Bursa: Healthy IPO pipeline in the second half of the year

KUALA LUMPUR: Bursa Malaysia Bhd expects strong listing activity in the second half of the year with 13 initial public offerings (IPOs), according to its CEO, Datuk Muhamad Umar Swift (pix).

“We have a healthy pipeline of 13 companies to be listed in the second half of the year with an estimated market capitalisation of RM15 billion,” he told reporters at a briefing on Bursa Malaysia’s financial results today.

“While the market is softer, it makes us confident that we are seeing this stream of businesses coming in, that Malaysia has a deep base for investors,” he said.

Of the 13 companies that have received approval for listing, three will be listed on the Main Market and seven on the ACE Market, while the remaining three will be listed on the LEAP Market.

In the first half of the year, a total of 14 companies with a market capitalisation of RM5.5 billion were listed on the bourse.

Meanwhile, Bursa Malaysia’s profit after tax and minority interest (patami) fell 23.6% to RM93.2 million in the first half of the year ended June 30, 2019 (1H19) from RM122 million in 1H18.

Despite a decline in its performance, Muhamad Umar said he is cautiously optimistic for the second half of the year. With the net foreign funds inflows in June, he believes that the market has bottomed out.

“We think Malaysia has a wonderful story, growth is good, we have foreign funds flowing back in again and new projects are coming in, it’s time for investors to consider a comeback,” he said.

Although Muhamad Umar is upbeat on the prospect of foreign fund inflows for the second half of the year, he said it remains to be seen whether they will return to last year’s level due to the uncertainties in the market.

He said trade tensions between the US and China as well as a potential no-deal Brexit would be hurdles for foreign funds to return to their previous level on the local bourse.

“On the other hand, the fundamentals of the local market remain strong – we have a strong and sound banking system as well as positive developments such as the ECRL (East Coast Rail Link) and the relaunching of Bandar Malaysia,” he added.

For 1H19, Bursa Malaysia’s revenue fell 14% to RM250.49 million from RM291.27 million in first half of the previous year. It declared an interim dividend of 10.4 sen to be paid on Aug 30, 2019.

source https://www.thesundaily.my/business/bursa-healthy-ipo-pipeline-in-the-second-half-of-the-year-EB1201754

RAM Ratings: Malaysian exports in June likely higher, but external headwinds loom

KUALA LUMPUR: RAM Ratings expects Malaysia’s exports to have continued expanding in June, albeit at a more moderate pace of 1.1% (May: 2.5%), partly attributable to the Hari Raya festive holidays in June and generally more subdued global trade.

In line with its sustained export performance, imports in June are anticipated to be 1.6% higher (May: 1.4%). This would bring Malaysia’s overall trade surplus to RM5.7 billion at month-end.

Looking ahead, the Japan-South Korea trade row is envisaged to exert further downside pressure on weak regional trade momentum, particularly for the electrical and electronics (E&E) supply chain. This follows Japan’s decision to impose restrictions on exports of high-technology chemicals to South Korea (effective July 4).

According to RAM, these items are vital to the production of semiconductors and display screens on smart devices – components of South Korea’s prominent E&E sector. Given Japan’s dominance in the supply of these high-technology materials (accounting for a reported 90% of global supply), this will likely exacerbate the already sluggish outlook on South Korea’s E&E exports.

RAM said the direct impact on Malaysia’s exports from a potential shortfall in supply as well as a potential loss in demand from South Korea appears limited, as the former does not rely heavily on the latter’s E&E sector but Malaysia could be indirectly affected via a disrupted global E&E production chain.

RAM head of research Kristina Fong said the latest escalation in trade tensions between Japan and South Korea poses key downside risks to the global supply chain for E&E products, especially given the latter’s dominance in the supply of memory chips.

“South Korea accounted for 37.6% of global memory chip exports in 2018. Although first-degree effects may not be significant for Malaysia, the potential overarching supply bottlenecks for key inputs (such as these chips) in the short term may further stifle the tech cycle and retard the growth of the global E&E industry,” Fong said in a statement today.

However, she noted that there may still be some room for trade-diversion benefits for Malaysia, in a bid to manage bottlenecks in the supply chain for inputs arising from export restrictions.

She said demand may be diverted to Malaysian firms and global E&E players could also capitalise on the existing infrastructure and scale up their output capacity in Malaysia if they decide to diversify their production away from South Korea.

South Korea accounted for 37.6% of global memory chip exports in 2018. – REUTERSPIX

source https://www.thesundaily.my/business/ram-ratings-malaysian-exports-in-june-likely-higher-but-external-headwinds-loom-XB1201716

Tough demand conditions weigh on PMI in July

KUALA LUMPUR: The headline IHS Markit Malaysia Manufacturing Purchasing Managers’ Index™ (PMI®) – a composite single-figure indicator of manufacturing performance – was largely unchanged in July, falling only marginally from 47.8 in June to 47.6.

At current levels, the PMI is broadly indicative of annual gross domestic product (GDP) growth of 4.5%, according to historical comparisons.

According to IHS Markit, the seasonally adjusted Output Index increased for the first time since April during the latest survey period.

“Firms reported a net inflow of new business from abroad for the first time since April, albeit only marginal, with the US, Japan and Turkey mentioned as particular sources of higher export demand,” it said in a statement today.

The rise in exports helped keep the seasonally adjusted New Orders Index above the weak levels seen at the start of the year, but overall demand conditions remained challenging.

Anecdotal evidence suggested that increased competitive pressures had made securing new work more difficult, and that concerns over global economic growth and geopolitical concerns remained headwinds.

However, when looking towards the coming 12 months, Malaysian manufacturers anticipate order book volumes to pick up and support production growth, said IHS Markit, who noted Malaysia’s remarkably resilient business confidence despite external headwinds, though the July survey saw optimism pull back from June’s 68-month peak.

The latest survey data also highlighted firms taking a more cautious approach to staffing levels, as employment was reduced in July. Difficulties in retaining and hiring staff were also mentioned as a factor behind the weaker jobs numbers.

The cautious approach was also apparent in purchasing and inventories data. Buying levels were tapered in July, as has been the case since last October, while stocks of inputs and semi-manufactured items were also pared back. According to anecdotal evidence, existing stocks were sufficient to meet the current operational requirements.

Elsewhere, input prices continued to rise, propped up by unfavourable exchange rate variation as well as reports of increased charges from suppliers and greater utility costs.

“However, the rate of input price inflation eased to a three-month low from May’s recent peak to hint at an easing of supply chain inflationary pressures. At the same time, Malaysian manufacturers raised their output charges only marginally in July, in most cases to partly share greater cost burdens with customers,” said IHS Markit.

IHS Markit chief business economist Chris Williamson said the pull-back in the PMI from the higher levels seen early in the second quarter comes at a time of weakening global economic growth and rising worldwide geopolitical concerns.

He said the global PMI surveys have indicated the slowest pace of worldwide GDP expansion for three years in recent months, with deteriorating trade flows and reduced business investment acting as major drags.

Williamson said the positive net balance of companies expecting output to continue to rise over the coming year is an encouraging sign of resilience in the face of global headwinds, with optimism commonly being fueled by new projects, expansion plans and more aggressive marketing.

source https://www.thesundaily.my/business/tough-demand-conditions-weigh-on-pmi-in-july-CB1201466

RAM revises up global sukuk issuance forecast

KUALA LUMPUR: RAM Ratings has revised its global sukuk issuance projection for this year to US$80 billion-US$90 billion (RM331.56 billion-RM373 billion) from US$70 billion-US$90 billion (RM290.12 billion-RM331.56 billion) previously.

It said in a statement today that the upward revision is based on Bank Negara Malaysia’s (BNM) better-than-expected issuance of Islamic securities, the Indonesian government’s commitment and support for the Islamic finance agenda and its role in raising awareness for sustainable and responsible investments (SRI).

As at end of June, global sukuk issuance stood at US$72.7 billion, exceeding the lower range of RAM’s initial projection.

RAM said the new projection was also driven by expectations of the Gulf Cooperation Council’s public sector sukuk issuance providing a sustainable baseline and potentially accounting for a higher proportion of its funding mix.

“Going into the second half of the year, RAM expects Malaysia to retain its pole position as the sukuk market leader in 2019, underpinned by solid support from the government, BNM and the private sector,” said the rating agency.

As at end-June 2019, the gross issuance value of the Malaysian sukuk market had surpassed RAM’s projection of RM100 billion to RM120 billion for the entire year.

Malaysia’s sukuk issuance as at end-June amounted to RM136.9 billion, an increase of 38.3% from RM99 billion recorded in the corresponding period in the previous year.

This was primarily driven by a 61.1% spike in BNM’s issuance of Islamic securities to RM14.5 billion, followed by the corporate sector with RM65.1 billion (+55.5%) and government issues of RM39 billion (+9.9%).

source https://www.thesundaily.my/business/ram-revises-up-global-sukuk-issuance-forecast-XB1201437

Malaysia as Asean digital hub

GEORGE TOWN: Malaysia has the potential to become a digital hub for Asean as the combined market value in the region is projected to reach up to US$1 trillion (RM4.12 trillion) by 2025.

Malaysia Digital Economy Corporation Sdn Bhd (MDEC) vice-president (investment & industry development) Hew Wee Choong said that there is a huge potential to tap in this area.

Combined with the country’s digitalised ecosystem tailored to boost the start-up presence and to draw in investors, it was only natural for Malaysia to become a hub for the digital economy of Asean.

Currently, Asean has 639 million consumers, about half of China’s population with a gross domestic product (GDP) of US$2.5 trillion and an average growth of 6%.

The region with its 10 countries combined, is the globe’s fifth largest economy with tremendous potential to grow due to a young and energetic population.

Hew said that Malaysia has placed the country in a position to spread the growth of the digital economy throughout the region.

The country already has 20.9 million smartphone users with a household internet penetration rate of 86% while the digital economy is expected to contribute up to 20% of the nation’s entire GDP by next year.

Hew outlined that Malaysia will boost funding for start ups and reaching out to techpreneurs in the region.

“We will also set up an environment which would allow start-ups to collaborate seamlessly with multinational corporations and with fellow service providers,” he said after attending a technology assessment seminar titled “Keysight World”.

The Keysight World seminar was organised by the US-based Keysight Technologies, whose production line in Penang provides the leadership for its global supply chain.

According to him, Malaysia will also bring in the necessary technology applications to help start-ups grow their ventures.

In addition, MDEC will liaise with venture capitalists and new age investors to consider setting up more funds for the Asean digital ecosystem.

Keysight Technologies president Datuk Gooi Soon Chai said that 40% of future capital investments for the Internet of Things (IoT) would be in Asia.

He said that Keysight is already involved in the processes of IoT, Artificial Intelligence, Big Data with one example being the firm’s research in autonomous vehicles, which may come to fruition by the middle of this new millennium.

In light of the progress made in the electronics and electrical market, Gooi said that Keysight has also doubled its research grant from US$300 million to US$600 million to be invested in Penang.

With the bigger investment, Penang is set to play a big part in the age of the Industrial Revolution 4.0 hence it is important for both the public and private sectors to be ready for the digitalisation of the state and the region, said Gooi.

source https://www.thesundaily.my/business/malaysia-as-asean-digital-hub-FB1201403

Bursa expects stronger listing activity in 2H19

KUALA LUMPUR: Bursa Malaysia Bhd expects a stronger listing activity in the second half of the year with 13 initial public offerings (IPO), according to its CEO Datuk Muhamad Umar Swift.

“We have a healthy pipeline of 13 companies to be listed in the second half of the year with an estimated market capitalisation of RM15 billion,” he told the media at Bursa’s first half financial results briefing here today.

“While the market is softer, it makes us confident that we are seeing this stream of businesses coming in, that Malaysia has a deep base for investors.”

Of the 13 companies that have received approval to list by Bursa, three are for its Main Market, seven companies will be listed on the ACE market, while the remaining three will be listed on LEAP market.

In the first half of the year, Bursa saw the listing of 14 companies with a market capitalisation of RM5.5 billion.

source https://www.thesundaily.my/business/bursa-expects-stronger-listing-activity-in-2h19-KA1200927

Tashin debuts on ACE Market

KUALA LUMPUR: Tashin Holdings Bhd, which debuted on the ACE Market of Bursa Malaysia Securities Bhd this morning, slid 13% to 50.5 sen at mid-day from its offer price of 58 sen.

At 12.22pm, 44.76 million shares were traded.

Tashin is setting up a factory as well as upgrading its existing steel processing line in Seberang Prai, Penang as it expands the steel processing business segment after listing.

Tashin managing director Lim Choon Teik said the factory will have additional steel processing lines and five new wire mesh production lines with a combined effective production capacity of 50,000 mt per annum.

“We plan to utilise RM25.25 million from the initial public offering (IPO) proceeds to expand our business operations after listing” he said in a statement.

The new factory to produce wire mesh is expected to be completed by 2021.

Tashin’s current core activity is steel processing and manufacturing of steel products. Trading of wire mesh and the expansion into the manufacturing of wire mesh will enable it to have control over the supply of wire mesh. The manufacturing of wire mesh will enable the company to diversify its manufacturing products and improve its profitability.

“We believe the addition of wire mesh in our manufactured product offerings will allow us to improve our profitability and strengthen our customer base, which in turn will enhance our competitive position. Our plans to make new products will hinge on the market developments,” Lim added.

source https://www.thesundaily.my/business/tashin-debuts-on-ace-market-KK1194963