Listing momentum seen continuing into 2022 – Investors keen on businesses with tech, digital touch

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Deloitte Malaysia IPO leader Wong Kar Choon foresees a continuous momentum of listings next year as economic recovery gets underway in view of the higher number of initial public offerings (IPOs) on Bursa Malaysia this year. There are some potential IPOs next year as the firm received enquiries on IPOs from its clients. He said that based on what they know in the market and how busy they are with clients, he feels very bullish about IPO listings in the coming year. The number of positive Covid-19 cases are declining and coupled with the additional booster vaccination shots, these provide confidence to the capital market. Malaysia saw a higher number of IPO listings this year, totalling 25 year-to-date from 19 listings last year, bolstered by the drive-in vaccination rates and the reopening of the economy. Despite it being the second year of the pandemic, fund raising has not stopped. Companies have continued to attract investments through mergers and acquisitions as well as IPOs. There is still continuous support of retail investors in the market. Of the 25 listings up until now, Malaysia has had four Main Market IPOs, followed by 11 in the ACE Market and the remainder in the LEAP Market. Proceeds raised from the IPOs were lower at RM789mil from RM1.9bil last year mainly due to MR DIY Group (M) Bhd’s listing that raised RM1.5bil the year before. The proceeds raised made MR DIY Group’s IPO the largest in three years and the only listing to surpass the billion-ringgit threshold last year. In 2021, there was no such big IPO. However, CTOS Digital Bhd (which was listed this year) also did an outright offer of sale of RM990mil plus the RM200mil from the public funds raised, making it an impressive RM1.2bil deal, especially in the pandemic year. There is an increase in the number of real estate sector listings in the country this year compared to a year ago as a result of the economic recovery from the Covid-19 pandemic. Property technology firms would gather an attractive IPO listing in Malaysia, noting that property tech listings in other countries have been appealing to retail and cornerstone investors. The capital market in Malaysia continues to be vibrant, supported by both retail and cornerstone investors. They are interested in particularly certain type of businesses that have technology and digital outreach. They will look out for outfits that disrupt conventional businesses. It is also worth noting that price-to-earnings ratio of tech companies tends to be higher than conventional businesses.  

According to Deloitte Malaysia business tax executive director Choy Mei Won, the government’s proposal to remove the RM200 stamp duty on contract notes for the trading of listed shares and increasing the rate to 0.15% would make it more expensive to buy and sell shares. It would impact intraday traders, given their high frequency of buying and selling transactions. Following the move, potentially a marginal percentage of intraday traders may be attracted to trade in other financial hubs such as Singapore and Hong Kong. 

Lack of impetus could leave market directionless – Inter-Pacific Securities 

Inter-Pacific Securities Sdn Bhd said there is still a lack of market impetus, and this could leave the market directionless over the near term. The research house said that once again, the key index made little headway as fresh buying interest remains thin, despite the prospects of an early General Election following the Melaka state election. As it is, there were still few leads to draw market players and as a result, traded volumes continue to fall and slipping to just 2.45b shares – its lowest in 2021. The broader market was also directionless and became broadly lower to result in losers still overwhelming gainers for the day. Fresh buying interest remains anaemic with the ongoing results reporting not providing the much-needed catalysts to attract more market players back to the market. Therefore, the wait-and-see stance is likely to prolong and keep the FBM KLCI trapped within a tight range for the time being, hovering between the 1,520 and 1,530 levels over the near term. The other support and resistance levels are at 1,515 and 1,540 points respectively. The lower liners and broader market shares are also experiencing low participation, and this is likely to prolong their insipid outlook. With few positive leads, the selling and profit taking activities could also stay and leave most of these stocks lower for the time being. 

Eye On The Markets 

This week, on Friday (26Nov), the Ringgit opened at 4.2345 against the USD from 4.1890 on Monday (22Nov). Meanwhile, the Ringgit was 3.0939 to the Sing Dollar on Friday (26Nov). On Monday (22Nov), the FBM KLCI opened at 1526.76. As at Friday (26Nov) 10:00am, the FBM KLCI is down 13.12 points for the week at 1513.64. Over in US, the overnight Dow Jones Industrial Average closed down 9.42 points (-0.03%) to 35,804.38 whilst the NASDAQ added 70.10 points (+0.44%) to 15,845.20.  

Bursa inks MoU with OCBC, Alliance to introduce sustainable financing for PLCs

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According to Datuk Muhamad Umar Swift, chief executive officer (CEO) of Bursa Malaysia, the exchange operator and regulator has entered into a memorandum of understanding (MoU) with Alliance Bank Malaysia Bhd and OCBC Bank (Malaysia) Bhd to establish #financing4ESG, an initiative to improve Malaysian public listed companies’ (PLCs) environmental, social and governance (ESG) adoption. Bursa Malaysia said it will collaborate with both banks to develop sustainable financing options that recognise PLCs’ ESG credentials in accordance with the FTSE4Good assessment criteria. The initiative enables PLCs the opportunity to accelerate their ESG adoption while also improving their ESG ratings for inclusion into the domestic capital market’s ESG index, FTSE4Good Bursa Malaysia Index. FTSE Bursa Malaysia EMAS Index constituents are eligible for the sustainability financing under the initiative as they form the FTSE4Good ESG assessment universe. The signing of the MoU with Alliance Bank and OCBC Bank underscores Bursa’s commitment towards accelerating ESG adoption among PLCs, in line with the aspiration to elevate PLCs as regional leaders in this space. He is optimistic that this collaboration will spur the growth of sustainable finance while also enhancing PLCs’ appeal to investors. He noted that for PLCs, ESG is no longer nice-to-have but has become need- to-have. Joel Kornreich, group CEO of Alliance Bank, speaking at the event, noted that it is important to help business owners adopt ESG practices and innovation to reduce carbon footprint as the sustainable choices they make can be a force for good for the community and environment. He added that sustainable choices will result in positive climate impact, social outcomes, and business profitability in the long term and that their collaboration with Bursa Malaysia will enable them to help businesses, large and small, innovate and grow sustainably. Also present at the MoU was Tan Ai Chin, managing director, senior banker and head of investment banking of OCBC Bank, who said that the bank will collaborate with Bursa Malaysia by synergising OCBC Bank’s leading experience in pioneering various sustainable finance transactions and capitalising on Bursa Malaysia’s ESG database to provide optimal financing solutions for PLCs. They aim to mainstream the adoption of sustainable finance to further accelerate the PLCs’ sustainability agendas, as a means to support the Malaysian government’s commitment towards achieving carbon neutrality by 2050. Besides the competitive financing from Alliance Bank and OCBC Bank, PLCs will obtain non-monetary benefits from the collaboration’s branding and capacity building exercises. Bursa Malaysia will also provide access to its investor relations engagements and event platforms, along with the opportunity to participate in specialised technical workshops on climate-related disclosures. The #financing4ESG initiative sets the foundation for Bursa Malaysia to collaborate with other ecosystem players to advance the nation’s ESG adoption, which is in line with the Exchange’s vision to be al leading sustainable and globally connected marketplace. PLCs interested in learning more about the initiative or improving their general ESG practices may approach the Exchange’s Index & Sustainable Business unit via email at isb@bursamalaysia.com 

Govt to unveil MSC 2.0 to attract more digital investment — Mustapa 

According to Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed, the government will unveil MSC 2.0 with a new branding and further improvements to address the digital divide, meet current challenges and constraints, and enhance Malaysia’s value proposition to attract more digital investment nationwide. This effort is in line with the 12th Malaysia Plan (12MP), Malaysia Digital Economy Blueprint (MyDIGITAL), and United Nations Sustainable Development Goals. He said the decision was made at the fourth meeting of the National Digital Economy and Fourth National Industrial Revolution (4IR) Council, which was chaired by Prime Minister Datuk Seri Ismail Sabri Yaakob. For 25 years, the Malaysia Digital Economy Corporation (MDEC) through the MSC Malaysia initiative, has succeeded to increase the contribution of the digital economy from 0% to more than 20% to gross domestic product by 2021. As at Dec 31, 2020, MSC Malaysia had helped the country raise investments of more than RM384 billion and revenue of RM588 billion. The country has grown into a global digital economic power, having been ranked among the top three of the Kearney Global Services Location Index since 2004 through this initiative. Hence, efforts to digitise the people’s economy and popularise the digital economy will continue. The government was satisfied with the implementation of the National Digital Network Plan (JENDELA) through the Malaysian Communications and Multimedia Commission (MCMC) with a total of 6.427 million premises covered with fibre optic, average mobile broadband speed increased to 31.34 Mbps, and 4G coverage increased to 94.03% in populated areas until the third quarter of 2021. The 5G network throughout Malaysia will be implemented aggressively to achieve the target of 80% coverage in populated areas by 2024 to ensure the country is back on par with neighbouring countries in the near term. To encourage the adoption of digital technology by micro, small and medium enterprises (MSMEs), the MyDIGITAL Corporation will be organising the National MSME Digitisation Empowerment Programme 2021 from Nov 21 to 23. The programme will be held in collaboration with the Ministry of Communications and Multimedia, Ministry of Entrepreneur Development and Cooperatives, Ministry of International Trade and Industry (MITI), MDEC, MCMC, and other relevant government agencies and private entities. The prime minister will be launching the programme which will be held in Bera, Pahang. The programme aims at sharing information on the stimulus or support packages provided by the federal and state governments, the private sector, as well as to share the experiences of entrepreneurs who have achieved success from the various assistance. It was decided that the Ministry of Science, Technology and Innovation, through early-stage start-up influencer Cradle Fund Sdn Bhd, would coordinate and monitor the implementation of the Malaysia Startup Ecosystem Roadmap (SUPER) 2021-2030 through the MYStartup platform in an effort to place Malaysia in the top 20 of the global start-up ecosystem by 2030. It was also decided that the achievements of the MyDIGITAL initiative be used as a key performance indicator (KPI) for ministers and department heads, in line with the importance of the digital economy. 

Eye On The Markets 

This week, on Friday (19Nov), the Ringgit opened at 4.1800 against the USD from 4.1640 on Monday (15Nov). Meanwhile, the Ringgit was 3.0804 to the Sing Dollar on Friday (19Nov). On Monday (15Nov), the FBM KLCI opened at 1531.38. As at Friday (19Nov) 10:00am, the FBM KLCI is down 7.59 points for the week at 1523.79 Over in US, the overnight Dow Jones Industrial Average closed down 60.10 points (-0.17%) to 35,870.95 whilst the NASDAQ added 72.10 points (+0.45%) to 15,993.70.  

Prosperity Tax a one-off measure – Tengku Zafrul

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According to Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz, the Prosperity Tax is a one-off tax measure amid analysts’ fear of its reintroduction in the future. In reiterating, he added that it would not impact more than 250 companies – only companies with more than RM100 million in chargeable income would be taxed. The Prosperity Tax is one-off in this extraordinary time and it will be implemented in that spirit. It will be used to ensure the public health system is more resilient in the face of any threat in the future. Speaking at the Invest Malaysia 2021 Series 2 virtual event, he said that several large corporations have stated that the Prosperity Tax will not affect their dividend payments, citing Telekom Malaysia, Tenaga Nasional and Axiata that have supported the effort. There are more than 900 listed companies on Bursa Malaysia, of which 145 made over RM100 million in their financial year 2019. But in the financial year 2020, only 125 listed companies earned more than RM100 million. According to Bloomberg data, only 130 companies achieved the same pre-tax earnings level across the last two financial years. It is a very small number of companies on the stock exchange. Different countries have decided to permanently increase their taxes in the future as they recover from the Covid-19. For example, in the UK, corporate tax is increased permanently. Saudi and Indonesia have increased value added tax (VAT). In the medium term, the government is considering options to reduce the reliance on direct taxes and to widen the revenue base including shifting to a consumption tax base. There will be more discussion on this when the Fiscal Responsibility Act is tabled next year which will cover the medium-term revenue strategy and outline the stages of revenue measures. We want to review tax legislation and modernise revenue administration. The Prosperity Tax certainly does not fall in that spirit. More reliable consumption tax will be explored as new taxation revenues such as taxation on the digital economy. As part of the 12th Malaysia Plan, the government is now looking into imposing the carbon tax. The finance ministry is working with the environment and water ministry on the imposition of the carbon tax, adding that the government will continue to assess the entire revenue ecosystem. 

Malaysia’s Q3 2021 e-commerce income increases to RM279b – DOSM 

According to the Department of Statistics Malaysia Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin, Malaysia’s e-commerce income surged to RM279.0 billion, a jump of 17.1% year-on-year, in Q3 of 2021. Commenting on the Malaysia Digital Economy 2021 report, he said that in terms of quarter-on-quarter growth, it maintained a positive trend of 4.3%. From January to September,   e-commerce income recorded RM801.2 billion, an increase of 23.1% y-o-y. E-commerce was driven by industrial centres such as Selangor, Kuala Lumpur, Johor, and Penang. In terms of industry, manufacturing and services remained the key drivers of growth. The improved performance was attributed to the adoption of new normal during the Covid-19 pandemic, in which it boosted digital usage in Malaysia. On e-commerce income by market segment in 2019, the local sector dominated with a contribution of 87.6%, generated from sales in Malaysia, compared with the international sector’s 12.4%. The value of the income generated was RM591.8 billion and RM83.5 billion, respectively. E-commerce income by type of customers via business-to-business registered the highest income of RM449.6 billion with a 66.6% contribution, followed by business-to-consumer at RM194.0 billion, or 28.7%. In the meantime, business-to-government recorded RM31.8 billion (4.7%) adding that digital technology has the potential to propel Malaysia’s economic growth. The Malaysia Digital Economy Blueprint (MyDigital), which was launched by the government in February 2021, is the foundation for the country’s transformation into a “regional digital pulse” which is expected to boost productivity, stimulate innovation, and improve livelihoods by harnessing the internet, Big Data, the Internet of Things, artificial intelligence, and other technologies. 

Malaysian healthcare sector to benefit from progressive reforms – Fitch Solutions 

According to Fitch Solutions Country Risk & Industry Research, the spread of the Delta variant had stretched the healthcare system in Malaysia. It said that Malaysian hospitals were overstretched, while Covid-19 bed utilisation was consistently beyond 100% during its peak in August 2021, leading to the construction of field hospitals. As the virus now progresses from the pandemic to endemic stage, Malaysia aims to invest in regional disease centres, vaccine development and develop better understanding of communicable diseases. And, as the Covid-19 pandemic has shown, infectious diseases threaten a blow to health systems already facing significant pressure on their capacity to care for patients. Malaysia’s public healthcare system is mainly financed through federal government taxation and general revenue. Although government spending on healthcare as a percentage of the country’s gross domestic product had been gradually increasing over the years, the World Health Organization still considers this to be below global as well as regional standards. The pandemic had underscored the need to increase funding for the healthcare system both in terms of facilities and working conditions for staff. Citing Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz, it said Malaysia will undertake a medium-to long-term reform of its healthcare sector while gradually aiming to increase healthcare spending every year. Fitch Solutions added that among other policy directions being considered is increasing public healthcare charges for higher-income earners, and incentivising people to buy health insurance. Social protection schemes will also provide health benefits for informal workers. Moreover, looking beyond the pandemic, it believes that the Malaysian government will remain firmly committed to improving health quality and access across the country. Noting that in recent years, the healthcare sector has seen a rise in government expenditure, with an increase in medical facilities and higher-quality treatments. The implementation of the B40 healthcare scheme is one of the key initiatives that will expand healthcare access to the nation’s lowest earners. In 2020, healthcare expenditure in Malaysia grew 6.9% year-on-year, with an estimated value of RM63.1 billion. In 2021, it’s growth is expected to accelerate to 9.6%, reaching RM69.2 billion. It forecasts health expenditure to experience a five-year compound annual growth rate of 7.6% in local currency terms and 8.9% in US dollar terms, reaching RM91.1 billion by 2025. While reforms are under way to secure the long-term sustainability of the public healthcare system, challenges remain. Fitch Solution remains sceptical about the progress of the reforms and any alteration of the funding structure of the healthcare system will require a revision of its healthcare expenditure forecast. It will not incorporate this into their forecast until the reforms are officially approved and it notes that it is likely that the funding structure will change. Public healthcare expenditure will increase considerably in the short term. Its longer-term forecast reflects that the growth in spending will decelerate as cost-containment measures will inevitably be introduced to maintain sustainable levels of funding. 

Eye On The Markets 

This week, on Friday (12Nov), the Ringgit opened at 4.1675 against the USD from 4.1545 on Monday (08Nov). Meanwhile, the Ringgit was 3.0764 to the Sing Dollar on Friday (12Nov). On Monday (08Nov), the FBM KLCI opened at 1534.21. As at Friday (12Nov) 10:00am, the FBM KLCI is down 6.46 points for the week at 1527.75. Over in US, the overnight Dow Jones Industrial Average closed down 158.71 points (-0.44%) to 35,921.23 whilst the NASDAQ added 81.60 points (+0.52%) to 15,704.30.  

Maybank Kim Eng lauds govt decision on EV incentives in Budget 2022

INVE$T | Market Sentiments | 05 November 2021

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According to head of regional equity research Anand Pathmakanthan, Maybank Kim Eng has applauded the government’s decision to give full exemption of import duty, excise duty, as well as sales tax for electric vehicles (EVs) as it seeks to support the local EV industry. The government initiatives will kick start the infrastructure investment by various parties for the EV space. Malaysia is a bit slow to address the EV issue when the rest of ASEAN countries have got so many policies in place. This initiative would be good to the economy, would be good for stocks in this sector as well. This was in reference to Finance Minister Tengku Datuk Seri Zafrul’s who in his Budget 2022 presentation in Parliament on Friday (Oct 29), said a 100% road tax exemption will also be given to EVs. And that the government sees the potential of EV as it is energy efficient and that it also helps to reduce air pollution. The government is also giving tax income exemption for individuals of up to RM2,500 on the cost of purchase, installation, rental, hire purchase as well as subscription fees for EV charging facilities. The government will extend the 100% sales tax exemption for completely knocked down (CKD) passenger vehicles and a 50% discount for completely built-up (CBU) cars, including multi-purpose vehicles (MPVs) and sports utility vehicles (SUVs) for six months until June 30 next year. In view of this, Maybank Investment has maintained its positive outlook on the automotive sector. The extended sales tax exemption announcement is welcoming but the timing of the announcement is relatively off. This would affect vehicle sales in Nov-Dec 2021, as prospective buyers will not be rushed to place orders before the earlier deadline of Dec 31, 2021.  

Return of GST not only way to tackle revenue issue – Tricor’s Dr Veerinderjeet Singh 

According to Tricor Malaysia chairman Dr Veerinderjeet Singh, bringing back the goods and services tax (GST) is not the only answer to Malaysia’s revenue issue but is only one of many that can be introduced. Speaking at the Malaysian Economic Association’s (MEA) 2022 Post-Budget Dialogue, he said that his suggestion for the way forward is to examine the existing sales and services tax (SST) and expand it a little bit – but this year might not be the right time – to cover a lot more services over time and integrate it to have the attributes of GST. In other words, there is some kind of harmonisation that has to occur but it might take three years. He reminded participants that there was a particular issue with profiteering in the previous implementation of GST. He said the strength of the consumption tax is built into its multistage mechanism, which forces traders to come onboard, enhancing the compliance culture as well as marking an audit trail to the tax invoice. That is the strength on which we can actually build better compliance and therefore the revenue collected can be more secure as prediction will be with a little bit more accuracy. He also cleared the misconception that GST produces more revenue than SST. He said it is the preferred tax regime across the world because it is more robust as the multistage tax can help address issues with tax collection at the retail level, especially relating to compliance. 

MIDF Research foresees normalisation of OPR next year 

According to MIDF Research, it expects Bank Negara Malaysia (BNM) to consider normalising its benchmark interest rate in 2022, despite keeping the overnight policy rate (OPR) unchanged at 1.75 per cent throughout this year. At this point, the policy normalisation will likely be carried out in the latter half of 2022. We believe the current focus of BNM’s monetary policy setting is to ensure a sustainable recovery of Malaysia’s economy, coming out from the full lockdown. With the rate of inflation hovering within BNM’s forecast, there is less pressure for BNM to quickly shift towards policy tightening. However the decision will be subject to the stability of economic growth, the pace of price increases and further improvement in macroeconomic conditions, particularly a continued recovery in the labour market and growing domestic demand. From a medium-term perspective, the policy rate normalisation is needed to avert risks that could destabilise the future economic outlook such as the persistently high inflation and a further rise in household indebtedness. At the Monetary Policy Meeting, the central bank decided to keep the OPR unchanged at 1.75 per cent, in line with MIDF’s and market’s expectations, as the current rate is deemed to be appropriate and supportive of Malaysia’s economic growth. 

Eye On The Markets 

This week, on Friday (05Nov), the Ringgit opened at 4.1590 against the USD from 4.1475 on Monday (01Nov). Meanwhile, the Ringgit was 3.0739 to the Sing Dollar on Friday (05Nov). On Monday (01Nov), the FBM KLCI opened at 1545.99. As at Friday (05Nov) 10:00am, the FBM KLCI is down 18.34 points for the week at 1527.65. Over in US, the overnight Dow Jones Industrial Average closed down 33.35 points (-0.09%) to 36,124.23 whilst the NASDAQ added 128.70 points (+0.81%) to 15,940.30.  

PMB Investment introduces its first global equity fund

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PMB Investment introduces its first global equity fund 

According to PMB Investment Bhd CEO Mahani Ibrahim, the wholly-owned subsidiary of Pelaburan Mara Group, has launched its maiden global equity fund that caters to investors seeking capital growth over the medium to long term. The PMB Shariah Global Equity Fund (PMBSGEF) provides investors access to an actively managed portfolio of global shariah-compliant securities. The fund’s minimum initial investment is RM1,000 for individual investors and RM10,000 for institutional investors, while the minimum additional investment is RM100 and RM1,000 respectively. The fund invests up to 99.5% of its net asset value (NAV) into shariah-compliant global equities and related securities in more than 15 countries including the US, United Arab Emirates, China and Japan. PMB Investment is partnering with Nasdaq Dorsey Wright, a leading advisor to Wall Street and investment managers worldwide, to manage the fund using its proven methodologies and investment strategies. PMB Investment believes the fund offers an attractive opportunity for Malaysian investors looking to ride on the recovery trend on shariah-compliant investments.  

Agrobank, MAFI announce RM110 mil financing campaign for SMEs, micro agropreneurs 

According to Ministry of Agriculture and Food Industries (MAFI) Minister Datuk Seri Dr Ronald Kiandee, Agrobank in collaboration with MAFI, has allocated RM110 million fund to support small and medium enterprises (SMEs) and micro agropreneurs. The fund had been allocated through a financing campaign called Dana Agromakanan Keluarga Malaysia in line with the Keluarga Malaysia (Malaysian Family) concept. The fund was set up to ensure the sustainability of agricultural and food industries while also stimulating economic growth. The launch of this campaign coincides with the National Agrofood Policy 2021-2030 (DAN 2.0), which aims to drive the development and modernisation of agro-food industries for the next 10 years, and Agrobank has pledged to continue supporting the DAN 2.0. It will be channelled through two of Agrobank’s financing programmes. The first is Agromakanan (PENJANA), which includes financing assistance for entrepreneurs under microenterprise and the B40 group with a total fund of RM50 million, maximum financing up to RM50,000 and profit rate as low as 3.5% per annum. The second is the Dana Pembiayaan Agromakanan (DPA) financing, specifically for agropreneurs in the food industry to increase local production and reduce imports with a total fund of RM60 million. The financing offer is up to RM10 million with a profit rate of 3.5% per annum (RM10,000-RM5 million) and 4.75% per annum (RM5 million-RM10 million). The bank will waive the guarantee fee for both Agromakanan (PENJANA) and DPA funds during the campaign period. The campaign is valid until the RM110 million is fully utilised or up to Dec 31, 2021, whichever comes first. 

DHL to invest RM200m to build auto-sort gateway at KLIA by 2023 

According to DHL Express Malaysia and Brunei managing director Julian Neo, the global logistic provider plans to invest RM200 million to build its first fully auto-sort gateway at Kuala Lumpur International Airport (KLIA) by the first quarter of 2023. Located at KLIA Air Cargo Terminal One (KACT1), the 13,422 square metre gateway will nearly triple the size of its current facility in KLIA. The Kuala Lumpur Gateway will be equipped with state-of-the-art technologies and designed for optimal shipment processing efficiency, including a high-speed dimensioning and weighing system. There has been a significant rise in import and export volumes in Malaysia and the fully auto-sort gateway will enable DHL to manage the increasing growth of shipment and parcel volume. The facility will be equipped with an automated sort system that can handle 10,000 packages per hour, 24 hours a day, as compared to the current 2,400 packages per hour. The new gateway will have two dedicated aircraft flying five times a week to and from Hong Kong, and four times a week to and from Singapore. The move coincides with the Malaysian Transport Ministry’s efforts to upgrade Malaysia as a transport and logistics hub in the region by 2025. 

RAM Ratings: Banking sector not out of the woods yet, but remains resilient 

According to Wong Yin Ching, RAM Ratings’ co-head of financial institution ratings, the Malaysian banking sector is expected to stay resilient in 2022 amid the challenges of the Covid-19 pandemic. Even as impairments begin to surface in the coming year, credit losses will be amply cushioned by healthy earnings accretion, comfortable provisioning buffers and solid capitalisation. In the next 12 months, most ratings in RAM’s banking portfolio will remain intact. RAM also projects loan growth to come in at 4% in 2022, in line with the anticipated economic recovery. This is a higher rate than the 3% forecasted for 2021 and the 2.5% recorded in August. The household sector will anchor growth next year with mortgages as the main driver, similar with what was seen in previous years. This is not surprising as Malaysia has a young demographic where household formations are high and there is an underlying demand for homes. For business, on the other hand, RAM is only projecting a slight pick-up as most firms are currently operating below capacity. Even as the economy gradually recovers, they do not see firms rushing to invest or expand just yet.  

Meanwhile, RAM senior analyst Loh Kit Yoong added that funding and liquidity conditions are envisaged to stay healthy. Banks’ liquidity coverage ratio has generally hovered around 150%, well above the 100% minimum. They believe that Bank Negara Malaysia (BNM) has a strong incentive to ensure ample liquidity in the financial system; the many regulatory flexibilities introduced since the onset of the pandemic is a testament of that. Although most banks will likely extend further relief to borrowers who are still viable when the nationwide opt-in moratorium expires in the first half of 2022, RAM expects some impairments to start crystallising in the latter part of the year. As such, RAM projects the gross impaired loan ratio to rise to between 2.3% and 2.5% in 2022 from the current 1.7% that has been contained by wide-ranging loan repayment assistance and moratorium. As at end-July 2021, about 30% of total loans were under relief. Based on discussions with some banks, majority of their borrowers under relief stemmed from the middle- and higher-income brackets. They are of the view that a sizeable portion of borrowers had taken the moratorium as a precautionary measure, given that bulk of these relief loans actually have zero arrears. As banks have set aside sizeable forward-looking provisions and management overlays in 2020, RAM foresees banks’ average credit cost ratio to ease to between 50 and 60 basis points (bps) next year, from the expected 60 to 70bps for 2021. While hopeful of an economic rebound in 2022, the banking sector is not out of the woods yet. That said, banks went into the Covid-19 pandemic from a position of strength. RAM believes the sector will remain on solid footing amid our nation’s protracted recovery 

Eye On The Markets 

This week, on Friday (29Oct), the Ringgit opened at 4.1560 against the USD from 4.1535 on Monday (25Oct). Meanwhile, the Ringgit was 3.0795 to the Sing Dollar on Friday (29Oct). On Monday (25Oct), the FBM KLCI opened at 1586.77. As at Friday (29Oct) 10:00am, the FBM KLCI is down 17.39 points for the week at 1569.38. Over in US, the overnight Dow Jones Industrial Average closed up 239.79 points (+0.68%) to 35,730.48 whilst the NASDAQ added 212.30 points (+1.39%) to 15,448.10.  

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According to Permodalan Nasional Bhd (PNB) president and group chief executive Ahmad Zulqarnain Onn, the Malaysian government-owned fund management entity’s focus on creating value and generating long-term sustainable returns for its unitholders goes hand in hand with PNB’s commitment to raising financial literacy standards and empowering Malaysians to make better financial decisions for their future. PNB’s statement was issued in conjunction with the Thursday pre-launch of PNB’s Minggu Saham Digital (MSD) from Nov 17 to 23, 2021 after a successful inaugural run in 2020. With the same goal as its predecessor Minggu Saham Amanah Malaysia (MSAM), MSD remains as PNB’s integrated financial literacy platform to achieve this aim. MSD is an evolution from PNB’s MSAM which had been held physically from 2000 until 2019. The digital event is now accessible to a much wider audience throughout the country from the comfort of their own homes and at the touch of their fingertips. MSD 2021 will be broadcast daily between 12.30pm and 10.00pm from Nov 17 to 23, 2021 through its official Facebook page and YouTube channel. The official launch ceremony of MSD 2021 is scheduled for Nov 18, 2021 at 1pm. MSD 2021 follows the encouraging response PNB received for its maiden MSD in 2020 during which the programme received over two million views across its Facebook page and YouTube channel. Learning from last year and seeing the success of MSD 2020 from a number’s standpoint, he is confident and hopes to be able to attract more viewers and engage them with even higher quality content this year. He believes that while planning for financial well-being is a serious matter, learning the ropes need not be. With the official theme #LaburBersama, MSD makes available various resources and educational materials on unit trust investments, risk and return, and financial planning for all Malaysians in the comfort of their own homes. 

Malaysia’s consumer spending to begin recovery in 2022 – Fitch 

According to Fitch Solutions Country Risk & Industry Research in its Malaysia 2022 Consumer Outlook report, it has forecast household spending in Malaysia to grow by a real rate of 5.1% over 2022 as consumers recover from two years of contraction in spending levels. Spending will follow the wider economic recovery as higher vaccination rates over the first half of 2022 allow for more localities to lift restrictions that have hampered retail sales. However several risks remain to the outlook over 2022, especially in the first quarter of the year, including elevated inflation and the possibility of new Covid-19 variants, which could lead to the reimposition of Covid-19 related restrictions. Total consumer spending would fall to RM855 billion over 2021, 5.4% lower than the RM905 billion recorded in 2019 in the pre-Covid-19 environment. As such the Malaysian consumer recovery from Covid-19 will only begin in 2022. However, the recovery will be rapid enough to total RM915 billion in 2022, building slightly on the figure recorded pre-pandemic. Retail sales in Malaysia had been weak over 2021, with growth mainly coming from a low base. This weakness stems from the prolonged lockdown restrictions impacting both consumers and retailers. These restrictions have been severe in populated regions of the country, like the Klang Valley (centred on Kuala Lumpur and includes its adjoining cities and towns in Selangor) which accounts for approximately 60% of retail sales in Malaysia, delaying the recovery in retail sales. Although vaccination is accelerating, it is unlikely that the country achieves herd immunity before the end of 2021, making a surge in retail sales towards the end of the year improbable. Further downside risks to the forecast, given the high level of political risk since the beginning of 2H21 and the risk that the Covid-19 outbreak could worsen over the coming months, which could further affect both retail sales and consumer confidence. Its consumer spending forecast is in line with its country risk view that the wider economy is forecast to grow by 5.5% over 2022. Malaysia’s economic recovery from the Covid-19 pandemic will be slow, with the country being in a constant state of lockdown for nearly two years. The domestic demand outlook had weakened considerably, with consumer spending in 2021 likely to be worse than in 2020. Citing the Department of Statistics Malaysia, unemployment is likely to rise over 2H21, and already started to climb to 4.8% in June 2021 from 4.5% in May 2021 when unemployment had averaged 3.3% pre-pandemic. Industries Unite, an association of 115 Malaysian businesses, had warned in early July 2021 of impending mass unemployment if the lockdowns were to persist. The serious outbreak will also set back any plans to reopen to international travel, dashing any prospects of tourism and other related sectors beginning to recover in 2021. 

Government will step up efforts to help MSMEs – Mustapa 

According to Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed, in his keynote address on “Shifting the Malaysian Economy Into Higher Gear: Assessment, Strategy, and Action” at the virtual Perdana Leadership Foundation CEO Forum 2021, the government will intensify its efforts to help micro, small and medium enterprises (MSMEs), especially small business owners, by implementing income-raising and capacity-building programmes in urban and rural areas, as well as by encouraging entrepreneurship and access to financing facilities. The government has recognised that it cannot adopt a “business-as-usual” approach in dealing with post-pandemic challenges. Some of the vulnerabilities and weaknesses exposed by this crisis are certainly not new. Hence, it is imperative that the government take this opportunity to reform the economy and ‘build back better’. In building back better, the 12th Malaysia Plan (12MP) aims to ensure that the nation can achieve high income status by 2025 and be more sustainable in order to ensure that it can become a carbon neutral country at the earliest in 2050. The plan will also provide more balanced development across regions and states to ensure that the fruits of development are equally shared by the citizens. The government’s priorities in the next five years include increasing incomes, eliminating absolute poverty, and reducing development gaps between states and regions, as well as ensuring quality growth that is sustainable. 

Eye On The Markets 

This week, on Friday (22Oct), the Ringgit opened at 4.1550 against the USD from 4.1590 on Monday (18Oct). Meanwhile, the Ringgit was 3.0949 to the Sing Dollar on Friday (22Oct). On Monday (18Oct), the FBM KLCI opened at 1602.89. As at Friday (22Oct) 10:00am, the FBM KLCI is down 17.38 points for the week at 1585.51. Over in US, the overnight Dow Jones Industrial Average closed down 6.26 points (-0.02%) to 35,603.08 whilst the NASDAQ added 94.0 points (+0.62%) to 15,215.70.  

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.