KUALA LUMPUR, March 31 ― The Producer Price Index (PPI) local production increased 2.7 per cent in February 2021 compared with -0.1 per cent in January 2021, the first positive shift after experiencing negative growth for 11 consecutive months since March 2020.
“The Index of Agriculture, forestry & fishing continued to increase 35.0 per cent compared to 22.6 per cent in the previous month. The Index of Manufacturing and Water supply increased 1.5 per cent and 0.8 per cent, respectively,” Department of Statistics Malaysia chief statistician Datuk Seri Mohd Uzir Mahidin said.
The index of Mining recorded a negative change of 11 per cent, improved from -28.3 per cent in January 2021, while the Index of Electricity & Gas Supply recorded a decrease of 1.9 per cent, similar to the previous month, he said in a statement here, today.
On a monthly basis, the PPI local production showed an increase of 1.5 per cent in February 2021, lower than 2.0 per cent recorded in the previous month. The manufacturing and agriculture, forestry & fishing sector increased with slower growth of 0.5 per cent (January 2021: 1.3 per cent) and 2.2 per cent (January 2021: 3.0 per cent), respectively.
However, the mining sector recorded a higher growth of 12.9 per cent compared to 11.3 per cent a month ago. Electricity & gas supply also recorded a positive growth of 0.3 per cent (January 2021: -0.1 per cent). Meanwhile, the index of Water supply decreased 0.4 per cent.
The DOSM also reported that the PPI local production year-on-year for all stages of processing recorded an increase in February 2021.
A higher increase was recorded by crude materials for further processing with a growth of 10.0 per cent (January 2021: -3.4 per cent). Concurrently, the index of intermediate materials, supplies & components, and finished goods increased 1.5 per cent and 0.4 per cent, respectively. ― Bernama
BNM said the impact of the temporary relief measures on ITOs’ profitability has been limited as the cumulative amount of premiums deferred and on holiday remained minimal at 7.7 per cent of premiums in force. — Picture by Ahmad Zamzahuri
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KUALA LUMPUR, March 31 ― The insurance and takaful sector's total net policy benefit payouts could increase in 2021 due to additional costs associated with Covid-19-related procedures and treatments that are incidental to covered conditions, but the impact is expected to remain manageable, Bank Negara Malaysia (BNM) said.
“While death due to the pandemic is claimable under all life insurance policies and family takaful certificates, the low mortality rate observed among Covid-19 patients in Malaysia at 0.4 per cent against the global rate of 2.2 per cent would likely limit the impact from any additional death claims,” it said in the Financial Stability Review for Second Half 2020 report released today.
It also noted that medical and health insurance policies/takaful certificates (MHIT) in Malaysia generally carry a pandemic exclusion clause in line with practices globally.
“These exclusions reflect the complexity of pricing for such events due to the incalculable impact and costs, an absence of viable risk diversification instruments for insurers and takaful operators (ITOs), and to avoid significant premium hikes following a pandemic event,” the central bank said.
In view of the resurgence in Covid-19 cases and the reintroduction of movement control order in most states in early 2021, ITOs have extended the option for affected consumers to defer premiums due under life insurance policies and family takaful certificates for three months without affecting the coverage.
The option is now available for applications received until June 30, 2021.
BNM said the impact of the temporary relief measures on ITOs’ profitability has been limited as the cumulative amount of premiums deferred and on holiday remained minimal at 7.7 per cent of premiums in force.
The central bank said some ITOs made adjustments to their repricing plans in 2020 to reduce the financial burden on policyholders and preserve their MHIT coverage, including deferring re-pricing plans to 2021, and permitting extended deferral of premiums.
ITOs are expected to be able to comfortably support the financial impact of these adjustments without affecting their overall resilience in the short term, it said.
“Nevertheless, deferment of re-pricing over an extended period will not be financially sustainable for both the MHIT providers and policyholders as over the longer term, medical claims would reflect the underlying trends in medical inflation,” added BNM.
The central bank said medical claims are expected to increase this year compared to 2020 as a result of the resumption of treatments and procedures that were earlier delayed by policyholders due to Covid-19 concerns.
“Thus, further delays in re-pricing plans can lead to much steeper premium increases or reduced capacity of the industry to provide coverage in the future,” said BNM. ― Bernama
BNM said broadly, this framework could encompass policies to catalyse economic transformation, enhancing skills, training and education systems, strengthening Active Labour Market Policies (ALMPs), and promoting inclusive labour market outcomes. — AFP pic
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KUALA LUMPUR, March 31 ― The government should consider implementing long-term structural reforms, such as a holistic labour market policy framework to guide policymakers in building a robust labour market ecosystem post-Covid-19.
BNM said broadly, this framework could encompass policies to catalyse economic transformation, enhancing skills, training and education systems, strengthening Active Labour Market Policies (ALMPs), and promoting inclusive labour market outcomes.
“Drawing from this policy paradigm, the following three policy strategies could be considered.
“First, there is an urgent need to introduce policies and economic reforms that would ultimately lead to the higher creation of and demand for high-skilled and knowledge-based workers.
“Second, efforts to enhance skills and facilitate the reallocation of workers to more resilient, productive, and high-growth areas must be intensified, with more focus towards the ‘future of work’.
“And third, initiatives to enhance labour market resilience should be intensified, beginning with closing gaps in, and enhancing access to, social security and insurance,” BNM said in the Economic Monetary Review 2020 released today.
On the ALMPs in Malaysia, BNM said as pointed out recently by the World Bank, even though Malaysia has made significant progress in its skills development system since the 2000s, there exists duplication and fragmentation in Malaysia’s ALMPs.
“Specifically, implementation and deployment are spread over multiple agencies, leading to inefficiency and high administration costs.
“As a result, this manifests in relatively lower levels of programme spending and fewer beneficiaries,” it said.
BNM also said this fragmentation in the ALMP system also results in a lack of overarching strategy and importantly, weak linkages between training and employment support with the needs of industry.
“Over the long term, economic policies should be geared towards creation of high-skilled, high-paying jobs, with complementary focus on advancing skills enhancement, enhancing search and matching mechanisms in the labour market, and promoting more inclusive outcomes for vulnerable segments of the labour market.
“Current efforts by the government to enhance the labour market statistics landscape are also welcome, as comprehensive, granular, and timely data on developments in the labour market is key to enabling quality analysis and the formulation of impactful policies,” it said.
Nevertheless, BNM said during the pandemic, the impact of the virus in Malaysia was mitigated by a slew of measures to soften the economic burden of lockdowns on households, businesses and workers.
Among the key policies included Prihatin, Penjana, Budget 2021, Permai, and Pemerkasa packages encompassing, among others, the Wage Subsidy Programmes (WSP 1.0, 2.0 and 3.0), increased access to the Micro Credit Scheme and micro-SME special grants, as well as enhanced hiring incentives under the Penjana Kerjaya initiative, it added. ― Bernama
The benchmark Nikkei 225 index was down 0.81 per cent or 239.72 points at 29,192.98 in early trade, while the broader Topix index slipped 0.91 per cent or 18.08 points to 1,959.78. — Reuters pic
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TOKYO, March 31 ― Tokyo stocks opened lower today, tracking falls on Wall Street where rising bond yields renewed inflation concerns, with investors also focused on Chinese data due later in the day.
The benchmark Nikkei 225 index was down 0.81 per cent or 239.72 points at 29,192.98 in early trade, while the broader Topix index slipped 0.91 per cent or 18.08 points to 1,959.78.
“Japanese shares are seen starting with losses following a rout in the US market... with investor eyes on China's manufacturing and non-manufacturing PMIs” due during morning trade, Toshiyuki Kanayama, senior market analyst at Monex, said in a note.
The dollar fetched ¥110.40 (RM4.14) in early Asian trade, against ¥110.38 in New York late yesterday after the greenback broke through the ¥110 barrier for the first time in a year.
In Tokyo, Mitsubishi UFJ Financial was down 2.50 per cent at ¥600.1 after it warned it could face a US$300 million loss in its dealings with a US client.
The announcement came after Japan's Nomura and Switzerland's Credit Suisse warned they faced significant losses after reports of their exposure to a US fund that sold billions in stocks last week.
Mitsubishi UFJ rival Sumitomo Mitsui Financial was also down 2.06 per cent at ¥4,045.
Renesas Electronics was down 1.91 per cent at ¥1,179 after it said it could take three to four months to fully recover from a fire at one of its plants that threatens to worsen a global semiconductor shortage plaguing automakers.
Among other shares, Sony was up 1.39 per cent at ¥11,655 and Toyota was up 2.31 per cent at ¥8,555.
On Wall Street, the Dow ended down 0.3 per cent at 33,066.96. ― AFP
At 11.05am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) shed 22.10 points to 1,587.09 from yesterday's close of 1,609.19. ― Picture by Hari Anggara
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KUALA LUMPUR, March 31 ― The key index fell below the 1,600-level at mid-morning, weighed down by glove stocks and fragile sentiment on the back of weak Wall Street performance overnight.
At 11.05am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) shed 22.10 points to 1,587.09 from yesterday's close of 1,609.19.
The index opened 0.23 of-a-point easier at 1,608.96.
On the broader market, losers thumped gainers 656 to 256, while 369 counters were unchanged, 920 untraded and 86 others suspended.
Total volume stood at 3.22 billion shares worth RM1.30 billion.
Among the glove stocks, Top Glove lost 31 sen to RM4.47, Hartalega slipped 35 sen to RM9.01 and Supermax went down 10 sen to RM3.85.
Of the other heavyweights, Hong Leong Bank rose two sen to RM18.82, Maybank slid nine sen to RM8.31, Petronas Chemicals was one sen easier to RM8.09, TNB decreased 18 sen to RM10.22, IHH Healthcare gave up nine sen to RM5.34 and CIMB eased four sen to RM4.42
As for the active counters, Berjaya Corp rose two sen to 41.5 sen and Widad added one sen to 59.5 sen, while Fintec, AT Systematization and TA Win all edged down half-a-sen to six sen, 10 sen and 42.5 sen, respectively.
On the index board, the FBM Emas Index weakened 139.13 points to 11,683.64, the FBM 70 decreased 128.96 points to 15,473.41, the FBMT 100 went down 141.5 points to 11,353.54, the FBM ACE gave up 83.72 points to 10,149.17, and the FBM Emas Shariah slipped 174.47 points to 12,914.92.
Sector-wise, the Financial Services Index dropped 120.33 points to 15,338.58, the Plantation Index was 41.29 points lower to 7,093.38, and the Industrial Products and Services Index fell 1.24 points to 192.29. ― Bernama
BNM says axing the export conversion rule would enable exporters to manage the conversion of export proceeds according to their foreign currency cash flow needs. — Picture by Yusof Mat Isa
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KUALA LUMPUR, March 31 ― Bank Negara Malaysia (BNM) today announced today the removal of export conversion rule along with a few other liberalisation measures starting April 15, 2021, as part of liberalisation measures aimed at enhancing Malaysia’s position as a Foreign Direct Investment (FDI) destination and global supply chain hub.
Axing the export conversion rule would enable exporters to manage the conversion of export proceeds according to their foreign currency cash flow needs.
Secondly, exporters would also be allowed to settle domestic trade in foreign currency with other residents operating in the global supply chain.
“This move is expected to facilitate natural hedge for exporters and their business partners along the global supply chain to better manage foreign exchange risk,” BNM governor Datuk Nor Shamsiah Mohd Yunus told an editor briefing session yesterday.
She said exporters are also allowed to net-off export proceeds against permitted currency obligations that would enhance business efficiency and cash flow management of exporters.
“Exporters can extend the period of export repatriation beyond six months under exceptional circumstances. Exempt exporters from seeking the Bank’s approval to extend export proceeds beyond six months period for reasons beyond the exporters’ control.
“This may include the situations where buyers are in financial difficulties,” she said.
Lastly, corporates are free to undertake commodity derivatives hedging directly with non-resident counterparties, which would broaden avenues and options for corporates to hedge their commodity price risk. “These measures are expected to lift investor sentiment and enhance Malaysia’s position as FDI destination,” said Nor Shamsiah. ― Bernama
BNM governor Datuk Nor Shamsiah Mohd Yunus says the number of unsold properties remains worrisome amid the new norms. ― Bernama pic
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KUALA LUMPUR, March 31 ― The number of unsold properties has seen a respite amid the government’s Home Ownership Campaign (HOC) except for the commercial market, as it remains worrisome amid the new norms, Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus said.
“The amount of unsold properties is still very high. It is about 170,000 units but it has been coming down but the level is still very high. The HOC that the government has introduced last year has helped clear some of these unsold units,” she said.
“But in terms of unsold properties, we are worried about commercial properties because even before the pandemic we had a very high supply office space and shopping complex.
“With the pandemic and greater online sales, more work from home arrangements, the need for office space and physical premises will come down and the demand will not be as high as before,” she told an editors’ briefing session on Tuesday.
So, in terms of unsold properties, BNM is much more worried of the unsold commercial space because the excess capacity in the market would be made much worse under the new normal. “Luckily, the bank’s exposure to this segment is very small. It accounts to 3.2 per cent of the total loans,” she said. ― Bernama
BNM says international reserves preserves macroeconomic and financial stability, as well as maintains orderly financial market conditions and public confidence. — Picture by Yusof Mat Isa
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KUALA LUMPUR, March 31 ― Bank Negara Malaysia’s (BNM) international reserves play a critical role in domestic’s macroeconomic management and in particular, it helps Malaysia withstand large and volatile capital outflows.
The central bank, in its Annual Report 2020, said thereby, this preserves macroeconomic and financial stability, as well as maintains orderly financial market conditions and public confidence.
Based on a wide range of internationally accepted benchmark, BNM’s international reserves remained sufficient at end-2020.
BNM’s international reserves meet the adequate thresholds but do not significantly exceed these benchmarks.
“The international reserves are therefore adequate and not excessive,” it noted.
BNM said the management of international reserves by the central bank is subject to a strict governance and risk management framework established pursuant to the Central Bank of Malaysia Act 2009 (CBA 2009).
Under CBA 2009, BNM is entrusted to hold and manage international reserves for the purpose of ensuring financial and monetary stability, as well as maintaining public confidence.
“Given Malaysia’s deep trade and financial integration with the global economy, international reserve holdings are vital as a tool that can be deployed to insulate the domestic economy against sudden capital flow reversals.
“In this regards, international reserves held by BNM are primarily for precautionary purposes to facilitate international trade and financial transactions, and to ensure orderly foreign exchange market conditions, especially during the period of economic or financial distress,” it said.
BNM noted that as a highly open economy, Malaysia is exposed to sudden and sizeable two-way capital flows.
For example, during the 2008-2009 Global Financial Crisis and 2014-2015 oil price shock episodes, portfolio outflows amounted to US$26 billion (Q3 2008-Q1 2019 and US$13.7 billion (Q3 2014-Q3 2015), respectively.
During these times, BNM deployed its international reserves to mitigate the significant withdrawal of foreign currency liquidity and ensure orderly functioning of the domestic foreign exchange market.
This successfully prevented excessive ringgit exchange rate fluctuations that would harmed the domestic economy.
“It also underscores that BNM’s international reserves are needed for its intended objectives and should not be utilised for other purposes, including financing the government’s fiscal deficit or paying off government debt.
“Financing fiscal spending using international reserves is viewed negatively by financial market investors and analysts as it signals potential for further depletion of international reserves,” it added.
To further strengthen Malaysia’s external resilience, BNM said it has continued to pursue the initiative to deepen the domestic financial market and to promote more active management of foreign exchange risks by corporates, banks and households.
This includes enhancing the domestic foreign exchange market access and facilitating the development and offering of efficient foreign exchange hedging products and instruments to protect against exchange rate fluctuations.
BNM said these measures enhance Malaysia’s flexible exchange rate to serve its purpose as the first line of defence in facilitating adjustments in the economy in responses to shocks.
These initiatives have also helped increase the average monthly turnover of foreign exchange swaps, forwards and options to US$171.9 billion in 2020 from US$67.3 billion in 2012.
In addition, the progressive liberalisation of the Foreign Exchange Policy has resulted in the accumulation of external assets by corporates and banks amounting US$365.5 billion as at end-2020, an increase from US$62.6 billion in 2001. ― Bernama
BNM says Blueprint 3.0 will also emphasise the catalytic role of the financial sector in advancing the sustainable agenda, in particular, climate-related risks to support an orderly transition towards a greener economy. — Picture by Ahmad Zamzahuri
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KUALA LUMPUR, March 31 ― Bank Negara Malaysia (BNM) said its priority this year is to set out the critical development and regulatory priorities for the next five years (2022-2026) under a new blueprint for the financial sector (Blueprint 3.0).
“These priorities will focus on enabling technology and data-driven innovation, enhancing the competitiveness of the financial sector, expanding access and responsible usage of financial solutions, and ensuring financial intermediation remains effective to support the future needs of the economy.”
Blueprint 3.0 will also emphasise the catalytic role of the financial sector in advancing the sustainable agenda, in particular, climate-related risks to support an orderly transition towards a greener economy, the central bank said in the Annual Report 2020 released here, today. ― Bernama
Chinese factory activity normally goes dormant during the Lunar New Year break, but this year millions of workers stayed put due to Covid-19 fears, which led to an earlier-than-usual resumption of business at factories. — Reuters file pic
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BEIJING, March 31 ― China's manufacturing activity expanded at the fastest pace in three months in March as factories cranked up production after a brief lull during the Lunar New Year holidays, with improving global demand adding further momentum to a solid economic recovery.
The official manufacturing Purchasing Manager's Index (PMI) rose to 51.9 from 50.6 in February, data from the National Bureau of Statistics (NBS) showed today, remaining above the 50-point mark that separates growth from contraction for the 13th straight month.
Analysts had expected it to rise to 51.0.
Chinese factory activity normally goes dormant during the Lunar New Year break, but this year millions of workers stayed put due to Covid-19 fears, which led to an earlier-than-usual resumption of business at factories.
Authorities successfully curbed the domestic transmission of Covid-19 virus during the winter, leading to quarantine restrictions and testing requirements being scaled back as life once again returns to normal.
The official PMI, which largely focuses on big and state-owned firms, showed the sub-index for production stood at the highest level since December, while new orders also grew at the fastest place in three months.
Adding to the positive impulse, export orders returned to growth amid improving foreign demand, the survey showed.
China managed to largely bring the Covid-19 pandemic under control much earlier than many countries as authorities imposed stringent anti-virus curbs and lockdowns at the initial phase of the outbreak.
That has helped its economy mount a rapid turnaround after a slump at the start of 2020, led by resurgent exports growth as factories raced to fill overseas orders. Factory-gate prices have accelerated at their fastest pace in more than two years, while industrial output has also surged.
The resurgent Covid-19 infections abroad and logistics jams have seen some surveyed firms grappling with inadequate imports of few raw materials, leading to prolonged delivery timeframes, said Zhao Qinghe, a senior statistician with the NBS in a statement accompanying the data.
Beijing has set an annual economic growth target at above 6 per cent this year, well below analyst expectations for an expansion of more than 8 per cent. Premier Li Keqiang has said policies would not be dramatically loosened to chase higher growth, adding that the focus will be on consolidating the economic recovery.
China's was the only major economy to post growth last year with an expansion of 2.3 per cent, but that still marked the weakest annual pace in more than 40 years due to the Covid-19 fallout.
Growth in China's services sector picked up significantly in March, a separate survey showed, as consumers opened up their wallets after months of hesitation.
The official composite PMI, which includes both manufacturing and non-manufacturing activity, rose to 55.3 from February's 51.6.
A sub-index for activity in the construction sector stood at 62.3 as weather turns warm, compared with 54.7 in February. ― Reuters
At 9am, the local note fell 10 basis points (bps) to open at 4.1500/1560 against the greenback from yesterday’s close of 4.1490/1530. — Picture by Hari Anggara
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KUALA LUMPUR, March 31 ― The ringgit extended its decline to open slightly lower against the US dollar today, weighed down by a strengthening greenback and higher US Treasury yields.
At 9am, the local note fell 10 basis points (bps) to open at 4.1500/1560 against the greenback from yesterday’s close of 4.1490/1530.
The 4.15-mark is a level last seen on Nov 3, 2020 when the local note closed at 4.1540/1580 versus the greenback.
“Higher US Treasury yields continue to act like a wrecking ball crashing any semblance of positive ringgit sentiment,” Axi chief global market strategist Stephen Innes told Bernama.
Innes said despite Malaysia being removed from the FTSE Russell Watch List, the news did little to stem the tide of the ringgit selling.
“This is likely (so) because foreign bond investors have turned into better sellers of bonds than local bond buyers,” he said.
According to news report, the US 10-year Treasury yields rose to 14-month highs on Tuesday, buoyed by expectations for a swift and strong US economic recovery.
On Monday, the FTSE Russell announced that Malaysia would be removed from the Watch List for potential reclassification of its market accessibility level from “2” to “1” and will retain its membership in the FTSE World Government Bond Index.
At the opening bell, the ringgit was traded mostly higher against a basket of major currencies, except for the Singapore dollar whereby the local unit depreciated to 3.0809/0865 from 3.0799/0841 at yesterday’s close.
The local note appreciated against the yen to 3.7489/7553 from 3.7633/7672, rose vis-a-vis the euro to 4.8638/8725 from 4.8697/8760, and gained against the pound to 5.7021/7116 from 5.7094/7158 yesterday. ― Bernama
At 9.05am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) fell 5.30 points to 1,603.89 from yesterday’s close of 1,609.19. ― Picture by Hari Anggara
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KUALA LUMPUR, March 31 ― Bursa Malaysia opened marginally lower today in line with the weaker Wall Street performance overnight.
At 9.05am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) fell 5.30 points to 1,603.89 from yesterday’s close of 1,609.19.
The index opened 0.23 of-a-point easier at 1,608.96.
On the broader market, losers led gainers 231 to 159, while 311 counters were unchanged, 1,500 untraded and 86 others suspended.
Total volume stood at 453.71 million shares worth RM154.29 million.
Rakuten Trade Sdn Bhd said trading activities on the local bourse have somewhat weakened as sentiment remained cautious.
“As for the benchmark index, it seems like it is still stuck in a consolidation mode, hence, we anticipate it to hover within the 1,605-1,615 range today,” it said in a research note today.
Among heavyweights, Public Bank and Hong Leong Bank rose two sen each to RM4.30 and RM18.82, respectively, Petronas Chemicals gained one sen to RM8.11, Maybank was flat at RM8.40, TNB eased four sen to RM10.36, and IHH Healthcare fell five sen to RM5.38.
As for the active counters, Sapura Energy edged up half-a-sen to 15.5 sen, Solid Automotive bagged 1.5 sen to 24 sen, AirAsia X and MTouche were both flat at 9.5 sen and four sen, respectively, while AT Systematization and Berjaya Corp inched down half-a-sen to 10 sen and 39 sen.
On the index board, the FBM Emas Index dipped 30 points to 11,792.77, the FBM 70 decreased 11.06 points to 15,591.31, the FBMT 100 slipped 30.16 points to 11,464.88, the FBM ACE gave up 22.75 points to 10,210.14, and the FBM Emas Shariah shed 56.60 points to 13,032.79.
Sector-wise, the Financial Services Index put on 28.85 points to 15,487.76, the Plantation Index went down 6.33 points to 7,128.34, and the Industrial Products and Services Index edged down 0.08 of-a-point to 193.45. ― Bernama
The German DAX rose 1.3 per cent to scale a record high, boosted by automakers and a 1.6 per cent rise in Deutsche Bank. — Reuters pic
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FRANKFURT, March 31 ― European shares ended close to record highs yesterday on hopes of a vaccine-driven economic recovery, while investors looked past the fallout of a US hedge fund default that hit banking stocks a day earlier.
The pan-European STOXX 600 index gained 0.7 per cent, trading less than a percent below its pre-pandemic peak.
Bank stocks jumped 2.7 per cent, rebounding after a 1 per cent drop on Monday, as US and European government bond yields rose on hopes of stronger economic growth and inflation ahead.
Swiss lender Credit Suisse fell 3.1 per cent, following its near 14 per cent slide in the previous session as it warned of “highly significant and material” losses after the fund, named by sources as Archegos Capital, defaulted on margin calls.
“Though Archegos uncertainties are still hanging over the markets, European investors felt settled enough to push the region's indices higher,” Connor Campbell, a financial analyst at SpreadEx, said in a note.
The German DAX rose 1.3 per cent to scale a record high, boosted by automakers and a 1.6 per cent rise in Deutsche Bank .
“If all goes well in the next 48 hours, it (the DAX) could close out March above 15,000,” said Campbell.
The benchmark STOXX 600 is on course to end the first quarter with a near 8 per cent gain ― its fourth straight quarterly rise ― as global growth optimism overshadowed sluggish vaccination drives in the euro zone and new coronavirus-related lockdowns.
Economically sensitive cyclical sectors such as autos, banks and travel and leisure have been the top performers this quarter as investors snapped up the cheap stocks on hopes that the reopening of economies will spur growth in the sectors.
“The light at the end of the tunnel is getting brighter and equities remain the top choice for investors despite the recent turbulence and inflation fears,” said Milan Cutkovic, market analyst at Axi.
Data showed French consumer confidence rose unexpectedly in March despite new restrictions to combat coronavirus contagion in large areas of the country and the prospect of more curbs on the way.
Italian luxury puffer jacket maker Moncler rose 2.9 per cent and Swiss watch group Swatch gained 3.3 per cent after Deutsche Bank upgraded their stocks to “buy”.
Defensive sectors such as utilities and healthcare fell, while rising yields weighed on highly valued technology stocks. ― Reuters
PETALING JAYA: Malaysia’s uneven recovery due to the movement control order (MCO) implemented at the start of 2021 has now passed, said UOB Asset Management (Malaysia).
For the next couple of quarters, its chief investment officer Francis Eng projected that the country would see an improvement as it benefits from a general improvement in commodity prices.
“Palm oil prices are above RM4,000 per tonne and oil prices have also recovered which should help the government and the country’s finances,” he told the media during UOB’s “Global Markets Update for 2021” virtual briefing yesterday.
In terms of asset classes, Eng stated a preference for equities given that the economy is at the initial stages of recovery and in such a situation, equities are expected to fare better compared with fixed income.
Simultaneously, he noted that the market is seeing some rise in interest rates as well as long-term bond yields, and going by historical trends the equity market is better able to absorb such rise in interest rates.
“As long as it is moderate, we think the equity market is better able to absorb it.”
Nonetheless, he conceded that with a rise in the US 10-year treasury yield, things are starting to look interesting for fixed income investors given the better yield compared with three to four months ago.
Moving forward, the chief investment officer advocated a barbell approach for equities, striking a balance between value stocks involved in reopening plays with stocks in the growth sector.
In the last couple of quarters, he elaborated, the market swung between the two.
“We think it is difficult to time it, so it is better to have both and take companies that they think are best in class to benefit from either value or growth.”
Eng said the asset management firm is quite positive on some of the value and reopening plays.
“We think that markets typically react ahead, we are anticipating a recovery and we have already positioned ourselves for a recovery.”
In addition, the pace of Covid-19 vaccination is expected to support the country’s recovery, and he expects after a slow start Malaysia’s vaccination effort gathers speed in the next couple of months.
UOB listed that among the value sector that would fare better with the economic reopening are financials, property and real estate – particularly mall owners as the public have started going out and resume some semblance of normalcy, as well as the consumer sector in general as consumption is expected to be fairly strong.
Asked about his projection for the end-2021 FBM KLCI, Eng said believes the index will close the year 5% higher than its current standing. This translates to 1,686.46 points based on the index’s opening price of 1,606.15 points yesterday.
However, he stressed that investors should not be too fixated at index target levels as they should aim to outperform the market.
“That is the more important thing, whether the market moves up or down what we want to do is better than what the market is doing.”
PETALING JAYA: Sapura Energy Bhd’s wholly owned subsidiary Sapura TMC Sdn Bhd has executed multi-currency financing facilities agreements (MCF 2021) to raise RM10.3 billion.
MCF 2021, signed with a consortium of Malaysian, regional and international banks, includes a conventional facility agreement and a further issuance of unrated sukuk murabahah under the MultiCurrency Sukuk Programme announced in 2015.
The banks will make available a US dollar term loan facility amounting to US$602 million (RM2.5 billion) and a ringgit term loan facility amounting to RM906 million to Sapura TMC under the conventional facilities agreement 2021 upon completion of certain conditions precedent. The further issuance of unrated sukuk murabahah amounts to RM6.38 billion and US$125 million in nominal value under the Multi-Currency Sukuk Programme.
MCF 2021 has a tenure of seven years and is guaranteed by Sapura Energy and material subsidiaries within the group.
“The proceeds from MCF 2021 will be utilised towards full settlement of all amounts payable and outstanding by Sapura TMC under a 2014 conventional facility, a 2015 Islamic facility, a 2017 conventional facility and the existing outstanding sukuk murabahah under the Multi-Currency Sukuk Programme,“ the group said in a stock exchange filing.
The planned refinancing is part of the group’s capital management program to lengthen the maturity of its debt.
For MCF 2021, it is a condition for Sapura Energy’s major shareholder Permodalan Nasional Bhd and funds controlled by it to continue to own more than 33% of the energy services and solutions provider; and be the single largest shareholder of Sapura Energy during the tenure of the facilities.
“The refinancing exercise and previously announced RM1.2 billion working capital provides us timely financial headroom in a recovering energy market. This will allow us to continue our track record of winning new oil & gas contracts; and explore emerging opportunities in the renewable energy sector,” said Sapura Energy group CEO Datuk Mohd Anuar Taib.
The participating banks are Maybank, CIMB Bank, RHB Bank, AmBank, EXIM Bank Malaysia, United Overseas Bank, ING Bank, Sumitomo Mitsui Banking Corporation, Standard Chartered Bank and First Abu Dhabi Bank.
PETALING JAYA: Malaysia’s exclusion from the FTSE Russell Watch List is positive as it eliminates market concerns over short-term fund outflows from this potential event, according to CGS-CIMB.
“The removal of Malaysia from FTSE Russell Watch List helps remove the risk of Malaysia’s potential removal from the FTSE World Government Bond Index (WGBI), which could exert upward pressure on bond yields and lead to a potential overhang on the ringgit. This could potentially, in turn, lead to short-term selling of foreign funds in the equity market and heightened volatility in the market,“ the research house said in a note yesterday.
Malaysia will be removed from the FTSE Russell Watch List for potential reclassification of its market accessibility level from “2” to “1” and will be retained in the WGBI.
FTSE Russell commended Bank of Negara Malaysia (BNM) on its previously implemented and ongoing initiatives to address the concerns of foreign investors when accessing the Malaysian government bond market. It noted that recent market enhancements include improving secondary market bond liquidity and enhancing the foreign exchange market structure and liquidity.
“FTSE Russell is grateful for the constructive engagement that has taken place with BNM and the number of positive initiatives that have been introduced over the last two years. FTSE Russell strongly encourages BNM to continue efforts to enhance the experience of international participants in the Malaysian fixed income market,“ FTSE Russell said in its FTSE Fixed Income Country Classification Announcement for March 2021.
“This is in line with our expectations. To pave the way for China’s inclusion in the WGBI, Malaysia’s weight in the index would be pared by 0.02% to 0.39%,“ commented UOB in a note yesterday.
Malaysia was placed on FTSE’s watch list in March 2019 for a potential exclusion. Since then, cumulative foreign flows into Malaysia’s government bonds totaled RM41.6 billion. Foreign holdings of Malaysia’s government bonds rose to 24.7% in February 2021, from 21.9% in April 2019. This suggests that Malaysia’s government bonds remain attractive and supported by stable macro fundamentals.
FTSE Russell said Chinese Government Bonds will be included in the WGBI over a period of 36 months commencing Oct 29, 2021.
PETALING JAYA: Flexidynamic Holdings Bhd debuted on the ACE Market of Bursa Malaysia Securities Bhd yesterday, closing at 43 sen per share, a 23 sen or 115% premium over its 20 sen offer price with over 101.08 million shares traded.
The group is principally involved in the design, engineering, installation, and commissioning of glove chlorination systems, as well as the design and installation of storage tanks and process tanks for the glove manufacturing industry.
Flexidynamic shares had earlier opened at 69 sen, which is 245% above its IPO price of 20 sen. The group’s IPO shares allocated to the Malaysian public of 14.195 million new shares was oversubscribed by 155.72 times.
Managing director Tan Kong Leong said it has seen rubber-glove manufacturing activity growing significantly across the world during the Covid-19 pandemic. This increase in demand has led to the nearly full utilisation of production capacity among these manufacturers.
“We strongly believe that we can leverage off this increase in activity, which will benefit the group in the long-run. We have come a long way from when we first started with a rented factory located in Banting carrying out design, engineering, installation, and commissioning of on-line glove chlorination systems to what we are today, providing both on-line and off-line glove chlorination systems with a wide customer base not only from Malaysia but also Vietnam, Thailand, Indonesia, and Sri Lanka,” he added.
From the RM15.05 million in proceeds raised from the IPO, RM6.38 million will be used to repay bank borrowings drawn to fund the acquisition of new factories. A further RM0.42 million will be used for the renovation of these factories, while RM1.63 million has been allocated for the purchase of machinery and equipment. From the proceeds, another RM3.62 million will be allocated for working capital, with another RM3.0 million to be utilised for the estimated listing expenses.
Flexidynamic’s expansion includes building another two factories, which is expected to be completed by May 2021, with operations to start in the third quarter of the year. Both factories will have new machinery and equipment to carry out in-house manufacturing works and components for on-line glove chlorination systems.
“This listing of our group will strengthen our profile as one of the leading players in the glove manufacturing industry. It also marks a new phase for us and we believe that Flexidynamic can scale the heights to more growth.”
HONG KONG/SINGAPORE: Asian bourses from Tokyo to Singapore are considering rule changes to allow listing of SPACs, but some industry players say the region may not attract the kind of frenzy, or the massive billions of dollars, seen in the US for such blank cheque firms.
The trend to list through Special Purpose Acquisition Companies (SPACs) has seen such floats raise US$96 billion (RM398.4 billion) in the United States this year after a bumper 2020.
In Asia, industry executives worry that low valuations in some markets and the need for SPAC regimes to include strong investor protection safeguards would keep such listings from rapidly taking off.
“We don’t get the sense that anyone is rushing to do this,“ said one person with knowledge of Asian exchanges’ informal consultations with industry executives, referring to SPAC listing prospects in Asia.
“Hong Kong is more strongly leaning to the no side, while Singapore, because it has less equities activity, has more pressure,“ said the person, declining to be named as he was not authorised to speak to the media.
With the hot new method of floating a company taking the US tech world by storm, Asian exchanges are stepping up efforts for SPAC listings although the response has been tepid in Europe.
Earlier this year, Singapore Exchange's regulatory unit said it was exploring a consultation on SPACs, while the Hong Kong government directed the city's exchange and regulator to look into allowing such listings.
Indonesia's bourse has also said it would consider allowing SPACs, and in Japan, a government panel said SPACs listings should be considered to boost growth.
SPACs or shell companies, raise funds via IPOs to merge with operating firms and then take them public by enticing them with shorter listing timeframes and strong valuations.
One problem for SPACs in Hong Kong are recent rule changes brought in to resolve long standing worries about illegal practices linked to the formation and trading of shell companies.
“A lot of the changes that were introduced from 2016-2019 would need to be changed to accommodate SPACs,“ said Christina Lee, a capital markets partner at Baker McKenzie, adding that she had received inquiries from clients, many from mainland China, about listing SPACs in Hong Kong.
Singapore, which has attracted listings mainly of real estate investment trusts, could find it tougher.
“Singapore doesn’t have as deep liquidity and the velocity of the leading markets and that could be an issue particularly when it comes to the adoption of new investment models,“ said Yang Eu Jin, co-head of corporate and capital markets practice at RHTLaw Asia.
SGX consulted the market on SPAC listings in 2010 but this didn't take off due to lack of market interest.
Stefanie Yuen Thio, joint managing partner at TSMP Law in Singapore, said a quick roll out of regulations this year and more interest for SPAC listings for Chinese tech targets, due to the unrest in Hong Kong and US-China tensions, could help Singapore.
“The important thing will be to ensure that our rules are, as far as possible, aligned with US listing rules for SPACs so that Singapore can be seen as the Asian alternative bourse,“ she said. “That may be more of a challenge but if Singapore wants to stay competitive and relevant as a stock exchange, we will need to resist the urge to create a Frankenstein’s monster of the SPAC listing rules.” – Reuters
SHANGHAI: Index provider FTSE Russell has given its final approval for Chinese sovereign bonds to be included in its flagship bond index from later this year, setting the stage for billions of dollars of inflows into the world's second-largest economy.
But a longer-than-expected inclusion period – of 36 months, rather than one year, as FTSE had previously announced – reflects persistent concerns among some global investors about investing in the world's second-largest bond market.
Chinese government bonds (CGBs) will be added to the FTSE World Government Bond Index (WGBI) over three years from the end of October, FTSE Russell said in a statement released after the US market closed on Monday.
FTSE said “a more conservative” schedule was appropriate because of feedback from market participants, which had included concerns from Japanese investors around settlement and liquidity.
“The nature of the investors (tracking WGBI) is very different from other indexes,“ said Zhanying Li, Asia Pacific ex-Japan head of product sales and relationship management at FTSE Russell. “There’s a large passive investor base behind WGBI ... the preference was for a small monthly increment.”
Japanese investors, including Japan's ¥172 trillion (RM$6.47 trillion) Government Pension Investment Fund (GPIF), are the biggest users of WGBI.
Analysts say that historical animosity between China and Japan has contributed to concerns over investment in Chinese assets.
A source familiar with negotiations over China's inclusion said it continued to draw “emotional” opposition from investors in Japan. “Public pension is in the end citizens’ money and some citizens may not like allocation to China,“ the source said.
FTSE Russell is able to provide custom variants of the index for investors with concerns about investments in CGBs, said FTSE Russell's Li.
“Since there is still some time before the actual inclusion, we will have internal discussions to study how we will deal with it,“ said a spokesperson for GPIF.
Li said that smaller monthly increments over a longer period are also less likely to cause inflow-related volatility in Chinese markets, but added that Chinese regulators had not expressed concerns to FTSE Russell over issues caused by possible rapid inflows.
China's top banking and insurance regulator said in early March that Beijing is studying ways to manage capital inflows to prevent turbulence in domestic markets.
Chinese government bonds were previously included in index suites from JPMorgan and Bloomberg Barclays, but FTSE WGBI inclusion is expected to have a larger effect due to the size of passive flows tracking it.
HSBC said that with roughly US$2.5 trillion (RM10.4 trillion) tracking the WGBI, some US$130 billion in inflows could be expected, given China's eventual 5.25% weighting – about US$3.6 billion a month.
“From a global perspective, it improves inclusion statistics of the index – not having the second-largest country in it was a gap,“ said Binay Chandgothia, a portfolio manager at Principal Global Investors in Hong Kong.
“It will also pull up the index yield a bit,“ he said, though adding that would be limited by China's modest weighting.
China's debt is already increasingly popular with global investors, attracted by its yield and its relative insulation from movements in other bond markets.
Foreign investors held a record 2.06 trillion yuan (RM1.3 trillion) of Chinese government bonds (CGBs) in February, even as premiums over US debt shrank as a bond sell-off dented global markets.
Benchmark 10-year CGBs yielded 3.202% on Tuesday, compared with a 1.7419% US 10-year yield.
In its statement, FTSE Russell also said India and Saudi Arabia were being considered for potential inclusion. – Reuters
Xiaomi will initially invest 10 billion yuan in the unit, with a total investment goal of US$10 billion over the next ten years, it said in a filing published earlier on the Hong Kong stock exchange. — Reuters pic
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SHANGHAI, March 31 ― China's Xiaomi Corp announced plans yesterday to invest US$10 billion (RM41.5 billion) in a new smart electric vehicle (EV) business, and separately to release a self-developed computing chip, as the group expanded out of its core smartphone business.
At a livestreamed event held yesterday, Xiaomi CEO Lei Jun, who will also head the smart EV unit, said the division will be the “last major entrepreneurial project” in his life.
The firm will initially invest 10 billion yuan in the unit, with a total investment goal of US$10 billion over the next ten years, it said in a filing published earlier on the Hong Kong stock exchange.
The company's move into cars follows similar steps by other tech giants, in China and overseas. In January, Chinese search giant Baidu Inc said it would develop an EV unit via a partnership with domestic carmaker Geely Automobile Holdings Ltd.
Last month Reuters reported that Chinese smartphone giant Huawei Technologies Co Ltd was in talks with state-owned automaker Changan Automobile and others to manufacture EVs, while Apple Inc is also planning an entry into the EV market, according to reports.
Reuters reported last week that Xiaomi was in talks to partner with Chinese automaker Great Wall Motor Co for help in manufacturing EVs.
Xiaomi declined to comment on the report, while Great Wall said in an exchange filing that it had not discussed such a partnership with Xiaomi. Lei made no mention of partnerships in his public remarks.
During the press event, Xiaomi also announced the release of a self-developed computing chip. Known as the Surge C1, the chip is an image signal processor (ISP), used to enhance a phone's ability to process high-resolution images and video.
Xiaomi said that the company took two years and spent 140 million yuan in research and development costs to develop the chip, which will be placed in the company's newly announced Mi Mix folding phone.
The company has long been attempting to crack the semiconductor sector, though to date it has had limited success compared to rival Chinese Android maker Huawei. ― Reuters
Tech shares trimmed losses in afternoon trading with Treasury yields off the day's high, but the S&P technology sector ended down 1 per cent on the day and was the biggest drag on the S&P 500. — Reuters pic
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NEW YORK, March 31 ― US stocks ended down slightly yesterday, with investors selling tech-related growth shares after US Treasury yields hit a 14-month high.
At the same time, the S&P 500 financials, industrials and consumer discretionary sectors rose, extending the recent rotation out of growth and into so-called value names.
Tech shares trimmed losses in afternoon trading with Treasury yields off the day's high, but the S&P technology sector ended down 1 per cent on the day and was the biggest drag on the S&P 500. The Nasdaq was on track for its first monthly loss since November following the recent rise in yields.
Tech stocks, which have a low-rate environment heavily baked into their pricey valuations, have been among the hardest hit by the rise in yields.
“It's somewhat of a leadership-less market,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “Investors' preferences are flipping around here almost on a daily basis, primarily between tech plus and cyclicals.
“Cyclicals have certainly had the upper hand here for a while, trading off the reopening of the economy. Tech plus holds in there because it's really the promise of the future ― it should provide investors with steady growth.”
The 10-year US Treasury yield rose to 1.776 per cent in early London trade, its highest since January 22. But the yield reversed and was lower in late New York trading as traders prepared for quarter-end.
The Dow Jones Industrial Average fell 104.41 points, or 0.31 per cent, to 33,066.96, the S&P 500 lost 12.54 points, or 0.32 per cent, to 3,958.55 and the Nasdaq Composite dropped 14.25 points, or 0.11 per cent, to 13,045.39.
President Joe Biden on Wednesday will unveil more details about the first stage of his infrastructure plan, which could be worth as much as US$4 trillion (RM16.6 trillion).
A leading value index was up 0.1 per cent while a growth index shed 0.6 per cent in a continuation of a trend since late last year.
“For the next day or two, (value stocks) will probably be leaders because we have quarter-end and institutions want to make sure that they have exposure to the names that performed well,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in New York.
Bets on a swift economic rebound backed by vaccine rollouts and unprecedented stimulus have helped the S&P 500 and the Dow hit record closing highs recently.
Bank stocks rebounded as investors took heart from signs that the impact from the fall of a U.S. hedge fund did not ripple out to broader markets.
Wells Fargo & Co shares jumped 2.5 per cent after the lender said it had a prime brokerage relationship with Archegos Capital and that it no longer had any exposure and did not experience any losses.
Advancing issues outnumbered declining ones on the NYSE by a 1.48-to-1 ratio; on Nasdaq, a 1.47-to-1 ratio favoured advancers.
The S&P 500 posted 32 new 52-week highs and no new lows; the Nasdaq Composite recorded 49 new highs and 73 new lows.
Volume on US exchanges was 10.29 billion shares, compared with the 13.5 billion average for the full session over the last 20 trading days. ― Reuters
The stronger dollar and rising yields, along with expectations of a strong recovery, sapped demand for safe-haven bullion and pushed gold prices lower. — Reuters pic
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NEW YORK, March 31 ― The dollar rose and a gauge of global equity markets slipped yesterday as rising US Treasury yields dampened the appeal of big US tech stocks and led investors on both sides of the Atlantic to shares that stand to benefit as economies re-open.
The stronger dollar and rising yields, along with expectations of a strong recovery, sapped demand for safe-haven bullion and pushed gold prices lower.
European shares advanced to near-record highs on hopes of a vaccine-driven recovery as investors looked past the fallout of US hedge fund Archegos' default, which slammed Credit Suisse and Nomura shares hard on Monday.
The STOXX 600 index gained 0.7 per cent, putting the pan-European index less than 1 per cent from its pre-pandemic peak, while bank and mining stocks pushed the blue-chip FTSE 100 index in London to close 0.5 per cent higher.
Microsoft Corp, Apple Inc, Amazon.com Inc and Facebook Inc led the S&P lower, while Tesla Inc, JPMorgan & Co, Bank of America and Wells Fargo & Co were the top advancing stocks.
The playbook of the past month was for the most part evident in yesterday's session, said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
“When rates are higher you tend to see financials act better and the large-cap tech stocks tend to be for sale. They have a problem making headway,” James said.
“Look at Apple, Facebook, Amazon, Microsoft, they're all lagging in a meaningful way today,” he said.
Microsoft fell 1.44 per cent, with Apple down 1.23 per cent, 0.97 per cent and 0.66 per cent.
The Nasdaq tried to edge higher shortly before the market close as the yield on the benchmark 10-year Treasury note shed 6 basis points from 14-month highs to end slightly lower at 1.714 per cent.
While the major US equity indexes fell, advancing shares outnumbered declining issues by more than 1.4:1, a sign of the impact big tech has on Wall Street and MSCI's benchmark for global equity markets.
The MSCI all-country world index fell 0.11 per cent to 672.08, while its index for emerging markets stocks rose 0.71 per cent as travel-related stocks lifted Brazil's Bovespa index.
The Dow Jones Industrial Average fell 0.31 per cent. The S&P 500 slid 0.32 per cent and the Nasdaq Composite slipped 0.11 per cent.
Bets on a speedy economic recovery driven by the vaccine rollout and unprecedented stimulus lifted the S&P 500 and the Dow to record closing highs last week.
The dollar climbed to a one-year high against the yen and rose against major currencies on the increasing distribution of US vaccines and President Joe Biden's plans to spend up to US$4 trillion (RM16.6 trillion) on infrastructure.
Biden is expected to announce his plan today in Pittsburgh, details of which spurred yields higher on concerns the spending could push up the government deficit.
The 10-year Treasury yielding 1.7 per cent is not the harbinger of a bad economy, said Jason Pride, chief investment office for private wealth at Glenmede in Philadelphia. But there are concerns that inflation may be on the horizon, he said.
“Now we're starting to see the concerns of what comes after you have an economy recovering and you're injecting all this fiscal stimulus,” he said. “Does that mean the Fed has to raise rates to slow things down? The answer to that is 'kind of.'”
The dollar index rose 0.423 per cent, with the euro down 0.4 per cent to US$1.1715. The Japanese yen weakened 0.49 per cent versus the greenback at 110.34 per dollar.
The rally in European shares and signs of a pick-up in inflation in big euro zone economies weighed on euro-area bonds, pushing 10-year yields up 4 to 5 basis points across the board.
US gold futures settled down 1.7 per cent at US$1,686 an ounce. Spot gold fell 1.72 per cent to US$1,682.58.
Oil prices slid as the Suez Canal reopened to traffic, while focus turned to an Opec+ meeting this week that analysts expect will approve an extension to supply curbs amid disappointing demand prospects.
Brent crude futures slid 84 cents to settle at US$64.14 a barrel, while US crude futures settled down US$1.01 at US$60.55 a barrel. ― Reuters
In early Asian trade, Australian S&P/ASX 200 futures rose 0.84 per cent while Hong Kong's Hang Seng index futures were up 0.43 per cent. — Reuters pic
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NEW YORK, March 31 ― Asian stocks were set to open higher today, as global financial shares retraced some of their recent losses, driven in part by higher bond yields, and investors awaited a closely watched Chinese factory activity survey.
While Wall Street ended lower as yields weighed on tech shares, financial stocks rose, their gains helped by signs the fallout from the Archegos meltdown would be relatively contained.
The more upbeat tone expected in Asia also reflected heightened recovery prospects. China's manufacturing purchasing managers' index, due for release today, was expected to have ticked higher in March as the world's second-largest economy continues to reopen.
In early Asian trade, Australian S&P/ASX 200 futures rose 0.84 per cent while Hong Kong's Hang Seng index futures were up 0.43 per cent. Japan's Nikkei 225 futures were down 0.29 per cent.
In the US rising Treasury yields weighed on high-flying tech-related companies that benefit from low interest rates, while financials, industrials and consumer discretionary stocks rose.
Bond prices have been falling on concerns that inflation might tick up from US stimulus and the economic reopening allowed by vaccinations. But Ryan Felsman, a senior economist at CommSec in Sydney, said the inflation picture still seems benign.
“I'm not convinced by the reflation trade,” he said.
The benchmark US 10-year Treasury yield hit a 14-month high of 1.776 per cent early yesterday, but was at about 1.717 per cent by late afternoon in New York.
Those factors overshadowed news that the soured bets at New York-based Archegos Capital Management left banks that financed its trades nursing at least US$6 billion (RM24.9 billion) in losses.
While the fund's meltdown is drawing scrutiny from watchdogs, it was not directly regulated because it manages former hedge fund manager Bill Hwang's personal wealth as a single-family office.
The Dow Jones Industrial Average fell 0.31 per cent, the S&P 500 lost 0.32 per cent and the Nasdaq Composite dropped 0.11 per cent.
The dollar climbed to a one-year high against the yen and rose against major currencies on the increasing distribution of US vaccines and President Joe Biden's plans to spend up to US$4 trillion on infrastructure. In early Asian trading, the Japanese yen strengthened 0.01 per cent versus the dollar to 110.33 per dollar.
Brent crude fell 84 cents, or 1.3 per cent, to settle at US$64.14 a barrel while West Texas Intermediate US oil ended the session down US$1.01, or 1.6 per cent, at US$60.55 barrel.
Gold prices slipped nearly 2 per cent yesterday. ― Reuters
In a filing to Bursa Malaysia today, it said the MCF 2021, with a combined value of about RM10.3 billion, consisted of Conventional Facilities Agreement 2021 with Malaysian, regional and international banks, and Sukuk Murabahah Issuance 2021 under its Multi-Currency Sukuk Programme with a consortium of Malaysian banks. — Bernama pic
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KUALA LUMPUR, March 30 — Sapura Energy Bhd’s wholly-owned subsidiary, Sapura TMC Sdn Bhd, has executed multi-currency financing facilities agreements (MCF 2021) to refinance its existing borrowings.
In a filing to Bursa Malaysia today, it said the MCF 2021, with a combined value of about RM10.3 billion, consisted of Conventional Facilities Agreement 2021 with Malaysian, regional and international banks, and Sukuk Murabahah Issuance 2021 under its Multi-Currency Sukuk Programme with a consortium of Malaysian banks.
Sapura Energy said the banks will make available a US dollar term loan facility amounting to approximately US$602 million (RM2.5 billion) and a ringgit term loan facility amounting to RM906 million to Sapura TMC upon completion of certain conditions precedent.
The further issuance of unrated Sukuk Murabahah amounts to about RM6.38 billion and US$125 million in nominal value under the Multi-Currency Sukuk Programme.
The proceeds from the MCF 2021 will be utilised towards full settlement of all amounts payable and outstanding by Sapura TMC under its 2014 conventional facility, 2015 Islamic facility, 2017 conventional facility and the existing outstanding Sukuk Murabahah under the Multi-Currency Sukuk Programme.
The MCF 2021 is part of the Group’s capital management programme to lengthen the maturity of its debt profile.
“The refinancing exercise and previously announced RM1.2 billion working capital provides us timely financial headroom in a recovering energy market,” said Sapura Energy group chief executive officer Datuk Mohd Anuar Taib.
“This will allow us to continue our track record of winning new oil and gas contracts, and explore emerging opportunities in the renewable energy sector,” he added.
The participating banks are Maybank Islamic Bhd, CIMB Bank Bhd, CIMB Islamic Bank Bhd, RHB Islamic Bank Bhd, AmBank (M) Bhd, AmBank Islamic Bhd, Export-Import Bank of Malaysia Bhd, United Overseas Bank Ltd Labuan Branch, United Overseas Bank Ltd, Sumitomo Mitsui Banking Corporation Labuan Branch, ING Bank N.V. Singapore Branch, Standard Chartered Bank Offshore Labuan, and First Abu Dhabi Bank PJSC Labuan Branch.
The MCF 2021 has a tenure of seven years and is guaranteed by Sapura Energy and material subsidiaries within the group. — Bernama
A view shows Ever Given container ship in Suez Canal in this Maxar Technologies satellite image taken on March 29, 2021. — Maxar Technologies pic via Reuters
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CAIRO, March 30 ― The stranding of the 400m-long container ship Ever Given in the Suez Canal where over 10 per cent of global cargo and seven per cent of the world’s oil are transshipped is raising concerns about affecting of several Vietnamese enterprises, despite initial successes in the attempt to rescue this megaship.
First Secretary of the Vietnamese Embassy in Egypt and head of the embassy’s Trade Office Nguyen Duy Hung said that there is currently no official statistics on the number of Vietnamese commodities exported to other countries on ships waiting off the Suez Canal, as a number of shipping companies such as Maersk and CMS CGM decided to divert ships round Cape of Good Hope (South Africa) to Europe with the calculation of faster time.
According to a report by Vietnam News Agency, The Vietnam Trade Office in Egypt recommended Vietnamese companies coordinate closely with shipping companies to get updated on the transport capacity, the time of docking and goods loading as well as their insurance against delays or possible damage of goods, especially aquatic products.
Businesses also need to work with importers to address possible problems related to slow delivery to avoid any trade disputes. For support, affected businesses should soon contact with the Vietnam Trade Office.
The 200,000-tonne MV Ever Given veered off course in the Suez Canal on March 23. The incident causes global economic losses of up to US$9 billion each day, worsening the supply chain which is seriously affected by the Covid-19 pandemic.
The course of the ship has been corrected by 80 per cent with the stern of the ship currently 102m from the shore, instead of 4m.
According to the Suez Canal Authority, the number of ships jammed is over 350 and it takes at least 3-6 days to circulate all of the above. ― Bernama
A Renesas-owned Naka chip plant in northeast Japan was hit by fire earlier this month due to a power surge in one of the machines, putting more pressure on the broader chips industry amid a global shortage of semiconductors. ― Reuters pic
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TOKYO, March 30 ― Japan has asked some Taiwanese manufacturers to cooperate in alternative production of semiconductors, industry minister Hiroshi Kajiyama said today, after a chip plant owned by Renesas Electronic Corp was hit by a fire this month.
“We are in communication with several manufacturing equipment makers (in Taiwan) to speed up procurement,” Kajiyama told reporters after the cabinet meeting.
“The ministry will also work together for a swift recovery by using all possible means,” he added.
A Renesas-owned Naka chip plant in northeast Japan was hit by fire earlier this month due to a power surge in one of the machines, putting more pressure on the broader chips industry amid a global shortage of semiconductors.
The company, which has about a 30 per cent share of the global market for microcontroller unit chips used in cars, had initially said 11 machines were damaged in the fire, but today said 23 machines need to be replaced.
Renesas CEO Hidetoshi Shibata told a news conference that while production at the plant would resume within a month, recovery to pre-fire levels was expected to take 100 to 120 days from the incident.
He added that any short-term shipment of alternative chip production was impossible and the company would recuperate losses in the six months ending December.
An extended outage could add to a global shortages of chips which is disrupting some production of cars and electronic devices.
The Japanese government has called on equipment makers to help Renesas restore its production, with bureaucrats contacting companies at home and overseas to request they provide parts and machinery to the fire-hit company, a trade ministry official told Reuters on Wednesday. ― Reuters
At lunch break, the key index retreated 2.96 points to 1,608.32 from yesterday’s close of 1,611.28. ― Picture by Hari Anggara
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KUALA LUMPUR, March 30 ― The FTSE Bursa Malaysia KLCI (FBM KLCI) ended the morning session slightly lower by 0.18 per cent as the market bellwether was weighed down by losses in selected heavyweights led by Top Glove and Axiata.
At lunch break, the key index retreated 2.96 points to 1,608.32 from yesterday’s close of 1,611.28.
The index opened 5.13 points easier at 1,606.15 and moved between 1,601.67 and 1,608.65 throughout the morning session.
On the broader market, losers outnumbered gainers at 582 versus 364, while 429 counters were unchanged, 824 untraded and 93 others suspended.
Total volume stood at 2.86 billion shares worth RM1.78 billion.
Top Glove trimmed 22 sen to RM4.83, after the US Customs and Border Protection (US CBP) directed its personnel at all US ports of entry to begin seizing disposable gloves produced in Malaysia by the glove producer.
Among other heavyweights, Axiata and Hap Seng fell nine sen each to RM3.76 and RM8.23, respectively, Digi shed five sen to RM3.72, and Genting Malaysia eased three sen to RM3.11.
Maybank advanced seven sen to RM8.45, Public Bank gained four sen to RM4.27, TNB put on eight sen to RM10.42, and IHH Healthcare was nine sen higher at RM5.39.
As for the active counters, Berjaya Corp added 1.5 sen to 35 sen, ACE-market debutant Flexidynamic surged 26 sen to 46 sen, Dagang NeXchange perked up five sen to 93.5 sen, Kanger International was flat at seven sen, while Widad trimmed 4.5 sen to 61 sen.
On the index board, the FBM 70 slipped 51.08 points to 15,550.71, the FBM Emas Index shrank 24.96 points to 11,809.86, the FBMT 100 slid 25.41 points to 11,480.51, the FBM ACE eased 79.18 points to 10,404.91, and the FBM Emas Shariah fell 56.74 points to 13,076.88.
Sector-wise, the Financial Services Index expanded 55.66 points to 15,474.77, the Plantation Index increased 33.78 points to 7,130.24, and the Industrial Products and Services Index inched down 0.38 of-a-point to 192.48. ― Bernama
According to World Bank’s chief economist of the East Asia and Pacific Region, it is crucial for Malaysia to reform its services sector in order to achieve advanced services and innovations for its future economic growth post Covid-19. ― Picture by Choo Choy May
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KUALA LUMPUR, March 30 ― It is crucial for Malaysia to reform its services sector in order to achieve advanced services and innovations for its future economic growth post Covid-19, said Dr Aaditya Mattoo, chief economist of the East Asia and Pacific Region of the World Bank.
He is of the view that some restrictions imposed by the authorities, particularly access to the Malaysian market, need to be reviewed to attract more trade and investment in the services sector going forward.
“Malaysia (has) reaped the benefits of openness to trade and investment in goods, but why does it persists with restrictions in services?
“There are three pillars in reform ― opening up the market by eliminating restrictions on entry and reducing discretion in licensing; move from conventional (to a more modern and advance) regulations; and improving access to services,” he said at the Economic Action Council Executive Talk Series here today.
The virtual talk titled Future Economic and Business Landscape was moderated by Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed.
Mattoo said other long-term structural challenges that need to be addressed by Malaysia were its innovation deficit and fiscal limitation.
He said Malaysia’s productivity growth was slower than that of its peers with a very large proportion of talented Malaysians working outside the country.
Therefore, creating and retaining skilled human capital in the country is crucial, he added.
On fiscal constrains, Mattoo said many countries in this region have an inner sense to adopt a low tax approach and Malaysia’s direct income and commodity taxes were unusually low by the global standard.
Countries could not act in silo as it is very hard in today’s world to raise taxes as foreign investors are mobile and could run away to other jurisdictions, he said.
He suggested that a greater regional tax cooperation needs to be fully explored to help increase Malaysia's revenue collection, which has been showing a declining pattern since 2012.
“Regional cooperation will get through this better than a neighbour competition to try attract investment by reducing taxes or giving tax holidays.
“Maybe you can’t do it (raise tax) today, but you could pass that reform today and implement five years from now,” he added. ― Bernama
A worker at a production line in Top Glove factory in Shah Alam August 26, 2020. — Reuters pic
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KUALA LUMPUR, March 30 ― Losses in Top Glove Corp Bhd shares weighed on the key index in the early session after the US Customs and Border Protection (US CBP) directed its personnel at all US ports of entry to begin seizing disposable gloves produced in Malaysia by the glove producer.
At 12pm, Top Glove lost 23 sen or 4.55 per cent to RM4.82, with 38.04 million shares traded.
In a notice published by the US CBP, certain products by Top Glove were found to be manufactured with the use of convict, forced, or indentured labour. These include products from all Top Glove subsidiaries.
As a result, the US law enforcement agency can now seize and forfeit all gloves which have entered the US or those that may enter in the future.
AmInvestment Bank Bhd said while glove demand is projected to remain elevated in the next few years, it was unlikely that Top Glove found viable substitutes for the entire US customer base and this would affect the group’s earnings as glove urgency begins to normalise.
“Additionally, this provides local peers as well as China players such as Blue Sail Medical and Intco Medical with additional bargaining power amongst US customers,” the investment bank said in a research note today. ― Bernama
.JPG "BNM said the impact of the temporary relief measures on ITOs’ profitability has been limited as the cumulative amount of premiums deferred and on holiday remained minimal at 7.7 per cent of premiums in force. — Picture by Ahmad Zamzahuri")
.JPG "At 9.05am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) fell 5.30 points to 1,603.89 from yesterday’s close of 1,609.19. ― Picture by Hari Anggara")
.JPG "At lunch break, the key index retreated 2.96 points to 1,608.32 from yesterday’s close of 1,611.28. ― Picture by Hari Anggara")
