China’s factory activity expanded in February at a slower pace than a month earlier, hitting the lowest level since last May. — Reuters pic
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BEIJING, Feb 28 — China’s factory activity expanded in February at a slower pace than a month earlier, hitting the lowest level since last May and missing market expectations after brief Covid-19-related disruptions earlier in the year.
The official manufacturing Purchasing Manager’s Index (PMI) fell to 50.6 from 51.3 in January, data from the National Bureau of Statistics (NBS) showed today, remaining above the 50-point mark that separates growth from contraction.
Analysts had expected it to decline to 51.1.
Chinese factory activity normally goes dormant during the Lunar New Year break as workers return to their home towns. This year, the government appealed to workers to remain local to curb the spread of Covid-19.
Generally, China’s economic recovery has been gathering pace due to robust exports, pent-up demand and government stimulus.
The official PMI, which largely focuses on big and state-owned firms, showed the sub-index for new export orders was 48.8 in February compared with 50.2 in January, slipping back into contraction after months boosted by overseas demand.
A sub-index for activity among small firms stood at 48.3 in February versus 49.4 a month earlier.
A sub-index for employment in the official PMI stood at 48.1 in February, down from January’s 48.4 as firms laid off more workers and at a faster pace.
China’s factory gate prices rose on year in January for the first time in a year, as months of strong manufacturing growth pushed raw material costs higher.
China eked out 2.3 per cent economic growth last year. This year, the government may avoid setting a growth target for fear of provincial economies feeling pressured to take on more debt, policy sources previously told Reuters.
China will reinforce policy support for foreign trade and ensure the smooth operation of supply chains, its new commerce minister said earlier this week.
In the services sector, activity expanded for the 11th consecutive month but at a slower pace. — Reuters
HSBC has appointed Christina Cheah as head of global banking, Malaysia, effective tomorrow. — Reuters pic
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KUALA LUMPUR, Feb 28 — HSBC has appointed Christina Cheah as head of global banking, Malaysia, effective tomorrow.
In a statement today, HSBC said Cheah was previously head of large local corporates for global banking in Malaysia until the fourth quarter of 2020, when she was appointed acting head of global banking, Malaysia.
“Her appointment reflects HSBC’s desire to promote local talent as well as the bank’s commitment in nurturing and growing more women leaders in Malaysia.
“Cheah, who joined HSBC in 2013 and has close to 20 years of experience in financial services, is a key member of HSBC’s leadership team in Malaysia and has led many of the bank’s long-established client relationships,” it said.
HSBC Malaysia chief executive officer Stuart Milne said Cheah’s extensive experience and deep understanding of the Malaysian market would help her to lead the growth of HSBC’s global banking franchise in Malaysia.
“We at HSBC are very focused on building and developing local talent, and so we are delighted to have Cheah as the new head of global banking, Malaysia. Malaysia is a strategically important market for HSBC and we will continue to invest for growth,” he said. — Bernama
After having slowed considerably in 2020, inflation is expected to rise this year in Europe. — Reuters pic
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PARIS, Feb 28 — Investors are watching inflation carefully, worried that a boiling over of prices will ruin the expected strong pandemic recovery although analysts believe Europe faces much less of a risk than the United States.
Fears that US President Biden’s US$1.9 trillion (RM7.7 trillion) stimulus plan — which was passed by the House of Representatives yesterday — will stoke up the economy too much have unnerved investors in recent weeks.
A rise in yields on 10-year US Treasury bonds — a key indicator of expectations — shows the markets believe prices are set to rise much more sharply than last year’s gain of 1.4 per cent, which could force the US Federal Reserve to hike interest rates earlier than it says it plans to do.
Bond yields have risen elsewhere too, with 10-year French government bonds turning positive on Thursday for the first time in months while the benchmark 10-year German Bund has also risen although it remains negative.
European inflation data for January showed a jump in prices of 0.9 per cent compared to a minus 0.3 per cent reading in December, as increased costs of raw materials fed through into services and industrial goods.
After having slowed considerably in 2020, inflation is expected to rise this year in Europe as the economy picks up following the relaxation of measures to slow the spread of the Covid-19 pandemic.
But it is not so much a spike in inflation that worries investors but that the Fed would raise interest rates faster than it has communicated.
Federal Reserve Chairman Jerome Powell pledged Tuesday that the US central bank will keep benchmark lending rates low until the economy is at full employment and inflation has risen consistently above its 2.0 per cent target.
But bond yields continued to rise, indicating investor concern about a rise in interest rates that would make borrowing and investment more expensive and slow the economy.
However, many analysts are sceptical that Biden’s stimulus programme will spark considerable inflation.
“It isn’t clear that Biden’s recovery plan will create lots of inflation,” said Xavier Ragot, head of the French Economic Observatory think tank.
For the European Union, there is no likelihood that its pandemic recovery programme would, he believes.
“The amounts of the European recovery plans pose absolutely no inflationary risk,” he said.
‘No risk of overheating’
The European Commission’s recovery programme is worth €750 billion euros (RM3.67 trillion), with several EU members also having their own national programmes.
“We have a European recovery programme... considerably less strong, and a loss of growth that is much greater, so there aren’t the same risks of overheating as in the United States,” said Fabien Tripier, an economist at CEPII, a Paris-based research centre on the world economy.
The US economy shrank 3.5 per cent last year while the drop for the eurozone was nearly double that.
There is “no risk of overheating or a sustained rise in inflation” in the eurozone, the head of the Banque de France, Francois Villeroy de Galhau, insisted this past week.
The French Economic Observatory’s Ragot also does not believe that if the Fed is pushed by the markets into raising rates that the European Central Bank would be forced to follow suit.
“It doesn’t work like that in macroeconomics,” he said, noting that the monetary policy of the Fed and ECB had diverged considerably at the start of the last decade.
“With loose financial conditions still necessary to support the economy, the ECB is unlikely to react to the coming inflation overshoot,” said Capital Economics economist Jack Allen-Reynolds.
Francois Villeroy de Galhau, who as head of the Banque de France also sits on the ECB’s Governing Council, said the central bank wants to “maintain favourable financing conditions”.
For Fabien Tripier, the ECB needs to send “a strong signal” to the markets against the idea that “just because inflation hits 1.5 per cent or 2.2 per cent, speculation it will hike rates should begin.”
The ECB issued a reassuring message on Friday as executive board member Isabel Schnabel said it could broaden its support for the economy in case of a sharp rise in interest rates. — AFP
SMEs which are neither registered with Miti nor business councils are feeling the heat of poor consumer sentiments and being left out of the government’s assistance for businesses. — AFP pic
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KUALA LUMPUR, Feb 28 — Micro small and medium enterprises (SMEs) which are neither registered with the Ministry of International Trade and Industry (Miti) nor business councils are feeling the heat of poor consumer sentiments and being left out of the government’s assistance for businesses, a coalition of trade, business, and professional associations said.
Datuk David Gurupatham, group coordinator of Industries Unite, a coalition of more than 40 trade, business, and professional associations throughout Malaysia, said there were a handful of micro SMEs that fall into this category, hence, the information on government assistance as well as the necessary guidelines and procedures did not reach them.
He said the situation could be mended by engaging business associations and representatives.
“Engage with business associations and representatives, especially on Prihatin (Prihatin Rakyat Economic Stimulus Package) and Penjana (National Economic Recovery Plan) so that no one is left out and small businesses get the accurate information, ease the red tape and bureaucracy so that micro SMEs have an easier access to the assistance,” he told Bernama.
He also said that the current special electricity rebate under the Malaysian Economic and Rakyat’s Protection Assistance Package (Permai) did not reach micro SMEs and were focused on commercial sectors.
The six sectors in the commercial category are hotel operators, theme parks, convention centres, shopping malls, local airline offices, and travel and tour agencies, he added.
Meanwhile, the Wedding Professional Association of Malaysia president Patrick Low claimed that the wedding and event industry had often been overlooked although each event could involve between 25 and 50 sub-sectors.
“More than 100,000 businesses were affected and the workers were jobless and there are self-employed or husband and wife team, which neither has Social Security Organisation nor Employees Provident Fund contribution...these are micro-businesses that know how to do their job but not everyone knows how to run their business and grow their business.
“Adding to that, banks have rejected the majority of loan applications as they do not have proper supporting documents,” he said.
According to the Department of Statistics Malaysia (DoSM), the wedding industry was estimated to be worth RM10 billion in 2020, while the retail sales value for plants, flowers, seeds, and fertilisers were worth RM1.66 billion.
In 2018, the wholesale sales value for flowers and plants amounted to RM809 million while cut flowers and plants totalled RM122 million. — Bernama
People wait in line at the St Clements Food Pantry for food during the coronavirus disease pandemic in the Manhattan borough of New York City, December 11, 2020. — Reuters pic
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WASHINGTON, Feb 28 — The US economy is rebounding faster than expected from the Covid-19 recession, outperforming the most pessimistic estimates. But some areas remain largely shut down. So what will recovery look like?
How fast will the economy grow?
The International Monetary Fund estimates the GDP of the United States will expand by 5.1 per cent this year, after contracting by 3.5 per cent in 2020 as the pandemic forced lockdowns that shuttered businesses nationwide.
But economists think the growth rate could accelerate further.
The nearly US$3 trillion (RM12.2 trillion) in government stimulus programs last year, including a US$900 billion measure approved in late December, were key to helping the US economy bounce back.
And Congress is moving toward approving President Joe Biden’s US$1.9 trillion rescue package, which will provide more support for businesses, families and state and local jobs.
Federal Reserve Chair Jerome Powell acknowledged growth could hit 6.0 per cent, while private forecasters like Gregory Daco of Oxford Economics said it could break 7.0 per cent.
The quick recovery has raised concerns that price increases could spiral higher, but Powell tamped down those fears, saying inflationary spikes in coming months are unlikely to last.
And the Fed has pledged to keep interest rates low until employment recovers and inflation stays above 2.0 per cent for some time.
When will the jobs come back?
As businesses were able to reopen and adapt to new Covid-19 restrictions, the country regained about half of the 20 million jobs lost in the early weeks of the pandemic.
Many of the remaining 10 million jobs are in the hardest-hit service sectors like hotels and restaurants — losses that fell especially hard on Black and Hispanic workers.
And millions more have seen their hours cut or have left the labour force entirely, including large numbers of women who are taking care of children.
Those jobs and hours likely will not come back until the vaccine rollout reaches a critical mass of Americans, allowing people to resume normal activities without fear so businesses and schools can fully reopen.
The official unemployment rate — known as U-3 — hit 6.3 per cent in January, a dramatic worsening from 3.5 per cent a year earlier. For Black workers the rate was 9.2 per cent.
But when including individuals who have been discouraged from looking for work, or who are working part-time but want a full-time position, the broader U-6 rate was 11.1 per cent.
“The aid and stimulus are critical to bridging Covid-tainted waters, stemming employment losses ... and priming the pump for a more robust recovery once social distancing measures are lifted,” economist Diane Swonk of Grant Thornton said.
Moody’s Analytics estimates Biden’s stimulus plan would create 7.5 million jobs this year alone.
Which sectors are rebounding fastest?
The housing market, strong before the pandemic, paused only briefly before roaring back hotter than before.
Fuelled by rock-bottom mortgage rates — and with remote work perhaps starting a trend of people moving out of congested areas — sales of new and existing homes have jumped about 20 per cent above the pre-pandemic level.
But supplies have fallen as homebuilders struggle to keep up with demand, driving prices higher.
Manufacturing, too, has recovered steadily since last summer, although output remains below where it was in early 2020.
And even as consumers have been forced to curtail activities, they have opened their wallets to spend freely on autos, electronics, furniture, and building and gardening supplies.
Online retailers have been the big winners, with a sales increase of just under 30 per cent over the year.
Where is the damage still visible?
The most visible impact of the recession is in the travel, hospitality and entertainment industry, which likely will come back to life quickly once people are able to take vacations and enjoy concerts, movies or plays.
But economists have warned about the potential for more permanent scars on the economy in the wake of the pandemic.
Thousands of shops and restaurants have closed permanently, and there is a risk of a wave of bankruptcies if the recovery doesn’t come soon enough for some heavily indebted firms.
State and local governments, which typically cannot borrow to finance their operations, are facing the possibility of slashing teachers, police and firefighters from the payroll to compensate for massive relief spending.
And homeowners and renters currently are protected by moratoriums on foreclosures and evictions, but their fate will depend on what happens to their past-due mortgage and rent payments once those moratoriums expire.
“We must continue to provide economic support to our citizens, creating a bridge to the end of the pandemic,” US Treasury Secretary Janet Yellen said this week. — AFP
McDonald’s is weighing the sale of part of digital start-up Dynamic Yield, which it bought two years ago. — Reuters pic
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WASHINGTON, Feb 28 — McDonald’s is weighing the sale of part of digital start-up Dynamic Yield, which it bought two years ago in a bid to boost drive-through and in-restaurant kiosk orders, the two companies confirmed yesterday.
McDonald’s had originally looked to the artificial intelligence business to provide personalised digital promotions to consumers, which would vary depending on time of day, weather and wait times.
A potential partial sale of the company had “been discussed from the outset, and now feels like the right time to explore that possibility,” Dynamic Yield’s founder and CEO Liad Agmon said in a statement to AFP confirming an earlier report in the Wall Street Journal.
“We don’t have a set timeline for the potential sale,” the company added.
In its own statement to the AFP, McDonald’s said it had put Dynamic Yield’s technology to use in a number of markets around the world and would continue to do so.
It said it would continue to test “new approaches” in order to better serve its clients’ changing needs.
The 2019 purchase of Dynamic Yield by McDonald’s for more than US$300 million (RM1.22 billion) represented the US-based group’s largest purchase in years.
Company executives portrayed it as a key element of McDonald’s digital strategy. — AFP
Britain's Chancellor of the Exchequer Rishi Sunak poses with the red budget box outside his office in Downing Street in London March 11, 2020. — Reuters pic
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LONDON, Feb 28 — British finance minister Rishi Sunak will announce £5 billion (RM28 billion) of additional grants to help businesses hit hard by pandemic lockdowns in his budget statement next week, the government said yesterday.
Shops, bars, clubs, hotels, restaurants, gyms and hair salons would be among nearly 700,000 companies eligible for new direct cash grants of up £18,000.
The government said the funding takes the total spent on direct grants to businesses during the crisis to £25 billion.
Encouraged by the rapid roll-out of vaccines, British Prime Minister Boris Johnson has unveiled a route out of lockdown for England. However, some businesses will need to remain shuttered until the summer.
“There’s now light at the end of the tunnel and this £5 billion of extra cash grants will ensure our high streets can open their doors with optimism,” said Sunak.
Local authorities in England will also get an extra £425 million to distribute grants to businesses not eligible for the restart grants, while the devolved administrations in Scotland, Wales and Northern Ireland will receive £794 million of extra funding.
The government has already racked up more than £280 billion in coronavirus spending and tax cuts, pushing Britain’s borrowing to its highest level since World War Two.
While Sunak’s March 3 budget will include more spending to prop up the economy during what he hopes will be the last phase of lockdown, he will also probably signal tax rises ahead to plug the huge hole in the public finances.
In an interview with the Financial Times, Sunak said he would use the budget to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support.
Earlier yesterday the government said Sunak is also expected to announce an initial £12 billion of capital and £10 billion of guarantees for the new UK Infrastructure Bank. — Reuters
The Chancellor of the Exchequer Rishi Sunak is expected to announce the initial funding at Wednesday’s Budget and the bank will launch in spring, the Treasury said. — Reuters pic
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LONDON, Feb 28 — Britain is to launch a new Infrastructure Bank with £12 billion (RM68 billion) in capital and £10 billion in government guarantees, the Treasury said yesterday, aimed at kickstarting the economy.
The Chancellor of the Exchequer Rishi Sunak is expected to announce the initial funding at Wednesday’s Budget and the bank will launch in spring, the Treasury said.
“Britain’s businesses and the Great British public deserve world-class infrastructure and that is exactly what this new Bank will help us deliver for them,” Sunak was quoted as saying.
The bank is set to finance private sector projects in the green economy, focusing on areas such as carbon capture and renewable energy.
It will also provide loans to local authorities at low interest rates to support “complex infrastructure projects.”
The Treasury said the Bank would unlock billions more in private finance to support a £40 billion infrastructure investment to “fire up the economy” and help reach commitments on net zero emissions and reducing regional deprivation.
The announcement comes as Britain’s economy has been hard-hit by pandemic lockdowns.
Analysts expect unemployment to surge when the UK government’s furlough scheme paying the bulk of wages for millions in the private sector ends — as currently planned — at the end of April.
Sunak last week hinted he would announce further employment support in the coming months.
The Chancellor first announced the planned Infrastructure Bank in November last year, saying its headquarters would be in northern England rather than in the financial hub of London. — AFP
Ninety-year-old billionaire Warren Buffett reaffirmed his fervent belief in the American Dream. — Reuters pic
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WASHINGTON, Feb 28 — Ninety-year-old billionaire Warren Buffett reaffirmed his fervent belief in the American Dream in a letter to investors published yesterday — advising them never to bet against the country despite its many problems.
“In its brief 232 years of existence, there has been no incubator for unleashing human potential like America,” he said in the message to investors in his Berkshire Hathaway conglomerate.
Even after a particularly difficult 2020 — when the Covid-19 pandemic plunged the world’s largest economy into recession and pushed millions into poverty — “our country’s economic progress has been breathtaking,” he said.
The man known as the Oracle of Omaha added: “Our unwavering conclusion: Never bet against America.”
Buffett’s annual letter is always highly anticipated by the business world because of his reputation as a prudent investor with a canny view to long-term trends.
But in his latest letter, Buffett did acknowledge a mistake made in 2016 that became evident last year: Berkshire’s purchase of Precision Castparts (PCC), which led to an “ugly US$11 billion (RM44.6 billion) write-down.”
“I paid too much for the company,” Buffett wrote. “No one misled me in any way –- I was simply too optimistic about PCC’s normalised profit potential,” an error laid bare when the company’s aerospace customers fell on hard times last year.
Buffett also announced that Berkshire’s annual meeting, which in normal years draws thousands of shareholders to Omaha, Nebraska will take place in a virtual format on May 1, as it was last year because of the pandemic.
He said he and partner Charlie Munger would answer shareholders’ questions.
Last year, Buffett wrote, the conglomerate they led met neither of two goals: “Berkshire made no sizable acquisitions and operating earnings fell nine percent.
“We did, though, increase Berkshire’s per-share intrinsic value by both retaining earnings and repurchasing about 5 per cent of our shares.”
He voiced confidence that Berkshire’s capital gains from its investment holdings would be “substantial” over time.
Looking ahead, Buffett said Berkshire would remain “a collection of controlled and non-controlled businesses.”
He said shareholders’ capital would be invested in “whatever we believe makes the most sense, based on a company’s durable competitive strengths, the capabilities and character of its management, and price.”
Berkshire had net earnings in 2020 of US$42.5 billion, helped by its insurance business, but the overall figure was down 48 per cent from 2019.
Berkshire last year sold its airline stocks because of the pandemic and invested more heavily in pharmaceutical products. — AFP
Robinhood, which says it is 'cooperating' with the entities, is already facing dozens of class action lawsuits. ― AFP pic
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SAN FRANCISCO, Feb 27 — Stock trading app Robinhood yesterday confirmed it is cooperating with inquiries from US regulators into its decision to temporarily throttle purchases of shares in companies such as GameStop during frenzied trading in January.
The free brokerage platform is facing inquiries from federal financial regulators, state attorneys general and the US Congress, according to a filing with the Securities and Exchange Commission.
Robinhood, which says it is “cooperating” with the entities, is already facing dozens of class action lawsuits.
The lawsuits “generally allege breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, breach of fiduciary duty and other common law claims,” Robinhood said in the filing.
“We believe that the claims in these lawsuits are without merit and intend to defend against them vigorously.”
Key players in the GameStop shares trading frenzy told skeptical US lawmakers last week that their actions were above board and in line with ordinary stock market business.
Founders of Robinhood and the online forum Reddit were among those to testify at a House of Representatives financial services committee hearing.
Unprecedented recent volatility — with shares in the GameStop video game store surging more than 400 per cent — prompted calls for regulators to review the role of social media, hedge funds and trading platforms which some allege manipulated the market.
The GameStop Wall Street upheaval was sparked via a “subreddit” known as WallStreetBets.
“I am not trying to throw anyone under the bus,” Robinhood co-founder and chief executive Vlad Tenev told the House committee meeting.
“All I can say is Robinhood played it by the books.” — AFP
Ford Motor Co said a lack of chips could slash a fifth of its first-quarter production and General Motors Co cut output across North America. — Reuters pic
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NEW YORK, Feb 27 — When President Joe Biden on Wednesday stood at a lectern holding a microchip and pledged to support US$37 billion in federal subsidies for American semiconductor manufacturing, it marked a political breakthrough that happened much more quickly than industry insiders had expected.
For years, chip industry executives and US government officials have been concerned about the slow drift of costly chip factories to Taiwan and Korea. While major American companies such as Qualcomm Inc and Nvidia Corp dominate their fields, they depend on factories abroad to build the chips they design.
As tensions with China heated up last year, US lawmakers authorised manufacturing subsidies as part of an annual military spending bill due to concerns that depending on foreign factories for advanced chips posed national security risks. Yet funding for the subsidies was not guaranteed.
Then came the auto-chip crunch. Ford Motor Co said a lack of chips could slash a fifth of its first-quarter production and General Motors Co cut output across North America.
“It brings home very clearly the message that the semiconductor is really a critical component in a lot of the end products we take for granted,” said Mike Rosa, head of strategic and technical marketing for a group within semiconductor manufacturing toolmaker Applied Materials Inc that sells tools to automotive chip factories.
Within weeks, automakers joined chip companies calling for chip factory subsidies, and US Senate Majority Leader Chuck Schumer and President Biden both pledged to fight for funding.
Industry backers now aim to be part of a package of legislation to counter China that Schumer hopes to bring to the Senate floor this spring. Still, all agree it will do little to solve the immediate auto-chip problem.
Headlines about idled car plants resonated with the public that had shrugged off abstract warnings in the past, said Jim Lewis, a senior fellow at the Centre for Strategic and International Studies. Lawmakers, already worried that a promised infrastructure bill will not materialise this year, decided to push for quick solution.
“Nobody wants to be seen as soft on China. No one wants to tell the Ford workers in their district, ‘Sorry, can’t help,’” Lewis said. “It was one of those moments where everything aligned.”
The package includes matching funds for state and local chip-plant subsidies, a provision likely to heat up competition among states including Texas and Arizona to host big new chip plants that can cost as much as US$20 billion (RM81 billion).
The subsidies could benefit a factory in Arizona proposed by Taiwan Semiconductor Manufacturing Co and one in Texas eyed by Samsung Electronics Co Ltd, even though those factories would be geared toward high-end chips for smartphones and laptops, rather than simpler auto chips. And those factories would not come on line until 2023 or 2024, according to plans disclosed by the companies, the world’s two largest chip manufacturers.
In the longer term, a raft of US companies are also poised to benefit. Any chipmakers that build factories will source many tools from American companies such as Applied, Lam Research Corp and KLA Corp
Intel Corp, Micron Technology Inc and GlobalFoundries — which already have US factory networks — will also likely benefit.
Smaller, specialty chip factories also could benefit.
“The recent chip shortage in the automotive industry has highlighted the need to strengthen the microelectronics supply chain in the US,” said Thomas Sonderman, chief executive of SkyWater Technology, a Minnesota-based chipmaker that makes automotive and defence chips. “We believe that SkyWater is uniquely positioned due to our differentiated business model and status as a US — owned and US — operated pure play semiconductor contract manufacturer.”
Even with subsidies, the US companies still must compete with low-cost Asian vendors over the long run, and the immediate auto chip troubles will probably persist.
Surya Iyer, a vice president at Minnesota-based Polar Semiconductor, which makes chips for automakers, said his factory is booked beyond capacity and has started to speed some orders up while slowing others down, to meet automakers’ needs as best it can.
“We are expecting this level of demand to continue at least for the next 12 months, maybe even longer,” he said. — Reuters
Economic improvement will be in focus in the coming weeks, including the monthly US jobs report due next Friday, as will the country’s ability to ensure widespread coronavirus vaccinations, especially as new variants emerge. — AFP pic
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NEW YORK, Feb 27 — A shakeup in stocks accelerated by the past week’s surge in Treasury yields has investors weighing how far a recent leadership rotation in the US equity market can run, and its implications for the broader S&P 500 index.
Moves this week further spurred a shift that has seen months-long outperformance for energy, financial and other shares expected to benefit from an economic recovery, while a climb in Treasury yields weighed on the technology stocks that have led markets higher for years.
The two-track market left the benchmark S&P 500 down for the week, and sparked questions about whether it could sustain gains going forward if the tech and growth stocks that account for the biggest weights in the index struggle.
So far this year, the S&P 500, which gives more influence to stocks with larger market values, is up 1.5 per cent, while a version of the index that weights stocks equally is up 5 per cent.
“That just tells us the gains are less narrow, more companies are participating, and I think that’s healthy,” said James Ragan, director of wealth management research at D.A. Davidson.
The focus on market leadership comes as investors are weighing whether the S&P 500 is due for a significant pullback after a 70 per cent run since March, with the rise in long-dormant yields the latest sign of trouble for equities as it means bonds are more serious investment competition. The yield on the 10-year US Treasury note this week jumped to a one-year peak of 1.6 per cent before pulling back.
Economic improvement will be in focus in the coming weeks, including the monthly US jobs report due next Friday, as will the country’s ability to ensure widespread coronavirus vaccinations, especially as new variants emerge.
Tech and momentum stocks helped drive returns in 2020 “when everyone was locked down and all they had was their computer,” said Jack Ablin, chief investment officer at Cresset Capital Management. “Now it seems with the vaccines, the stimulus and the prospect of reopening that we are looking out toward a recovery phase.”
The shift in the market this week is building on one that was fuelled in early November, when Pfizer’s breakthrough Covid-19 vaccine news generated broad bets on an economic rebound in 2021.
Among the moves since that point: the S&P 500 financial and energy sectors are up 29 per cent and 65 per cent, respectively, against a nearly 9 per cent rise for the benchmark index and 7 per cent rise for the tech sector. The Russell 1000 value index has gained 16.5 per cent against a 4.3 per cent climb for its growth counterpart, while the smallcap Russell 2000 is up 34 per cent.
“You definitely are seeing the reopening trade that has pretty much come alive here,” said Gary Bradshaw, portfolio manager of Hodges Capital Management.
Despite the gains, there remains “plenty of room for the reflation trade to run from a valuation perspective,” Lori Calvasina, head of US equity strategy at RBC Capital Markets, said in a report this week. RBC is “overweight” the financials, materials and energy sectors.
Rising rates tend to be favourable for more cyclical sectors, David Lefkowitz, head of Americas equities at UBS Global Wealth Management, said in a note, with financials, energy, industrials and materials showing the strongest positive correlations among sectors with 10-year Treasury yields.
Still, how long the market’s reopening trade lasts remains to be seen. Investors may be reluctant to stray from tech and growth stocks, especially with many of the companies expected to put up strong profits for years.
Any setbacks with the economy or with efforts to quell the coronavirus could revive the stay-at-home stocks that thrived for most of 2020.
And with a GameStop-fuelled retail-trading frenzy taking hold this year, banks and other stocks in the reopening trade may fail to draw the same attention from amateur investors as stocks such as Tesla, said Rick Meckler, partner at Cherry Lane Investments.
“There isn’t the pizzazz to those stocks,” Meckler said. “There rarely is a potential for stocks to make the kind of moves that big tech growth stocks have made.” — Reuters
A convoy of vehicles carry the Sinovac Covid-19 vaccine with police escort from Cargo Village in KLIA February 27, 2021. ― Picture by Yusof Mat Isa
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KUALA LUMPUR, Feb 27 — The arrival of Sinovac Covid-19 vaccine marked a historic moment for Malaysia and an important milestone for Pharmaniaga Berhad’s (Pharmaniaga) venture into vaccine manufacturing as it will be the first-ever vaccine to be filled and finished locally.
Pharmaniaga LifeScience Sdn Bhd (PLS), a wholly — owned subsidiary of Pharmaniaga today received the first batch of Sinovac Covid-19 vaccine bulk for the purpose of process validation (PV) batch manufacturing.
PV is part of the registration application requirement by the National Pharmaceutical Regulatory Agency (NPRA).
The 200-litre bulk equalling to 300,000 doses of vaccine, arrived in an envirotainer which preserves the vaccine temperature between 2 to 8 degree Celsius was flown in by MASkargo on an Airbus A330-300 from Beijing, China.
“To date, Pharmaniaga has submitted two applications to the NPRA, consisting of product registration for ready to be administered vials from Sinovac Life Sciences and for the fill and finish (F&F) that will be manufactured in our EU certified PLS plant.
“The PV batch manufacturing followed by stability study monitoring is critical to complete the registration to application to ensure that vaccines are of equal quality even with the change in manufacturing sites from Sinovac to PLS,” said Pharmaniaga’s group managing director Datuk Zulkarnain Md Eusope in a statement today.
PLS will F&F the vaccines into vials in a highly sterile clean room environment in full compliance of Good Manufacturing Practice (GMP).
The PV will start on March 1, 2021 and expected to be completed within 12 days.
NPRA will perform a GMP inspection to verify PLS’s compliance and ensure vaccines produced by PLS are of the quality required for its intended use.
“We are very thrilled with the arrival of this PV batch manufacturing because it brings us a step closer to our vision of manufacturing vaccines in this country. Malaysia does not have the facility to manufacture or to F&F any vaccines until now, and we have been importing all the vaccines used in the National Immunisation Programme.
“Our vaccine roadmap, including the F&F facility and a full manufacturing plant will not only be the first in Malaysia, it will also be the first halal vaccine plant in the world. Many renowned vaccine manufacturers will be involved in the know-how and technology transfer in which Sinovac will participate for two vaccines, InsyaAllah,” said Zulkarnain.
In the long term, he said, besides helping the nation to reduce dependency on imported vaccines, Pharmaniaga’s foray into vaccine venture will help the government to reduce its yearly vaccine expenditure.
It will further help spur the industry growth within the value chain including R&D at universities, clinical trials providers and human capital expertise.
Pharmaniaga and Sinovac have signed an agreement for Sinovac to supply in bulk 14 million doses of its Covid-19 vaccine for PLS to conduct F&F manufacturing at its plant.
The bulk vaccine is a vaccine manufactured in the country of origin and transported in large quantities for filling into an administrable form of vials, ampoules or prefilled syringe vaccines.
PLS will process the inactivated vaccine (or killed vaccine), a vaccine consisting of virus particles that have been grown in culture and then lose disease-producing capacity.
The storage and distribution condition of this vaccine is between 2 to 8 degrees and proven to be very reliable and dependable as the technology was established more than 40 years ago.
The vaccine is also ready to use and requires no dilution, unlike some other Covid-19 vaccines in the market.
“Our vaccine roadmap, including the F&F facility and a full manufacturing plant will not only be the first in Malaysia, it will also be the first halal vaccine plant in the world.
“Many renowned vaccine manufacturers will be involved in the know-how and technology transfer in which Sinovac will participate for two vaccines, InsyaAllah,” added Zulkarnain.
Pharmaniaga is the leading pharmaceutical company of Boustead Holdings Berhad group of companies, which together with Armed Forces Fund Board, are the major shareholders of the company. — Bernama
Bursa Malaysia had been traded in a volatile pattern over the past week, with the market bellwether settling at its intra-day low for three straight days at the beginning of the week. — Reuters pic
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KUALA LUMPUR, Feb 27 — Bursa Malaysia is anticipated to re-test the 1,600-level next week, with recovery-theme and vaccine-related stocks likely to be in focus following the start of the National Covid-19 Immunisation Programme last Wednesday.
Rakuten Trade Sdn Bhd head of equity sales Vincent Lau said a series of better-than-expected corporate earnings results released recently would also lend some support to the local bourse in the coming week.
“We expect the FBM KLCI to range between 1,560 and 1,590 next week.
“But with so many corporate results that had beaten market anticipations, the key index is also likely to re-test the 1,600-level next week,” he told Bernama.
Bursa Malaysia had been traded in a volatile pattern over the past week, with the market bellwether settling at its intra-day low for three straight days at the beginning of the week.
Investor sentiment was mainly influenced by the vaccination programme, overnight Wall Street and regional markets performance, as well as corporate results amid the earnings season.
On a Friday-to-Friday basis, the benchmark FBM KLCI shrank 7.18 points to 1,577.75 from last week’s 1,584.93.
On the scoreboard, the FBM Emas Index decreased 27.44 points to 11,614.17 and the FBMT 100 Index trimmed 18.34 points to 11,302.0.
The FBM 70 retreated 101.82 points to 15,461.17, the FBM ACE Index shrank 375.10 points to 10,873.52, and the FBM Emas Shariah Index erased 139.94 points to 12,979.15.
Sector-wise, the Financial Services Index added 129.56 points to 15,002.34, Industrial Products and Services Index gained 3.07 points to 185.34 but the Plantation Index receded 11.72 points to 7,177.33.
The Energy Index dropped 15.06 points to 931.89, the Technology Index edged down 0.94 of-a-point to 88.97 and the Healthcare Index slipped 259.87 points to 3,191.67.
Turnover declined to 57.72 billion units worth RM30.94 billion from 61.61 billion units worth RM28.79 billion in the previous week.
Main Market volume dwindled to 36.43 billion shares valued at RM26.85 billion versus 40.97 billion shares worth RM23.49 billion last week.
Warrants turnover rose to 2.34 billion units worth RM406.84 million against 1.66 billion units worth RM248.97 million previously.
The ACE Market volume edged down to 18.91 billion shares valued at RM13.41 billion compared with 18.96 billion units worth RM5.04 billion, the week earlier. — Bernama
On a Friday-to-Friday basis, the ringgit fell against the US dollar to 4.0450/0443 versus 4.0380/0430 a week earlier. — Reuters pic
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KUALA LUMPUR, Feb 27 — The ringgit may continue to be pressured downward against the US dollar next week if the US Treasury yields remain elevated or increase further.
OANDA Asia Pacific senior market analyst Jeffrey Halley said investors were shifting their focus to bonds on the rise in yields.
“In terms of the bigger picture, the ringgit-US dollar pair remains comfortably ensconced within its three-month range of between 4.0000 and 4.1000.
“The ringgit may rise towards the upper end of that band next week, but concerns over an extended period of weakness are overdone unless the ringgit-US dollar traces out a weekly close above 4.1000, or if China starts rapidly weakening the Chinese yuan at its daily fixing,” he told Bernama.
According to Halley, as Malaysia is dominated by heavily cyclical sectors and industries, it should outperform in 2021 as the global recovery accelerates.
On a Friday-to-Friday basis, the ringgit fell against the US dollar to 4.0450/0443 versus 4.0380/0430 a week earlier.
The local note was traded mostly higher against other major currencies.
It appreciated against the Singapore dollar to 3.0443/0490 from 3.0489/0534 a week earlier, and strengthened against the Japanese yen to 3.7985/8035 from 3.8315/8366.
The ringgit rose vis-a-vis the British pound to 5.6395/6473 from 5.6488/6566 on Friday last week but was lower against the euro to 4.9054/9127 from 4.8993/9062 previously. — Bernama
Geoffrey Okamoto, first deputy managing director of the IMF, said a new allocation of SDRs would boost the reserve positions of all IMF members, calling it “a far superior option to the alternatives” currently available to poorer countries. — Reuters pic
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WASHINGTON, Feb 27 — The International Monetary Fund (IMF) yesterday said it would propose ways to improve the transparency and accountability of how its Special Drawing Rights are used, a key US demand for its support of a new issuance of the IMF’s own currency.
Geoffrey Okamoto, first deputy managing director of the IMF, said a new allocation of SDRs would boost the reserve positions of all IMF members, calling it “a far superior option to the alternatives” currently available to poorer countries.
“The IMF will respond to the #G20’s call for a proposal on a general allocation of Special Drawing Rights (SDRs),” he said in a tweet.
“So that countries see maximum benefit from new SDRs, we will propose ways to improve transparency and accountability in how SDRs are allocated and traded,” he added. He gave no details.
Finance officials from the Group of 20 major economies yesterday expressed broad support for boosting the IMF’s emergency reserves after US officials dropped the previous administration’s opposition.
Italy, which heads the G20 this year, is pushing for a US$500 billion (RM2 trillion) issuance of SDRs, a move backed by many other G20 members as a way to provide liquidity to poor countries hit hard by the Covid-19 pandemic without increasing their debt levels.
US Treasury Secretary Janet Yellen on Thursday expressed her qualified support, but called for greater transparency about the trading and use of SDRs.
SDRs are supplemental foreign exchange reserve assets issued by the IMF much as a central bank prints money. They can be cashed in by members in exchange for hard currency, without condition, to pay for vaccines, equipment and other needs.
Oxfam International, one of many groups pushing for an SDR allocation, welcomed the G20’s support and said IMF shareholders should approve the move at their spring meeting in April.
Senator Dick Durbin, who has introduced legislation calling for a US$2 trillion SDR allocation, urged the Biden administration to back “the largest issuance possible without any delay.” — Reuters
In the six-page letter dated Wednesday, World Bank executive directors representing major European shareholder countries and Canada, welcomed moves by the Bank to ensure its lending supports efforts to reduce carbon emissions. — AFP pic
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WASHINGTON, Feb 27 — Senior officials from Europe have urged the World Bank’s management to expand its climate change strategy to exclude investments in oil — and coal-related projects around the world, and gradually phase out investment in natural gas projects, according to three sources familiar with the matter.
In the six-page letter dated Wednesday, World Bank executive directors representing major European shareholder countries and Canada, welcomed moves by the Bank to ensure its lending supports efforts to reduce carbon emissions.
But they called on the Bank — the biggest provider of climate finance to the developing world — to go even further, the sources said.
“We ... think the Bank should now go further and also exclude all coal — and oil-related investments, and further outline a policy on gradually phasing out gas power generation to only invest in gas in exceptional circumstances,” the European officials wrote in the letter, excerpts of which were seen by Reuters.
The officials took note of the World Bank’s US$620 million (RM2.5 billion) investment in a multibillion-dollar liquified natural gas project in Mozambique approved by the Bank’s board in January, but did not call for its cancellation, one of the sources said.
Many of the recommendations included in the letter are already reflected in a second-phase climate action plan for fiscal years 2021-2025 that Bank officials are now finalising, two of the sources said. The first plan began in fiscal year 2016.
The United States, the largest shareholder in the World Bank, this month rejoined the 2015 Paris climate accord, and has vowed to move multilateral institutions and US public lending institutions toward “climate-aligned investments and away from high-carbon investments.”
World Bank President David Malpass told finance officials from the Group of 20 economies on Friday that the Bank would make record investments in climate change mitigation and adaptation for a second consecutive year in 2021.
He said it was also launching new reviews to integrate climate into all its country diagnostics and strategies, a step initiated before the letter from the European officials, said one of the sources. — Reuters
Nasdaq, which had its worst week since October, ended the month roughly 1 per cent higher while the S&P 500 posted a monthly gain of about 2.6 per cent.— Reuters pic
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NEW YORK, Feb 27 — The tech-heavy Nasdaq index rallied in choppy trading on Friday, even as sentiment remained fragile after the index’s worst performance in four months the day before as fears of rising inflation kept US bond yields near a one-year high.
The S&P 500 ended little changed, while the Dow index closed lower after earlier dropping to a three-week low. The Dow still posted gains of nearly 4 per cent for the month, as investors bought into cyclical companies set to benefit from an economic reopening.
Nasdaq, which had its worst week since October, ended the month roughly 1 per cent higher while the S&P 500 posted a monthly gain of about 2.6 per cent.
Shares of Apple Inc, Amazon.com Inc, Microsoft Corp and Alphabet Inc rose between 0.2 per cent to 1.4 per cent on Friday but had their worst week in months due to a sharp rise in US Treasury yields.
The benchmark 10-year US Treasury yield eased to 1.404 per cent after jumping to 1.614 per cent on Thursday, roiling stock markets. Wall Street’s fear gauge hovered at a one-month high.
Tech stocks are particularly sensitive to rising yields because their value rests heavily on future earnings, which are discounted more deeply when interest rates go up.
“There’s no question that the path in rates today is higher,” said Andrew Mies, chief investment officer at 6 Meridian.
The Dow Jones Industrial Average closed 469.64 points lower, or 1.5 per cent, to 30,932.37, the S&P 500 lost 18.19 points, or 0.48 per cent, to 3,811.15 and the Nasdaq Composite added 72.91 points, or 0.56 per cent, to 13,192.34.
Financials and energy shares, the best performing S&P sectors this month, slipped 2 per cent and 2.3 per cent on Friday. Technology stocks rose 0.6 per cent and semiconductor stocks advanced 2.3 per cent.
“There are a few tailwinds for stocks that we shouldn’t lose sight of,” Mies said, citing President Joe Biden’s US$1.9 trillion economic aid package before Congress.
The S&P 500 value index dropped 1.3 per cent while the growth index rose 0.3 per cent in a reversal of this month’s trend.
An early surge in the shares of GameStop Corp fizzled and left the video game retailer’s stock down 6.4 per cent on Friday, throwing water on a renewed rally this week that has left analysts puzzled.
On the economic front, the latest data showed US consumer spending increased by the most in seven months in January but price pressures remained muted.
Salesforce.com Inc dropped 6.3 per cent as the online software company forecast full-year profit below market expectations.
Volume on US exchanges was 15.54 billion shares on Friday, compared with the 15.40 billion average for the full session over the last 20 trading days.
Declining issues outnumbered advancing ones on the NYSE by a 1.56-to-1 ratio; on Nasdaq, a 1.73-to-1 ratio favoured decliners.
The S&P 500 posted four new 52-week highs and one new low; the Nasdaq Composite recorded 54 new highs and 50 new lows. — Reuters
Shares of Amazon.com Inc, Microsoft Corp and Alphabet Inc edged up after bearing the brunt of this week’s downdraft to help the Nasdaq shake off its worst day in almost four months on Thursday. — Reuters pic
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NEW YORK, Feb 27 — The Nasdaq recovered as the bond rout retreated yesterday, but most other equity markets swooned around the world as data showing a strong rebound in US consumer spending kept fears of rising inflation alive.
Shares of Amazon.com Inc, Microsoft Corp and Alphabet Inc edged up after bearing the brunt of this week’s downdraft to help the Nasdaq shake off its worst day in almost four months on Thursday.
The Nasdaq Composite advanced 0.56 per cent while the S&P 500 slipped 0.48 per cent after a late-session surge failed to hold. The Dow Jones Industrial Average fell 1.51 per cent.
US consumer spending rose by the most in seven months in January as low-income households got more pandemic relief money and new Covid-19 infections dropped, setting up the US economy for faster growth ahead.
The benchmark 10-year Treasury note on Thursday shot to a one-year high of 1.614 per cent, a move that rocked world markets. The note’s yield is up more than 50 basis points this year and is now close to the dividend return of S&P 500 stocks.
Yields on the 10-year note fell steadily throughout the session to trade 11.7 basis points lower at 1.3981 per cent.
The amount of money swirling through markets and US stocks at close to all-time highs has caused investor angst, said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.
“Many people are taking some profits and not necessarily reinvesting that money quite yet,” Kinahan said.
“The US equity market is still the best game in terms of safety versus opportunity. But there is a shift going on.”
The scale of the recent Treasury sell-off prompted Australia’s central bank to launch a surprise bond-buying operation to try to stanch the bleeding.
MSCI’s benchmark for global equity markets slid 1.61 per cent to 656.29 despite its large weighting to the US tech heavyweights.
In Europe, the broad FTSEurofirst 300 index closed down 1.64 per cent at 1,559.48. Technology stocks lost the most as they continued to retreat from 20-year highs.
The dollar rose against most major currencies as US government bond yields held near one-year highs and riskier currencies such as the Aussie dollar weakened.
The dollar index rose 0.683 per cent, with the euro down 0.9 per cent to US$1.2066 (RM4.89). The Japanese yen weakened 0.31 per cent versus the greenback at 106.55 per dollar.
Gold fell more than 2 per cent to an eight-month low, as the stronger dollar and rising Treasury yields hammered bullion and helped it post its worst month since November 2016.
US gold futures settled 2.6 per cent lower at US$1,728.80 an ounce.
Benchmark German government bond yields fell for the first time in three sessions but were still headed for their biggest monthly jump in three years after rising inflation expectations triggered a sell-off.
The 10-year German bund note fell 1.2 basis points to -0.271 per cent.
European Central Bank executive board member Isabel Schnabel reiterated yesterday that changes in nominal interest rates had to be monitored closely.
Copper recoiled after touching successive multi-year peaks in six consecutive sessions, falling more than 3 per cent as risk-off sentiment hit wider financial markets after a spike in bond yields.
Three-month copper on the London Metal Exchange (LME) slumped to US$9,112 a tonne.
MSCI’s emerging markets equity index slumped 3.36 per cent, its biggest daily drop since markets plunged in March.
The surge in Treasury yields caused ructions in emerging markets, which feared the better returns on offer in the United States might attract funds away.
Currencies favoured for leveraged carry trades all suffered, including the Brazil real and Turkish lira, which slid for a fifth straight day, erasing all the year’s gains.
The heaviest selling earlier was in Asia, with MSCI’s broadest index of Asia-Pacific shares outside Japan sliding more than 3 per cent to a one-month low, its steepest one-day percentage loss since the market rout in late March.
Oil fell. Brent crude futures settled down 75 cents at US$66.13 a barrel. US crude futures fell US$2.03 to settle at US$61.50 a barrel. — Reuters
Revenue also declined to RM2.26 billion from RM2.59 billion previously. — Reuters pic
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KUALA LUMPUR, Feb 26 — Maxis Bhd’s net profit for the fourth quarter ended Dec 31, 2020 (Q4 2020) eased to RM319 million from RM353 million in Q4 2019.
Revenue also declined to RM2.26 billion from RM2.59 billion previously, the telco said in its filing with Bursa Malaysia today.
“The service revenue fell to RM1.94 billion compared to RM1.99 billion in Q4 2019, largely due to the temporary lack of international roaming income due to COVID-19.
“However, this was offset by the growth in enterprise and fibre businesses,” it said.
The telco said its postpaid revenue posted a slight dip of 2.2 per cent to RM967 million due to a decrease in Mobile Termination Rate and the lack of international roaming income.
“Prepaid service revenue for Q4 2020 declined by 11.1 per cent to RM696 million from RM783 million in Q4 2019,” it said.
In a separate statement, Maxis chief executive officer Gokhan Ogut said moving forward, the telco remains cautiously optimistic in the new norm.
Nevertheless, he said the telco will continue to develop more innovative solutions beyond mobile, and create new growth opportunities for businesses across industries. — Bernama
PETALING JAYA: Kejuruteraan Asastera Bhd (KAB), an electrical and mechanical engineering services provider in Malaysia, through its wholly-owned subsidiaries KAB Technologies Sdn Bhd and KAB Smart Solar Energy Sdn Bhd have executed five contracts.
The five contracts are energy performance contract (EPC) between KAB Technologies and Pelita Mentari Sdn Bhd; EPC between KAB Technologies and Flexrise Project Sdn Bhd; EPC between KAB Technologies and KL Eco City Sdn Bhd; letter of appointment to KAB Technologies from AmanahRaya Real Estate Investment Trust (ARREIT); and a RM1.26 million outright purchase contract between KAB Smart Solar and Senz Yang Realty Sdn Bhd
Under the three EPCs, KAB Technologies is appointed to deploy a chiller optimisation solution that collects, analyses, manages and optimises KL Eco City Mall, Mercu 2 (KL Eco City) and Mercu 3 (KL Eco City)’s chiller energy consumptions. These three buildings developed by S P Setia Berhad are part of the KL Eco City development. The chiller optimisation solution, operated through a data driven approach creates an efficient chiller control programme that monitors the power consumption of the heating, ventilation and air conditioning system in order to achieve better operational efficiencies. The minimum duration for the contracts are 36 months from the date of commissioning of the installations and activations of the solution.
As for the letter of appointment from ARREIT, KAB Technologies has been appointed as a contractor for the non-comprehensive air conditioning and mechanical ventilation system for Vista Tower, The Intermark. The contract includes the operations and maintenance of the system for a duration of one year, commencing from Jan 1, 2021 until Dec 31, 2021.
KAB Smart Solar in turn, is to undertake the engineering, procurement, construction and commissioning works of a grid-connected photovoltaic net energy metering system under the contract from Senz Yang Realty. The contract is in relations to the development of a 551 kilowatt-peak solar rooftop for KipMall Desa Coalfield.
KAB managing director Datuk Lai Keng Onn said the optimisation solution uses a fully automated energy management system that customises specifically for all individual sites to meet energy needs and maximise the energy efficiency of buildings. Likewise, its commitment in the renewable energy came to fruition, with the Senz Yang Realty contract to develop solar rooftops for KipMall, which symbolises its second foray into the solar energy system.
“Together with the contract to install, service and maintain the air-conditioning and mechanical ventilation system at The Intermark, these new contracts will ultimately provide a new sustainable recurring income stream for us to further boost our profitability.”
“Fundamentally, these contracts reflect the confidence which the industry has in KAB as we are once again given the opportunity to showcase the esteem quality services which we provide to our customers. We expect to continue growing our business in the green solutions division, particularly in the energy efficiency solutions, in addition to our mechanical and engineering services. As we go forward, we maintain our commitment to help our customers to reduce energy costs and carbon footprint to promote greener sustainable buildings by providing fully integrated green energy solution,” said Lai.
To recap, KAB’s first foray into renewable energy field was the proposed 80% subscription of Mayang Hijau Sdn Bhd’s (MHSB) share capital earlier this month. MHSB has recently inked a solar supply agreement to finance, design, construct, own and operate a 1.59 megawatt-peak solar photovoltaic energy generating system under the build-operate-transfer concept with the expected commercial operation date by the third quarter 2021.
PETALING JAYA: Malaysia’s export rose 6.6% year-on-year (yoy) to RM89.63 billion in January 2021, the highest for the month of January thus far, while this also marks the fifth consecutive month of positive growth, according to Malaysia External Trade Development Corp (Matrade).
It noted that the expansion was supported by increase in global demand notably for electrical and electronic (E&E) and rubber products as well as front-loading activities prior to the festive season.
Higher exports were seen to China, the US, Vietnam, Singapore and Hong Kong.
Meanwhile, the agency stated that imports for the month grew 1.3% yoy to RM73.02.
On the whole, total trade rose 4.1% to RM162.65 billion, the highest value registered for the month of January. Consequently, Malaysia’s trade surplus surged by 38% to RM16.6 billion, sustaining a double-digit growth for eight consecutive months.
Compared to the preceding month, total trade, exports, imports and trade surplus decreased by 4.8%, 6.4%, 2.7% and 19.8%, respectively.
The agency highlighted that the export of manufactured goods contributed to 88.5% of total exports, translating to an 11.7% yoy growth to RM79.36 billion, supported by higher export of E&E products notably in automotive industry, 5G network and smart devices.
On the other hand, the exports of rubber products, especially rubber gloves which showed resilient performance, registering triple-digit growth for five consecutive months.
It also reported an increased export for the manufactures of metal, chemicals and chemical products as well as optical and scientific equipment.
Exports of agricultural goods fell 7.2% yoy to RM5 billion due to lower exports of palm oil and palm oil based agriculture products and mining goods exports shrank 31% to RM4.93 billion on lower exports of liquefied natural gas (LNG) and crude petroleum
Among the major exports for the month are, e&e products valued at RM36.6 billion (40.9% of total exports, +13.1% yoy), rubber products valued at RM6.36 billion (7.1% of total exports, +187.4% yoy), chemicals and chemical products valued at RM4.7 billion (5.2% of total exports, +10.6% yoy), petroleum products valued at RM4.56 billion (5.1% of total exports, -32.4% yoy) and manufactures of meta valued at RM3.71 billion (4.1% of total exports, +19.9% yoy).
On a month-on-month (mom) basis, Martrade listed that exports of manufactured, agriculture and mining goods declined by 3.2%, 40.2% and 1.8%, respectively.
For the month, Malaysia trade with Asean constituted 26.5% of its total trade, which translated to a 7.4% growth yoy to RM43.03 billion as exports grew for two straight months. January saw a 7.3% growth yoy to RM25.73 billion buoyed by higher exports of E&E products, while imports from Asean picked up by 7.6% to RM17.29 billion.
Meanwhile, the agency said that Malaysia’s export to China recorded double-digit growth for three straight months.
In January, trade with China jumped 13.3% yoy to to RM29.9 billion, accounting for 18.4% of Malaysia’s total trade. Exports to China has seen double digit growth since November 2020, expanding by 26% to RM13.11 billion in January 2021.
The increase is attributed to higher exports of e&e products, iron and steel products as well as other manufactures especially solid-state storage devices (SSD), while imports from China expanded by 5% to RM16.79 billion.
On the other hand, the country’s total imports grew 1.3% yoy to RM73.02 billion in January 2021 with the three main categories of imports by end use accounted for 72.8% of the total.
Matrade listed that the import of intermediate goods stood at RM39.39 billion or 53.9% of total imports rose 1.4% yoy, following higher imports of processed industrial supplies, capital goods valued at RM7.24 billion or 9.9% of total imports had declined 5.4% yoy, due mainly to reduced imports of capital goods and consumption goods, valued at RM6.54 billion or 9% of total imports, rose 1.3% yoy, as a result of higher imports of primary food and beverages mainly for household consumption, especially coffee, tea and spices.
At 12.30pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) eased 3.78 points, or 0.24 per cent to 1,577.76, from 1,581.54 at yesterday’s close. ― Picture by Hari Anggara
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KUALA LUMPUR, Feb 26 ― Bursa Malaysia ended the morning session in the red after trading sideways, in sync with the downtrend among its regional peers.
However, losses in the key index were capped by the positive performance in the financial counters after a spate of positive earnings results were released on Thursday, which helped to boost the sentiments.
At 12.30pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) eased 3.78 points, or 0.24 per cent to 1,577.76, from 1,581.54 at yesterday’s close.
The key index opened 0.57 of-a-point lower at 1,580.97 and moved between 1,577.53 and 1,586.23 throughout the morning trading session.
Market breadth was negative with losers thumping gainers 873 to 294, while 367 counters were unchanged, 665 untraded and 76 others suspended.
Total volume stood at 6.03 billion units worth RM3.28 billion.
Regionally, Singapore’s Straits Times Index slid 0.98 per cent to 2,944.33, Hong Kong’s Hang Seng Index fell 2.43 per cent to 29,342.49, while Japan’s Nikkei was 2.84 per cent easier at 29,310.38.
Of the 30 FBM KLCI constituents, Petronas Chemicals shed 17 sen to RM7.61 and Tenaga was 16 sen weaker at RM9.96.
Nonetheless, the retreat in the heavyweights was limited by gains in banking counters, led by Public Bank which increased three sen to RM4.20 and Maybank which added five sen to RM8.14.
Hong Leong Financial Group, which was also the top gainer across the board, strengthened 30 sen to RM16.50.
Top losers included MPI, which dipped RM1.10 to RM36.90, while Nestle shed 90 sen to RM135.10 and KESM contracted 48 sen to RM15.42.
Of the actives, Dagang Nexchange inched up half-a-sen to 72 sen while its warrant improved one sen to 36 sen, GFM Services warrant perked 4.5 sen to 8.5 sen, Signature International warrant advanced 4.5 sen to 11 sen, while XOX was flat at nine sen.
On the index board, the FBM Emas Index retreated 59.84 points to 11,616.01, the FBMT 100 Index erased 50.25 points to 11,302.53, and the FBM Emas Shariah Index was 106.95 points lower at 12,974.70.
The FBM 70 gave up 157.63 points to 15,463.73 and the FBM ACE dwindled 125.97 points to 10,837.23.
Sector-wise, the Industrial Products and Services Index inched down 2.28 points to 185.29 and the Plantation Index declined 47.93 points to 7,165.10.
The Financial Services Index rose 31.92 points to 15,017.71. ― Bernama
PETALING JAYA: The Securities Commission Malaysia (SC) today launched NaviGate: Capital Market Green Financing Series, a programme to create greater awareness and connectivity between green companies and the capital market.
The first edition of NaviGate, held virtually, focused on micro, small and medium enterprises (MSMEs) and the alternative capital market financing avenues available through the equity crowdfunding (ECF) and peer-to-peer (P2P) financing. A total of 100 participants and 40 MSMEs from the green technology and sustainable energy sectors in Malaysia participated in the programme which connected them to the ECF and P2P financing platforms.
ECF and P2P financing offer alternatives to traditional financing mechanisms, as these platforms provide smaller-scale financing options to address their financing needs. The Green Financing Survey carried out by the SC in 2020, also highlighted the high demand for smaller-scale financing options and the untapped financing opportunities within the green MSME segment.
“Since its launch, total funds raised through these digital platforms have reached RM1.3 billion as at end-December 2020, benefiting around 3,000 MSMEs. A number of companies have accessed ECF and P2P financing to fund their green projects and businesses such as in solar power, waste management, and energy efficiency,” said SC chairman Datuk Syed Zaid Albar.
He also highlighted that the government recognises the significant role MSMEs play in contributing towards the country’s growth, job creation and innovation, and has allocated an additional RM30 million and RM50 million in Budget 2021, for ECF and P2P investments respectively, through the Malaysia Co-Investment Fund.
NaviGate demonstrates the SC’s continued emphasis in fostering capital market inclusivity and in facilitating the acceleration of the SRI agenda for the Malaysian capital market, complementing the initiatives undertaken by Capital Markets Malaysia.
The inaugural session is supported by the Malaysian Green Technology and Climate Change Centre and Sustainable Energy Development Authority.
Mohd Uzir said total trade widened by 4.1 per cent yoy to RM162.6 billion. — Picture by Miera Zulyana
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KUALA LUMPUR, Feb 26 — Malaysia’s trade surplus soared by 38.0 per cent year-on-year (yoy) to RM16.6 billion in January 2021, said the Department of Statistics Malaysia (DOSM).
Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said total trade widened by 4.1 per cent yoy to RM162.6 billion.
He said Malaysia’s total exports continued its positive momentum of five consecutive months of improvement by expanding 6.6 per cent yoy to RM89.6 billion in January 2021, while imports continued to record an increase of 1.3 per cent to RM73 billion.
“This was the highest export value recorded for January so far, driven by both domestic exports and re-exports.
“Domestic exports grew by 6.3 per cent at RM72.1 billion and it contributed 80.5 per cent to the total exports,” he said in a statement on Friday.
Re-exports grew 7.5 per cent yoy to RM17.5 billion in January 2021, while imports increased 1.3 per cent y-o-y to RM73 billion.
Mohd Uzir said Malaysia's export expansion was supported mainly by higher exports to China (+RM2.7 billion), the United States (+RM1.6 billion), Vietnam (+RM1.2 billion), the European Union (+RM821.3 million), and Singapore (+RM621.0 million).
The main products, which contributed to the increase in exports, were electrical and electronic products (+RM4.2 billion); rubber products (+RM4.1 billion); manufacture of metal (+RM614.4 million), and chemical and chemical products (+RM448.9 million), he said.
Meanwhile, increases in imports were mainly from Taiwan (+RM1.0 billion), China (+RM793.9 million), Hong Kong (+RM686.1 million), and Indonesia (+RM662.1 million).
The expansion in imports were noted for electrical and electronic products (+RM3.4 billion) and rubber products (+RM623.9 million). — Bernama
Kim Beom-su is a self-made billionaire and founder of the South Korea’s biggest mobile messenger operator KakaoTalk. — AFP pic
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SEOUL, Feb 26 — Two self-made South Korean billionaires have pledged in as many weeks to give away half their fortunes — a rarity in a country where business is dominated by family-controlled conglomerates and charity often begins and ends at home.
Kim Beom-su, the founder of South Korea’s biggest messaging app KakaoTalk, announced this month he will donate more than half his estimated US$9.6 billion (RM38.7 billion) assets to try to “solve social issues”.
Shortly afterwards, Kim Bong-jin of food-delivery app Woowa Brothers and his wife, Bomi Sul, became the first South Koreans to sign the Giving Pledge. The philanthropic initiative was set up by Bill and Melinda Gates, alongside Warren Buffett, for billionaires to give away at least half their wealth.
Both Kims contrast with most of South Korea’s ultra-wealthy, who are largely descendants of the founders of the chaebol, the sprawling, usually family-run conglomerates that powered the country’s post-war boom and still dominate the economy.
Unlike the chaebol heirs who inherited their wealth, power and connections, the two Kims were born to working-class families.
In his Giving Pledge statement, Kim of Woowa Brothers described his “humble beginning” on a small island.
His parents ran a small restaurant, where he slept at night, and as a teenager he gave up his dream of attending an art high school, enrolling instead in a cheaper vocational school.
Wealth, he said, had value when it was used for “the greatest benefit of the least advantaged members of society”.
Rather than keeping the entirety of their fortune, Kim and his wife said in their statement: “We are certain that this pledge is the greatest inheritance that we could provide for our children.”
Neither of the billionaire Kims has so far provided a precise timeline for their pledged donations, or detailed the recipient organisations.
Tech industry
More than 200 super-wealthy from around the world have signed the Giving Pledge, according to its website.
But it has previously been criticised for not being legally binding, and it acknowledges it is only a “moral commitment”.
It has struggled to make headway in East Asia, listing only a handful of donors from China, Hong Kong and Taiwan, and none from Japan.
Like many East Asian societies, South Korea remains largely family-oriented, with financial ties extending well into adulthood as parents help finance higher education and housing, and little sense of obligation to give to non-relatives.
South Korea ranks 57th in the Charities Aid Foundation’s most recent World Giving Index — with Japan at 107 and China at 126.
Public philanthropy has a limited history among super-wealthy South Koreans, while the chaebols’ founding families often maintain their grip through complex webs of cross-holdings between subsidiaries.
“When the country was just reeling from the war, the priority was survival, not philanthropy, and working with your own family members was seen as the most efficient way of running a business,” Jangwoo Lee, a business administration professor at Kyungpook National University, told AFP.
But both Kim Beom-su and Kim Bong-jin have been at the forefront of South Korea’s social media and mobile tech industries boom, each founding their company in 2010 and rapidly accumulating a fortune.
Kakao’s flagship messaging application is installed on more than 90 percent of phones in the country.
Woowa owns South Korea’s biggest food delivery app, with more than 10 million monthly users — around 20 percent of the population.
The children of Kakao’s Kim have been appointed to positions in his holding company, but professor Lee said chaebol-style succession was effectively obsolete for such firms.
“Family-oriented management strategies may have worked for manufacturing businesses, but we have now entered an era where newly emerging enterprises do not really benefit from such ways,” he said.
“These are creative and unpredictable industries, and they need specialists, not family members, in leadership in order to thrive.”
That could give their owners more flexibility with their assets.
Art museum
According to the Washington-based Institute for Policy Studies, most donations under the Giving Pledge have gone to private foundations controlled by donors’ relatives, or donor-advised funds, enabling the givers to “retain significant managerial control over millions of philanthropic dollars” while generating “hefty tax reductions”.
South Korean law also offers donors some tax benefits, depending on the beneficiaries and how giving is structured.
Some chaebol families have engaged in high-profile philanthropy.
Hyundai Motor’s honorary chairman Chung Mong-Koo endowed an eponymous foundation with his personal assets and the Samsung group — South Korea’s biggest conglomerate — founded the Leeum, Samsung Museum of Art in Seoul, home to an extensive collection of antiquities and modern works.
But critics say South Korea is becoming an increasingly unequal society.
Kakao’s Kim was among those who grew up poor. Neither of his parents attended high school, and they took multiple blue-collar jobs to make ends meet, leaving him to be cared for mostly by his grandmother.
All eight members of the family shared a single room, and later he sometimes could not afford to buy lunch as a student at the prestigious Seoul National University.
Vladimir Tikhonov, professor of Korean Studies at the University of Oslo, said the South Koreans’ moves were a “display of public-mindedness on the part of the self-made rich men”.
“Meritocratic billionaires have something that rich heirs do not.” — AFP
.JPG "At 12.30pm, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) eased 3.78 points, or 0.24 per cent to 1,577.76, from 1,581.54 at yesterday’s close. ― Picture by Hari Anggara")
.JPG "Mohd Uzir said total trade widened by 4.1 per cent yoy to RM162.6 billion. — Picture by Miera Zulyana")
