Oil rises after drop in U.S. crude stocks suggests demand pickup

TOKYO: Oil prices rose more than 1% on Wednesday after data showed crude inventories in the United States fell much more than expected, suggesting demand is improving even as the coronavirus outbreak spreads around the world.

Brent crude rose 48 cents, or 1.2%, to $41.75 a barrel by 0345 GMT after declining more than 1% on Tuesday. U.S. crude was up 54 cents, or 1.4%, at $39.81 a barrel, having dropped by 1.1% in the previous session.

U.S. crude and gasoline stocks declined more than expected last week, while distillate inventories rose, data released by the American Petroleum Institute (API) late on Tuesday showed.

Crude inventories dropped by 8.2 million barrels to 537 million barrels, against analysts' forecasts for a draw of 710,000 barrels.

Official inventory data from the U.S. government's Energy Information Administration is due out later on Wednesday.

Also supporting prices was a drop in output from the Organization of the Petroleum Exporting Countries (OPEC) to the lowest in two decades in June.

The 13-member grouping produced an average of 22.62 million barrels per day (bpd) in June after they agreed to cut output, a Reuters survey found, down 1.92 million bpd from May's revised figure.

"The fall in output means that OPEC over-complied with the deal in June, with compliance coming in at 107%," ING Economics said, though noting that the over-compliance followed additional cuts by Saudi Arabia, the United Arab Emirates and Kuwait.

Those producers agreed to more cuts during June than other OPEC members.

"It is likely that compliance will slip again in July, unless we see a significant improvement in compliance from Iraq and Nigeria," ING said.

Prices for later this year are likely to be capped, analysts said, as the world is awash with oil after the coronavirus caused demand for fuel to drop by around a third.

A Reuters poll of analysts indicated that oil prices will consolidate at around $40 a barrel this year, with a recovery potentially picking up in the fourth quarter.

The coronavirus continues to spread around the world with ever increasing rates of infection. Cases now total more than 10 million with more than half a million people dying after catching COVID-19. - Reuters

source https://www.thesundaily.my/business/oil-rises-after-drop-in-u-s-crude-stocks-suggests-demand-pickup-AD2647064

Asia’s factory pain eases as region emerges from pandemic

TOKYO: Asia's factory pain showed signs of easing in June, as a rebound in China's activity offered some hope the region may have passed the worst of the devastation caused by the coronavirus pandemic.

But sluggish global demand and fears of a second wave of infections will tame any optimism on the outlook and keep pressure on policymakers to support their ailing economies.

China's factory activity grew at a faster clip in June after the government lifted coronavirus lockdown measures, a private sector survey showed on Wednesday.

Manufacturing activity also expanded in Vietnam and Malaysia, pointing to a slow but steady recovery ahead.

Japan and South Korea continued to see manufacturing activity shrink, underscoring the heavy blow the pandemic dealt to their export-reliant economies, although the pace of their declines slowed.

"The chance of a V-shape recovery in the manufacturing sector appears slim at this stage," said Joe Hayes, economist at IHS Markit, which compiles the survey.

"We're still awaiting signs of meaningful improvement in Japan's manufacturing sector, with the PMI for June failing to stage a substantial recovery."

China's Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 51.2 in June from 50.7 in May, marking the highest reading since December 2019. That followed a similarly upbeat reading from the Chinese government's own PMI on Tuesday.

Vietnam and Malaysia also saw their PMIs crawl back above the 50-mark separating growth from contraction, a welcome sign for policymakers struggling to combat the pandemic's fallout.

But analysts expect any recovery in the region to be slow.

While China's export orders shrank at a slower pace, its employment contraction worsened, the PMI showed, underscoring the fragile recovery in the world's second-largest economy.

"Overall manufacturing demand recovered at a fast clip, but overseas demand remained a drag," said Wang Zhe, senior economist at Caixin Insight Group.

Japan's PMI rose to a seasonally adjusted 40.1 in June, while South Korea's PMI ticked up to 43.4 - both remaining far below the boom-or-bust threshold of 50.

Separately, a Bank of Japan survey showed big manufacturers' confidence sinking to levels last seen during the 2009 global financial crisis, reinforcing expectations the country was sinking deeper into recession.

"If demand doesn't rebound fast enough, companies will have to shed jobs," said Shinichiro Kobayashi, senior economist at Mitsubishi UFJ Research and Consulting. "That will delay Japan's economic recovery, which could end up in a L-shape." - Reuters

source https://www.thesundaily.my/business/asia-s-factory-pain-eases-as-region-emerges-from-pandemic-DC2646995

Syahrumizam Samsudin fills UEM Edgenta’s vacant MD, CEO position

PETALING JAYA: UEM Edgenta appointed Syahrunizam Samsudin as its new managing director and CEO, effective today.

Prior to the appointment, he held the position of Touch ‘n Go Sdn Bhd’s CEO and oversaw the company’s \growth in the digital financial services sector.

With the departure of UEM Edgenta’s previous managing director and CEO, Datuk Azmir Merican Azmi in April, the group’s daily operations and strategic management was led by its C-level executives as a committee appointed its chairman and board of directors to steer it through the transition period.

source https://www.thesundaily.my/business/syahrumizam-samsudin-fills-uem-edgenta-s-vacant-md-ceo-position-LC2646973

Pandemic sinks Japan business mood to lowest since 2009 financial crisis

TOKYO: Japanese manufacturers' confidence sank in the second quarter to levels not seen since the 2009 global financial crisis, underscoring the damage the coronavirus pandemic inflicted on the export-reliant economy.

The Bank of Japan's closely-watched "tankan" survey also showed big non-manufacturers' mood tanked to a decade low, as lockdown measures put in place in April through late May forced businesses to shut and consumers to stay at home.

The dismal readings reinforce market expectations Japan's economy is headed for deep recession as the fallout from the pandemic weighs on output and consumption.

The headline index for big manufacturers' sentiment worsened to -34 in June from -8 three months ago, the tankan showed on Wednesday. That compared with a median market forecast for -31.

It marked the sixth straight quarter of declines and hit its lowest level since June 2009.

Big non-manufacturers' sentiment index worsened to -17 from +8 in March, the survey showed, the worst reading since December 2009.

However, both manufacturers and non-manufacturers expect business conditions to improve in the three months ahead, the tankan showed.

Big firms surveyed in the tankan expect to increase capital expenditure by 3.2% in the current fiscal year to March 2021, compared with a market estimate of a 2.1% increase.

The survey will be among key factors the BOJ will scrutinise at its next rate review on July 14-15.

Japan slipped into recession for the first time in 4-1/2 years in January-March and is set to suffer its deepest postwar slump in the current quarter.

The tankan's sentiment indexes are derived by subtracting the number of respondents who say conditions are poor from those who say they are good. A negative reading means pessimists outnumber optimists. - Reuters

source https://www.thesundaily.my/business/pandemic-sinks-japan-business-mood-to-lowest-since-2009-financial-crisis-JC2646931

Australia shares rise on stimulus hopes; NZ lower

Australian shares traded higher on Wednesday, boosted by hopes for further stimulus measures to prop up a pandemic-hit economy, although gains were capped by fears of a second wave of coronavirus infections.

The S&P/ASX 200 index rose 0.37% to 5,919.8 in early trade. The index finished 1.4% firmer on Tuesday after a senior central bank official said the economy would need "considerable" support for some time.

However, concerns over the pandemic's economic impact checked gains after the nation's second-biggest city, Melbourne, enforced the lockdown of 36 suburbs to counter a spike in coronavirus cases.

The gold subindex rose 2.72%, with Newcrest Mining rising more than 1% as bullion prices surged to a near eight-year high on safe-haven demand as virus cases rose.

Technology stocks gained more than 2%, with data centre manager NEXTDC Ltd jumping nearly 6% as it added contracted commitments to its New South Wales data centre.

Metals and mining stocks rose 0.86%, with global miner BHP Group advancing 0.3%. Red 5 Ltd, 7.5% higher, was the biggest gainer on the subindex.

Energy stocks fell 0.4%, with Cooper Energy Ltd leading losses, as the virus' impact on demand coupled with a potential resurgence of Libyan oil production hurt oil prices.

Insurer Suncorp Group fell 1.2% in early trade after saying it had set aside an additional $62 million-$90 million for natural hazard costs in 2020/21, compared with last year.

On Wall Street, the three major indexes rose between 0.9% and 1.9%.

The number of issues on the ASX that advanced were 772, while 340 declined.

New Zealand's benchmark S&P/NZX 50 index fell 0.34% to 11,411.7.

Auckland International Airport Ltd dropped 1.5% as it forecast a hit to reported profit and proposed further job cuts. - Reuters

source https://www.thesundaily.my/business/australia-shares-rise-on-stimulus-hopes-nz-lower-DC2646885

MBSB targets 3-4% loan growth this year, focuses on civil servants

PETALING JAYA: Malaysia Building Society Bhd (MBSB) is looking at a loan growth of between 3% and 4% for FY20 ending Dec 31, with a focus on civil servants, under its revised business plan, as it views the segment to be quite stable.

Apart from that segment, the group believes trade finance in areas of export for certain commodities would still continue to be strong. It will be shying away from sensitive segments such as tourism.

“Traditionally, the areas of growth would be traditional products and services that we see out there in the market, but for MBSB, we are really putting more emphasis on the personal financing and bundling of such products,” said president and CEO Datuk Seri Ahmad Zaini Othman.

For the first quarter of this year, the group posted a net loss of RM73.25 million, due to an increase in expected credit loss (ECL) as a result of staging deterioration for loans and financing as at end of March 2020. However, he noted that its treasury activities remain active and are expected to increase their income contribution in the current year.

As with other lenders in the country, MBSB granted a six-month moratorium to eligible customers on April 1, 2020, in line with the Covid-19 pandemic relief measures initiated by the government.

Ahmad Zaini said MBSB encourages customers to regularise instalment arrears during the moratorium, which will improve its ECL and financial results in the coming quarters.

He added that MBSB has identified customer engagement as one of the key measures for its return to profitability in the next quarter.

Further down the line, MBSB’s plan to list its wholly owned unit MBSB Bank is on track and will be done once it has transferred the converted assets to the bank and disposed of any non-converted assets. The bank is expected to convert all its existing conventional assets to Islamic assets by 2021.

“With this we hope that MBSB Bank will have better market penetration, liquidity to risk equity in a more wholesome way and engage with all the investors locally and internationally that are looking for shariah compliant shares,” said Ahmad Zaini.

Asked about the possibility of a merger, he said the group is not exploring the option at the moment.

“In fact, we have revised our business plans to fit the challenges of the prevailing economic conditions. We need to be lean and focused to ensure the entity survives.”

With regard to MBSB’s outlook for the remainder of the year, Ahmad Zaini said that this depends on whether there will be a second wave of Covid-19 outbreak.

“Should a second wave occur, the question is whether industries are able to sustain that second wave and whether financial institutions are able to provide continued support,” he said.

The CEO cautioned that as the United States is still seeing a high rate of Covid-19 infections, it might spill over and create a worldwide situation once again. “If the situation is not stabilised the industries would be more vulnerable. This would have a chain reaction that would cause distress throughout the financial system, which would result in people losing jobs and income and impact consumer sentiment,.”

source https://www.thesundaily.my/business/mbsb-targets-3-4-loan-growth-this-year-focuses-on-civil-servants-YY2643427

ASNB declared income distribution for ASB 3 Didik, ASN Equity 2

KUALA LUMPUR: Amanah Saham Nasional Bhd (ASNB) has declared an income distribution of 4.25 sen per unit for its fixed price fund Amanah Saham Bumiputera 3 (ASB 3 Didik) and two sen per unit for its variable price fund, ASN Equity 2, for the financial year ending June 30, 2020.

The total payout of RM275.4 million for ASB 3 Didik will benefit 298,560 unit holders who hold over 6.5 billion units, while the total payout of RM29.4 million for ASN Equity 2 will benefit 33,277 unit holders who hold over 1.4 billion units.

Permodalan Nasional Bhd (PNB), which owns the unit trust company, said the return of 4.25 sen per unit for ASB 3 Didik exceeded the benchmark Maybank 12-Month Fixed Deposit return of 2.10 per cent by 215 basis points (bps).

“As at May 31,2020, ASB 3 Didik recorded a net realised income of RM251.4 million,“ it said in a statement today.

It said the income distribution for ASN Equity 2 amounted to a dividend yield of 4.04 per cent based on the net asset value of the fund as at June 25, and that as at May 31, 2020, the fund recorded a net realised income of RM34.6 million.

According to PNB, the income distribution declared by the two funds were derived from their realised gains, dividends and other income.

“This is in accordance with PNB’s objective to continue delivering sustainable long-term returns to its unit holders,“ it said.

It added that the distribution declared by both funds would be re-invested as additional units and automatically credited into the accounts of unit holders on July 1, 2020. -Bernama

source https://www.thesundaily.my/business/asnb-declared-income-distribution-for-asb-3-didik-asn-equity-2-DE2644577

MAHB slashes capex to RM320m to optimise cost

SEPANG: As the COVID-19 pandemic left the global aviation industry in dire straits, Malaysia Airports Holdings Bhd (MAHB) has implemented a cost optimisation plan where its capital expenditure (capex) has been reduced to RM320 million from RM1.8 billion set earlier.

Group chief executive officer Datuk Mohd Shukrie Mohd Salleh said the plan will keep the airport operator stable for the next 18 months with a 20 per cent lower operating cost.

He said MAHB is taking steps to reduce operating costs, including revising operating hours and deferring several major infrastructure projects, including the expansion of the Penang International Airport.

“We are of the view that the RM320 million capex is critical for us to still push ahead with several other projects, including replacing our ageing aerotrain and baggage handling system, irrespective of the COVID-19.

“In fact, this is probably the best time for us to replace those assets,“ he told a media briefing after MAHB’s annual general meeting here today.

Meanwhile, Mohd Shukrie said in order to maintain MAHB’s liquidity going forward, it is planning to raise RM1.5 billion through sukuk issuance, in addition to the RM1.7 billion in credit facilities it had obtained from banks.

As at end-March, the airport operator’s cash reserves stood at a healthy RM2.8 billion, he said.

On another note, Mohd Shukrie said the delayed implementation of the regulated asset base (RAB) framework which was originally scheduled to start on Jan 1 this year was a “blessing in disguise” for MAHB.

Under the RAB funding mechanism, the government would provide MAHB with a RM4 billion capex for development and maintenance from 2020 to 2022, and MAHB would need to spend the fund according to the stipulated time frame, failing which it could be penalised.

“Imagine if we had spent a couple of billions, and there is no traffic during this pandemic.

“How are we suppose to get our money back?” he said, adding MAHB and other government agencies are working closely to determine the right time to implement the RAB. -Bernama

source https://www.thesundaily.my/business/mahb-slashes-capex-to-rm320m-to-optimise-cost-HE2644559

TNB declared record high dividend payout

KUALA LUMPUR: Tenaga Nasional Bhd (TNB) has declared a record high dividend payout of RM5.69 billion for the financial year ended Dec 31, 2019 (FY2019).

The TNB board of directors has approved a final single-tier dividend of 20 sen per share, raising the single-tier dividend to 50 sen per share for FY2019.

The board of directors had also approved a special dividend of 50 sen per share, bringing the total dividend per share to RM1.

“This is the third consecutive year that we have offered a dividend at the higher end of our stated policy of paying between 30 per cent and 60 per cent of our adjusted profit after tax and minority interest,” said TNB chairman Datuk Seri Mahdzir Khalid in a statement today.

As of May 2020, TNB’s major shareholders include Khazanah Nasional Bhd (25.8 per cent), Permodalan Nasional Bhd (18.1 per cent), Employees Provident Fund (16.7 per cent) and Kumpulan Wang Persaraan (6.7 per cent).

“TNB will continue to balance its commitment towards growing the business for fair shareholder returns with its responsibility to customers in this current challenging period.

“We will continue to work closely with the government to support the rakyat through various initiatives introduced under the PRIHATIN and Bantuan PRIHATIN Elektrik packages,” he added. -Bernama

source https://www.thesundaily.my/business/tnb-declared-record-high-dividend-payout-DE2644522

S&P Global revises outlook on 5 Malaysian banks

KUALA LUMPUR: S&P Global Ratings has revised its outlook on five Malaysian banks -- Malayan Banking Bhd (Maybank), CIMB Bank Bhd, Public Bank Bhd, RHB Bank Bhd and AmBank (M) Bhd -- from “stable” to “negative”.

At the same time, the rating agency said it is affirming all its ratings on the banks, given its base-case expectation that these banks’ stand-alone credit profiles (SACPs) have adequate buffers to withstand difficult operating conditions in 2020 and 2021.

S&P Global has an ‘A-’ long-term and ‘A-2’ short-term issuer credit ratings on Maybank, CIMB Bank, and Public Bank, and ‘BBB+’ long-term and ‘A-2’ short-term issuer credit ratings on RHB Bank and AmBank.

It said the rating actions on the banks follow its outlook revision on the sovereign credit ratings on Malaysia (foreign currency A-/Negative/A-2; local currency A/Negative/A-1), reflecting additional downside risk to the government’s fiscal metrics, due to the weak global economic climate and a heightened degree of policy uncertainty.

“We expect these banks to continue to benefit from external support from the sovereign over the next 12-24 months, although the sovereign’s creditworthiness itself could come under pressure.

“Our ratings on all five banks could fall by a notch in case of a downgrade of the sovereign in the next 18-24 months,“ it said in a statement.

It said the ratings on Maybank, CIMB Bank and Public Bank would continue to be capped by its sovereign credit ratings as these banks would not likely able to withstand the stress associated with a sovereign default.

Meanwhile, the ratings on RHB Bank and Ambank could be lowered in case of a sovereign downgrade or a deterioration in their SACP, S&P Global said.

“Our ratings on these two banks currently incorporate one notch uplift of government support from their ‘bbb’ SACP, reflecting a moderately high likelihood of government support,” it said.

S&P Global noted that it expects the banking sector’s non-performing loan (NPL) ratio and credit costs to increase to 2.8 per cent of total loans and 66 basis points (bps) of gross loans by the end of 2020.

“The sector’s NPL ratio and credit costs are likely to stay at relatively high levels of 3.9 per cent and 62bps in 2021 as we expect unemployment conditions to remain challenging in 2021.

“The blanket moratorium on loan repayments by all retail and small- and mid-sized enterprise clients could result in lower actual NPLs and credit losses this year compared with our forecasts.

“However, we expect banks to start proactively increasing provisioning, given the significantly weakening economic prospects and business outlook,” it said.

S&P Global believes Malaysian banks’ solid capital buffers (14 per cent common equity Tier-1 ratio) are important mitigants that could partially offset unexpected credit losses from the transitory but acute COVID-19 shock to the economy.

However, it said a likely deep compression in net interest margins (NIM) could mean additional downside risks to that buffer, adding that it forecasts a 10bps compression of NIM this year alone.

The rating agency also expects the unemployment rate to come under moderate pressure over the next two years.

“Any significant deterioration in unemployment conditions could materially weaken the creditworthiness of Malaysian banks,” it added. -Bernama

source https://www.thesundaily.my/business/sp-global-revises-outlook-on-5-malaysian-banks-KE2644149

Bank Negara unveils policy document on e-KYC

KUALA LUMPUR: Bank Negara Malaysia has issued a policy document on Electronic Know-Your-Customer (e-KYC), a digital on-boarding policy to enable account opening anytime or anywhere.

The policy document is aimed to accelerate and streamline practices of industry players in their adoption of e-KYC technology, the online process of identifying and verifying individual customers.

“The adoption of e-KYC technology by the industry is in line with the bank’s efforts to facilitate greater digital offerings of financial services.

“This is expected to pave the way for greater innovation in the financial sector, including end-to-end offering of digital financial services for customers,” BNM said in a statement today.

The central bank said with the implementation of e-KYC, a majority of customers would no longer need to visit the physical premises of a financial service provider to open an account.

“In addition to the increased customer convenience, the digital on-boarding of customers enabled by e-KYC also lowers the cost for both users and providers,” it said.

BNM said this could also help to increase competition in the financial sector over the long term.

“The policy document seeks to promote the safe and secure application of e-KYC technology in the financial sector by clarifying desirable outcomes in the use of e-KYC and sets out best practices, as well as parameters to ensure security and integrity of the on-boarding process for customers.

“It forms part of a series of measures adopted by the bank in ensuring that regulatory requirements support the country’s agenda on digital economy,” it added. -Bernama

source https://www.thesundaily.my/business/bank-negara-unveils-policy-document-on-e-kyc-HY2643889

Serba Dinamik bags 3 overseas contracts worth RM543.5m

KUALA LUMPUR: Serba Dinamik Holdings Bhd’s (SDHB) overseas subsidiaries have secured a total of three contracts in Indonesia and Zambia with a combined estimated contract value of about US$126.8 million (about RM543.5 million).

In a filing with Bursa Malaysia today, the company said one contract was secured in Indonesia through PT Serba Dinamik Indonesia, a 75 per cent-owned subsidiay of Serba Dinamik International Ltd, which in turn is a wholly-owned subsidiary of SDHB, consisting of engineering, procurement, construction and commissioning work for PT Polytama Propindo.

The other two contracts, in Zambia, are secured through SDIT International Ltd, a wholly-owned unit of Serba Dinamik IT Solutions Sdn Bhd, which in turn is a wholly-owned unit of SDHB, for the implementation of Digital Microlending Lending Platform through USSD channel for Zamtel and implementation of Digital Health Platform for National Health Insurance Management Authority, both for ZCOM Systems Ltd.

SDHB said it had also secured seven domestic contracts for operations and maintenance work through its wholly-owned subsidiary, Serba Dinamik Sdn Bhd.

It added that the contracts have no specific value as it is on a “call-out” basis whereby the work orders will be awarded at the discretion of the client based on their activities’ schedules and rates throughout the duration of the respective contracts. -Bernama

source https://www.thesundaily.my/business/serba-dinamik-bags-3-overseas-contracts-worth-rm5435m-NY2643870

Japan’s pandemic jobless data masks woes for millions: Experts

TOKYO: Unlike most major global powers, Japan has been spared an explosion in unemployment during the coronavirus pandemic, despite the world's third-biggest economy suffering its first recession in more than five years.

However, economists say the situation is not as rosy as the low headline figure may suggest, with millions struggling to make ends meet on precarious temporary contracts.

The latest figures published today showed Japan's unemployment rate climbed to 2.9% in May, up 0.3 percentage points from April and the third consecutive increase. There were 120 jobs available for every 100 jobseekers, compared with 132 in April. This was the steepest fall in this closely watched indicator since the 1974 oil crisis.

Economists forecast the unemployment rate in Japan will hit 4% by the end of the year, as the tourism and hospitality sectors suffer from border closures and people staying at home because of the virus.

Many countries would welcome an unemployment rate of "only" 4%, with the luxury of having more jobs than jobseekers. The US unemployment rate hit 13.3% in May, with more than 47 million people laid off since coronavirus lockdowns began.

So why has Japan's rate stayed so low? One major explanation lies in the country's dearth of workers owing to an ageing population.

Japan has the world's only "super-aged" society where more than 28% of people are 65 and over. This means firms are reluctant to lay people off even during a recession, as they fear they will have few options to recruit when the crisis passes.

Japanese law also makes it difficult for companies to hire and fire flexibly during a downturn, notes Munehisa Tamura from the Daiwa Institute of Research.

"Therefore, even if an economic shock happens, generally speaking, it does not directly lead to an immediate and sharp spike in unemployment," he told AFP.

Even then, analysts point out the low rate does not account for millions – especially women – who gave up their job during the pandemic to care for family and are not counted as jobseekers.

And some critics say the apparently healthy unemployment data belies the daily reality for millions – especially the 40% of the workforce on temporary or part-time contracts.

The government launched a massive economic package that includes funds to help businesses keep employees on – 4.2 million are on this furlough system, according to government data, some 6% of the workforce.

These staff are still technically on the payroll of their firms and so not included in the official unemployment data but many temporary workers complain they are getting paid very little or nothing at all.

"I was told to stay home, using my paid holidays," said one restaurant employee, who spoke to AFP on condition of anonymity. But his handful of paid holidays were quickly used up.

"For all of April, May and until now, I have been paid no salary. Absolutely zero."

He said seven other shift workers were in a similar position, while four full-time regular employees were continuing to work and be paid.

His employer, contacted by AFP, declined to comment. But the case is far from unique, experts say.

Union official Tetsuya Obayashi told AFP it was "easier for companies to leave shift workers in limbo".

"When the economy comes back, they can use them again. Shift-workers are nothing but a convenient buffer."

According to Ippei Torii, head of an NGO supporting overseas workers, the worst affected are foreign staff, who made up just 2.7% of the workforce in 2019 but frequently occupy temporary and precarious jobs.

"They will be the last to go back to work," he told AFP.

Geraldine, a hotel cleaner in Tokyo from the Philippines, told AFP she is now working just 10 days a month, three hours a shift.

"I earn less than 10% of my salary," she said. "Right now I'm living on my savings. But they are almost completely gone."

source https://www.thesundaily.my/business/japan-s-pandemic-jobless-data-masks-woes-for-millions-experts-YX2642320

Japan factory output slumps for fourth straight month, jobless rate hits 3-year high

TOKYO: Japan's industrial output fell for a fourth straight month in May to the lowest level since the global financial crisis and the jobless rate hit a three-year high, underscoring the broad economic pain caused by the coronavirus.

The world's third-largest economy is bracing for its worst postwar recession, hurt by coronavirus lockdown measures at home and overseas that have upended supply chains, kept businesses shut and depressed consumer spending.

Ministry of Economy, Trade and Industry (METI) data out today showed that factory output fell 8.4% month-on-month in May to 79.1, a level not seen since March 2009 when the financial crisis sapped global demand.

"The economy likely suffered a big contraction in April-June due to weak domestic and external demand," said Taro Saito, executive research fellow at NLI Research Institute.

"Domestic demand may look up from June, but exports will remain very weak, putting a drag on overall economic recovery," he said, adding that the worsening of the economy would flow on to the labour market.

The deterioration in economic conditions has triggered an increase in the jobless rate and a fall in the number of available jobs, while stoking fears of bankruptcies.

The seasonally adjusted jobless rate rose to 2.9% in May from 2.6% in April, separate government data showed, the highest rate since May 2017. While the jobless rate remained below 3%, less than in many advanced countries, economists say the actual figure is higher, given the rise in furloughed staff and the impact of discouraged workers who have stopped seeking jobs.

The coronavirus fallout has pushed 290 firms into bankruptcy since the end of February, with many service-sector firms like restaurants, hotels and inns and apparel suffering the most, data from private credit research firm Teikoku Databank showed.

The decline in factory output followed a 9.8% drop in the prior month, and was much bigger than the median market forecast of a 5.6% drop in a Reuters poll of economists, the data showed.

On a positive note, manufacturers surveyed by METI expect output to rise 5.7% in June and 9.2% in July.

The government, however, left its assessment of industrial production unchanged, saying it was "lowering sharply", the bleakest official view since late 2008.

Output of cars, production machinery, steel and other broad industries were hit hard by slumping demand at home and abroad due to the pandemic. All industries surveyed posted a fall in output.

Global production at Japan's major automakers, including Toyota Motor Corp and Nissan Motor Co, slumped 62% in May from a year ago, following a 55% fall in April, as car demand plunged globally amid lockdowns to stop the virus from spreading.

Japan's economy shrank an annualised 2.2% in January-March, slipping into recession for the first time in 4½ years, and analysts expect the health crisis to have driven a deeper slump in the current quarter.

The number of employees fell in May by 730,000 workers compared to a year earlier, posting the biggest annual decline since November 2009, a government official said.

The number of furloughed workers stood at 4.23 million, the second highest on record after hitting an all-time high of 5.97 million in April.

The jobs-to-applicants ratio fell to 1.20 in May from 1.32 in April, falling at its fastest pace since 1974 to mark the lowest reading since July 2015, labour ministry data showed. It means six jobs were available per five job seekers.

Output of cars, production machinery, steel and other broad industries were hit hard by slumping demand at home and abroad due to the pandemic. – REUTERSPIX

source https://www.thesundaily.my/business/japan-factory-output-slumps-for-fourth-straight-month-jobless-rate-hits-3-year-high-AX2642301

Shell to write off US$15 billion to US$22 billion worth of assets

LOBNDON: Royal Dutch Shell said today it would write off assets worth up to US$22 billion RM94.2 billion) after the coronavirus crisis knocked oil and gas demand and weakened the energy price outlook.

The impairments follow the Anglo-Dutch company's decision to shift from fossil fuel and reduce its greenhouse gas emissions to net zero by 2050, as laid out by CEO Ben van Beurden in April.

Global travel restrictions to prevent the virus spreading affected more than 4 billion people at one point, taking cars off the roads and grounding planes, driving down fuel demand.

Shell, the world's largest fuel retailer, said it expected a 40% drop in sales in the second quarter from a year earlier to about 4 million barrels per day (bpd), although that is more than its earlier prediction of a drop to 3.5 million bpd.

In its update before second-quarter results on July 30, Shell said upstream oil and gas production was expected to average 2.35 million bpd in the three months to June, down from 2.71 million bpd in the first quarter.

Shell, which has a market value of US$126.5 billion, said it would take an aggregate post-tax impairment charge of US$15 billion to US$22 billion in the second quarter.

The impairments relate to large liquefied natural gas (LNG) operations in Australia, including the Prelude floating LNG facility, the world's biggest, as well as oil and gas production assets in Brazil and the US shale basins.

Its shares were down 1.9% by 1014 GMT.

Credit Suisse analyst Thomas Adolff said the second quarter would be the toughest for many companies and Shell had sent a "wake up call".

Shell's move follows BP's decision to cut up to US$17.5 billion from its assets, as it responds to the coronavirus crisis and shifts to low-carbon energy.

Shell responded to the pandemic by cutting its dividend for the first time since World War II and lowering spending in 2020 to a maximum of US$20 billion from US$25 billion. It aims to announce its restructuring plan by the end of 2020.

Shell reduced its expected average benchmark Brent crude price for 2020 to US$35 a barrel from US$60, and cut its 2021 and 2022 forecasts to US$40 and US$50, respectively, also down from US$60.

Shell said its long-term oil price outlook was US$60. That is just below BP, which cut its long-term Brent forecast to US$55 from US$70. Other rivals still have higher projections.

The Anglo-Dutch group cut its long-term refining profit margin outlook by 30% and set its long-term natural gas price at $3 per million British Thermal Units (BTUs).

Shell's integrated gas business will account for US$8 billion to US$9 billion of the writedowns, while the upstream division will account for US$4 billion to US$6 billion. Downstream refining and marketing will account for another US$3 billion to US$7 billion.

The impairments will raise Shell's debt-to-equity ratio, or gearing, by 3%. Gearing stood at 28.9% at the end of March. – Reuters

source https://www.thesundaily.my/business/shell-to-write-off-us-15-billion-to-us-22-billion-worth-of-assets-XX2642213

Allianz Malaysia sees decent single-digit revenue growth this year

KUALA LUMPUR: Allianz Malaysia Bhd, which recently reported a 10.4 per cent increase in revenue for its first quarter (Q1) ended March 31, 2020, is expecting a decent single-digit top-line growth in this financial year.

Chief executive officer Zakri Khir said the group managed to record an increase in top-line figure in Q1 despite the implementation of the Movement Control Order (MCO) imposed to curb COVID-19.

“However, there was pressure during the MCO period where, for example, life agents could not meet customers to sell products. So, there was a bit of drop-off (in new business) then but now it’s starting to pick up again,“ he said during a virtual press conference today.

Asked on the bottom-line, he said the bottom-line was expected to be better this year.

Allianz Malaysia announced earlier this month that it recorded a 19.6 per cent year-on-year decline in unaudited net profit to RM79.50 million in Q1.

According to its filing with Bursa Malaysia, the group recorded growth in gross earned revenue during the quarter but the imposition of the MCO had impacted business from mid-March.

Regarding insurance claims, Zakri said Allianz General registered less claims during the MCO and was getting back to the normal frequency seen prior to the restriction period.

However, he said there was pressure in terms of cost of claims amid rising prices of treatment due to the usage of personal protective equipment by healthcare personnel and many others following the implementation of the standard operating procedures aimed at curbing the spread of COVID-19.

Asked if the company planned to acquire a digital financial services business, Allianz Life chief executive officer Joseph Gross said there was no plan for that at present.

Last week, Singapore-based insurer Great Eastern Holdings Ltd acquired a 21.87 per cent stake in Boost Holdings Sdn Bhd from Axiata Group Bhd for US$70 million (RM299.36 million).

In 2019, Allianz Malaysia recorded a higher net profit of RM492.48 million from RM377.02 million in the preceding year.

Revenue increased 6.8 per cent to RM5.53 billion from RM5.18 billion previously, mainly due to higher gross earned premiums and investment income by RM301.4 million and RM51.1 million, respectively. -Bernama

source https://www.thesundaily.my/business/allianz-malaysia-sees-decent-single-digit-revenue-growth-this-year-KY2643279

T7 Global ekes out 1.2% gain in Q1 net profit

PETALING JAYA: T7 Global Bhd’s net profit rose slightly by 1.2% to RM1.14 million in the first quarter ended March 31, against a net profit of RM1.13 due to a lower cost of sales offset by lower revenue.

Its revenue fell to RM48.78 million, a 13.3% decline from RM56.27 million reported previously.

According to the group’s Bursa disclosure, its engineering packages revenue for the quarter increased 17.7% to RM25.13 million compared to RM21.35 million reported previously.

As for its product & services business, revenue fell 32.3% to RM23.65 million from RM34.92 million posted previously.

Due to the current sustained oil prices and the uncertainties affecting the oil & gas sector, T7 expects the year to remain challenging as it will remain as its core business.

It stated it will continue to bid for new contracts and will be looking for industry opportunities where the group and its strategic alliances possess the relevant expertise and experience to venture into.

As for its aerospace division, the group is currently exploring opportunities to provide our metal surface treatment services to other relevant industries that require such services.

Simultaneously, the group stated that it will also look into new ventures within its capability and expertise for potential business growth.

source https://www.thesundaily.my/business/t7-global-ekes-out-12-gain-in-q1-net-profit-EY2643042

Green Packet hammered by fair value loss for Q1

PETALING JAYA: Green Packet Bhd’s net loss widened to RM34.07 million for the first quarter ended March 31, compared to a net loss of RM13.88 million in the same quarter of the previous year mainly due to fair value loss from a quoted investment.

Its revenue stood at RM147.05 million, a 16.5% increase from RM97.94 million reported previously.

The group told Bursa that its software and devices business saw a 357% jump in revenue to RM11.9 million from RM2.6 million reported previously.

Its communication and services segment posted a 41% gain in revenue to RM132.08 million from RM93.97 million, while its digital services posted a revenue of RM3.07 million, a 126% increase from RM1.36 million posted previously.

For Green Packet’s prospects for FY20, it expects a better financial performance despite the Covid-19 pandemic impact, due to the progressive market response to the rapid digital connectivity of workplace safety processes by both the private and public sectors.

It stated ongoing initiatives to improve operational efficiency for wholesale voice traffic and data business for its communication business as well as to expand geographical reach and supply chain for LTE products, has shown positive traction,

In addition, its initiative to adopt artificial intelligence application and the introduction of new digital solutions for workplace safety has indicated positive impact.

source https://www.thesundaily.my/business/green-packet-hammered-by-fair-value-loss-for-q1-KX2642840

Kerjaya Prospek’s Q1 net profit dampened by MCO impact

PETALING JAYA: Kerjaya Prospek Group Bhd’s net profits declined by 36.4% to RM22.33 million in the first quarter ended March 31, against a net profit of RM35.12 million in the same quarter of the previous year attributed to the negative impact of the implementation of the movement control order (MCO).

Its revenue fell by 19.8% to RM211.84 million from RM264.18 million reported previously.

According to the group’s Bursa filing, its construction segment posted a lower profit of RM21.5 million for the quarter, compared to RM28.21 million reported previously due to a halt in construction projects from the MCO.

Its manufacturing segment reported a loss of RM9,058 for the quarter, against a profit of RM1.5 million reported previously.

For the quarter, Kerjaya Prospek’s property development segment did not contribute any revenue as its maiden project, Vista Residences was completed last year and new projects have yet to be launched

Meanwhile, its investment division reported a profit of RM1.49 million, a RM70,000 decline from the profits reported previously.

In regards to its future prospects, the group stated that with various adversities and the challenging landscape, the group’s operations and financial performance may be lower for FY20 ending Dec 31, as compared to FY19.

It stated that it will continue to monitor and implement appropriate measures to address adverse risks from the pandemic to its operations and financial performance.

Nevertheless, Kerjaya Prospek highlighted that it is supported by an outstanding order book of RM3.67 billion as at March 31, 2020, with a RM990.4 million building construction contracts secured during the quarter.

Moving forward, the group aims to focus on the construction segment to be its main revenue driver.

source https://www.thesundaily.my/business/kerjaya-prospek-s-q1-net-profit-dampened-by-mco-impact-KX2642682

Saudi Arabia’s economy contracts by 1% in Q1 amid oil plunge

DUBAI: Saudi Arabia's economy contracted by 1% in the first quarter, official data showed today, but the figures only marginally captured the collapse in oil prices and the coronavirus crisis, which deteriorated in March.

"This negative growth originated mainly from the contraction in the oil sector by 4.6%, while the non-oil sector recorded a positive growth rate of 1.6%," the General Authority for Statistics said, citing preliminary estimates.

The world's largest oil exporter is facing its worst economic decline this year after the Covid-19 pandemic dampened global crude demand and measures to contain the coronavirus hurt the kingdom's non-oil economy.

"The coronavirus crisis means that this is somewhat old news and the figures for Q2 will almost certainly be terrible," James Swanston, MENA economist at Capital Economics said.

In the first quarter, the value of Saudi Arabia's oil exports plunged by about US$11 billion year on year, and in April alone the drop was of about US$12 billion, official data showed this month.

Sharp production cuts in May and June, aimed at lifting oil prices, are likely to weigh further on oil GDP in the second quarter, and figures released by the central bank this week showed the non-oil economy continued to suffer in May.

Profits for the banking sector posted an annual decline of nearly 40% in May and points of sale transactions were down by nearly 16%, according to Saudi Arabian Monetary Authority data.

"Lockdown measures and weak confidence continued to take a toll on spending," said Dubai-based Arqaam Capital, which estimated consumer spending fell by 32% year on year last month after a 35% decline in April.

Hoping to raise non-oil revenues, the government has ordered an increase in value-added tax, but this is likely to dampen consumer spending and slow down economic recovery as measures to contain the coronavirus are lifted, economists have said.

The International Monetary Fund estimates Saudi Arabia's economy will shrink by 6.8% this year. – Reuters

source https://www.thesundaily.my/business/saudi-arabia-s-economy-contracts-by-1-in-q1-amid-oil-plunge-DX2642371

Govt needs to keep economic stimulus going, says Australian central bank deputy head

Govt needs to keep economic stimulus going, says Australian central bank deputy head

SYDNEY: Australia's economy will need "considerable" support for some time, Reserve Bank of Australia (RBI) deputy governor Guy Debelle said today, adding it would be a "problem" if the government ended fiscal stimulus in September as initially flagged.

Australia's fiscal response to the coronavirus pandemic is among the biggest in the world at almost 10% of gross domestic product. It comes as the central bank slashed interest rates to a record low 0.25% and launched an unlimited quantitative easing programme to help buffer the economy against the fallout of the global outbreak.

The emergency measures have so far been successful in supporting the A$2 trillion (RM5.86 trillion) economy, though further support will be required, Debelle noted.

"If everything ceases at the end of September then yes that would be a problem," Debelle said, responding to a question following a speech.

"The government's made it very clear in recent days that they are well aware of that and they are considering what they're going to do to address that. We'll find out more in a few weeks' time."

Treasurer Josh Frydenberg is due to provide an update on July 23 on whether there will be changes to the fiscal package, in particular an extension of support beyond the current end-September due date.

With the economy in recession for the first time in 30 years, the government would have reason to keep stimulus going.

Official data out today showed payroll jobs were still 6.4% below mid-March levels when Australia had recorded its 100th confirmed case of Covid-19.

The recovery in payroll jobs between mid-April and mid-June represents only around 30% of the jobs initially lost to Covid-19, the Australian Bureau of Statistics (ABS) said.

Another worry is that an uptick in cases in Victoria could hurt Australia's second biggest economy, with the latest data showing a drop in electronic card spending in the state.

"The pace of recovery has clearly slowed ... and further highlights the importance of supplementary wage support via the JobKeeper and JobSeeker programmes," said Sydney-based RBC economist Robert Thompson.

"The future of wage supplement programmes will be key." – Reuters

source https://www.thesundaily.my/business/govt-needs-to-keep-economic-stimulus-going-says-australian-central-bank-deputy-head-FX2642351

Singapore central bank says Wirecard assessing ability to continue offering local services

SINGAPORE: Singapore's central bank said today that German payment company Wirecard's local entities had informed it that they are assessing their ability to continue providing services in the city-state after their parent firm filed for insolvency.

"Credit card payments at merchants using Wirecard's services, as well as usage of prepaid cards issued by Wirecard, will be affected if it ceases operations here," the Monetary Authority of Singapore (MAS) said in a statement.

There was no immediate response from Wirecard to a Reuters query sent outside business hours.

Last week, Wirecard filed for insolvency owing creditors almost US$4 billion (RM17 billion) after disclosing a US$2.1 billion hole in its accounts that its auditor EY said was the result of a sophisticated global fraud.

Singapore is home to Wirecard's Asia-Pacific headquarters, where its main business is to process payments for merchants and assist companies in issuing prepaid cards.

MAS said late on Monday that it was working with the local police's white-collar crime unit and the accounting regulator to scrutinise Wirecard's local entities.

Singapore's Commercial Affairs Department began criminal investigations into Wirecard's Singapore operations in February 2019 and MAS said the investigations "are extensive and ongoing."

Today, the MAS said Wirecard's entities had complied with its directions to hold customer funds in segregated accounts with banks in Singapore.

"MAS is closely monitoring the operations of Wirecard," the central bank said. – Reuters

source https://www.thesundaily.my/business/singapore-central-bank-says-wirecard-assessing-ability-to-continue-offering-local-services-YX2642247

Domestic consolidation to drive Asia M&A revival during coronavirus fallout

HONG KONG/SINGAPORE: Domestic consolidation will likely drive the recovery of dealmaking in the Asia-Pacific region, bankers said, after the novel coronavirus outbreak sent the value of mergers and acquisitions in the first half of 2020 to a seven-year low.

The total region-wide deals value fell 20% from the same period a year earlier to $381.2 billion, data from Refinitiv showed. Globally, dealmaking plunged 43.5% to $1.16 trillion.

The virus, which has infected over 9.5 million people with COVID-19 and led to nearly half a million deaths globally, has caused demand to plummet across industries such as retail and travel, making it difficult for many firms to raise new capital, if to survive at all.

That has created opportunities for consolidation as bigger, better-positioned companies seek to acquire smaller or distressed peers at bargain prices, bankers said.

“We are just starting to see the emergence of what a potential post-COVID situation will look like,“ said Greg Peirce, co-head of global M&A at UBS. “Larger corporations with stronger capital structures and good access to debt markets are well placed to look for opportunities.”

Ongoing examples include Singapore state investor Temasek Holdings supporting a $1.5 billion rights issue by money-losing rig builder Sembcorp Marine Ltd.

Parent Sembcorp Industries Ltd plans to reduce its 61% stake after the deal, meaning Temasek - which is also trying to buy control of the parent of another rig builder - could become the largest shareholder.

“There are domestic consolidation discussions underway in almost every market,“ said Rohit Chatterji, co-head of Asia-Pacific M&A at JPMorgan.

China’s Zhejiang Geely Holding Group Co Ltd - Daimler AG’s largest stakeholder and owner of Volvo Cars - is set to take over automaker Chongqing Lifan Holdings Ltd, whose prolonged sales fall has been exacerbated by the impact of the virus, Reuters reported this month.

“We are seeing less appetite for venturing into new markets with risky new bets and more desire to get an asset down the street that you know you can run well, and where you can take lots of costs out,“ said Chatterji. “That then makes the shareholders happy and it makes it easier to get financing to back the trade.”

Private equity firms have stayed busy, with 912 deals being the record number for a six-month period. By value, deals rose 4.2% to $41.9 billion.

The industry holds a record $382.1 billion in investable funds for the region, data from Preqin showed.

This month, a consortium led by KKR & Co Inc invested $650 million in Vietnamese property firm Vinhomes JSC as parent Vingroup JSC revamps businesses.

Buyout firms are also considering the potential to take listed companies private, betting valuations that dropped during the pandemic could eventually yield profitable re-listing or sale opportunities.

A consortium involving General Atlantic and Warburg Pincus LLC is set to take Chinese online classified advert firm 58.com Inc private in a deal valuing it at about $8.7 billion - the region’s largest private equity take-private deal so far this year.

To be sure, there is increased uncertainty for deals to close, bankers said, as buyers may seek bigger discounts to compensate for an economic outlook made less predictable by the virus.

“If there is a long wait before a widely available and effective vaccine for COVID-19 is found, then we will have to ask difficult questions about the prospects of sectors such as tourism, conferences & conventions, cruises, gaming, hospitality, aviation, and certain categories of leisure services,“ said Cho Tse Wei, head of strategic advisory at DBS Bank. -Reuters

source https://www.thesundaily.my/business/domestic-consolidation-to-drive-asia-ma-revival-during-coronavirus-fallout-DX2642612

UK economy shows biggest drop in 40 years in early 2020

LONDON: Britain's economy shrank by the most since 1979 in early 2020 as households slashed their spending, according to official data that included the first few days of the coronavirus lockdown.

Gross domestic product (GDP) dropped by a quarterly 2.2% between January and March, the Office for National Statistics (ONS) said. That was below the median forecast in a Reuters poll of economists for a fall of 2.0%.

Prime Minister Boris Johnson will set out his plan to speed up the British economy's recovery later today when he will promise to fast-track £5 billion (RM26 billion) of infrastructure investment.

Britain's economy may have contracted by 20% in the first half of 2020, the Bank of England (BoE) said earlier this month as the full effects of the lockdown hammered most sectors in the April-June period. The BoE has said the slump in the economy this year could be the worst in three centuries.

Today's figures – which build on previously released data for the first quarter – showed a surge in household saving as their spending collapsed by the largest amount, in cash terms, since records began in the 1950s.

"The lockdown of most businesses on March 23 meant that households were unable to spend even if they wanted to," said Thomas Pugh, UK economist at Capital Economics, adding that it will take the economy until 2022 to regain its pre-crisis level.

The household savings ratio shot up to 8.6% in the first quarter from 6.6% at the end of 2019.

The ONS has previously estimated that Britain's economy shrank by a record 20.4% in April from March but there have been some signs of recovery more recently.

The ONS also said Britain's current account deficit widened by more than expected in the first three months of 2020.

The balance of payments deficit – a long-standing concern for investors because it leaves Britain reliant on foreign inflows of cash – grew to £21.1 billion in the first quarter, compared with a median forecast of £15.4 billion in a Reuters poll of economists.

Stripping out volatile movements of gold and other precious metals, the current account deficit narrowed slightly, the ONS said. – Reuters

source https://www.thesundaily.my/business/uk-economy-shows-biggest-drop-in-40-years-in-early-2020-BX2642388

PPI falls 5.5% in May 2020

PETALING JAYA: The Producer Price Index (PPI) of local production which measures costs for goods at the factory gate decreased 5.5% year-on-year in May 2020, marking the third consecutive month in a row of the index to fall into negative territory.

Out of 1,063 items covered in PPI, 42.9% of items recorded price increase in May 2020 as compared to May 2019. On the contrary, 49.9% of items showed a decline while 7.2% of items were unchanged.

Chief statistician Malaysia Datuk Seri Dr Mohd Uzir Mahidin said the decrease in the overall index was driven by the decline in the index of mining (-52.7%) due to the slump in the global commodity prices namely crude oils and natural gas. In addition, water supply (-1.1%), manufacturing (-0.8%) and electricity & gas supply (-0.2%) were also contributed to the decrease in the index.

Conversely, the index of agriculture, forestry & fishing edged up by 5.5%. PPI of local production for the period of January-May 2020 registered a decrease of 1.8% as compared to the same period last year.

As compared to the previous month, the PPI of local production declined marginally by 0.2% in May 2020. This marginal decline was supported by a 16.6% increase in the mining index which offset the fall in four other industries: agriculture, forestry & fishing (-4.5%), manufacturing (-0.8%), electricity & gas supply (-0.3%) and water supply (-0.3%). This was the first positive in the mining index after declining for fourth consecutive months since January 2020.

The PPI of local production by stage of processing in May 2020 for crude materials for further processing and intermediate materials, supplies & components decreased 26.6% and 0.9% respectively as compared to the same month of the preceding year. Meanwhile, finished goods rose 0.2%.

source https://www.thesundaily.my/business/ppi-falls-55-in-may-2020-YB2641256

Sapura Energy refutes allegations in social media

PETALING JAYA: Sapura Energy Bhd has refuted all innuendos, allegations and unfounded allegations made about the company in the social media of late.

“As a listed company, the board of directors subscribes to the guidelines and rules of the Main Market Listing Requirements of Bursa Malaysia Securities Bhd and all other relevant authorities; and is

bound by high standards of corporate governance stipulated in the Malaysian Code on Corporate

Governance,“ Sapura Energy said in a statement today.

“The board of directors has always and continues to act in the best interests of the company,“ it added.

At 10.36am, Sapura Energy jumped 5.56% to 9.5 sen on 81.52 million shares traded after it returned to the black with a RM14.21 million net profit in its first quarter ended April 30, 2020.

source https://www.thesundaily.my/business/sapura-energy-refutes-allegations-in-social-media-AB2641103

Norwegian Air cancels 97 Boeing MAX and Dreamliners, claims compensation

OSLO: Norwegian Air has cancelled orders for 97 Boeing aircraft and will claim compensation from the U.S. plane maker for the grounding of the 737 MAX and for 787 engine troubles that hit its bottom line, the Oslo-based carrier said on Monday.

The airline cancelled 92 of the 737 MAX jets, five 787 Dreamliners and so-called GoldCare service agreements related to both aircraft.

"Norwegian has in addition filed a legal claim seeking the return of pre-delivery payments related to the aircraft and compensation for the company's losses related to the grounding of the 737 MAX and engine issues on the 787," it said.

Norwegian did not specify the amount it would seek to claim from Boeing, which it had been in talks with about compensation. Neither company was immediately available for comment.

The problematic Trent 1000 engines, used on the Dreamliners, were made by Rolls-Royce, which Norwegian has been in a dialogue with about compensation. Monday's statement did not say whether Norwegian would file a legal claim against Rolls-Royce.

The European budget carrier, which revolutionised transatlantic travel by offering cheap fares, was struggling before the COVID-19 pandemic brought the airline industry to its knees. One reason was the grounding of the 737 MAX plane in March 2019 following the second of two fatal crashes that together killed 346 people. Norwegian had 18 MAX passenger jets in its 163-aircraft fleet at the time.

Originally a small regional airline in Scandinavia, Norwegian made its breakthrough on the global stage with a multi-year order in 2012 for up to 372 aircraft, of which 222 were from Boeing and 150 from Airbus.

News of the cancellation comes as Boeing on Monday began a crucial set of certification flight testing of the MAX as the aircraft maker hopes to overcome its greatest crisis. - Reuters

source https://www.thesundaily.my/business/norwegian-air-cancels-97-boeing-max-and-dreamliners-claims-compensation-LA2640973

China’s June factory activity quickens, but exporters struggle amid pandemic

BEIJING: China's factory activity expanded at a stronger pace in June, as the economy continues to recover after the government lifted strict lockdowns and ramped up investment, but export orders remained weak as the global coronavirus crisis shatters demand.

The official manufacturing Purchasing Manager's Index (PMI) came in at 50.9 in June, compared with May's 50.6, National Bureau of Statistics (NBS) data showed on Tuesday, and was above the 50.4 forecast in a Reuters poll of analysts.

The 50-point mark separates expansion from contraction on a monthly basis.

The uptick was underpinned by the quickening pace of expansion in production, which grew to 53.9 in June from 53.2 the previous month.

The forward-looking total new orders gauge also brightened, rising to 51.4 from May's 50.9, suggesting domestic demand is picking up as industries from non-ferrous metals to general equipment and electrical machinery all showed an improvement.

But export orders continued to contract, albeit at a slower pace, with a sub-index standing at 42.6 compared to 35.3 in May, well below the 50-point mark.

"Although the PMI index picked up this month and the manufacturing sector recovered steadily, it is also important to see that uncertainty remains," NBS official Zhao Qinghe said in a statement accompanying the data.

DOWNWARD PRESSURE

High frequency Chinese data tracked by Nomura showed a flurry of better-than-expected indicators recently, including power production, property and auto sales, prompting the brokerage to raise its GDP growth forecast for the second quarter to 2.6% from 1.2%.

While higher spending, particularly in infrastructure, was expected to boost economic activity for the rest of this year, some analysts have warned against being overly optimistic about the outlook given uncertainties around the COVID-19 pandemic.

Export demand has remained weak with infections steadily rising across the world. Some fear a worldwide recession might turn out to be more pronounced than expected in the event a second wave of coronavirus cases force many countries to reimpose strict lockdowns.

Adding to the worries domestically is a cluster found earlier this month, which has steadily grown to more than 200 cases associated with a food market emerged in Beijing, underscoring the ever present economic threat posed by the virus.

Beijing has announced a range of measures to bolster the economy and support jobs, but the global downturn has meant activity remains patchy in most sectors.

Despite stronger demand, factories reduced headcount for the second time in June since they reopened, with a sub-index falling to 49.1 from 49.4 in May, the survey showed.

A separate official survey on China's services sector showed activity expanded at a faster clip in June. The non-manufacturing Purchasing Managers' Index rose to 54.4, from 53.6 in May, suggesting steadily stabilising business confidence.

Still, a sub-index for construction activity, a key driver of growth, fell to 59.8 from 60.8 the previous month, the survey showed, highlighting the uneven nature of the recovery. - Reuters

source https://www.thesundaily.my/business/china-s-june-factory-activity-quickens-but-exporters-struggle-amid-pandemic-IA2640903

Lotte Chemical on track to be top-tier Asean petchem firm

KUALA LUMPUR: Lotte Chemical Titan Holding Bhd’s vision to become a top-tier petrochemical company in the Southeast Asia region by 2024 remains intact, despite the current market turbulence.

In a statement issued after the company’s virtual annual general meeting today, it said this vision would be achieved through continuous business enhancement as well as being constantly on the lookout for new value-accretive business development and expansion opportunities.

It said maintaining strong financial resilience remained the pivotal factor for business sustainability during this critical period, while its healthy balance sheet and net cash-zero debt position with more than RM4 billion of cash would enable the company to better manage the expected market volatilities.

“Arising from the business volatility due to the COVID-19 pandemic, the company is also undertaking a strategic review on the timing and progress of the Indonesia LINE project and the company expects to update the market in due course.

“This will also be further bolstered by the strong support from its parent company, LOTTE Chemical Corporation, which is committed to supporting the company’s continuous growth in the Southeast Asia region,” it said.

For the first half of 2020, the company said that demand and sales were sluggish due to the global lockdown caused by the COVID-19 pandemic and slowing of global economic activities.

Nevertheless, business activities should begin to gradually normalise and improve for the second half of 2020, as it expects lifting of major lockdowns worldwide starting from the third quarter of the year.

For the financial year ended Dec 31, 2019, the company registered sales revenue of RM8.44 billion and profit after tax stood at RM442.6 million.

On the back of satisfactory performance for 2019, it paid a dividend of 7 sen per share, which amounted to about RM161 million distributable dividend to its shareholders. -Bernama

source https://www.thesundaily.my/business/lotte-chemical-on-track-to-be-top-tier-asean-petchem-firm-NK2639179

Hektar REIT introduces tenant support programme

KUALA LUMPUR, June 29 (Bernama) -- Hektar Real Estate Investment Trust (Hektar REIT) has introduced the Tenant Support Programme across shopping centres under its portfolio as a relief measure for tenants affected by the Movement Control Order (MCO) to curb COVID-19.

Executive director and chief executive officer Datuk Hisham Othman said the programme would be able to help the majority of the 600 tenants in six shopping centres -- Subang Parade in Subang Jaya, Selangor; Mahkota Parade in Melaka; Wetex Parade and Classic Hotel in Muar, Johor; Central Square in Sungai Petani, Kedah; Kulim Central in Kulim, Kedah; and Segamat Central in Segamat, Johor.

“Hektar’s Tenant Support Programme will help to ease cash flow challenges that tenants may be facing due to the sudden drop in revenue during the MCO,” he said.

The measures also included rental rebates, Hisham said during a virtual media briefing after the company’s annual general meeting here today.

He said the approval and arrangement for each tenant would vary, depending on the specific circumstances of individual tenants such as the severity to which the business was affected.

Hisham said following guidelines from the Health Ministry and Malaysia Shopping Malls Association (PPK), the management had implemented measures to manage the coronavirus outbreak, covering employees, shoppers, tenants and vendors, and to tackle key issues.

“Hektar remains committed to supporting public health and safety amid the COVID-19 outbreak,” he said.

He said among the key issues were promoting awareness and safety guidelines, issuing real-time updates on email and messenger platforms and ensuring all staff were informed of the latest procedures; daily thermal scans and face masks for front-line and customer-facing staff; and restricting travel, training and events to minimise exposure and contact.

Other key issues are self-quarantine and remote work programmes; and frequent, routine sanitisation and cleaning measures of all public utilities and touch point areas.

“We have also developed Emergency Response Procedures to tackle live infection cases including case management and escalation procedures, communication to the media and public, control measures, collaboration with public health authorities and post-incident deep cleaning activities,” he said.

Meanwhile, Hisham said the overall occupancy for 2019 remained steady at 92.5 per cent, marking the 13th year of an overall occupancy rate over 90 per cent, with visitor traffic at Hektar REIT’s portfolio remaining stable at 32.3 million visits -- slightly higher than the previous year.

“Rental reversions were positive in Wetex Parade with an increase of 24.8 per cent, Kulim Central with 15.6 per cent, Segamat Central with 10.6 per cent and Central Square with 9.2 per cent,” he said.

He added that the main decline was in Subang Parade due to initiatives in anticipation for the new supermarket anchor. -Bernama

source https://www.thesundaily.my/business/hektar-reit-introduces-tenant-support-programme-EK2639161

Advancecon inks MOU to develop rooftop solar PV system

PETALING JAYA: Advancecon Holdings Bhd’s wholly-owned subsidiary Advancecon Solar Sdn Bhd (Adv Solar) has entered into a memorandum of understanding (MOU) with YHI Manufacturing (Malaysia) Sdn Bhd to develop rooftop solar photovoltaic system under the Net Energy Metering (NEM) scheme on the rooftop of YHI’s premises in Kawasan Perindustrian Bukit Rambai, Malacca with the adoption, execution and implementation of the Supply Agreement with Renewable Energy (SARE) between YHI and Adv Solar with Tenaga National Bhd (TNB).

Adv Solar will fulfil the role of engineering, procurement and construction of a 2,663.28kWp solar photovoltaic system that will be installed on YHI’s premises; and will invest and own the solar photovoltaic system throughout the terms of the SARE agreement. It will fulfil the role of operations and maintenance of the solar photovoltaic system throughout the terms of the SARE agreement.

YHI will give consent and allow Adv Solar to install the solar photovoltaic system on YHI’s premises during the terms of the SARE agreement period; and ownership, operations and maintenance of the solar photovoltaic system shall be transferred to YHI after the expiration of the terms of the SARE agreement.

“In the event the MOU results in definitive agreement between Adv Solar and YHI on the project, the implementation thereof is expected to have a positive impact to the future earnings of Advancecon group,” Advancecon said.

source https://www.thesundaily.my/business/advancecon-inks-mou-to-develop-rooftop-solar-pv-system-GK2639080

SCGM sees return to black with PPE expansion

PETALING JAYA: SCGM Bhd posted a net profit of RM6.83 million in its fourth quarter ended April 30, from a net loss of RM7.14 million reported in the corresponding quarter of the previous year.

This was driven by the maiden contribution from higher-profit products of face shields, reduced resin prices, lower interest expenses, higher gain on foreign exchange, partial utilisation of unutilised reinvestment allowance brought forward from prior year, and partial recognition of deferred tax asset on unabsorbed reinvestment allowance previously not recognised.

Revenue for the period fell slightly by 2% to RM49.66 million from RM50.7 million reported previously.

For the full financial year, SCGM reported a net profit of RM17.28 million from a net loss of RM5.12 million recorded in the previous financial year.

Revenue for the period slowed 4.1% to RM210.48 million from RM219.57 million reported previously.

For the period, the group’s directors have proposed a fourth interim single tier dividend of 1.5 sen per share payable on July 29.

In its Bursa filing, the group stated that it will stay on course to serve recession-proof segments; the food and beverage (F&B) sector as its primary target, and medical personal PPE as its secondary market.

For the F&B segment, SCGM will further intensify its marketing efforts in the domestic and export markets to continue growing its sales of its packaging products and emphasize on the fulfilling demand for customised F&B packaging.

For the PPE segment, it will expand its product portfolio by adding face masks to its current range of face shields.

Furthermore, the group revealed that the consolidation of its rented manufacturing plant in Telok Panglima Garang, Selangor and its headquarters and manufacturing plant in Kulai, Johor since March 2020 is expected have a positive impact for the group due to increased output per worker and improved economies of scale as well as lower operating cost.

source https://www.thesundaily.my/business/scgm-sees-return-to-black-with-ppe-expansion-CK2639062

QL sees slight contraction to its net profits from higher tax, finance cost

PETALING JAYA: QL Resources Bhd’s net profit contracted marginally by 0.7% to RM42.97 million in its fourth quarter ended March 31, from RM43.26 million reported in the corresponding quarter of the previous year due to higher tax expense and finance costs.

Revenue for the quarter rose 8.4% to RM979.42 million from RM903.77 million reported previously.

According to the group’s Bursa disclosure, its marine product manufacturing business earnings for the period rose by 20% to RM41.47 million on the back of higher sales from surimi, fishmeal and surimi-based products.

Its palm oil activities saw a 68% decline in earnings to RM3.34 million from lower sales and forex translation loss.

Meanwhile, QL Resources’ integrated livestock farming saw an 11% increase in earnings to RM17.98 million from higher sales, feed raw material trade and contribution from FamilyMart.

For the financial year ended March 31, 2020, its net profits rose 10.4% RM293.32 million, from RM216.78 million recorded in the previous financial year.

Revenue for the period grew 14.7% to RM4.15 billion from RM3.62 billion reported previously.

For the period, the group’s directors have proposed a final single tier dividend of 4.5 sen per share subject to the approval of its shareholders in the upcoming annual general meeting.

In regards to the group’s prospects ahead, it stated that despite the severe Covid-19 pandemic crisis and impending economic recession, barring unforeseen Covid-19 resurgence, the management is still committed to strive for growth of QL’s resilient businesses in FY2021.

The group is also proposing to undertake a bonus issue of up to 811.21 million new ordinary shares on the basis of 1 bonus share for every 2 existing QL shares held.

“The proposed bonus issue serves to reward the existing shareholders of the company for their loyalty and continued support to QL and its subsidiaries and in conjunction to QL’s 20 years of listing,” it said.

The proposed bonus issue is expected to be completed by the fourth quarter this year.

source https://www.thesundaily.my/business/ql-sees-slight-contraction-to-its-net-profits-from-higher-tax-finance-cost-JL2638946

PNB appoints ex-Khazanah deputy MD as president, CEO

PETALING JAYA: Permodalan Nasional Berhad (PNB) has appointed Ahmad Zulqarnain Onn as group president and CEO effective July 1.

In a statement, PNB said it has received all the relevant regulatory approvals for the appointment of the new president and CEO, including from Yayasan Pelaburan Bumiputra, the PNB board and the regulatory authorities.

“Following this, the PNB board of directors welcomes Ahmad Zulqarnain, as part of PNB’s drive towards becoming a distinctive, world-class investment institution,” it said.

Prior to his appointment, Ahmad Zulqarnain was the deputy managing director at Khazanah Nasional Bhd. He was appointed as one of the two deputy managing directors in 2018, in charge of the strategic fund and managing Khazanah’s strategic holdings in government-linked companies (GLCs).

In addition, he headed the corporate strategy team in Khazanah.

source https://www.thesundaily.my/business/pnb-appoints-ex-khazanah-deputy-md-as-president-ceo-DL2638621

Hai-O’s Q4 net profit slips 7.6% from MCO impact

PETALING JAYA: Hai-O Enterprise Bhd net profits slipped 7.6% to RM9.57 million in its fourth quarter ended April 30, 2020 from RM10.35 million reported in the corresponding quarter of the previous year due to impact from the implementation of the movement control order (MCO) to the group’s business activities.

Revenue for the period fell 23.3% to RM53.69 million from RM70 million reported previously.

According to the group’s Bursa filing, its multi level marketing division’s pre-tax profits for the quarter fell by a marginal 1.5% to RM10.2 million thanks to a higher sales of ‘small ticket’ items during from its e-commerce platform during the MCO period, cost optimisation initiatives, as well as higher advertising & promotion subsidy from suppliers.

Its wholesale division saw pre-tax profits decline by 54.4% to RM900,000 from lower revenue and an estimated credit loss of RM1.1 million as required under MFRS 16 coupled with lower contribution from inter-segment sales.

Meanwhile, Hai-O’s retail division was hit hardest by the MCO, as it reported a pre-tax loss of RM900,000 compared to a pre-tax profit of RM400,000 registered previously.

Its other division posted a pre-tax profits decline of 26.1% to RM3.1 million dragged by lower manufacturing contribution, RM500,000 compensation paid of a sealed judgment arising from an alleged early termination of a tenancy agreement for one of the investment properties.

For FY20, its net profits for the year stood at RM32.23 million, a 32.5% decline from RM47.74 million recorded in the previous financial year.

Revenue for the period fell 22.3% to RM255.16 million from RM328.41 million reported previously.

For the full financial year, the group has recommended a final single tier dividend of 4 sen subject to the approval of its shareholders in the upcoming annual general meeting.

In regards to its prospects ahead, the group stated the unprecedented challenges faced by businesses and individuals during this unexpected and extended health and economic crisis will inevitably have a prolonged impact on consumer sentiment in the midst of rising unemployment.

“Amidst the challenges, the group has delivered resilience in the latest quarter under review as operating profit was maintained despite an almost 20% decline in revenue from the immediate preceding quarter,” it told bursa.

Although the outlook remains highly uncertain in light of the new norm, Hai-O stated that it is optimistic over its ability to face and adapt to sudden and unexpected changes, which will place it in good stead to ride challenges ahead.

Moving forward, the group said it will continue to optimise costs, re-strategise business plans, and work to further strengthen our existing digital infrastructure, enhance our presence in social media and digital advertising to reach out to existing and potential customers.

It stated that with the Covid-19 pandemic it hopes fortify its position as a premier healthcare company in Malaysia.

With that, the board expects Hai-O to remain profitable amidst the challenging business environment in the next financial year.

source https://www.thesundaily.my/business/hai-o-s-q4-net-profit-slips-76-from-mco-impact-IL2638309

Manila promises thorough Wirecard investigation, looks at 3 local payments firms

MANILA: The Philippines' anti-money laundering agency today said it would conduct a "swift and thorough" investigation into scandal-hit German payments firm Wirecard AG and that it has drawn up an initial list of people and entities of interest.

Wirecard's collapse last week and admission that US$2.1 billion (RM9 billion) of its cash probably didn't exist came after auditor EY refused to sign off on accounts for 2019, adding there were clear indications of an elaborate fraud involving multiple parties around the world.

The Southeast Asian country became involved after the German firm initially claimed it kept the $2.1 billion in two Philippine banks.

Mel Georgie Racela, executive director of the Philippines' Anti-Money Laundering Council (AMLC), said entities of interest include three local firms - Centurion Online Payment International, PayEasy Solutions and ConePay International.

"As we continue to monitor developments and dig further, we may be able to identify more entities and individuals," he told Reuters.

The Financial Times in March 2019 said the three firms were Wirecard partners.

Reuters could not determine their relationship to Wirecard. PayEasy did not immediately respond to e-mails and its telephone number was disconnected. Centurion's number was out of service and ConePay could not be reached for comment, with no contact details on its website or its annual filing with the corporate regulator.

Wirecard Philippines did not immediately respond to a request for comment.

Philippine central bank governor, Benjamin Diokno, who chairs the AMLC, declined to say who else the probe might look at.

The central bank has said no money from Wirecard entered the Philippines' financial system. The local lenders named by the German firm – the Bank of the Philippines Islands and Banco de Oro Unibank - have also said it was not a client.

Wirecard Chief Executive Markus Braun was arrested in Germany last week and has been released on bail. German media have reported that German prosecutors will also seek the arrest of Jan Marsalek, its former chief operating officer.

Justice Secretary Menardo Guevarra told Reuters on Friday that Marsalek was in the Philippines on June 23 and immigration records showed he flew to China from Cebu the next day.

But Guevarra added that Marsalek was not captured leaving the country on airport surveillance cameras and there is no record of a flight to China from Cebu on June 24, suggesting he may still be in the Philippines.

source https://www.thesundaily.my/business/manila-promises-thorough-wirecard-investigation-looks-at-3-local-payments-firms-CL2638260

UOA Development’s net profit doubles in Q1

PETALING JAYA: UOA Development Bhd’s net profit for the first quarter ended March 31, 2020 doubled to RM124.22 million from RM59.86 million a year ago attributed mainly to progressive recognition of the on-going development projects from United Point Residence, South Link Lifestyle Apartments and Sentul Point.

Revenue for the quarter under review increased by 53.4% year-on-year to RM375.27 million from RM244.67 million.

New property sales for the quarter was RM114.8 million with contributions mainly from projects such as United Point Residence, The Goodwood Residence, Aster Green Residence, Sentul Point, South Link Lifestyle Apartments and other sale of inventories. Unbilled sales stood at RM640.9 million as at March 31, 2020.

source https://www.thesundaily.my/business/uoa-development-s-net-profit-doubles-in-q1-HA2637823

AMMB’s Q4 net profit declines 46% to RM247.5m

PETALING JAYA: AMMB Holdings Bhd saw its net profit for its fourth quarter ended March 31 fall 46.1% to RM247.54 million, from RM459.67 million in the previous corresponding quarter, while revenue dipped 5.1% to RM2.21 billion from RM2.33 billion.

According to the group’s Bursa announcement, interest income from securities grew mainly from hold to collect and sell securities, while interest income from customer lending decreased attributable to hire purchase financing mitigated by increase in term loans and housing loans.

The group’s core interest bearing assets recorded a growth in gross balances by RM5.37 billion from March 31 2019 to RM107.2 billion. The group’s impaired loans ratio was at 1.7%.

Deposits from customers was higher compared to March 31, 2019 at RM113 billion. Low cost deposits which constituted 25.5% of total deposits from customers increased compared to 23.3% as at March 31, 2019.

Fee based income recorded an increase of RM58.9 million driven by growth in income from wealth management and unit trust activities.

Funding costs decreased attributable to lower interest expense on customer deposits, term funding and debt capital. Interest on term funding and debt capital decreased due to redemption by the group. The decrease was offset by higher interest on securities sold under repurchase agreements.

For the full year, net proft was at RM1.34 billion, from RM1.5 billion previously. Revenue, however, was higher at RM9.32 billion, from RM9.12 billion.

A final dividend of 7.3 sen per share (FY19:15 sen), bringing the total dividend payout for the year to 13.3 sen and a dividend payout ratio of 30%.

AmBank Group CEO Datuk Sulaiman Mohd Tahir said following the conclusion of its Top 4 Strategy, which has put the group on a strong footing to navigate the economic uncertainties and challenges, particularly given the current Covid-19 pandemic.

“We started FY20 strongly, achieving over RM1 billion of core revenue in the first three quarters of the year, with higher net interest income and stronger trading and fee income, while the final quarter’s performance was impacted by the Covid-19 pandemic.

“Overall, we have achieved most of the key metrics set out in the Top 4 Strategy and our results are testament of our ability to execute. We look forward to the next phase of transformative growth as the group operates under our refreshed strategy and business plans,” he said.

Looking at 2021, Sulaiman said the group will remain steadfast in exercising credit vigilance, with greater emphasis being placed on n risk management, stress testing, capital planning and liquidity management in order to safeguard the group’s financial resilience.

“Operationally, we will continue our cost discipline and prioritise investments. The group will continue to drive operational efficiencies through simplification and automation in line with the second phase of our BET300 efficiency programme. We expect a gradual recovery of the economy, however, we will exercise caution against all aspects of risks in the short term.”

source https://www.thesundaily.my/business/ammb-s-q4-net-profit-declines-46-to-rm2475m-KA2637804

Coronavirus rekindles global trade disputes

BRUSSELS: At the start of the year, U.S.-China tensions were easing after their Phase I trade deal, while Washington, Brussels and Tokyo agreed on new global trading rules to curb subsidies. A relative calm had set in.

Then the new coronavirus struck.

Countries across the world imposed 222 exports curbs on medical supplies and medicines and in some cases food, according to Global Trade Alert, a Swiss monitoring group. For medical products, it was more than 20 times the usual level.

Those curbs are now being lifted, but the pandemic has reinforced protectionist arguments by highlighting how global supply chains can deprive people of essential medical protection and disrupt food supplies, as well as threaten jobs.

U.S. President Donald Trump has said he wants to cut ties with China, the European Union is planning barriers to state-backed investment from China and elsewhere and China is demanding declarations that food imports are virus-free.

Former EU trade chief Cecilia Malmstrom said there was a "worrying" tendency towards protectionism in the world and the re-emergence of trade conflicts briefly paused by the health crisis.

"Trade-wise we should be concerned," she told a seminar on Wednesday.

The World Trade Organization said on Tuesday that global trade in goods was set for a record fall this year and that wider restrictions could see a 2021 rebound falling short.

In the past fortnight, the United States has withdrawn from negotiations with European countries over a tax on digital firms and pledged a "broad reset" of its set of tariffs agreed with World Trade Organization partners.

It has also threatened tariffs on a new range of European products, including fresh olives, bakery items and gin, to maintain pressure in a 16-year dispute over aircraft subsidies.

RHETORIC VS REALITY

To some extent, political rhetoric is running ahead of reality: U.S. China trade rose in April after COVID-19-related falls and U.S. officials have said China is committed to buying more U.S. goods in line with the Phase 1 deal.

Chinese leaders and EU chiefs met virtually last Monday, although Brussels told China to make good on its promise to allow greater access for European companies and criticised its actions on the coronavirus and Hong Kong.

China offered deeper cooperation on COVID-19 and urged the EU to relax export controls. On Wednesday, Beijing said it was opening up seven more sectors to foreign investors.

Beijing and Brussels are keeping up contacts with Washington and some progress has been made in limited EU-U.S. talks on food standards and technology cooperation.

Senior EU and U.S. trade officers are holding talks every three weeks, officials say. China's most senior diplomat Yang Jiechi also met with U.S. Secretary of State Mike Pompeo in Hawaii on Wednesday, although Trump renewed his threat to cut ties with Beijing the next day.

BIDEN

Trade is a bellwhether for the cooperation and trust needed to help economies recover, particulary those of smaller countries, said Rohinton Medhora, president of Canada-based think tank the Centre for International Governance Innovation.

Both China and Europe are bracing for rocky relations in the leadup to the U.S. presidential election, but see some hope if Trump's Democrat challenger Joe Biden wins.

"Biden as president is the only chance for China-U.S. relations to regain rationality," said Zhu Feng, dean of the Institute of International Studies at Shanghai's Fudan University.

But he did not expect relations to change dramatically in the short term. There is broad bipartisan support in the U.S. Congress for being tough on China, and European optimism over more cooperation with Washington is also tempered.

Reinhard Buetikofer, a trade expert of the Greens in the European Parliament, did not envisage a return to the "golden years" of the Clinton or Obama administrations if Biden won.

"I don't expect Biden to be soft on Europe... The mood has changed to a huge degree, not only in Washington, even more so in the U.S. states," he said, although he did envisage an approach more tuned to creating alliances.

U.S. figures show a trade deficit with the EU in goods and services of $109 billion in 2018.

Rebalancing the relationship with Europe, including on trade, was a core U.S. national interest, according to Hosuk Lee-Makiyama, director of trade think-tank ECIPE.

"The difference between the current administration, or the next or previous is really more about table manners," he said. - Reuters

source https://www.thesundaily.my/business/coronavirus-rekindles-global-trade-disputes-FA2637575