Top Glove engaging with US CBP towards resolution in August

PETALING JAYA: Top Glove Corp Bhd expects to arrive at an agreement on remediation within the month of August 2020 in relation to the detention order by the US Customs and Border Protection (CBP) on its products, upon which the company plans to commence remediation payment immediately.

“This will enable us to continue delivering our gloves especially to first respondents, whose safety and lives are on the line during this critical time,“ Top Glove said in a statement today.

The US CBP had on July 15 enforced a detention order on disposable gloves manufactured by Top Glove’s subsidiaries Top Glove Sdn Bhd and TG Medical Sdn Bhd, believed to be related to labour issues.

The glovemaker said it has been in cordial and constructive engagement with the US CBP via its headquarters in Malaysia as well as its US office on the matter since July 17, 2020.

“In addition, we have appointed an independent consultant to advise us on this matter.”

source https://www.thesundaily.my/business/top-glove-engaging-with-us-cbp-towards-resolution-in-august-DY3230764

SC: Bursa to ensure systems integrity, reliability

PETALING JAYA: The Securities Commission Malaysia (SC) has instructed Bursa Malaysia Bhd to conduct a thorough systems review, including scalability, resilience and recoverability, to minimise the risk of further issues in the future following the trading halt on the local stock exchange on July 16, 2020.

SC chairman Datuk Syed Zaid Albar said the SC has reviewed the incident report and met with senior officials of Bursa Malaysia to assess the measures being taken to address the situation.

This is the second system glitch resulting in a trading halt that has occurred in seven months. Trading was also halted in the last 15 minutes of trading hours on Dec 19, 2019.

“We take occurrences of technical glitch at our market infrastructures including Bursa Malaysia very seriously. In view of the critical role they play in our market, it is vital that their systems remain resilient and always available. It is important they adopt best practices and latest technology to ensure continued seamless market operations. The management of Bursa Malaysia has assured the SC that the problem has been rectified,” he said in a statement today.

The SC will continue to closely engage with Bursa Malaysia, as well as other market participants and stakeholders to ensure that the overall trading ecosystem and market intermediaries are offering reliable service to investors and end users.

source https://www.thesundaily.my/business/sc-bursa-to-ensure-systems-integrity-reliability-LG3228793

SC issues new guidelines on conduct of directors of listed issuers and other subsidiaries

KUALA LUMPUR: The Securities Commission Malaysia (SC) today issued new Guidelines on Conduct of Directors of Listed Issuers and Their Subsidiaries (Guidelines) to strengthen board governance and oversight of listed issuers and their subsidiaries.

SC chairman Datuk Syed Zaid Albar said the issuance of these guidelines was in line with the SC’s Corporate Governance Strategic Priorities (2017-2020) which seeks to, among others, promote the proper discharge of directors’ fiduciary duties among corporate Malaysia.

The guidelines set out guidance on duties and responsibilities of boards in company group structures and requirements for the establishment of a group-wide framework to enable, among others, oversight of group performance and the implementation of corporate governance policies, he said in a statement.

"The new guidelines take into account the evolving Malaysian corporate governance landscape, lessons learnt from the SC’s regulatory work in enforcing corporate governance breaches and the need to ensure that Malaysia’s framework remains relevant and effective.

"In discharging his fiduciary duties, a director owes the company duties of disclosure, honesty, candour and the duty to favour the company’s interest over his own," he said.

The introduction of these guidelines was one of the measures approved by the Special Cabinet Committee on Anti-Corruption (JKKMAR) in 2019.

The guidelines come into effect on July 30, 2020, with the exception of Chapter 5 on Group Governance which will come into effect on January 1, 2021. The guidelines were available at the SC website.

source https://www.thesundaily.my/business/sc-issues-new-guidelines-on-conduct-of-directors-of-listed-issuers-and-other-subsidiaries-CG3228895

Malaysian mid-sized corporations must be more risk conscious, says survey

KUALA LUMPUR: Mid-sized corporations in Malaysia have indicated the need for enterprises to be more risk conscious than before the COVID-19 pandemic, according to a Standard Chartered survey.

According to the bank’s mid-sized corporates pulse survey, over 73 per cent of respondents in Malaysia indicated that the need to be more risk conscious outweighed that of making their operations more agile and flexible (69 per cent), ahead of the desire to use technology to differentiate from competitors (65 per cent).

In all of Asia, on the other hand, over 70 per cent of medium enterprises surveyed prioritised making their operations more agile and flexible to support business growth.

“As markets emerge from lockdown restrictions and businesses begin on their road to recovery, the need to ensure resilience in their operating model ranked above the relevance of using technology as a differentiator from competitors and providing more value-added solutions to customers,” it said.

The survey, which was conducted with decision-makers from more than 200 mid-sized corporates across mainland China, Hong Kong, India, Malaysia and Singapore, also highlighted the vulnerability of these businesses due to COVID-19.

Over 60 per cent of the respondents indicated a reduction in monthly revenues by between 20 per cent and 50 per cent, with more than half of them foreseeing that it would take at least six to 12 months to recover from the disruptive impact and stabilise operations again.

However, sentiments were slightly more optimistic in Malaysia, where 50 per cent of the respondents indicated between 20 per cent and 50 per cent reduction in monthly revenues, and 62 per cent foreseeing that it would take at least six to 12 months to recover from the impact of COVID-19.

Standard Chartered global head of commercial banking Jiten Arora said mid-sized corporates are often more vulnerable to disruptions compared to their larger counterparts due to limitations around financing support, as well as uncertainties about the end-consumer demand.

“Despite these challenges, there is an opportunity for new profitable growth if these businesses can use their size to their advantage and be nimbler in innovating and transforming their ways of working to become more resilient,” Arora added. - BERNAMA

source https://www.thesundaily.my/business/malaysian-mid-sized-corporations-must-be-more-risk-conscious-says-survey-MF3227916

Cognisance of banking gives us the edge to craft people-centric policies - Tengku Zafrul

KUALA LUMPUR: The ability to have in-depth understanding of banking and the financial sector has given a shot in the arm for the Ministry of Finance to implement various initiatives including the six-month blanket moratorium for the rakyat’s benefit, says Tengku Datuk Seri Zafrul Abdul Aziz (pix).

The Finance Minister said despite the initial backbites during the early days of his appointment when people said he would care more for the finance sector due to his position as a former banker, what has happened is the other way round.

“I was a banker for most of my career but what is important now is how to help fellow Malaysians. My understanding of banks, their capabilities and the initiatives they could take has appeared to be an advantage,” he told Bernama in an exclusive interview today.

He added that his experience has enabled him to communicate better with his former peers to ensure the best initiatives are given during this difficult time faced by all Malaysians.

When asked on the targeted approach moratorium, Tengku Zafrul said when the initiative was announced under the Prihatin Rakyat Economic Stimulus Package (PRIHATIN), about 7.7 million people including those who were not impacted financially by COVID-19 had taken it.

“For the targeted approach, we estimate about three million Malaysians will benefit from it which include those who have lost their jobs as well as facing pay cuts,” he said.

According to the Department of Statistics, more than 83.5 per cent or 12.7 million employees have returned to work.

Prime Minister Tan Sri Muhyiddin Yassin said while the government recognises the economy is on a recovery path and a vast majority of Malaysians are back at work, this positive scenario does not apply to all sectors.

“I understand there are businesses that are still unable to operate fully and there are those who have lost their jobs and sources of income.

“Hence, the government made the decision to extend the moratorium for the most deserving ones after discussing with the Finance Ministry and Bank Negara Malaysia,” he said yesterday when announcing the moratorium extension and targeted approach.

Tengku Zafrul stressed that if a blanket moratorium continuity is given; the banking sector would face an adverse impact with some banks already feeling the heat.

“What is important is that banks need to lend to drive up the economy. In the last six months, banks’ opportunity to lend has been reduced by RM79 billion. Hence, the targeted approach is taken to balance the need to support the rakyat and also to support businesses,” he said.

Among others, Affin Bank has said that under the six-month blanket moratorium, the financial institution has incurred RM80 million in total losses for not charging its customers for six months under the moratorium.

Its president and group CEO Wan Razly Abdullah Wan Ali said 63 per cent of its RM45 billion loan book is currently inactive under the moratorium.

According to Bloomberg data, Affin, whose majority shareholder is the Armed Forced Fund Board (LTAT), has the smallest market capitalisation of RM3.23 billion among the nine banks in the country.

This is followed closely by Alliance Bank at RM3.31 billion, Bank Islam (RM6.29 billion) and AmBank (RM8.89 billion).

Analysts today have maintained the forecast for the banking sector following the announcement yesterday.

Kenanga Research in its note today said that it does not expect the measures to be as punitive on the banks as the current arrangement and said the targeted approach is consistent with Bank Negara Malaysia's recent signal.

“While we believe these measures will serve to keep asset quality in check in the near term, visibility further out remains cloudy and thus, it is difficult to gauge the adequacy of loan provisions at this juncture," it said.

Additionally, the research house said it does not discount the possibility that these loans may also require higher expected credit loss reserves, leading to upside risk to 2020-forecast credit cost guidance, which will push the banks forward into a cleaner slate. -- BERNAMA

source https://www.thesundaily.my/business/cognisance-of-banking-gives-us-the-edge-to-craft-people-centric-policies-tengku-zafrul-EF3227897

Singapore extends $60b swap facility with Fed through March 2021

SINGAPORE: Singapore's central bank and the U.S. Federal Reserve have extended a $60 billion swap facility through to March 2021 to bolster U.S dollar lending to firms in the city-state and the wider region, Singapore said on Thursday.

The facility launched in March this year has already seen around $22 billion provided to banks for lending, the Monetary Authority of Singapore (MAS) said.

The Fed's swap arrangements with central banks globally has "provided a critical backstop" for funding and helped "maintain stability" of financial markets during the pandemic, MAS added. - REUTERS

source https://www.thesundaily.my/business/singapore-extends-60b-swap-facility-with-fed-through-march-2021-IC3224659

US braces for terrible GDP report, rise in jobless claims

WASHINGTON: US data reports Thursday are set to confirm the coronavirus pandemic caused a historic plunge in GDP as well as a worryingly high number of new unemployment filings.

Analysts forecast the economic crash in the second quarter was 35 percent annualized, while new claims for jobless benefits in the week ended July 25 will remain in the 1.4 million range as the COVID-19 continues to hammer businesses.

The data will underscore how the US failure to contain the virus has wrecked the world's largest economy.

Despite a promising rebound in June, July has seen a resurgence of cases across the country with several new one-day records, causing some states to roll back the reopening measures that benefitted sectors like retail and travel.

"Several high-frequency indicators... support our estimate of a material slowing in the pace of recovery beginning in July, as households and businesses curtail activity in response to a resurgence of new COVID-19 infections," IHS Markit said in an analysis.

Dependent on virus

Economists warn the situation will not get better until COVID-19 is stopped, and the Federal Reserve's rate-setting committee said Wednesday, "The path of the economy will depend significantly on the course of the virus."

Another concern weighing on the outlook is the lack of agreement in Congress on another relief measure to follow-up on the $2.2 trillion CARES Act passed in March.

The aid for businesses and the supplementary unemployment benefits for individuals, which expires Friday, have been credited with buoying consumer spending and saving jobs.

Without weighing in directly on the negotiations in Congress, Fed Chair Jerome Powell said Wednesday the recovery will depend on how much support the government provides, while warning the rise in virus cases is weighing on the economy.

The sharp decline in second-quarter GDP is expected, yet it will be historic nonetheless.

IHS Markit senior economist Ben Herzon said if the Commerce Department GDP data shows the economy contracting as much as predicted, it would be the steepest one-quarter decline since 1947.

And it would be far worse than the 8.4 percent contraction in the fourth quarter of 2008, the worst point of the global financial crisis.

"Implicit in the dramatic second-quarter decline in GDP is the beginning of recovery, as a huge decline in monthly GDP in April is partially reversed by increases over May and June," Herzon said.

Eroding jobs gains

Perhaps more worrying is the Labor Department jobless claims data for the week ended July 25 set to be released simultaneously with the GDP estimate on Thursday.

First time unemployment claims peaked in late March amid nationwide business shutdowns to stop the virus, and though they have been declining ever since, they remain much higher than those seen at the peak of the global financial crisis.

In the most recent data, initial claims rose 109,000 in the week ended July 18 to nearly 1.42 million, with an additional 974,999 filed under a program for people who would not normally be eligible.

The insured unemployment rate for people receiving benefits dropped 0.7 points to 11.1 percent, but Gorilla Trades strategist Ken Berman said he remains worried about the elevated level.

"The number of continuing claims is the more worrisome data point, as it could mean that the more layoffs will be permanent than analysts predicted," he said in an analysis.

That could push the national unemployment rate up in July - and keep it high. - AFP

source https://www.thesundaily.my/business/us-braces-for-terrible-gdp-report-rise-in-jobless-claims-MC3224583

Under the new normal, Raffcomm Group steps in to help companies get back to business

PETALING JAYA: It would not be an understatement to say that businesses all over the world were brought to its knees from the loss of operations after being forced to close under a variety of lockdown measures. In Malaysia though, things have slowly started to pick back up under the “new normal”, but in this new environment, getting back to “business as usual” has taken on a different meaning.

Companies need to resume their activities amid standard operating procedures (SOP), social distancing, and differences in the way people interact. As a result, businesses are looking into new ways to continue business as usual.

When it comes to important procedural matters such as obtaining company-related documentation, in the past, company secretaries would have to had to request for the relevant documents at the Company Commission of Malaysia’s (SSM) office.

However, this is where Raffcomm Group and its lineup of services come in. The group provides contactless online retrieval of documents, which are essential for daily routine activities such as banking applications, grant applications, and even the recently announced Prihatin and Penjana govenrment aid applications.

Raffcomm’s group CEO and managing director Arief Adly Md Afendi shared more about the company and the safe, fast, and efficient solutions it offers.

Q: Could you tell us about the Raffcomm Group and its history?

A: Since its inception in 1999, Raffcomm Technologies has evolved from an IT services company that provides digital strategies for products and services to more advanced and new technologies like identity services. It is redefining the way the IT industry serves the business. Raffcomm Group, as an identity services company, focuses on securely giving assurance to relying parties on legalized digital identity of business identities and citizens, which may include government agencies and private sectors.

Besides the SSM e-info platform that has been running since 2006, Raffcomm Group has two trust business licenses, namely the e-money issuing license by Bank Negara Malaysia (BNM) since 2013 and the certification authority license by Malaysian Communications and Multimedia Commission (MCMC) since 2018.

Q: What is Raffcomm Group's offering?

A: We offer #StayHome services both with legally binding digital signature technology solutions under MCMC Regulated Environment & SSM e-info business verification services. One of them is the legally binding digital signing cloud solution. Our cloud-based digital signing solution handles all aspects of the digital signing process, from authenticating the user's legal identity to embedding the approval and tamper-evident seal on the final document. Users can invoke their signatures on mobile apps (IOS & Android) and web application. If the validity of the digitally signed documents were challenged in the future, the audit trail generated by our digital signing solution could serve as relevant proof to demonstrate the link between the identity of a signatory and a signature.

This is a service that we have provided as a licensed certification authority (CA) for SSM e-info documents. It is a transformational offering that enables users to get digitally signed SSM documents, for example, the company and business information, which are their profiles, certificates, scanned form images, and many more, on top of saving them from the hassle to get it over-the-counter at SSM.

The availability of digital CTC services is vital for ministries, government agencies like Inland Revenue Board (LHDN), Immigration, Road Transport Department Malaysia (JPJ), municipal councils, and other financial institutions and licensing bodies to conduct validations and approvals. Also, it allows the public to obtain certified documents for submissions and applications digitally without having to visit SSM counters. This is indeed an easier, faster, and reliable way to retrieve SSM documents during these times and beyond. Another service is the legally binding customer onboarding service with e-KYC (Know Your Customer) for business entities and individuals.

Q: How could Raffcomm Group's offering assist SMEs in recovering from the MCO Lockdown?

A: Since the lockdown, the world has seen the value of online transactions. To recover from the cost of not being able to sell products and services during the lockdown, SMEs, as well as big corporations, need to firm up their business processes to not only generate revenue faster but to cover losses twice as quickly. Our digital signature services can help businesses reduce costs and have legally binding digital transactions that can protect them, their customers, and the relying parties. These products ease business efforts to continue their regular operations. They are critical for many SMEs, financial institutions, legal firms as well as the authorities to conduct their business or carry out due diligence.

The main difference between digital signatures and other newly famous technologies such as distributed ledger technology (DLT), smart contracts, and biometric is that the technical security of digital signature which is digital certificate-based electronic signature is globally considered to be more secure and confer more evidential weight in court because of its legal effect.

Q: What are the challenges Malaysian SMEs are facing, and how can the Raffcomm Group solutions help?

A: The modern-day dilemma of physically meeting face-to-face to complete certain transactions such as the opening of an account, signing documents or contracts, and the risks of repudiation of digital transactions such that some stakeholders may not be protected in Malaysia's laws and regulations. From a legal perspective, digital certificates issued by a licensed CA has value in Malaysia's digital economy, as mentioned in Article 64 and 65 of the Digital Signature Act 1997, that a digitally signed message is deemed to be a written document and deemed to be an original document.

With our E-KYC solution, we ask both our clients and their customers to stay home while they let us verify the identity of your customer and carry out checks on their financial records or due diligence. Therefore, it is no longer necessary for the individual to go to the physical branch to sign agreements, approve payments, request, or perform any other daily business processes.

Q: How can you assure services provided by Raffcomm Group can protect users from cybersecurity threats?

A: Due to the nature of the business, cybersecurity is of the utmost importance for us; in order to safeguard the data in our systems and the interest of our stakeholders, we are continuously improving our infrastructures and internal cybersecurity resources as well as working with cutting-edge partners to ensure the overall resilience of the platforms and services.

For example, we use our CA services to support the group with public key infrastructure (PKI) technology. Features of PKI includes authentication which validates the identity of machines and individuals, digital signing encryption and last but not least, non-repudiation that ensures communications, data exchanges, and transactions are legally valid and irrevocable.

So, the technology certifies a particular cryptographic key belongs to a specific user or device, thus enabling digital certificates for encryption & digital signing, where one or more trusted parties could digitally sign documents. In other words, these cryptographic keys are the identity proof for users in our platforms.

We are also highly regulated by BNM for our e-money issuing licence which has a set of compliance requirements that involve yearly audits. These measures help us to fulfil the requirements of confidentiality, identity authentication, non-repudiation, and integrity of information. Besides strong policy and risk management methodology, our CA differentiation is also regulated by the MCMC, and it also goes through a stringent yearly audit process by MCMC and Webtrust Canada.

source https://www.thesundaily.my/business/under-the-new-normal-raffcomm-group-steps-in-to-help-companies-get-back-to-business-HC3224382

Does FBM KLCI’s liquidity-driven rally still have legs?

PETALING JAYA: Given Bursa Malaysia’s roller-coaster ride since the beginning of the year – having to contend with the intensifying foreign investor outflows and the rally driven by retail investors which detracts from market fundamentals – analysts are pessimistic about the FBM KLCI’s trajectory for the rest of year.

The benchmark index started 2020 at 1,602.5 points before crashing to a 10-year low of 1,219.72 points on March 19 and since then it has been riding on an intense liquidity-fuelled rally. The FBM KLCI closed at 1,611.42 points yesterday. Year to date, the index has gained a marginal 0.8%. However, since its low on March 19, that gain jumps to 32.1%.

With regard to the equity market’s trajectory, MIDF Research strategy head Syed Muhammed Kifni Syed Kamaruddin cited Bank Negara Malaysia’s monetary policy committee statement in July which said that although a trough is expected in the second quarter, broad-based weakness in labour markets and precautionary behaviour by households and businesses could affect the recovery.

He said MIDF Research holds a similar sentiment, pointing out that rising financial conservatism among households and businesses may be counterproductive to economic recovery efforts.

“In gist, while the macro performance may have seen its worst, however, the ensuing recovery might not be swift,” Syed Muhammed Kifni told SunBiz.

“On the above score, the prevailing retail and liquidity-fuelled equity price rally risks stretching market valuation beyond what the underlying fundamentals would normally support.”

He said the resultant ascent in market valuation may eventually result in price correction. With that, MIDF Research is still maintaining its year end target of 1,320 points for the FBM KLCI.

“If investors insist on taking a fresh long position now, we advise on stocks with defensive earnings coupled with attractive dividend yield,” he added.

Furthermore, he said, the retail and liquidity-fuelled equity rally is not isolated to Malaysia, but it is also prevalent in other markets such as Wall Street. In this regard, the eventual price correction may be externally led.

Inter-Pacific Securities head of research Victor Wan holds similar doubts over the equity market rally, saying it is simply overbought.

“As it is now, the markets have largely recovered from the dip at the start of the Covid-19 pandemic and valuations are getting more expensive,” he said.

Wan discerns no particular themes or strategies for investors, except that the market will ride on the earnings recovery prospects going forward.

Apart from the glove sector, which has gained extraordinary traction from the pandemic, he said, the dismal fixed deposit rate of 1.5% has led to the record trading volume on Bursa Malaysia, fuelled by retail investors, as they have better luck seeking returns in equities.

Meanwhile, CGS-CIMB expressed optimism over the benchmark index’s performance, raising its year-end target to 1,550 points from 1,496 points previously, based on an unchanged price-to-earnings target of 16 times.

However, it expects the market to remain volatile in the second half of the year due to uncertainties on the pace of the global economic recovery as social distancing and intermittent periods of mandated lockdowns are set to be the norm in second-half 2020 and 2021 until effective, mass-market treatments and vaccines are available or until the infectiousness and fatality rate of Covid-19 are reduced to acceptable levels.

“Our key concerns going into the second half lie in the ability of corporate earnings to recover to pre-Covid-19 levels, when stimulus measures progressively end in 4Q20, as the market appears to have already priced in this potential,” said the research house in a report.

For the second half of 2020, CGS-CIMB has identified five themes, which are 15th general election play, mergers and acquisitions or deep value, dividend yield play, Covid-19 beneficiaries and Covid-19 recovery play.

source https://www.thesundaily.my/business/does-fbm-klci-s-liquidity-driven-rally-still-have-legs-FE3215250

Cabinet approves appointment of PM’s economic adviser as Bank of Thailand’s new governor

BANGKOK: Thailand picked yesterday an economic adviser to the prime minister and a former World Bank economist to be its next central bank governor, in a move seen by analysts as unlikely to herald any major shake-up of monetary policy.

Cabinet approved the appointment of Sethaput Suthiwart-Narueput as governor of the Bank of Thailand (BOT) for five years from Oct 1, to succeed Veerathai Santiprabhob, who did not seek a second term for personal reasons.

The new chief faces a tough task of steering Southeast Asia's second-largest economy through the coronavirus pandemic, and with near-zero interest rates and high household debt.

Sethaput, 55, was widely tipped to get the job. He sits on the BOT's Monetary Policy Committee and holds a doctorate in economics from Yale University.

Charnon Boonnuch, an economist at Nomura, saw "limited monetary policy implications" from Sethaput's appointment, given he has been an MPC member since 2014.

Sethaput's role as an economic adviser to Prime Minister Prayuth Chan-ocha should present no concern about central bank independence, he said, due to his credible track record in the public and private sectors.

Pote Harinasuta, who once worked with Sethaput and now heads One Asset Management, described him as "taciturn and capable". "If he decides to do anything, it will be based on a variety of information at that time," he said.

Analysts expect him to work smoothly with Predee Daochai, the man widely tipped to be finance minister in a new cabinet to be completed by mid-August.

Sethaput was picked for his qualifications, performance, attitude, vision, and because he was from a younger generation, Prayuth said. "That's from the selection committee," he added. "It's not me to decide anybody".

The BOT has cut its policy rate three times this year to a record low 0.50%, and predicts the economy will contract a record 8.1% this year due to a coronavirus crisis that decimated tourism and slowed domestic activity.

A persistently strong baht has been hurting export competitiveness.

The BOT has emphasised it can only smooth out excessive currency moves amid reports that Thailand risks being added to the US currency manipulation watchlist.

In a 2015 interview with the central bank's magazine, Sethaput said he had learned from his father the importance of integrity and his World Bank experience had taught him to value and understand different perspectives.

Monetary policy had limits and was no "magic sword", but consequences of its misuse could be enormous, he said.

Asked his secret to success, Sethaput told the magazine: "Who does not like success? Success is important. But if attached to that too much, our life may not be that happy." – Reuters

source https://www.thesundaily.my/business/cabinet-approves-appointment-of-pm-s-economic-adviser-as-bank-of-thailand-s-new-governor-DC3217498

Sagging sales from aviation business burn General Electric Q2 results

NEW YORK: General Electric Co (GE) reported a bigger-than-expected loss today, due in part to sagging sales from its aviation business in the wake of the coronavirus outbreak.

The company's loss was US$2.2 billion in the second quarter, compared with a loss of US$61 million in the year-ago period. Revenues tumbled 24% to US$17.8 billion.

As with so many other companies, the coronavirus and shutdowns to contain the virus was the driving factor behind 2020 results.

However, GE saw less cash outflow than estimated in the second quarter. The Boston-based industrial conglomerate reported cash outflow of US$2.1 billion (RM8.9 billion) from industrial operations, a tad lower than a quarter ago and considerably below its own estimate of between US$3.5 billion and US$4.5 billion for the quarter.

GE suffered a 44% fall in revenues in its aviation business, where orders for plane engines have been derailed due to the downturn in commercial aviation that threatens major carriers.

The aviation unit, which makes engines for Boeing Co. and Airbus SE, had already been reeling from the grounding of Boeing's 737 MAX planes. With the pandemic bringing global travel to a virtual halt, its troubles have worsened.

However, the company is taking heart from an improvement in flight departures globally, which it expects would boost the unit's services business.

A recovery in the aviation business is critical for chief executive Lawrence Culp, who is trying to turn around the company by improving free cash flow and cutting debt.

While the company sees a slow recovery in the aviation business, it expects free cash flow to be better in the second half of the year and turn positive in 2021.

The company also took a one-time accounting charge of US$608 million in light of weakened expectations for aviation and customer credit risk. Aviation had been one of GE's stronger division prior to the coronavirus outbreak.

GE's healthcare business has played a role in the Covid-19 response through the production of ventilators to treat the illness. However, healthcare profits also fell on much lower revenues in the quarter due to weak demand for products less correlated to Covid-19.

"We're working through a still-difficult Covid-19 environment, and while it's still to early to predict the trajectory for the recovery of commercial aviation, we continue to plan for a prolonged return to prior levels of activity," said Culp.

"Still, based on what we see today and the actions we've taken, sequential improvement in earnings and cash in the second half of the year is achievable."

GE reduced aviation headcount by 11% during the quarter as part of a plan to cut 25% of its global workforce this year. The cuts helped improve decremental margin at the unit to 59% from 62% in the first quarter.

Analysts at Gordon Haskett Research Advisors, however, dubbed the progress as "weak", warning the lagging impact of the pandemic could further hurt the performance of the services part of GE's aviation business in the third quarter.

GE said it is launching a programme to fully monetise its stake in Baker Hughes over about three years to reduce its debt.

On an adjusted basis, GE reported a loss of 15 cents per share compared with a loss of 10 cents a share estimated by analysts, according to IBES data from Refinitiv. – AFP, Reuters

source https://www.thesundaily.my/business/sagging-sales-from-aviation-business-burn-general-electric-q2-results-YD3216881

AerCap cancels orders for 15 Boeing 737 MAX jets

DUBLIN/PARIS: Leasing giant AerCap said today it had cancelled 15 orders for the grounded Boeing 737 MAX aircraft as it slows the pace of new plane deliveries to weather the coronavirus crisis.

Announcing the cancellations – which leave 80 of the MAX jets still on its order books – the world's largest aircraft owner also called for more production cuts by Boeing and rival Airbus to help balance the jet market.

AerCap, which has deferred dozens more MAX deliveries, said it remains uncertain when the five MAX planes already on lease will return to service, as regulators review changes to the jet after two fatal crashes.

US authorities said last week they expect to give a green light in the "near future". As a result, AerCap reached agreement with Boeing this month to restructure its order book, it said today.

AerCap boss Aengus Kelly called for a further aircraft manufacturing slowdown as he reported a drop in second-quarter net income to US$246 million from US$331 million a year earlier, amid a global travel slump unleashed by the pandemic.

"I think we'll see more production cuts both from Boeing and Airbus, to help us get to that equilibrium," he said during an earnings call with analysts.

"I would be hopeful that tomorrow when Airbus release their results we'll see another production cut there," the AerCap CEO said. Airbus declined to comment ahead of its own results announcement on Thursday.

Leasing firms are traditionally conservative about production to preserve the value of their fleets, but the call from the world's largest lessor puts pressure on Airbus to defend output levels that some analysts consider too high.

AerCap said it was well placed to weather the coronavirus crisis thanks to its US$27 billion in unencumbered assets and record-high liquidity including US$3 billion in new funding.

"We have begun leasing airplanes again, but it's almost exclusively focused on the European market," Kelly said, adding that earlier signs of a US travel rebound had since "run out of steam" amid new virus outbreaks and lockdowns.

Despite European reversals such as renewed British quarantine measures for Spanish arrivals, a recovery is now "well underway" in the region, Kelly said.

"No doubt there will be setbacks, but the willingness and the desire of the consumer to travel is very clear." – Reuters

source https://www.thesundaily.my/business/aercap-cancels-orders-for-15-boeing-737-max-jets-ID3216864

India’s IndiGo to raise at least US$268m through sale, leaseback of planes and other assets

BENGALURU/NEW DELHI: IndiGo, India's largest airline, said yesterday it planned to raise at least 20 billion rupees (US$268 million/RM1.13 billion) through the sale and leaseback of planes and other assets, after reporting its steepest quarterly loss in at least five years.

Chief financial officer Aditya Pande said the airline, owned by Interglobe Aviation Ltd, would consider raising even more than 20 billion rupees and the board would meet tomorrow to discuss this.

"Managing cash continues to remain our primary focus and we continue to work with all our stakeholders to raise liquidity," Pande told analysts on a call, adding it was in advanced talks on selling and leasing back some of its unencumbered assets.

Pande did not say how much additional cash the airline could raise on top of the 20 billion rupees announced yesterday.

Airlines globally are looking for ways boost their finances after the coronavirus crisis kept travellers at home. The airline industry body IATA forecasts passenger traffic will not return to pre-crisis levels until 2024.

Indigo temporarily halted operations in March when India began a two-month lockdown, at a time when the carrier was already grappling with higher maintenance costs and weak demand. It has been slowly rebuilding its schedule.

Rival Indian carrier SpiceJet said it had deferred payments to vendors and statutory authorities, and was renegotiating some contracts, particularly with aircraft lessors.

IndiGo, which reported a net loss of 28.49 billion rupees in April to June compared with a 12 billion rupee profit a year earlier, said last week it would cut 10% of its workforce.

The airline reduced its daily fixed cash burn to 300 million rupees in April to June from 400 million rupees in the previous three months, Pande said, adding it expected to end the year with 30% lower employee costs.

IndiGo expects to operate about 40% of its average seat capacity from July to September compared with the same period a year earlier and 60% to 70% in the following quarter, if rules allowed, Pande said. – Reuters

source https://www.thesundaily.my/business/india-s-indigo-to-raise-at-least-us-268m-through-sale-leaseback-of-planes-and-other-assets-JD3216847

Oil prices gain as US crude stocks post steepest drawdown this year

NEW YORK: Oil prices edged up yesterday after a steep drop in US crude inventories, but another record day for Covid-19 cases worldwide kept gains in check.

Brent crude futures gained 35 cents to US$43.57 (RM148.89) a barrel by 1457 GMT. US West Texas Intermediate crude futures were up 18 cents to US$41.22 (RM174.92)

US crude oil inventories fell by 10.6 million barrels last week to 526 million barrels, the Energy Information Administration said, in their largest drawdown since December. Net US crude imports fell 1 million barrels per day to 1.9 million bpd, the EIA said.

The drawdown was likely a result of supply cuts by the Organization of the Petroleum Exporting Countries and its allies, which were agreed-upon in April, finally being realized in fewer shipments.

"There's an assumption those tankers pretty much let go of all their oil and so the expectation is that the OPEC cuts are going to lead to bigger draws in the United States," said Phil Flynn, senior analyst at Price Futures Group in Chicago.

A record number of new coronavirus infections were reported globally, while in the United States, deaths from the novel coronavirus were approaching 150,000, the highest level in the world and rising by 10,000 in 11 days, according to a Reuters tally.

"The virus is spreading like wildfire across the Americas while Europe and Asia are displaying worrying signs of a second surge in cases," said Stephen Brennock of oil brokerage PVM.

Six US states reported one-day records for coronavirus deaths on Tuesday and cases in Texas passed the 400,000 mark.

Attempts to provide relief amid the outbreak were in disarray after Republicans in the United States on Tuesday disagreed over their own plan for providing US$1 trillion in new coronavirus aid.

Indian refiners are cutting crude processing and shutting units for maintenance as fuel demand falters, officials at the companies said. – Reuters

source https://www.thesundaily.my/business/oil-prices-gain-as-us-crude-stocks-post-steepest-drawdown-this-year-LD3216728

Siingapore Airlines incurs record quarterly loss of S$1.12 billion

SINGAPORE: Singapore Airlines (SIA) reported a first-quarter net loss of more than S$1 billion today, the latest carrier to take a massive hit as a result of the coronavirus pandemic.

Passenger traffic was reduced to almost zero in the three months to June, SIA said, leading to the Asian carrier's biggest-ever quarterly net loss of S$1.12 billion (RM334 billion).

The numbers extended the flag-carrier's financial bloodletting after losing S$732 million in the 2019 fourth quarter ended March 31, leading to its first-ever annual loss.

"Demand for air travel evaporated as travel restrictions and border controls were imposed around the world to contain the spread of the virus," SIA said.

Earnings from cargo flights were not enough to offset the massive decline in passenger numbers, and group revenue plunged 79.3% year-on-year, it said.

Shukor Yusof, an analyst with aviation consultancy Endau Analytics, described SIA's first-quarter earnings as "grotesque", reflecting the severity of coronavirus on the global industry.

"Unfortunately there will be more losses in the coming quarters and which will require SIA to sadly lay off staff," he told AFP.

It was also unlikely that the bulk of the airline's 19 Airbus A380s would return to service as there would be overcapacity, he said.

Wholly dependent on international routes, the airline was particularly hard-hit by the virus and cut passenger services by 96 percent from April to June – grounding most of its fleet.

The International Air Transport Association (IATA) estimates that airlines operating in the Asia-Pacific region stand to lose a combined US$27.8 billion this year.

On Tuesday IATA said global air traffic is unlikely to return to precoronavirus levels until at least 2024 -- a year later than previously projected.

Among the reasons for this "more pessimistic" outlook is the slow virus containment in the United States and other developed economies, it said.

SIA said it has raised a total S$11 billion in fresh funds to help it weather the crisis, including S$8.8 billion from a rights issue backed by its majority shareholder, state investment fund Temasek, – AFP

source https://www.thesundaily.my/business/siingapore-airlines-incurs-record-quarterly-loss-of-s-112-billion-YD3216504

General Motors reports smaller-than-expected US$758m Q2 loss on lower car sales

NEW YORK: General Motors (RM) reported a smaller-than-expected loss today as strong pricing for some newer auto models partially mitigated the hit from much lower sales amid the coronavirus pandemic.

The big US automaker lost US$758 million in the second quarter, compared with a US$2.4 billion profit in the year-ago period.

The company described the results as "solid" amid the pandemic, and said steps it had taken to cut costs meant the automaker was well-positioned to weather the storm.

GM said some of the austerity measures, which included worker furloughs, would become permanent.

"We have a track record of making swift and strategic decisions to ensure our long-term success for the benefit of all our stakeholders," GM chairman and CEO Mary Barra said in a statement.

"We will continue to drive the necessary change throughout the company to enable growth as we prepare to deliver a world with zero crashes, zero emissions and zero congestion."

Strong truck and SUV sales continued to support US results, GM said, but US sales were down 34% due to the Covid-19-imposed production shutdowns. Sales in China were down just 5.3% while global sales fell 24%, the company said.

Revenues were below expectations at US$16.8 billion but the results translated into a loss of just 50 cents per share, far better than the expected hit of US$1.77 a share.

Shares of the auto giant rose nearly 4% in pre-market trading. – AFP

source https://www.thesundaily.my/business/general-motors-reports-smaller-than-expected-us-758m-q2-loss-on-lower-car-sales-LD3216368

Boeing reports US$2.4b quarterly loss, signals more job cuts

NEW YORK: Boeing suffered a bigger-than-expected loss in the latest quarter, the company announced today, and signaled additional job cuts are likely as it contends with a protracted air travel downturn amid the coronavirus pandemic.

The company suffered a US$2.4 billion (RM10.18 billion) loss in the quarter ending June 30 as revenues plunged 25% to US$11.8 billion.

The aerospace giant, which previously suspended the dividend for shareholders and announced a 10% staff downsizing, also said it would phase out production of the iconic 747 jumbo jet and ratchet back production plans on other commercial aircraft due to the weak outlook.

Those moves are expected to lead to further job cuts.

"Regretfully, the prolonged impact of Covid-19 causing further reductions in our production rates and lower demand for commercial services means we'll have to further assess the size of our workforce," chief executive Dave Calhoun said in a message to employees.

"This is difficult news, and I know it adds uncertainty during an already challeng

ing time. We will try to limit the impact on our people as much as possible going forward."

Calhoun, in an interview with CNBC, said the latest surge in US coronavirus cases made the near-term travel outlook "more difficult" because airlines that had added flights amid a brief uptick in interest are now cutting back.

But there also was "more optimism about a vaccine" for Covid-19 sometime in 2021 that would support an industry recovery, he said.

The hit from coronavirus has prolonged and worsened Boeing's slump due to the crisis surrounding the 737 MAX, which was grounded globally in March 2019 following two deadly crashes.

Boeing said it was making "steady progress" towards getting the MAX recertified to fly, after the Federal Aviation Administration completed test flights earlier this month. That process, too, was delayed by the pandemic.

The company resumed some activity on the MAX in May after completely halting work for a few months, but on Wednesday slowed the production plans further.

Boeing said it planned to gradually increase output of the aircraft to 31 a month at the beginning of 2022, a delay from the earlier plan to hit that level in 2021, and a far cry from the 57 a month target for 2020 before the coronavirus disruption.

The Boeing chief also lowered the output plans for the 777 and the 787 and said the company would cease production of the 747 in 2022.

In the television interview, Calhoun said ending the 747 was an "emotional decision for everyone" at Boeing, but the move bowed to commercial needs.

"This is just us facing reality," he told CNBC. "Our customers want the new technology."

But he said the company would continue to service the 747s already on the market for decades into the future.

"Our customer commitment does not end at delivery, and we'll continue to support 747 operations and sustainment well into the future," Calhoun said.

While Boeing's commercial plane business has been battered by Covid-19, the company reported flat revenues from its defense and space business compared with the year-ago period

Calhoun said these programmes ensured "some critical stability for us in the near-term as we take tough but necessary steps to adapt for new market realities," according to a Boeing earnings release.

He told CNBC he does not expect to need additional financing following a US$25 billion bond offering earlier this spring that is expected to provide enough cash to get through the downturn.

The company's share price initially gained ground, but then retreated and was down 3.5% to US$165 in early trading. – AFP

source https://www.thesundaily.my/business/boeing-reports-us-24b-quarterly-loss-signals-more-job-cuts-GE3215976

Banks to provide targeted moratorium extension, repayment flexibility after Sept 30

PETALING JAYA: Ahead of the blanket moratorium ending on Sept 30, Bank Negara Malaysia (BNM) said it has been working closely with banks to ensure assistance continues to be provided to borrowers affected by Covid-19, via repayment plans and other arrangements appropriate to their specific circumstances.

However, in line with Prime Minister Tan Sri Muhyiddin Yassin’s announcement today on measures to provide a targeted extension of the moratorium and repayment flexibility to individuals and SMEs who continue to be affected by Covid-19, the central bank said the banking industry will provide a targeted moratorium extension and provision of repayment flexibility.

Firstly, individuals who have lost their jobs in 2020 and have yet to find a job will be offered an extension of the loan moratorium for a further three months by their bank.

For individuals who are still in employment but whose salaries have been affected due to Covid-19 will be offered a reduction in loan instalment in proportion to their salary reduction, depending on the type of financing.

“Banks will offer the flexibility for a period of at least six months. Banks will also consider extending the flexibility at the end of that period, bearing in mind the salary of the borrower at that time,” it said in a statement.

For hire purchase financing, affected borrowers will be offered revised instalment schedules that are consistent with the Hire-Purchase Act 1967.

In addition, banks have also committed to provide repayment flexibility to other individuals and all SME borrowers affected.

The flexibility offered by each bank will take into account the specific circumstances of borrowers including allowing borrowers to pay only the interest portion of the loan over a period of time, lengthening the overall period of the loan to reduce monthly instalments or providing other forms of flexibility until a borrower is in a more stable position to resume repayments in full.

“All other borrowers who have the means should start to repay as it will reduce their overall debt and borrowing cost,” it said.

BNM said to obtain these flexibilities, borrowers need to apply directly to their respective banks beginning Aug 7, and to ease the concerns of borrowers with loans from multiple banks, they may also approach the relevant “one-stop” centre to work out an appropriate assistance package.

This would be Agensi Kaunseling dan Pengurusan Kredit (AKPK) for individuals and Small Debt Resolution Scheme (SDRS) for SMEs.

“BNM has communicated to the banks to deliver a simplified application and documentation process for borrowers. In recognition of these exceptional circumstances, the flexibilities provided to borrowers during this period will not appear in the CCRIS reports of borrowers,” it said.

In addition, the central bank will monitor the progress of banks in assisting borrowers that may continue to face temporary financial difficulties, and continue to focus efforts in ensuring that the banking system continues to carry out its intermediation function effectively in support of the economic recovery.

source https://www.thesundaily.my/business/banks-to-provide-targeted-moratorium-extension-repayment-flexibility-after-sept-30-NE3215528

TNB increases stake in Jimah Energy to 25%

PETALING JAYA: Tenaga Nasional Bhd (TNB) entered into a sale and purchase agreement with Menteri Besar Negeri Sembilan (Incorporation) (MBINS) for the acquisition of 5% ordinary shares in Jimah Energy Ventures Holdings Sdn Bhd (JEVH) and 5% class B notes issued by Special Power Vehicle Bhd for a consideration of RM80 million.

JEVH holds a 100% stake in Jimah Energy Ventures Sdn Bhd (JEV), a special purpose vehicle company which was incorporated for the development and operation of a conventional thermal coal fired power plant located at Jimah, Port Dickson.

Edra Power Holdings Sdn Bhd owns 75% interest in JEVH, while TNB and MBINS hold the remaining interest of 20% and 5% respectively.

With the acquisition, the group will acquire MBINS’ entire stake in JEVH as well as its Class B Notes in Special Power, effective raising TNB’s stake in Jimah Energy to 25% and its Class B Notes to 25% with the remaining 75% held by Edra Power Holdings Sdn Bhd.

According to its Bursa disclosure, TNB will utilise internal funds to satisfy the RM80 million consideration.

It elaborated that the consideration sum was arrived on the basis of a valuation by an external advisor pursuant to pre-emption rights under the JEVH shareholders agreement, while the Class B notes was valued based on a discounted cash flow method after taking into account the restriction on distribution to shareholders imposed in the existing financing documents.

source https://www.thesundaily.my/business/tnb-increases-stake-in-jimah-energy-to-25-NE3215384

Ta Win, Terengganu state agency in joint venture to develop RM2.4 billion ecocycle park

PETALING JAYA: Copper wire and rods manufacturer Ta Win Holdings Bhd today entered into a joint venture agreement with Perbadanan Memajukan Iktisad Negeri Terengganu for the development of an eco-friendly industrial park called Terengganu Ecocyle Park.

Under the agreement, a joint venture company, namely Ta Win Copper Ecocycle Sdn Bhd, will be established, in which Ta Win will hold an 80% stake.

Through the proposed joint venture, Ta Win and the Terengganu state government aim to create an industrial ecosystem with an ecocycle concept, to support both upstream and downstream industry participants along the supply chain of the non-ferrous metal industry.

Covering 500 acres in Kemaman, Terengganu Ecocycle Park is to be developed in four phases over a nine-year period, with an estimated total gross development cost of RM2.4 billion.

The group expects to fund the development with its internally generated funds, bank borrowings and/or other funding alternatives which may include equity fundraising exercises.

Terengganu Ecocycle Park will comprise a core technology zone, sub-core technology zone and supporting technology zone, measuring 85 acres, 250 acres and 165 acres respectively.

Ta Win group managing director Datuk Seri Ngu Tieng Ung said with Terengganu Ecocycle Park, it will be able to propel the sustainable long-term development of the non-ferrous metal industry.

“In fact, to lead the way forward and promote environmental conservation and sustainability in the non-ferrous metal industry supply chain, Ta Win will be relocating our existing headquarters and factories to the core technology zone of the Terengganu Ecocycle Park,” he said in a statement.

Based on the ecocycle concept which utilises the closed-loop system of development, conservation, destruction, and renewal that is seen in natural ecological systems, the Terengganu Ecocycle Park will see industry players form an industrial ecosystem to achieve long-term sustainability in the processes of raw materials procurement and production.

This is expected to facilitate industry innovation, sustainable practices in the usage conservation and climate change issues through responsible consumption and production, as well as encouraging collaboration between the public and private sectors to promote sustainable economic growth.

Manufacturers will be able to benefit from lower input costs and cost savings due to the closed-loop system, as well as higher efficiency as manufacturing and production activities will be integrated. The park will also be located with connectivity to Kuantan Port and Kuantan Airport.

To date, Ta Win has identified manufacturers with local and overseas operations in the non-ferrous metal industry who may potentially be interested to operate their businesses in Terengganu Ecocycle Park and will be engaging with relevant parties.

source https://www.thesundaily.my/business/ta-win-terengganu-state-agency-in-joint-venture-to-develop-rm24-billion-ecocycle-park-BX3213131

UOB Malaysia prices RM750 million Tier 2 subordinated debt issue

PETALING JAYA: United Overseas Bank (Malaysia) Bhd (UOB Malaysia) has priced an offering of RM750 million Tier 2 subordinated medium term notes due August 2030 and callable in August 2025 at a fixed coupon rate of 3% per annum.

The pricing is at the tight end of price guidance and is the lowest coupon ever achieved to-date for a ringgit-denominated Basel III-compliant subordinated Tier 2 transaction.

Rated AA1 by RAM Rating Services Bhd, the subordinated debt offering saw strong demand, with the issuance size increased from the initial target of RM600 million to RM750 million and oversubscribed more than two times.

Orders in excess of RM1.5 billion were received from 25 institutional investors, including insurance companies, fund managers, banks and private banks.

UOB Malaysia CEO Wong Kim Choong said he is encouraged by investors’ response to the bank’s Basel III-compliant Tier 2 subordinated notes and the pricing it achieved.

“The successful transaction reflects investors’ confidence of UOB Malaysia’s strong credit profile and robust business fundamentals against the backdrop of a challenging business environment and the impact of the Covid-19 pandemic. We will continue to deepen our presence and to sharpen our capabilities in support of our customers,” Wong said in a statement.

CIMB Investment Bank Bhd, HSBC Bank Malaysia Bhd and UOB Malaysia acted as joint lead managers for the transaction.

source https://www.thesundaily.my/business/uob-malaysia-prices-rm750-million-tier-2-subordinated-debt-issue-GY3212989

Axiata says it’s well positioned to cope with Covid-19 challenges

PETALING JAYA: To position itself for emerging “new normal” opportunities, Axiata Group Bhd will execute measures driven by the conviction that as the digital economy accelerates, there will be significant demand for digitisation, and e-commerce and digital payments.

The need for innovation in digital security, e-health, e-learning, remote working, deurbanisation and food security will see an uptrend alongside consumption of online content, media and entertainment.

Axiata president and group CEO Tan Sri Jamaludin Ibrahim said that in this unprecedented time, the group has shifted its immediate focus to put employees, customers and communities at the front and centre of all its markets.

“Like many industries worldwide, we have been negatively impacted and expect implications in the short to mid-term due to extraordinary Covid-19 challenges and other national requirements. But as an industry, we are relatively more fortunate than others.

“In the longer term, we believe we will stand to be one of the biggest gainers in terms of how telcos can serve customers in the post-Covid-19 world. Telcos will not only be the data connectivity platform as a required basic utility but also provide many services and solutions to businesses and customers in an increasingly digital environment,” he said in a statement.

In future-proofing and activating its next growth trajectory across its triple core businesses of digital telco, digital businesses and infrastructure, the group will be guided by its Axiata 5.0 Roadmap which sets out “10 value creation drivers” to firm up near-term financial performance, ensure long-term sustainable growth, and address structural changes via industry consolidation and portfolio optimisation.

Axiata concluded its AGM virtually yesterday with shareholders expressing strong support for the group’s efforts to shore up its defences in battling short to mid-term Covid-19 challenges, as the group continues its pursuit to become a new generation digital champion by 2022.

All other resolutions tabled at the AGM were passed.

Shareholders re-elected Thayaparan S Sangarapillai who was appointed to the board on March 18, 2020 as a replacement for Datuk Izzaddin Idris, who has been redesignated as executive director after his appointment as deputy group CEO and group CEO-designate on Jan 24, 2020.

Axiata chairman Tan Sri Ghazzali Sheikh Abdul Khalid said this will be an important year on two fronts. First, the board continues to be committed to ensuring a smooth succession at the top, as Jamaludin retires at the end of this year and Izzaddin takes over the helm.

“In light of the overall successful year of value creation across the group, the board approved a total dividend of 9.5 sen per share. This includes an interim dividend of 5 sen per share, and a special dividend of 0.5 sen to share gain from disposal of the M1 investment.”

source https://www.thesundaily.my/business/axiata-says-it-s-well-positioned-to-cope-with-covid-19-challenges-EY3212053

TM appoints Imri Mokhtar as MD & group CEO

PETALING JAYA: Telekom Malaysia Bhd (TM) has appointed Imri Mokhtar as the new managing director and group CEO effective Aug 1, 2020 following the resignation of Datuk Noor Kamarul Anuar Nuruddin effective today.

TM chairman Tan Sri Mohd Bakke Salleh said Imri is a TM homegrown talent with a strong background in strategy and business operations, and his last positions in TM as chief operations officer as well as acting group CEO prior to that, put him in the best position to take TM forward in its next phase of growth.

“Together with the leadership bench, Imri will be at the helm to navigate TM through the current challenges and position us on a more resilient, competitive and sustainable footing. TM is well primed to lead in the Industrial Revolution 4.0; as the national connectivity and digital infrastructure provider and in enabling Malaysia’s digital economy aspirations,” Bakke said in a statement.

He thanked Noor Kamarul for the valuable contributions he has made to TM over the past 13 months.

Noor Kamarul leaves TM in a better position despite the current unprecedented challenges amid the Covid-19 pandemic. Under his leadership, notably under the movement control order, TM as an essential service continued to deliver smooth continuity of connectivity and digital solutions for Malaysians nationwide; while ensuring the safety of its employees on the frontlines and a stable financial performance.

Noor Kamarul joined TM as managing director and group CEO on June 13, 2019.

source https://www.thesundaily.my/business/tm-appoints-imri-mokhtar-as-md-group-ceo-CY3212361

Dollar teeters, stocks stalled as Fed comes in to focus

SINGAPORE: The U.S. dollar hovered just above a two-year low on Wednesday, while stocks struggled, as growing worries about the U.S. economy had investors looking to Congress and the Federal Reserve for a renewed commitment to endless stimulus.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2%, as gains in China were offset by falls elsewhere, while Japan's Nikkei fell 1.2% on a rising yen and a weak start to corporate earnings season.

S&P 500 futures dipped 0.2% and a slightly softer start to European trade is in the offing, with Euro STOXX 50 futures down 0.7% and FTSE futures down 0.5%.

The Fed is expected to sound reassuringly accommodative at its policy review later in the day and perhaps open the door to a higher tolerance for inflation - something dollar bears think could squash real yields and sink the currency even further.

Against a basket of currencies the dollar was steady, but just 0.3% above a two-year low hit a day ago. It has lost 3.7% in July and is headed for its worst month in nine years.

Gold slipped as the dollar found its feet, pulling back to $1,951 an ounce after zooming to a record high of $1,980 on Tuesday. Bonds were firm with benchmark U.S. 10-year yields under pressure at 0.5822%.

The Fed's forward guidance probably determines the next moves and the extension of several emergency lending facilities on Tuesday fuelled anticipation of a particularly dovish tone.

"Some pockets of the market are looking for the forward guidance to be a bit bolder in a dovish direction," said Imre Speizer, currency analyst at Westpac in Auckland. "If we don't get that, you may well get a small rebound in the dollar."

The Fed publishes its interest rate decision, which is not expected to change, at 1800 GMT and Chair Jerome Powell holds a press conference half an hour later.

SHOW ME THE MONEY

Besides the Fed, the other focus is on political wrangling over the next U.S. fiscal package, which weighed on Wall Street overnight where the S&P 500 fell 0.6%.

Republicans' $1 trillion proposal includes cutting a weekly $600 unemployment benefit, which expires on Friday, to $200 just as cracks emerge in the economic rebound.

U.S. consumer confidence fell by more than expected this month, as COVID-19 infections flared.

The Democrats are pressing for a larger spending commitment, while President Donald Trump also said he didn't like elements of the Republican plan, adding to the sense of confusion.

"This is a big deal - there's 30 million people unemployed and so much of U.S. GDP is consumer spending," said Chris Brankin, CEO of brokerage TD Ameritrade Singapore.

"Markets are hopeful that some type of extension gets done ... even if it's reduced - if you just cut if off wholly you'd see significant volatility in the markets."

Elsewhere in currencies, the Australian dollar eased to $0.7160 after second quarter consumer prices fell by the most on record, cementing views interest rates would stay low for a long time to come.

The euro was steady at $1.1728 while the yen was testing a new four-month top at 105.07 per dollar.

Copper - an industrial metal often used as a gauge of global growth - made its first retreat in three sessions as investors wait for guidance on global stimulus.

Oil prices steadied after a surprise drop in U.S. inventories pointed to energy demand, even as virus infections surge.

Brent crude futures were last up 0.1% at $43.28 per barrel and U.S. crude was flat at $41.01 a barrel. - Reuters

source https://www.thesundaily.my/business/dollar-teeters-stocks-stalled-as-fed-comes-in-to-focus-EI3208350

Oil rises after surprise drop in U.S. inventories offsets demand concerns

TOKYO: Oil prices rose on Wednesday after an industry report showed that crude inventories in the United States increased against expectations, giving the market a boost amid record increases of coronavirus infections in the U.S. and elsewhere.

Brent crude was up by 24 cents, or 0.6%, at $43.46 a barrel by 0041 GMT, after dropping 0.4% on Tuesday.

U.S. oil gained 14 cents, or 0.3%, to $41.18 a barrel, having dropped 1.4% in the previous session.

Inventories of crude oil in the U.S. dropped by 6.8 million barrels last week to 531 million barrels, data from industry group the American Petroleum Institute showed on Tuesday.

Analysts' expectations were for an increase of 357,000 barrels. U.S. government data is due Wednesday.

"This should temporarily alleviate some concerns about ongoing demand distress," Stephen Innes, chief global markets strategist at AxiCorp said in a note.

The raging COVID-19 pandemic is keeping alive concerns about falling fuel demand causing an oversupplied market as record numbers of infections are reported globally, including the U.S., the world's biggest consumer of oil.

Four U.S. states reported one-day records for coronavirus deaths on Tuesday and cases in Texas passed the 400,000 mark.

Attempts to provide relief amid the outbreak were in disarray as Republicans in the U.S. disagreed over their own plan for providing $1 trillion in new coronavirus aid on Tuesday.

In Hong Kong, the government on Wednesday warned the city is on the edge of a large-scale coronavirus outbreak and urged people to stay indoors as much as possible. - Reuters

source https://www.thesundaily.my/business/oil-rises-after-surprise-drop-in-u-s-inventories-offsets-demand-concerns-LC3206418

South Korea launches safety probe into Tesla vehicles

SEOUL: South Korea said it is investigating suspected safety issues with vehicles made by U.S. automaker Tesla Inc, which is competing strongly with Hyundai Motor Co in the South Korean electric vehicle market.

Braking and steering systems including the Autopilot function were part of the investigation, a transport ministry official said on Wednesday.

The ministry declined to elaborate but South Korean media said Tesla's Model 3 was under investigation, and the probe might take anywhere from six months to a year.

Tesla would cooperate with the investigation, an official at its South Korean unit said.

The U.S. National Transportation Safety Board last year cited driver errors and Tesla's Autopilot design as the probable cause of a January 2018 crash of a Model S in California.

In Hyundai's home market, Tesla had its best month in June, with its Model 3 beating Hyundai's Kona EV, as well as premium models from BMW and Audi. - Reuters

source https://www.thesundaily.my/business/south-korea-launches-safety-probe-into-tesla-vehicles-YC3206313

As lawmakers spar, Federal Reserve aims to buoy economy

WASHINGTON: Facing the second recession in just over a decade and with Congress locked in debate over a new emergency spending package, the Federal Reserve will seek a way to put some guardrails on the US economy.

With the COVID-19 case count resurging and the death toll approaching 150,000, economists are projecting a shocking 35 percent collapse of American GDP in the April-June quarter.

As hopes dim that businesses can reopen and allow life to return to normal with the virus still rife, fears are mounting of a lasting recession, which would jeopardize the rebound in employment in the past month and erode gains in consumer confidence.

The policy-setting Federal Open Market Committee (FOMC) is not expected to announce major changes when it wraps up its two-day meeting at 1800 GMT on Wednesday, but could offer new guarantees that it will keep the stimulus in place for an extended period.

The Fed dropped the key lending rate to zero in the early days of the pandemic, and has made it clear it will stay there until the recovery is firmly in place.

It also flooded the financial system with cash and constructed a web of loan programs to support every size of business and corporate borrower as well as state and local governments.

Economists expect policymakers to change the Fed's guidance to make it clear they could allow inflation to rise higher and unemployment to go lower before it taps the brakes on the economy with an interest rate increase -- but they are divided on the timing of the change.

Many expect the committee to hold off on any changes until the next meeting in September, but some say the deterioration in the pandemic and the economy argue for more rapid action.

Less rigid inflation goal?

"Why now instead of in September as most are expecting? The resurgence in hospitalizations and deaths due to COVID-19 is taking a toll on growth. Consumer spending has, at best, hit a plateau. Employment may have actually contracted in recent weeks," Grant Thornton chief economist Diane Swonk said in an analysis.

"This is at the same time that Congress has stalled in debate over a new aid package," she said.

But Ian Shepherdson of Pantheon Macroeconomics said the Fed may not want to get ahead of Congress, and is likely to wait until after the fiscal package is settled and after the release of a policy review discussing the shift to an average inflation policy rather than the current two percent target.

"Clearly, we can't rule out an announcement of inflation-based forward guidance," he said.

Fed Chair Jerome Powell, who will hold a press conference following the meeting, has tried to stay far away from advising Congress, but has made it plain that the central bank's options are limited and the federal government will need to provide more cash to support households and businesses.

As expanded unemployment payments and a moratorium on evictions are set to expire, Senate Republicans late Monday unveiled a $1 trillion support package that slashes additional weekly jobless benefits to $200 a week from $600, but also would offer a second round of $1,200 payments to individuals and give funding to schools, provided they reopen.

That sets the stage for a showdown with Democrats who are pushing their own $3 trillion plan that retains the higher unemployment payments.

US stocks tumbled on Tuesday amid mixed results from companies battered by the pandemic, and the lack of progress in Congress towards reaching an agreement on a new rescue package. - AFP

source https://www.thesundaily.my/business/as-lawmakers-spar-federal-reserve-aims-to-buoy-economy-LC3206296

Australia dollar steps back from highs after consumer price fall

SYDNEY: The Australian dollar eased from recent highs on Wednesday after second quarter consumer prices fell the most on record, cementing views interest rates will stay low for a long time.

The Australian dollar was down 0.2% at $0.7155, easing from a 15-month peak of $0.7184 touched a week ago.

Risk appetite was generally weaker on worries about rising coronavirus cases and deaths in the United States, dashing hopes for a quick global economic recovery.

The U.S. Federal Reserve is expected to strike a dovish stance at its policy review later in the day and dollar bears bet it could even hint at further easing down the road.

In Australia, the prospect for interest rates to remain at record lows was further strengthened after data showed the consumer price index (CPI) fell 1.9% in the June quarter.

"This was the largest quarterly fall in the 72-year history of the CPI," said Bruce Hockman, chief economist at the Australian Bureau of Statistics (ABS).

The Reserve Bank of Australia (RBA) left rates at an all-time low of 0.25% after an emergency cut in March and may have to do more to reignite consumer prices.

"We think (inflation) is likely to remain depressed for years to come," Capital Economics wrote in a note to clients.

"That's why we think the RBA's forecasts for underlying inflation to reach 1.5% by mid-2022 are too optimistic. We therefore think the bank has more work to do."

Across the Tasman Sea, the New Zealand dollar was flat at $0.6657, not far from a six-month high of $0.6702 touched on Tuesday.

New Zealand government bonds rose, sending yields about 3-4 basis points lower across the long-end of the curve.

Australian government bond futures rose, with the three-year bond contract up half a tick at 99.695. The 10-year contract climbed 4.5 ticks to 99.105.

The debt market was supported by details of Tuesday's A$15 billion sale of a new 30-year bond which showed two thirds of the issue was snapped up by offshore buyers.

Fund managers took a hefty 69% of the sale, underlining the strong demand for very long-dated triple-A rated debt. - Reuters

source https://www.thesundaily.my/business/australia-dollar-steps-back-from-highs-after-consumer-price-fall-DC3206261

US consumer confidence dims in July as Covid-19 pandemic intensifies

WASHINGTON: US consumer confidence deteriorated in July as the coronavirus pandemic intensified, with the short-term outlook for business conditions, earnings and employment all worsening, according to a key survey released on Tuesday.

The Conference Board research firm said its consumer confidence index fell to 92.6 from 98.3 in June, worse than analysts expected amid a surge in coronavirus cases nationwide that has hampered the tentative economic recovery.

"Looking ahead, consumers have grown less optimistic about the short-term outlook for the economy and labour market and remain subdued about their financial prospects," said Lynn Franco, The Conference Board's senior director for economic indicators.

"Such uncertainty about the short-term future does not bode well for the recovery, nor for consumer spending."

The index shot up more than 12 points in June as states lifted lockdowns meant to stop Covid-19 from spreading.

The reopening of businesses has boosted economic activity in recent months, but left the country struggling to contain the resurgence in new cases of the coronavirus, forcing some authorities in the hard-hit South and West regions to either close businesses again or halt reopenings.

"Large declines were experienced in Michigan, Florida, Texas and California, no doubt a result of the resurgence of Covid-19," said Franco.

The expectations index gauging consumers' short-term outlook plunged to 91.5 in July from 106.1 in June, with less than a third of respondents expecting conditions to get better in the next six months.

Ian Shepherdson of Pantheon Macroeconomics said future expectations are primed for another hit thanks to the surge in cases, "which has peaked but is unlikely to fall far enough over the next few weeks to prevent another drop in the index in August."

And Shepherdson warned the index could worsen further if expanded unemployment benefits included in the US$2.2 trillion (RM9.35 trillion) CARES Act rescue package are allowed to expire at the end of July.

Republicans and Democrats in Congress are currently locked in debate over the best plan to support the economy, with Republicans favoring a sharp decline in expanded jobless benefits.

The Conference Board said the present situation index measuring views on employment and business conditions rose in July to 94.2 from 86.7.

The number of consumers saying business conditions were "good" was relatively steady at 17.3% while those saying they were "bad" fell in July to 39.1%.

People saying jobs were "plentiful" also increased slightly while those saying they were "hard to get" decreased more than three percentage points.

The share of consumers expecting an increase in income was little changed at 15.1% this month and the proportion anticipating a drop rose to 15.0% from 14.1%. – AFP, Reuters

source https://www.thesundaily.my/business/us-consumer-confidence-dims-in-july-as-covid-19-pandemic-intensifies-GY3199008

Mitsubishi Motors shares hit record low as Asean sales slump casts doubt on recovery

TOKYO: Japan's Mitsubishi Motors faced doubts about a quick recovery after posting dismal quarterly sales in its key Southeast Asia market partly due to the coronavirus outbreak, sending its shares down 13% to a record low on Tuesday.

A day earlier, Mitsubishi Motors, a junior member of the auto alliance of Nissan Motor and Renault SA, reported that sales in Southeast Asian countries, which normally account for a quarter of its global sales, plunged by a sharper-than-expected 68% to make up just 17% of total sales during April-June.

The automaker has bet on growth in Indonesia, the Philippines, Thailand and Vietnam where it has dominated bigger rivals, and which have felt the brunt of the coronavirus pandemic later than China and other countries.

As a result, some experts say that Mitsubishi's sales recovery may lag other automakers' and complicate a restructuring plan that it detailed on Monday.

The automaker also projected an operating loss of ¥140 billion (RM5.64 billion) for the year ending on March 31, 2021, its biggest loss in at least 18 years.

Mitsubishi Motors' results were "shocking", said analyst Mio Kato of LightStream Research, who publishes on the Smartkarma platform, noting that Southeast Asia was particularly concerning.

"Asean was meant to be its growth driver and was even positioned as its key attractive point to the Renault-Nissan Alliance. Asean sales have collapsed and it is now generating losses," Kato said in a note to clients, referring to Southeast Asia.

Globally it sold just 139,000 vehicles in the April-June quarter, a 53% tumble from a year ago. To preserve cash, the automaker said it would not pay a dividend this year.

Mitsubishi's shares closed down 12.6% at ¥235 after falling as low as ¥234, a lifetime low since their 1988 listing. The shares have nearly halved this year.

Hisashi Arakawa, deputy head of investment management at Aberdeen Standard Investments in Tokyo, said Mitsubishi Motors' difficulties also stood in contrast to those of some other Japanese car makers, especially Toyota Motor Corp, which were doing relatively well in the pandemic by increasing market share in several markets.

"On top of big losses, cuts in dividend may have contributed to the fall in its shares," he added.

Some analysts were sanguine about the company's longer-term outlook and backed its recovery strategy.

"In the short term Southeast Asia is not going to work that well for them, but in the longer term it's the right thing for them to do," said Chris Richter, deputy head of Japan research at CLSA. – Reuters

source https://www.thesundaily.my/business/mitsubishi-motors-shares-hit-record-low-as-asean-sales-slump-casts-doubt-on-recovery-NX3198906

Peugeot maker PSA Group upbeat on strong rebound

PARIS: Peugeot maker PSA Group delivered a profit in the first half of the year even as the Covid-19 pandemic hit revenue, and said a strong sales rebound in June in its core European markets had extended into July.

The French carmaker, which suffered like rivals as dealerships closed and which halted production as the outbreak spread from China to Europe and the United States, also said on Tuesday it was sticking with its mid-term profit margin target.

"June has been a very strong rebound in sales and July is seeing a similar trend," Financial Chief Philippe de Rovira told reporters.

Chief executive Carlos Tavares added order books were "excellent" at the end of the first half, boosted by pent-up demand for new versions of its Peugeot 208 model and Opel's Corsa after coronavirus lockdowns eased.

Data on Tuesday showed a surge in export expectations among German automakers, adding to signs of a strong sector recovery. However, troubled Japanese manufacturer Nissan forecast a record annual operating loss.

PSA is in the middle of working through a merger agreement with Italy's Fiat Chrysler Automobiles (FCA), which will open it up further to other markets like the United States.

The French group reiterated a goal for average margins of over 4.5% in its automotive unit for 2019-2021, even though these were down to 3.7% in the first half from 8.5% at the end of 2019.

PSA's profitability has eclipsed that of some rivals including France's Renault in recent quarters, helped by a focus on pricier models like SUVs.

Under Tavares, PSA has kept a lid on production costs, and executives said on Tuesday the operational breakeven point - which had reached 53%, meaning the firm could still generate cash with half its usual car volume - would be even lower in 2020.

The group's net profit for the first half of 2020 also stayed in positive territory, at €595 million (RM2.96 billion), down from €1.83 billion a year ago. Revenue, meanwhile, fell 34.5% to €25.12 billion.

PSA said it was experimenting with more online sales, including with its own employees in France and across Europe, and expected this to become a growing part of its business.

Tavares told analysts the merger with FCA – set to create the world's fourth largest carmaker under the name "Stellantis" – was still on course to close in the first quarter of 2021.

Earlier this month, European Union antitrust regulators suspended their investigation into the proposed merger while waiting for data. – Reuters

source https://www.thesundaily.my/business/peugeot-maker-psa-group-upbeat-on-strong-rebound-NK3194708

Nissan warns of record ¥470 billion operating loss for current financial year

TOKYO: Nissan Motor Co warned of a record operating loss this year and its lowest sales in a decade as the Covid-19 pandemic hampers its turnaround efforts.

Japan's No. 2 carmaker is battling to recover from a rapid expansion that has left it with dismal margins and an ageing portfolio, as well as revive its alliance with Renault that was rocked by the arrest of long-time boss Carlos Ghosn.

But the virus pandemic and associated plunge in demand has taken a heavy toll on the car industry, with Nissan reporting a second straight quarter of operating losses on Tuesday.

The company forecast an operating loss of ¥470 billion (RM18.94 billion) for the year to March 2021, much larger than analysts' consensus estimate for a ¥262.8 billion loss, according to Refinitiv data. That would be the second annual loss in a row.

The maker of Rogue SUVs and Leaf electric cars also warned revenue would likely plunge by a fifth to ¥7.8 trillion this year, with vehicle sales falling to an 11-year low of ¥4.13 million from ¥4.93 million the year before.

Adding to expected losses is a likely deterioration in Nissan's sales financing business as cash-strapped customers struggle to make lease payments, while underutilised factories are also burning through cash.

"The market outlook remains uncertain and we may see a further deterioration in demand due to a possible second wave of the pandemic," chief executive Makoto Uchida told a livestreamed briefing.

"Fiscal year 2020 will be a challenging year in terms of profitability and free cash flow," Uchida said, adding Nissan would not issue a dividend this year.

Still, Nissan said it expected to cut more than ¥150 billion this year from costs related to marketing, selling and depreciation – roughly half its target to cut ¥300 billion from its fixed costs by March 2024.

In an attempt to revive its fortunes, Nissan unveiled a far-reaching restructuring plan in May that calls for a dramatic reduction in production lines and its vehicle model range.

In the first quarter of this financial year, it made an operating loss of ¥153.9 billion, following a loss of ¥94.8 billion the quarter before.

Global sales tumbled 48% to 643,000 vehicles in April-June as sales halved in North America and fell 40% in China.

While demand in the United States remains weak due to the pandemic, Nissan said the proportion of retail sales was increasing as it shifts away from years of highly discounted fleet sales. As a result, each car sold in the United States resulted in an increase in revenue of more than US$700.

Nissan said it had secured more loans and issued debt in the past two months to boost liquidity to cope with the virus crisis, resulting in an untapped credit line of around 1.9 trillion yen at the end of June.

But free cash flow at its automotive business has deteriorated to minus ¥815.7 billion, as it burns through cash to keep its plants running, with many of them yet to return to normal production levels.

As global output normalises, chief financial officer Stephen Ma said he saw a "pretty good chance" that free cash would turn positive in the second half.

source https://www.thesundaily.my/business/nissan-warns-of-record-470-billion-operating-loss-for-current-financial-year-FJ3193711

IATA: Global air traffic won't return to pre-Covid level before 2024

PARIS: Global air traffic will not return to levels seen before the coronavirus pandemic until at least 2024, the International Air Transport Association (IATA) said.

Uncertainty about the timing of border reopenings is the main factor, IATA's chief economist Brian Pearce told a news conference. "We now are expecting 2019 levels not to be reached until 2024 which is a year later that what we had previously expected," he said.

The outlook depends on how countries manage "to control the virus", he said.

New British restrictions on travel with Spain had "created a lot of uncertainty", Pearce said.

"What we haven't seen is a wide spread of reopening, particularly for long haul, particularly for inter-Atlantic travel," he said.

Any recovery in the second half of the year would be "slower than we hoped" after a weaker-than-forecast rebound in May and June.

Because of rising Covid numbers in some countries, the reopening of international borders would take longer than previously forecast, he said.

For 2020 as a whole, IATA now expects a 63% drop in air traffic, worse than its previous forecast of 55%, Pearce said.

IATA, which groups 290 airlines, projects their income to be amputated by half this year compared to 2019.

Recovery prospects are weakened by the spread of COVID-19 in the United States and developing countries together representing 40% of global air travel, IATA said.

Business travel may also face a sustained slump, threatening the profitability of long-haul airlines and routes as corporate clients rein in spending and make greater use of video-conferences that have become the norm during lockdowns.

"It will remain to be seen whether we see a recovery to pre-crisis business travel patterns," Pearce said. "Our concern is that we won't."

Long-haul carriers may need to rely more heavily on cargo to maintain the viability of some routes because of lower business demand, he said. "For many network airlines, the premium-paying passengers were essentially the ones who drove the profitability." – AFP, Reuters

source https://www.thesundaily.my/business/iata-global-air-traffic-won-t-return-to-pre-covid-level-before-2024-BY3199355

Bursa Malaysia posts best-ever first-half results since its listing, says IPO pipeline still healthy

KUALA LUMPUR: Bursa Malaysia Bhd, which achieved its best-ever first-half financial performance in January-June 2020 (H1’20) since its listing in 2005, stressed that the pipeline of initial public offerings (IPO) remains healthy with 25 new listings expected this year compared with its initial target of 40 due to the impact of Covid-19.

“We anticipate two Main Market, 16 ACE Market and seven LEAP Market listings this year,” CEO Datuk Muhamad Umar Swift told a press conference after announcing its Q2 results yesterday.

There were seven listings in H1’20, while there were 30 listings last year.

Umar said RM1.6 billion was raised in H1’20 from new listings compared with RM1.4 billion in H1’19 due to the bigger IPO sizes.

On new offerings, Umar said the bourse is interested in exchange-traded funds and new derivatives products, looking at potential options around rubber and coffee.

“We’re also engaging other exchanges to bring their products to Malaysia’s derivatives space.

One of the key objectives is to ‘democratise’ investing. We’d like to see the opportunities provided to private banking clients, private wealth clients to be available on the exchange.”

Bursa Malaysia’s net profit for the second quarter ended June 30 jumped 86% to RM86.23 million from RM46.34 million a year ago, thanks to the securities market. Revenue went up 45% to RM179.78 million compared with RM123.96 million in the same quarter last year.

For the six months period, its net profit jumped 62% to RM150.96 million from RM93.19 million due to higher operating revenue, which increased by 33.6% to RM320.7 million from RM240 million in H1’19. Revenue was up 32% to RM330.53 million from RM250.49 million in the previous year corresponding period.

Total operating expenses in H1’20 increased by 3.7% to RM127.1 million from RM122.6 million in H1’19, mainly due to higher staff and technology costs.

Its annualised return on equity and earnings per share of 39% and 18.7 sen respectively have allowed the board to declare an interim dividend of 17 sen, or a dividend payout ratio of 91.1%.

CFO Rosidah Baharom said the possibility of a higher dividend this year will depend on its H2’20 performance. “We will evaluate in terms of our cash position. We’ll strive to maintain our track record to pay at least 90%, subject to the board’s approval.”

The elevated market volatility has resulted in higher trading activities in both the securities and derivatives markets.

For H1’20, the securities market registered a trading revenue of RM188.2 million compared with RM117.8 million in H1’19, increasing by 59.7% as a result of higher average daily trading value for on-market trades. The broader market was supported by local investors, with higher retail participation during the period.

“We see confidence coming back to the market (in H2’20). However we are also mindful because this is fragile. If we see a re-emergence of Covid-19 infections, that would also impact the volatility and confidence of the market,“ said Umar.

Derivatives market trading revenue increased by 44.3% to RM48 million in H1’20 from RM33.3 million in H1’19, mainly due to higher number of contracts traded for crude palm oil futures and FTSE Bursa Malaysia KLCI futures. Average daily contracts for the derivatives market rose 55.9%, with 76,956 contracts in H1’20 compared with 49,351 contracts in H1’19.

Bursa Malaysia recorded the highest trading volume in its history of 12.5 billion shares on July 20, Umar noted, adding that the emergence of millennials in the market is encouraging.

“This has been something we have been working very hard to achieve. We will continue to introduce initiatives and streamlined product offerings, such as expanding the range of trading channels and platforms to improve the seamless digital journey on Bursa Malaysia for the new generation of investors,” he said.

source https://www.thesundaily.my/business/bursa-malaysia-posts-best-ever-first-half-results-since-its-listing-says-ipo-pipeline-still-healthy-MX3198718