K-One ramps up operations to full capacity

PETALING JAYA: K-One Technology Bhd has ramped up its operations, consisting research, design & development and manufacturing activities, to full capacity following the approval by the Ministry of International Trade & Industry (Miti) to operate during the movement control order (MCO) period.

The group said this is in line with Miti senior minister Datuk Seri Mohamed Azmin Ali’s call for businesses that have been allowed to operate to ramp up their operations to full capacity effective April 29.

“The company will abide by the standard operating procedures that have been set by Miti and the relevant authorities,” K-One assured in a stock exchange filing today.

Previously, K-One was granted approval to operate during the MCO as it plans to focus on the engineering development and prototype build of ventilators, at the same time assessing the design and development of swabs used to collect sample material for Covid-19 tests which may be 3-D printed to meet the surge in demand.

In the initial approval, the number of employees permitted working on the premise is to be reduced to a minimum or at most 50% of the current or registered number.

source https://www.thesundaily.my/business/k-one-ramps-up-operations-to-full-capacity-JD2353795

EPF reduces upfront fees for members investment scheme

PETALING JAYA: Eligible Employees Provident Fund (EPF) members investing under its members investment scheme will be entitled to a reduction of upfront fees charged by fund management institutions (FMIs) for a period of 12 months ending April 30, 2021.

For investments made through agents, EPF said the upfront fee will be reduced from a maximum of 3% to a maximum of 1.5%, while no upfront fees will be imposed for investments transacted through i-Invest via EPF i-Akaun.

Chief EPF officer Alzakri Alias said eligible and financially literate members may wish to take advantage of the lower fees structure to optimise returns and diversify their portfolio according to their retirement plans.

“The timing is also opportune as the current market downtrend offers opportunities to invest in undervalued funds,” he said in a statement today.

“However, we urge members to do proper research and analysis of funds, through tools available in the i-Invest platform for example, to ensure the funds meet their long term investment strategies and fit their risk profiles.”

Simultaneously, to help ensure the continued health of the fund management industry during the current challenging times, it will also be reducing the service fee charged to FMIs by the EPF for the same period by 50%.

It explained that the service fee which will be reduced to 0.0625% from 0.125% is based on the assets under management managed by FMIs and it is not charged to the fund or members.

Furthermore, for members aged 55 and above transacting through i-Invest, the service fee charged to FMIs by the EPF is now reduced to 0.125% from 0.250% per withdrawal amount.

It also reminded members that the fee reductions are only applicable to investments made under EPF’s member investment scheme, and is not applicable to other EPF transactions or services, as claimed by some quarters.

source https://www.thesundaily.my/business/epf-reduces-upfront-fees-for-members-investment-scheme-BD2353542

Banks to inform borrowers on loan moratorium

PETALING JAYA: Bank customers with hire-purchase (HP) loans and fixed rate Islamic financing will receive a notification starting tomorrow via SMS, email or registered mail on the necessary steps that they need to take to complete the process of deferring their loan/financing payments under the six-month moratorium.

Bank Negara Malaysia (BNM) has required banking institutions to take appropriate steps to ensure that borrowers are provided with clear information on the process and changes to the terms of their agreements, as well as convenient means to conclude these agreements in view of the movement control order (MCO).

“Banking institutions will also provide to each borrower/customer specific details of changes to the terms of his/her HP loan or fixed rate Islamic financing agreement. This should contain information on the revised payment schedule and any changes to payment amounts, including those arising from normal interest/profit rate accrued during the moratorium,” BNM said in a statement today.

Borrowers/customers who do not wish to take up the moratorium can still choose to do so at this time by informing their banking institutions and resuming their scheduled payments based on the terms of their existing agreements. In such a case, borrowers/customers will be given reasonable time by banking institutions to regularise any outstanding scheduled payments that were earlier deferred under the moratorium. Banking institutions will not impose overdue or late payment charges on these payments until they are due based on the revised payment schedule agreed with borrowers/customers.

On March 25, BNM said banking institutions are in the process of formalising agreements to reflect the revised payment terms with customers with HP loans and fixed rate Islamic financing for the six-month moratorium, from April 1 to Sept 30, 2020, on loan/financing payments.

This is to comply with the procedural requirements under the Hire-Purchase Act 1967 and syariah requirements which are applicable to any changes that are made to the terms of these agreements, including changes to the payment schedules and/or amounts as a result of the moratorium.

In line with BNM’s announcement, the Association of Banks in Malaysia (ABM) said its members will reach out to their respective HP customers to notify them of the procedures to complete their processing for the moratorium.

ABM pointed out this is not applicable to customers who have already notified their banks of their decision to continue their existing monthly instalments, and they do not have to take any further action to restate their decision.

On the other hand, all customers who wish to take up the moratorium are now required to formally confirm the same with their respective banks upon receipt of communication from their banks.

“ABM members will communicate with their impacted customers on the exact procedures they will need to follow to take up the moratorium as well as the instalment payment options available to them once the six-month moratorium is over.”

Customers who have opted to take up the moratorium can choose to pay the accumulated six months deferred installments together with their October 2020 installment without being charged any additional interest; or continue the repayment of these instalments post October 2020 through an extension of six months in repayment period after the original maturity date.

ABM pointed out that in the case of the latter option, interest based on the contractual rate will be charged on the amount of the deferred instalments that remains outstanding until these instalments are fully repaid, which should be by the end of the extended six-month tenure.

Banks will also communicate the relevant deadlines as well as the method they will adopt to ensure minimal inconvenience to customers on the acceptance process.

ABM member banks encouraged their customers to utilise their respective bank’s online banking platform to digitally indicate their acceptance to the moratorium and agreement to its terms, where possible.

It also cautioned that HP customers who do not formally accept the moratorium upon receipt of notification from their banks will be considered as not taking up the moratorium and must continue to pay their monthly instalments as usual according to their original schedule.

“However, our member banks will not impose any additional interest charges nor late payment fees for instalments that remain outstanding for April and May 2020 by HP customers who had deferred their monthly instalment payment, provided that payment for April, May and June 2020 are made no later than June 30, 2020,” said ABM.

If the payments are not made by June 30, 2020, it warned that the accounts will go in arrears and late payment charges will start accruing from July 2020 onwards.

source https://www.thesundaily.my/business/banks-to-inform-borrowers-on-loan-moratorium-JD2353290

Piam urges consumers, businesses to review property insurance policy

PETALING JAYA: In light of the Covid-19 pandemic and the ensuing movement control order (MCO), the General Insurance Association of Malaysia (Piam) has urged consumers and business owners to review their property insurance policies such as their fire insurance and business interruption coverages where necessary.

It said the situation is unprecedented and that all businesses and service providers are making every effort to ensure that their customers or policyholders continue to be served within the parameters of their respective contracts or agreements.

“In this respect, not all insurance companies are providing the same coverage for an insurance policy,” said Piam in a statement today.

It confirmed that all relevant fire policy coverage which are conditioned on the premise being occupied will not be affected by restrictions imposed by the MCO.

“In short, policyholders are assured continuity of cover despite their premises not occupied during the MCO period. However, policyholders are expected to take all reasonable precautions to safeguard their premises during this period,” said Piam.

However, it pointed out that the exemption is not applicable to premises unoccupied prior to or not related to the MCO.

Generally, basic fire insurance policy provides protection for buildings and/or its contents from losses or damages caused by fire, lightning and domestic gas explosion.

It may also be extended to include special perils such as storm and tempest, earthquake and volcanic eruption, flood damage, impact damage, riot, strike, malicious damage, landslips and landslide among others.

For businesses, there may be additional extensions to cover electrical installation, bush fire, spontaneous combustion, sprinkler leakage and smoke damages.

The business interruption insurance, which can only be taken together with fire insurance, provides indemnity to the insured in respect of loss of profit.

“A business interruption policy compensates loss of gross profit resulting from a fire including damage by any additional perils specified in the material damage policy. This is in respect of reduction in turnover and increase in cost of working,” Piam explained.

It pointed out that the policy can be extended to include cover; specified/unspecified supplier’s extension; prevention of access extension; public utilities extension (water, electricity and gas); specified customer’s extension; infectious or contagious diseases, murder, suicide, pest, food or drink poisoning or defective sanitary arrangements.

Piam also advised consumers that under the current de-tariff environment policy coverage, terms and conditions may differ between one insurer and another.

It said insurers strive for product differentiation for the benefit of consumers, adding that what is covered in one policy may not be covered in another policy, therefore consumers are advised to shop around for the best protection that caters to their needs.

It also advises consumers and business owners to contact their respective insurers and insurance agents or brokers for any assistance/clarifications on their property insurance policies.

source https://www.thesundaily.my/business/piam-urges-consumers-businesses-to-review-property-insurance-policy-MC2352824

Malaysian property market to remain active in 2020 - FIABCI

GEORGE TOWN: The Malaysian property market had a good run in 2019 due to the Home Ownership Campaign (HOC), facilitating a good spillover effect at the beginning of 2020, according to the Malaysian chapter of the International Real Estate Federation (FIABCI).

Its president, Michael Geh said the property sector entered 2020 on the tail end of the HOC and was anticipating its continuation but this did not materialise due to the political crisis on Feb 21 that led to a change in government and political leadership.

He said this was followed by the COVID-19 pandemic that hit Malaysian shores, prompting the enforcement of the Movement Control Order (MCO) from March 18 to flatten the curve.

"Despite the political upheaval, the pandemic and MCO, the property sector remained active. The property sector will continue to remain resilient for the rest of the year," he said in a statement to Bernama here today.

He said Bank Negara Malaysia's (BNM) automatic six-month loan repayment moratorium for small and medium enterprises (SMEs) and individuals was a measure that could relieve the burden of businesses and households affected by the pandemic.

Geh said he was informed that Mah Sing Bhd reportedly receiving RM35 million worth of bookings within a week during the MCO period, while another developer also reportedly issued a statement stressing that it will not revise downwards its sales forecast for 2020.

"There were also activities of collection of earnest deposits on properties for sale on the secondary market by estate agents," he said.

Based on these movements in the sector, he concurred with BNM's recent statement that the property market will remain resilient in 2020 and that in line with global projections, it will rebound in 2021.

On post-MCO, Geh believed that businesses and the public will have to continue to co-exist with COVID-19 over the next 18 months.

Business practices and operations need to change to accommodate new health requirements such as the need to wear face masks and maintain social distancing, he said, adding that, “This will impact the operations of building management needs of the office and retail sector."

Meanwhile, Geh noted that the high number of overhang residential high-rise units was mostly due to its locations and not spread widely all over the country.

"The districts with high overhang should be studied in detail and I do find the residential unsold overhang units, especially units priced RM500,000 and below, were built in unattractive locations," he said.

Geh said government intervention and stimulus are vital to ensure the property sector will not crash in 2020 and rebound by 2021. - BERNAMA

source https://www.thesundaily.my/business/malaysian-property-market-to-remain-active-in-2020-fiabci-CC2352664

Bursa Malaysia net profit up 38.2% in Q1’20

PETALING JAYA: Bursa Malaysia Bhd’s net profit rose 38.2% to RM68.73 million in the first quarter ended March 31, 2020 (Q1’20) compared with RM46.86 million in the corresponding period of the previous year, attributed to a higher revenue thanks to the growth in the securities market.

Revenue for the period stood at RM150.75 million, a 19.1% improvement from RM126.53 million reported previously.

Its CEO Datuk Muhamad Umar Swift said the Covid-19 pandemic has affected all industries and the exchange continued to ensure orderly operations of its market to preserve the economy’s capital flows and to aid market participants in managing potential risks and opportunities.

“Amid the exceptionally volatile and uncertain market environment, we saw higher trading activities in both the securities and derivatives markets,” he said in a statement.

Umar said its derivative products have served as an efficient price discovery and hedging instrument during this volatile period, adding that the derivative market registered new highs in trading volume and open interest in Q1’20.

During the quarter, the securities market trading revenue rose 32.2% to RM78.1 million from RM59.0 million reported in the same quarter of the previous year, as a result of a higher average daily trading revenue.

It noted that the broader market is supported by local investors, both institutional and retail, recording a net buy position in Q1’20.

Meanwhile, the derivatives market trading revenue jumped 63.5% to RM26.7 million in the quarter from a trading revenue of RM16.4 million reported previously, mainly due to higher number of contracts traded for Crude Palm Oil Futures (and FTSE Bursa Malaysia KLCI Futures, as well as higher number of trading days.

On the other hand, Bursa revealed that conference fees and exhibition-related income decreased in Q1’20, mainly due to the postponement of the Palm and Lauric Oils Price Outlook Conference & Exhibition 2020.

Its Islamic capital market Bursa Suq Al-Sila’ (BSAS) reported a 25.2% decline in trading revenue to RM2.9 million from RM3.9 million in the previous quarter due to intense competition and slower economic activities.

Nevertheless, the exchange has reported that it onboarded nine new participants for BSAS, two of which are foreign, and is expected to sustain its level of activities through continuous engagement with its participants to increase trading activities.

On its outlook, Umar said it will adjust its approach as it continues through this uncertain and challenging environment. He shared that appropriate measures will be introduced as required to ease the financial burden of the capital market participants and help speedier market recovery.

“We remain confident in our strategy to enhance market attractiveness and vibrancy through initiatives that we have in place that includes efforts to broaden our product and service offerings, as well as initiatives to strengthen our ecosystem,” said Umar.

source https://www.thesundaily.my/business/bursa-malaysia-net-profit-up-382-in-q1-20-LC2352481

Malaysia’s PPI down 1.9% in March

PETALING JAYA: The Producer Price Index (PPI) for local production fell by 1.9% year-on-year (yoy) in March 2020 attributed to a decline in the index of mining (35.8%), electricity & gas supply (-0.3%) and water supply (-0.3%).

“In contrast, the index of agriculture, forestry & fishing and manufacturing increased by 13.4% and 0.6% respectively,” chief statistician Datuk Seri Dr Mohd Uzir Mahidin said in a statement today.

PPI for local production in the first quarter of the year reported an increase of 0.6% compared to the corresponding quarter of the previous year, attributed to the increase contributed gains from agriculture, forestry & fishing (13.5%), manufacturing (0.8%) and electricity & gas supply (0.8%).

Meanwhile, the index of mining and water supply recorded a decrease of 11.0% and 0.7%.

On a quarterly basis, the PPI local production fell 0.9% as compared to the fourth quarter of 2019.

source https://www.thesundaily.my/business/malaysia-s-ppi-down-19-in-march-LF2351863

Stocks rally on treatment hopes, currencies await ECB

SINGAPORE/NEW YORK: Asian stocks rose to a fresh seven-week high on Thursday, lifted by encouraging early results from a COVID-19 treatment trial, though bonds and currencies held cautious ranges ahead of a European Central Bank meeting later in the day.

Anthony Fauci, the top U.S. infectious disease official, said Gilead's antiviral remdesivir will become the standard of care for COVID-19 after early results from a trial seemed to show it helped speed recovery.

The news rallied Wall Street on Wednesday and lifted MSCI's broadest index of Asia-Pacific shares, excluding Japan , by 0.8% to its highest since mid-March.

Japan's Nikkei, returning from a holiday on Wednesday, jumped 2.5% to a seven-week high as well, catching up on the week's gains. More caution was evident in other asset classes, with the U.S. dollar firm and U.S. futures steady.

"Any positive medical development is helpful," said Westpac FX analyst Sean Callow.

"But no-one should be counting on a major breakthrough - the key for markets is control of the spread of the virus," he said, another front where there are positive signs.

"I think it is reasonable for markets to be less bearish than they were in mid-March...but it's far too early for a sustained rally in risk appetite, so we're probably due for a little bit of a pullback."

Futures for Wall Street's S&P 500 handed back early gains to turn flat and the dollar held its own against the risk-sensitive Antipodean currencies - rising for the first time in a week against the Aussie and kiwi.

The yield on benchmark U.S. 10-year Treasuries stayed parked at 0.6237%, after the U.S. Federal Reserve left interest rates near zero and gave no indication of lifting them any time soon.

Australia's ASX 200 rose 1.4%. The Shanghai Composite rose 1%. Markets in Hong Kong and South Korea were closed for public holidays.

OF MONEY AND MEDICINE

Markets have been excited by the prospect of a COVID-19 treatment because it may help countries emerge from lockdowns - even though investors' hopes don't seem to take into account regulatory and distribution difficulties should a treatment be found.

Another focus has been the enormous fiscal and monetary policy efforts from world governments and central banks to staunch the economic damage from the pandemic.

That has the ECB under increasing pressure to deliver even more support on Thursday - probably by expanding its bond buying programme - as European leaders seem unable to agree on the details of a rescue package.

"The tone has been set for the ECB to 'do whatever it takes' via its bond purchase programmes in terms of size, composition and maturity," strategists at Singapore's DBS Bank said in a note.

A press conference following the ECB meeting is due at 1330 GMT.

The euro was stuck at $1.08640 on Thursday, near the top of a range where it has been pegged for two weeks, but drifted lower as the dollar broadly firmed.

The greenback scraped off multi-week lows against the Antipodean currencies and last sat at $0.6537 per Aussie and $0.6122 per kiwi.

Elsewhere there was encouraging news from South Korea, which on Thursday reported no new domestic coronavirus cases for the first time since its Feb. 29 peak.

However, comments from U.S. President Donald Trump accusing China of seeking to defeat his re-election bid in November gave cause for renewed caution.

Gold was steady at $1,711.31 per ounce.

Brent crude and U.S. crude futures each rose more than 6% amid optimism that a storage squeeze is not as bad as first feared, and that demand for fuel may soon return. - Reuters

source https://www.thesundaily.my/business/stocks-rally-on-treatment-hopes-currencies-await-ecb-KF2351194

Japan’s factory output, retails sales drop as virus hits economy

TOKYO: Japan's March factory output fell at the fastest pace in five months, while retail sales also dropped as businesses struggled with the coronavirus pandemic's sharp hit to overseas and domestic demand.

The global economy could this year see the steepest downturn since the Great Depression of the 1930s due to a virus-driven collapse of activity, with Japan's economy facing stagnation due to its export dependence and soft domestic consumption.

Official data on Thursday showed factory output slipped 3.7% in March from the previous month, a smaller decline than the 5.2% drop in a Reuters forecast.

The reading marked the sharpest fall in production since October last year, and followed a downwardly revised 0.3% drop in the previous month.

Automakers and machinery manufacturers suffered output declines due to slower demand for parts and equipment from factories overseas, especially in China.

Manufacturers surveyed by the government expect output to rise 1.4% in April and drop 1.4% in May, the data showed.

Separate data showed retail sales tumbled at their fastest pace since last October's sales tax hike as the outbreak forced department stores to shut their doors and consumers to cut spending.

Retail sales slumped 4.6% in March from a year earlier, pulled down by tumbling demand for general merchandise and clothing as well as plunging department store sales.

Japan was already struggling with weak demand before the outbreak after the government raised the sales tax to fix its heavy public debt burden, which is more than twice the size of the gross domestic product.

The economy shrank an annualised 7.1% in the three months through December due to the hit from the U.S.-China trade war and the sales tax hike.

The soft batch of data comes after the government boosted its spending package to a record $1.1 trillion to expand cash payouts to every citizen to offset the widening economic hit.

That move was followed this week by expanded stimulus from the Bank of Japan, which rolled out fresh steps to ease corporate funding strains and pledged to buy unlimited amounts of bonds to keep borrowing costs low.

Official data on Tuesday showed the widening hit to the jobs market from the outbreak. The March jobless rate rose to its highest in a year, while job availability slipped to a more than three-year low. - Reuters

source https://www.thesundaily.my/business/japan-s-factory-output-retails-sales-drop-as-virus-hits-economy-EF2351152

Nine companies rent 23 mln barrels worth of space in U.S. emergency oil reserve -official

WASHINGTON: Nine companies including Chevron Corp, Exxon Mobil Corp and Alon USA Inc have agreed to rent space to store 23 million barrels of crude in the U.S. emergency oil reserve, a U.S. official said on Wednesday, as the Trump administration tries to help energy firms deal with the crash in oil prices.

The Department of Energy, or DOE, said on April 2 it would offer to oil companies 30 million barrels of space in the Strategic Petroleum Reserve, or SPR. Later in the month, it said that companies were in contract negotiations for only 23 million barrels of space.

President Donald Trump had ordered Energy Secretary Dan Brouillette in March to fill the reserve, which has about 77 million barrels of free space, "to the top." But an initial plan to buy about 30 million barrels fell through after the U.S. Congress declined to fund the purchase.

The Energy Department did not immediately respond to a request for the terms of the lease contracts.

The other companies leasing space in the reserve are Atlantic Trading, Energy Transfer, Equinor Marketing & Trading (US) Inc, Mercuria Energy America, MVP Holdings, LLC and Vitol, Inc. The list of companies was provided by the U.S. official on condition of anonymity.

The DOE has said it is continuing to work with Congress on finding ways to fund a purchase of oil for the reserve and could initiate more plans to lease space in the facility.

Companies storing oil will be allowed to keep it in the SPR through March 2021 and will pay a small amount of oil to cover the SPR's cost of storage, the department said earlier this month. Most of the deliveries of the oil will be received in May and June, with some shipments in April.

The SPR website says that 1.1 million barrels of sour crude oil had been moved to the facility in April and the reserve currently holds 636.1 million barrels.

Oil prices surged more than 10% on Wednesday after U.S. crude stockpiles grew less than expected feeding optimism that fuel consumption will recover as some European countries and U.S. states ease lockdowns caused by the coronavirus. - Reuters

source https://www.thesundaily.my/business/nine-companies-rent-23-mln-barrels-worth-of-space-in-u-s-emergency-oil-reserve-official-EF2351134

China’s factory activity expands for 2nd month, but slump in export orders deepens

BEIJING: Factory activity in China expanded for a second straight month in April as more businesses resumed work from the coronavirus-led shutdowns, but a worsening slump in export orders pointed to a long road to recovery for the embattled economy.

China's official Purchasing Managers' Index (PMI) eased to 50.8 in April from 52 in March, China's National Bureau of Statistics said on Thursday, but stayed above the neutral 50-point mark that separates growth from contraction on a monthly basis.

Analysts polled by Reuters had expected a PMI reading of 51.

With the coronavirus under control domestically, China's economy has begun to open up again as authorities loosen lockdown restrictions including stay-at-home orders.

But the recovery remains sluggish and analysts warn the rest of the year will be bumpy for businesses and consumers, especially due to depressed external demand and mounting job losses.

That has left Chinese manufacturers with reduced export orders and a logistics logjam, as many exporters grapple with rising inventory, high costs and falling profits. Some have let workers go as part of the cost-cutting efforts.

The survey's sub-index of export orders dived to 33.5 in April from 46.4 in March with some factories even having their orders cancelled after reopening, said Zhao Qinghe, senior statistician at the NBS.

That pushed overall business activity down, with a reading of new orders falling to 50.2 from 52.0 a month earlier. The expansion in production also eased in April.

"As the COVID-19 outbreak did not escalate in Europe and North America until late February, the adverse impact from slumping external demand may become more apparent in April and May," analysts from Nomura said in a research note this week.

"We expect export growth to drop further in May and June, after the impact from the slump in new export orders in March and April fully kick in."

Hobbled by the coronavirus, China's economy shrank 6.8% in the first quarter from a year earlier, the first contraction since current quarterly records began alomost 30 years ago.

The expansion in labour force also eased, with a sub-reading for employment falling slightly to 50.2 from 50.9.

China's urban jobless rate fell to 5.9% in March from 6.2% in February, suggesting the pain in the labour market is yet to be reflected in official numbers.

However, analysts warn of nearly 30 million job losses this year due to stuttering work resumptions and plunging global demand.

A survey conducted by UBS early this month indicated that the youngest age group was hardest hit by the nationwide shutdowns, with 47% of respondents said they had not yet resumed work and around 70% saw their income declining since the outbreak.

The service sector, which accounts for 60% of China's GDP, also saw an expansion in activity, with the official non-manufacturing PMI rising to 53.2 from 52.3 in March, a separate NBS survey showed.

Analysts say the outlook for the services and manufacturing remains challenging as concerns remain over job security and potential wage cuts brought about by a struggling economy. Nationwide retail sales have plunged every month so far this year.

Chinese authorities have rolled out more support to revive the economy. The People's Bank of China earlier in April cut the amount of cash banks must hold as reserves and reduced the interest rate on lenders' excess reserves.

It has also guided benchmark lending rates lower to reduce borrowing costs for companies. - Reuters

source https://www.thesundaily.my/business/china-s-factory-activity-expands-for-2nd-month-but-slump-in-export-orders-deepens-CF2351114

China consul-general: Malaysia remains important regional trade, economic partner in region

GEORGE TOWN: China continues to see Malaysia as an important partner in regional economic and trade cooperation despite the challenges that the Covid-19 pandemic has caused to both countries.

Penang-based China Consul-General Lu Shiwei (pix) said the virus is just a short-term interference to economic and mutual prosperity ties. The underlying mission to boost growth and mutual benefits between both countries in a globalised economy remains on track, Lu stressed.

“We can find new opportunities in the middle of difficulties. We believe that the impact of the pandemic is temporary and limited. When it ends, the two sides will quickly resume relevant activities, continue to seize opportunities in jointly building the Belt and Road Initiatives and to make full use of respective advantages, as well as to create new highlights of cooperation,” he said in an interview with SunBiz.

At present, there are nearly 70 Chinese enterprises that are based in northern Malaysia.

The areas of cooperation include new energy, pharmaceuticals, electronics, building materials and transport.

“We will continue to encourage more Chinese companies to accelerate their investment in Penang, explore new fields of economic cooperation, especially in key sectors such as electronics. It should be developed. We will also encourage more Chinese enter-prises to participate in the construction of relevant major projects and contribute to local development,” Lu said.

Meanwhile, despite China’s recent economic slowdown, Lu reassured Malaysian investors that the recovery is expected to be “robust”.

He pointed out that some of the main indicators, such as manufacturing, services, investment, retail sales of consumer goods, imports and exports have narrowed their declines.

“Despite the severity of the virus infections, the main industries have not been greatly affected, there are no large-scale layoffs, the employment situation is generally stable, and the industrial upgrading continues, especially the new economic drivers represented by new industries, new products, and new business models have achieved growth against the difficult situation,” he said.

In the wake of the Covid-19 pandemic, China’s gross domestic product shrank 6.8% year on year in the first quarter of the year, the first decline seen since 1992.

As for the country’s investment projects, there were 11,477 projects recorded in the first quarter, a jump of 144 projects compared with the same period of the previous year.

“It is expected that China’s economy will continue its upward momentum. The second quarter will be better than the first, the second half year will be better than the first half year, and next year will be better than this year,” said Lu.

He added that confidence is returning to the domestic market and the International Monetary Fund has predicted that China’s economy will grow by 1.2% in 2020 and surge to 9.2% next year.

“Covid-19 is a public health emergency, but its impact on China’s economy is only short term and limited,” Lu reiterated.

Lu says mission to boost growth and mutual benefits between both countries remains on track. – Picture courtesy of Consul-General’s Office.

source https://www.thesundaily.my/business/china-consul-general-malaysia-remains-important-regional-trade-economic-partner-in-region-XE2350303

Boeing posts US$641m Q1 loss, says to cut staff, aircraft output

NEW YORK: Boeing announced sweeping cost-cutting measures after reporting a first-quarter loss of US$641 million following the hit to the airline business from the coronavirus pandemic.

The aerospace giant plans to reduce its workforce by 10% through a combination of voluntary and involuntary layoffs and will slash production of its main commercial planes, including the 787 and 777, chief executive David Calhoun said in a message to employees that accompanied an earnings release yesterday.

"The aviation industry will take years to return to the levels of traffic we saw just a few months ago," Calhoun said. "We have to prepare for that."

Calhoun said the job cuts would be deeper – more than 15% – in commercial airplanes and services, as compared with defense and space systems, where the business has been more stable.

The company had 160,000 employees prior to the announcement, putting the downsizing at some 16,000 jobs.

The quarterly loss of US$641 million compared to profits of US$2.1 billion in the year-ago period. Revenues fell 26.2% to US$16.9 billion. Total debt at the end of the quarter was US$38.9 billion, up from US$27.3 billion at the end of December.

Calhoun said the belt-tightening was needed to maintain adequate liquidity at a time its revenues are depressed, adding that the company is "exploring potential government funding options" in the wake of Covid-19.

Boeing has previously called for US$60 billion in government support for the US aerospace industry. The federal "Cares Act" legislation includes US$17 billion aimed at Boeing.

In an interview with CNBC yesterday, Calhoun said the company would weigh potential support from the US Treasury against private sources. Credit markets have improved in the wake of the Cares Act and moves by the Fed to pump cash into credit markets, he said.

"We're going to evaluate all these options," Calhoun told the network. "We need liquidity."

The loss reflected "abnormal production costs" connected to the temporary suspension of Puget Sound manufacturing operations due to Covid-19 and due to the suspension of production of the 737 MAX, which remains grounded following two deadly crashes.

Boeing said the pandemic crisis has hit demand for new planes and services, with airlines delaying purchases of jets, slowing delivery schedules and deferring elective maintenance.

It will cut production of the 787 from 14 per month to 10 per month in 2020 and gradually to seven per month by 2022.

Boeing also will trim output on the 777 and lower its targets for the 737 MAX.

"We have done a tremendous job of increasing our production rates and services offerings in recent years," Calhoun said. "But the sharp reduction in our demand for our products and services over the next several years simply won't support the higher levels of output."

Calhoun told CNBC the company has made progress with regulators on the MAX, but that "there is still a mountain of documents that have to be completed."

The jet has been grounded since March 2019 following two crashes that killed 346 people.

Boeing has previously said it expects to win regulatory approval for the MAX in mid-2020, but that time frame is expected to push back in light of the coronavirus, which has challenged regulators and transformed the market for commercial travel.

"We've moved from a supply issue to what is now a demand issue," Calhoun told CNBC.

Boeing shares jumped 4.7% to US$137.49 in pre-market trading. – AFP

source https://www.thesundaily.my/business/boeing-posts-us-641m-q1-loss-says-to-cut-staff-aircraft-output-AE2350345

SMEs, traditional firms still face challenges in digital transformation

PETALING JAYA: The implementation of the movement control order (MCO) due to the Covid-19 crisis and its impact on commercial activities have forced many companies to look at ways to digitise their businesses but most small and medium enterprises (SMEs) and traditional industries still face a number of challenges in digital transformation.

Speaking at the Digitalization of Current Biz #MCO webinar, Selangor Information Technology and E- Commerce Council (Sitec) CEO Yong Kai Ping said these challenges include lack of relevant knowledge/overall strategy, lack of human resources, lack of resources, uncertain return on investment, and lack of willingness on the part of top management for full implementation of digitisation in the company operation.

To that end, Yong said, Sitec and Malaysia Digital Economy Corporation (MDEC) will jointly launch a digital centre in May to help SMEs digitise through consultation and provide relevant information such as the SME Digitalisation Matching Grant.

He also explained the digitisation is the way forward to ensure business sustainability after this crisis, and that the process is fairly simple. This includes concepts such as digital sales tools including web-store platforms, online user behaviour, understanding user consumption patterns and competitors through data and the online to offline marketing model.

Biztory founder and CEO Bryan Soong said the pandemic has led many SMEs to switch to e-commerce. He encouraged micro and small enterprises to move to e-commerce, which could not only reduce costs but also achieve sustainable development.

“Small and micro enterprises could use big data to adopt an omnichannel retail model, selling goods or services by integrating physical and e-commerce channels, and providing customers with a non-discriminatory buying experience,” he said.

Soong also strongly encouraged micro and small enterprises to upload data to the cloud for security, so they do not have to worry about losing critical data and business applications, and can view data at any time.

Meanwhile, Beckhoff Automation managing director Daniel Tay pointed out industrial automation is very important to further development of Malaysia’s manufacturing industry.

However, most of the country’s manufacturing industry is still between 2.0 and 3.0, with only a few manufacturing industries having moved toward 3.0- 4.0.

He said adoption of open technologies in industrial automation is critical to sustainable development, and computer-based control is one of the open technologies.

The Digitalization of Current Biz #MCO” webinar was organised by the Malaysia-China Chamber of Commerce Young Entrepreneurs Committee.

source https://www.thesundaily.my/business/smes-traditional-firms-still-face-challenges-in-digital-transformation-NM2349834

US decade of growth ends as first-quarter GDP shrinks 4.8%

WASHINGTON: The US economy's decade of expansion ended dramatically in the first quarter as the coronavirus pandemic caused gross domestic product (GDP) to shrink by 4.8%, and second quarter growth is set to plummet even further.

The decline – the biggest fall in GDP in 12 years and slightly worse than analysts had expected – came after the pandemic forced businesses to close and halted purchases and investments, the Commerce Department said today.

Yet the report noted it could not quantify the full economic effects of the virus, and the figures are expected to sink well into the double digits in the second quarter, when the impacts from the shutdowns are fully felt.

"Thus ended the expansion which began in the third quarter of 2009; killed by Covid-19," Ian Shepherdson of Pantheon Macroeconomics said. "But these data capture only the squall before the second quarter hurricane, so it's not going to change anyone's mind on the future trajectory of the economy."

The grim numbers underscore the damage done to the world's largest economy by the pandemic, which has already caused an estimated 26 million job losses and sent Congress and President Donald Trump scrambling to cut the losses.

The coronavirus outbreak in United States has grown into the world's largest and deadliest, with the country's caseload rising to 1,011,877 on Tuesday and deaths hitting 58,351.

Commerce Secretary Wilbur Ross acknowledged the numbers were "weak" but in line with expectations.

"We continue to have the most resilient economy in the world, driven by innovative and hardworking Americans who have shown that they are willing to make the needed sacrifices to defeat this invisible enemy," Ross said in a statement, predicting the country would come back "stronger and healthier than ever."

In Washington, Democratic and Republican lawmakers are negotiating over aid to state and local governments after last month passing a massive US$2.2 trillion stimulus measure that included direct payments to Americans and loans and grants for struggling small businesses.

Meanwhile, states across the country are eyeing lifting lockdown measures, with Georgia recently allowing beaches and restaurants to reopen, though many other areas have committed to keeping the confinements in place for now.

The new GDP data is a sharp reversal from the last quarter of 2019, when the economy grew by 2.1 percent and analysts were more concerned with whether Trump's trade policies would continue to weigh down growth in 2020.

Personal consumption fell by 7.6% in the first quarter, the data said, due to decreases in spending in a wide variety of sectors, including healthcare, motor vehicles and parts.

Worrying as the report is, the lockdowns, travel curtailments and quarantine restrictions necessitated by the virus only came in the last few weeks in March, which were the tail end of the quarter. That means next quarter's numbers will be even worse, analysts say, with Oxford Economics projecting growth plunging by 40%.

Overall, the economy is set to see its worst contraction since World War II, and even with the congressional stimulus and trillions of dollars in new liquidity from the Federal Reserve, "the employment losses will be traumatic, and the rebound post-virus will be very gradual and fraught with pitfalls," Oxford said.

The Fed is today wrapping up its first scheduled meeting since it lowered the benchmark lending rate to zero in March as the virus's potential for economic devastation became clear.

But having already greatly expanded its liquidity measures and its lending to banks, corporations, small businesses and state and local governments, Fed Chair Jerome Powell is expected to mainly underscore the central bank's committment to aiding the economy when he speaks after the meeting. – AFP

source https://www.thesundaily.my/business/us-decade-of-growth-ends-as-first-quarter-gdp-shrinks-48-DE2350324

FGV expects 2020 crude palm oil output to plunge due to pandemic

KUALA LUMPUR: FGV Holdings, the world's largest crude palm oil producer, forecast a significant drop in 2020 output as coronavirus-driven restrictions disrupted work at its plantations and mills.

Malaysia last month imposed restrictions on movement until mid-May that include shutting most businesses, although essential services including the palm industry were allowed to operate with reduced staffing in the world's second-largest producer of the vegetable oil. The company said on Tuesday disruptions to plantations and mill operations would affect crude palm oil (CPO) supplies, while restrictions on logistic services would impact movement of the commodity and inventory levels.

"While the full impact of the outbreak has yet to be determined, FGV will be affected mainly because of the effects of the movement control order imposed by the Malaysian authorities which has curtailed our workforce strength," CEO Datuk Haris Fadzilah Hassan said.

"For our downstream business, we are expecting a reduction in processing volume especially for the export and bulk product segments," he added.

FGV said demand was being supported by restocking in China as the world's second-largest economy recovers from a more than two-month-long lockdown to contain the pandemic, but Malaysia faces competition from Indonesia due to its lower price for the commodity.

The company estimated CPO prices would trade between RM2,200 and RM2,400 (US$505.17 and US$551.09) per tonne this year, compared with palm's closing price of RM3,052 (US$700.80) per tonne in 2019.

Malaysia's benchmark CPO contract has plunged about 35% since the turn of the year to RM2,037 per tonne by today.

A jump in biodiesel demand due to higher biodiesel mandates in Malaysia and top producer Indonesia is likely to absorb any significant rise in production, FGV said.

It, however, added that lower fertiliser usage and weather challenges last year were likely to cut Malaysia's 2020 production to around 19.3 million tonnes to 19.6 million tonnes, from 19.9 million tonnes in 2019.

"While CPO price remains stable for the first quarter of 2020 in spite of the Covid-19 challenges, the duration for recovery from the pandemic across the world is crucial for the CPO outlook," it said. – Reuters

source https://www.thesundaily.my/business/fgv-expects-2020-crude-palm-oil-output-to-plunge-due-to-pandemic-NE2350285

Malaysian property market to remain resilient, says department

PETALING JAYA: Malaysia’s property market is expected to remain resilient in the coming year despite the economic headwinds, as affordable housing and finding the right solutions to the property overhang will continue to be the main agenda of the government, according to the Valuation and Property Services Department (JPPH).

The department released nine reports today, including the Property Market Report, which showed that the property market is expected to rebound in tandem with the Malaysian economy.

“The close monitoring on the implementation of programmes under the National Housing Policy 2.0 (2018–2025) and various incentives introduced to promote home ownership among Malaysians, are expected to contain the overhang situation in the coming year,“ JPPH said in a statement.

It noted that it would continue to monitor and evaluate the expected impact of the pandemic on the property market.

“Many incentives are given by the government to cushion the impact on the property market. However, given the challenging market coupled with the downside in consumers and business community confidence, market activity and market absorption are likely to be slow,” it said.

In 2019, Malaysia’s property market recorded a marginal improvement, with a 4.8% increase in volume to 328,647 transactions and a 0.8% jump in value to RM141.4 billion, compared with 313,710 transactions worth RM140.33 billion in 2018.

The residential sub-sector led the overall property market, contributing 63.7%.

For residential property, there were 209,295 transactions worth RM72.42 billion recorded in 2019, denoting a 6% jump in volume and a 5.3% growth in value respectively as compared with 2018 (197,385 transactions worth RM68.75 billion).

By price range, demand continued to focus on RM300,000 and below, accounting for 61.7% of the residential transactions.

JPPH said the overhang and unsold situation took an upturn last year with 30,664 overhang units worth RM18.82 billion, marking a 5.1% decrease in volume and 5.2% drop in value respectively against 2018 (32,313 units worth RM19.86 billion).

Similarly, the unsold under construction and not constructed improved as the number dropped to 72,692 units and 16,774 units, down by 10.2% and 15.6% respectively.

Johor had the highest number and value of overhang units in the country with 5,627 units worth RM4.7 billion, accounting for 18.4% and 25% respectively of the national total.

However, the serviced apartment overhang continued to increase and formed the bulk of the property overhang. There was a total of 17,142 overhang units with a value of RM15.04 billion, up by nearly 51% in volume and 65% in value against 2018.

On the contrary, the unsold under construction and not constructed improved with volume declined to 33,827 units and 7,659 units, down by 9.3% and 40.5% respectively.

By state, once again Johor recorded the highest serviced apartment overhang with 71.2% share in volume (12,207 units) and 76.9% share in value (RM11.56 billion).

The retail sub-sector recorded a stable performance, recording an overall occupancy rate of 79.2%, attributed to decreased slightly from 79.3% recorded in 2018.

The overall performance of office sub-sector was less promising as the overall occupancy rate declined to 80.6% in 2019, down from 82.4% in 2018. Private office buildings recorded average occupancy rate at 74.8%, with Putrajaya recording the lowest occupancy rate at 37.6%.

source https://www.thesundaily.my/business/malaysian-property-market-to-remain-resilient-says-department-XE2350264

Titijaya enters healthcare-related business via tie-up with China’s Sinopharm

PETALING JAYA: Titijaya’s wholly owned subsidiary Titijaya Resources Sdn Bhd (TRSB) is collaborating with China’s Sinopharm Medical Equipment QuanZhou Co Ltd to develop the marketing and sale, trading and supply of medical and hospital equipment and products, as well as medical industry-related real estate.

The collaboration is for five years and subject to a renewable period of five years.

Sinopharm is part of Sinopharm China National Medical Device Co, whose holding company is China National Pharmaceutical Group Corp (Sinopharm Group).

Titijaya deputy group managing director Lim Poh Yit said the economic uncertainties and possible long-term health risks posed from the onslaught of Covid-19 have necessitated Titijaya’s involvement in the healthcare-related business.

“That will provide Titijaya with a good opportunity for growth expansion in its real estate core business. The geographical areas to be covered by this joint business development will include South East Asian countries and other Asian countries, potentially providing a large market for Titijaya and Sinopharm,” he said in a statement.

The collaboration will leverage on Sinopharm Group’s and/or Sinopharm’s supply and value chain throughout China as well as TRSB’s and Sinopharm Group’s networks.

The main immediate focus will be medical supplies for combating Covid-19, such as personal protection equipment, RT-PCR test kit, rapid test kit, mobile test lab, and other necessities.

TRSB will be responsible for medical industry-related real estate by providing infrastructure, land and facilities for the medical industry operators recommended by Sinopharm Group or Sinopharm.

source https://www.thesundaily.my/business/titijaya-enters-healthcare-related-business-via-tie-up-with-china-s-sinopharm-FE2350241

NextX partners with Finexia Securities for Aussie digital forex platform

PETALING JAYA: NetX Holdings Bhd’s wholly-owned subsidiary E-FX Sdn Bhd has inked a collaboration agreement with Finexia Securities Ltd to introduce, promote and operate a point-to-point currency exchange digital platform with an inbuilt e-wallet function (E-FX platform) in Australia for two years.

Finexia Securities is an Australian based diversified financial services provider with an Asia centric focus, with core investments in equity capital markets and other global trading markets such as foreign exchange and derivatives.

It will be responsible for securing a fintech regulatory sandbox license from the Australian Securities and Investment Commission for the initial real market testing of the E-FX platform in Australia.

Netx stated under the agreement, as consideration for the exclusive use and operation of the platform, Finexia will be responsible for generating a minimum total revenue of AU$1 million for the first year of its operation and AU$3 million for the second year.

The group revealed that both parties have agreed to split the profits generated from the spread of forex, remittance, investment, balance floats of the E-FX platform on a 50:50 basis for the duration of the agreement.

NetX’s executive director Steve Tan said the E-FX platform is a true reflection of the group’s vision and mission to disrupt and challenge existing industries and markets via innovative technologies that will contribute and bring great value.

“The idea is to solve and eliminate the age old travellers’ frustrations with the need to visit the traditional brick and mortar currency exchange dealers which entails time and place restrictions and inflexibility, worries of personal safety from carrying around huge amounts of cash as well as the uselessness of small unexpended foreign notes that dealers refuse to accept after a vacation abroad,” he said in an exchange filing.

NetX stated the initial roll out and real market testing of the E-FX platform will be carried out in Malaysia and Australia.

source https://www.thesundaily.my/business/nextx-partners-with-finexia-securities-for-aussie-digital-forex-platform-KM2349590

Bursa Malaysia ends broadly higher

KUALA LUMPUR: Bursa Malaysia ended on a higher note today across the board driven by buying from local institutions as well as domestic retail investors.

At the close, the key index FTSE Bursa Malaysia KLCI (FBM KLCI) gained 8.10 points to 1,380.30 from yesterday’s close of 1,372.20.

Market breadth was also positive with gainers outpacing losers by 629 to 250, while 328 counters were unchanged, 696 untraded and 71 others suspended.

Turnover meanwhile stood at 4.82 billion units worth RM2.46 billion compared with yesterday’s 5.02 billion units worth RM2.49 billion.

For the day, industrial products as well as the services and consumer product counters emerged as top gainers, with total transactions worth RM693 million on the back of positive market sentiment.

An analyst said that as the government slowly lifts the movement control order (MCO) and businesses start to operate as usual, the market had reacted positively amid the backdrop of local uncertainty.

Since the MCO started, the country had lost nearly RM100 billion due to business suspensions. Coupled with the troubling oil price, the government’s revenue has dropped drastically.

“However, following the declining number of new cases, economic activities that were halted are now being resumed slowly, which will create job opportunities again,” the analyst said.

Malaysia today recorded 94 new Covid-19 cases with 72 of them comprising returning students from Indonesia and are in quarantine.

Local transmission meanwhile stood at 22 cases with zero added fatality.

The Ministry of International Trade and Industry yesterday announced that some sectors have been allowed to resume operations at 100% capacity, including construction and construction-related services, starting today.

This move will restore almost two million jobs that was previously hanging by a thread due to the MCO which was implemented to curb the spread of Covid-19.

On global developments, she said that investors were awaiting for the announcement from the US Federal Reserve (Fed) today on the expected discussions on the guidance for the economy to move forward.

“US interest rates are now near zero, but with staggering unemployment data due to Covid-19, the Fed would have to decide on how long the rates would stay while banks continue to provide liquidity to the market,” she said.

The US since Monday had slowly lifted its lockdown despite cases hitting the one million benchmark with 58,964 deaths, the highest in the world.

On the performance of index-linked companies, IHH was the day’s top performer, rising nine sen to RM5.21, Petronas Chemicals and Maybank both added five sen to RM5.41 and RM7.41, while Public Bank rose six sen to RM16.00.

Of the actives, NETX, Xidelang and AirAsia X all inched up half a sen to 1.5 sen, seven sen and 11 sen, respectively.

Top gainers included Ajinamoto which rose 46 sen to RM14.26, while Heineken added 34 sen to RM23.90 and Carlsberg increased 34 sen to RM28.14.

Meanwhile, among the top losers, MISC remained in the red due to its arbitration conflict, shedding 48 sen to RM7.90, while United Plantation declined eight sen to RM24.62 due to the lower consumption outlook for the palm oil sector.

On the index board, the FBM Emas Index was 79.04 points stronger at 9,637.06, the FBMT 100 Index increased 70.93 points to 9,507.23, the FBM Emas Shariah Index advanced 96.06 points to 10,707.85, the FBM ACE added 68.91 points to 4,701.93 while the FBM 70 surged 148.45 points to 11,533.78.

Sector-wise, the Financial Services Index expanded 58.73 points to 12,257.53, the Industrial Products and Services Index inched up 1.11 points to 115.43, while Plantation Index rose 91.76 points to 6,245.96.

Main Market volume increased to 3.30 billion shares worth RM2.12 billion from yesterday’s 3.03 billion shares worth RM2.03 billion.

Warrants turnover meanwhile declined to 243.59 million units worth RM59.47 million from yesterday’s 269.78 million units worth RM69.91 million.

Volume on the ACE Market slipped to 1.27 billion shares worth RM276.05 million from Tuesday’s 1.71 billion shares worth RM388.48.

Consumer products and services accounted for 625.83 million shares traded on the Main Market, industrial products and services (582.59 million), construction (306.52 million), technology (573.53 million), SPAC (nil), financial services (55.59 million), property (313.76 million), plantations (27.71 million), REITs (11.87 million), closed/fund (100), energy (451.77 million), healthcare (34.04 million), telecommunications and media (160.43 million), transportation and logistics (144.78 million), and utilities (18.84 million). - Bernama

source https://www.thesundaily.my/business/bursa-malaysia-ends-broadly-higher-LM2349397

Worried China bondholders call for protection as restructuring wave looms

SHANGHAI: China’s bondholders are increasingly worried that there is little to protect them from being railroaded into bad deals by troubled borrowers amid a wave of virus-related extensions and restructurings.

The country’s 25 trillion yuan ($3.53 trillion) corporate bond market has become an increasingly important funding channel for Chinese companies and government-backed vehicles, but it has limited experience with distress or default.

While bondholders the world over fret about what happens when a company can’t repay them, those in China say they have few established precedents or procedures to guide them.

China’s first public bond default happened just six years ago.

“Onshore investors used to pay less attention to the covenants and provisions,“ said Ivan Chung, head of Greater China Credit Research & Analysis at Moody’s. “Credit incidents and defaults in the past two years have alerted investors about these weaknesses. Yet there are still lots of outstanding bonds in the market with weak protection for investors.”

Risks for bondholders are rising even faster now as Chinese officials seek to avert an avalanche of defaults caused by the country’s coronavirus-ravaged economy. They are encouraging struggling companies to extend repayment dates or exchange debt coming due for new bonds - both of which need bondholder agreement.

Rising financing costs

Goldman Sachs analysts count at least 10 Chinese borrowers that have avoided defaults this year by extending principal repayments worth a combined 6 billion yuan ($846.80 million).

But not all such agreements have been reached smoothly, and disagreements can carry risk.

Inadequate investor protection threatens to “push up companies’ financing costs ... and reduce foreigners’ willingness to participate in China’s bond market,“ said Xin Chen, finance professor at Shanghai Advanced Institute of Finance (SAIF).

China has been courting foreign investors for its local markets to help bolster its currency and fund domestic growth.

One of the latest causes of investor outrage was conglomerate HNA, which gave holders of one $55 million bond just 30 minutes’ official notice of a meeting that would extend by a year its imminent repayment, even though its own rules required 30 days’ notice and exchange rules require 10 days.

HNA subsequently apologised and explained it had discussed the deferral with major bondholders ahead of the meeting. Three big investors accounting for more than 98% of the bonds represented at the meeting voted for the plan, while 29 voted against.

“If authorities give the nod to such a practice, it shows deficiency in our legal protection for bondholders,“ Chen said of the move.

HNA declined to comment.

Bondholders in other companies have complained about the way they have been treated. One angry investor found his line cut off mid-question during a call in February to discuss an offer to pay about 40 cents on the dollar for $850 million in Qinghai Provincial Investment Group (QPIG) bonds.

QPIG didn’t reply to requests for comment.

Grabbing attention

Unlike mom-and-pop retail investors, who dominate China’s stock market, bondholders fear they can’t get officials’ attention because they are mostly institutions, and less likely to protest in the streets.

For example, while mechanisms for shareholder decisions have long been enshrined in national law, a requirement that companies should have bondholder meetings and disclose relevant rules and procedures in bond prospectuses was only added this March.

“Before it was a bit theoretical what would actually happen in a bankruptcy because you never had one. You can do all the preparation you want but you won’t really know what works and what doesn’t. Clearly there have been practical issues,“ said Samuel Fischer, head of China onshore debt capital markets at Deutsche Bank in Beijing.

In July, the National Association of Financial Market Institutional Investors (NAFMII), China’s interbank market regulator, will introduce new guidelines for bond trustees - third parties who ensure bond conditions are upheld.

Internationally, these have been independent. But in China, they have typically been the banks and brokers underwriting the deal, who may have conflicts of interest, Moody’s Chung said. The new guidelines strengthen rules around conflicts of interest and disclosure requirements to bring China more in line with offshore markets.

Another thorny issue is courts’ unfamiliarity with bondholder issues. Even if meetings and votes do not follow the rules, investors may struggle to contest those because of a lack of legal precedents, according to Lei Jiping, partner at King & Wood Mallesons.

The China Securities Regulatory Commission (CSRC) and NAFMII didn’t respond to requests for comment.

Rising defaults

Last year defaults in China’s onshore corporate bond market hit a record 142 billion yuan, according to Moody’s. But that accounts for just 0.6% of the total market, while the default rate in the U.S. bond market is about 1.8%.

The stakes are high for China as Beijing works to reform its financial system and deepen its credit markets to help shift some banking risks. And there are signs that bondholders’ influence may be growing.

Last week, Chinese property developer Gemdale Corp offered holders of its 1 billion yuan 5.29% May 2021 bond a 1.5% rate for the final coupon payment, despite a prospectus clause that said any coupon adjustments must be increases.

The move angered bondholders and prompted sarcastic suggestions on social media that Gemdale had increased the coupon by a negative number. The Shanghai Stock Exchange demanded an explanation.

On Wednesday, Gemdale said that after “careful consideration,“ it had decided to maintain the bond’s coupon at 5.29%, and issued an apology. -Reuters

source https://www.thesundaily.my/business/worried-china-bondholders-call-for-protection-as-restructuring-wave-looms-AM2349147

Sapura Energy sees RM4.23b net loss in Q4

PETALING JAYA: Sapura Energy Bhd posted a net loss of RM4.23 billion for the fourth quarter ended Jan 31, 2020 compared with a net profit of RM500.43 million a year ago after making a RM3.3 billion provision for impairment on goodwill and property, plant and equipment.

The group said the impairments were necessary due to the prolonged recovery expected in the oil and gas industry. In addition, a provision of RM439 million was recognised in anticipation of extended delays towards completion of current projects arising from the Covid-19 global pandemic and taking into consideration current market conditions.

Its revenue fell 25.1% to RM1.11 billion from RM1.49 billion in the corresponding quarter of the preceding year, mainly attributable to the lower revenue from engineering and construction (E&C) business segment.

For the full year period, Sapura Energy suffered a net loss of RM4.56 billion compared with a net profit of RM207.55 million a year ago after making the RM3.3 billion provision for impairment on goodwill and property, plant and equipment.

Its revenue jumped 41.2% to RM6.45 billion RM4.57 billion, primarily due to the higher revenue from E&C business segment.

Sapura Energy president and group CEO Tan Sri Shahril Shamsuddin said the revenue growth is a result of its efforts to strengthen core markets in Asia, while further expanding into Middle East, Africa and the Americas.

“Ownership of strategic assets provided sustainable competitive advantage for the company, especially as we diversified revenue streams through renewables, decommissioning, marine terminal, and large volume engineering, procurement, construction, installation & commissioning projects,” he said in a statement.

The group’s current orderbook stands at RM13.5 billion.

The group remains cautiously optimistic in its outlook for FY21, as the oil and gas industry braces for the full impact of Covid-19 and low oil prices. The board of directors anticipates the challenging environment to remain in the short to medium term.

“Having weathered the previous downturn, we have in place an agile strategy designed for the cyclical nature of the industry.

“Sapura Energy has also been implementing key initiatives since mid-2019 to optimise cost and improve operational efficiencies, which will be a crucial leverage as we manage uncertainties in FY21,” said Shahril.

As part of the group’s planned capital management program, a refinancing exercise is underway and is on track to be completed this year.

“The refinancing exercise will enhance the group’s financial position. A stronger and leaner company will ensure we remain competitive in this current environment, and position ourselves well to capture opportunities when the market recovers.”

source https://www.thesundaily.my/business/sapura-energy-sees-rm423b-net-loss-in-q4-DM2349005

MMHE back in black in 1Q’20

PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) posted a net profit of RM6.13 million for its first quarter ending March 31, an improvement from a net loss of RM29.37 million reported in the corresponding quarter of the previous year, mainly due to higher revenue and improved performance from its heavy engineering and marine segments.

Revenue for the period jumped by 70.6% to RM346.44 million from RM203.11 million reported previously.

According to the group’s Bursa filing, the heavy engineering segment reported an operating profit of RM1.2 million in the quarter, compared to an operating loss of RM23.9 million previously, mainly attributed to reversal of cost provisions in the current quarter.

Meanwhile, the group’s marine segment registered a reduced operating loss of RM1.5 million for the period compared to a RM7.5 million loss reported previously, due to a higher revenue from LPG vessels and conversion work.

In regards to outlook for the year, MHB acknowledged that the Covid-19 pandemic had caused global demand and oil prices to plummet at an unprecedented rate and most oil majors have started reducing their annual capital spending and revising their investment plans to counter the negative financial impact amidst the grim landscape.

The subsequent oil production cut agreed by OPEC+ to mitigate the oil price crash did not result in any significant recovery in prices.

“The group expects the risks of deferments and scale-down of upstream projects to prolong and continue to pose challenges to the industry for the remainder of the year. In light of the risks, the group remains cautious on the remaining opportunities despite Petronas’ announcement of its intention to maintain domestic capital spending plans,” it said.

MHB also noted that the outlook for marine repairs and dry-docking activities remains uncertain, despite an increase in demand for oil storage including floating storage and tankers.

With regards to the impact of the movement control order (MCO), the group expects significant disruptions to the global supply chain and logistics which may potentially impact the supply of materials, equipments and resources related to the execution of the projects it has in hand.

This may lead to sourcing for alternatives which may have cost and schedule consequences.

In view of the current crisis, MHB conceded that it faces significant risks to its financial results and position including potential impairment of assets.

“However, at the present time, the group is unable to fully assess and quantify the impact as discussions are still ongoing with clients and key stakeholders on the way forward,” it told Bursa.

“Nevertheless, the group remains focused on resource optimisation to reduce its operating cost in line with the challenging outlook of the industry.”

MHB revealed that it is continuing its efforts to replenish its orderbook by diversifying into new business opportunities, namely onshore and renewable segments.

source https://www.thesundaily.my/business/mmhe-back-in-black-in-1q-20-NN2348870

AirAsia to see 30% reduction in costs for 2020

PETALING JAYA: AirAsia Group Bhd expects to see cost reductions of at least 30% this year, following several initiatives it has implemented to carry it through the current challenging operating environment.

In a statement, executive chaiman Datuk Kamarudin Meranun said flexibility remains the key to the group’s business model.

“We do not intend to take any new aircraft deliveries this year with the target to end 2020 with 242 aircraft, a net reduction of one aircraft from last year.

“We are relooking at our orderbook with Airbus. The decision to sell and lease our aircraft in late 2018, has provided us greater flexibility to scale back growth than owning aircraft today. We were also able to lock in the best price for those aircraft at prime market conditions while eliminating the residual risk of owning aircraft,” he said.

He added that AirAsia has also restructured a major portion of the fuel hedges with supportive counterparties and are still in process of restructuring the remaining exposure.

“This will help deal with the excess of hedged volume against expected fuel consumption post-Covid-19 and reduce the hedging losses if fuel price remains at today’s prices.

“Further measures in managing and containing cost include both the management and senior employees of AirAsia Group volunteering a salary sacrifice, re-negotiating contracts and deferring all non-essential expenditures,” he said.

Meanwhile, the group has also resumed its Malaysian operations today, which will be followed by hailand (May 1), the Philippines (May 16), and Indonesia (May 7), subject to approval from the authorities.

The resumption of services will initially be for key selected domestic routes, which will increase gradually to include international destinations around the region, once the situation improves and governments lift borders and travel restrictions.

Kamarudin said AirAsia is working actively with all relevant regulators, local governments, civil aviation and health authorities, and will adhere to guidance from the World Health Organisation (WHO) and International Civil Aviation Organisation (ICAO) to ensure the highest standards of compliance and conformance are in place for every single flight.

Additionally, he said the diversification of the group’s revenue base will continue, with a more rigorous and market-friendly approach to further expand digital and ancillary businesses such as Santan, Teleport and BigPay.

“AirAsia also participated in a number of recovery flights initiated by governments and private companies during the period, providing a boost to its charter service.

“To help as many local businesses as possible, we have launched the Save Our Shops (S.O.S) campaign by allowing them onboard our e-commerce platform OURSHOP with last-mile delivery by Teleport. AirAsia Foundation also launched an e-pay donation drive in collaboration with BigPay,” he said.

source https://www.thesundaily.my/business/airasia-to-see-30-reduction-in-costs-for-2020-MN2348853

InvestKL: Greater KL remains MNC’s preferred FDI destination despite Covid-19

KUALA LUMPUR: Fortune 500 and Forbes 2000 multinational companies (MNCs) are still looking at Greater Kuala Lumpur (Greater KL) as their strategic investment destination despite the ongoing COVID-19 global crisis.

Invest Kuala Lumpur Corporation (InvestKL) chief executive officer Muhammad Azmi Zulkifli said it has received a lot of positive feedback as well as queries from overseas companies looking to expand their operations in Malaysia or Southeast Asia.

“There are companies out there that are looking further ahead and they are still continuing with their plans and investments compared with other companies which have only started to look out for opportunities or just exploring their options,” he said during in an interview with Bernama Radio here today.

Muhammad Azmi said the COVID-19 pandemic has clearly changed the economic and business landscape, both locally and globally.

“The change can be seen in the way we work, with the shift to digitalisation and the widespread use of high impact technology in industries.

“Although we are working from home, InvestKL continues to hold discussions and meetings through mediums like this (digital),” he said.

As of December last year, more than 90 MNCs from the United States, Europe and Asia have chosen Greater KL as their regional hub, resulting in RM13 billion foreign direct investments and creating 14,000 high quality jobs. -Bernama

source https://www.thesundaily.my/business/investkl-greater-kl-remains-mnc-s-preferred-fdi-destination-despite-covid-19-YN2348818

Malaysia faces several challenges in growth trajectory: Moody’s

KUALA LUMPUR: Malaysia is currently facing several challenges in continuing its growth trajectory, despite having made commendable progress over the past four decades, said Moody’s Analytics.

In a research note today, it said the challenges include income inequality -- a growing issue among Malaysian states, particularly between the richer manufacturing hubs and states that rely on agriculture and other natural resources like palm oil and mining.

“The country’s aging population appears to exacerbate this, as younger workers migrate to urban areas while the older population moves back to rural areas to retire,” it said.

It said Malaysia has also struggled to move up the value chain, and there are concerns of the country being stuck in the “middle income trap”-- unable to sustain high rates of growth to reach high-income status.

While manufacturing continues to drive economic growth, Moody’s Analytics said Malaysia is moving towards diversifying its economy through services such as tourism and Islamic banking.

“Prevailing demographic and human capital trends, however, indicate that urbanised areas would disproportionately benefit from this change in industry composition, widening the income gap between the states,” it said.

On long-term projection, Moody’s Analytics said Malaysia needs to adapt to broader trends, as being a net exporter of petroleum and palm oil, it is heavily dependent on volatile commodity prices and changes in global demand.

“However, crude oil’s share of exports has decreased steadily from a high of 6.5 per cent in 2008 to 3.7 per cent in 2018, while palm oil’s share has increased from 3.6 per cent in 2005 to a peak of 8.5 per cent in 2011, before falling back to 3.9 per cent in 2018.

“There has also been a move by key trading partners towards more environmentally friendly products.

“The European Union (EU), for instance, is looking at imposing new limits on food contaminants in refined fats and oils, including palm oil,” it said.

Meanwhile, Moody’s Analytics said the crude oil industry is also challenged by demand for cleaner energy.

“Malaysia has plans to diversify its energy sources, but on palm oil, it is planning to challenge the EU in the World Trade Organisation, rather than adapting to trends,” it added. -Bernama

source https://www.thesundaily.my/business/malaysia-faces-several-challenges-in-growth-trajectory-moody-s-GN2348800

Eversendai inks MoU with Hyundai for global partnership

source https://www.thesundaily.my/business/eversendai-inks-mou-with-hyundai-for-global-partnership-KN2348682

Lotte Chemical Titan sinks into the red in Q1

PETALING JAYA: Lotte Chemical Titan Holding Bhd saw a net loss of RM170.06 million in the first quarter ended March 31, 2020 compared with a net profit of RM55.83 million a year ago on notable operating margin compression and higher provision for write down of inventory cost to net realisable value as a result from the lower product average selling price (ASP) coupled with sudden drop in its inventory value to market price.

Its revenue fell 33% to RM1.46 billion from RM2.17 billion in the previous year’s corresponding quarter.

The company noted that the sudden plunge in global crude oil prices has intensified volatility in its naphtha feedstock costs while its ASP were being further depressed by sluggish demand amid regional movement containment measures sparked by the pandemic. The lockdown of major cities in China since January had disrupted critical global supply chain and caused severe impact to the global economy.

Operationally, the company had undergone turnaround activities since end-February for majority of its plants in Malaysia which was completed within schedule in early April and the plants involved have resumed normal operations. Hence, the overall operating rate for its complex was lower in the quarter which led to lower production volume.

Its president & CEO Dr Lee Dong Woo said the company would also be impacted as the petrochemical industry correlates with and is heavily dependent on the overall consumption patterns which drive the global economic growth.

“Nonetheless, our company maintains strong financial resilience, being comfortably in a net cash position with RM4 billion cash as well as generated about RM271 million cash flows from operations in the quarter. In addition, we are able to continue our operations and supply key raw materials to our customers during this period as we are deemed an essential service, which provides vital raw materials to the plastic packaging and healthcare sector in Malaysia,” he said in a statement.

Moving forward, the company will continue to focus on operational and financial performance optimisation initiatives amid the volatile external environment. It will also be undertaking a strategic review on the timing and progress for its Indonesia Line project in light of the pandemic impact to the global economy.

“Notwithstanding the current challenges, we will continue to be vigilant and explore value-accretive opportunities to further drive our growth to achieve our vision of being a top-tier petrochemical company in Southeast Asia.”

source https://www.thesundaily.my/business/lotte-chemical-titan-sinks-into-the-red-in-q1-DN2348665

Australia’s Q1 inflation hits 5-1/2-yr high, prices to plunge in Q2

SYDNEY: Australian inflation accelerated to its highest in over five years last quarter, data showed on Wednesday, but the long-desired pick-up is likely to be fleeting in the face of a coronavirus lockdown and collapsing energy prices.

The headline consumer price index (CPI) rose 0.3% in the first quarter, from the previous quarter, lifting annual inflation to 2.2% from 1.8%. That was the highest reading since the third quarter of 2014 and topped forecasts of 2.0%.

It was also the first time inflation reached the Reserve Bank of Australia's (RBA) 2-3% target band since early 2018 and could have led to a much-needed pick up in wage growth.

A key measure of underlying inflation rose a surprisingly firm 0.5% in the quarter and 1.8% for the year, driven mainly by food, education, drugs and tobacco taxes.

Yet all that has changed since March when much of the economy shut down and world oil prices fell off a cliff, drastic events that could lead to the largest ever fall in inflation this quarter.

"Our early forecast for Q2 inflation is for a 1.9% decline in the headline CPI, which would see annual deflation of 0.4%," said Kaixin Owyong, an economist at NAB.

That would also be the first annual drop in the CPI since 1997 and a dangerous dip into deflation where falling prices squeeze profits, wages and consumer spending.

Part of the fall would be a side effect of government policy, since it chose to make childcare free for many parents as part of a massive stimulus package the cushion the economic hit of the coronavirus pandemic.

That policy change is temporary, but an expected spike in unemployment toward 10% and a steep slide in spending on everything from clothes to cafes would likely weigh on inflation for some time to come.

The RBA has already flagged a long period of very subdued inflation ahead, one reason it cut rates to a record low of 0.25% and launched a major campaign of bond buying.

"In effect, the RBA's actions are already consistent with the prospect of very weak annual inflation later this year, as the likely large drop in aggregate demand and a sharp rise in unemployment put downward pressure on inflation," said Hayden Dimes, an economist at ANZ. - Reuters

source https://www.thesundaily.my/business/australia-s-q1-inflation-hits-5-1-2-yr-high-prices-to-plunge-in-q2-EN2348215

Asia shares extend gains as economies slowly re-open, oil rallies

SYDNEY/NEW YORK: Asian shares rose for a third session on the trot on Wednesday as investors took heart from easing coronavirus lockdowns in some parts of the world while oil prices jumped on hopes demand will pick up.

Risk assets including equities have rallied for most of this month thanks to heavy doses of fiscal and monetary policy stimulus around the globe aimed at softening the economic blow from the COVID-19 pandemic.

Positive news around potential treatments for the infection as well as progress in developing a vaccine have also boosted sentiment recently.

Moreover, investors have regained some confidence as parts of the United States, Europe and Australia are gradually easing restrictions while New Zealand this week allowed some businesses to open.

These factors helped lift MSCI's broadest index of Asia-Pacific shares outside Japan by 0.9% on Wednesday, having rallied 3.3% already this week.

Japan's markets were closed for a public holiday.

Australian shares rose 1.2% led by energy and resources firms while South Korea added 1.2%.

Chinese markets opened in the black with the blue-chip index up 0.6%.

All the same, analysts were circumspect about the rally.

"The recovery in global share prices from the March lows has not been accompanied by an expansion in market breadth," said Jefferies analyst Sean Darby.

Darby said the number of stocks above their 260-day moving average was still very low across emerging market and developed market indexes while the number of stocks making new highs versus new lows is about equal.

"Unlike turning points for markets and earnings at the bottom, there is no clear evidence on how the technical picture should evolve. The current rally suggests that conviction levels are low in our view," Darby added.

The equity gains have come even as analysts predict a sharp contraction in world growth.

Moody's expects economies of the group of 20 advanced nations (G-20) to shrink 5.8% this year with momentum unlikely to recover to pre-coronavirus levels even in 2021.

Markets were next looking for any guidance from the U.S. Federal Reserve, which is due to issue a policy statement at the close of its two-day meeting on Wednesday. The European Central Bank meets on Thursday.

Analysts said it was unlikely the Fed would make further major policy moves, given the scope and depth of its efforts to counter the economic damage caused by the coronavirus.

On Wall Street overnight, investors dumped tech giants despite an earnings beat from Alphabet Inc's Google, driving all three major U.S. stock indexes into the red.

The Dow Jones Industrial Average fell 0.3%, the S&P 500 lost 0.5% and the tech-heavy Nasdaq Composite dropped 1.4%.

Investors are now watching out for the other major tech firms - Facebook, Amazon and Apple.

"There was a big sector rotation as money left high value, growth sectors in tech like Amazon and went to value and cyclical sectors like energy, industrial, financials," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

In currencies, the dollar weakened against the Japanese yen to 106.52 on concerns the coronavirus could spread further than previously thought if businesses reopened prematurely.

The euro was up 0.3% at $1.0848 though the euro index eased after Fitch cut Italy's credit rating to BBB-, just one notch above "junk" status.

The dollar index against a basket of currencies fell 0.2%.

In commodities, U.S. crude jumped 15.7% to $14.29 per barrel, and Brent was up 4% at $21.28 after U.S. stockpiles rose less than expected.

U.S. crude was trading above $50 a barrel just in February.

Gold was a touch higher at $1,710.61 an ounce. - Reuters

source https://www.thesundaily.my/business/asia-shares-extend-gains-as-economies-slowly-re-open-oil-rallies-NN2348197

Boeing eyes major bond issue to raise fund-sources

Boeing Co is working with investment banks on a multibillion-dollar bond-fueled financing package, aiming to shore up its balance sheet amid a sharp travel downturn from the pandemic, three people familiar with the matter said on Tuesday.

The preparations reflect Boeing's confidence that it can tap the capital markets to strengthen its finances, even as the largest U.S. planemaker weighs seeking government aid.

Boeing has lined up investment banks to potentially market an offering to bond investors in the coming days, provided that market conditions are favorable, the sources said, cautioning that the exact timing and size of the offering had not been decided. The proceeds could amount to $10 billion or more, depending on investor demand, one of the sources added.

The sources asked not to be identified because the matter is confidential. Boeing declined to comment. The company is expected to elaborate on its funding options when it unveils its first-quarter earnings on Wednesday.

Boeing has also considered applying to the U.S. Treasury Department for aid under a $17 billion program for companies that are critical to national security, according to the sources. But Boeing's chief executive, David Calhoun, has been wary of the strings attached to such aid, especially the possibility that the company would have to give the government an equity stake.

Boeing is also examining the funding support available to companies from the Federal Reserve, one of the sources said. One of Federal Reserve's newly established programs, the Primary Market Corporate Credit Facility, will provide support to companies issuing bonds without placing any strict conditions on them, such as limits to dividend payouts or executive compensation.

Calhoun told investors during the company's annual shareholder meeting on Monday that the company would need to borrow more over the next six months.

Credit ratings agency Moody's Investors Service Inc estimated this month that Boeing's funding needs could top $30 billion in 2020. The company secured about half of this by drawing down on a $13.8 billion credit line in March, Moody's said. Boeing also suspended its dividend.

Boeing is trying to bring its 737 MAX jet back into service after two fatal crashes, even as the aviation industry is hammered by the coronavirus pandemic, which has dried up demand for passenger air travel.

The 737 MAX jet is expected to remain grounded at least until August, as the manufacturer continues to grapple with software issues, people briefed on the matter told Reuters on Tuesday.

Boeing's first-quarter deliveries were a third of the 149 seen a year earlier and the lowest since 1984 for the first quarter.

The Chicago-based company also canceled a $4.2 billion deal for Embraer SA's commercial aviation division over the weekend, prompting the Brazilian company to initiate arbitration.

On Monday, Boeing unveiled new voluntary layoff offers (VLOs) to employees. Boeing spokesman Bernard Choi said on Tuesday that "several thousand employees taking VLO or retiring is our expectation." - Reuters

source https://www.thesundaily.my/business/boeing-eyes-major-bond-issue-to-raise-fund-sources-NN2348179