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PRICES IN US OUTSTRIP FORECASTS IN SIGN
OF INFLATION PERSISTING p15

T H U R S DAY, M AY 1 2 , 2 0 2 2 w w w. t h e e d g e m a r k e t s. c o m

ISSUE 376/2022

CEOMorningBrief
HOME: Ringgit regains strength against US dollar after OPR hike p4
Indonesia’s flip-flops give Malaysia edge in top palm oil market India p5

WORLD: Lagarde joins ECB officials signalling July as rate lift-off p15
France plans food vouchers, welfare rise to calm inflation fears p17

THE EDGE FILE PHOTO THE EDGE FILE PHOTO

OPR hiked Felda
as BNM sees exercises put
growth on option to sell
firmer 37% stake in
footing Eagle High
to Rajawali
Report on Page 3.
Report on Page 2.

THURSDAY MAY 12, 2022 2 THEEDGE CEO MORNING BRIEF

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HOME

Felda exercises put option to sell 37% stake
in Eagle High to Rajawali

KUALA LUMPUR (May 11): Felda’s BY ADAM AZIZ pabilities” to honour its obligations under
wholly-owned unit FIC Properties Sdn theedgemarkets.com the put option.
Bhd (FICP) has exercised its put option
to sell a 37% stake in loss-making PT PT Eagle High Plantations Tbk “If the put option is properly exercised,
Eagle High Plantation Tbk back to the for example, to be exercised at Felda’s sole
Rajawali Group. Vol (bil) IDR and absolute discretion on the fifth anni-
2 400 versary of the completion date — May 11,
The option entails either PT Rajawali 2022 — Rajawali will honour its obliga-
Capital International or PT Rajawali Cor- 1.5 300 tions,” he explained then.
pora buying back the 37% stake in Eagle
High that was sold to FICP for US$505.4 1 200 Acquired at 96% premium
million (around RM2.2 billion), with 6% 200 Felda bought the 37% stake in Eagle High
interest per annum from May 11, 2017 to 100 soon after its listed associate FGV Holdings
the date of full payment. 0.5 74 Bhd called off a plan to acquire the same
block of shares at a US$632 million price tag.
The put option is exercisable from the 0 0
fifth anniversary of the transaction. Dec 1, 2016 May 11, 2022 Rajawali, which retains a majority stake
in Eagle High, is controlled by tycoonTan
In a statement, Felda said FICP exer- Source: Bloomberg Sri Peter Sondakh, a known associate of
cised the put option “to fully safeguard its Malaysia’s former prime minister Datuk
rights and interests”. Felda’s investment in the stake through Seri Najib Razak.
the put option,” Mohamed Azmin told
“Felda is confident that the exercise of the Dewan Rakyat when tabling Felda’s Critics at the time questioned Fel-
the put option by FICP today is a prudent white paper. da’s acquisition, as the final price tag of
business decision driven by sound corpo- US$505.4 million or 580 Indonesian ru-
rate governance principles. The decision Felda’s early attempt to exercise the put piah per share was at a 95.86% premium
also serves as one of the initiatives to es- option in 2019 was “resisted” by Rajawali, to the market value of Eagle High then.
tablish a leaner and more sustainable busi- Mohamed Azmin said, resulting in Felda
ness model for the Felda Group,” it said. bringing the matter to the Singapore In- The plantation group’s shares were
ternational Arbitration Centre. trading at 74 Indonesian rupiah at the
Ball in Rajawali’s court after long wait time of writing.
The ball seems to be now in Rajawali’s court In response, Rajawali’s managing direc-
to honour its obligations under Felda’s put tor SatrioTjai in April 2019 toldThe Edge In December 2016, Felda’s manage-
option, which has been a contention be- that the group had “more than enough ca- ment justified to The Edge that the valu-
tween the two parties since Felda’s attempt ation used was at US$16,000 enterprise
to exit the investment three years ago. value per hectare, which “compares favour-
ably with recent transactions involving In-
In April 2019, economic affairs minis- donesian palm oil companies”.
ter Datuk Seri Mohamed Azmin Ali told
the Dewan Rakyat that RM1.58 billion or It also described it as “the last oppor-
71% of the original investment had been tunity” to acquire an Indonesian planta-
impaired. Comparatively, Eagle High had tion with a large land bank, and pointed
lost 87.24% in market value to-date versus to Eagle High’s average tree age of seven
Felda’s acquisition price. years versus Felda’s 15 years then.

“There is no proof to show that Felda’s However, the company has failed to
board and management have conducted turn around and has bled for seven con-
due diligence or credit assessment for the secutive years. Despite high crude palm oil
year 2016 on the original owner of Ea- prices, it suffered a net loss of US$15.1
gle High to ensure its ability to pay back million from US$51.9 million in revenue
in the first quarter ended March 31, 2022.

THURSDAY MAY 12, 2022 3 THEEDGE CEO MORNING BRIEF

HOME

OPR hiked as BNM sees growth
on firmer footing

BY AHMAD NAQIB IDRIS OPR
theedgemarkets.com
(%)
KUALA LUMPUR (May 11): Bank Ne-
gara Malaysia’s (BNM) Monetary Policy 3.0 2.75
Committee (MPC) onWednesday (May 11) 2.5 2.50
increased the overnight policy rate (OPR) by
25 basis points to 2% from a record low of 2.0 2.00 1.75 1.75 1.75 1.75 1.75 1.75 1.75 1.75 1.75 1.75 1.75 2.00
1.75% as global inflationary pressures have
increased sharply and after taking into ac- 1.5
count that the sustained reopening of global
economy and improvement in labour mar- 1.0
kets continue to support the recovery of
economic activity from the impact of Cov- 0.5
id-19-driven movement restrictions.
0.0
The ceiling and floor rates of the OPR’s Jan Mar May July Sept Nov Jan Mar May July Sept Nov Jan Mar May
corridor are correspondingly increased to 2020 2021 2022
2.25% and 1.75% respectively, according
to BNM. Source: Bloomberg

“Inflationary pressures have increased ticularly in the US, several central banks calation of geopolitical conflicts, worsening
sharply due to a rise in commodity prices, are expected to adjust their monetary policy supply chain disruptions, and adverse devel-
strained supply chains and strong demand settings at a faster pace to reduce inflation- opments surrounding Covid-19,” BNM said.
conditions, particularly in the US. ary pressures, according to BNM.
Malaysia’s headline inflation, as meas-
“For the Malaysian economy, latest in- “The global growth outlook will con- ured by the consumer price index, is pro-
dicators show that growth is on a firmer tinue to be affected by the developments jected to average between 2.2% and 3.2%
footing, driven by strengthening domestic surrounding the conflict in Ukraine, in 2022, BNM said.
demand amid sustained export growth,” Covid-19, global supply chain condi-
BNM said in a statement. tions, commodity price shocks, and fi- Given the improvement in economic
nancial market volatility,” BNM said. activity amid lingering cost pressures, the
The OPR at 1.75% is the lowest on re- country’s underlying inflation, as meas-
cord, according to BNM data dating back On the Malaysian economy, BNM said ured by core inflation, is expected to trend
to 2004 on the central bank’s website. the latest indicators show that the country’s higher to average between 2% and 3% in
economic growth is on a firmer footing, 2022, according to BNM.
The OPR had been maintained at driven by strengthening domestic demand
1.75% since July 7, 2020, when BNM cut amid sustained export growth. “Nevertheless, upward pressure on pric-
the rate from 2% following the Covid-19 es would be partly contained by existing
outbreak which began in early 2020. The labour market is further lifted by a price controls and the continued spare ca-
lower unemployment rate, higher labour pacity in the economy.
On Wednesday (May 11, 2022), BNM participation and better income prospects,
said in its statement that the sustained reo- according to BNM. “The inflation outlook continues to be sub-
pening of the global economy and improve- ject to global commodity price developments,
ment in labour market conditions continue “The transition to endemicity on April arising mainly from the ongoing military con-
to support the recovery of economic activity. 1, 2022 would strengthen economic activi- flict in Ukraine and prolonged supply-related
ty, in line with further easing of restrictions disruptions, as well as domestic policy meas-
BNM said these factors have partly and the reopening of international borders. ures on administered prices,” BNM said.
cushioned the impact of the military con- Investment activity and prospects have also
flict in Ukraine and the strict Covid-19 Looking back, BNM said that over the
containment measures in China. improved, underpinned by the re- course of the Covid-19 crisis, the OPR was
alisation of multi-year projects reduced by a cumulative 125 basis points
As global inflationary and positive growth outlook. to a historic low of 1.75% to provide sup-
pressures have increased “However, risks to port to the Malaysian economy.
sharply due to the rise in growth remain, which in-
commodity prices, strained clude a weaker-than-expect- BNM said the unprecedented condi-
supply chains and strong ed global growth, further es- tions that necessitated such monetary ac-
demand conditions, par- tions have since abated.

“With the domestic [economic] growth
on a firmer footing, the MPC decided to
begin reducing the degree of monetary
accommodation.

“This will be done in a measured and
gradual manner, ensuring that monetary
policy remains accommodative to support
a sustainable economic growth in an en-
vironment of price stability,” BNM said.

THURSDAY MAY 12, 2022 4 THEEDGE CEO MORNING BRIEF

HOME

KUALA LUMPUR (May 11): Bank Nega- Economists tion as the domestic economy strengthens.
ra Malaysia’s (BNM) decision to increase surprised by “We believe the focus of BNM’s mone-
the overnight policy rate (OPR) took econ- BNM’s earlier-
omists by surprise, as many did not expect than-expected tary policy setting is to ensure a sustainable
the key policy rate to be hiked up so soon, recovery of Malaysia’s economy.With the
even though they had anticipated rate nor- OPR hike rate of inflation hovering within BNM’s
malisation this year. forecast, we opine there is less pressure for
BY AHMAD NAQIB IDRIS BNM to adopt aggressive policy tighten-
The central bank instituted a 25-ba- theedgemarkets.com ing,” said the research house.
sis-point (bps) hike to the key policy rate
to 2%, after keeping the rate at a record BLOOMBERG It expects another 25bps increase in the
low of 1.75% since July 2020. It cited glob- third quarter of the year to 2.25%, although
al inflation risks from the sharp rises in horizon — the next 25bps in September, this would be subject to the stability of eco-
commodity prices, supply chain disruptions and another 25bps in the fourth quarter, nomic growth, pace of inflation and im-
and strong demand as factors prompting which would take the OPR to 2.5% at year provement in macroeconomic conditions.
its decision. end.
“We do not expect BNM would simply
Notably, the rate hike came amid weak- However, if some of the projected down- adjust OPR in response to any changes on
ness in the ringgit in part due to the eco- side risks to growth do not materialise, he the external front such as Fed’s (US Fed-
nomic slowdown in China. said the bank will prioritise economic re- eral Reserve) monetary policy tightening
covery and leave the rate unchanged in the and the recent weakening of the ringgit
Since end-April, the ringgit has depre- final quarter of the year, to end the year at against the US dollar.
ciated by 3.5% against the US dollar, and 2.25% instead.
was trading at 4.3785 at the time of writing. “Any decision to hike OPR will indicate
Similarly, MIDF Research did not ex- BNM’s confidence in the country’s eco-
OCBC Bank economistWellianWiranto pect a rate hike so soon, but it said the in- nomic fundamentals including the stabil-
was surprised by the central bank’s move crease marked the start of rate normalisa- ity of demand conditions in the economy,”
as he had initially expected the OPR to be said MIDF.
raised at the next Monetary Policy Com-
mittee meeting in July based on the “tame” For UOB Malaysia senior economist
inflation rate. Julia Goh, the hike was not a surprise as
she pointed out that the research house al-
“Alas, the stickiness of global inflation- ready foresaw a May hike back in January.
ary pressures — which have ‘increased
sharply’ in its view — together with its “Taking a cue from BNM’s sanguine
confidence in the ‘firmer footing’ of the outlook on the economy as well as signals
domestic economy, cemented the decision that further monetary policy normalisa-
to start withdrawing the monetary accom- tion would be done in a ‘measured and
modation that was put in place because of gradual manner’, we keep to our current
the pandemic, especially because the Cov- projections for the next 25bps rate hike
id-19 crisis carries less existential threat in the third quarter of 2022, bringing the
now,” he said. OPR to 2.25% by year end.

Wiranto expects more rate hikes on the “Hence, we expect one more rate hike
this year,” said Goh.

KUALA LUMPUR (May 11):The ringgit Ringgit regains Intraday movement of USD/MYR
appreciated against the US dollar in the strength against
afternoon shortly after Bank Negara Ma- US dollar after 4.375 4.3758
laysia (BNM) announced a 25-basis-point
increase in overnight policy rate (OPR) OPR hike 4.378
to 2% to contain inflation.
BY IZZUL IKRAM 4.381
The local currency hit an intraday low theedgemarkets.com 4.382
of 4.3757 against the greenback compared 4.384
with 4.3850 in the morning. 4.3850 on Tuesday (May 10). Year to
date the ringgit has lost 5.05% against 4.387 5.58pm
The ringgit closed at 4.3770 against the US dollar. 8am May 11, 2022
the US dollar compared with Tuesday’s May 11, 2022
(May 10) close at 4.3810. According to BNM’s statement on
Wednesday (May 11), BNM’s move to Source: Bloomberg
The market generally did not expect raise the OPR was influenced by global
the central bank to lift the OPR from inflationary pressures’ sharp increase as en movement restrictions.
a record low of 1.75% so soon consid- well as taking into account that the sus- The ceiling and floor rates of the OPR’s
ering the inflationary pressure is not as tained reopening of the global economy
bad as in other countries although it is and improvement in labour markets con- corridor are correspondingly increased to
mounting. tinue to support the recovery of economic 2.25% and 1.75% respectively, according
activity from the impact of Covid-19-driv- to BNM.
Like many currencies in the emerging
markets, the ringgit has been weakening
over the past two months as the US Fed-
eral Reserve demonstrated its hawkish
stance by raising interest rate by 50 basis
points last week.

It depreciated to a two-year low of

THURSDAY MAY 12, 2022 5 THEEDGE CEO MORNING BRIEF

HOME

MUMBAI/KUALA LUMPUR (May 11): Indonesia’s New normal?
Indonesia’s “unpredictable” palm oil export flip-flops give The flip in Indian palm oil imports would
policies may help Malaysia emerge as the Malaysia edge upend an established pattern of Indonesian
dominant supplier to India, the world’s top in top palm oil dominance across South Asia.
buyer of the edible oil, industry sources said. market India
However, Indian oil refiners feel they
Indonesia is the world’s biggest palm BY RAJENDRA JADHAV & MEI MEI CHU have to protect their supply chains against
oil producer but its erratic export policies, Reuters policy shake-ups after Indonesia’s inter-
including the most recent ban announced ventions in the palm oil market since 2021.
on April 22, have pushed Indian consumers pared to 982,123 from Indonesia, data
to increase their dependence on Malaysia, compiled by SEA showed. “You can’t just rely on Indonesia and
the world’s second-largest producer whose run a business. Even if Indonesia offers
output is less than half of its rival. Trader estimates for May show In- you a discount over Malaysia, one has to
dia imported around 570,000 tonnes of secure supplies from Malaysia to hedge
Malaysia is positioning itself to take palm oil, with 290,000 from Malaysia and against Indonesia’s unpredictable policies,”
advantage of Indonesia’s ban by cutting 240,000 from Indonesia. a Mumbai-based refiner said.
palm oil export taxes by as much as half,
Malaysia’s Commodities Minister Datuk If Indonesia’s export ban stays in place “Refiners commit sales of finished goods
Zuraida Kamaruddin said on Tuesday. for two more weeks, then India’s June palm in advance and we cannot back out just be-
oil imports could fall to 350,000 tonnes, cause raw material is not available,” he said.
The combination of lower export taxes mostly from Malaysia.
and the Indonesian ban may mean Indone- But, Malaysia’s relatively tight palm oil
sia’s share of palm oil exports to India will inventories are a lingering concern follow-
fall to 35% in the current marketing year ing an enduring labour shortage that has
ending on Oct 31, from more than 75% slashed plantation yields.
a decade ago, according to an estimate
from the Solvent Extractors’ Association “Malaysia has limited stocks. Many pro-
of India (SEA), a vegetable oil trade body. ducers in Malaysia are well-sold nearby,”
said an official with a Malaysian planter with
“Malaysia is the biggest beneficiary from operations across Indonesia and Malaysia.
Indonesia’s unpredictable policies,” said
BV Mehta, executive director of Mum- Malaysia produces roughly 40% of In-
bai-based Solvent Extractors’ Association donesia’s output so it cannot completely
of India (SEA), a vegetable oil trade body. replace Indonesian supplies. Even so, Indian
oil consumers are keen to increase Malaysian
“As Indonesia is not in the market, Ma- deals and reduce their reliance on Indonesia.
laysia is selling more, and at near record
high prices.” “Indonesia may lift the ban on exports
sometime this month, but there is no guar-
In the first five months of the 2021/22 antee it will not restrict exports again. Ma-
marketing year, India has bought 1.47 mil- laysia’s export policy is far more stable and
lion tonnes of Malaysian palm oil com- that’s what we want,” said an Indian buyer,
who declined to be named.

BENGALURU (May 11): Malaysia’s eco- Malaysia’s modity prices and domestic demand and
nomic growth likely gathered pace in the economy likely still-buoyant exports are expected to help
last quarter, driven by stronger demand picked up pace drive growth this year and next.
following a relaxation of Covid-19 meas- in 1Q, China
ures, but a prolonged slowdown in China slowdown a worry Growth is forecast to average 6.1% and
could have significant knock-on effects, a 5% this year and in 2023 respectively, ac-
Reuters poll found. BY DEVAYANI SATHYAN cording to a separate Reuters poll published
Reuters last month.
Southeast Asia’s third-largest economy
is predicted to have expanded 4% in the That, along with an improved ex- While the domestic economy is expect-
January-March quarter compared to the port-led acceleration in manufacturing in ed to expand as activities recover from the
same three-month period a year earlier, March, suggests foreign trade remains a disruption caused by Covid-19, a signif-
according to the median forecast of 18 growth engine for a country rich in natural icant slowdown in China poses a greater
economists, faster than the 3.6% increase resources such as oil, natural gas, timber, risk to the world’s second-largest palm oil
in the preceding quarter. palm oil and cocoa. exporter.

Forecasts for annual gross domestic Demand for Malaysian palm oil is set to China is Malaysia’s biggest trade and
product growth, due to be released on rise after top producer Indonesia temporar- investment partner.
Friday (May 13), range from 2% to 5.7%. ily banned shipments last month in a bid to
tame soaring domestic cooking oil prices. “As the engine of growth for the APAC
“Malaysia’s growth improvement in (Asia-Pacific) region, China’s slowing
1Q22 (the first quarter of 2022) was like- Malaysia’s economic performance growth poses risks to the rest of the re-
ly underpinned by stronger domestic de- has improved sharply on stronger com- gion. In particular, the export and import
mand driven by private consumption and of high-value intermediate goods with Chi-
services activities,” said Chua Han Teng, na will affect Malaysia’s key manufacturing
an economist at DBS. sector,” wrote Denise Cheok, an economist
at Moody’s Analytics.
“Relaxed virus containment measures
helped by high vaccination [rates] despite “While Malaysia has limited direct trade
the Omicron wave translated into an up- exposure to Russia and Ukraine, the risk
tick in services activity.” of inventories running low rises as the con-
flict drags on.”

THURSDAY MAY 12, 2022 6 THEEDGE CEO MORNING BRIEF

HOME

Berjaya Food
3Q net profit

more than
doubles, declares
1.5 sen dividend

Heineken’s strategies,” the statement highlighted. BY SHAZNI ONG
1Q profit leaps “Despite the challenging external envi- theedgemarkets.com
54% to RM113.4m
to kick off FY22 ronment, we have delivered a commenda- KUALA LUMPUR (May 11): Starbucks
ble performance for the quarter. and Kenny Roger’s Roasters franchise
BY SEAH EU HEN operator Berjaya Food Bhd’s net prof-
theedgemarkets.com “Our cost and value initiatives are bear- it for the third quarter ended March 31,
ing fruit, whilst we continue investing be- 2022 (3QFY22) more than doubled to
KUALA LUMPUR (May 11): Heineken hind our brands with a consumer-first RM31.58 million from RM11.61 million
Malaysia Bhd kicked off financial year 2022 approach. We thank our employees and in the same period last year in tandem with
(FY22) strongly as net profit jumped 54% to business partners for their resilience and higher revenue recorded for 3QFY22.
RM113.38 million in the first quarter of FY22 commitment as we support Malaysia’s ac-
(1QFY22) ended March 31, 2022 versus celerated economic recovery from the Cov- Earnings per share for the quarter bal-
RM73.54 million in the same period last year. id-19 pandemic,” Heineken’s managing looned to 8.72 sen from 3.27 sen,its bourse
director Roland Bala said in the statement. filing showed onWednesday (May 11).
Earnings per share (EPS), based on
302.1 million shares, stood at 37.53 sen He added that effective commercial exe- Revenue for the quarter jumped 35.37%
from 24.34 sen last year, according to its cution during the quarter enabled top line to RM246 million from RM181.73 mil-
filing on Wednesday (May 11). growth whilst efficient investments helped lion due to higher same-store-sales growth,
deliver an improved bottom line. particularly from Starbucks cafe outlets as
Quarterly revenue grew to RM698.33 a result of the improved mobility upon the
million, a 27% improvement from On the brewery’s business outlook, Bala resumption of domestic tourism and fur-
RM547.74 million. said the group is mindful of the volatile and ther relaxation of the Covid-19 standard
uncertain situation externally and has learned operating procedures.
Despite a strong start to FY22, no div- to be agile and highly adaptable to changes.
idend was declared. Berjaya Food also declared a sin-
“Whilst we are encouraged by the gle-tier third interim dividend of 1.5
Compared with the preceding quarter, gradual improvement in the external en- sen, payable on June 23.
Heineken’s net profit rose 18.29% from vironment, we remain focused on our
RM95.85 million while revenue only improved EverGreen strategy, which is our mul- On a quarterly basis, Berjaya Food’s
marginally by 1% from RM692.34 million. ti-year strategy, allowing us to adapt to a net profit dropped 18.78% from RM38.88
fast-changing world and grow stronger, million recorded in 2QFY22,while revenue
Separately in a statement, Heineken at- by adapting to the new external dynamics, slipped 9.81% from RM272.75 million.
tributed its improved revenue mainly to ensuring the safety of our people, keeping
higher sales driven by easing of Covid-19 a tight rein on costs and accelerating our For the cumulative nine-month pe-
restrictions, effective commercial execution business recovery to emerge stronger from riod, Berjaya Food saw its net prof-
during Chinese NewYear as well as revenue the Covid-19 crisis,” he added. it grow 2.4 times to RM82.08 million
growth initiatives such as price adjustments from RM33.1 million a year ago, while
for certain products in the preceding quarter However, the group also expects contin- revenue was up 31.67% to RM706.47
and promotional spend optimisation. ued pressure from global supply chain dis- million from RM536.55 million.
ruptions and rising input cost given the price
It said despite the pressure on input volatility of raw and packaging materials but On prospects, Berjaya Food expects the
cost and increased investment in sustain- noted that it will take appropriate measures overall operating results of the group to be
able brand growth, the group managed to to mitigate the impact when necessary. satisfactory for the remaining quarter of
grow its profit. the financial year ending June 30, 2022
Heineken also said it welcomes the following further easing of restrictions and
“The group’s performance in 1QFY22 stance taken by the government not to the opening of international borders.
improved against pre-pandemic levels as increase excise duties on beer in Budget
well, with group revenue growing by 33% 2022, as any hike in excise rates will drive “Consumers are easing back into nor-
(1QFY19 revenue: RM525.1 million) and greater demand for illicit alcohol. It said malcy as we move towards an endemic
group PBT (profit before tax) improving that it remains committed to supporting stage and this augurs well for the group.
by 120% (1QFY19 PBT: RM70.4 million), the government to stamp out illicit trade
indicating a significant recovery attributed through holistic efforts including strength- “We hope to continue this positive
to the easing of social restrictions as well as ening enforcement and raising greater growth momentum as we move into the
the effectiveness of the group’s commercial awareness in the market. final quarter of the financial year ending
June 30, 2022,” said Berjaya Food chief
Heineken shares slipped 32 sen or executive officer Datuk Sydney Quays
1.35% to RM23.32 onWednesday, valuing in a separate statement.
the brewery group at RM7.04 billion.The
counter has risen RM1.64 or 7.56% from Berjaya Food’s share price finished 23
RM21.68 since the beginning of 2022. sen or 6.63% higher at RM3.70, bring-
ing a market capitalisation of RM1.44
billion.

THURSDAY MAY 12, 2022 7 THEEDGE CEO MORNING BRIEF

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Analysts cut Hartalega earnings
forecasts on lower ASPs and
sales volume, higher cost

KUALA LUMPUR (May 11): Analysts BY TAN SIEW MUNG year historical mean) 2023 EPS of 18.9 sen.
onWednesday (May 11) cut their earnings theedgemarkets.com MIDF Research, which opined that
forecasts for Hartalega Holdings Bhd on
lower glove average selling prices (ASPs) ment in sales volume in the next few quar- Hartalega’s results came in below its ex-
and sales volume, as well as higher cost. ters as the lack of workers has limited Har- pectations, also revised its FY23 earnings
talega’s ability to increase output,” he said. forecast downward by 21% to RM755.8
This was after the group posted its million to reflect higher social compliance
first-ever quarterly loss of RM197.9 mil- He also said the group’s margins are cost, higher operating cost due to the im-
lion for the fourth quarter ended March likely to remain depressed due to com- plementation of the new minimum wage
31, 2022 (4QFY22) due to a provision for petition. policy and conversion cost of raw mate-
the ProsperityTax (Cukai Makmur).This rials as highlighted by the management.
brought its full-year earnings for FY22 to He believes that its earnings before in-
RM3.23 billion. terest, taxes, depreciation and amortisa- It maintained its “neutral” call on Har-
tion (EBITDA) margin had yet to bottom talega but cut its TP to RM4.31 (from
The results were within most analysts’ at 26.7% in 4QFY22, given that it was RM5.88) based on a PER of 19.5 times,
expectations. still significantly above the 22% to 23% which is the two-year historical average
achieved in 2019. pegged at a revised FY23 EPS of 22.1 sen.
KAF Research analyst Nabil Zainoodin
said in a note that he expects the group to “The management highlighted that as Likewise, TA Securities analyst Tan
return to profitability next quarter as the there is new capacity coming through in Kong Jin adjusted his FY23 and FY24
management had guided that the effec- the first half of 2022, margins would con- earnings forecasts for Hartalega lower by
tive tax rate will be lower than the prevail- tinue to remain depressed as it would be 6.9% and 11% respectively after reducing
ing corporate tax rate of 24% from next challenging for Hartalega to raise ASPs his sales volume assumptions by 7.9% due
quarter. to pass on the rising production cost. As to a slower pace of commissioning of the
such, we reckon that profit margins would Next Generation Integrated Glove Man-
“That said, Hartalega’s near- to mid- only likely bottom out by the end of 2022,” ufacturing Complex (NGC) 1.5.
term outlook remains challenging given he said.
the intense competition resulting from the Going into 1QFY23, he expects ASPs
oversupplied glove market.The downward He maintained his “sell” call on Har- to soften further by about 15% quar-
pricing pressure in the current environ- talega due to continued uncertainty over ter-on-quarter, while the utilisation rate
ment would make it difficult for the group future ASPs and lowered his TP to RM3 will remain at around 70%.
to fully pass on the rising input cost to from RM4.60 based on 13 times 2023
customers, which could result in further PER (from 12.5 times 2022 PER). Headwinds are expected to persist due
margin compression,” he said. to inflationary pressure (the higher mini-
Meanwhile, PublicInvest Research said mum wage and gas tariff) as the group is
Additionally, he said global logistics dis- in a note that it expects a weaker perfor- unable to fully pass through the cost in-
ruptions and container shipping shortages mance for Hartalega in FY23 as inflation- creases, he added.
may continue to affect shipments and pos- ary pressure would lead to higher raw ma-
sibly may persist for the next few quarters. terial costs. Positively, he said ASPs seem to have
troughed and are expected to be higher
Post the full FY22 results release and “Therefore, we lower our forecasts by about 8% in June.
based on the management’s forward guid- for FY23 and FY24 by 10% and 26% to
ance, he revised his FY23 and FY24 earn- RM731 million and RM620.3 million re- Following the earnings revision, he re-
ings forecasts for Hartalega downwards spectively to factor in higher cost,” it said. duced his Hartalega TP to RM5.06 from
by 11% and 3% to RM582.8 million and RM5.62 based on an unchanged 30 times
RM528.3 million respectively. However, as Hartalega’s long-term pros- 2023 EPS. He, however, maintained “buy”
pects remain positive, the research house on Hartalega.
“We maintain our ‘sell’ recommenda- maintained its “neutral” call on Hartalega
tion on Hartalega and revise our target with a revised TP of RM4.92 based on a Kenanga Research analyst Raymond
price (TP) to RM3.66 from RM3.80 pre- PER of 26 times (at its pre-Covid-19 five- Choo Ping Khoon also downgraded his
viously based on 2023 of 15.9 sen pegged FY23 net profit forecast for Hartalega by
at -0.5 standard deviation below the five- 16% to RM585.6 million, taking into ac-
year historical mean forward price-earnings count ASPs being reduced to US$25 per
ratio (PER) of 23 times,” he said. 1,000 pieces from US$26, and the EBIT-
DA margin shaved to 20% from 22%.
Affin Hwang Investment Bank analyst
Ng Chi Hoong also in a note lowered his While reiterating “outperform” on Har-
FY23 and FY24 earnings per share (EPS) talega, he reduced hisTP to RM5.60 from
forecasts for Hartalega by 1.5% and 0.4% RM7 based on 30 times 2023 EPS (at
to RM634.3 million and RM832.7 million slightly above the five-year pre-Covid-19
respectively to factor in the latest perfor- forward historical mean).
mance, and the latest ASP and sales vol-
ume assumptions. At 10.36am on Wednesday, Hartalega
was unchanged at RM4.34, valuing the
“We are not expecting a major improve- group at RM14.88 billion. Year to date,
the counter has tumbled 23.05%.

THURSDAY MAY 12, 2022 9 THEEDGE CEO MORNING BRIEF

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WASHINGTON, DC (May 11): Malaysia Azmin: Malaysia Malaysia open to more discussions
is expected to garner RM14.62 billion in expected to garner on IPEF
new investments from the US following RM14.6b in new On the Indo-Pacific Economic Framework
theTrade and Investment Mission (TIM) (IPEF) mooted by US President Joe Biden,
led by Senior Minister and International investments which was raised during a separate bilateral
Trade and Industry Minister Datuk Seri from US meeting with US Secretary of Commerce Gina
Mohamed Azmin Ali. Raimondo onTuesday,Azmin said Malaysia is
BY NIAM SEET WEI open to more discussions on the matter.
Azmin said many US-based companies Bernama
had expressed their commitments to ex- “Being a small economy like Malaysia,
panding their operations and footprint in Azmin said Malaysia is principally open we are open to more discussions on the
Malaysia during his 10-day USTIM which to having further discussions on the mat- matter, and we want to ensure that the spir-
began on May 8. ter with the US as the last discussion on it of ASEAN centrality will be respected,
TIFA between the two countries was held and ensure that all ASEAN member states
“We are going to make some major an- in 2005, and no further development was discuss the matter thoroughly,” he said.
nouncements in the next few days in terms of seen since then. Both attempted to revisit
new investments that have been committed and revive it in 2017 but to no avail. A memorandum of cooperation on en-
to by these companies,” he told Bernama and suring supply chain resilience was signed
TV3 reporters here onTuesday (May 10). “But of course, we need to see how between Azmin and Raimondo following
TIFA can accommodate and mitigate the bilateral meeting.
Thus far, Azmin has met several the global challenges that we are facing
high-technology (hi-tech) companies such now, such as [to ensure] supply chain re- Azmin said bothTai and Raimondo had
global semiconductor company Texas In- silience,” he said after having a bilateral agreed to increase dialogue and consul-
struments Inc and global material supplier to meeting with Tai on Tuesday. tation between the US and Malaysia to
the electronics assembly and semiconductor address issues related to workforce gov-
packaging industries Indium Corporation, ernance practices in line with the envi-
and he is scheduled to engage with more ronmental, social and governance frame-
hi-tech industry players on his next visits work, as well as international standards
to San Francisco, Seattle and Los Angeles. that would definitely benefit and give an
advantage to Malaysian companies to com-
Azmin said his ministry would continue pete in the global market.
its trade mission to attract more investments,
and that the high-quality investments would Following the bilateral meeting, Azmin
create more jobs for Malaysian talent. and Raimondo also co-hosted a round-table
session with top US semiconductor industry
US welcomes Malaysia’s suggestion to players,where both leaders ensured resilience
revive TIFA of the supply chain despite soaring demand
Meanwhile, Azmin said US Trade Repre- for semiconductors in the automotive, aero-
sentative Ambassador KatherineTai had wel- space and medical device sectors.
comed Malaysia’s suggestion to revive the
Trade and Investment FrameworkAgreement “These companies also assured me that
(TIFA), and he is hopeful that both countries they will continue to help develop the eco-
could come to a conclusion for the activation system with the participation of small and
of the agreement in the very near future. medium enterprises and local vendors in
Malaysia,” he said.

PADANG BESAR (May 11): The Min- Govt aims to cut “To realise this, the government cannot
istry of Agriculture and Food Industries livestock feed be alone and that is why we need to bring
(MAFI) has set a target to reduce livestock imports by 30% industry players together to be involved
feed imports by 30% by 2030 through the by 2030 in the cultivation of grain maize,” he said.
Grain Corn Industry Development Project.
Bernama He added that efforts to reduce depend-
MAFI deputy secretary-general (devel- ence on the import of grain maize had been
opment) Datuk Badrul Hisham Mohd said REUTERS started since 2015 and would take at least 15
presently, Malaysia imports about four mil- years through three phases of implementation.
lion metric tons of grain corn valued at for the government to find a new formula
about RM6.2 billion a year. to overcome the country’s high depend- According to him, a long period is needed
ence on grain maize imports. to enable research and studies to be done
For the ministry to achieve the target, he with stakeholders to create a stable industry.
said a large area of land is needed to plant
corn, which is seen to be a new source of “We are now at the end of the pilot
wealth for industry players in the country. phase for five years, starting 2015 until
2022, and after that will move on to the
“Right now, we are working to bring to- consolidation and expansion phases.
gether major commodity industry players
to be equally involved in this crop. “During this period, we evaluate various as-
pects that need to be considered, including cul-
“We are also discussing with palm oil tivation methods, appropriate use of seeds, the
industry players, so that they can allocate weather, quality control and others,” he said.
10% of their land to plant maize,” he said
after conducting a walkabout in Lembah He said if the government could resolve
Chuping here on Wednesday (May 11). the issue of supply for livestock feed, the peo-
ple would definitely benefit and at the same
Badrul Hisham said that there is a need time spending on subsidies would be reduced.

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KUALA LUMPUR (May 11): AME Elite AME Elite expenses relating to establishing the REIT.
Consortium Bhd said it has secured its secures According to AME Elite, AME REIT
shareholders’ approval for the proposed
listing of AME Real Estate Investment shareholders’ is an Islamic REIT that will have an in-
Trust (REIT) on the Main Market of greenlight for itial portfolio of 31 industrial properties
Bursa Malaysia Securities Bhd, at an AME REIT Main with ongoing leases or tenancies to vari-
extraordinary general meeting held on Market listing ous local and foreign companies, as well
Wednesday. as three workers dormitories that mainly
BY IZZUL IKRAM cater to the workers of the group’s indus-
In a statement, the integrated industrial theedgemarkets.com trial park tenants.
space solutions provider said the greenlit
proposal comprises the listing and quo- ing land acquisitions and joint ventures. “As at March 31, 2022, the average oc-
tation for 520 million units (undivided Meanwhile, it added that RM105 mil- cupancy rate of the industrial properties
interest) on the Main Market of Bursa and workers dormitories stood at 97.1%
Malaysia. lion is to be utilised to repay borrowings, and 100% respectively,” it added.
and the RM4.5 million balance will be for
“AME Elite shareholders also voted in AME Elite group managing director
favour for a proposed offering of 254.8 Kelvin Lee Chai said that upon receiving
million units, representing 49% of the total its shareholders’ nod, the group is a step
520 million units in AME REIT. closer to finalising AME REIT’s listing
on the Main Market in the second half of
“The proposed offering comprises up 2022 — expected to be completed by the
to 156.6 million Restricted Offer For Sale third quarter of 2022.
(ROFS) units to entitled AME Elite share-
holders on the basis of one ROFS unit for He noted that AME REIT will be AME
every five ordinary shares held in AME Elite’s main property investment activity
Elite on the entitlement date, 7.8 million vehicle upon its debut on the Main Market,
units to eligible employees and directors and added that the group is set to benefit
of AME Elite and subsidiaries, and 10.4 from the symbiotic relationship.
million units to the Malaysian public,”
it added. On AME REIT’s prospects, Lee said
that the group’s confidence in AME REIT
Via the proposed listing of its REIT, is in view of the high occupancy rate of its
AME Elite said it is expected to raise portfolio’s industrial properties, which he
RM254.8 million in proceeds at an illus- added will be able to provide its unithold-
trative offer price of RM1 per unit. ers with a stable and growing distribution
of income in addition to any capital ap-
The group said it has earmarked preciation on their investments.
RM145.3 million of the proceeds to be
used for future industrial property devel- AME Elite’s shares closed unchanged at
opment and investment projects — includ- RM1.68 onWednesday, giving it a market
capitalisation of RM1.08 billion.

KUALA LUMPUR (May 11): Independ- LGMS inks sia’s website, 91.395 million new shares
ent professional cybersecurity services underwriting are to be issued under the listing exercise.
provider LGMS Bhd has inked an under- agreement with
writing agreement with UOB Kay Hian UOB Kay Hian It said 22.8 million of these shares will
Securities (M) Sdn Bhd towards its move towards IPO be made available for application by the
for a listing on the ACE Market of Bursa Malaysian public, followed by 12.5 million
Malaysia Securities Bhd. launch shares to be reserved for eligible directors
and employees as well as persons who have
In a statement onWednesday (May 11), BY IZZUL IKRAM contributed to the success of the group.
LGMS executive chairman Fong Choong theedgemarkets.com
Fook said the underwriting agreement Meanwhile, 11.4 million shares will be
marked a key milestone in LGMS’ initial and penetration testing, cyber risk manage- made available by way of private placement
public offering (IPO) journey. ment and compliance, and the provision to bumiputera investors approved by the
of digital forensics and incident response Ministry of InternationalTrade and Indus-
Fong noted that the group has “timed” services. try (MITI), while another 44.695 million
the IPO to fit its expansion plans and is will be made available for institutions and
now finalising its prospectus for the launch In October last year, it was reported that selected investors.
to take place in the coming weeks. LGMS was seeking an ACE Market listing
to raise funds for its business expansion Additionally, the IPO also comprises
“Southeast Asia is experiencing rapid and working capital. an offer for sale of 45.6 million existing
growth in the digital technology sector, shares by way of private placement to
and the increasing reliance on the internet According to the group’s IPO prospec- identified bumiputera investors approved
also brings about security threats that can tus on the Securities Commission Malay- by MITI.
cause immense damages.
For the financial year ended Dec 31,
“Backed by the proceeds from the IPO, 2020 (FY20), LGMS posted a higher
we will be scaling up our operations both profit after tax of RM8.07 million from
within Malaysia and regionally being Sin- RM6.33 million a year prior. The group
gapore,Vietnam and Cambodia,” he said. reported a revenue of RM20.65 in FY20,
which was only marginally higher than the
According to LGMS, the group is pri- RM20.56 million it achieved in FY19.
marily involved in cybersecurity assessment

T H U R S D A Y M A Y 1 2 , 2 0 2 2 11 T H E E D G E C E O M O R N I N G B R I E F

WORLD

NEWS IN BRIEF

Yinson fixes two-for-five rights issue at RM1.41 KPower wins bid to develop SEDA’s
40.4MW hydro power plants in
KUALA LUMPUR (May 11): Yinson Holdings Bhd has fixed its rights issue price at Kelantan
RM1.41 apiece on an entitlement basis of two rights shares for every five existing
shares held, to raise gross proceeds of up to RM1.21 billion. The rights issue comes KUALA LUMPUR (May 11): Construction
with free detachable warrants, on the basis of three warrants for every seven rights and engineering solutions player KPower
shares subscribed, with an exercise price of RM2.29 apiece. Shares of Yinson traded Bhd has been selected as one of the
unchanged at RM2.28 apiece on Wednesday (May 11). The group has already successful bidders under the feed-in tariff
secured the undertaking for the rights issue from its major shareholder, the Lim (FiT) e-bidding exercise conducted by
family, which controls 27.53% in the company. The issue price of RM1.41 represents Sustainable Energy Development Authority
a discount of approximately 32.21% to the theoretical ex-rights price of Yinson (SEDA) for the development of small hydro
shares of RM2.08, Yinson said. This is based on the five-day volume-weighted power plants in Malaysia. In a bourse
average market price of Yinson shares of RM2.3587 up to and including May 10, filing on Wednesday, Mikrogrid Lestari
the date prior to the price-fixing date. It also took into consideration the discount Sdn Bhd (MLSB), a 55%-owned subsidiary
range of other precedent rights issue exercises in particular those of oil and gas of KPower, via KPower RE Sdn Bhd, a
companies. — by Adam Aziz wholly-owned subsidiary of KPower, was
notified that it was a successful bidder
Syarikat Takaful 1Q net profit slips ATA IMS appoints Dharma Rajan under SEDA’s e-bidding mechanism for the
14.21% on fair value losses Nadarajah as COO development of small hydro power plants
with installed capacities of 13.1 megawatt
KUALA LUMPUR (May 11): Malaysia’s KUALA LUMPUR (May 11): ATA IMS (MW) and 27.3MW. Under the e-bidding
oldest Islamic insurance, or takaful, Bhd has appointed a new chief operating exercise, MLSB shall develop small hydro
operator Syarikat Takaful Malaysia officer (COO) to lead the electronics power plants with a total capacity of
Keluarga Bhd’s net profit for the manufacturing service (EMS) company. 40.4MW in Gua Musang, Kelantan with a
first quarter ended March 31, 2022 ATA announced on Wednesday (May basic FiT rate of 22.49 sen per kilowatt-
(1QFY22) fell 14.21% to RM86.77 11) that Dharma Rajan Nadarajah had hour “The feed-in approval certificate shall
million from RM101.14 million in the assumed his duties on Monday (May 9). be issued within 14 days upon fulfilling
same period last year. This came after Dharma’s key roles include overseeing the conditions as set out by SEDA,” it said.
having recognised fair value losses the group’s operations, building high KPower added that the company would
under its family takaful business of performance teams, strengthening make further announcements upon the
RM35.6 million as compared to fair ATA’s revenue base, and expanding its receipt of the approval certificate. — by
value gains of RM1.2 million in the environmental, social and governance Shazni Ong
same period of the preceding year initiatives. He was previously the
which Syarikat Takaful attributed executive vice president of another Awang Adek
mainly to equity market performance. electronic manufacturing company — resigns from
Earnings per share for the quarter fell Venture Corporation Ltd — and had non-executive
to 10.38 sen from 12.18 sen previously, managed its global operations, customer chairman post in
its bourse filing showed on Wednesday management, design services and PRG
(May 11). Revenue for the quarter, sales. “ATA is confident that Dharma’s
however, was up 8.94% to RM997.39 knowledge and experience will further KUALA LUMPUR
million from RM915.49 million, mainly the group’s goal of strengthening our (May 11): Soon-to-
attributed to higher sales from both position as the leading EMS provider in be new Securities
family and general takaful businesses. Malaysia and the region,” ATA said in a Commission
— by Shazni Ong statement. — by Hailey Chung Malaysia (SC) executive chairman Datuk
Dr Awang Adek Hussin on Wednesday
CSH Alliance sees a spike in trading interest after announcement on announced his resignation from PRG
setting up EV plant Holdings Bhd as its independent non-
executive chairman. PRG, which is in the
KUALA LUMPUR (May 11): Little-traded CSH Alliance Bhd (formerly known as KTG business of investment holding and the
Bhd), which ventured into rubber glove manufacturing last year and now electric provision of management services, said
vehicle (EV) assembly, was the third most active counter on Bursa Malaysia. Awang Adek’s resignation was due to
Its trading volume ballooned to one-month high of 160.58 million shares. his recent appointment as the executive
CSH Alliance’s stock price climbed to an intraday high of 13 sen before it closed chairman of SC with effect from June 1,
at 12.5 sen, up one sen or 8.7%. The increase in trading interest came after the its bourse filing showed. Awang Adek
company’s announcement on its move to acquire plots of land to set up an EV was appointed as independent non-
assembly plant. However, the loss-making ceramic ware maker has not revealed the executive chairman of PRG on August 18,
details of its EV venture. On Tuesday (May 10), CSH Alliance announced that its EV 2017. “The board of directors takes this
unit had inked a sale and purchase agreement (SPA) to buy three adjoining plots opportunity to thank Awang Adek for
of industrial land measuring 55.32 acres in Tanjung Malim, Perak for RM12 million his numerous contributions towards the
from Minetech Resources Bhd to build an EV assembly plant. — by Izzul Ikram group during his almost five-year tenure
here. “We wish him every success in his
new endeavours,” said group executive
vice chairman Datuk Lua Choon Hann in
a separate statement. — by Shazni Ong

T H U R S D A Y M A Y 1 2 , 2 0 2 2 12 T H E E D G E C E O M O R N I N G B R I E F

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PUTRAJAYA (May 11):The Court of Ap- Sri Ram to lead her on bail of RM10,000 with one surety
peal was informed onWednesday (May 11) Sam KeTing’s pending the hearing of her appeal.
that former Federal Court judge Datuk appeal in basikal
Seri Gopal Sri Ram will be the lead counsel lajak case, Court High Court Judge Datuk Abu Bakar
in Sam KeTing’s appeal for reckless driv- of Appeal told Katar, who meted out the jail sentence and
ing that killed eight teenagers on “basikal fine on Sam, also ordered the 27-year old
lajak”, or modified bicycles, in 2017. BY TIMOTHY ACHARIAM female to be jailed for six months if she
theedgemarkets.com fails to pay the fine and a three-year driving
In case management via Zoom before ban upon completion of her prison term.
Senior Deputy Registrar Mohd Khairi Bhd (1MDB) case against Najib, who is
Haron, former premier Datuk Seri Na- charged with four counts of abuse of power The court handed down the decision
jib Razak’s lawyer Harvinderjit Singh in- in enriching himself with RM2.3 billion after allowing the prosecution’s appeal to
formed the court that Sri Ram would be of 1MDB funds and 21 counts of money set aside the Magistrate’s Court’s decision
the lead counsel in the case and that he will laundering of the same amount.The for- on Oct 10 last year, which acquitted and
be assisting the latter as a junior counsel. mer prime minister could face a fine and discharged the woman.
up to 20 years’ imprisonment if convicted.
Harvinderjit also informed the regis- Sam, who was 22 years old at the time
trar that the appeal would determine the Meanwhile, Harvinderjit represents Najib of the incident, was charged with commit-
issue of the prima facie case against Sam. in the SRC International Sdn Bhd case in ting the offence in Jalan Lingkaran Dalam,
which the former premier is currently appeal- Johor Baru at 3.20am on Feb 18, 2017.
Sam’s lawyer Faizal Mokhtar, who has ing the sentence of a 12-year jail term and
been her legal counsel since 2017, was also RM210 million fine in the Federal Court. This is Sam’s final appeal where she will
instructed to write to the Johor Baru High either be acquitted or her sentence may be
Court to request for cause papers,submissions To recap, on April 18, the court allowed upheld by the Court of Appeal.
and the notes of proceedings of her previous Sam’s application to stay the execution of
appeal for the hearing in the Court of Appeal. the jail sentence and fine imposed by the The eight teenagers killed in the incident
High Court on April 13 and also released were Mohamad Azrie Danish Zulkefli, 14;
Deputy Public Prosecutor Ng Siew Muhamad Shahrul Izzwan Azzuraimie, 14;
Wee was representing the respondent in Muhammad Firdauz Danish Mohd Azhar,
the case. 16; Fauzan Halmijan, 13; Mohamad Azhar
Amir, 16; Muhammad Harith Iskandar Ab-
The registrar then fixed June 28 for case dullah, 14; Muhammad Shahrul Nizam
management to inform the court of the Marudin, 14; and Haizad Kasrin, 16.
appellant’s progress. Click here for the full story

Sri Ram is also the lead prosecutor
in the ongoing 1Malaysia Development

KUALA LUMPUR (May 11): A former Witness: Never working with 1MDB, she worked at Sime
1Malaysia Development Bhd (1MDB) com- saw written Darby Bhd as company secretary for 16 years.
pany secretary told the High Court here on
Wednesday (May 11) that she had never approval by PM Wan Aizuddin asked Goh, based on her
seen an ‘official written approval’ by former for major financial experience and training, if she agreed that
prime minister Datuk Seri Najib Razak for the ultimate decision maker in a company
major financial commitments or investments commitments would be its board of directors.
by the strategic investment company.
BY TARANI PALANI & TIMOTHY ACHARIAM Goh indicated that this was not neces-
Goh Gaik Kim, who was testifying theedgemarkets.com sarily the case as there are certain transac-
as the prosecution’s 17th witness in the tions which would require the sharehold-
1MDB-Tanore trial, agreed with Najib’s had once broached the matter with former er’s approval.
counselWan AizuddinWan Mohammed that 1MDB general counsel Jasmine Loo, but the
the PM’s written approval was needed for latter said the PM’s approval was not need- “Under the Companies Act, there are
major financial commitments and restructur- ed for that particular transaction. Goh did certain transactions that need shareholder’s
ing. However, she had not seen such a writ- not elaborate on details of the transaction. approval [for instance,] substantial transac-
ten approval during her time with 1MDB. tions which exceed a threshold,” she said.
“I did discuss once with Jasmine Loo,
According to Article 117(c) of 1MDB’s she said this is not required because [it Goh also said approvals for appoint-
memorandum & articles of association was] not regarding investment but this was ments of directors would come in the form
(M&A), any major financial commit- regarding a small loan... I can’t remember of “yellow papers” with a PMO letterhead.
ment including investments, restructur- what she said but it was something about it
ing or matters relating to guarantees issued doesn’t affect the guarantee given,” she said. Former 1MDB chief executive officer
by the federal government would require ‘Certain transactions would require (CEO) Datuk Shahrol Azral Ibrahim Hal-
written permission by the prime minister. shareholder’s approval’ mi would then pass Goh these letters.
Goh, 54, is a chartered secretary who holds
Wan Aizuddin: In relation to 117(c) an Institute of Chartered Secretaries & Ad- She, however, agreed withWan Aizud-
financial commitments, investment and ministrators (ICSA) qualification. Prior to din that this was in line with Article 68 of
restructuring, have you ever sighted a writ- the M&A which dealt with the formalisa-
ten approval by PM? tion of appointments by the prime minister.

Goh: No, I have not. Wan Aizuddin will continue his
Goh, who served as company secretary cross-examination on Thursday.
from March 2011 to April 2016, said she
Najib has been charged with four counts
of abuse of power in enriching himself with
RM2.3 billion of 1MDB funds and 21
counts of money laundering of the same
amount. He could face a fine and up to 20
years’ imprisonment if convicted.

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Muhyiddin says statements concerning
Ahmad Zahid are true, hence not defamatory

BY HAFIZ YATIM THE EDGE FILE PHOTO
theedgemarkets.com

KUALA LUMPUR (May 11): Former Zahid, despite his promises to support Muhyiddin, in his affidavit in reply to
prime minister Tan Sri MuhyiddinYassin me, led the charge to withdraw the sup- Ahmad Zahid’s injunction application,
has maintained that statements he made port from me,” he added. said Ahmad Zahid had brought with him
about Umno president Datuk Seri Ah- a stack of files of his criminal case to the
mad Zahid Hamidi asking for his inter- Muhyiddin further alleged that Ahmad former’s house, and sought his interven-
vention in the latter’s ongoing court cases Zahid had triggered the fall of the Ber- tion.
are true and hence cannot be considered satu-led government in Perak and Johor.
defamatory. As in the affidavit in reply, Muhyiddin
He claimed that Ahmad Zahid was reiterated that he could not and would
Muhyiddin in his defence filed on bent on dissolving the Johor state assem- not carry out any interference with the
Monday (May 9) sighted by theedgemar- bly even though it was a stable govern- ongoing court proceedings and that Ah-
kets.com maintained that the comments ment as in January this year, the Johor mad Zahid should defend himself if he
he made in Mersing last February were state legislature had successfully amended was truly innocent.
based on substantially true facts. the state constitution to lower the min-
imum voting age and to lower the qual- For these reasons, Muhyiddin pleads
“There cannot be damage to Ah- ification age to be elected as an assem- that he was justified in making the com-
mad Zahid’s reputation, as his (Ahmad blyman to 18. ments as being a politician, he has a duty
Zahid’s) public reputation was already to inform the public, who have a legit-
questionable and or damaged prior to He said that he met Prime Minister imate and corresponding interest to re-
the statements being made. Datuk Seri Ismail SabriYaakob, who reit- ceive the right information.
erated he did not agree to the dissolution
“The statements made were true and of the Johor state assembly. “As politicians, Ahmad Zahid and I are
therefore cannot be defamatory in na- accountable to the public. The voters in
ture,” said Muhyiddin, who is also Parti “Given that the PM was not agreeable Johor then and party members were free
Pribumi Bersatu Malaysia’s president. to the dissolution, the Menteri Besar of to decide on the veracity of the informa-
Johor, who is an UMNO member, would tion and that the matters spoken of (the
He observed that Ahmad Zahid had not have initiated the dissolution of the purported defamatory statement) are of
been ordered to enter his defence in his Johor state assembly without any direc- public interest as the Umno president is
first court case in Kuala Lumpur and that tion or approval of Ahmad Zahid, as the also a public figure,” he added.
he was allegedly caught lying to the court Umno president,” the Pagoh MP added.
when he sought an adjournment to his As the events are true, Muhyiddin said
ongoing trial as he claimed that Muhy- “There was no good reason to suggest the statement should be considered as
iddin had called for a meeting when the that the Johor state assembly was unsta- fair comment.
Bersatu president became the new PM ble when it was dissolved. The Johor as-
in late February 2020. sembly was dissolved at Ahmad Zahid’s A case management of the matter was
behest,” he said. held before High Court deputy registrar
This showed that the Umno president Nor Afidah Idris on Wednesday, where
could not be trusted, he said, noting the Ahmad Zahid is seeking an injunction a case management and an inter-partes
Prime Minister’s Office had issued a state- against Muhyiddin from repeating his al- injunction hearing were fixed for May 25
ment denying the alleged meeting, after legation that he had sought his interven- before Justice Datuk Rozana Ali Yusoff.
which Ahmad Zahid changed his story. tion in his ongoing court case.

“As a result, Ahmad Zahid was brand-
ed by the prosecution as “a liar”; the pros-
ecution had threatened to bring contempt
proceedings,” Muhyiddin said.

However, the contempt proceedings
did not materialise.

Ahmad Zahid triggered Johor state
elections
Muhyiddin said that when Umno joined
the Perikatan Nasional (PN) government
in February 2020, Ahmad Zahid, who led
the party and the Barisan Nasional coali-
tion, had made a personal commitment
to him to support PN.

“However, on or about Oct 11, 2020,
Ahmad Zahid had issued a letter to the
Yang di-Pertuan Agong that he and a
group of MPs are supporting Datuk Seri
Anwar Ibrahim as the new PM. Ahmad

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KUALA LUMPUR (May 10): The Ses- Bung Moktar fee was mentioned during the recording.
sions Court here was told onTuesday (May trial: Zizie Izette When re-examined by deputy public
10) that the wife of Kinabatangan MP, Da- admits receiving
tin Seri Zizie Izette Abdul Samad admitted prosecutor Law Chin How as to why the
she received an introduction fee of RM2.8 RM2.8 mil as couple’s statements were recorded under
million from a unit trust consultant for rec- introduction fee Section 30 (3) (b) of the MACC Act 2009,
ommending her husband Datuk Seri Bung Mohd Haris said the statements were re-
Moktar to get Felcra to invest in Public — witness corded as witnesses’ statements because no
Mutual Bhd unit trusts. arrests were made against them.
Bernama
Malaysian Anti-Corruption Commis- According to Mohd Haris, he then com-
sion (MACC) investigating officer Mohd THE EDGE FILE PHOTO pleted the investigation paper and submit-
Haris Ibrahim, 42, said Zizie Izette in- ted the recommendation to the prosecution
formed that she received the sum from Datuk Seri Bung Moktar (left) and wife to charge Bung Moktar and Zizie Izette
Norhaili Ahmad Mokhtar when the actress Datin Seri Zizie Izette Abdul Samad. in court.
had her statements recorded by MACC on
July 27, 2016. The MACC senior superintendent On May 3, 2019, Bung Moktar, 64,
also agreed with the suggestion made by pleaded not guilty to two charges of ac-
“I do not remember how many times Bung Moktar’s lawyer M.Athimulan that cepting bribes amounting to RM2.2 mil-
Datin Seri Zizie Izette informed the matter Zizie Izette’s statements were recorded lion and RM262,500 as an inducement to
(RM2.8 million introduction fee) but it was according to Section 30 (3) (b) of the obtain Felcra’s approval to invest RM150
in the recording,” he said when cross-ex- MACC Act 2009, and the introduction million in Public Mutual unit trusts.
amined by Zizie Izette’s lawyer Datuk K.
Kumaraendran in the hearing of a corrup- Bung Moktar, who was the non-exec-
tion case involving Bung Moktar and Zizie utive chairman of Felcra at the time, was
Izette over a Felcra investment in Public accused of accepting bribes from an invest-
Mutual Bhd unit trusts. ment agent, Madhi Abdul Hamid, through
Zizie Izette at Public Bank’s Taman Mel-
In previous proceedings, Norhaili told awati branch here between 12.30pm and
the court that Zizie Izette was eligible to re- 5pm on June 12, 2015.
ceive an introduction fee of RM2.8 million
because she managed to get her husband to He also pleaded not guilty to accepting
obtain Felcra’s approval to invest RM150 an RM335,500 cash bribe from Norhaili
million in Public Mutual unit trusts. under the name of Zizie Izette for similar
reasons, at the same place on June 19, 2015,
Mohd Haris, the 27th prosecution wit- while Zizie Izette, 44, pleaded not guilty to
ness, said Zizie Izette’s recorded state- three charges of abetting her husband in
ments were handed over to him by anoth- the matter at the same place, date and time.
er MACC officer.
The hearing before Judge Rozina Ayob
continues on May 17.

KUALA LUMPUR (May 11): Business- Businessman no right to use the argument of qualified
man Datuk Habibul Rahman Kadir Shah files application privilege in this matter as the statements
has filed an application to strike out a coun- the latter made were “baseless” and “not
terclaim by Syed Saddiq Syed Abdul Rah- to strike out of public importance”.
man, claiming that the counterclaim was an Syed Saddiq’s
abuse of court process. counterclaim in “The words uttered in 2017 were for his
defamation suit (Syed Saddiq’s) own political gain,” the ap-
Previously, Syed Saddiq filed the coun- plication read.
terclaim stating that Habibul’s defamation BY TIMOTHY ACHARIAM
suit against him was baseless and an abuse theedgemarkets.com Habibul also stated that Syed Saddiq can-
of court process as well. not stick to the argument of fair comment as
ex-premier Datuk Seri Najib Razak. his comments were not based on facts and
Habibul is suing the Muar Member of Previously, Syed Saddiq, in his statement were only to “satisfy his anger, dissatisfac-
Parliament over remarks the latter made at tion and malice towards him (Habibul)”.
a press conference at the Seri Pacific Hotel of defence against the lawsuit, cited the de-
in Kuala Lumpur on Oct 2, 2017, when he fence of justification, qualified privilege and “The plaintiff (Habibul) states that the
was part of Parti Pribumi Bersatu Malaysia. fair comment. defendant’s comments were not said in
truth or with good intentions or with any
At the press conference, Syed Saddiq said In the application by Habibul which was fact-checking,” the application read.
there was a conspiracy by unnamed party sighted by theedgemarkets, Syed Saddiq was
leaders to weaken the party by “threatening alleged to have uttered the words in malice “Furthermore, the plaintiff pleads that
or bribing” its leaders. to damage and hurt the former’s reputation the defendant’s counterclaim can jeopard-
in public. ise, obstruct or delay the fair hearing of the
Reports had said that Syed Saddiq, who action (the defamation suit),” Habibul con-
was then the Bersatu youth chief, also alleged Habibul also said that Syed Saddiq had tended.
that there was a “systematic” attempt to in-
fluence Bersatu leaders in quitting the party. According to Syed Saddiq’s lawyer Lim
Wei Jiet, the counterclaim has been filed in
Habibul is suing Syed Saddiq because he the court and case management has been
thought that the latter was referring to him set for July 21.
as one of the leaders of the party who were
threatening and bribing. The application to strike out the coun-
terclaim was filed by law firm Jahaberdeen
Habibul is a former adviser to and Co.

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(May 11): US consumer prices rose by more Prices in US inflation this year hinges on a slowdown in
than forecast in April, indicating inflation will outstrip forecasts goods prices as Americans shift their discre-
persist at elevated levels for longer and keep- in sign of inflation tionary income to activities like travel and
ing the Federal Reserve on the path of aggres- dining out.The rate of goods and other com-
sive interest-rate hikes. persisting modities inflation declined while services
costs increased by the most since 2001 on
The core consumer price index, which BY READE PICKERT a monthly basis.
excludes food and energy, increased 0.6% Bloomberg
from a month earlier and 6.2% from April Food prices rose 0.9% in April, and were
2021, according to Labor Department data gest high inflation will persist for some time. up 9.4% from a year earlier.The annual gain
released Wednesday. The broader CPI rose Despite the Fed raising interest rates, in food costs since 1981, including a record
0.3% from the prior month and 8.3% on an advance in prices for chicken, fresh seafood,
annual basis, a slight cooling but still among including the biggest rate hike since 2000 baby food and prepared salads.
the highest readings in decades. last week, global headwinds like China’s
lockdowns and resilient services’ demand Energy costs declined in April, as gasoline
Some of the largest contributors to the may mean a slow road to the central bank’s prices fell 6.1% from the prior month in what
monthly increase included shelter, food, air- 2% goal. may prove to be just a temporary reprieve. Gas
fares and new vehicles. prices have since rebounded to a record high.
Fed Chair Jerome Powell signaled last
The core CPI was projected to rise 0.4% week that officials are open to several half- Shelter costs — which are the biggest ser-
from a month earlier, while the headline gauge point increases in the central bank’s bench- vices’ component and make up about a third
was seen climbing 0.2%, according to the mark rate in the months ahead.The CPI will of the overall index — rose 0.5% for a third
median estimates in a Bloomberg survey of help shape estimates for the April personal straight month. Rent of primary residence
economists. consumption expenditures price index, the climbed 0.6%, while owners’ equivalent rent
Fed’s preferred inflation gauge, which will be increased by the most since 2006.
Treasuries declined, erasing earlier gains, released on May 27.
as two-year yields rose as much as 11 basis In another sign of soaring costs of house-
points to 2.73% after the figures. Stock fu- Inflation has put President Joe Biden and hold necessities, prices for energy services,
tures fell and the dollar rose.Traders steep- Democrats on their heels this year, threaten- which includes electricity and natural gas,were
ened bets for the path of Fed moves, increas- ing their thin congressional majorities despite up 13.7% from a year earlier in the biggest
ingly betting on a fourth straight half-point a robust job market and resilient consumer advance since 2008.
rate hike in September. spending.
Last week, Powell said “inflation is much
Breadth, Persistence A key expectation for a moderation in too high” and emphasized the central bank
While the latest report shows that US inflation understands the financial hardship for Amer-
has likely peaked, the figures underscore the icans.
breadth of price increases in the economy and, Click here for the full story
when combined with firm wage growth, sug-

FRANKFURT/LJUBLJANA (May 11): Lagarde joins cludes — probably in June — saying the
European Central Bank (ECB) president ECB officials move “could be in July”. France’s Francois
Christine Lagarde said a first interest-rate signalling July as Villeroy de Galhau said he expects rates to
increase in more than a decade may follow be increased gradually “from the summer
“weeks” after net bond-buying ends ear- rate lift-off onwards”.
ly next quarter, joining a growing crowd
of policymakers signalling a move as soon BY ALEXANDER WEBER, CAROLYNN LOOK Few caution against an early-summer
as July. & JAN BRATANIC move — though one is executive board
Bloomberg member Fabio Panetta. In an interview last
“The first rate hike, informed by the week with Italy’s La Stampa newspaper,
ECB’s forward guidance on the interest Despite the war in Ukraine raising the he warned that the eurozone economy was
rates, will take place some time after the spectre of stagflation in Europe, money “de facto stagnating” and said he favoured
end of net asset purchases,” Lagarde said markets are fully pricing quarter-point in- awaiting second-quarter gross domestic
on Wednesday. creases from the ECB in its July and Sep- product data before deciding on rates.
tember decisions, with a further hike by year
“We have not yet precisely defined the end. Traders are betting the deposit rate Adding to the sense of concern, German
notion of ‘some time’, but I have been very will peak at 1.5% in about two years’ time. Finance Minister Christian Lindner said on
clear that this could mean a period of only a Wednesday that “we mustn’t underestimate
few weeks,” she said in a speech in Ljublja- Speaking earlier onWednesday, ECB ex- the danger of stagflation”.The Bundesbank
na, Slovenia, advocating a “gradual” nor- ecutive board member Frank Elderson said predicts German inflation will come in close
malisation of monetary policy after the in- officials can begin looking at raising rates to 7% this year.
itial increase. from record lows in July, downplaying the
risk of a euro-area recession as Russia’s in- It is prices that are driving policy, and as
Faced with record inflation that is almost vasion saps growth and stokes prices. the timetable for lift-off crystallises debate
four times the ECB’s 2% goal, Lagarde’s will probably switch to how high borrowing
ECB colleagues are increasingly pushing Bundesbank chief Joachim Nagel backed costs will rise.
publicly for a hike at the July 20-21 meet- a “timely” hike after net bond-buying con-
ing.While the Federal Reserve and the Bank “With the July lift-off appearing like a
of England are well under way with policy done deal, the discussion within the gov-
tightening, the ECB has not raised bor- erning council will likely shift towards the
rowing costs since 2011. Its deposit rate neutral rate and the path to get there,” UBS
has been negative since 2014. economists led by Reinhard Cluse said in
a report to clients.

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(May 11): Chinese Premier Li Keqiang China’s Premier The producer price index rose 8% from
urged officials to use fiscal and monetary urges fiscal, a year earlier compared to 8.3% in March,
policies to stabilize employment and the official data showed Wednesday, above the
economy as the country reels from Covid monetary policies 7.8% median estimate in a Bloomberg survey
outbreaks and rising inflationary pressure. to boost economy of economists. Consumer-price growth ac-
celerated to 2.1% from 1.5% in the previous
The world’s second-largest economy Bloomberg month, faster than a projected 1.8% gain.
came under greater downward pressure in
April due to the latest virus outbreak and country’s most important cities. Li instructed According to the stateTV reportWednes-
bigger-than-expected impact from interna- all government departments and regions to day, China will also take the following meas-
tional situations, China’s state broadcast- prioritize measures aimed at helping busi- ures to shore up the economy:
er CCTV reported, citing a State Council nesses retain jobs and weather the current • Ensure smooth logistics, especially in ma-
meeting headed by Li. difficulties.
jor hubs, with an aim to stabilize supply
The report did not mention what specific The cabinet also urged to stabilize con- chain
monetary and fiscal policies Beijing will take. sumer prices and ensure grain output and • China will offer another 50 billion yuan
Some Chinese analysts, including a former supply, CCTV reportedWednesday. (US$7.4 billion) of renewable energy
official at the country’s foreign exchange reg- subsidy to major state-owned power
ulator, are predicting China may cut banks’ China’s factory and consumer prices rose producers, and plans capital injection of
reserve requirements and interest rates, pos- faster than expected in April as Covid lock- 10 billion yuan to support coal-powered
sibly in the second quarter. downs battered supply chains and prompted generators
people to stockpile food. • Make use of real estate investment trust
The State Council meeting came just (REITs) products to help finance infra-
days after Li warned of a “complicated and structure projects
grave” employment situation as Beijing and • Will exempt some interest payment of
Shanghai tightened curbs on residents in a college graduates’ student loans
bid to contain Covid-19 outbreaks in the

BEIJING/SHANGHAI (May 11): China China calls United Nations andWeibo did not respond
hit back onWednesday against what it called WHO chief to requests for comment.WeChat, another
“irresponsible” comments by the head of the ‘irresponsible’ for platform, disabled sharing of a similar UN
World Health Organization, who described saying zero-Covid post, citing a “violation of rules”.
the country’s uncompromising and increas- strategy ‘not
ingly painful “zero Covid” policy as “not sus- sustainable’ “It shows that Beijing has zero tolerance
tainable”. on anyone who challenges its Covid-zero
BY MARTIN QUIN POLLARD & BRENDA GOH policy,” Fang Kecheng, a Chinese media re-
The policy has placed hundreds of mil- Reuters searcher at the Chinese University of Hong
lions of people across dozens of cities under Kong, said about the censorship.
various degrees of movement restrictions, tion against critics of the policy, which au-
most dramatically in Shanghai, causing sig- thorities say “puts life first”. “This issue has been entirely politicised
nificant economic damage in China and be- and any dissenting opinion would be con-
yond and fuelling wide-spread frustration. Critics of the WHO have previously ac- sidered as challenging the top leadership.”
cused the UN agency as being too close to
Officials in Shanghai, now in its sixth China, which theWHO denies. Shanghai’s lockdown has tested the ability
week under a sweeping lockdown, said on of manufacturers to function under Covid
Wednesday half the city had achieved “zero China has pointed to the millions of curbs, withTesla’s Shanghai plant operating
Covid” status, but restrictions would remain deaths caused by Covid in other countries. well below capacity this week due to prob-
in place. Its official toll since the virus first emerged lems securing parts.
in the city ofWuhan in late 2019 is just over
China’s uncompromising approach 5,000, far below the nearly 1 million deaths China’s auto sales plunged 47.6% year-
stands in contrast to most other parts of the in the United States. on-year in April, data showed onWednesday.
world, where governments have chosen to
live with the virus. New modelling by scientists in China and The impact on supplies of critical goods
the United States sees the risk of just over was far-reaching.
In rare public comments on a govern- 1.5 million Covid deaths if China ditches
ment’s policies, WHO Director-Gener- its current policy without any safeguards Some of the largest US hospitals said on
al Tedros Adhanom Ghebreyesus said on such as ramping up vaccination and access Tuesday they were facing critical shortages
Tuesday China’s zero-tolerance strategy is to treatments. of products used in CT scans, X-rays and
not sustainable and that it was time for a radiography as a result of reduced produc-
change in approach. Only half of China’s over-80s are vac- tion in Shanghai.
cinated.
Tedros’ comments were not covered in General Electric’s healthcare unit said on
China’s state media and were censored on A United NationsWeibo post ofTedros’ Tuesday it had increased output of chemicals
social media, with the only official response comments was removed from theTwitter-like used for medical scans and tests at its facto-
coming at a regular foreign ministry news platform shortly after being posted. The ry in Ireland to compensate for its Shanghai
conference. factory not operating at full capacity.
Click here to read the full story
“We hope the relevant individual can view Read also:WHO chief’s remarks on Chi-
Chinese Covid policy objectively and ration- na’s Covid-19 policy blocked on country’s
ally and know the facts, instead of making social media Click here
irresponsible remarks,” spokesman Zhao
Lijian said.

China’s leaders last week threatened ac-

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France plans NEW DELHI (May 11): India has eased envi- India eases green
food vouchers, ronmental approvals for coal mine expansions to rules for coal
welfare rise to boost output amid fuel shortages that have triggered mines to tackle
calm inflation hours-long blackouts. fuel crisis

fears Some existing sites will be able to raise pro- BY RAJESH KUMAR SINGH
duction by a further 10% without requiring new Bloomberg
BY ANIA NUSSBAUM impact assessments and rules on consulting local
& WILLIAM HOROBIN residents have been loosened, according to a gov- consultation risks creating friction between min-
ernment note. The changes come after the coal ing operations and local communities, which can
Bloomberg ministry flagged “huge pressure on domestic coal result in delays from protests and legal challenges.
supply”, the message said.
PARIS (May 11):The French government “Policymakers think such exemptions bring an
has pledged to increase social benefits and Coal supplies at power plants are shrinking amid ease of doing business, whereas the reality is exact-
issue food vouchers to the poorest house- a gruelling heat wave that has pushed electricity ly the opposite,” Dahiya said. “It’s a very myopic
holds as freshly re-elected President Em- demand to a record in recent weeks, with sever- vision by the environment regulator.”
manuel Macron seeks to avert panic over a al facilities operating with critical reserves of the
cost-of-living crisis before legislative elections fuel, power ministry data showed. Blackouts and The environment ministry’s exemption is
next month. curbs on supply to some industries have prompt- valid for mines that have already won approvals
ed street protests. to expand output by 40% and will allow them to
The finance ministry has already pre- produce as much as 50% more than the original
pared a revised budget with an array of meas- The fuel accounts for more than 70% of In- planned capacity.
ures to cover promises Macron made while dia’s electricity generation, and the country’s coal
running for re-election.That will be present- mining and transportation infrastructure is failing India should stick to its decarbonisation goals
ed to parliament after the second round of to keep pace with rising demand.A lack of railway to avoid future supply shocks, and take action in-
legislative elections takes place on June 19, carriages to transport the fuel from mines to power cluding modernising the electricity grid and adding
government spokesman Gabriel Attal said. plants has exacerbated the shortages. capacity to produce solar and wind equipment,
according to Vibhuti Garg, an energy economist
The cost of living was front and centre Changes will last for six months and follow com- at the Institute for Energy Economics and Finan-
during the presidential campaign and is set plaints that lengthy processes to win environmental cial Analysis. “The long term solution is to build
to remain a key issue in legislative elections approvals could hamper efforts to ease the crisis. more renewable energy,” she said in a Bloomberg
next month as inflation in France contin- Miners are aiming to quickly accelerate output be- Television interview.
ues to surge. Opposition parties vying for a fore a rainy season arrives in late June, which can
majority in the National Assembly have set flood operations and slow down production rates.
out more radical policies, such as outright
caps on the prices of certain goods or per- Weakening environmental regulations could
manent cuts to sales taxes. ultimately prove counterproductive, according to
Sunil Dahiya, an analyst with the Centre for Re-
If Macron’s party fails to secure a major- search on Energy and Clean Air. Bypassing public
ity in the elections, it would hamstring his
ability to move ahead with potentially un- Goldman says ued against the dollar and screens as the cheapest
popular economic reforms including changes yen shows safe-haven asset at a time when global recession risk
to the pension and welfare systems. is on the rise, according to Goldman strategist Ka-
significant value as ren Reichgott Fishman. Furthermore, the dollar-yen
Attal said the revised budget will cover a recession hedge pair has climbed to levels that imply greater odds of
pledges to extend energy price caps through official intervention, she added.
2022, introduce food vouchers, make fuel BY CHIKAKO MOGI
subsidies more targeted, and cut television Bloomberg A recession scenario could lead to a 15% to 20%
licence fees and taxes on bonuses for low-in- drop in the currency pair, she suggested.
come workers. Social benefits and pensions (May 11):The relentless selling of the yen looks to
will also be revised sooner than normal to have come to an end and some green shoots of posi- “Over the short term, amid highly volatile global
account for inflation, he said. tive commentary are beginning to appear. markets, the yen will likely be influenced by changes
inTreasury yields and commodity prices,” Fishman
The exact details of the measures Goldman Sachs Group Inc touted the curren- wrote.“At the same time,we expect the combination
and their cost will be defined in the final cy as an ideal recession hedge and remarked on its of cheap valuation, non-trivial risk of intervention
budget bill. “significant value” in a note onTuesday (May 10). and, most importantly, rising odds of recession to
Scotiabank analysts made the case for a modest yen open up paths to dollar-yen downside.”
Before the presidential election, Ma- rebound in a report on the same day.
cron’s government had already earmarked Fishman’s more upbeat analysis of prospects for
about €25 billion (US$26.4 billion) as part The yen has been in free fall this year as the dov- the yen contrasts with comments she made last month
of a“resilience plan”that includes temporary ish Bank of Japan keeps local yields anchored to that government intervention would be unlikely to
caps on electricity and natural-gas prices and the floor while their Treasury equivalents surge on drive a “sustained appreciation” of the currency.
a gasoline rebate for motorists.While costly, expectations of aggressive US Federal Reserve rate
the measures have had a significant impact hikes.It has fallen 12% against the dollar — the worst The yen traded around the 130.40 level on
on prices, lowering the inflation rate by two performance among Group of 10 peers — with Ja- Wednesday, not far off a 20-year low of 131.35
percentage points, according to estimates pan’s position as a commodity importer at a time of reached on Monday.But the currency is little changed
from statistics agency Insee. surging prices also weighing. in May compared to recent months — it slumped
over 6% in April and more than 5% in March.
But the currency is now 20% to 25% underval-
While longer-term headwinds for the currency
remain intact, the “bear trend” may be slowing,
opening up the door for a modest reversal, wrote
Scotiabank analysts Shaun Osborne and Juan Ma-
nuel Herrera.

“Basically, the yen is heavily oversold,” they said.

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Toyota warns Kon told reporters, referring to carmakers. Cathay Pacific
profit to skid 20% “Since the price of materials is rising, cash burn
as raw material improves as
we need to work to reduce the amount Hong Kong
costs pile up of materials we use as much as possible
and to replace them with less expensive starts easing
BY SATOSHI SUGIYAMA materials.” Covid curbs
Reuters
The automaker expects to sell 8.85 mil- BY DANNY LEE
TOKYO (May 11): Toyota Motor has lion vehicles globally this fiscal year, up Bloomberg
warned “unprecedented” hikes in raw 7.5% from last year.
material costs could slice a fifth off full- (May 11): Cathay Pacific Airways Ltd.
year profit, a clear sign the world’s top au- For the current fiscal year,Toyota fore- expects cash burn to drop to less than
tomaker by sales can no longer shrug off cast operating profit will fall about 20% HK$500 million (US$64 million) a
the supply-chain crunch that has roiled the to ¥2.4 trillion from almost ¥3 trillion in month within “the next few months” as
global industry. the previous year. Analysts had expected Hong Kong gradually rolls back some of
earnings to rise 12% to ¥3.36 trillion, ac- the world’s strictest, and longest lingering,
Also reporting a 33% drop in cording to Refinitiv. Covid-19 curbs.
fourth-quarter operating profit, the Jap-
anese giant saw its shares slide more than In the January-March quarter, its profit “The recent adjustments to the gov-
5% on Wednesday, before closing down slumped to ¥463.8 billion, also significant- ernment’s travel restrictions and quar-
more than 4% — their biggest one-day ly below an average estimate of ¥521.1 antine requirements will help facilitate
fall in two months.TheTokyo benchmark billion. the gradual resumption of travel activ-
was up 0.3%. ities and the strengthening of network
The yen’s sharp depreciation to connectivity to and from the Hong Kong
Toyota fared well during the earli- two-decade lows has worked in favour of aviation hub,” the carrier said in a state-
er months of a global semiconductor Japan’s export-driven auto industry. But ment Wednesday.
shortage, thanks to its larger stockpile the surging raw material costs and glob-
of chips, but it has now joined rivals in al supply chain disruptions exacerbated It noted that flight arrangements from
slashing production thanks to the pro- by China’s tough Covid-19 measures are early June will include daily flights to and
longed crunch, as well as China’s fresh putting pressure on profitability. from London Heathrow as well as a re-
Covid-19 restrictions. sumption or increase in passenger flights
Toyota’s domestic rivals Nissan Motor to the US, Australia, New Zealand and
The home of the famed Corolla com- Co and Honda Motor Co report earnings India. Cathay is wholly reliant on inter-
pact car said it expects material costs onThursday and Friday respectively. Nis- national travel considering it has no do-
to more than double to ¥1.45 trillion san shares closed 1.5% lower onWednes- mestic market.
(US$11.1 billion) in the fiscal year that day, while Honda dropped 3.1%.
started in April, which it expected to deal Cathay, which at its annual general
with by switching to lower-cost materials. On Tuesday Toyota cut its global pro- meeting earlierWednesday warned Hong
duction target for May by around 50,000 Kong is falling behind as the rest of the
“We need to think about how we can re- vehicles to about 700,000 as it plans to world reopens, posted traffic figures for
spond to material inflation by eliminating suspend operations on 14 lines at eight April that are still well down on pre-Covid
the distinction between original equipment domestic factories for up to six days this levels.The airline carried a total of 40,823
manufacturers and suppliers and working month due to the Covid-19 lockdown in passengers last month, up 82.2% on April
together as one,” chief financial officer Kenta China. 2021 but 98.7% lower than April 2019.

The plan follows several cuts in its Still, the city is starting to ease travel
production plan between April and June, curbs, lift flight bans and reduce lengthy
which have frustrated its suppliers. quarantine stays that largely closed it off
Read also: Panasonic sees flat profits amid to the rest of the world for more than
price rises, shortages Click here two years.

BERLIN (May 11): German car parts Continental 1Q “We will continue to look for oppor-
supplier Continental on Wednesday said net income halves tunities to add back capacity, and rebuild
its net income almost halved in the first our hub and network,” Cathay Chief Cus-
quarter of the year as rising raw materials, as rising prices tomer and Commercial Officer Ronald
logistics, and energy prices took a toll on weigh Lam said. “April saw some positive de-
its business. velopments for our travel business with
BY RIHAM ALKOUSAA improved demand across our network.”
First-quarter net income was at €245 Reuters
million (US$258.35 million), down from Cargo has also been something of a
€448 million in the same period last year. costs, adding that the company still ex- bright spot for Cathay. The airline car-
pects a slight improvement regarding the ried 92,361 tonnes of cargo last month,
The automotive division reported an semiconductor bottlenecks in the second an increase of 26.3% compared to April
adjusted loss before interest and tax of half of the year. However, she predicted 2021 but a 43.6% decrease compared
€165 million. the crunch to still have an impact in 2023. with the same period in 2019.

The company confirmed its 2022 rev-
enue and EBIT margin outlook which it
revised in April.

Chief financial officer Katja Duerrfeld
said Continental made initial progress in
negotiations with clients to pass on higher

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JAKARTA (May 11): Indonesia is seeking a bal- Indonesia seeks “Farmers are bearing the brunt of this export
ance between capitalising on high global palm oil to balance stoppage. Mills are now stocking up (cheap) oil
prices while ensuring food at home is affordable, from farmers to be sold later at high price when
a senior government official said onWednesday, international, local the ban is lifted,” he said, adding he hoped a
amid the country’s ongoing ban on exports of palm oil demand, more mutually beneficial policy would replace
the vegetable oil. the ban.
says official
The Southeast Asian nation, the world’s top Chief economics ministerAirlangga Hartarto
palm oil producer, has since April 28 halted ex- BY BERNADETTE CHRISTINA MUNTHE has said the ban will stay in place until bulk cook-
ports of crude palm oil and refined products & FRANSISKA NANGOY ing oil price drops to 14,000 rupiah (US$0.96)
in order to control soaring prices of cooking Reuters per litre across the country.As ofTuesday,Trade
oil at home. Ministry data showed bulk cooking oil was being
Palm Oil Association (GAPKI), said he hoped sold at 17,600 rupiah per litre.
The surprise move rattled global vegetable oil the ban could be lifted within two weeks to a
markets that were already struggling after the war month. GabrielTay, associate economist at Moody’s
in Ukraine removed a big chunk of sunflower oil Analytics, said in a research note that while the
supply. Palm oil makes up more than a third of Gulat Manurung,chairman of farmers group export ban may address the high price of cooking
the world’s vegetable oil market, while Indone- APKASINDO, said small-scale farmers were oil, it will be a “Pyrrhic victory”, which could
sia accounts for around 60% of palm oil supply. badly impacted by the export ban with mills harm Indonesia’s economy.
buying palm oil fresh fruits at roughly half the
Musdhalifah Machmud, deputy coordinat- price set by the regional government and even “Hasty and poorly communicated policies
ing economics minister, said the government below production costs. do not instil confidence in the government; in-
wanted palm oil to not only be available, but vestors crave policy stability,”Tay said, noting
also affordable. He is now forced to sell his palm fruits at that Indonesia had also imposed a surprise coal
around 1,500 rupiah per kg, while it costs him export ban earlier this year and the palm oil ban
“As government, we have to keep a balance around 1,800 rupiah per kg to produce. Some was preceded by various policy changes which
between high international prices and (con- mills have stopped buying from independent could deter direct investment.
trolling) domestic prices to fulfil cooking oil farmers to prioritise harvest from their own plan-
demand for our people,” she said. tation, he added. “This will be detrimental to Indonesia’s am-
bition to transition from an exporter of largely
The official said she could not make any unprocessed raw materials to a manufacturing
promises regarding future palm oil policy since nation.”
oversight involved various ministries and she was
“waiting for the best decision on palm oil from Moody’s Analytics operates independently
our highest leader”. from the credit rating agency Moody’s Inves-
tors Service.
Fadhil Hasan, an official at the Indonesia

(May 11): Prices are surging in some corners Diamond prices ing down of deals with the company expired
of the rough-diamond market, as sanctions are spiking and on May 7.
on one of the world’s two giant miners ripple even De Beers
through the supply chain. In the past, the in- can’t fill the gap The fallout from Russia’s invasion of
dustry could turn to behemoth De Beers to Ukraine has divided the global trade.As west-
crank out extra gems when supply ran tight BY THOMAS BIESHEUVEL ern governments levy sanctions on Russia and
— but not this time. Bloomberg companies pull away from the country, many
in India’s diamond industry still want to keep
The price of a small rough diamond, the ficer Bruce Cleaver said in an interview in buying, according to people familiar with the
type that would end up clustered around the Cape Town. “Thirty percent of supply being matter. And while big-name US jewelersTif-
solitaire stone in a ring, has jumped about removed isn’t sustainable.” fany & Co and Signet Jewelers Ltd have said
20% since the start of March, according to they will stop buying new diamonds mined
people familiar with the matter.The reason: De Beers also produces relatively few of in Russia, retailers in places like China, India
Diamond cutters, polishers and traders are the type of diamonds Alrosa specializes in: the and the Middle East have not followed suit.
struggling to source stones after the US levied small and cheap gems that surround a larger
sanctions on De Beers’s Russian rival, Alro- center-point stone or are used in lower-end That dynamic is spurring concern that
sa PJSC, which accounts for about a third of jewelry sold in places likeWalmart or Costco. diamonds from Russia will be passed off as
global production. other origins.
For many in the sector, that means growing
For most of the modern history of dia- shortages unless Alrosa and its trade buyers Very few diamonds remain in one party’s
monds, this is the sort of situation where De can find a work around. custody through the entire supply chain. Most
Beers could have tapped its vast stockpiles or are cut, polished, manufactured and then set
simply fired up latent mining capacity. Little Alrosa canceled its last sale in April and is in jewelry by different companies and often
more than 20 years ago, its safes in London unlikely to sell any large volumes again this traded inbetween each step. Diamonds are
held stocks of diamonds worth perhaps as month, the people said. It’s uncertain when routinely mixed into parcels of similar sizes and
much as US$5 billion. the company will be able to sell normally again, qualities throughout this process, making ori-
they said, even as the company, banks and gin tracking almost impossible in many cases.
Those days are now long gone.The compa- buyers look for solutions.
ny now only carries working inventory stocks De Beers, which sells to around 60 hand-
and its mines are running at full tilt.There is Alrosa’s press service declined to comment. picked customers, is already looking to beef
little chance of material increases in supply A USTreasury licence that allowed for wind- up its standards. It’s considering increasing
before 2024, when an expansion at its flag- both the paper and physical audits it already
ship South African mine will be completed. carries out on its customers to make sure sup-
ply remains segregated.
“It’s very difficult to see us bringing on
any new production,” Chief Executive Of- “They have to show us that our production
is not being mixed,” Cleaver said.

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FRANKFURT (May 11): Allianz SE is setting Allianz hit from The company said in March that advisers it
aside an additional €1.9 billion (US$2 billion) hedge fund hired to dig into what happened had found no
to resolve lawsuits and regulatory probes tied to “breaches of duty” by the management board.
the collapse of a group of its hedge funds two implosion reaches Two fund managers responsible for Structured
years ago. US$5.9 bil Alpha were fired over violations of compliance
policies, regulatory records showed.
The additional amount is a “fair estimate” BY STEPHAN KAHL Recipe for bigger risks
of the remaining exposure, including potential Bloomberg The lawsuits by investors had accused Allianz
payments to resolve government proceedings, of abandoning a stated investment mandate
Allianz said in a statement on Wednesday.The they lost billions of dollars. Allianz liquidated and downside risk protections, and then dou-
German company is seeking a timely resolution two of the vehicles in March 2020 and has been bling down on risky strategies in an attempt to
with authorities, it added. unwinding the others. recoup losses during the market volatility — a
Consequences for AGI move that some plaintiffs derided as an “ex-
The charges bring the total cost from the im- The funds were part of Allianz Global Investors traordinarily risky and self-interested gamble”.
plosion of the Florida-based Structured Alpha (AGI), the sister unit of Pacific Investment Man-
funds to €5.6 billion, after the insurer anounced agement Co.At the end of last year,Allianz’s total The Structured Alpha team was incenti-
a €3.7 billion hit earlier in a first round of set- assets under management stood at €2.6 trillion. vised to pursue outsized returns, Bloomb-
tlements with investors. erg reported earlier. Instead of employing the
The case has attracted the attention of the usual formula for hedge-fund fees — the “2
Chief executive officer Oliver Baete is trying US Department of Justice and the Securities and 20” mix of management charges and a
to move past the most painful chapter of his and Exchange Commission, which both opened cut of profits — they were compensated for
tenure, which reminded investors of the risks investigations. Allianz said it will inform about one thing alone: performance.The bigger the
associated with the insurer’s giant asset manage- a resolution and its consequences for AGI be- investment gains, the bigger the payday.While
ment business.AndreasWimmer, who took over yond payment obligations once an agreement Allianz made no secret of this arrangement,
as the new head of asset management after the with authorities has been reached. clients would later claim it was a recipe for
debacle, indicated earlier this year that despite bigger risks.
the cost, the company planned to push further The newest provisions reduce first-quarter
into alternative asset classes and continue its profit by €1.6 billion after tax, resulting in a net Fitch Ratings said in a February note it be-
focus on active fund management. income attributable to shareholders of about lieved that “this case of misconduct is an isolat-
€600 million. Operating profit for the three ed case and is no indicator of more widespread
Allianz shares rose 2.2% at 10.15am in months amounted to €3.2 billion, Allianz said corporate conduct concerns at the group”.
Frankfurt trading,paring losses this year to 4.6%. on Wednesday.
Analysts at Jefferies said in a note the charges Read also: ARK’s Wood sees global reces-
were smaller and came earlier than expected, sion, blames market selloff on Fed hike plan
removing a substantial overhang on the stock. Click here

The Structured Alpha hedge funds were de-
signed to provide protection against a market
crash yet incurred steep hits during the tumul-
tuous early days of the pandemic. Investors said

(May 11): An investment fund launched last AQR’s new ESG That’s as others in the industry have publicly
year by AQR Capital Management LLC out- fund tops 94% criticized regulators for failing to acknowledge
performed the vast majority of its peers thanks of peers with the power of shorting as a way to deliver envi-
to a long-short ESG strategy that shuns fossil long-short bets ronmental, social or governance results.
fuels.
BY LISA PHAM Asness defended the merits of shorting as
The AQR Sustainable Long-Short Equi- Bloomberg a powerful way to target the “bad guys,” in
ty-Carbon Aware Fund is up about 20% this an opinion published on the fund manager’s
year, which is a better result than 94% of com- and coal despite this year’s stunning rebound in website. In a Feb 23 article titled “Shorting
parable funds, according to data compiled by fossil fuels.That’s amid warnings from some in Counts,” Asness said the strategy has the po-
Bloomberg.The MSCI World Index plunged the industry, including JPMorgan Chase & Co, tential to raise the cost of capital for compa-
17% in the same period. that clients are starting to worry about missing nies that pollute.
out on the outsized returns they’re seeing in
A key focus of the fund, which is co-man- non-ESG assets. That point of view was recently challenged
aged by AQR co-founder Cliff Asness and by MSCI Inc. Rumi Mahmood, vice president
Lukasz Pomorski, the firm’s head of ESG re- The AQR fund’s biggest long bets at the end of ESG and climate fund research at MSCI,said
search, has been to look for undervalued stocks of March included Microsoft Corp,Apple Inc last month there’s not much evidence to prove
that score well on environmental, social and andWalmart Inc, while some of its biggest short that shorting has a meaningful impact on the
governance metrics, while shorting companies bets targeted Nidec Corp,Toyota Motor Corp cost of capital. He also urged fund managers to
that don’t seem prepared for the ramifications and AstraZeneca Plc, according to the firm’s “back things up in an evidence-based manner”
of global warming. website.Of the roughly 2,000 stocks in the fund, when making ESG claims, amid “enhanced
just under half were shorted in the period. scrutiny” from regulators.
The fund is “very keenly aware of climate
and fossil-fuel exposure,” Pomorski said in an AQR has gained a reputation as one of the According to Pomorski, ESG investors who
interview. “We don’t allow any long exposure main fund managers promoting short-selling don’t take advantage of both long and short
in fossil fuels, oil majors and such.”Within that as an effective ESG strategy. strategies are ultimately missing out.
framework, “the single most important driver
has been valuation,” which “paid off in spades “It’s an unfortunate truth that if you want
in the first quarter and continued into April,” to build a diversified, long-only allocation to
he said. equities or credit for example, you can’t do a
lot to lower your exposure to ESG-type risks,”
The fund’s gains suggest ESG investors can he said. “Some risks are just too systemic to
still generate solid returns by shunning oil, gas completely eliminate if you’re long-only.”

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Google paying platforms to pay musicians, performers, Morgan Stanley
more than 300 authors, news publishers and journalists says Asia,
EU publishers for using their work.
emerging-market
for news, News publishers, among Google’s fiercest stocks in late stage
more to come critics, have long urged governments to en-
sure online platforms pay fair remuneration of bear market
BY FOO YUN CHEE for their content. Australia last year made
Reuters such payments mandatory while Canada BY ABHISHEK VISHNOI
introduced similar legislation last month. Bloomberg
BRUSSELS (May 11): Alphabet unit
Google has signed deals to pay more than “So far, we have agreements which cover (May 11):Asia and emerging-market
300 publishers in Germany, France and more than 300 national, local and specialist equities are entering the late stages
four other EU countries for their news and news publications in Germany, Hungary, of a bear market but earnings and
will roll out a tool to make it easier for oth- France, Austria, the Netherlands and Ire- valuations aren’t sufficient to call a
ers to sign up too, the company told Reuters. land, with many more discussions ongo- turnaround, according to Morgan
ing,” Sulina Connal, director for news and Stanley, which maintained a neutral
The move to be announced publicly lat- publishing partnerships, said in blogpost top-down view for the region.
er onWednesday followed the adoption of seen by Reuters and expected to be pub-
landmark EU copyright rules three years lished later onWednesday.The blog did not Risks are known but “still potent”
ago that require Google and other online say how much publishers were being paid. and there is a possibility of further
downside ahead, the firm’s strategists
Two-thirds of this group are German including Jonathan Garner wrote in
publishers including Der Spiegel, Die Zeit a note on Tuesday (May 10). The
and Frankfurter Allgemeine Zeitung. bear market has “traversed valuation,
regulation, geopolitics and supply
“We are now announcing the launch chain pressures”, they wrote.
of a new tool to make offers to thousands
more news publishers, starting in Germa- The Chinese market’s “potential
ny and Hungary, and rolling out to other final leg is likely to be bumpy” due to
EU countries over the coming months,” Covid-19-induced lockdowns and a
Connal said in the blogpost. gloomier global outlook, strategists
led by Laura Wang wrote in a sepa-
The tool offers publishers an extend- rate note. “The policy easing cycle
ed news preview agreement that allows is forming, but the timing and scale
Google to show snippets and thumbnails are contingent on Covid-19 control,
for a licensing fee. implying likely front-loaded risks.”

(May 11):A consortium led by DigitalBridge DigitalBridge to Global monetary tightening,
Group Inc agreed to buy US data-center op- buy data-center raging inflation and Chinese lock-
erator Switch Inc for about US$8.4 billion. firm Switch for downs have so far dashed hopes of
Asian equities finding a footing this
DigitalBridge and Australian infrastruc- US$8.4 bil year. A four-month slump has wiped
ture manager IFM Investors Pty are offer- out more than US$2 trillion (about
ing US$34.25 per share in cash for Las BY GILLIAN TAN & SCOTT DEVEAU RM8.77 trillion) in market value
Vegas-based Switch, the companies said Bloomberg from Asia in 2022, while benchmarks
in a statement Wednesday, confirming an carrying Chinese stocks are among
earlier Bloomberg News report.The transac- close in the second half of the year, sub- the world’s worst performers.
tion values Switch at about US$11 billion ject to shareholder approval, according to
including debt, according to the statement. the statement. Shares of Switch jumped Morgan Stanley said it prefers
as much as 8.9% in pre-market trading Japan, due to its return ratios, and
The proposal represents a 19% premi- Wednesday, touching as high as US$33.50. countries that export commodities
um to Switch’s closing price on March 18, or benefit from higher interest rates.
the last full trading day before Bloomberg Switch reported first-quarter results late The US investment bank upgrad-
News reported Switch was exploring a sale. Tuesday, saying adjusted profit in the pe- ed Brazil to overweight and said the
DigitalBridge, led by Chief Executive Of- riod was 4 cents a share.That missed the firm continues to like Saudi Arabia,
ficer Marc Ganzi, beat out rival bidder 5-cent average estimate of 10 analysts in Australia, Indonesia and Singapore.
Brookfield Asset Management Inc, people a Bloomberg survey.
with knowledge of the matter said earlier.
Goldman Sachs Group Inc and Morgan
Mergers and acquisitions of data-center Stanley advised Switch’s special board com-
companies have proliferated, in part due mittee on the deal. Royal Bank of Canada
to the sector’s fragmented nature and rel- served as lead adviser to the buyers, while
atively strong growth dynamics. Switch is Toronto-Dominion Bank acted as co-advis-
among the largest of such firms listed in the er and is leading the debt financing. Societe
US, after giants Digital Realty Trust and Generale SA, RBC and Citizens Financial
Equinix Inc. One of its rivals, CyrusOne Group Inc are also joining the debt financing.
Inc, agreed last year to be acquired by KKR
& Co and Global Infrastructure Partners.

The DigitalBridge transaction was
unanimously approved by a special board
committee at Switch and is expected to

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SoftBank faces record loss as
Masayoshi Son’s bets tumble again

(May 11): Billionaire Masayoshi Son is BY MIN JEONG LEE & TAKAHIKO HYUGA Korea’s Coupang (US$5.4 billion), Sin-
poised to set another record — and not Bloomberg gapore’s Grab Holdings Ltd. (US$2.4
the good kind. When he reports earnings billion), China’s Didi (US$2.4 billion),
for the March quarterThursday, SoftBank SoftBank’s two Vision India’s Paytm (US$1.3 billion) and the
Group Corp.’sVision Fund investment unit Funds have been hit U.S.’s DoorDash Inc. (US$1.1 billion).
may have lost more money in one quarter hard by plunging tech
than it ever has before. valuations as global Unrealized losses in the public portfo-
interest rates climb lio were in the range of US$37 billion to
The world’s largest tech fund is estimat- and China tightens US$38 billion for fiscal 2021, according to
ed to have lost about US$18.6 billion on its its regulatory grip Boodry. All together,Vision Fund’s public
public portfolio alone during the quarter portfolio companies are down more than
ended Mar. 31, even greater than the record on the industry. 50% from their all-time highs.
US$18.3 billion drop marked in the fiscal
second quarter, according to Kirk Boodry, BLOOMBERG To be sure, SoftBank losses are largely
an analyst at Redex Research who publishes on paper, just as his profits were a year
on SmartKarma.That would mean a loss A sharp downturn in global stock markets ago. Few analysts provide estimates, at
for the Vision Fund unit of about US$10 is working against SoftBank’s business model, least publicly. Because of the company’s
billion, accounting for SoftBank’s stake in which Son repositioned into an investment transformation into an investment holding
each fund, Boodry estimates. holding company with the Vision Fund in company, it has to log mark-to-market val-
2016.A series of scandals and missteps from ues on holdings. Warren Buffett has long
It’s a drastic reversal from a year ago WeWork Inc., Wirecard AG and Greensill argued such quarterly figures for invest-
when Son took the stage in Tokyo to an- Capital have led to international scrutiny. ment firms like his Berkshire Hathaway
nounce SoftBank had earned more money are almost meaningless.
in a single quarter than any Japanese com- Now jitters over further tech valuation
pany in history.The company he founded falls have dented Son’s reputation and Still, SoftBank’s latest quarter could be
about 40 years earlier hit net profit of 1.93 raised concern over the sustainability of its a stain on Son’s reputation as he strives to
trillion yen (US$17.7 billion at the time), business.The lack of transparency over how reinvent himself and become the world’s
eclipsing Japan Inc. heavyweights such as much of the funds’ assets are collateralized most influential venture capitalist.
Toyota Motor Corp. and NTT Corp. is another factor fanning market anxiety.
Son had built hisVision Fund initiative
“It’s not normal. Investors, markets “Softbank’s entire business structure on his track record of picking startups, in-
are starting to get worried,” Boodry said. is dependent on one key assumption and cluding a bet on China e-commerce giant
When it comes to “the scale or potential that is ever-rising stock prices,” specifi- Alibaba Group Holding Ltd. that became
of losses, markets seem to be building in cally in tech stocks, which are leading the one of the most successful venture deals of
more downside in general.” current market sell-off, Amir Anvarzadeh all time. But even that deal has lost luster,
of Asymmetric Advisors wrote in a note. as Beijing’s crackdown on Jack Ma’s em-
SoftBank’s two Vision Funds have This “fundamental flaw” is being increas- pire has wiped out more than 70% of Alib-
been hit hard by plunging tech valuations ingly exposed by the bear market, he said. aba’s value since its peak in October 2020.
as global interest rates climb and China
tightens its regulatory grip on the industry. The Vision Fund lost money on 32 The Nasdaq 100, a key benchmark for
South Korea’s Coupang Inc. and China’s out of 34 public holdings last quarter, tech shares, is down about 25% year-to-date
Didi Global Inc. have been among the big- according to Nomura Securities Co. ana- and on track for its worst annual performance
gest drags for theVision Fund, with each of lyst Daisaku Masuno.That includes South since 2008. The measure rallied 27% last
them posting their biggest quarterly share- year following a whopping 48% gain in 2020.
price slump of 40% and 50%, respectively.
Tech-heavy funds have been hit across
The Vision Fund’s biggest loss to date the globe including Chase Coleman’s Ti-
— 825.1 billion yen — came in the fiscal ger Global Management, one of the most
second quarter when global stock markets successful equity hedge funds of the past
tumbled. The unit then regained profita- two decades. The fund posted the indus-
bility, earning 109 billion yen in the three try’s largest loss so far in 2022, with the
months ended Dec. 31. tech rout helping to erase US$16 billion
from its hedge and long-only funds.
The actual bottom line for the fiscal
fourth quarter will hinge on how SoftBank Dan Baker of Morningstar Inc. is among
marks the value of its vast number of private- those who are less pessimistic about Soft-
ly-held holdings.These include ByteDance Bank’s prospects.While the performance
Ltd., which operates the popular short video for tech funds that invest in early-stage
platform TikTok, and India’s Oyo Hotels. companies will be just as volatile, SoftBank
— with its scale — will have greater access
“There is much less visibility on this part and more opportunities to invest, he said.
of the portfolio, particularly atVision Fund 2
where many of these investments are smaller “It’s not for everyone,” Baker said. “But
or at an earlier stage,” Boodry wrote in a note if you’re willing to accept the volatility,
to investors. Still, “SoftBank will likely take then if you look at the long-term perfor-
meaningful losses in the private portfolio too.” mance of the company, it’s actually been
pretty decent.”

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BLOOMBERG

Philip Morris enters US smokeless
market with US$16 bil deal

LONDON/ZURICH (May 11): Four- BY DEIRDRE HIPWELL & CORINNE GRETLER to take over Vectura Group, a developer
teen years after splitting off its US busi- Bloomberg of asthma drugs. It also acquired Fertin
ness, Philip Morris International Inc is Pharma, which produces a smoking-cessa-
pushing back into that key market in a Swedish Match is a leading maker of tion aid, and OtiTopic, a respiratory drug
big way — this time, with cigarette al- snus — a smokeless tobacco product that developer with an inhalable aspirin treat-
ternatives. users place between their upper lip and ment for heart attacks in late-stage trials.
gum popular in Sweden but banned across
The maker of Marlboros on Wednes- much of the rest of Europe.The company With new products and a string of ac-
day agreed to buy Swedish Match AB, a also makes nicotine pouches called ZYN. quisitions, the company last year gener-
maker of nicotine pouches, for US$16 ated almost 30% of its net revenues from
billion.The move intensifies BigTobacco’s The deal raises questions about Phil- smoke-free products — up from zero in
race for leadership in smokeless products ip Morris’ future relationship with Altria, 2015.
and thrusts Philip Morris into compe- which has a range of oral nicotine products.
tition with Altria Group Inc, its former Philip Morris offered 106 kronor
US operation. Philip Morris was split off from Altria (US$10.56) a share for the smaller
in 2008 amid shareholder demands for business — a premium of nearly 40% to
The deal gives Philip Morris a vast dis- better returns.The move freed up the fast- Swedish Match’s closing price on Monday
tribution network in the US, the world’s er-growing international operations while — ranks as one of the largest transatlantic
largest market for smoking alternatives, the US business grappled with smoker law- deals.The board of directors at the Stock-
that paves the way for the roll-out of other suits. holm-based company said shareholders
products such as vaping devices. It is the should accept the offer.
company’s biggest step as it exits Russia The separation resulted in a complex
following the war in Ukraine, and pivots non-compete arrangement between the In March, Swedish Match decided to
towards smoke-free products. two companies. For example, Altria sells suspend a planned spin-off of its US cigar
Marlboro cigarettes in the US, while Philip business amid heightened regulatory risk.
The tobacco industry has been shift- Morris only does so outside the US. Altria
ing to potentially less harmful alternatives was the distributor of Philip Morris’ IQOS Philip Morris expects the transaction
to cigarettes, and has been looking into products in the US before an import ban will result in a combined company with
products that are not even linked to nic- took effect late last year. three times net debt to adjusted earnings.
otine, as smoking rates across the devel- It plans to deleverage over the coming
oped world drop and regulations become “This deal would almost certainly sug- years and has suspended its current three-
stricter. Competition escalated as more gest Philip Morris would want to get out year share repurchase program which be-
similar products hit shelves in heated to- of the IQOS agreement with Altria and go gan last July.
bacco, vaping, and oral nicotine pouches, it alone,” Jefferies analyst Owen Bennett
leading to an increasing number of pat- wrote in a note to clients earlier this week. The company said it plans no material
ent disputes. changes to Swedish Match’s operational
Philip Morris developed the IQOS heat- sites, its management, and employees as
ed-tobacco system and last year agreed the business is complementary to its own.

T H U R S D A Y M A Y 1 2 , 2 0 2 2 24 T H E E D G E C E O M O R N I N G B R I E F

MARKETS

CPO RM 6,461.00148.00 OIL US$ 105.823.36 RM/USD 4.377 RM/SGD 3.1588 RM/AUD 3.0692 RM/GBP 5.415 RM/EUR 4.6238

Top 20 active stocks

NAME VOLUME CHANGE CLOSE YTD MARKET
(MIL) (RM) CHANGE CAP
(%) (RM MIL)

SERBA DINAMIK HOLDINGS BHD 195.90 -0.015 0.060 -82.86 222.6

TECHNA-X BHD 181.80 0.000 0.115 53.33 254.3

CSH ALLIANCE BHD 160.60 0.010 0.125 31.58 172.7

WIDAD GROUP BHD 41.80 0.000 0.360 -1.37 990.9

MY EG SERVICES BHD 35.70 -0.015 0.885 -17.29 6,536.2

AHB HOLDINGS BHD 34.90 -0.005 0.215 65.38 80.5

SC ESTATE BUILDER BHD 28.60 0.000 0.070 -6.67 3.1

DAGANG NEXCHANGE BHD 26.40 0.010 1.010 32.89 75.2

DYNACIATE GROUP BHD 25.20 -0.005 0.140 40.00 3,187.5 World equity indices

BUMI ARMADA BHD 25.00 -0.015 0.405 -13.83 136.7

PUBLIC BANK BHD 24.60 0.010 4.650 11.78 2,393.7 CLOSE CHANGE CHANGE CLOSE CHANGE CHANGE
(%)
BINA PURI HOLDINGS BHD 23.80 0.005 0.060 33.33 90,259.7 (%) INDONESIA 6,816.20 -3.59 -0.05
DOW JONES 32,160.74 -84.96 -0.26 JAPAN 26,213.64 46.54 0.18
JAG BHD 23.50 0.005 0.370 10.45 95.9 KOREA 2,592.27 -4.29 -0.17
PHILIPPINES 6,635.86 -85.07 -1.27
HIBISCUS PETROLEUM BHD 21.50 0.000 1.350 65.64 223.8 S&P 500 4,001.05 9.81 0.25 SINGAPORE 3,226.07 -8.12 -0.25
TAIWAN 16,006.25 -55.45 -0.35
DATAPREP HOLDINGS BHD 21.00 -0.005 0.260 -67.90 2,716.8 NASDAQ 100 12,345.86 158.14 1.30 THAILAND 1,613.34 -9.44 -0.58
VIETNAM 1,301.53 7.97 0.62
PUC BHD 19.40 -0.005 0.05 -65.52 175.0 FTSE 100 7,326.13 82.91 1.14
Source: Bloomberg
NWP HOLDINGS BHD 18.7 -0.005 0.235 -4.08 81.3 AUSTRALIA 7,064.68 13.53 0.19

AVILLION BHD 18.7 0 0.095 -9.52 123.7 CHINA 3,058.70 22.86 0.75

VORTEX CONSOLIDATED BHD 17.7 -0.005 0.17 161.54 107.7 HONG KONG 19,824.57 190.88 0.97

TWL HOLDINGS BHD 17.3 -0.005 0.075 50 266.3 INDIA 54,088.39 -276.46 -0.51

Data as compiled on May 11, 2022 Source: Bloomberg Data as compiled on May 11, 2022

Top gainers (ranked by %) Top losers (ranked by %)

NAME CLOSE CHANGE VOLUME YTD MARKET NAME CLOSE CHANGE VOLUME YTD MARKET
(%) (‘000) CHANGE CAP (%) (‘000) CHANGE CAP
(%) (RM MIL) (%) (RM MIL)

TOYO VENTURES HOLDINGS BHD 0.670 55.81 2911.3 -52.48 71.7 BARAKAH OFFSHORE PETROLEUM 0.025 -28.57 4,230.7 -68.75 25.1

FINTEC GLOBAL BHD 0.015 50.00 1647.6 50.00 88.8 EDUSPEC HOLDINGS BHD 0.020 -20.00 2,222.6 33.33 60.9

GREEN OCEAN CORP BHD 0.020 33.33 1138.1 -33.33 42.2 SERBA DINAMIK HOLDINGS BHD 0.060 -20.00 195,856.1 -82.86 222.6

EA TECHNIQUE M BHD 0.045 12.50 566.6 -43.75 23.9 TALAM TRANSFORM BHD 0.020 -20.00 1,103.6 0.00 85.9

GRAND CENTRAL ENTERPRISES BHD 0.375 10.29 30.7 11.94 73.9 BORNEO OIL BHD 0.025 -16.67 961.7 -16.67 186.6

BINA PURI HOLDINGS BHD 0.060 9.09 23783.1 33.33 95.9 MLABS SYSTEMS BHD 0.025 -16.67 90.0 -16.67 36.2

PAN MALAYSIA HOLDINGS BHD 0.060 9.09 289.0 -25.00 55.7 MNC WIRELESS BHD 0.025 -16.67 3,431.7 66.67 57.2

CSH ALLIANCE BHD 0.125 8.70 160583.9 31.58 172.7 ENRA GROUP BHD 0.750 -14.77 0.5 -11.76 101.2

NESTCON BHD 0.505 8.60 11971.8 29.49 325.1 JERASIA CAPITAL BHD 0.030 -14.29 877.1 -81.25 2.5

HARN LEN CORP BHD 1.280 8.47 9080.1 82.86 260.0 IMPIANA HOTELS BHD 0.030 -14.29 1,577.0 -60.00 43.3

PJBUMI BHD 0.330 8.20 9.3 -18.52 27.1 HANDAL ENERGY BHD 0.130 -13.33 31.0 -35.00 30.0

SPRING ART HOLDINGS BHD 0.275 7.84 380.9 -6.78 114.3 ADVANCE INFORMATION 0.130 -13.33 4.0 0.00 34.6

FAST ENERGY HOLDINGS BHD 0.070 7.69 12857.4 -26.32 47.9 CATCHA DIGITAL BHD 0.165 -13.16 226.1 3.13 22.2

SOUTH MALAYSIA INDUSTRIES 0.365 7.35 10629.3 82.50 76.6 SAPURA ENERGY BHD 0.035 -12.50 3,134.5 -30.00 559.3

MANAGEPAY SYSTEMS BHD 0.150 7.14 2500.6 -26.83 129.2 FOCUS DYNAMICS GROUP BHD 0.035 -12.50 2,468.4 -12.50 223.0

LKL INTERNATIONAL BHD 0.075 7.14 6163.6 7.14 72.9 CME GROUP BHD 0.040 -11.11 330.1 -33.33 39.1

PNE PCB BHD 0.075 7.14 223.2 -11.76 42.0 REACH ENERGY BHD 0.040 -11.11 4,435.2 -33.33 43.9

EONMETALL GROUP BHD 0.455 7.06 22.5 -5.21 92.7 HONG SENG CONSOLIDATED BHD 2.140 -10.83 1,486.8 -20.45 5466.0

LYC HEALTHCARE BHD 0.235 6.82 2.4 -14.55 120.1 QUALITY CONCRETE HOLDINGS 1.240 -10.79 12.1 -7.46 71.9

SUBUR TIASA HOLDINGS BHD 2.060 6.74 543.4 96.19 387.9 CITRA NUSA HOLDINGS BHD 0.085 -10.53 6,925.8 13.33 61.2

Data as compiled on May 11, 2022 Source: Bloomberg Data as compiled on May 11, 2022 Source: Bloomberg

Top gainers (ranked by RM) Top losers (ranked by RM)

NAME CLOSE CHANGE VOLUME YTD MARKET NAME CLOSE CHANGE VOLUME YTD MARKET
(RM) (‘000) CHANGE CAP (RM) (‘000) CHANGE CAP
(%) (RM MIL) (%) (RM MIL)

NESTLE MALAYSIA BHD 132.70 0.800 63.6 -1.12 31118.2 PETRONAS DAGANGAN BHD 21.240 -0.420 223.8 3.11 21101.0

BATU KAWAN BHD 27.90 0.500 12.6 22.91 10985.3 HEINEKEN MALAYSIA BHD 23.320 -0.320 118.8 11.90 7044.9

MALAYSIAN PACIFIC INDUSTRIES 29.70 0.400 426.3 -39.83 5907.2 HONG SENG CONSOLIDATED BHD 2.140 -0.260 1486.8 -20.45 5466.0

GENTING PLANTATIONS BHD 8.48 0.320 223.9 28.64 7608.2 MALAYSIA SMELTING CORP BHD 3.670 -0.220 6849.0 12.92 1541.4

HENGYUAN REFINING CO BHD 6.73 0.310 6,459.0 73.90 2019.0 QUALITY CONCRETE HOLDINGS 1.240 -0.150 12.1 -7.46 71.9

SARAWAK OIL PALMS BHD 6.20 0.260 1331.6 77.65 3598.1 COMPLETE LOGISTIC SERVICES 4.200 -0.140 4.1 67.33 540.3

AEON CREDIT SERVICE M BHD 15.48 0.260 88.0 13.66 3952.2 ENRA GROUP BHD 0.750 -0.130 0.5 -11.76 101.2

PETRON MALAYSIA REFINING 6.01 0.250 1217.0 37.21 1622.7 HARRISONS HOLDINGS MALAYSIA 5.900 -0.120 17.6 22.92 404.0

TOYO VENTURES HOLDINGS BHD 0.67 0.240 2911.3 -52.48 71.7 TRANSOCEAN HOLDINGS BHD 2.530 -0.100 42.1 -18.39 164.7

BERJAYA FOOD BHD 3.70 0.230 1053.9 72.09 1334.0 MISC BHD 7.600 -0.100 2347.1 7.80 33924.5

CHIN HIN GROUP BHD 3.73 0.190 1533.4 42.91 3300.0 KESM INDUSTRIES BHD 7.720 -0.080 6.3 -37.13 332.1

DUTCH LADY MILK INDUSTRIES BHD 33.70 0.160 1.2 0.54 2156.8 COUNTRY VIEW BHD 1.000 -0.080 16.6 0.00 100.0

PETRONAS GAS BHD 17.04 0.160 831 -4.78 33717.6 TENAGA NASIONAL BHD 8.940 -0.080 1967.9 -4.28 51191.3

VITROX CORP BHD 7.21 0.140 114.1 -27.61 6810.8 KOTRA INDUSTRIES BHD 3.930 -0.070 20.6 24.37 581.5

TA ANN HOLDINGS BHD 5.83 0.130 2186.6 66.10 2567.9 PADINI HOLDINGS BHD 3.300 -0.070 106.7 17.86 2171.1

SUBUR TIASA HOLDINGS BHD 2.06 0.130 543.4 96.19 387.9 METROD HOLDINGS BHD 1.430 -0.060 51.1 7.52 171.6

KLCCP STAPLED GROUP 6.88 0.130 57.4 5.04 12420.7 HONG LEONG FINANCIAL GROUP 18.920 -0.060 139.5 9.11 21668.0

ALLIANCE BANK MALAYSIA BHD 3.75 0.120 4373.5 31.12 5805.4 CARLSBERG BREWERY MALAYSIA 21.800 -0.060 82.2 8.57 6665.3

KUALA LUMPUR KEPONG BHD 26.90 0.100 1103.4 23.51 29002.4 DIALOG GROUP BHD 2.380 -0.060 5717.1 -9.16 13429.3

MALAYAN BANKING BHD 9.10 0.100 9940.8 9.64 108927.1 BERMAZ AUTO BHD 1.76 -0.060 1770.4 11.39 2045.5

Data as compiled on May 11, 2022 Source: Bloomberg Data as compiled on May 11, 2022 Source: Bloomberg