (between July and December 2020 after Covid-19 decimated demand at the onset of the pandemic,” it said.

Citing the Ministry of Plantation Industries and Commodities, Maybank Kim Eng said Malaysia’s government currently has no plans to extend the tax exemption beyond December 31, 2020.

The research firm said a quicker stockpile build-up will hasten the seasonal CPO price correction by mid-2021.

“The unintended consequence will be a quicker build-up in Malaysia’s MPOB stockpile in 2021 which the market tracks for price discovery,” it said today.

Come Jan 1, 2021, Maybank Kim Eng expects Malaysia’s CPO export to attract more or less eight per cent export duty (or about RM270 per tonne) assuming CPO price stays at RM3,430 per tonne (as at 26 Nov).

At the same price level, Indonesia’s CPO export duty will be just US$18 per tonne or RM75 a tonne.

Furthermore, the Malaysian growers have a general reluctance to pay CPO export duty in the past (i.e. not export CPO).

The research house said it is keeping its CPO average selling price forecast of RM2,500 per tonne for 2021.

The research house has upgraded the sector “call” to positive from “neutral” as the import duty reduction was effective November 27, 2020. — Bernama

Source: Malay Mail

Bursa Malaysia edges higher after seesaw trade

On the broader market, gainers thumped losers 661 to 430 while 442 counters were unchanged, 467 untraded and 80 others suspended. ― Picture by Hari Anggara

KUALA LUMPUR, Nov 30 — Bursa Malaysia’s barometre index was marginally up after a seesaw trade as a downtrend in the banking sector and fresh trade worries clouded market sentiment.

At lunch break, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was 0.48 of-a-point higher at 1,608.07 compared with Friday’s close of 1,607.59.

The index opened 0.82 of-a-point lower at 1,606.77.

On the broader market, gainers thumped losers 661 to 430 while 442 counters were unchanged, 467 untraded and 80 others suspended.

Volume stood at 4.78 billion shares worth RM2.51 billion.

The financial sector was one of the worst performers after a slew of disappointing third-quarter earnings results.

In addition, it was also reported that the Donald Trump administration is considering blacklisting China’s top chipmaker SMIC as well as oil and gas producer CNOOC, while Australia has threatened to take China to the World Trade Organisation after it imposed a series of tariffs on Australian products.

An analyst said the regional markets were also performing mixed following the trade concerns.

At home, Public Bank lost 52 sen to RM18.08, CIMB dropped 10 sen to RM3.73 and Sime Darby Plantation declined five sen to RM5.00.

In contrast, Hong Leong Bank surged 92 sen to RM17.94 and Tenaga Nasional added 14 sen to RM10.86.

Among the actives, AT Systematization and Kanger International were unchanged at 20 sen and 18.5 sen respectively, while Sapura Energy inched up half-a-sen to 12 sen.

On the index board, the FBM Emas Index gained 28.70 points to 11,570.73, the FBMT 100 Index expanded 23.50 points to 11,344.65, the FBM Emas Shariah Index increased 86.03 points to 13,354.94, the FBM 70 rose 109.71 points to 14,850.10 and the FBM ACE added 198.90 points to 10,788.39.

Meanwhile, the Industrial Products and Services Index inched up 1.45 points to 163.93, the Plantation Index was 79.02 points better at 7,314.91 and the Financial Services Index slipped 36.30 points to 14,226.80. — Bernama

Source: Malay Mail

Petronas expected to increase prudency in spending, says research house

Petronas posted a net loss of RM3.4 billion for the third quarter (Q3) ended Sept 30, 2020, compared with a net profit of RM7.4 billion in the same quarter last year, due to lower earnings before interest, taxes, depreciation, and amortisation. — Picture by Yusof Mat Isa

KUALA LUMPUR, Nov 30 — Petroliam Nasional Bhd (Petronas) is seen increasing prudence in spending going forward amid mildly declining balance sheet, earnings, as well as increased dividend payment commitment, Kenanga Investment Bank said today.

It said this would then lead to lower activity levels and would be most impactful to local-centric contractors which derived most of its earnings in Malaysia such as Dayang Enterprise Holdings Bhd, Uzma Bhd and Velesto Energy Bhd.

“Nonetheless, we also acknowledge that fundamentals for the global oil market are still weak at the moment, and internationally exposed players are also expected to see overall weaker activities for the time being,” it said in its research note today.

Petronas posted a net loss of RM3.4 billion for the third quarter (Q3) ended Sept 30, 2020, compared with a net profit of RM7.4 billion in the same quarter last year, due to lower earnings before interest, taxes, depreciation, and amortisation.

Higher impairment loss on assets and higher tax expenses attributed to the derecognition of deferred tax assets, primarily as a result of lower oil and gas prices outlook, also affected its financial performance.

The group recorded revenue of RM41.1 billion, down 25 per cent from RM55.1 billion in the corresponding quarter last year, mainly due to lower average realised prices for major products.

Kenanga noted that Petronas’ net cash position had shrunk 17 per cent quarter-on-quarter to RM61 billion in Q3 2020.

Year-to-date, the group’s net cash position has contracted a total of 25 per cent since end-2019 financial year.

“This is slightly alarming, especially considering that earlier this month it was announced that Petronas is set to pay an additional RM10 billion special dividend to the Federal Government, on top the ordinary dividends of RM24 billion, in efforts to combat the challenges caused by the Covid-19 pandemic,” Kenanga said.

It said Petronas had already fully paid the ordinary dividends of RM24 billion, and RM2 billion of the RM10 billion special dividend.

The remainder RM8 billion is expected to be paid in the fourth quarter of 2020.

This marks the second consecutive year that Petronas was asked to pay special dividends. Last year, Petronas had paid a special dividend of RM30 billion in the 2019 financial year, raising that year’s dividends to RM54 billion, it said.

“We believe that continued commitment to higher dividends may hamper the recovery of the sector locally, especially considering the global trend of lowering dividends among other international oil majors,” it said.

Kenanga is maintaining a neutral call, although, in a recovery trajectory, the pace of recovery is expected to largely be slow and gradual as fundamentals of the sector are still weak.

“As such, we do not expect to see activity levels returning to 2019-level at least until 2023,” it said.

That said, Kenanga recommends keen investors to adopt a trading approach towards the sector (in contrast to a fundamentally driven investment strategy), favouring names with historically high standard deviations to capitalise on the current sentiment boost following positive news flow of Covid-19 vaccine development recently.

Kenanga said its trading picks included Uzma, Dayang and Malaysia Marine and Heavy Engineering Bhd, with a stance to taking profit on any sizable gains within the next two to three months. — Bernama

Source: Malay Mail

Malaysia's Producer Price Index increases marginally to 101.3 in October, data shows

Chief statistician Datuk Seri Mohd Uzir Mahidin said the slight increase was attributed to the incline in the sectoral indexes of agriculture, forestry & fishing (1.1 per cent) and manufacturing (0.3 per cent). — Picture by Hari Anggara

KUALA LUMPUR, Nov 30 — The Producer Price Index (PPI) for local production increased by a marginal 0.1 per cent to 101.3 in October 2020 from 101.2 in September 2020, the Department of Statistics Malaysia said.

In a statement, chief statistician Datuk Seri Mohd Uzir Mahidin said the slight increase was attributed to the incline in the sectoral indexes of agriculture, forestry & fishing (1.1 per cent) and manufacturing (0.3 per cent).

Meanwhile, the indexes of mining and electricity & gas supply slipped to -3.1 per cent and -0.4 per cent, respectively. The water supply index remained unchanged.

Year-on-year (y-o-y), the PPI for local production decreased 3.6 per cent in October 2020 to 101.3 from 105.1 in the same month of the preceding year, driven by the indexes of mining (-43.5 per cent), electricity & gas supply (-1.2 per cent), and manufacturing (-1.1 per cent).

In contrast, the indexes of agriculture, forestry & fishing and water supply increased 21.0 per cent and 1.0 per cent y-o-y, respectively.

The PPI for local production for the period of January to October 2020 fell 2.7 per cent compared to -2.6 per cent in the same period last year.

“Meanwhile, for the y-o-y performance of the PPI local production by stage of processing, all stages recorded a decline.

“Raw materials for further processing fell 13.2 per cent followed by Intermediate materials, supplies & components (1.6 per cent) and finished goods (0.8 per cent),” Mohd Uzir added. — Bernama

Source: Malay Mail

Mida eyes 23 high-profile projects with potential investment value of RM75.4b for 2021

Deputy International Trade and Industry Minister Datuk Lim Ban Hong said as of Oct 31, 2020, Mida had evaluated 786 investment projects in the two sectors before bringing them to the National Committee on Investments (NCI) for approval.— Picture by Yusof Mat Isa

KUALA LUMPUR, Nov 30 — The Malaysian Investment Development Authority (Mida) has identified 23 high-profile foreign investment projects in the manufacturing and services sectors, with a combined potential investment value of RM75.4 billion, that are targeted to be brought into Malaysia for 2021.

Deputy International Trade and Industry Minister (Miti) Datuk Lim Ban Hong said as of October 31, 2020, Mida had evaluated 786 investment projects in the two sectors before bringing them to the National Committee on Investments (NCI) for approval.

“The International Trade and Industry Ministry, through Mida, will continue its endeavour to bring in a high level of investments as in previous years,” he told the Dewan Rakyat today.

He was replying to questions from Datuk Ahmad Nazlan Idris (BN-Jerantut) on the projection for foreign direct investment (FDI) in 2021 and efforts to increase foreign investments in the country.

Lim said such a forecast would be guided by several data, including the RM109.8 billion investments approved in the manufacturing, services and primary sectors in the first nine months of this year.

He said the manufacturing sector was the biggest contributor to the approved investment value during that period at RM65.3 billion, followed by the services sector (RM42.8 billion) and primary sector (RM1.7 billion).

Of that, FDI contributed 38.8 per cent, or RM42.6 billion, while the rest comprised domestic investment.

He said the approved investments comprised 2,935 projects that were expected to create 64,701 job opportunities. — Bernama

Source: Malay Mail

CIMB drags down Bursa Malaysia’s banking index

CIMB Group Holdings Bhd’s profit shrank to RM194.44 million in the quarter ended September 30, 2020, from RM1.01 billion in the same quarter last year due to the economic impacts caused by the Covid-19 pandemic. — Picture by Firdaus Latif

KUALA LUMPUR, Nov 30 — CIMB Group Holdings Bhd’s shares slipped about 2.9 per cent or 11 sen to RM3.72 after reporting on Friday a drop of more than 80 per cent in its third quarter (Q3) net profit.

At 10.45am, more than 18.73 million shares had changed hands.

Its profit shrank to RM194.44 million in the quarter ended September 30, 2020, from RM1.01 billion in the same quarter last year due to the economic impacts caused by the Covid-19 pandemic.

Revenue also contracted to RM4.46 billion from RM4.64 billion previously.

AllianceDBS Research in a note today said CIMB remains a banking group in transition as it seeks to establish stronger footholds in its key competencies while resolving asset quality and cost concerns, which have historically been a drag on return on equity (ROE).

“CIMB’s financial year 2020’s (FY20) ROE will be the lowest since 1999, hit by lower margins and the highest charge-offs in 10 years.

“Though we expect a strong recovery in FY21, this is unlikely to meaningfully re-rate the stock without a strong uptick in loans growth or non-interest income,” it said.

In addition, AllianceDBS Research said although earnings are bottoming out this year and are expected to recover, this is not material enough to re-rate the stock.

On the other hand, it believes swifter-than-expected economic recovery could prompt potential writebacks, which would re-rate the stock given the hefty overlays being made.

AllianceDBS Research said CIMB has revised its FY20 ROE guidance to 2.0 — 3.0 per cent from 2.0 — 4.0 per cent previously, mainly due to higher expected net credit costs of 140 — 150 basis points (bps) and more tempered loans growth

“We revised our FY20/FY21/FY22 earnings forecasts by -21 per cent, +3.0 per cent, and +4.0 per cent respectively after imputing higher credit costs (145bps from 130bps previously) and provisions for the group’s bond portfolio while assuming lower overheads (-7.0 per cent, -4.0 per cent, and -4.0 per cent) given the lower FY20 base.

“After imputing our revised earnings and raising our ROE assumption to 7.6 per cent from 7.5 per cent, our target price is increased to RM3.35,” it noted.

AllianceDBS Research also maintains a hold call on CIMB. — Bernama

Source: Malay Mail

Bursa Malaysia continues upward momentum at mid-morning

On the broader market, gainers thumped losers 638 to 376 while 442 counters were unchanged, 715 untraded and 80 others suspended. — Picture by Azneal Ishak

KUALA LUMPUR, Nov 30 — Bursa Malaysia continued its upward momentum at mid-morning with gains almost across the board except for the financial sector.

At 11am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was 5.0 points higher at 1,612.59 compared with Friday’s close of 1,607.59.

The index opened 0.82 of-a-point lower at 1,606.77.

On the broader market, gainers thumped losers 638 to 376 while 442 counters were unchanged, 715 untraded and 80 others suspended.

Volume stood at 3.49 billion shares worth RM1.72 billion.

Among the heavyweights, Hong Leong Bank jumped 82 sen to RM17.84, IOI rose 13 sen to RM4.53 and Petronas Gas gained 40 sen to RM17.12.

In contrast, CIMB lost 12 sen to RM3.71, Petronas Dagangan declined 56 sen to RM21.44, Public Bank dropped 14 sen to RM18.46 and Maybank was one sen lower at RM8.28.

Among actives, AT Systematization and Kanger International were unchanged at 20 sen and 18.5 sen respectively, while Sapura Energy added half-a-sen to 12 sen.

On the index board, the FBM Emas Index gained 53.16 points to 11,595.19, the FBMT 100 Index expanded 49.03 points to 11,370.18, the FBM Emas Shariah Index increased 100.12 points to 13,369.03, the FBM 70 rose 118.12 points to 14,858.51 and the FBM ACE added 188.37 points to 10,777.86.

Meanwhile, the Industrial Products and Services Index rose 1.32 points to 163.80, the Plantation Index was 126.67 points stronger at 7,362.56 and the Financial Services Index slipped 2.8 points to 14,260.30. — Bernama

Source: Malay Mail

Affin Bank expects more visible impact from Covid-19 in Q4, says Kenanga Research

The research house said based on the bank’s presentation slides to analysts recently, the bank appeared to have toned down its Affinity in Motion (AIM22) return of equity target to seven per cent in FY22 from eight per cent earlier. — Reuters pic

KUALA LUMPUR, Nov 30 — Affin Bank Bhd expects the impact from the Covid-19 pandemic to become more visible in the fourth quarter of the financial year ending December 31, 2020 (FY20), according to Kenanga Research .

The research house said based on the bank’s presentation slides to analysts recently, the bank appeared to have toned down its Affinity in Motion (AIM22) return of equity target to seven per cent in FY22 from eight per cent earlier.

“Other AIM22 targets are gross impaired loan ratio of less than 2.5 per cent and cost-to-income ratio of less than 55 per cent,” it said in a note today.

Last Friday, Affin Bank announced that its net profit for the third quarter (Q3) of FY20 fell to RM48.72 million from RM72.40 million in the same quarter last year, while revenue rose to RM694.20 million from RM474.26 million previously.

Quarter-on-quarter, the bank saw its Q3 FY20 headline net profit slip 28 per cent on higher tax rate, while the absence of the RM80 million Day One Modification losses in the immediate preceding quarter was largely utilised to book in pre-emptive loan provisions of RM70 million in Q3.

With that, Kenanga Research said the bank’s loan loss coverage (LLC) now stands at 61 per cent, closing the gap to the 70 per cent target by end-2021 that management shared earlier.

“Thus we believe credit cost trend ahead will be largely dependent on asset quality outlook, now that ‘catch-up’ provisions to build coverage are close to being out of the way,” it said.

Despite the company’s profit after tax and minority interests for FY20-estimate being tweaked down by four per cent, Kenanga Research continued to keep its “market outperform” rating on Affin Bank with a higher target price of RM1.50 from RM1.45 previously.

“In our view, Affin Bank’s capital strength provides ample headroom for the group to absorb the required loan impairment allowances ahead with respect to the impact from the pandemic, as well as to build up LLC.

“This is balanced by our concern regarding asset quality, where its high corporate exposure may see volatile earnings and keep bottom-line at depressed levels ahead,” it said. — Bernama

Source: Malay Mail

Bank Islam: Foreign selling narrows to RM86.6m

On a year-to-date basis, Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said foreign investors had taken out RM23.46 billion net of local equities in 2020. — Reuters pic

KUALA LUMPUR, Nov 30 — Foreign selling narrowed to RM86.6 million on Bursa Malaysia from Monday to Friday last week compared with RM268.7 million sold in the whole of the preceding week.

Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the local exchange began the week on an auspicious note as international investors mopped up RM169.5 million net of local equities on Monday amid speculation that a Covid-19 vaccine may be available soon.

“In fact, the head of the United States government tasked with getting the vaccines noted that vaccinations against Covid-19 in the US will ‘hopefully’ start in less than three weeks,” he told Bernama today.

According to Adam, tables were turned on Tuesday as offshore investors sold RM106.0 million net of local equities as anxiety built up ahead of the parliamentary sitting to approve the national Budget 2021.

Wednesday then saw foreign funds entering Bursa Malaysia to the tune of RM25.1 million net as sentiment was boosted by US President Donald Trump’s decision to cooperate with a transition of power to president-elect Joe Biden, he said.

Adam said foreign investors later decided to withdraw RM17.2 million net of local equities on Thursday as China’s economic recovery stabilised in November, underpinned by solid global demand for exports ahead of the year-end holiday period, and the stock market’s climb to its highest since 2015.

“The momentum of foreign net selling accelerated to RM158.1 million of Friday amid profit-taking activity following the local bourse’s 0.9 per cent rally to close at 1,612.1 points the previous day, the highest close since December 2019,” he added.

On a year-to-date basis, Adam said foreign investors had taken out RM23.46 billion net of local equities in 2020.

In terms of participation of foreign investors, he said the average daily traded value from Monday to Friday remained robust at RM1.35 billion.

Among its Asean peers, he said Malaysia recorded the second largest year-to-date foreign outflow after Thailand. — Bernama

Source: Malay Mail

The Green Equilibrium – Is Budget 2021 greenwashing?

GOING paperless using existing equipment may be viewed as a sustainable move. But getting specific gadgets to go paperless for many individuals may need an overall analysis as gadgets have other serious environmental risks that may undo positive paperless efforts. With that note, Budget 2021 is still far away from improving the water, energy and environment situation in Malaysia.

Rampant water pollution

Frequent water pollution incidents in raw water intake locations have once again proven the failure of federal and state agencies to tackle pollution issues. Many suggestions were put forward for many years and continue to fall on deaf ears. It is no surprise that such incidents are becoming rampant. Giving rewards for those who report pollution incidents is just a very tiny effort. What happened to the real solution given? Does the government fear the polluters?

Langat 2 Water Treatment Plant (WTP) Delayed again!

Pengurusan Aset Air Bhd (PAAB) is a wholly owned company by Ministry of Finance Inc. PAAB handled the tender process for Langat 2 WTP. It was scheduled to be completed by the end of 2019. The former water minister announced that this project will only be completed by late 2022 and the current water minister delays it further to 2023.

Why there is such a delay? What happened to the contracts? Is PAAB incompetent or the contractors they appoint via tender process is incompetent?

Water companies have long complained that PAAB sidelines water companies when it comes to selection committee for tender process. Legally, water companies must sit there as they are the vehicle state government uses to pay lease rental and own these assets. Why there is delay and what actions are taken to speed up?

The delay in Langat 2 WTP completion is eroding investors’ confidence in Malaysia as it also plays a role in reducing impact of water disruption due to pollution. Can the Auditor General and the Public Accounts Committee investigate this matter?

Save 2.0 Programme

A RM200 rebate for locally manufactured air conditioners and refrigerators was introduced in the recent budget. Save 1.0 was already a failed programme and there was no proof that it reduced the price of energy-efficient products for consumers or reduced the carbon foot print as the report by the government agency was based on assumptions only. In a Energy Efficiency (EE) study conducted by Awer few years ago, Save was reported as a failed and meaningless programme.

We have proposed to the government to target 80 -90% of electrical products to be included in the five-star rating labelling to assist consumers to buy more efficient products by 2020. This move will have more EE products in the market and is estimated to save RM7 billion worth of electricity tariff from domestic consumers alone when the implementation hits full impact. Thus, we feel the RM30 million should be given to needy groups.

We urge the government to drop this inane programme. In fact, during a meeting with the ministry officials few years ago, it was agreed such a meaningless programme would not be carried out. We wonder who lobbied this to be approved again.

Redundant agencies a waste of taxpayers’ money

Malaysia is hard hit due to the global Covid-19 pandemic. We need to ensure every ringgit is spent responsibly. Administration cost will increase when we have redundant agencies. The 11th Malaysia Plan has already paved the way to close redundancies. We raised this issue with the previous administration and it fell on deaf ears yet again.

For Budget 2021, we did propose it again to the current administration. Why should we waste our resources in such an abusive way? Awer urges the Federal Government to shut down the Sustainable Energy Development Authority, the Water Supply Department, the Sewerage Services Department, and Yayasan Hijau. All these redundant agencies’ job functions can be implemented by other existing agencies and licensees. This is called optimisation and sound resource allocation.

Finally, greenwashing is an easy task carried out by many large corporation and governments to portray their “environmentally friendly” efforts. Implementing real sustainable changes takes true and holistic understanding of the environment and its respective parameters.

Will the government lead by example?

This article was contributed by Awer president Piarapakaran S, president of the Association of Water and Energy Research Malaysia (Awer), a non-government organisation involved in research and development in the fields of water, energy and environment.

A RM200 rebate for locally manufactured air conditioners and refrigerators was introduced in the recent budget. – REUTERSPIX

Source: The Sun Daily

Allegations of white collar crime must be investigated

THE FIRST half of 2020 saw tumbling profits at many of Malaysia’s public companies as the Covid-19 pandemic wreaked havoc on the global economy. As financial accounts increasingly turn red, more companies will likely be forced to make moves to restructure debt repayments, recaptalise or cut operating costs as they struggle to retain cash.

When they do, these companies will need to place their financial accounts, transactions and operations under the magnifying glass and have them scrutinised like never before. For some, this heightened attention may uncover cases of white-collar crime – accounting fraud, bribery, asset misappropriation or procurement fraud – and breaches of accounting regulations that had until then been hidden from view.

The game is afoot

How a company’s board of directors first responds to allegations of corporate fraud – and importantly how it is perceived to respond – is vitally important and in some cases can even help prevent escalation into a major public crisis, with significant implications for shareholder value.

The launch of a thorough independent investigation to uncover the facts is often be a key component of a fraud response, bringing to the fore the financial detectives and forensic technologists that are called upon to follow the clues in these typically complex cases.

The benefits of conducting a thorough independent investigation into allegations of serious fraud are manifold.

First, it will help to ascertain the extent of the wrongdoing and quantify the financial losses incurred. Second, it will identify the employees responsible and importantly whether management was involved. Third it will help to pinpoint governance, oversight and procedural failings that enabled the fraud to take place in the first place and shape remedial measures to prevent similar fraud happening again.

And finally, and perhaps most importantly, it will demonstrate that the company’s leadership is taking the issue seriously, has zero-tolerance for unethical conduct and is acting in good faith to protect the interests of shareholders and other stakeholders.

The financial detectives

The appointment of an outside counsel to lead an investigation as part of an independent ‘Investigative Committee’ is good practice. Using the analogy of a Sherlock Holmes story, the appointed law firm can be thought of as Scotland Yard, leading and coordinating the investigation and calling in support from independent experts with specialist skills, like Holmes and Watson, to follow the clues in complex cases.

In the case of corporate fraud, our Holmes and Watson are expert forensic accountants and forensic technologists. The forensic accountant will analyse a company’s financial records and transactions in search of evidence and conduct interviews with suspected employees to determine the extent of the fraud and the losses incurred. While forensic technologists will secure and analyse the electronic data from laptops, mobile phones and servers to help understand how the fraud was conducted and build the case against those involved.

Managing the disclosure

As an investigation progresses and the smoke clears, it may be necessary to begin communicating with various stakeholders – the regulatory authorities, shareholders, creditors, clients and employees, to name a few.

The regulatory authorities could contact the company at any point once allegations emerge and a company should be prepared to respond to queries promptly and cooperate fully with any investigation they are undertaking.

Shareholders and creditors will be concerned about the quantum of the fraud, its impact on financial performance and cash flow and how the company will remedy deficiencies in corporate governance, compliance policies and procedures that the misconduct has exposed. If the losses due to the fraud are potentially material a company should be prepared to make timely disclosures to the market as details are confirmed.

Once a fraud allegation has been disclosed, key customers and clients should be contacted to reassure them that the company and its leadership are committed to ethical business practices and that quality and continuity of service will not be impacted. Depending on the scale of the misconduct, employees may also need to be engaged to rebuild morale and address concerns over job security, the conduct of co-workers and even confidence in management.

Throughout, leadership should reaffirm its zero-tolerance approach to unethical behaviour and commitment to maintaining the highest standards regarding integrity and ethical business practices. If appropriate, highlighting the initiation of disciplinary or legal action against the perpetrators provides an important proof point of leadership’s tough stance on unethical behaviour among employees.

While managing the traditional media clearly remains important, social media is becoming increasingly significant and can quickly turn a corporate fraud allegation into a full-blown public crisis. Monitoring the online conversation and, if necessary, acting to correct misinformation or counter negative commentary with positive content can prove a vital component of the crisis response.

As more of Malaysia’s public companies take steps to stem the flow of red ink caused by the ongoing Covid-19 pandemic, some are likely to uncover previously hidden incidents of financial misconduct. When this occurs, being seen to address the issue head-on through an independent investigation will send a strong message about a company’s zero-tolerance of unethical behaviour and can even provide a platform for the board to reaffirm its commitment to good corporate governance and the protection of shareholder value.

This article was contributed by FTI Consulting managing directors Malcolm Robertson and Ben Ee. The views expressed herein are those of the authors and not necessarily the views of FTI Consulting, Inc, its management, its subsidiaries, its affiliates, or its other professionals.

Source: The Sun Daily

S&P Global in advanced talks to buy IHS Markit for about $44 bln - WSJ

S&P Global Inc is in advanced talks to buy London-based IHS Markit Ltd for about $44 billion in a deal that would combine two major data providers, the Wall Street Journal reported on Sunday, citing people familiar with the matter.

A person familiar with the matter confirmed to Reuters that S&P Global was nearing a deal to buy IHS.

The deal, which at that price would be the largest of the year, could be announced as soon as Monday, according to the WSJ report.

S&P Global and IHS did not immediately respond to Reuters' requests for comment.

S&P Global provides debt ratings of sovereigns, companies, as well as data to capital and commodity markets around the world.

IHS' diverse set of businesses range from selling data on automotive and technology industries to publishing Jane's Defence Weekly. The company was formed after U.S.-based IHS Inc bought Britain's Markit Ltd in 2016.

IHS has a market value of around $36.88 billion based on the stock's last close on Friday, Reuters calculations showed. - Reuters

Source: The Sun Daily

China’s factory activity expands at fastest pace in over 3 yrs

BEIJING: China's factory activity expanded at the fastest pace in more than three years in November, keeping it on track to be the first major economy to fully recover from the coronavirus crisis.

The official manufacturing Purchasing Manager's Index (PMI) rose to 52.1 in November from 51.4 in October, data from the National Bureau of Statistics showed on Monday. It was the highest PMI reading since September 2017 and remained above the 50-point mark that separates growth from contraction on a monthly basis.

Analysts had expected it to climb slightly to 51.5.

China's vast industrial sector is steadily returning to the levels of activity seen before the pandemic and tough containment measures paralysed huge swathes of the economy early this year.

But surging infections and fresh lockdowns in many of its key trading partners could dent demand for Chinese exports, which have been surprisingly resilient so far.

The official PMI, which largely focuses on big- and state-owned firms, showed the sub-index for new export orders stood at 51.5 in November, improving further from 51.0 a month earlier.

Economic indicators ranging from trade to producer prices all suggest a further pick up in the industrial sector.

A sub-index for the activity of small firms stood at 50.1 in November, up from October's 49.4.

A strong November e-commerce shopping festival in China unleashed strong consumer demand, bolstering confidence for small and medium firms.

Analysts at Nomura expect economic growth will quicken to 5.7% in the fourth quarter year-on-year, from 4.9% in the third quarter.

It is expected to expand around 2% for the full year - the weakest in over three decades but still much stronger than other major economies that are still struggling to bring their coronavirus outbreaks under control.

In particular, China has seen a robust rebound in vehicle sales, fuelled by surging demand for trucks and electric vehicles.

In the services sector, activity expanded for the ninth straight month and at the fastest pace since June 2012, as consumer confidence further improves amid few COVID infections. Railway and air transportation, telecommunication and satellite transmission service and the financial industry are among the best performing sectors in November.

A sub-index for construction activity stood at 60.5 in November, improving from 59.8 in October. - Reuters

Source: The Sun Daily

Ringgit opens slightly higher on continued US dollar weakness

At the opening bell, the ringgit was traded mixed against other major currencies. — AFP pic

KUALA LUMPUR, Nov 30 — The ringgit opened slightly firmer against the US dollar today, benefiting from the continued greenback weakness and potential extension of the Organisation of the Petroleum Exporting Countries’ (Opec) output cut.

At 9.01am, the local note was traded at 4.0630/0680 against the greenback from last Friday’s close of 4.0670/0710.

In a note today, Kenanga Research said the local unit’s uptrend might sustain against a backdrop of continued dollar weakness and higher crude oil price, should Opec decides to extend the oil production cut at its meeting this week.

Over the past week, it said the ringgit surged further to its strongest level since Jan 24, 2020 as Parliament passed Budget 2021 with a voice vote at the policy stage, reducing policy uncertainty and political risks.

“The ringgit was also lifted by firmer oil price amid favourable Covid-19 vaccine developments,” it said.

On the technical front, Kenanga Research said according to the exponential moving average (EMA) technical indicator, the ringgit is expected to weaken slightly by 0.25 per cent to 4.079 as the US dollar attempts to reverse the pair trend.

“All in all, our technical analysis indicates a short-term bearish bias for the ringgit trend this week, probably due to potential profit-taking activities,” it said.

It said the bearish pattern could persist towards the 4.098 resistance level if the 4.083 resistance level is breached.

“Inversely, a rally towards the 4.061 level will invalidate the ringgit bearish pattern,” it said.

At the opening bell, the ringgit was traded mixed against other major currencies.

It was lower against the yen at 3.9112/9164 from 3.9083/9133 at Friday’s close and softer against the euro at 4.8634/8710 from 4.8479/8543 previously.

Vis-a-vis the pound, it rose to 5.4172/4243 from 5.4319/4389 and unchanged against the Singapore dollar at 3.0380/0420. — Bernama

Source: Malay Mail

China’s factory activity expands at fastest pace in over three years

China’s vast industrial sector is steadily returning to the levels of activity seen before the pandemic and tough containment measures paralysed huge swathes of the economy early this year. ― Reuters pic

BEIJING, Nov 30 — China’s factory activity expanded at the fastest pace in more than three years in November, keeping it on track to be the first major economy to fully recover from the coronavirus crisis.

The official manufacturing Purchasing Manager’s Index (PMI) rose to 52.1 in November from 51.4 in October, data from the National Bureau of Statistics showed today. It was the highest PMI reading since September 2017 and remained above the 50-point mark that separates growth from contraction on a monthly basis.

Analysts had expected it to climb slightly to 51.5.

China’s vast industrial sector is steadily returning to the levels of activity seen before the pandemic and tough containment measures paralysed huge swathes of the economy early this year.

But surging infections and fresh lockdowns in many of its key trading partners could dent demand for Chinese exports, which have been surprisingly resilient so far.

The official PMI, which largely focuses on big — and state-owned firms, showed the sub-index for new export orders stood at 51.5 in November, improving further from 51.0 a month earlier.

Economic indicators ranging from trade to producer prices all suggest a further pick up in the industrial sector.

A sub-index for the activity of small firms stood at 50.1 in November, up from October’s 49.4.

A strong November e-commerce shopping festival in China unleashed strong consumer demand, bolstering confidence for small and medium firms.

Analysts at Nomura expect economic growth will quicken to 5.7 per cent in the fourth quarter year-on-year, from 4.9 per cent in the third quarter.

It is expected to expand around 2 per cent for the full year — the weakest in over three decades but still much stronger than other major economies that are still struggling to bring their coronavirus outbreaks under control.

In particular, China has seen a robust rebound in vehicle sales, fuelled by surging demand for trucks and electric vehicles.

In the services sector, activity expanded for the ninth straight month and at the fastest pace since June 2012, as consumer confidence further improves amid few Covid infections. Railway and air transportation, telecommunication and satellite transmission service and the financial industry are among the best performing sectors in November.

A sub-index for construction activity stood at 60.5 in November, improving from 59.8 in October. — Reuters

Source: Malay Mail

Bursa Malaysia opens easier but rebounds thereafter

At 9.09am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was 0.30 of-a-point higher at 1,607.89 compared with Friday’s close of 1,607.59. — Bernama pic

KUALA LUMPUR, Nov 30 — Bursa Malaysia opened easier but rebounded thereafter on the back of a positive reaction to Covid-19 vaccine developments.

At 9.09am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) was 0.30 of-a-point higher at 1,607.89 compared with Friday’s close of 1,607.59.

The index opened 0.82 of-a-points lower at 1,606.77.

Across the broader market, gainers thumped losers 415 to 198 while 343 counters were unchanged, 1,215 untraded and 80 others suspended.

Volume stood at 661.20 million shares worth RM303.28 million.

Malacca Securities said with the Covid-19 vaccine development and distribution edging closer, the vaccine-related stocks may continue to garner increase trading interest.

“We reckon that the plantation sector may march higher, premised on firmer crude palm oil prices as demand remain relatively strong,” it said, adding that the lower liners may also continue to edge higher, largely supported by the liquidity-driven momentum as investors continue their quests for higher yields.

Overall, Malacca Securities said the market is set to maintain a positive tone on the local bourse as investors continue to pin their expectations for an economic recovery following the recent batch of corporate earnings that appeared to have bottomed-out.

Globally, US stocks registered gains as the Dow Jones edged higher on Friday on decreasing political uncertainty and market enthusiasm about the coming vaccines amid low trading volume due to early market close on Black Friday.

At home, Hong Leong Bank, Petronas Gas and Tenaga Nasional rose 46 sen, 24 sen and eight sen to RM17.48, RM16.96 and RM10.80 respectively.

In contrast, CIMB, Petronas Dagangan and Hartalega down by 13 sen, 68 sen and 10 sen to RM3.70, RM21.32 and RM14.38, respectively.

Among actives, Vsolar and Bintai Kinden added half-a-sen each to five sen and 80 sen, while Bioalpha dropped one sen to 30.5 sen.

On the index board, the FBM Emas Index was 13.11 points up at 11,555.14, the FBMT 100 Index expanded 10.27 points to 11,331.42, the FBM Emas Shariah Index rose 37.44 points to 13,306.35, and the FBM 70 improved 45.35 points to 14,785.05.

Meanwhile, the FBM ACE surged 114.81 points to 10,704.30, the Industrial Products and Services Index perked up 0.42 of-a-point to 162.90, the Plantation Index was 104.22 points stronger at 7,340.09, and the Financial Services Index slipped 56.91 points to 14,206.19. — Bernama

Source: Malay Mail

World stocks boast record-breaking month, led by Europe

Japan’s Nikkei firmed 0.7 per cent, bringing its gains for the month to 16.7 per cent for the largest rise since 1990. — Reuters pic

SYDNEY, Nov 30 — World shares were set to seal a record-busting month today as the prospect of a vaccine-driven global economic recovery next year and yet more free money from central banks eclipsed concerns about the pandemic in the near-term.

The rush to risk has also benefited oil and industrial commodities while undermining the safe-haven dollar and gold.

“November looks set to be an awesome month for equity investors with Europe leading the charge at a country/regional level,” said NAB analyst Rodrigo Catril.

Many European bourses are boasting their best month ever with France up 21 per cent and Italy almost 26 per cent. The MSCI measure of world stocks is up 13 per cent for November so far, while the S&P 500 has climbed 11 per cent to all-time peaks.

Early today, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent, to be up more than 11 per cent for the month in its best performance since late 2011.

Japan’s Nikkei firmed 0.7 per cent, bringing its gains for the month to 16.7 per cent for the largest rise since 1990.

E-Mini futures for the S&P 500 edged up another 0.1 per cent in early trade, and NASDAQ futures 0.4 per cent.

“Markets are overbought and at risk of a short term pause,” said Shane Oliver, head of investment strategy at AMP Capital.

“However, we are now in a seasonally strong time of year and investors are yet to fully discount the potential for a very strong recovery next year in growth and profits as stimulus combines with vaccines.”

Cyclical recovery shares including resources, industrials and financials were likely to be relative outperformers, he added.

The surge in stocks has put some competitive pressure on safe-haven bonds but much of that has been cushioned by expectations of more asset buying by central banks.

Sweden’s Riksbank surprised last week by expanding its bond purchase programme and the European Central Bank is likely to follow in December.

Dollar in decline

Federal Reserve Chair Jerome Powell testifies to Congress tomorrow amid speculation of further policy action at its next meeting in mid-December.

As a result US 10-year yields are ending the month almost exactly where they started at 0.84 per cent, a solid performance given the exuberance in equities.

The US dollar has not been as lucky.

“The idea that a potential Treasury Secretary (Janet) Yellen and Fed chair Powell could work more closely to shape and coordinate super easy monetary policy and massive fiscal stimulus that could drive a rapid post pandemic recovery saw the dollar under pressure,” said Robert Rennie, head of financial market strategy at Westpac.

Against a basket of currencies, the dollar index was pinned at 91.771 having shed 2.4 per cent for the month to suffer its lowest close in two years on Friday.

The euro has caught a tailwind from the relative outperformance of European stocks and climbed 2.7 per cent for the month so far to reach US$1.1964 (RM4.87). A break of the September peak at US$1.2011 would open the way to a 2018 top at US$1.2555.

The dollar has even declined against the Japanese yen, a safe-haven of its own, losing 0.5 per cent in November to reach 104.03 yen, though it remains well above key support at 103.16.

Sterling stood at US$1.3325, having climbed steadily this month to its highest since September, as investors wagered a Brexit deal would be brokered even as the deadline for talks loomed ever larger.

One major casualty of the rush to risk has been gold, which was near a five-month trough at US$1,789 an ounce having shed 4.7 per cent so far in November.

Oil, in contrast, has benefited from the prospect of a demand revival should the vaccines allow travel and transport to resume next year.

Some profit-taking set in early today and pulled Brent crude futures back 53 cents to US$47.65, while US crude eased 30 cents to US$45,23 a barrel. — Reuters

Source: Malay Mail

Dollar plumbs two-year low as Fed comes in to focus

The dollar index is down some 2.4 per cent for November as promising trial results for three major vaccine candidates excited investors about an eventual end to the coronavirus pandemic. — Reuters pic

SYDNEY, Nov 30 — The dollar fell to a more than two-year low today and is set to log its largest monthly fall since July, as a combination of vaccine optimism and bets on more monetary easing in the United States drives investors out of the world’s reserve currency.

Against a basket of currencies, the greenback slipped 0.1 per cent to 91.707, its lowest since April 2018.

The risk-sensitive New Zealand dollar hit a two-and-a-half year high and is headed for its best monthly percentage gain in seven years.

“The themes remain familiar: broad dollar weakness amid improving risk appetite,” ANZ Bank analysts said in a note.

“This sentiment is likely to continue into December and the (US Federal Reserve) meeting, at which some further action is likely, given the near-term virus risks in the United States.”

The euro and Australian dollar each rose slightly to three-month peaks.

The Aussie is up more than 5 per cent for the month, the kiwi 6.4 per cent and the euro 2.7 per cent.

Sterling stood at US$1.3325 (RM5.42), having climbed steadily this month to its highest since September, as investors wagered a Brexit deal would be brokered even as the deadline for talks loomed ever larger.

The dollar index is down some 2.4 per cent for November as promising trial results for three major vaccine candidates excited investors about an eventual end to the coronavirus pandemic.

It is nearly 11 per cent below a March peak of 102.990.

Nervousness about a wave of new infections across Europe and the United States, and fresh lockdowns, have provided some support to safe-haven currencies and a slight brake on the dropping dollar.

However, as the drawn-out US election has distracted lawmakers from passing any sort of fiscal spending package, investors have begun to expect that the Fed will step in, probably with more bond buying, when it next meets in December.

Testimony from Fed chair Jerome Powell before Congress tomorrow and Wednesday, as well as US labour market data this week will be closely watched for clues as to the central bank’s thinking and the broad shape of the economy recovery.

The Japanese yen was a fraction firmer at 104.07 per dollar today and has gained a little over half a per cent through November as the death toll from the pandemic climbed towards 1.5 million people.

“The dollar is gently drifting to the lows of the year as investors re-allocate portfolios to recovery trades in the rest of the world,” ING strategists Chris Turner and Francesco Pesole said in a note to clients.

“While more lockdown restrictions may stand to curb US equity markets, the prospect of the Fed being prepared to add more liquidity should limit any dollar upside. And given that the dollar index has fallen in seven of the last ten Decembers, we do favour gentle dollar downside into the end of the year.”

November also marks a sixth consecutive monthly gain for the Chinese yuan, which has soared some 9 per cent from a low in May.

That equals a similar run of monthly gains in 2013, but it is far larger in magnitude as China leads the world out of the coronavirus pandemic and capital inflows push the currency to new heights.

It last sat at 6.5743 per dollar in offshore trade, more or less steady as investors await the November purchasing managers’ index due at 0100 GMT.

“These month-on-month reads are all expected to show expansion across the Chinese economy,” said Michael McCarthy, chief strategist at stockbroker CMC Markets in Sydney. — Reuters

Source: Malay Mail

Sudan inflation soars, raising spectre of hyperinflation

The skyrocketing prices have led many consumers to spend their salaries quickly, particularly on durable items that hold their value. — Reuters pic

CAIRO, Nov 30 — Inflation in Sudan has risen to one of the highest levels in the world, and the country risks slipping into hyperinflation unless it gets its budget deficit and money supply under control, economists say.

The runaway prices have worsened an economic crisis for millions of ordinary Sudanese and imperilled a political transition under a military-civilian power sharing deal.

The government has run up enormous budget deficits by subsidising the cost of fuel, then financed the deficits by printing money.

This has debased the currency, weakening it against other currencies and driving inflation up to annual 230 per cent in October, according to the state statistics bureau.

The skyrocketing prices have led many consumers to spend their salaries quickly, particularly on durable items that hold their value.

Idrees Abdelmoniem, who works in marketing at an engineering company in Khartoum, said he had snapped up car spare parts and furniture, but was not as quick with food and drink, whose prices were not increasing as fast.

“If I have something I want to buy outside of the monthly house supplies, I buy it as soon as I get money, and I won’t even try to haggle because tomorrow it could be double the price,” he said.

Central bank figures show the scale of money printing by the authorities with the M2 money supply measure increasing by over 50 per cent in the year to end-September. In September alone M2 rose by 7.13 per cent.

Steve Hanke, a hyperinflation specialist at Johns Hopkins University, calculated that on a monthly basis, the inflation rate has accelerated to about 24 per cent a month, dangerously high, but still below hyperinflation, generally defined as 50 per cent a month.

He placed Sudan among the five countries with the highest inflation.

“It’s pretty scary,” he said, adding that it was hard to predict what direction inflation would go from here.

Subsidies

A US decision to remove Sudan from its list of state sponsors of terrorism has provided little immediate relief from the economic crisis and the country has turned to the International Monetary Fund for help.

Sudan is counting on a reform programme drawn up with the lender to help get control of the deficit, exacerbated by decades of US economic sanctions and by economic mismanagement under President Omar al-Bashir, who was ousted in a popular uprising in April of last year.

Gross domestic product (GDP) contracted by more than 2 per cent in both 2018 and 2019 and is expected to shrink another 8.5 per cent in 2020 after being walloped by the coronavirus pandemic, Sudan told the IMF in September.

The one-year staff-monitored programme signed with the IMF commits the transitional government to reforming energy subsidies and reducing government borrowing from the central bank, among other reforms.

The programme is designed to provide a track record that would qualify Sudan for debt relief from its official creditors.

“The issue of hyperinflation is real, and it requires serious attention,” said Ibrahim Elbadawi, who stepped down as Sudan’s finance minister in July.

“The starting point should be the subsidies, because that will have unquestionable implications for the finances of the government.”

Fuel subsidies, which account for 71 per cent of all subsidies, were equivalent to 10.6 per cent of GDP in 2019, according to the IMF.

The government this year began allowing private companies to import petrol and diesel at near market prices and has gradually reduced the number of stations where subsidised fuel is sold.

Last month it doubled the price of locally produced petrol to 56 Sudanese pounds a litre, still among the lowest levels in the world. It says it stopped subsidising petrol and diesel altogether as of September.

The reforms should reduce fuel subsidies to 2.2 per cent this year, the IMF said, but imported fuel will further stretch people’s resources as a collapsing currency pushes up its local price.

This week one US dollar bought 255 Sudanese pounds on the black market, up from about 85 pounds a year ago. At the official rate a dollar fetches 55 pounds.

“Because of the gas situation, I’ve literally stopped going further than a 9 kilometre radius,” said Huda Khalid, who considers herself relatively well paid as a primary school teaching assistant at a private school. A 50 per cent salary raise has done little to help.

“Electricity, gas money, internet, and groceries for a week and my salary is basically gone. For the rest, my dad sends money from Oman.” — Reuters

Source: Malay Mail

Britain expects 'very significant' week for Brexit talks as clock ticks down

Britain’s transitional EU exit agreement expires on December 31, and Britain says it will not seek any extension. — AFP pic

LONDON, Nov 30 — Britain and the European Union are heading into a “very significant” week, British foreign minister Dominic Raab said yesterday, as talks over a trade deal enter their final days with serious differences yet to be resolved.

EU negotiator Michel Barnier told reporters in London that “works continue, even on Sunday” on his way to a negotiating session, as both sides look for a deal to prevent disruption to almost US$1 trillion (RM4 trillion) of trade at the end of December.

“This is a very significant week, the last real major week, subject to any further postponement we’re down to really two basic issues,” Raab told the BBC.

Despite missing several self-imposed deadlines, the negotiations have failed to bridge differences on competition policy and the distribution of fishing rights.

But Britain’s transitional EU exit agreement — during which the bloc’s rules continue to apply — expires on December 31, and Britain says it will not seek any extension. A deal would have to be ratified by both sides, leaving little time for new delay.

“The bottom line is... in the ordinary course of things we need to get a deal done over the next week or maybe another couple of days beyond that,” Raab told Times Radio in a separate interview.

Earlier, he had signalled some progress on the ‘level playing field’ provisions which look to ensure fair competition between Britain and the EU, and said fishing remained the most difficult issue to solve.

Despite accounting for 0.1 per cent of the British economy, fishing rights have become a totemic issue for both sides. Britain has so far rejected EU proposals and remains adamant that as an independent nation it must have full control of its waters.

“The EU have just got to recognise the point of principle here,” Raab told Times Radio. — Reuters

Source: Malay Mail

Israel 2021 Budget worth US$129b to be presented to PM today, says source

The source told Reuters that the Budget will include 40 to 50 reforms aimed at helping the economy recover from the coronavirus pandemic and does not include any tax increases. — Reuters pic

JERUSALEM, Nov 30 — Israel’s Finance Ministry will present a long awaited 2021 state budget to Prime Minister Benjamin Netanyahu today that will total 426 billion shekels (RM523 billion), a ministry source said yesterday.

The source told Reuters that the Budget will include 40 to 50 reforms aimed at helping the economy recover from the coronavirus pandemic and does not include any tax increases.

Israeli media noted that the 2021 Budget to be presented is only 15 billion shekels more than the unapproved 2020 Budget and based on a growth estimate of as much as 5 per cent, versus an expected contraction of up to 8 per cent this year.

The Ynet news site quoted Finance Minister Israel Katz as saying he intends to bring the Budget to the cabinet for approval by mid-December.

However, Israel’s leaders are locked in a political standoff over the Budget, so it is unclear whether the Budget will be approved.

Failure to approve a 2021 Budget by March 31 would trigger a snap election, which would be Israel’s fourth in two years.

The political squabbling has also prevented the 2020 Budget from being approved. That must be approved by December 23 or it could trigger a new election.

Israel is still using a prorated version of the 2019 Budget approved in 2018.

Last week, Israel’s central bank urged the government to approve a 2021 state Budget as soon as possible to avoid further fiscal restraint when the economy needs stimulus to weather the coronavirus crisis.

Israel has approved a stimulus of more than 140 billion shekels to help businesses and households cope with the effects of the virus. — Reuters

Source: Malay Mail

N. Korea’s Kim stresses economic policies at a politburo meeting

In August, Kim said the ruling party would hold a congress in January to decide on a new five-year plan, with a party meeting noting serious delays in improving the national economy. — Korean Central News Agency (KCNA) image via Reuters

SEOUL, Nov 30 — North Korean leader Kim Jong-un stressed the need to carry out economic policies with responsibility, as he presided over a meeting of the politburo of the ruling Workers Party, state news agency KCNA reported today.

The meeting comes during a tough year for North Korea as the coronavirus pandemic has put more pressure on an economy already battered by international sanctions aimed at stopping its nuclear programme.

The politburo harshly criticised the economic guidance organs for failing to provide scientific guidance for economic tasks ahead of a congress next year, KCNA reported.

“It stressed the need to put the operation and command for carrying out the Party’s economic policies on a scientific basis and display great dedication and responsibility,” said KCNA.

In August, Kim said the ruling party would hold a congress in January to decide on a new five-year plan, with a party meeting noting serious delays in improving the national economy.

North Korea embarked on an 80-day campaign in October to attain its goals in every sector before next year’s congress. — Reuters

Source: Malay Mail

EU budget rules need adjustment but no debt cancellation, says Gentiloni

European Commissioner for Economy Paolo Gentiloni said yesterday that eurozone average debt to GDP ratio would be 103 per cent-104 per cent at the end of the pandemic next year. — Reuters pic

MILAN, Nov 30 — European Union budget rules need to be more consistent with expected higher levels of sovereign debt, the bloc’s economics commissioner said, but dismissed calls to cancel debt amassed during the coronavirus crisis.

The idea of debt cancellation has been raised by Italy’s co-ruling 5-Star Movement, backing a proposal by EU Parliament President David Sassoli.

“In Europe debts cannot be cancelled”, Paolo Gentiloni said.

The European Commission, which is in charge of enforcing EU fiscal rules, this year suspended requirements to keep government deficits below 3 per cent of GDP and to cut public debt below 60 per cent of GDP as the economy entered a record recession.

Gentiloni said yesterday that eurozone average debt to GDP ratio would be 103 per cent-104 per cent at the end of the pandemic next year.

“We need to take in account this new scenario,” the EU commissioner told Italian state broadcaster RAI, adding that discussions on how to adjust the budget would occur next year.

“The answer is not debt cancellation but creating conditions to gradually change and make our rules more consistent with the new reality,” Gentiloni said. — Reuters

Source: Malay Mail

Uptick in syariah compliancy highlights investor priorities

PETALING JAYA: Following the review of the syariah-compliant stocks on Bursa Malaysia by the Shariah Advisory Council (SAC) of the Securities Commission Malaysia (SC), 39 inclusions made it to the list as of Nov 27, compared with 12 in the May 2020 review while exclusions totalled 16 versus nine previously.

The notable jump in the number of companies on the list is suggestive of companies appreciating the importance of the syariah-compliant status, said PublicInvest Research, as a good number of the companies are actually reinclusions.

“Quite a few names dropped in the November 2019 review made it back at the second time of asking – Advance Synergy, Amcorp Properties, AYS Ventures, Bertam Alliance, Brem Holdings, HCK Capital, IFCA MSC, Leader Steel, MNC Wireles, OCK Group, Securemetric, Solution Group and YKGI Holdings – having done the necessary to ensure reinclusion.

“FSBM Holdings (dropped in May 2019) made it back on the third try,” it said.

The increase in syariah compliancy for these stocks also points to increasing investor priorities on environmental, social, governance (ESG) values – for which syariah status acts as a proxy.

The correlation between syariah-compliant companies and ESG values is evident with analysis of 7,636 public listed corporations by asset management firm Arabesque commissioned by Salaam Gateway, which found a 7.8% higher mean ESG scores in syariah-compliant companies compared to the wider dataset.

In an EY Climate Change and Sustainability Services survey released in August, it highlighted that investors are increasingly holding companies accountable, with ESG factors playing a central role in their decisions with 91% of investors stating that non-financial performance has played a pivotal role in their investment decision-making over the past 12 months, either frequently or occasionally.

Institutional investors have also ramped up their assessment of ESG factors to assess the performance of companies, with 98% of respondents evaluating non-financial performance based on corporate disclosures, with 72% saying they conduct a structured, methodical evaluation, a leap forward from the 32% who said they used a structured approach in the survey’s fourth edition in 2018.

According to the SAC review, of the 39 inclusions this time round, eight are initial public offerings. The LEAP market saw seven additional securities classified as syariah-compliant, bringing the total to 28.

A slightly higher 715 (May 2020: 697) securities are now classified as syariah compliant, with the proportion slightly higher at 79%, from 77% in May, on account of the 903 securities listed on Bursa Malaysia.

The research house noted that of all the exclusions in this current review, only NTPM Holdings, Sentoria Group and Yi-Lai appear to have syariah-based/Islamic institutional fund holdings among its listing of top 30 shareholders.

“While there is still no compulsion for anyone to sell should investments be out-of-money, past instances have suggested compliance (i.e. immediate disposals) by funds regardless. While Pentamaster Corp was a notable casualty in the November 2019 review, exclusions in the May 2020 review didn’t seem to hurt share prices,” it said.

It should be noted that the share prices of three other droputs from the list in the May review, namely CAB Cakaran, Subur Tiasa Holdings and Techbond Group, also did not see a noticeable impact post-review.

Meanwhile, it also pointed out that market dynamics have taken a decided turn for the better, much earlier than expected, as a recovery which remains susceptible to setbacks is now being fuelled by optimism surrounding progress on various vaccines.

It added that market sentiment will also be lifted by the prospect of greater policy clarity and more stimulus in 2021.

“Domestically, some measure of political calm has returned with the first-round passing of Budget 2021, with earlier concerns to the contrary.

“While largely academic at this juncture with views firmly fixed on 2021, we are compelled to raise our end-2020 to 1,590 points due to the lowering of risk premiums. We see 2021 GDP of 6.2% providing impetus to domestic market conditions in the coming year, with the banking, construction and gaming sectors potential market movers.”

Source: The Sun Daily

The Malaysian economy in 2020 – the year that wasn’t

KUALA LUMPUR: The ideal 2020 embedded in the mind of many Malaysians is the creation of a developed society, the assurance of economic justice and the birth of a competitive economy; instead the expectations were shattered when the first coronavirus case was traced in Wuhan in November last year.

A month later, on Dec 31, 2019, China informed the World Health Organisation (WHO) of a few cases of unusual pneumonia in Wuhan, and the first case outside China was reported on Jan 13, 2020 in Thailand and it did not take long for WHO to declare the 2019-nCoV outbreak a Public Health Emergency of International Concern.

The first case of coronavirus infection in Malaysia was reported on Jan 25, and, on Feb 11, WHO said the new coronavirus was being named Covid-19.

The looming pandemic of Covid-19 posed further pressure on Malaysia’s economy, which saw gross domestic product (GDP) in the fourth quarter of 2019 decline to 3.6%, the lowest in 41 quarters since third-quarter 2009 at -1.1%.

Malaysia’s GDP growth in 2019 moderated to 4.3%, and while growth remained in positive territory in Q1 2020, it was impacted by a slowing global economy, global geopolitical tensions, the trade spat between the United States and China, and India’s move to increase import duty on Malaysia’s palm oil to 50%.

The lower GDP growth in 2019 signalled to an unpleasant 2020, whereby in Q1 2020, Malaysia’s growth continued to slow, charting 0.7% amid uncertainties in all directions, including in the economic and political landscapes.

Tan Sri Muhyiddin Yassin was sworn in as the eighth prime minister on March 1, after a week-long crisis that saw a realignment of the country’s political landscape and, two weeks later, Malaysia introduced containment measures to curb the spread of Covid-19, culminating in the enforcement of the movement control order (MCO) in four phases from March 18 until May 3, the first time in the country’s history.

The step has had implications on the country’s domestic business landscape, resulting in the government rolling out economic stimulus packages from the Prihatin Rakyat Economic Stimulus Package (Pirhatin) to the National Economic Recovery Package (Penjana) and Kita Prihatin, amounting to a mammoth RM315 billion.

Concerted efforts were taken to avoid a recession, with Bank Negara Malaysia stepping in to announce an Overnight Policy Rate (OPR) cut by 25 basis points to 2.75% from 3.0%, a level not seen since March 11, 2011, which surprised the market in January.

Since then, BNM has slashed the OPR three consecutive times as the pandemic dwindled global economic conditions during the period.

In March, the OPR was reduced by 25 basis points to 2.50%, then weakened by 50 basis points to 2.00% in May and lowered by another 25 basis points to 1.75% in July, a record low since the floor was set in 2004.

However, the OPR was maintained at 1.75% in September as the central bank said the global economy continued to improve, with the easing of containment measures across more economies, coupled with strong policy support.

For Malaysia, the central bank said economic activity continues to recover from the trough in April this year, and the latest high-frequency indicators show that labour market conditions, household spending and trade activity have continued to improve.

The efforts continue as the government introduced an additional measure to keep the engine of economy running, with the prime minister announcing a six-month moratorium on loan repayments to financial institutions from April 1 until Sept 30. However, the implication of abrupt disruption in the economic activities resulted in Malaysia’s economy contracting 17.1% in the second quarter.

The largest contraction was in the construction sector, which recorded a rate of -44.5 , followed by manufacturing at -18.3% and services at -16.2%.

The construction number looks massive and is certainly worrying but, ultimately, the sector makes up just 3.1% of the country’s GDP. However, despite falling by 16.2%, the services sector constitutes 57.8% of GDP and employs about 61% of the labour force.

The government’s decision to implement key transport infrastructure projects, with a total allocation of RM15 billion in Budget 2021, augurs well for the industry, especially after country’s construction industry suffered RM18.5 billion in losses during the first three phases of the lockdown to curb the spread of coronavirus.

As the country went into the third quarter, Bank Negara Malaysia announced that the country’s GDP recorded a lower contraction of 2.7% due to relaxation of the movement restrictions, allowing gradual resumption of business activities.

BNM has reaffirmed its positive outlook going forward with the reopening of business activities, forecasting the country’s economy to grow between 6.5% and 7.5% in 2021, driven by recovery internally and externally.

As 2020 draws to a close, news on the development of Covid-19 vaccines brings cheer across the world, including Malaysia, which has agreed to buy 12.8 million doses of Pfizer’s Covid-19 vaccine.

Malaysia is the first country in Southeast Asia to announce a deal with the US drugmaker, despite some parties expressing reservations over the need for ultra-cold storage facilities for the vaccine.

The news has encouraged a certain optimistic outlook towards on resumption of global trade and opening up of borders, even though the post-Covid-19 situation could take a longer time to return to normalcy. – Bernama

The construction sector contracted 44.5% in the second quarter. – AFPPIX

Source: The Sun Daily

US dollar’s weak bias, oil prices to support ringgit

PETALING JAYA: The ringgit could rediscover pre-Covid-19 pandemic levels going forward, as the US dollar’s overall weak bias creates a conducive environment and oil prices provide further support for the Malaysian currency, according to FXTM market analyst Han Tan.

He noted that the exchange rate between the ringgit and the dollar is now primed to launch another attempt at breaking below the 4.05 support level, having been rejected before in January 2020, and in March 2019.

“The first Friday of December will feature the release of the November US non-farm payrolls data. Markets are expecting an increase of 500,000 jobs added for the period, which would be the lowest figure since the pandemic. Further signs of a slowing pace in the US jobs market’s recovery would underscore the need for fresh fiscal stimulus.

“However, once the transition in the US administration gets underway in January, barring any further political impasses, that should offer a bigger boost to the reflation trade. Ultimately, developments surrounding the Covid-19 vaccine are expected to dominate market sentiment, with risk assets set to react according to the shifting tides in the global economic outlook,” he said.

The ringgit was Asia’s second best performer behind the South Korean won last week, as regional currencies continued to take advantage of the weaker US dollar.

Last Thursday’s Budget 2021 vote propelled the ringgit to its strongest level since January, erasing all of its year-to-date losses incurred since the height of the pandemic.

The ringgit’s gains were helped along by the increase in oil prices as well as the risk-on sentiment stemming from positive news surrounding the development of Covid-19 vaccines. The positive surprise in Malaysia’s October exports figures released Friday also aided the ringgit’s return below the 4.07 mark.

Source: The Sun Daily

Fishing rights top of the menu as Brexit talks continue

Britain's Secretary of State for Foreign affairs Dominic Raab is seen outside Downing Street, London March 17, 2020. — Reuters pic

LONDON, Nov 29 — Last-ditch Brexit trade talks continued in London today with fishing rights remaining an “outstanding major bone of contention,” according to British foreign minister Dominic Raab.

European Union chief negotiator Michel Barnier told reporters that “work continues, even on a Sunday,” as he arrived for the second day of talks.

Barnier had arrived in London on Friday following a spell in self-isolation after a member of his team contracted coronavirus and ahead of the resumption of talks with British counterpart David Frost yesterday.

Both men warned that a deal could not be reached without major concessions from the other party.

There are only five weeks to go until the end of the current transition period, during which trade relations have remained largely unchanged.

The two key sticking points remain post-Brexit access to British fishing waters for European vessels and the EU’s demand for trade penalties if either side diverges from common standards or state aid regulations rules.

Raab told Sky’s Sophy Ridge On Sunday that this could be the final week of “substantive” talks, with time running out to agree and ratify a deal.

“There’s a deal to be done,” he said.

“On fishing there’s a point of principle: as we leave the EU we’re going to be an independent... coastal state and we’ve got to be able to control our waters,” he added.

Barnier told envoys last week that London was asking that European access to UK waters be cut by 80 per cent, while the EU was willing to accept 15 to 18 per cent, according to a Brussels source.

A British official called the demands “risible”, according to the domestic Press Association, adding that the “EU side know full well that we would never accept this.”

“There seems to be a failure from the Commission to internalise the scale of change needed as we become an independent nation,” said the source.

However, Raab was cautiously optimistic over the “level playing field” issue, saying “it feels like there is progress towards greater respect” for Britain’s position.

A failure to reach an agreement would see Britain and the EU trading on World Trade Organization terms, with tariffs immediately imposed on goods travelling to and from the continent.

As it stands, Britain will leave Europe’s trade and customs area on December 31, with no prospect of an extension.

A no-deal scenario is widely expected to cause economic chaos, with customs checks required at borders.

Concern is particularly acute on the border between EU member Ireland and the British province of Northern Ireland, where the sudden imposition of a hard border threatens the delicate peace secured by 1999’s Good Friday Agreement.

The talks have already dragged on much longer than expected and time is running out for ratification of any deal by the European Parliament by the end of the year. — AFP

Source: Malay Mail

Amanah Saham Nasional declares 3.32 sen income distribution for ASN Imbang 1

Amanah Saham Nasional Bhd today declared an income distribution of 3.32 sen per unit for ASN Imbang (Mixed Asset Balance) 1 for the financial year ending November 30, 2020. ― Reuters pic

KUALA LUMPUR, Nov 29 — Amanah Saham Nasional Bhd (ASNB) today declared an income distribution of 3.32 sen per unit for ASN Imbang (Mixed Asset Balance) 1, amounting to a total payout of RM40.57 million, for the financial year ending November 30, 2020.

The wholly-owned unit trust company of Permodalan Nasional Bhd (PNB) said the figure represents a dividend yield of 3.60 per cent based on the net asset value (NAV) of the fund as at November 30.

PNB in a statement today said the total payout will benefit over 46,156 unit holders with over 1.22 billion units held.

“The FTSE Bursa Malaysia KLCI index increased by 3.23 per cent for the financial year to date up to November 26, 2020, from 1,561.73 points to 1,612.11 points within the same period.

“The slight improvement is a welcome development for PNB as it continues its commitment to deliver competitive returns and provide valuable services to unit holders in the ongoing battle against the coronavirus outbreak,” said the fund.

PNB has also undertaken several strategies to improve the investment portfolio by further diversifying into international equities and focusing on sectors which are less susceptible to the current economic environment.

The computation of the income distribution for ASN Imbang 1 is based on the units held and the NAV thereof as of November 30, 2020.

The distribution declared will be re-invested as additional units into the unit holders’ accounts and automatically credited into their accounts on Dec 1, 2020.

Transactions at all ASNB branches and agents have been temporarily suspended from November 27-30 to facilitate the computation of the income distribution.

Unit holders may update their accounts at myASNB portal www.myasnb.com.my or via its mobile application, or at any ASNB branches or its agents nationwide when transactions resume on Dec 1, 2020. — Bernama

Source: Malay Mail

Opec, allies mull extending output cuts

The logo of the Organization of the Petroleoum Exporting Countries (Opec) is seen outside of Opec's headquarters in Vienna April 9, 2020. ― Reuters file pic

VIENNA, Nov 29 — The Opec oil producers' club and its allies will hold a virtual meeting on Monday and Tuesday to finalise an expected extension to production cuts as the coronavirus pandemic continues to weigh on global demand.

The meeting comes as the oil industry hopes to turn a page on a disastrous year which saw the cartel forced to adopt drastic cuts in response to the cratering of demand caused by the pandemic.

Member states want to avoid a repeat of the collapse in prices seen in April.

According to the deal reached in that month, the current cut of 7.7 million barrels per day (bpd) is meant to be eased to 5.8 million bpd as of January 2021, but most observers expect this to be extended by between three and six months.

Key players within the grouping have hinted in recent weeks that such a move may be on the cards despite positive news on the development of vaccines against the virus by several pharmaceutical companies.

AstraZeneca, Pfizer/BioNTech and Moderna have all shared encouraging trial results from their candidate vaccines in recent weeks, providing a lifeline for the oil demand.

However, while the effects of a vaccine will play out over the longer term, Opec and its allies will be focused on supporting prices in the first and possibly the second quarter of 2021.

Tensions and price wars

While an extension of the cuts is the most likely scenario, there is always the possibility of discord arising among the 23 countries involved.

The memory of the debacle of a meeting in March this year is still fresh, when Saudi Arabia and key ally Russia failed to reach agreement and spent the next month engaged in a fratricidal price war.

In mid-November the United Arab Emirates displayed reluctance at the prospect of fully applying the cuts past the end of the year.

Then there is the sensitive topic of whether all members are currently sticking to the output quotas that have already been assigned to them.

Those exceeding their allotted output — foremost among them Iraq and Nigeria — regularly come in for a scolding from Prince Abdelaziz bin Salman, energy minister of Opec kingpin Saudi Arabia.

Falling US output

The cartel's main focus is on crude oil prices, which have returned to roughly their pre-pandemic levels of between 45 and 50 dollars per barrel for both the US benchmark, West Texas Intermediate (WTI), and Europe's Brent North Sea contracts. 

But members also have to keep a keen eye on production figures outside the bloc as well as how much oil is currently being stored at any one time.

Output from the world's biggest producer, non-Opec member the US, has fallen from the historic highs at the beginning of the year to around 11 million bpd now.

The trend is unlikely to be reversed as victorious Democratic presidential candidate Joe Biden has committed to modest curbs on fracking.

Within its ranks, Opec will also have to pay attention to developments in the three members which have been granted exemptions from quotas — Libya, Iran and Venezuela.

Libya's production had been almost wiped out by civil conflict but spiked since October and now stands at over a million bpd, according to the countries National Oil Corporation (NOC).

In the longer term, Iran's offer on the oil market may also increase if the incoming US administration pursues a policy of detente with Tehran and relaxes sanctions.

That would lead hundreds of thousands of barrels coming on to market, exerting a fresh downward pressure on prices. — AFP

Source: Malay Mail