AirAsia Group renames airline holding company to create clear distinction from digital business

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AirAsia Group renames airline holding company to create clear distinction from digital business 

AirAsia Group Bhd has renamed its 100%-owned subsidiary AirAsia Investment Ltd to AirAsia Aviation Ltd in a corporate reorganisation to create a clear distinction between AirAsia Group’s airline and digital businesses. Bo Lingam, formerly president (airlines) for AirAsia Group, takes over as group CEO of AirAsia Aviation to oversee the group’s four airlines, namely AirAsia Malaysia, AirAsia Philippines, AirAsia Thailand and AirAsia Indonesia. As AirAsia’s rapid transformation from an airline into a digital travel and lifestyle services group continues to gain strong momentum, the holding company for the airline group has been officially renamed AirAsia Aviation Ltd.  

According to Bo Lingam, this structural change helps facilitate strong projected growth in both airline and non-airline portfolio businesses. 

Earlier in the week, AirAsia Group’s group chief executive officer Tan Sri Tony Fernandes said the budget airline’s digital businesses, which have a valuation of over US$1 billion (about RM4.16 billion), have achieved unicorn status in record time at under two years since the group accelerated the growth momentum of its non-airline businesses during the Covid-19 pandemic-driven aviation sector downturn. AirAsia Group should no longer be known as just an airline. 

URUS programme to assist B50 borrowers who have lost jobs, income — BNM 

According to Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus, BNM welcomes the Financial Management & Resilience Programme (URUS) by Agensi Kaunseling dan Pengurusan Kredit (AKPK) and the banking industry, which seeks to aid B50 borrowers with performing loans who have lost their jobs or who are experiencing income loss of at least 50%. Eligible borrowers who wish to apply for the programme can approach their banks starting from Nov 15, 2021 to Jan 31, 2022. BNM has been working with AKPK to put in place a holistic debt management and financial planning solution. The aim is to provide appropriate support to borrowers so that they not only meet their loan obligations but importantly, return to a firmer financial footing. This will strengthen the financial resilience of borrowers in the longer term. The central bank also encouraged those that are not eligible for URUS to also approach their banks to discuss other repayment solutions that suit their financial circumstances. Borrowers and customers facing any difficulty with their applications may contact BNM TELELINK at bnm.my/RAsurvey  to seek assistance, and that they may obtain more information on the new scheme by visiting banks’ and AKPK’s websites. There will be further enhancements to BNM’s Fund for SMEs in the Budget 2022, targeted at assisting businesses in their cash flow management and reposition themselves with the reopening of the economy. Despite heightened credit risks, bank financing to SMEs continues to expand with the additional capacity provided through the fund and credit guarantee schemes. A total of RM154 billion was disbursed to SMEs, 4% higher than the pre-pandemic level, with a total of RM18 billion allocated under the fund to augment financing by the banking system to SMEs. Loans outstanding for the SME segment increased 6% year-on-year, and efforts are underway to develop debt equity and blended financing initiatives to enable SMEs access to a wider range of appropriate financing options across their growth cycle. This will be important to lower the leverage and strengthen the long-term resilience and capacity of SMEs, and increase their contribution to the economy. 

Maybank IB retains ‘positive’ call on regional plantations 

According to Maybank Investment Bank (Maybank IB) Research, it has maintained its “positive” call on the regional plantation sector based on expectations of crude palm oil (CPO) prices staying relatively lofty until the first quarter of 2022 (1Q22). CPO prices were expected to remain lofty on supply concerns although it may not sustain at RM5,000 per tonne. Near-term CPO price may continue to be supported by the fact that palm oil output will enter into a seasonal low yield period in 1Q22. According to the Malaysian Palm Oil Board, September 2021 stockpile fell 7% month-on-month to 1.75 million tonnes below street estimates of 1.87 million tonnes. The recent CPO price rally to above RM5,000 per tonne (spot month) has further narrowed CPO price discounts. It maintain the view that the current high CPO price is not sustainable as a wider discount is needed to sustain demand. India’s demand for vegetable oils will likely weaken post Deepavali. In 4Q21, the market will closely monitor ongoing South America planting season of crops for new price direction. The market is expecting record planting and harvest at this juncture. A confirmation and potential impact of La Nina on South America crop development till its harvest in March and April 2022 will be a key swing factor to watch in the coming months. 

Eye On The Markets 

This week, on Friday (15Oct), the Ringgit opened at 4.1565 against the USD from 4.1665 on Monday (11Oct). Meanwhile, the Ringgit was 3.0827 to the Sing Dollar on Friday (15Oct). On Monday (11Oct), the FBM KLCI opened at 1567.88. As at Friday (15Oct) 10:00am, the FBM KLCI is up 26.07 points for the week at 1593.95. Over in US, the overnight Dow Jones Industrial Average closed up 534.75 points (+1.56%) to 34,912.56 whilst the NASDAQ added 251.80 points (+1.73%) to 14,823.40.  

East Malaysia CPO Futures contract enables greater price transparency & better risk management

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According to Bursa Malaysia Bhd CEO and Bursa Malaysia Derivatives Bhd chairman Datuk Muhamad Umar Swift, the East Malaysia Crude Palm Oil Futures (FEPO) will provide greater price transparency for palm oil and risk management for oil palm players in Sabah and Sarawak. Compared with the crude palm oil futures (FCPO), FEPO has physical delivery ports in Sabah and Sarawak, which efficiently eliminates the logistical cost barrier that prevented East Malaysian firms from hedging with the existing futures contracts. This will improve the cost effectiveness of managing price risk for palm oil industry players in East Malaysia, both upstream and downstream. As a result, their refining margins and competitiveness in selling end products to their customers will also improve. Aside from the physical delivery location, trading of the East Malaysia futures contract begins at 9am compared with FCPO’s start of 10.30am. In his welcome address at the virtual launch of FEPO, he explained that this is designed to meet the needs of participants who have exposure to East Malaysian palm oil as well as to meet the demand of arbitrageurs trading in China’s market. The Covid-19 pandemic has greatly affected the global commodities sector, in production and demand, besides creating supply chain and market disruptions. In a highly volatile environment, it is critical for businesses to consider implementing a more robust price risk management strategy to mitigate against fluctuating commodity prices while remaining competitive. Looking ahead to 2022, market participants need to brace themselves for another uncertain year, with numerous key elements having the potential to cause heightened price volatility. These include the unpredictable weather conditions, uncertain economic recovery, and potential changes to global trade policy. Despite the volatile conditions, Bursa’s derivatives market continued to see remarkable growth as it grew 35% in 2020 to hit a total trading volume of 18.2 million contracts. In addition, the year saw a record 14.6 million FCPO contracts traded, which is equivalent to 365 million tonnes of crude palm oil, representing five times the world’s production. 

Malaysia expected to see renewed interest in SPAC listing 

According to Deloitte Malaysia IPO leader Wong Kar Choon, Malaysia may see a renewed interest in the special purpose acquisition company (SPAC) listing moving forward. One key reason is that SPACs is seen as a faster alternative in raising capital than the traditional initial public offerings (IPOs). There is no denying that certain businesses flourished and have been doing well in this trying time. To seize the opportunities, technology-based start-up companies are also seeking a different type of fundraising. Over the last couple of months, we have heard an increasing buzz on SPAC. There were also announcements made on a number of Southeast Asian (SEA) technology-based start-ups seeking a SPAC merger in the capital market in the United States. Based on data from Spacktrack.net, the current SPAC trust funds available in the US that is still searching for a viable business merger is about US$114 billion. Last month, the Securities Commission Malaysia said it was still in the midst of reviewing its framework for SPAC listings amid developments in other markets. On the capital markets in Malaysia and SEA, there is continued support from retail investors. Although the average trading volumes have decreased from a high peak in 2020, it is hoped that the average trading volume would pick up towards the tail end of 2021 as vaccination rate increases for most countries and businesses open. In the first six months of 2021, Malaysia recorded 14 listings, of which two were on the Main Market, seven on the ACE Market, and five on the LEAP Market. They raised about RM395 million with a market capitalisation of RM1.5 billion. 

Bursa Anywhere app now has eGO feature 

According to Bursa Malaysia Bhd chief executive officer Datuk Muhamad Umar Swift, the exchange has introduced a new feature called electronic General Offer (eGO) to its Bursa Anywhere mobile application. eGO is aimed at providing convenience to investors by fast-tracking their general offer applications. Previously, investors were required to submit a transfer form to their brokers in order to transfer the securities and followed by the submission of an offer document for the acceptance of the offer. Now all applications and submission of documents can be performed via eGo. The shareholders no longer need to physically go to their brokers, or deal with the traditional method of delivering the physical transfer form to the broker for transfer execution, and share registrar for submission of the offer document. The new feature is timely as the COVID-19 outbreak had prompted most investors to switch to electronic investing options for improved security and convenience. It also offers investors tremendous cost and time savings by providing secure access to investment opportunities and services anytime anywhere, in line with the evolving demands of modern investors. Bursa Anywhere was developed to provide investors ease of accessibility in managing their central depository system (CDS) accounts remotely. The eGO feature complements the mobile app’s existing extensive services, such as facilitating CDS account openings, rights issue subscriptions, as well as reactivation of dormant and inactive CDS accounts. The app has garnered over 210,000 downloads since its release in June 2019. 

RHB provides more than RM20.3b in financial assistance to SMEs 

According to Jeffrey Ng, Managing Director of Group Community Banking of RHB Banking Group, the RHB Group continues to take a holistic approach to building resilience amongst Small and Medium Enterprises during this challenging economic environment through the Group’s financial relief facilities and repayment assistance programmes, providing access to new working capital, as well as implementing various targeted programmes to further stimulate SME business growth. Throughout the COVID-19 pandemic and the prolonged Movement Control Order (“MCO”) period, the Group has continued to assist SMEs in bolstering their financial positions by providing more than RM20.3 billion in financial assistance comprising RM12 billion in Repayment / Payment Assistance and more than RM8.3 billion in loans and financing facilities. These include facilitating the smooth delivery of Government-led relief financing facilities such as the Special Relief Facility (SRF) and Targeted Relief and Recovery Facility (TRRF). In addition, RHB continues to supplement wider recovery efforts through its own RHB BizPower Relief Financing (BRF) programme to provide even more SME businesses, especially those impacted by the prolonged COVID-19 pandemic, access to much needed capital at affordable rates. With the gradual re-opening of the economy, many SMEs in various industries continue to require additional assistance to sustain business operations. RHB has therefore remained proactive in engaging directly with SME customers to better understand their concerns and expectations, and by playing an active role towards their recovery. As such, it had recently launched its Retailer SME Relief Financing programme in partnership with shopping mall operators to provide a total of RM200 million in financing facilities with attractive terms to retailers impacted by the steep reduction in footfall in their respective shopping malls due to the MCO. The bank adopts a holistic approach in assisting and supporting SMEs throughout the prolonged MCO period, by providing relief facilities and payment assistance, as well as working with partners to enable SMEs build financial resilience. Since the start of the pandemic, various COVID-19 related financing facilities have been provided to almost 10,000 SME customers amounting to RM3.4 billion, and as at 22 September 2021 the Group has also provided Repayment / Payment Assistance to close to 7,000 SMEs with loan and financing facilities totalling RM12 billion. 

In helping to drive business resilience, the bank has partnered with Beep.it, Food Market Hub, and Lapasar to provide its SME customers easy access to local e-commerce platforms at competitive rates, while through their ongoing RHB #JomSapot programme, it continues to actively assist SMEs to promote their products and services to its extensive customer base at no extra cost. Support is also extended through their comprehensive SME digital ecosystem towards improving operational efficiencies amongst the bank’s SME customers. RHB will continue to reach out and provide financial support and other types of assistance to SME customers, including microenterprises, while actively driving the acceleration of local business activity in line with the gradual re-opening of the economy. 

Eye On The Markets 

This week, on Friday (8Oct), the Ringgit opened at 4.1820 against the USD from 4.1745 on Monday (4Oct). Meanwhile, the Ringgit was 3.0792 to the Sing Dollar on Friday (8Oct). On Monday (4Oct), the FBM KLCI opened at 1529.04. As at Friday (1Oct) 10:00am, the FBM KLCI is up 35.41 points for the week at 1564.45. Over in US, the overnight Dow Jones Industrial Average closed up 337.95 points (+0.98%) to 34,754.94 whilst the NASDAQ added 152.10 points (+1.05%) to 14,654.0.  

Malaysia’s near-term prospects for economic recovery appear more favourable — MoF

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According to Ministry of Finance, the prospects for economic recovery in the near term appear more favourable, supported by the country’s National Recovery Plan’s (NRP) systematic re-opening of various economic sectors, including social activities such as dining-in and tourism. The 2022 growth is expected to rebound in line with the recovery in the global economy and trade throughout the second half of 2021 and next year, particularly as more countries step up their vaccination efforts. As a small and open economy, Malaysia’s recovery is highly dependent on the global economic recovery, particularly that of its major trading partners. The continued implementation of economic and fiscal stimulus measures will also support Malaysia’s economic growth, which is expected to remain strong at 6% and 5.8% according to the International Monetary Fund and the World Bank estimates, respectively. The government’s fiscal policy will continue to be centred on providing constant support in promoting a sustainable economic recovery and the smooth implementation of the recently announced 12th Malaysia Plan (12MP) (2021-2025). The immediate priority is restoring the nation’s potential growth capacity to allow communities and businesses to adjust to new norms, as well as to invest for future growth and better job opportunities. Given the need for spending flexibility during this unprecedented pandemic crisis, the government will table a motion during the current Parliamentary sitting to raise its statutory debt limit from 60% to 65% of GDP. The government continues to be committed to fiscal consolidation in the medium term as outlined in the 12MP, with a deficit target of 3.5% of GDP by 2025. These efforts will be aligned with the 12MP’s medium-term macroeconomic strategies, designed to catalyse an inclusive and sustainable growth for all Malaysians.” 

PNB announces total income distribution of RM650.73 mil for three funds 

Amanah Saham Nasional Bhd (ASNB), the wholly-owned unit trust management company of Permodalan Nasional Bhd (PNB), announced a total income distribution payout of RM650.73 million for the financial year ending Sept 30, 2021 (FY2021), for three of its funds. The funds were the Amanah Saham Malaysia 3 (ASM 3), ASN Equity 5 and ASN Sara (Mixed Asset Conservative) 2 (ASN Sara 2). For ASM 3, PNB declared a total income distribution payout of RM593.04 million, benefitting 525,038 unit holders who currently own 14.83 billion units. ASM 3 recorded a net realised income of RM653.27 million for FY2021, reflecting an increase of 17.87% from last year. The return of 4.00 sen per unit remains competitive and exceeds the benchmark Maybank 12-Month Fixed Deposit return of 1.85% by 215 basis points (bps) for FY2021. Meanwhile, ASN Equity 5 and ASN Sara 2 registered total returns of 11.46% and 4.04% respectively, for FY2021, outperforming their benchmarks by 8.66% and 1.73% respectively. These returns are benchmarked against the FTSE Bursa Malaysia Top 100 Index (FBM 100) and Maybank 12-Month Fixed Deposit, at a ratio customised to each fund. With these returns, ASNB will be paying out a total income distribution of RM9.80 million to ASN Equity 5 unitholders — equivalent to 2.85 sen per unit for 11,202 unitholders who own a combined total of 343.80 million units. Meanwhile, ASN Sara 2 unitholders will receive a total income distribution payout of RM47.88 million, equivalent to 2.80 sen per unit to 42,860 unit holders with 1.71 billion units. These distributions translate into a dividend yield of 2.95% for ASN Equity 5 and 2.75% for ASN Sara 2 respectively, based on the Net Asset Value of the funds as at Sept 23, 2021. The income distributions of these funds were derived from the funds’ realised gains, dividends and other income from local and international investments, generally driven by the gradual recovery of global and domestic financial markets. Income from international investments grew significantly with contributions between 32% and 73% to each respective fund for the financial year-to-date. 

Eye On The Markets 

This week, on Friday (1Oct), the Ringgit opened at 4.1845 against the USD from 4.1875 on Monday (27Sept). Meanwhile, the Ringgit was 3.0783 to the Sing Dollar on Friday (1Oct). On Monday (27Sept), the FBM KLCI opened at 1532.89. As at Friday (1Oct) 10:00am, the FBM KLCI is down 3.75 points for the week at 1529.14. Over in US, the overnight Dow Jones Industrial Average closed down 546.80 points (-1.59%) to 33,843.92 whilst the NASDAQ shed 63.90 points (-0.44%) to 14,448.60.  

Capital Market Masterplan – SC launches 5 year masterplan

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According to SC chairman Datuk Syed Zaid Albar, the Securities Commission’s third Capital Market Masterplan (CMP3) will serve as a strategic framework for the growth of Malaysia’s capital market over the next five years. Both Capital Market Masterplan 1 (2001-2010) and Capital Market Masterplan 2 (2011-2020) had successfully expanded the capital market while ensuring market stability and integrity over the last two decades. As such, the new master plan now seeks to leverage the strengths and potential of the Malaysian capital market to accelerate economic growth that is sustainable and inclusive. Malaysia is now at a critical juncture in its post-pandemic journey. It is imperative for the capital market to continue to support the economy’s transition into an inclusive and sustainable nation. The progress in the capital market cannot be measured solely by growth and size as it also has to serve underlying needs and aspirations of the country and its people. The CMP3 takes into consideration global megatrends that will shape the recovery and growth of global and Malaysian economies as it steers the capital market towards three desired outcomes, namely being relevant, efficient and diversified. Malaysia now has a well-diversified capital market, with an equity market that has over 900 listed companies, a bond market that is the third largest in Asia, an Islamic capital market that is innovative and well-regarded globally, a derivatives market that leads in crude palm oil (CPO) price discovery and a unit trust industry that is one of the largest in the region. Governance strategies implemented during the previous master plans had ensured robust regulatory oversight to enhance confidence in the integrity of Malaysia’s capital market. The Malaysian capital market regulatory framework is benchmarked and ranks highly internationally with regard to, among others, investor protection standards, corporate governance and enforcement capabilities. The CMP3 will build on this solid foundation to pave the way for the next stage of Malaysia’s market evolution and growth. To achieve these desired outcomes, the CMP3 outlines six key development and regulatory thrusts that will collectively serve as pillars in developing strategic initiatives over the next five years. 

The first development thrust is facilitating fundraising for competitive businesses through a diverse market and intermediation ecosystem. The CMP3 also aims to empower all Malaysians to invest for their future and promote digital inclusion and protection for vulnerable investors. Furthermore, through the Sustainable and Responsible Investment (SRI) and Islamic Capital Market (ICM) pillars, the CMP3 aims to shape a stakeholder economy by mobilising more capital towards sustainable businesses. In tandem, the SC’s regulatory approach will also evolve in response to changing trends and the market landscape, with the CMP3 striving to embed greater shared accountability within the capital market, particularly corporate responsibility to stakeholders beyond short-term profitability. It also aims to achieve a more efficient regulatory outcome and greater efficiency in investor protection through swift, effective and targeted enforcement and supervision approaches. In addition, as the industry becomes more digital, the CMP3 envisions greater use of technology — both regulatory technology (RegTech) and supervisory technology (SupTech) — for greater efficiency and deeper insights. 

Bursa Malaysia aims to be carbon neutral by 2022 

According to Bursa Malaysia chairman Tan Sri Abdul Wahid Omar, Bursa Malaysia is targeting to become carbon neutral by 2022 and achieve net zero emissions by 2050 across its entire operations, in line with the global drive for decarbonisation. The stock exchange operator would systematically manage its carbon footprint across the exchange’s entire business activities, while reducing emissions in line with a net zero future. Bursa Malaysia will participate in global campaigns, “Business Ambition for 1.5°C” and “Race to Zero”, to support the transition to a climate resilient and inclusive economy. Climate change poses a significant threat to the planet and society. It is in everyone’s best interests to work towards a systemic change that prevents a climate catastrophe. He believes it is important for all companies regardless of size, industry and operating models to scale-up their climate contributions with firm commitments and concerted actions towards achieving a climate-resilient future. Climate change has always been a priority for Bursa Malaysia. 

Eye On The Markets 

This week, on Friday (24Sep), the Ringgit opened at 4.1770 against the USD from 4.1860 on Monday (20Sept). Meanwhile, the Ringgit was 3.0974 to the Sing Dollar on Friday (24Sep). On Monday (20Sept), the FBM KLCI opened at 1547.62. As at Friday (24Sep) 10:00am, the FBM KLCI is down 17.97 points for the week at 1529.65. Over in US, the overnight Dow Jones Industrial Average closed up 506.50 points (+1.48%) to 34,764.82 whilst the NASDAQ added 155.40 points (+1.04%) to 15,052.20.  

Malaysia’s approved FDI leaps 223% in 1H 2021 – MITI

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According to Senior Minister and Minister of International Trade and Industry (MITI) Datuk Seri Azmin Ali, an increase in approved foreign direct investment (FDI) in the first half of 2021 (1H’21), which leapt 223.1% year-on-year, signals the confidence of foreign investors in the country’s stable and conducive economic climate and business ecosystem. The positive performance augurs well for Malaysia’s path to a vibrant and sustainable economic recovery. The stellar performance also demonstrates that Malaysia’s strategy of positioning the country as an attractive investment destination of choice and a supply chain hub in ASEAN, particularly for manufacturing operations, is showing positive results. FDI was the main driver of the manufacturing sector during this period with a contribution of RM58.2bil in approved investments while domestic sources of investment came to RM8.7bil. In terms of total approved investment, Malaysia recorded RM107.5bil of FDI and domestic direct investments (DDI) in the manufacturing, services, and primary sectors, representing a jump of 69.8% compared with the same period of last year. The investments involved 2,110 projects and are expected to generate 44,994 jobs in the country. Malaysia continues to attract high-value and high-tech investments, bolstered by its high-skilled talent and adoption of advanced technology for value-added industries. 

Meanwhile, in tandem with the National Investment Aspirations (NIA), Malaysia pursues more capital-intensive projects and those that support the development agenda of the nation, consistent with environmental, social and governance (ESG) goals. There is an emphasis on jobs creation with the 367 manufacturing projects worth RM66.9bil approved in the first half of 2021 (1H’21) creating 32,220 job opportunities. The workforce required for the approved investments include 1,367 managerial positions and 4,031 technical professionals such as engineers in the field of E&E, mechanical, chemical, and other disciplines, reflecting the higher value chain transition of the manufacturing sector. In addition, the approved manufacturing projects will also require 4,144 skilled craftsmen. Notable projects approved in 1H’21 include South Korea’s SK Nexilis project for a new copper foil manufacturing plant; Risen Energy’s proposed project to produce bi-facial technology solar products, and OCIM’s proposed investment to expand the capacity of its solar grade polysilicon plant. Going forward, from the strategic vantage point of the NIA, MITI will continue to pursue high quality investments to bring value to the nation and people, not just in preserving jobs but in creating new high value-added employment. The ministry is committed towards positioning Malaysia as the ideal partner for investors in the region, and propelling long term growth for Malaysia through the flow of sustainable quality investments in new and complex growth areas. 

Bursa Malaysia to enhance investor relations capabilities of public-listed companies  

According to Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift, the bourse has embarked on an investor relations and public relations incentive programme to enhance the visibility and accessibility of its public-listed companies (PLCs) to the investment community through more active investor relations engagements. PLCs participating in this pilot programme will undergo training for one year to enhance their in-house investor relations capabilities for more effective investor relations engagements. The scope of the investor relations and public relations programme includes, among others, assisting PLCs and their senior management with the preparation of corporate presentation slides and factsheets, planning and organising investor briefings with analysts and fund managers, and assisting with public relations engagements such as press releases and media interviews. It is important for PLCs to develop strong relationships with existing and potential shareholders, as well as effectively communicate their equity story and ambitions to all stakeholders. Doing so consistently, will assist investors in making informed investment decisions, which is a key component to companies’ success in the investment market. This programme will not only help PLCs recognise the value of investor relations, but also help to market and promote their attractiveness as a viable investment, potentially elevating their profile, valuations, and liquidity. The programme is the latest of Bursa Malaysia’s strategic focus on ecosystem enhancement, which aims to grow market vibrancy and liquidity while providing a conducive capital raising platform to its existing PLCs. As of September 1, two PLCs namely Ge-Shen Corporation and Excel Force MSC Bhd had conducted their investor relations briefings, which garnered huge interest and participation of over 130 attendees, comprising fund managers, analysts, and institutional investors. 

Eye On The Markets 

This week, on Friday (17Sep), the Ringgit opened at 4.1765 against the USD from 4.1425 on Monday (13Sept). Meanwhile, the Ringgit was 3.1023 to the Sing Dollar on Friday (17Sep). On Monday (13Sept), the FBM KLCI opened at 1573.78. As at Friday (17Sep) 10:00am, the FBM KLCI is down 24.47 points for the week at 1549.31. Over in US, the overnight Dow Jones Industrial Average closed down 63.07 points (-0.18%) to 34,751.32 whilst the NASDAQ added 20.40 points (+0.13%) to 15,181.90.  

11 Malaysian firms in Forbes Asia’s 200 Best Under A Billion list

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According to Forbes Asia, a total of 11 Malaysian firms were recognised under their 2021 Best Under A Billion list. The list highlights the resilience of 200 public-listed small and mid-sized companies in the Asia-Pacific region with sales under US$1bil (RM4.16bil). The Malaysian companies that made the list this year were Comfort Gloves Bhd, D&O Green Technologies Bhd, Dancomech Holdings Bhd, Dufu Technology Corp Bhd, FoundPac Group Bhd, Frontken Corp Bhd, Revenue Group Bhd, Scientex Bhd, Thong Guan Industries Bhd, UG Healthcare Corp Ltd and ViTrox Corp Bhd.  

The top-three performing Malaysian firms in terms of total sales were Scientex (US$834mil or RM3.47bil), Thong Guan Industries (US$229mil or RM952mil) and Comfort Gloves (US$225mil or RM936mil). In terms of total net income, the top-three performers were Scientex (US$92mil or RM383mil), Comfort Gloves (US$67mil or RM279mil) and ViTrox (US$25mil or RM104mil).  

Scientex manufactures and sells plastic products and also engages in property development. Thong Guan Industries is primarily involved in the manufacture of plastic packaging, while Comfort Gloves is engaged in the manufacture and trading of natural and synthetic specialty examination gloves. ViTrox specialises in designing and developing automated vision inspection systems and equipment testers for the semiconductor and electronic packaging industries, as well as electronic communications equipment. 

The sound financial figures of the 200 companies on the list reflected how well they coped in the midst of a global pandemic. No surprise, healthcare and pharmaceutical-related companies were standouts while tech and logistics firms linked to the global e-commerce boom also benefitted. The list was meant to identify companies with long-term sustainable performances across a variety of metrics. From a universe of 20,000 publicly traded companies in the Asia-Pacific region with an annual revenue above US$10mil (RM41.58mil) and below US$1bil (RM4.16bil), only these 200 companies were selected. The companies on the list, which were unranked, were selected based on a composite score that incorporated their overall track record in measures. These include debt, sales and earnings-per-share growth over both the most recent fiscal one and three-year periods, as well as the strongest one and five-year average returns on equity. Aside from the quantitative criteria, qualitative screens were used as well, such as excluding companies with serious governance issues, questionable accounting, environmental concerns, management issues or legal troubles. State-controlled and subsidiaries of larger companies were also excluded. The criteria also ensured a geographic diversity of companies from across the region. The list used full-year annual results, based on the latest publicly available figures as of Aug 12, 2021, compiled by FactSet. FactSet is a United States-based financial data and software company that provides integrated data and software. All other research was done by Forbes Asia. 

Relief measures delay recognition of problem loans – RAM 

According to RAM Ratings co-head of financial institution ratings Wong Yin Ching, in conjunction with the publication of the rating agency’s Banking Quarterly Roundup Q2’21, the emergence of bad loans in the banking system is expected to be delayed in view of the sizeable proportion of loans under relief. With the reintroduction of the six-month blanket loan repayment moratorium for all retail, microenterprise and affected SME borrowers, impaired loans will continue to be suppressed for the rest of the year and even in the first half of 2022 (H1’22). The latest regulatory support measure – on an opt-in basis but automatically approved – came into effect in July following a rise in infections and stricter lockdowns which resulted in major disruptions to business activity. Targeted relief programmes offered by banks were already available prior to this. Based on data obtained during the recent bank results briefings, the average proportion of domestic loans under relief or restructuring and rescheduling programmes doubled to about 26% (ranging from 22% to 32% for individual banks) from the previous quarter for eight selected banking groups. This figure may creep up in the coming months although it understands the number of applications has already slowed in recent weeks. Not all relief loans will turn problematic as some borrowers took the payment holiday as a precaution. This is evident from the high percentage of relief loans with no arrears or held by the T20 income group, as shared by some banks. The system’s underlying asset quality however will only become clearer after forbearance measures are phased out, with bad loans likely to peak in late 2022 or early 2023. As at end-July 2021, the banking industry’s gross impaired loan ratio stood at a still-low 1.67%. All eight banks posted a higher year-on-year pre-tax profit in Q2’21, largely due to a low base effect, but performance was mixed on a quarter-on-quarter (q-o-q) basis. Results for the previous corresponding period were marred by a sharp squeeze in net interest margins (NIMs) because of substantial modification charges arising from the first loan moratorium and multiple policy rate cuts. NIMs have since staged a strong recovery (Q2’21: 2.33%; Q2’20: 1.83%), but the q-o-q improvement was modest (+2bps) as most deposits had already been repriced lower by Q1’21. The system’s NIM is envisaged to hover at the current level in the coming quarters and may even see slight compression. Banks are expected to book some modification losses in Q3’21 on account of the recent moratorium, but the quantum will be significantly lower than last year’s. In Q2’21, the average credit cost ratio (annualised) of the eight banks moderated q-o-q to 52bps from 61bps. RAM is maintaining its full-year projection of 60-70bps (2020: 84 bps) it is foreseen that banks will continue or step up efforts to build up provision reserves as the protracted lockdown has dampened nascent economic recovery. Despite heightened uncertainties, profit performance for the full year is expected to be better than previous year’s, driven by NIM recovery and to a lesser extent, lower provisioning charges. 

Eye On The Markets 

This week, on Friday (10Sep), the Ringgit opened at 4.1475 against the USD from 4.1440 on Monday (6Sept). Meanwhile, the Ringgit was 3.0886 to the Sing Dollar on Friday (10Sep). On Monday (6Sept), the FBM KLCI opened at 1590.67. As at Friday (10Sep) 10:00am, the FBM KLCI is down 11.87 points for the week at 1578.80. Over in US, the overnight Dow Jones Industrial Average closed down 151.69 points (-0.43%) to 34,879.38 whilst the NASDAQ shed 38.40 points (-0.25%) to 15,248.30.  

Budget 2022 to rebuild economic resilience and spur recovery

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According to the Finance Ministry, in its inaugural pre-budget statement (PBS), the upcoming Budget 2022 will focus on protecting and driving the recovery of lives and livelihoods of Malaysians, rebuilding resilience of the economy, and catalysing socio-economic reforms. Budget 2022 will prioritise continuing programmes to support and spur economic recovery in line with the gradual reopening of the economic sectors through the National Recovery Plan. It will also address potential lingering and longer-term effects of the pandemic on public health and economic structure. Another theme of Budget 2022 will be to ensure the continuity in policy and assistance provided to the people and businesses. It will also focus on efforts to help the vulnerable and disadvantaged segments of society, women, indigenous people and the disabled to ensure no one is left behind in the nation’s developmental and recovery agenda. Efforts to protect and generate new job opportunities will continue to be a priority. Budget 2022 will catalyse structural reforms in the post-pandemic period to boost the nation’s competitiveness, apart from ensuring greater sustainability and inclusiveness in its development agenda. 

Beginning this year, the PBS will be published ahead of the tabling of the budget to increase transparency in annual budget preparation, a move which is in line with the proposed framework in enacting the Fiscal Responsibility Act, which aims to improve the governance, transparency, and accountability of the country’s fiscal management. This effort will enhance Malaysia’s position in the Open Budget Index, an international report published by the International Budget Partnership (IBP). Based on the IBP report for 2019, Malaysia recorded a relatively low score of 47 for budget transparency compared to regional countries such as the Philippines (76), Indonesia (70) and Thailand (61). This Budget also serves as a catalyst towards the implementation of the 12th Malaysia Plan (12MP) that will drive economic growth, inclusiveness, and sustainability in the medium term, based on the Sustainable Development Goals and the Shared Prosperity Vision (SPV) 2030. The government is also considering measures to increase tax revenue through increased tax compliance. Among the measures under consideration are :- the implementation of the Special Voluntary Disclosure Programme for indirect taxes administered by the Royal Malaysian Customs Department; the introduction of a Tax Compliance Certificate as a pre-condition for tenderers to participate in government procurement; the implementation of the Tax Identification Number as well as reviewing tax treatment that is identified as having elements of revenue leakage or harmful practices. 

ASNB launches ASN Equity Global for investors with high risk tolerance 

Amanah Saham Nasional Bhd (ASNB), the wholly-owned unit trust management company of Permodalan Nasional Bhd (PNB), today introduced ASN Equity Global (ASNEG), the first ASNB fund to focus entirely on global equities, which will be available for subscription from September 1, 2021 onwards. ASNEG primarily caters to investors with high risk tolerance as the fund employs a capital growth investment strategy that involves a big degree of exposure to international markets. True to its name, the fund will heavily focus on global public equities with an asset allocation of up to 99 per cent as it adopts a strategy of investing in high quality international companies with strong growth prospects and companies that will benefit from global megatrends. According to PNB group chairman Tun Arifin Zakaria, the introduction of ASN Equity Global marks another major milestone for PNB and ASNB as the fund management companies continue to fulfil their mandate to all Malaysians by providing easy access to global markets at an affordable entry point. The comprehensive range of unit trust products now cuts across multiple geographies and fund categories, comprising conservative, balanced, and growth funds, allowing unit holders to fulfil their financial and investment goals. ASN Equity Global is managed by PNB’s team of professional fund managers based in Kuala Lumpur as well as its London office, to capture and capitalise on opportunities in more than 50 major global stock markets. The minimum initial investment is only RM10.00 and additional investment from as low as RM1.00. Starting from September 1, 2021, investors can subscribe to ASN Equity Global at the initial offer price of RM1.00 per unit until September 21, 2021 on all channels, including www.myasnb.com.my and myASNB mobile app, ASNB branches and agents nationwide, as well as ASNB agents’ internet banking facilities. Between September 1 and December 31, 2021, ASNB is offering a lower sales charge rate for all over-the-counter subscriptions. 

Eye On The Markets 

This week, on Friday (3 Sep), the Ringgit opened at 4.1510 against the USD from 4.1770 on Monday (30Aug). Meanwhile, the Ringgit was 3.0935 to the Sing Dollar on Friday (3 Sep). On Monday (30Aug), the FBM KLCI opened at 1593.19. As at Friday (3 Sep) 10:00am, the FBM KLCI is down 12.22 points for the week at 1580.97. Over in US, the overnight Dow Jones Industrial Average closed up 131.29 points (+0.37%) to 35,443.82 whilst the NASDAQ added 21.80 points (+0.14%) to 15,331.20.  

Political changes not expected to derail current economic policies, recovery plans, vaccination progress — UOB Research

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According to a report by UOB Research, the political changes in Malaysia are not expected to derail the current economic policies, recovery plans and vaccination progress. As at Aug 22, 55.6%, or 18.26 million, of Malaysia’s adult population have been fully vaccinated while 78%, or 13.02 million, have received at least one dose of vaccine. Larger parts of the economy and more sectors are gradually reopening. Currently, six states — Penang, Perak, Terengganu, Kelantan, Pahang and Sabah — have transitioned to phase 2 of the National Recovery Plan (NRP) while Perlis, Sarawak and Labuan are under Phase 3 of the NRP. While Kuala Lumpur and Selangor remain in Phase 1 of the NRP, more restrictions were loosened on business operations and social activities recently. Malaysia has one of the highest rates of vaccination roll-outs based on vaccination doses. The vaccination timeline expects to achieve the target of 100% of Malaysian adults fully vaccinated by October. Going by this assumption, the Research House expects most economic and social sectors to reopen by 4Q21 which paves the way for a rebound in gross domestic product (GDP). Positive spill-overs from external demand will also provide further impetus to the recovery pace ahead. Nonetheless, it will continue to watch how the external uncertainties surrounding the Covid-19 resurgence unfolds in major countries, the expected US Federal Reserve quantitative easing tapering in the later part of this year and the pace of China’s economic slowdown. They maintained their full-year GDP outlook of 4% for 2021 and expect the key policy rate to be kept unchanged at 1.75% for the rest of the year 

Malaysia’s CPI up 2.2% in July 2021 

According to Department of Statistics Malaysia (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s Consumer Price Index (CPI) grew 2.2% year-on-year (y-o-y) in July 2021 to 122.5, marking its sixth consecutive month in positive territory due to the low-base effect. The inflation measure rose from 119.9 in the same month last year, but the growth was slower compared with the 3.4% y-o-y increase in June 2021. Among the reasons cited for the moderate increase was the monthly electricity bill discount given to domestic consumers for a three-month period starting from July 1 under the National People’s Well-Being and Economic Recovery Package (PEMULIH). Nevertheless, the CPI remained in positive territory as there were increases in petrol and diesel prices in July 2021 compared to a year ago. The growth was mainly driven by a double-digit increase of 11.6% in the transport group due to the setting of the RON95 petrol ceiling price at RM2.05 per litre since March, compared with the average price of RM1.69 in July 2020. This was followed by furnishings, household equipment and routine household maintenance (1.7%), food and non-alcoholic beverages (1.3%), and housing, water, electricity, gas and other fuels (0.7%). For the first seven months of 2021, the CPI increased 2.3% y-oy. The core index, which covers all goods and services except volatile items of fresh foods as well as administered prices rose 0.7% y-o-y in July 2021. Among the major groups which influenced the increase were furnishings, household equipment and routine household maintenance (1.7%), food and non-alcoholic beverages (1.1%), transport (1%), restaurants and hotels (0.7%), housing, water, electricity, gas and other fuels (0.6%), recreation services and culture (0.6%), health (0.4%), education (0.1%) and miscellaneous goods and services (0.1%). The CPI without fuel edged up 0.8% y-o-y in July 2021 to 113.2 versus 112.3 in the same month last year. The CPI without fuel covers all goods and services, except unleaded petrol RON95, unleaded petrol RON97 and diesel. Five states surpassed the national CPI rate of 2.2% in July 2021, namely Terengganu (2.8%), Pahang (2.5%), Selangor and Putrajaya (2.4%), Kelantan (2.4%) and Sarawak (2.3%), compared to the same month last year. All states witnessed an increase in the index of food and non-alcoholic beverages. The highest increase was recorded by Selangor and Putrajaya (2%). Meanwhile, other states showed an increase below the national index of food and non-alcoholic beverage rate of 1.3% in July 2021 compared to July 2020. 

Eye On The Markets 

This week, on Friday (27Aug), the Ringgit opened at 4.2020 against the USD from 4.2345 on Monday (23Aug). Meanwhile, the Ringgit was 3.1015 to the Sing Dollar on Friday (27Aug). On Monday (23Aug), the FBM KLCI opened at 1519.99. As at Friday (27Aug) 10:00am, the FBM KLCI is up 73.25 points for the week at 1593.24. Over in US, the overnight Dow Jones Industrial Average closed down 192.38 points (-0.54%) to 35,213.12 whilst the NASDAQ shed 96.10 points (-0.64%) to 14,945.80.  

Kuala Lumpur among top 10 cities in Asia Pacific seen as leading technology innovation hub — KPMG

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According to Guy Edwards, head of technology, media and telecommunications sector at KPMG in Malaysia, Kuala Lumpur is ranked the ninth top city in the Asia Pacific and outside of Silicon Valley/San Francisco as a leading technology innovation hub over the next four years. In its global Technology Industry Survey 2021 involving more than 800 industry leaders, this was based on several factors both at a local level such as infrastructure and demographics and at a macro level such as the regulatory environment and potential national tax incentives. This is not all that surprising considering several studies have already recognised and identified factors that make Malaysia an attractive investment opportunity. 

There is definitely continued global confidence in the country’s potential as a development hotbed, thanks to the Malaysian government’s dedication to advance the country’s technology infrastructure with the introduction of initiatives such as the National Fourth Industrial Revolution policy. While government impetus could be just the thing to amplify Malaysia’s potential as a tech hub, more is needed beyond simply introducing newer policies. The survey showed that 61% of industry insiders believed the pandemic has changed their opinions of which cities would become leading technology innovation hubs. Only one third feel that Silicon Valley will maintain its innovation leadership position, while an equal number feel it will not. 

Agri-commodities export jumps 65% in second quarter 

According to Minister of Plantation Industries and Commodities (MPIC) Datuk Dr Mohd Khairuddin Aman Razali, agri-commodities and agri-commodities product exports jumped 65% to RM105bil in the second quarter of 2021 from RM64bil in the same period last year. As of June this year, palm oil-based products which were the biggest contributor with 43% of the total agri-commodities export, increased to RM46bil compared to RM33bil in the first six months last year. 

However, palm oil based products export quantity declined 5% to 11.5 million tonnes. Covid-19 pandemic continuously impacted palm oil production and exports not only in Malaysia but also other global palm oil producing countries. The implementation of the movement control order by the government up to the National Recovery Programme on a scheduled basis over the past six months has directly impacted the export of palm oil and agri-commodity-based products. Following the encouraging performance, he is optimistic that the RM75bil palm oil export target this year could be achieved even though the country is still facing a shortage of workers in oil palm plantations. Meanwhile, rubber products that contributed 42% of the total agri-commodities export recorded a surge of 150% to RM44bil from RM17.77bil in the same period last year. 

Due to the Covid-19 pandemic, the value of latex-based products export such as rubber gloves and others rose 200% to RM37bil from RM12bil in the same period in 2020. Rubber gloves that are mainly for medical uses recorded more than threefold growth or 210%. On the other hand, wood-based products contributed 11% to agri-commodities export, increasing 21% to RM12bil from RM10bil in the same period 2020. Cocoa-based products export also posted an increase of 7% to RM3.4bil compared with RM3.1bil previously and pepper-based products export climbed 19.24% to RM62mil from RM52mil in the same period 2020. 

Eye On The Markets 

This week, on Friday (20Aug), the Ringgit opened 4.2375 against the USD from 4.2420 on Monday (16Aug). Meanwhile, the Ringgit was 3.1063 to the Sing Dollar on Friday (20Aug). On Monday (16Aug), the FBM KLCI opened at 1499.92. As at Friday (20Aug) 10:00am, the FBM KLCI is up 19.28 points for the week at 1519.20. Over in US, the overnight Dow Jones Industrial Average closed down 66.57 points (-0.19%) to 34,894.12 whilst the NASDAQ added 15.90 points (+0.11%) to 14,541.80.  

PM launches Perkukuh to reform Malaysia’s GLICs

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Prime Minister Tan Sri Muhyiddin Yassin launched Pelaburan Rakyat (Perkukuh), a ‘GLIC mandate recharge’ to reform the mandate and roles of Malaysia’s government-linked investment companies (GLICs) to be aligned with the national agenda and support the nation’s economic recovery plan. Perkukuh as a reform comprises 20 key initiatives focusing on achieving a clearer mandate for each GLIC, more investments in catalytic and developmental areas, increased private sector participation and streamlining of the government’s role. Malaysia’s GLICs involved in the programme comprise four sovereign wealth funds (SWFs) and four institutional investors. The SWFs comprise Khazanah Nasional Bhd, Kumpulan Wang Persaraan (KWAP), the National Trust Fund (KWAN) and Ministry of Finance Inc (MoF Inc). The institutional investors, meanwhile, comprise the Employees Provident Fund (EPF), Permodalan Nasional Bhd (PNB), Lembaga Tabung Haji (LTH) and Lembaga Tabung Angkatan Tentera (LTAT). Speaking at the virtual launch, PM shared measures to attract private investments, such as by kick-starting the development of new growth ecosystems — including through Khazanah’s newly-established RM6 billion Impact Fund. He also mentioned three examples of measures under Perkukuh “to increase the attractiveness of GLCs while allowing them to operate effectively in a regulated environment”, namely to: 

  1. review the government’s golden shares in investee companies; 
  1. re-define Malaysia’s strategic sectors; and 
  1. determine new areas of national interest. 

Stating that succession planning will have an impact on the outcome of the Perkukuh programme, he hoped that there will be a more structured, yet flexible, approach involving socioeconomic leadership development which should include talent rotation programmes between the GLICs, GLCs and the public sector. Perkukuh will also look at optimising operations of the GLICs “where the management of certain asset classes will be pooled” to achieve economies of scale and improved returns. For the SWFs, there will be a re-balancing of focus between financial returns and socio-economic deliverables. A key priority will be on patient capital investing in a more strategic and targeted way into new growth areas. Meanwhile, institutional investors will retain their mandate of maximising returns of contributors, be it future retirees or those who wish to pursue the haj, while playing a synergistic role in contributing to national development. This will include a more cohesive and scaled-up approach to Corporate Social Responsibility (CSR) and supporting national priorities like ESG and green financing. The programme will be overseen by a “New Growth Coordination Council” chaired by the prime minister. As Perkukuh will push GLICs to optimise capital allocation and focus on new growth areas, the council will ensure these are aligned with key policies comprising the National Fourth Industrial Revolution Policy, MyDIGITAL, the National Investment Aspirations framework, the Twelfth Malaysia Plan, and the Shared Prosperity Vision 2030. In formulating Perkukuh, the Govt drew on the deep expertise of the GLICs’ ecosystem, regulators, ministries as well as industry captains, including those involved in the first GLC Transformation Programme. 

E-commerce income in Q2 jumps 23% on-year to RM276.6 billion – DOSM 

According to the Department of Statistics Malaysia (DOSM) Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s e-commerce income for the second quarter of 2021 rose 23.3% year-on-year (y-o-y) to RM276.6 billion, attributed to transaction growth driven by the manufacturing and services sectors, Coming from a low base, the services sector registered a significant 20.5% y-o-y increase to RM404.5 billion. The wholesale & retail trade, food & beverages and accommodation segment increased 21.8% to RM324.6 billion. This was followed by a 14.7% rise to RM59.5 billion in the information & communication and transportation & storage segment. Simultaneously, the health, education and arts, entertainment & recreation segment as well as the professional and real estate agent segment reported a similar uptrend, with a 27.3% hike to RM12.2 billion and an 8% increase to RM8.2 billion, respectively. The number of persons engaged in this sector was 3.6 million persons, a 0.7% or 25,812-person decline compared with the same period last year. The decline was attributed to the information & communication and transportation & storage segment which fell by 2.4% (11,297 persons), followed by a 0.2% (6,127 persons) drop in the wholesale & retail trade, food & beverages and accommodation segment. Similarly, the health, education and arts, entertainment & recreation segment fell 1.7% (4,772 persons) and the professional and real estate agent segment dropped 2% (3,616 persons). Compared with the same quarter of last year, salaries and wages paid increased by 0.4% or RM100.5 million. The growth was contributed by the information & communication and transportation & storage segment, which jumped RM120.8 million or 2.8%. This was followed by the wholesale & retail trade, food & beverages and accommodation segment and the health, education and arts, entertainment & recreation segment, which rose RM9.3 million and RM3.0 million respectively. 

Eye On The Markets 

This week, on Friday (13Aug), the Ringgit opened 4.2375 against the USD from 4.2245 on Monday (9Aug). Meanwhile, the Ringgit was 3.1205 to the Sing Dollar on Friday (13Aug). On Monday (9Aug), the FBM KLCI opened at 1491.76. As at Friday (13Aug) 10:00am, the FBM KLCI is up 9.82 points for the week at 1501.58. Over in US, the overnight Dow Jones Industrial Average closed up 14.88 points (+0.04%) to 35,499.85 whilst the NASDAQ added 51.10 points (+0.35%) to 14,816.30.