Individuals to be exempted from tax on foreign-sourced income – MOF

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According to the Ministry of Finance (MOF), the government has agreed to exempt all types of foreign incomes of individuals from tax, and has also extended the exemption to dividend incomes earned by limited liability companies and partnerships. This would be subject to the eligibility criteria which will be detailed in the Inland Revenue Board’s guidelines. For individual taxpayers, the government provides exemption to all individuals except those who conduct business partnership in Malaysia, which will be subject to tax on foreign-sourced income (FSI) received. Non-resident categories (individuals, companies, etc) remain eligible for income tax exemption. At the same time, FSI received in the year of assessment 2022 is exempt from tax calculation for the purpose of Cukai Makmur. The exemption would be effective Jan 1, 2022 until Dec 31, 2026. During the tabling of Budget 2022, the government had proposed the withdrawal of the tax exemption on FSI received in Malaysia, which had caused a stir among companies and individuals, especially those with significant investments abroad. The exemption on FSI has been in place since 1998 for companies and since 2004 for individuals, in a bid to encourage remittance of such income. The withdrawal of the exemption is part of its revenue sustainability measures, adding that it is in line with international regulations. 

Policy transition raises risk of volatility in 2022 – Kenanga Research 

According to Kenanga Research in its investment strategy note, Malaysia’s policy transition from monetary accommodation and fiscal expansion to austerity and consolidation raises the risk of volatility in the stock market in 2022. However this is only likely to happen in the second half of the year and after the 15th general election (GE15). Until then, conditions are supportive for positive stock market returns as liquidity remains ample, while value has emerged following 2021’s steep market decline and regional underperformance. And for all the anxieties that the recent floods have caused, the implied Q4’21 earnings results already suggested that Q4’21’s earnings would be the lowest. This is despite commodity prices holding up and a surge in economic reopening activities (briefly disrupted by the floods notwithstanding), plus encouraging data of leading economic indicators released recently. However, catalysts were lacking and there would be the usual pre-election inertia that would drag the market’s advance, and so, returns would not be broad-based. While the severe floods in mid-December would likely impact Q4’21 earnings, the market had already projected very conservative earnings estimates around lockdown-related impacts, which may have been overly aggressive, given anecdotal evidence of a surge in economic reopening activities. Several signs suggested the likelihood of GE15 being called well before the July 2023 deadline, including the resounding win by the Barisan Nasional in the November Melaka state election, followed by the convincing win by its close ally, Gabungan Parti Sarawak, recently. Additionally, economic data released in Q4’21 suggested the current recovery was intact for now, and would likely hit the government’s targeted 3% to 4% growth. The Opposition is more fragmented after the Sheraton Move and it looks highly unlikely for Pakatan Harapan, Bersatu and Parti Pejuang to regroup. And finally, the pandemic looks to be subsiding. These events should likely embolden the ruling coalition to call an election possibly as early as Q2’22. Meanwhile liquidity remained ample and no tightening is expected in Q1’22. The tightening would only likely be a post-GE15 event. When Bank Negara finally tightens by raising the overnight policy rate and statutory reserve requirement, the research house expects heightened market volatility as liquidity reduces. 

Eye On The Markets 

This week, on Friday (31Dec), the Ringgit opened at 4.1740 against the USD from 4.1975 on Monday (27Dec). Meanwhile, the Ringgit was 3.0869 to the Sing Dollar on Friday (31Dec). On Monday (27Dec), the FBM KLCI opened at 1517.37. As at Friday (31Dec) 10:00am, the FBM KLCI is up 15.21 points for the week at 1532.58. Over in US, the overnight Dow Jones Industrial Average closed down 90.55 points (-0.25%) to 36,398.08 whilst the NASDAQ shed 24.70 points (-0.16%) to 15,741.60.  

Bursa extends validity period of 20% general mandate

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According to Bursa Malaysia CEO Datuk Muhamad Umar Swift, the exchange has announced another 12 months extension of the temporary relief measures for the increased general mandate of 20% for new issue of securities by way of private placement (20% general mandate) and the general mandate of 50% based on a pro-rata entitlement for new issue of securities by way of rights issue (pro rata 50% general mandate), each of which would expire on Dec 31, 2021. This extension is in line with Bursa Malaysia’s commitment to assist listed issuers to address their funding needs and working capital requirements by easing compliance and facilitate secondary fundraising. Covid-19 has had an unprecedented lingering impact on the listed issuers. It is imperative for listed issuers to be able to raise funds through the secondary market in an expedient, efficient and cost-effective manner during these challenging times. The 20% general mandate previously announced on April 16, 2020 will be extended for another 12 months for listed issuers that have not raised any funds using the 20% mandate in 2020 or 2021. Such listed issuers will have up to Dec 31, 2022 to issue new securities under the 20% general mandate subject to the same prescribed conditions. For example, procuring shareholders’ approval for the 20% general mandate at a general meeting, complying with all applicable legal requirements including the constitution and disclosing views from the board of directors that the 20% general mandate is in the best interest of such listed issuers and their shareholders as well as the basis for such views. The validity of the pro-rata 50% general mandate announced on Nov 10, 2020 is similarly extended for another 12 months until Dec 31, 2022. An eligible listed issuer may issue rights securities on a pro-rata basis using this mandate, subject to compliance with the same conditions as imposed earlier. Additionally, the pro-rata 50% general mandate can now be utilised to issue a combination of ordinary shares/units and convertible equity securities (instead of just ordinary shares/units previously) as part of the rights issue exercise. 

PNB declares 5 sen income distribution for ASB unitholders 

According to Permodalan Nasional Bhd (PNB) Group chairman Tun Arifin Zakaria, PNB’s wholly owned unit trust management company Amanah Saham Nasional Bhd (ASNB) has declared an income distribution payout of five sen per unit for its flagship unit trust fund Amanah Saham Bumiputra (ASB) for the financial year ending Dec 31, 2021. The payout comprised an income distribution of 4.25 sen per unit, as well as a bonus payment of 0.75 sen totalling RM8.9 billion which will benefit 10.4 million ASB unit holders, bringing the fund’s total cumulative income distribution and bonus to RM168.5 billion since it was first introduced in 1990. ASB’s performance remains competitive compared to other low-risk investment instruments, and continuous efforts in diversifying and strengthening the portfolio have yielded positive results. The stronger performance of its global equity investments has managed to cushion the impact of the challenging domestic market. This exemplifies the importance of a well-diversified portfolio in managing portfolio risks and delivering sustainable returns. The income distribution for ASB this year is competitive, a result of hard work and dedication of our investment team. The total rate of five sen per unit translates into a spread of 315 basis points over the 12-month fixed deposit rate which currently stands at 1.85%. ASB transactions are suspended from Dec 23 until Jan 2, 2022 for dividend distribution and will reopen on Jan 3, 2022. 

Malaysia’s total approved investments up 51.5% y-o-y to RM177.8b in January to September – MIDA 

According to Senior Minister and International Trade and Industry Minister Datuk Seri Mohamed Azmin Ali, Malaysia attracted a total of RM177.8 billion in approved investments in the manufacturing, services and primary sectors, involving 3,037 projects, between January to September 2021. This represented a 51.5% increase compared to the same period last year and is expected to generate 79,899 jobs in the country. The country’s stellar performance is indeed a testament to investors’ strong confidence in Malaysia as a preferred investment hub, particularly its conducive business ecosystem in providing high-skilled talent and having strong readiness for advanced technology. This, in turn, further bolsters its role as a prominent site in global companies’ manufacturing networks, enhancing Malaysia’s position as a pioneering and renowned investment destination in the region. The manufacturing sector accounted for the largest share of total investments in the January-to-September period, amounting to RM103.9 billion (58.4%), followed by the services sector with RM57.8 billion (32.5%) and the primary sector with RM16.1 billion (9.1%). Foreign direct investment (FDI) accounted for nearly 60% of approved investments, valued at RM106.1 billion. Singapore, China, Austria, Japan and the Netherlands were the top five foreign investment sources, contributing nearly 85.3% or RM90.6 billion of total approved FDI. While FDI led approved investments in the manufacturing sector, investments from local companies dominated in the services and primary sectors. Domestic direct investment totalled RM71.7 billion or 40.3% of total approved investments. Five states, namely Kedah, Sarawak, Kuala Lumpur, Selangor and Pahang, contributed RM134.8 billion or 75.8% of total approved investments in various sectors. 

Eye On The Markets 

This week, on Friday (24Dec), the Ringgit opened at 4.1985 against the USD from 4.2285 on Monday (20Dec). Meanwhile, the Ringgit was 3.0916 to the Sing Dollar on Friday (24Dec). On Monday (20Dec), the FBM KLCI opened at 1497.57. As at Friday (24Dec) 10:00am, the FBM KLCI is up 18.35 points for the week at 1515.92. Over in US, the overnight Dow Jones Industrial Average closed up 196.67 points (+0.55%) to 35,950.56 whilst the NASDAQ added 131.50 points (+0.85%) to 15,653.40.  

Bursa Malaysia launches Bursa Digital Research

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Bursa Malaysia Bhd launched Bursa Digital Research (BDR), a multi-faceted research portal that serves to provide investors with an added source of research and data analysis with the objective of improving financial literacy and facilitating informed investment decision making. In addition, the BDR platform offers public listed companies (PLCs) a direct digital touch point with investors to improve PLCs’ overall visibility, enable better understanding of business operations and value propositions, while facilitating price discovery. This platform complements the Bursa Broadcast platform which seeks to enrich investors’ capital market understanding. According to Bursa Malaysia CEO Datuk Muhamad Umar Swift, BDR aims to provide an additional resource to help investors gain market insight and keep abreast of the latest developments in the stock market. Four main content categories are now available on the BDR portal, with more content to be added from time to time. Research data and market information are crucial to making informed investment decisions which will act as a catalyst for greater investor participation on Bursa Malaysia. 

Market Updates: In-house research analysis offering latest insights within the capital market, covering a wide range of topics including but not limited to trading momentum of stocks, global and local market trends, compilation of analyst consensus, indices revisions and highlights of investor product segments. 

Bursa Blitz: A series of FAQs touching on matters related to PLCs’ businesses and industries, covering latest development and future prospects. 

Initial Public Offering (IPO): A factsheet offering quick read about latest IPO launches while the quarterly performance report provides a comprehensive performance review, key statistics and insights on the trading of new listings. 

Exchange Traded Fund (ETF): Monthly performance reports to enrich investors’ understanding about ETFs available on the exchange. 

The BDR is accessible at https://www.bursamalaysia.com/reference/bursa_digital_research/ 

Night trading session to boost Bursa Derivatives’ competitiveness 

According to Bursa Malaysia Derivatives chief executive officer Samuel Ho, Bursa Malaysia Derivatives Bhd’s after-hours (T+1) night trading session, which has gone live, is expected to bode well for the country’s derivatives market and enhance the competitiveness of the exchange’s products. The after-hours trading offered by Bursa Malaysia Derivatives is an extension of the exchange’s current market trading hours in line with global market practices. With its improved price discovery, the after-hours trading can be used as a hedging and risk management tool, allowing investors to manage their risk exposure to price fluctuations in response to any major market movement that occurs during the United States and European market hours. More recently, the exchange’s trading volume for Bursa Malaysia’s crude palm oil futures in the third quarter of this year recorded a positive growth momentum with a total of 11.8 million contracts, an increase from 10.8 million in the same period last year. After-hours trading is important for hedging in the highly volatile crude palm oil market. Market participants will now have an avenue to better manage their risk exposure based on real-time global developments. By strengthening the connection between the Malaysian derivatives market and the global markets, the price discovery and effectiveness of its products as risk management solutions will be improved, hence enticing global investors to trade in our market. Market participants are able to trade between 9pm and 11.30pm from Monday to Thursday, thereby closing the gap between local and foreign market trading hours.  

Eye On The Markets 

This week, on Friday (10Dec), the Ringgit opened at 4.2220 against the USD from 4.2325 on Monday (6Dec). Meanwhile, the Ringgit was 3.0924 to the Sing Dollar on Friday (10Dec). On Monday (6Dec), the FBM KLCI opened at 1503.66. As at Friday (10Dec) 10:00am, the FBM KLCI is down 0.9 points for the week at 1502.76. Over in US, the overnight Dow Jones Industrial Average closed down 0.06 points (0.00%) to 35,754.69 whilst the NASDAQ shed 269.60 points (-1.71%) to 15,517.40.