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.  

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