INVE$T | Market Sentiments

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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.  

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

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

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

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

Eye On The Markets 

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

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

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

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

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

Relief measures delay recognition of problem loans – RAM 

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

Eye On The Markets 

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

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

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

ASNB launches ASN Equity Global for investors with high risk tolerance 

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

Eye On The Markets 

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

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

Malaysia’s CPI up 2.2% in July 2021 

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

Eye On The Markets 

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

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

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

Agri-commodities export jumps 65% in second quarter 

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

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

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

Eye On The Markets 

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

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

1. review the government’s golden shares in investee companies; 

2. re-define Malaysia’s strategic sectors; and 

3. determine new areas of national interest. 

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

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

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

Eye On The Markets 

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

INVE$T | Market Sentiments

According to executive chairman Datuk Syed Zaid Albar, the Securities Commission Malaysia (SC) has introduced the Shariah Screening Assessment Toolkit (Toolkit) for unlisted micro, small and medium enterprises (MSMEs). The toolkit is a major initiative by the commission to provide guidance in screening the Shariah status of unlisted MSMEs as part of its ongoing efforts to enhance the ecosystem for Shariah-compliant fundraising activities. The toolkit will primarily benefit equity crowdfunding and peer-to-peer financing platform operators, as well as Shariah advisers. It is anticipated that the introduction of the toolkit will encourage more Shariah-compliant offerings on alternative market-based fundraising platforms. It will also result in more diversified Islamic investing across asset classes and economic sectors, and enable end-to-end Shariah compliance among MSMEs in the halal sector. He mentioned this in his keynote address at the virtual SC-Halal Development Corporation (HDC) Forum 2021. The toolkit includes a series of questions based on the Shariah screening methodology for MSMEs, endorsed by the SC’s Shariah Advisory Council (SAC). The MSMEs are the backbone of the Malaysian economy, contributing close to 40% of gross domestic product (GDP). MSMEs were one of the hardest-hit segments in the global response to the pandemic. He said that considering the critical role they play in our economy, we must spare no effort to ensure that our MSMEs are able to pull themselves out of the current quagmire to flourish again. The halal economy could play a critical role in their growth and success. Hence appropriate and effective measures must be put in place to support a comprehensive end-to-end Shariah-compliant ecosystem for emerging businesses in the halal economy. Meanwhile, given that Malaysia’s halal economy is projected to grow to US$113.2 billion (about RM477.82 billion now) in 2030, better funding access will certainly assist halal industry players to capitalise on opportunities for expansion. In the long term, market-based funding obligations will also provide MSMEs the necessary discipline to better manage their cash flow and finances. 

Bank Pembangunan Malaysia offers five financing schemes worth RM5.6b, targeting key strategic sectors 

According to Bank Pembangunan Malaysia Bhd (BPMB) Chairman Datuk Seri Nazir Razak, the bank remains committed to supporting the country’s economic recovery in line with its developmental mandate and is offering five financing schemes totalling RM5.6 billion, targeting key strategic sectors. The financing schemes, in addition to its general corporate banking facilities, are offered at preferential financing rates to targeted sectors, including digitalisation, sustainability, maritime and logistics, tourism and public transportation. It welcomes viable projects and businesses in these eligible sectors to submit their applications. So far these schemes, previously announced by the government, have seen a total of RM2.4 billion being approved for utilisation, leaving RM3.2 billion still available for deployment. The Covid-19 pandemic had hit businesses and industries hard and as a development finance institution, BPMB plays a catalytic role to help businesses and the economy recover. It is in unprecedented times like this that BPMB has to step up with countercyclical lending by looking at business viability over longer horizons and providing viable companies support over this extreme but temporary downturn. Since inception, BPMB had been a strong partner to businesses in support of the development of Malaysia’s economy and improving the lives of the rakyat, guided by its vision and mission statement as Malaysia’s leading developmental partner. The bank is reinforcing its focus, given the crucial needs of the country at the moment. 

Eye On The Markets 

This week, on Friday (6Aug), the Ringgit opened 4.2175 against the USD from 4.2255 on Monday (2Aug). Meanwhile, the Ringgit was 3.1198 to the Sing Dollar on Friday (6Aug). On Monday (2Aug), the FBM KLCI opened at 1497.39. As at Friday (6Aug) 10:00am, the FBM KLCI is down 1.72 points for the week at 1495.67 Over in US, the overnight Dow Jones Industrial Average closed up 271.58 points (+0.78%) to 35,064.25 whilst the NASDAQ added 114.60 points (+0.78%) to 14,895.10.  

INVE$T | Market Sentiments

According to Bursa Malaysia Bhd Chairman Tan Sri Abdul Wahid Omar, the exchange expects trading on the stock market to remain vibrant, supported by active retail participation and high volatility in the market. The challenges arising from COVID-19 are likely to continue for at least in the short term, hence the exchange would continue with ongoing initiatives to attract investments and sustain retail participation in its market. Speaking at the virtual media briefing of Bursa Malaysia’s first half (H1) financial performance today, he said the high average daily trading value (ADV) momentum of 2020 continued into the H1 of 2021 with ADV increasing by 4.9% to RM4.4 billion. This contributed to the exchange recording a profit after tax of over RM210 million, a 39.4% increase from the previous corresponding period in 2020, and was also the highest ever half-year financial results since listing back in 2005. 

The global risk-off sentiment that has spurred an outflow by foreign investors from equities is not unique to Malaysia as this was also experienced by other emerging markets in ASEAN. Nonetheless, Malaysia is well positioned for recovery, following the eight COVID-19 fiscal stimulus programmes amounting to RM530 billion as well as the accommodative interest-rate levels have been crucial in supporting the economy. There are three potential upsides to support this view Firstly, Bursa Malaysia’s market valuation, with its forward price-to-earnings ratio of 13.3 times being the lowest in the region, makes it an attractive recovery play over the next few months. Secondly, Bursa Malaysia’s initial public offering (IPO) pipeline continues to remain healthy across all three markets, having sustained from the strong momentum last year. Year-to-date, there have been 20 new listings from the target of about 31 new listings this year, which include the recent RM1.21 billion listing of CTOS Digital Bhd, the largest IPO this year. And thirdly, the recovery in domestic and major economies appears to be on track, with the ramped-up vaccination rates seen in recent times and the implementation of the National Recovery Plan would facilitate the reopening of the economy.  

Meanwhile, according to Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift, various relief measures and incentives have been introduced to support listed issuers amidst these challenging times. The exchange will continue to enhance its platform to support the investing community in growing their wealth and managing risk against volatilities. Last May, the exchange launched the Pilot Market Making Program which aims to provide greater liquidity for less traded and illiquid stocks in the marketplace. Net profit rose to RM88.97 million in the second quarter ended June 30, 2021 (Q2 2021) from RM86.23 million in the same quarter last year. Revenue increased to RM196.10 million from RM179.78 million previously. In the coming months, Bursa Malaysia will introduce the after-hours (T+1) trading session for the derivatives market (Night Trading), which will offer greater accessibility and enhance the attractiveness of the Malaysian derivatives market to global players. 

PPI for local production up 11.5% y-o-y in June — Dept of Statistics 

According to Department of Statistics Malaysia chief statistician Datuk Seri Dr Mohd Uzir Mahidin, the Producer Price Index (PPI) for local production increased 11.5% year-on-year (y-o-y) in June 2021, marking the fifth consecutive month of an upward trend. The mining index increased 64.4% due to higher prices of natural gas, as well as a continuous increase for crude petroleum. The index of agriculture, forestry and fishing inclined at a slower pace of 29.8% because of lower prices of crude palm oil (CPO) and livestock. In addition, the manufacturing index, which was influenced by a rise in prices of primary and construction-related commodities, also showed a significant increase of 6.7%. In terms of the utility indices, water supply rose 1.6%, while electricity and gas supply declined 0.2%. On a monthly basis, the PPI for local production registered a marginal increase of 0.2% in June 2021, compared with 1% in the previous month, in which the increase was supported by the indices of mining (8.2%) and manufacturing (0.8%). However, the agriculture, forestry and fishing; electricity and gas supply; and water supply indices declined 10.5%, 0.8% and 0.2% respectively. Meanwhile, the PPI for local production in the second quarter of 2021 (2Q21) rose 11.3% to 111.3 from 100.0 in the same quarter of the previous year. The increase was contributed by the index of mining (74%), agriculture, forestry and fishing (46%), manufacturing (5%) and water supply (1.4%), while that of electricity and gas supply declined 0.3%. On a quarterly basis, the PPI for local production rose 2.6%, compared with 5.1% in 1Q21. The PPI for local production for all stages of processing recorded an increase in prices for June 2021. The index of crude materials for further processing increased 39.2%, compared with 53.6% in the previous month. The index of intermediate materials, supplies and components also increased 9%, while the finished goods index edged up 0.3%. 

Eye On The Markets 

This week, on Friday (30July), the Ringgit opened 4.2375 against the USD from 4.2285 on Monday (26July). Meanwhile, the Ringgit was 3.1297 to the Sing Dollar on Friday (30July). On Monday (26July), the FBM KLCI opened at 1524.47. As at Friday (30July) 10:00am, the FBM KLCI is down 16.39 points for the week at 1508.03. Over in US, the overnight Dow Jones Industrial Average closed up 153.60 points (+0.44%) to 35,084.53 whilst the NASDAQ added 15.70 points (+0.11%) to 14,778.30.  

INVE$T | Market Sentiments

According to CEO Muhammad Azmi Zulkifli, InvestKL has attracted RM1.92 billion in new investments with 1,207 jobs for the first half of this year, reinforcing Greater Kuala Lumpur’s appeal as a top location for multinational corporations (MNCs) to set up a regional base. 

In 1H21, it has secured investments from seven MNCs, contributing to its year-end target as well as the larger 10-year strategic plan to attract 100 of the world’s MNCs and fast-growing companies to set up regional services and technology hubs in Malaysia through 2030. Over the last decade the agency, under the International Trade and Industry Ministry, has succeeded in securing investments from 103 MNCs. The achievement is a testament to the country’s continued appeal to foreign investors as a preferred investment destination despite the Covid-19 pandemic disruption, reflecting Malaysia’s fundamentals and investor-friendly policies. The MNCs coming in this year are involved in various sectors, from financial services, food technology, infrastructure, to data and software solutions provider. They represent a balanced mix of countries and regions including the US, Europe, China, and Japan. These companies will offer regional job opportunities to Malaysians while helping to upskill them. The Greater Kuala Lumpur Live Lab and Fit4Work initiatives have contributed to its progress this year. The two initiatives are designed to help revitalise the nation’s innovation capacity and build a pool of globally competitive Malaysian talent to complement the kind of high-value, high-technology and high-growth companies it is aiming to attract. This is aligned with the National Investment Aspiration, which is aimed at achieving a balance between economic development and environmental sustainability. 

Since the agency’s inception in 2011 to end-June 2021, it has realised RM11.56 billion or 65% of the RM17.73 billion investment commitments, translating into 10,850 or 71% of the 15,318 high-skilled regional jobs on the payroll with an average salary of RM10,384. Moving forward, the challenges ahead are inevitable given the shift in business landscape due to a prolonged pandemic environment as companies reassess strategies and deferring investment plants. By showcasing Malaysia’s growth and resilience in the next remaining months, he is positive on a return of investor confidence. InvestKL has embraced a new era in investment promotion where we continue to engage and connect with potential investors through new ways and actively promote Greater Kuala Lumpur as the ideal location for regional operations and future growth. 

Property market confidence returning by 2022 – Knight Frank Malaysia 

According to Knight Frank Malaysia managing director Sarkunan Subramaniam and deputy managing director Keith Ooi, residential properties are expected to remain subdued this year until the health crisis is brought under control. The residential market would continue to self-correct amid challenges brought on by the Covid-19 pandemic. There were fewer completions and launches in the first half of this year as the strict containment measures delayed construction works, project delivery, and completion of real estate transactions.

In the secondary market, no property viewings and on-site surveys have been allowed since June. There appears to be pent-up demand in the housing market which is evident by the short burst of recovery in market activity when movement restrictions were temporarily lifted. The high-end condominium market in Kuala Lumpur would continue to undergo price correction due to weaker demand amid rising inventory for both existing and newly built. Similarly, in the tenant-led market, rentals remain under pressure due to weaker leasing demand. The economy is still in its recessive phase and market confidence is expected to return gradually by early 2022 as buyers and financiers are all on cautiously optimistic mode. The property market is widely expected to start recovering on the back of a more positive outlook, following recent acceleration in vaccine drive, and strong interest from domestic investors shifting from the stock market to safer and less volatile alternative investment products. 

On a positive note, the Home Ownership Campaign has been successful in reducing the property overhang with an estimated 34,354 residential units worth RM25.65bil sold from June 1, 2020, to Feb 28, 2021. The Covid-19 pandemic has fuelled the demand for residential properties, especially new landed housing outside the city – in established and upcoming suburbs with good connectivity where prices are more affordable and competitive. With the potential shift to hybrid work arrangements post-pandemic, buyers are seeking ideal living spaces with a higher emphasis on functionality and comfort. The general buyer focus has now shifted from investment towards creating a haven to live, relax and work in comfort due to the ‘stay at home’ orders amid the various phases of the movement control order. Potential buyers and investors who have the financial capability may be enticed to enter the housing market – to buy a home for their own stay, upgrade or investment – taking advantage of the price discount, attractive deals, stamp duty exemption as well as the current low-interest-rate regime. 

Eye On The Markets 

This week, on Thursday (22July), the Ringgit was 4.2235 against the USD from 4.2125 on Monday (19July). Meanwhile, the Ringgit was 3.1104 to the Sing Dollar on Thursday (22July). On Monday (19July), the FBM KLCI opened at 1522.67. As at Friday (23July) 10:00am, the FBM KLCI is up 4.45 points for the week at 1527.12. Over in US, the overnight Dow Jones Industrial Average closed up 25.35 points (+0.07%) to 34,823.35 whilst the NASDAQ added 52.60 points (+0.36%) to 14,684.60.