Brand Finance reveals Top 100 Malaysian Brands 2020 Ranking

Joint session between ministries to be held in preparing Budget 2021

According to Samir Dixit, managing director of Brand Finance Asia Pacific, the Malaysia 100 Brands  2020 ranking remains very top heavy this year and hopes to see a more diverse mix at the top and more significant brand value increases at the bottom. To do so, brands must start to focus on building both brand value and strength, rather than being sales and offers driven. These tactics will help in the short term but might destroy the long-term value and strength of brands. It is the brand strength for most Malaysian brands that remains a concern – these have remained stagnant this year. Brand has to be a strategic agenda for senior management and boards and must be treated like any other business asset and not just a legal trademark. See the complete ranking from pages 13 to 19.

Joint session between ministries to be held in preparing Budget 2021

According to Finance Minister Tengku Datuk Seri Zafrul Aziz, a joint session will be held between ministries to discuss proposals as well as the operational and development needs in relation to Budget 2021. The Finance Ministry is in the process of drafting Budget 2021, which will be tabled on Nov 6. Economic continuity would be given priority to ensure the momentum of economic recovery was maintained. The government calls on the people to work together in combating the COVID-19 pandemic by always practicing the new norms and physical distancing, maintaining hygiene and health, as well as be disciplined in complying with the standard operating procedures issued by the government. The government was constantly monitoring developments on the COVID-19 situation and was always ready to increase allocations, as and when needed. The government has allocated RM1.7 billion to combat the spread of COVID-19, channelled via 14 ministries and state governments. The government, through the Health Ministry, has also channelled an additional allocation of RM44 million to strengthen Sabah’s healthcare front-liners. Apart from that, the government, through the National Security Council, recently approved an additional allocation of RM50 million to the National Disaster Management Agency (NADMA). These additional provisions are in line with the commitment to ensure preparedness in the face of increasing COVID-19 infections nationwide. Meanwhile, 11.36 million people had successfully received RM50 in their eWallets, amounting to RM567.9 million, under the RM50 eWallet credit programme that ended on Sept 30. The eWallet providers such as Boost, GrabPay and TouchnGo eWallet had also contributed benefits in the form of credit matching and various other incentives, amounting to RM433.8 million, in an effort to boost the Malaysian economy.

China remains Malaysia’s largest foreign investor in manufacturing sector

According to Deputy International Trade and Industry Minister Datuk Lim Ban Hong, China remains Malaysia’s largest foreign investor in the manufacturing sector for four consecutive years since 2016, with 32 foreign direct investments (FDIs) amounting US$452.43million approved in the first six months of 2020. Malaysia approved 79 FDIs worth US$3.74 billion from China in 2019. In terms of total trade, the bilateral trade between Malaysia and China stood at US$80.06 billion from January to August 2020, while in 2019, the two-way trade hit US$123.96 billion. Despite the current Covid-19 pandemic, Malaysia and China continued to show sincere friendship to support each other and overcome difficulties together in these trying times. It is hoped that the corporate elites from both countries would continue to collaborate in sectors such as digital economy big data, innovative economy, as well as industrial innovation and modern agriculture.

DOSM expects Malaysian economic recovery to continue

According to the Department of Statistics Malaysia (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin, the country’s economy is expected to continue its recovery trend based on the smoothed growth rate of leading index (LI), a predictive tool to anticipate upturns and downturns in the economy. The LI registered 108.5 points in August 2020 from 100.8 points in August 2019, maintaining an annual growth of 7.6 per cent. However the LI slipped to negative 0.5 per cent, dragged by the number of new companies registered (negative 0.6 per cent), real imports of semi- conductors (negative 0.4 per cent), and the number of housing units approved (negative 0.1 per cent). Despite the softening LI for the reference month, the growth rate of smoothed LI is consistently above trend and moving upwards. This implied that the Malaysian economy is expected to continue its recovery trend in the months ahead. Nevertheless the downside risk to growth remained amid the recent spike in COVID-19 cases. Meanwhile Coincident Index (CI), which measures the current economic performance, anticipated a better year-on-year growth to register negative 2.3 per cent in August 2020 from negative 2.4 per cent in July 2020. On a monthly basis, the CI rose to 0.5 per cent supported by the increase in volume index of retail trade (0.5 per cent) and real salaries and wages in manufacturing sector (0.1 per cent). The current situation was supported by the performance of volume index of wholesale and retail trade which depicted a sign of recovery to register 130 points with a growth of negative 2.4 per cent year-on-year. This was the smallest negative growth since March 2020. Besides that, in terms of labour force statistics, the number of employed persons improved 0.5 per cent to 15.2 million persons, contributed mainly in the services sectors.

On The Markets

This week, on Thursday (22Oct), the Ringgit eased to 4.1495 against the USD from 4.1470 on Monday (19Oct). Meanwhile, the Ringgit was 3.0593 to the Sing Dollar on Thursday (22Oct). On Monday (19Oct), the FBM KLCI was up 14.27 points (0.95%) to 1518.11 from previous Friday’s close of 1503.84. As at Friday (23Oct) 10:00am, the FBM KLCI continued sideways over the past month at 1500.06. US stocks were higher after the close on Thursday, even as lawmakers worked to strike a stimulus deal but buoyed by a surprise upside on the economic data front, reduced jobless claims and higher home sales. The DJIA rose 0.54% to 28,363.66 while the NASDAQ added 0.19% to 11,506.01.

FBM KLCI 3 Years Chart

Top 100 Malaysian Brands 2020 Ranking exclusively in Inve$t next week Oct 23 issue

Bursa first virtual listing – Samaiden Group

In an exclusive deal with Brand Finance, Inve$t will be featuring the Top 100 Malaysian Brands 2020 Ranking. Look out for it in our October 23 issue. For a better insight into the power of brands, join the IAA/Brand Finance free webinar. Refer to their advertisement on Page 5 and use the interactive links to register.   

Bursa’s first virtual listing – Samaiden Group

According chief executive officer Datuk Muhamad Umar Swift, Bursa Malaysia welcomed Samaiden Group Berhad as its newest “member” on the ACE Market via a virtual listing ceremony. This first virtual listing is a new offering by the exchange arising from the reinstatement of the conditional movement control order (CMCO) in Selangor, Kuala Lumpur and Putrajaya. In line with the CMCO requirements, the exchange introduced this virtual listing service, enabling flexibility for new issuers during CMCO. Samaiden Group is one of Malaysia’s leading consultants of renewable energy and environmental service provider. Historically, listing ceremonies on the local bourse marked a significant milestone in a company’s life cycle. The event would usually attract many invited guests of the company who come together to celebrate the event with the company’s owners and promoters. Notwithstanding the CMCO, the exchange is happy to maintain this long standing tradition. It will continue to leverage on technology to adapt traditions to the continuously changing environment while always prioritising the health and safety of our stakeholders.

BNM sees spike in property market risks as MCO takes toll

According to Bank Negara Malaysia (BNM), the risks in the real estate sector have risen due to both prevailing oversupply and a re-evaluation of business property needs due to the various movement control orders. In its Financial Stability Review for 1H 2020 Report that was prepared prior to the latest CMCO that has been imposed on the entire Klang Valley, the most apparent loser of the movement curbs was the retail space sector with consumers either shying away due to restrictions or perceived risks amid the Covid-19 pandemic. Overall, property transactions fell by over 25 per cent by volume in the first half and by nearly 27 per cent in terms of value. Amid pre-existing oversupply conditions and changes to consumption behaviour since the pandemic, rental rates in the retail commercial property market are likely to remain depressed in the period ahead. The estimated timeline for a recovery could be as long as 12 months, according to industry experts cited in the report. Another loser was the office space sector citing the shift towards telecommuting and home-working arrangements that were forced by the initial MCO and which were kept up by some firms even after restrictions were relaxed. The report suggested that some firms may make such arrangements permanent or at least incorporate more of these into their operations in the immediate term. Such a trend would further depress both office occupancy and rental rates. Both the retail and office space sectors already had significant overhang prior to the MCO first imposed in March. More worryingly from the report was the conclusion that the property market risk could also extend to the residential market. The pandemic may increase risks of a broader decline in house prices due to a deterioration in income and weaker demand conditions. This in turn would increase risks to financial stability given that loans for the purchase of residential properties account for the bulk of banks’ total property-related exposures. For the residential sector, however, it cited previous findings that four in five mortgages were for owner-occupied homes, which reduced the risk of default. It also said mortgages were also typically held by “higher-income” borrowers with monthly incomes of above RM5,000 who were financially more resilient. Repeated cuts to the overnight policy rate should also support demand for residential property.

Total value of loan repayments reached 70% of pre-moratorium levels

According to Bank Negara Malaysia (BNM) deputy governor Jessica Chew, data showed that the total value of loan repayments had reached 70% of what it was prior to the blanket loan moratorium period. Many borrowers are starting to repay their loans. The data revealed that two million borrowers had been engaged by banks by the end of September, out of which 514,000 were R&R (rescheduling and restructuring) applications received with a 98% approval rate. For businesses, banks approved 6.3 times applications compared to total outstanding R&R loans at the end of 2019. Just this month, Malaysia transitioned into a targeted moratorium after the blanket automatic loan moratorium period ended on Sept 30, 2020. According to BNM’s latest Financial Stability Review Report for 1H 2020, at the start of the blanket moratorium period, more than 95% of individuals and small and medium enterprise (SME) borrowers took up automatic repayment deferment. Up to Sept 25, 2020, a total of 840,000 individuals and SME borrowers had opted out or already started to resume repayments in line with improved economic conditions. This number is expected to increase further following the end of automatic repayment deferment. With the automatic moratorium in place, aggregate impairment and delinquency ratios remained low at 1% and 0.9% of total outstanding household debt respectively (2019: 1.2% and 1.1%). Household asset quality is expected to see some deterioration in 2H2020 and throughout 2021 with the automatic moratorium ended, but banks are well positioned to absorb higher credit losses. At its peak, close to 90% of household borrowers with about 87% of outstanding household loans in the banking system were under the moratorium as most borrowers elected to defer their loan repayments to secure greater flexibility in managing their cash flows during a highly uncertain period. Many of these borrowers would have been able to continue servicing their debt if chosen to. Based on the enhanced financial margin framework, it estimated that household borrowers who may experience difficulties (such as those with negative financial margins) in servicing their debt as a result of income and unemployment shocks are unlikely to account for more than 15% of total borrowers. Among these borrowers, about 1% of total borrowers with 3% of outstanding household debt are expected to default after accounting for financial buffers held and targeted repayment assistance extended to borrowers in need. It also noted that about 40% of potential defaults arise from housing debt with an average loan-to-value (LTV) ratio of 70%, thus limiting financial exposure of affected borrowers and losses for the banking system. It noted that household loan impairments are projected to double — albeit from historically low levels. Higher household impairments are expected to emerge in 2H21 given the extended repayment assistance programmes that will remain in place through the first quarter of 2021 (1Q21) for individuals who have experienced a loss in income.

This week, on Thursday (15Oct), the Ringgit eased to 4.1480 against the USD from 4.1385 on Monday (12Oct). Meanwhile, the Ringgit was 3.0553to the Sing Dollar on Thursday (15Oct). On Monday (12Oct), the FBM KLCI was down 11.92 points (0.78%) to 1518.43 from previous Friday’s close of 1530.35. As at Friday (16Oct) 10:00am, the FBM KLCI was sideways for the week at 1518.33. US stocks were lower after the close on Thursday as fears of a resurgence in Covid-19 cases and a lack of additional fiscal stimulus led investors to safer havens like the USD. At the close in NYSE, the Dow shed 19.80 points (-0.07%) to 28,494.20 while the NASDAQ declined 54.86 points(- 0.47%) to 11,713.87.

FBM KLCI 3 Years Chart

Bursa aims to educate investors on fraud & scams

2020 GDP projection kept at -5.5% to -3.5% despite Covid-19 resurgence

According to Bursa Malaysia Bhd’s chief executive officer Datuk Muhamad Umar Swift, its education programmes are aimed to increase investor awareness of financial frauds and scams, which are on the rise, as financial products become more complex. An educated investor is less likely to fall prey to financial frauds. He sounded the exchange’s ceremonial gong in front of the session’s virtual audience to mark the ‘Ring the Bell for Financial Literacy’ ceremony held on Wednesday in conjunction with World Investor Week 2020. It is a global initiative by the World Federation of Exchanges to promote financial literacy and boost financial inclusion. This year, nearly 40 exchanges have come together in support of this cause. He added that Bursa Malaysia has a strong commitment towards advocating financial literacy in its marketplace and the wider community. It is an important agenda, not just for encouraging retail participation but also to enhance investor protection through education. Bursa Malaysia, over the last 12 months, had accelerated the use of digital technology to effectively reach large segments of the population and promote financial inclusion. In June, the exchange had launched Bursa Academy, a comprehensive one-stop e-learning platform targeted at retail investors across the securities, derivatives and Islamic capital markets. Since its launch, Bursa Academy has continued to grow in traction, registering close to 93,000 users with more than 217,000 pageviews as at end-September 2020. Through its digital learning webinars conducted at the onset of the pandemic, the exchange has reached out to 51,943 investors.

2020 GDP projection kept at -5.5% to -3.5% despite Covid-19 resurgence

According to Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz, there is no further deceleration of the nation’s gross domestic product (GDP) projection despite the sudden rise in Covid-19 infections and the 2020 growth projection remains between -5.5% and -3.5%. The second wave is very much concentrated and more than 60% is confined. We did not implement a movement control order (MCO) so all business activities are allowed to go on. However for this year, Malaysia, along with 150 other countries, is undergoing a recession. But come 2021 the economy would pick up and Malaysia’s GDP growth is expected to be around 5.5% to 8%, a projection that is in line with the stronger GDP forecast by the World Bank and International Monetary Fund (IMF). The government had announced various stimulus packages which would end this year but will continue to look at various avenues to save the people’s livelihood and focus on the recovery momentum in the upcoming Budget 2021.

More small- and mid-cap companies aim to have 30% of board comprising women directors

According to the Securities Commission of Malaysia (SC), gender diversity on boards of listed companies showed slight improvement at 24.82% of the top 100 listed companies as at Aug 31, 2020, up from 23.68% in 2018. Across all listed companies, the ratio stood at 16.96% as at Aug 31 compared with 15.69% in 2018. There are five companies with all-male boards on the top 100 listed companies, namely Comfort Glove Bhd, Focus Dynamics Group Bhd, Frontken Corp Bhd, Guan Chong Bhd and Pentamaster Corp Bhd. Overall, the number of companies with all-male boards stood at 248. The data shows that there’s progress in relation to gender diversity on the boards. However, it appears unlikely to achieve the 30% target [for the top 100 PLCs] by Dec 31, 2020. While the SC, together with other relevant stakeholders will continue to drive greater gender diversity on boards, other measures and interventions are also being considered to accelerate progress. It is worth noting that the number of large companies that had adopted the target of having 30% or more women directors in 2019 remained at 42, the same as in 2018. Among mid-cap companies, however, the number of adopters increased to 28 in 2019 (25 in 2018) and among small-cap companies, the number of adopters rose to 342 in 2019 (302 in 2018) according to data in the CG Monitor 2020. Overall, a total of 412 companies adopted the target in 2019, up from 369 in 2018. There are 682 public-listed companies with at least one woman director on the board, up from 634 in 2018. A total of 165 listed companies here have complied with the target of having 30% women directors, up from 145 in 2018. In 2019, women accounted for 21% of new board appointments. The trend of appointing younger women directors continued, with 41% of women directors below 50 years old and 11% below 40 years old. More listed companies adopted best practices as outlined in the Malaysian Code on Corporate Governance (MCCG) in 2019, compared to the year before. Areas which show an increase in adoption include the two-tier voting process and board practices to determine the remuneration of directors and senior management. The CG Monitor 2020, which is available on the SC’s website, also presents observations on three thematic reviews on the adoption of two-tier resolutions, board remuneration of listed companies on the FTSE Bursa Malaysia Top 100 Index and the conduct of fully virtual general meetings by listed companies since the Movement Control Order.

OPEC, in major shift, says oil demand to plateau in late 2030s

According to the Organization of the Petroleum Exporting Countries (OPEC), the world oil demand will plateau in the late 2030s and could by then have begun to decline in a major shift for the producer group that reflects the lasting impact of the coronavirus crisis on the economy and consumer habits. The prediction, made in its 2020 World Oil Outlook, comes amid a growing number of other forecasts that the pandemic may prove the tipping point for peak oil demand. Oil use will rise to 107.2 million barrels per day (bpd) in 2030 from 90.7 million bpd in 2020, a 1.1 million bpd below its 2030 forecast last year and over 10 million bpd below its 2007 prediction of 2030 demand. Global oil demand will grow at relatively healthy rates during the first part of the forecast period before demand plateaus during the second half. Future demand will likely remain persistently below past projections due to the lingering effects of the COVID-19-related shutdowns and their impact on the global economy and consumer behaviour. While oil use to fuel cars, trucks and industry will rebound as economies recover, it voiced concern that future growth may be partly offset by factors like a post-pandemic shift to homeworking and teleconferencing over commuting, as well as efficiency improvements and a shift to electric cars. Even before the pandemic, rising climate activism in the West and widening use of alternative fuels were putting the strength of long-term oil demand under more scrutiny. This year will also see potential for demand to begin to decline after 2030 given developments like faster adoption of electric cars, more fuel efficiency and a larger reduction in business and leisure travel after the pandemic. This year OPEC, with Russia and other allies, a grouping known as OPEC+, agreed record output cuts of 9.7 million bpd, the equivalent of 10% of global supply.

This week, on Thursday (08Oct), the Ringgit gained to 4.1555 against the USD from 4.1595 on Monday (05Oct). Meanwhile, the Ringgit was 3.0573 to the Sing Dollar on Thursday (08Oct). On Monday (05Oct), the FBM KLCI was up 12.13 points (0.81%) to 1512.43 from previous Friday’s close of 1500.30. As at Friday (09Oct) 10:00am, the FBM KLCI continued marginally upwards for the week gaining only 4.2 points to 1516.63 dragged by a surge in Covid-19 infections, continued political uncertainty and lacklustre regional markets. Meanwhile US stocks were higher after the close on Thursday despite uncertainty over proposed stimulus aid as investors’ focus on value stocks saw gains in the Financial Services, Industrials and Energy sectors. At the close, the Dow added 122.05 points (+0.43%) to 28,425.51 and the NASDAQ climbed 56.38 points (+0.50%) to 11,420.98.

FBM KLCI 3 Years Chart