PM-linked stocks see trading swell, sin stocks under pressure

PETALING JAYA: Eden Inc Bhd and Thriven Global Bhd saw a surge in investor interest today, following the appointment of Tan Sri Muhyiddin Yassin as Malaysia’s eighth Prime Minister over the weekend.

At the noon break, Eden shares had settled at 26.5 sen, 7 sen or 35.9% higher than its closing price of 19.5 sen last Friday, with 171.7 million. The shares had risen as much as 92.3% to an intraday high of 37.5 sen in early trade after opening at 35 sen.

Likewise, Thriven shares were 11 sen or 50% higher at 33 sen at 12.30pm, with a turnover of 57.3 million shares. The counter had opened 90.9% higher at 42 sen, from its close of 22 sen last Friday, with an intraday high of 48 sen seen in early trade.

Eden and Thriven are linked to Datuk Fakhri Yassin Mahiaddin, the son of Muhyiddin. Thriven is a property developer, while Eden is engaged in food and beverage and tourism operations.

Conversely, ‘sin’ stocks such as Carlsberg Brewery Malaysia Bhd and Heineken Malaysia Bhd and consumer stocks such as Nestle (Malaysia) Bhd and Dutch Lady Milk Industries Bhd topped the losers list on Bursa amid fears of change in governing policy under the new government, as well as the spread of Covid-19.

Carlsberg was the top loser this morning, with its share price plunging as much as 11.43% to RM28.20 in early trade, the lowest since Dec 24, 2019. At the noon break, the group’s shares shed RM2.84 or 8.92%, ending at RM29.

Heineken’s share price dived to almost a year low at RM21.72 this morning, tumbling as much as 14.82% in early trade. At 12.30pm, the brewer’s shares were at RM23.18, RM2.32 lower on 699,000 shares done.

Nestle lost RM2.70 or 1.89% to end at RM140.30 at 12.30 pm. The counter had opened 2.7% lower at RM139.10. Meanwhile, Dutch Lady shares had opened 3% or RM1.30 higher at RM43.84, from last Friday’s close of RM42.54.

However, it tumbled to an intra-day low of RM41.70, before rebounding slightly but still 74 sen lower at RM41.80 by the noon market close, with 7,700 shares done.

Gaming counters were also impacted as Magnum Bhd and Berjaya Sports Toto Bhd (BToto) dropped to their lowest levels since June last year.

Magnum’s share price went down as much as 15 sen or 6.22% at RM2.26, the lowest since June 4, 2019. At 12.30pm, the counter was 9 sen or 3.73% lower at RM2.32.

At the opening bell, BToto’s share price fell 2 sen to RM2.49, before sliding 5.2% lower to an intraday low of RM2.38. At the noon break, BToto shares were 12 sen down to RM2.39, with 1.37 million shares exchanging hands.

source https://www.thesundaily.my/business/pm-linked-stocks-see-trading-swell-sin-stocks-under-pressure-EY2067574

Guocoland to sell Menara Guoco to Tower REIT for RM242.1m

PETALING JAYA: Guocoland (Malaysia) Bhd has proposed to dispose of Menara Guoco in Damansara Heights to Tower Real Estate Investment Trust (Tower REIT) for RM242.1 million cash, in a related party transaction.

It is expected to realise an estimated net gain on disposal of RM6.8 million for Guocoland, which represents a consolidated earnings per share of 1 sen.

Guocoland told Bursa Malaysia that its indirect wholly owned subsidiary DC Offices Sdn Bhd had on Monday entered into a conditional sale and purchase agreement (SPA) with Tower REIT’s trustee MTrustee Bhd for the exercise.

The proposed disposal is deemed to be a related party transaction as Guocoland is a major unitholder of Tower REIT.

Menara Guoco is a a 19-storey office building which forms part of an integrated commercial development known as Damansara City, comprising another office building, a hotel, a retail mall, serviced apartments and car parks.

DC Offices acquired the development rights in respect of the property in 2012 and completed the construction in 2015 with a total cost of investment of RM165.1 million as at Feb 6, 2020.

The investment objective of Tower REIT is to invest primarily in a portfolio of real estate including quality office buildings, commercial properties, residential properties and industrial properties in order to provide its unitholders with regular and stable distributions as well as to achieve medium to long-term growth in its net asset value per unit.

Tower REIT’s portfolio comprises two commercial office buildings located in Kuala Lumpur.

For Guocoland, it represents an opportunity for the group to realise its investment in the property as well as in line with the group’s strategy to focus on property development. Proceeds from the proposed disposal will provide the group with the necessary funds for existing working capital requirements.

“In addition, the repayment of bank borrowings using the proceeds from the exercise is also expected to result in interest savings, which would improve the group’s overall cash flow management.”

The exercise is expected to be completed by the third quarter of 2020.

At the midday break, Guocoland’s share price was down 3 sen to 63 sen, while Tower REIT slipped 1 sen to 73 sen.

source https://www.thesundaily.my/business/guocoland-to-sell-menara-guoco-to-tower-reit-for-rm2421m-EY2067457

BOJ reassurance on coronavirus bolsters speculation of global policy action

TOKYO: Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank will take necessary steps to stabilise markets jolted by the coronavirus outbreak, bolstering speculation about coordinated global policy action.

Kuroda’s comments, made in an emergency statement just days after a similar move by Federal Reserve Chair Jerome Powell, were welcomed by markets as a signal the world’s biggest central banks were mustering a coordinated response to the crisis.

Kuroda said financial markets have made “unstable movements” on heightening uncertainty over the impact on the economy from the epidemic.

“The BOJ will monitor developments carefully, and strive to stabilise markets and offer sufficient liquidity via market operations and asset purchases,“ he said.

The statement’s language suggested the BOJ will make full use of its existing tools to flood markets with funds, before pondering additional monetary easing steps.

Indeed, the BOJ subsequently offered 500 billion yen ($4.62 billion) in two-week funds via market operations. Investors also expect the central bank to ramp up daily purchases of exchange- traded funds (ETF) to put a floor on stock prices.

“Kuroda’s statement focused on market operations and asset purchases, which meant the BOJ may make its ETF buying more flexible to support stock markets or take steps to avoid money markets from tightening,“ said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities.

In his own unscheduled statement issued on Friday, Powell said the Fed would “act as appropriate” to support the economy in the face of risks posed by the epidemic.

Goldman Sachs’ economists Jan Hatzius and Daan Struyven said Powell’s statement “strongly hints” at an interest rate cut at or even before the Fed meets on March 17-18, as well as the likelihood of coordinated action.

“Chair Powell’s statement on Friday suggests to us that global central bankers are intensely focused on the downside risks from the virus,“ Hatzius and Struyven said in a note.

“We suspect that they view the impact of a coordinated move on confidence as greater than the sum of the impacts of each individual move.”

Kuroda’s comments reinforced that view. Asian shares steadied from early losses on Monday as investors placed hopes on a coordinated global policy response to weather the damaging economic impact of the coronavirus epidemic.

But some analysts warned markets against betting too much on additional BOJ easing or globally coordinated rate cuts, given the dwindling tools some central banks have been left with.

Former BOJ board member Takahide Kiuchi said Kuroda’s statement was not a pre-announcement of an imminent easing.

“U.S., European and Japanese central banks could issue a joint emergency statement pledging to act against market turbulence,“ said Kiuchi, currently an economist at Nomura Research Institute.

“That will probably happen before any joint interest rate cuts are pondered. In any case, I don’t think conditions have worsened enough yet for these things to happen.”

The BOJ next meets for a rate review on March 18-19.

Japan fears recession

As of Monday, Japan had 962 coronavirus cases, including 705 from Carnival Corp’s Diamond Princess cruise liner, which was quarantined near Tokyo last month, according to the public broadcaster, NHK.

The outbreak has heightened fears of recession in Japan as supply chain disruptions, slumping overseas tourists and event cancellations hurt an already fragile economy.

Prime Minister Shinzo Abe said the government will announce a second batch of measures around March 10 to prevent the spread of the virus and mitigate its damage to the economy.

Any steps, however, will not involve big fiscal spending as Abe has repeatedly said the government will tap its 270 billion yen in budget reserves for now.

“We will carefully monitor developments and take steps without hesitation, as needed,“ Abe said.

Under a policy dubbed yield curve control, the BOJ guides short-term rates at -0.1% and pledges to cap long-term borrowing costs around zero. It also buys government bonds and risky assets, such as ETFs, as part of its massive stimulus programme. -Reuters

source https://www.thesundaily.my/business/boj-reassurance-on-coronavirus-bolsters-speculation-of-global-policy-action-DX2066858

Oil comes off lows as hopes of OPEC cut, stimulus counter virus gloom

SINGAPORE: Oil prices rebounded more than $1 a barrel after earlier hitting multi-year lows on Monday, as hopes of a deeper cut in output by OPEC and stimulus from central banks countered worries about damage to demand from the coronavirus outbreak.

Brent crude was at $51.31 a barrel, up $1.64 or 3.3%, by 0502 GMT, off $48.40, the lowest since July 2017.

Across the Atlantic, U.S. West Texas Intermediate crude hit a 14-month low of $43.32, before recovering to $46.11, up $1.35, or 3%.

Both marked their first gain after six sessions of losses amid virus worries. The coronavirus, which originated in China, has killed nearly 3,000 and roiled global markets as investors brace for a steep knock to world growth. Equities marked their biggest rout since the 2008 financial crisis last week.

Dragging on oil prices earlier in the day was data unveiled over the weekend by China, the world’s top energy consumer.

Factory activity in the country shrank at the fastest pace ever in February, underscoring the colossal damage from the outbreak on its economy.

“On the one hand, it’s pretty negative on worldwide crude oil and product demand,“ said Lachlan Shaw, head of commodity research at the National Australia Bank.

But then there is news Saudi Arabia is pushing for a million barrels per day cut to be agreed this week, while central banks are increasingly signalling an appetite to intervene and support markets by cutting interest rates, he said.

“So it’s a balance and it’s going to be pretty volatile.”

Several key members of the Organization of the Petroleum Exporting Countries (OPEC) are mulling the additional production cut in the second quarter amid fears the virus outbreak will erode oil demand. The previous proposal was for an additional output cut of 600,000 bpd.

Oil prices are down more than 20% since the start of the year despite OPEC and its allies including Russia, a grouping known as OPEC+, curbing oil output by 1.7 million bpd under a deal that runs to the end of March.

“Inaction by OPEC+ would likely trigger another potentially severe bout of selling,“ analysts at Fitch Solutions have said.

Also, current prices would incentivize Russia to agree to further output cuts although “any cut will likely be of a short duration, for example, three months, with the barrels brought immediately back to market thereafter,“ Fitch analysts said. -Reuters

source https://www.thesundaily.my/business/oil-comes-off-lows-as-hopes-of-opec-cut-stimulus-counter-virus-gloom-IX2066785

Manufacturing sector tested by Covid-19, PMI slips to 48.5

PETALING JAYA: Malaysia’s manufacturing Purchasing Managers’ Index (PMI) fell to 48.5 in February, from 48.8 in January, as the delivery of key raw materials from China was disrupted by the coronavirus outbreak, according to a note by IHS Markit.

The research unit said overseas demand was also adversely impacted, causing new export orders to fall at the steepest rate in over seven years.

IHS Markit chief business economist Chris Williamson said Malaysia’s manufacturing sector reported a double hit from the coronavirus in February.

“Supply shortages for many imported inputs constrained output, while foreign sales were also dampened by virus-related slowdowns in key export markets, notably China, where the extended New Year holiday appears to have played a major role in both limiting supply and hitting demand for Malaysia’s exports,” he said.

Supplier delivery times lengthened to the greatest extent since survey data were first collected in July 2012.

Panel members reported shortages of key raw materials due to the Covid-19 outbreak in mainland China, with shipments being delayed and even cancelled in some cases.

“With delivery delays for inputs more widespread than at any time in the seven-and-a-half year history of the survey, leading to sharp falls to purchasing and inventories, production is also likely to be affected in coming months unless fresh supplies can be sourced,” Williamson added.

According to the IHS survey, production across the Malaysian manufacturing sector was adversely impacted by shortfalls of inputs, with the output index slipping to an eight-month low in February, signalling softening momentum.

In addition to the supply chain issues, headwinds also came from external markets as new export orders fell at the steepest rate since November 2012.

Total new order intakes were subsequently placed under pressure due to the unfavourable external environment. Overall, the survey’s new order index fell to its lowest since last September.

Meanwhile, firms were unable to clear volumes of outstanding work as quick as they were in January due to inadequate input stocks. The rate of backlog depletion eased to a four-month low.

“Due to negative Covid-19 demand- and supply-side shock, Malaysian manufacturers reported a reduction in both purchasing activity and inventories.

“The level of employment was also reduced as some firms opted to not renew contracts for some employees given the possibility of production being constrained by an uncertain supply of inputs,” IHS noted in its statement.

However, the 12-month ahead outlook for manufacturing output remained positive in February as some companies foresee a pickup in economic growth.

On the other hand, the degree of optimism slid to a 20-month low as uncertainty towards raw material supplies and demand conditions weighed on confidence.

source https://www.thesundaily.my/business/manufacturing-sector-tested-by-covid-19-pmi-slips-to-485-CX2066712

Khazanah, govt to further review proposals for Malaysia Airlines

KUALA LUMPUR: Malaysia’s sovereign wealth fund Khazanah Nasional Bhd says it will continue to work closely with the government and Malaysia Airlines to further review the proposals and finalise a decision on the appropriate strategic option moving forward.

Managing director Shahril Ridza Ridzuan (pix) said the fund has evaluated options to resolve key issues faced by Malaysia Airlines.

He said Khazanah had also launched a process to evaluate potential partners for the airline in 2019.

“A total of nine proposals were received, of which four were shortlisted,” he said in a statement today.

Meanwhile, Shahril Ridza said that Khazanah has successfully achieved a resolution on the PLUS Malaysia toll restructuring.

He said the resolution resulted in an 18 per cent reduction in toll rates on PLUS highways and savings to the government totaling RM42 billion over the new concession period ending 2058 while maintaining Khazanah and the Employees Provident Fund as PLUS shareholders.

“This restructuring is now at the stage of discussions with stakeholders to put into place the necessary amendments to existing agreements,” he added. - BERNAMA

source https://www.thesundaily.my/business/khazanah-govt-to-further-review-proposals-for-malaysia-airlines-XX2066110

Khazanah reports turnaround in overall 2019 performance, profits up to RM7.36b

KUALA LUMPUR: Khazanah Nasional Bhd, in the first full year of its refreshed mandate, reported a turnaround in overall performance for 2019 with record profits from operations contributed by higher divestment gains and lower impairments, and robust portfolio returns.

It achieved profit from operations of RM7.36 billion last year, compared to a loss from operations of RM6.27 billion in 2018.

Gains on divestments increased to RM9.9 billion compared to RM1.4 billion, while impairments were at RM4.9 billion, down from RM7.3 billion the previous year.

The strategic fund also declared a dividend of RM1.0 billion for 2019 while strengthening its financial position with expenses reduced by 28.2 per cent to RM484 million, compared to RM674 million in 2018.

This equates to 35 basis points (bps) as a percentage of assets, compared to 50bps the previous year.

“Our 2019 performance was achieved against a backdrop of uncertainties in the global landscape, which saw a prolonged Brexit process as well as the heightening of the US-China trade war.

“This was made more challenging by the continued low returns environment and generally slower economic growth. Despite these challenges, we managed to achieve significant progress in delivering on our mandate to grow Malaysia’s long-term wealth,” managing director Shahril Ridza Ridzuan said in a statement today.

He said one year into its portfolio rebalancing exercise, Khazanah has progressed significantly towards diversifying the commercial fund under the refreshed mandate and is well positioned to increase its investment activities in 2020.

The strategic fund achieved financial and strategic outcomes for specific assets despite the sluggish market in 2019.

Khazanah conducted regular engagements with the government to enhance the regulatory landscape, refreshed and strengthened the leadership bench at investee companies, and commenced restructuring initiatives to improve financial performance and unlock value.

Looking ahead, Shahril said this year will be particularly challenging as an already uncertain global economy is harmed by the ongoing COVID-19 spread.

“While our government’s stimulus package is a welcome response, we nevertheless are preparing for a period of global economic slowdown.

“The current uncertainties will affect countries and companies alike. Nevertheless, we are comfortable that our diversified portfolio and strategies are robust while accepting that it will be extremely difficult to achieve the same levels of success as 2019,” he said.

Khazanah, he said, would continue to focus on further diversifying the commercial fund, while working with the government to enhance relevant regulatory frameworks, embedding Environment, Social and Governance considerations across all investment activities, and engaging investee companies on value creation initiatives. - BERNAMA

source https://www.thesundaily.my/business/khazanah-reports-turnaround-in-overall-2019-performance-profits-up-to-rm736b-CX2066015