CEOMorningBrief THURSDAY, J U LY 6 , 2 0 2 3 ISSUE 598/2023 theedgemalaysia.com CHINA ADVISER WARNS CHIPMAKING EXPORT CURBS ARE ‘JUST A START’, AS YELLEN VISIT LOOMS p19 HOME: EPF explores basic income drawdown option p4 Scientex inks new deal to buy Johor land from S P Setia, now for RM548 mil p5 Proton posts best sales since 2012 in first half of 2023 p6 WORLD: Singapore’s central bank posts net loss of US$30.8 bil for FY22/FY23 amid depressed market environment p21 Singapore to change tax rules to attract the super rich p22 Ringgit’s depreciation exposes a structural issue beyond BNM’s control, say economists Report on Page 3. REUTERS EC: STATE POLLS FIXED ON AUG 12 Report on Page 2.
THURSDAY JULY 6, 2023 2 THEEDGE CEO MORNING BRIEF published by ( 2 6 6 9 8 0 - X ) tel . 603-77218000 Level 3, Menara KLK, 1 Jalan PJU 7/6, Mutiara Damansara, 47810, Petaling Jaya, Selangor, Malaysia publisher + ceo . Ho Kay Tat editor-in-chief . Kathy Fong chief commercial officer . Sharon Teh chief operating officer . Lim Shiew Yuin editors . Jenny Ng . Tan Choe Choe Lam Jian Wyn to contact editors: [email protected] to advertise: [email protected] the edge ceo morning brief Read from desktop or mobile device. You can print in A4 to read. Set print mode to fit or shrink oversize page. to get on emailing list [email protected] EC: State polls fixed on Aug 12 PUTRAJAYA (July 5): The upcoming elections for six states, namely Penang, Negeri Sembilan, Selangor, Kelantan, Terengganu and Kedah, will be held on Aug 12. This was announced by Election Commission (EC) chairman Tan Sri Abdul Ghani Salleh in a press conference on Wednesday (July 5) after he chaired the commission’s special meeting pertaining to the key state election dates. Abdul Ghani said nomination day is to fall on July 29, leaving candidates three weeks to campaign. Writ issuance is to be done on Wednesday. He said early voting is to be held on Aug 8, while postal voting applications have BY IZZUL IKRAM theedgemalaysia.com Run-up to the 2023 state polls Over half of eligible voters are under 40 MALE Total voter (mil) 4.84 FEMALE Total voter (mil) 4.94 % 49.50 % 50.50 Age category 0 1,000 2,000 3,000 above 90 28.99 661.91 2,169.12 2,163.98 1,695.88 1,380.45 1,035.26 491.11 146.88 Total voters (’000) 18-20 21-29 30-39 40-49 50-59 60-69 70-79 80-89 *As at July 5, 2023 Source: Election Commission of Malaysia Less than six weeks to polling day Aug 12 (Saturday) Early voting: Aug 8 (Tuesday) Nomination: July 29 (Saturday) 6 states, 245 seats, 9.77 mil voters Selangor - 56 seats GE14 results Simple majority: 29 Simple majority: 19 Simple majority: 23 Simple majority: 17 3.75 mil voters Nov 2022: 3.68 mil PH PAS BN 51 1 4 Kedah - 36 seats 1.59 mil voters Nov 2022: 1.57 mil 18 15 3 Negeri Sembilan - 36 seats 864,425 voters Nov 2022: 850,865 20 16 Kelantan - 45 seats 1.41 mil voters Nov 2022: 1.4 mil 37 8 Penang - 40 seats 1.23 mil voters Nov 2022: 1.23 mil 37 1 2 Terengganu - 32 seats 930,894 voters Nov 2022: 922,856 22 10 Simple majority: 19 Simple majority: 21 HOME been open since June 15 and will close on July 8 for Malaysians residing overseas, July 11 for agencies and organisations, and July 26 for media, military, police and election personnel. The upcoming state polls involve the assemblies of Penang, Negeri Sembilan and Selangor, previously led by Pakatan Harapan — which are now in a bloc with former political juggernaut Barisan Nasional (BN) as the unity government — as well as Kelantan, Terengganu and Kedah, long-time strongholds of Perikatan Nasional’s PAS. All six state assemblies were recently dissolved to make way for the state polls, leaving a total of 245 state assembly seats up for grabs — 56 seats in Selangor, 45 in Kelantan, 40 in Penang, 36 in both Kedah and Negeri Sembilan, and 32 in Terengganu. According to Abdul Ghani, a total of 9.77 million individuals are eligible to vote in the upcoming state elections, with 153,760 election officials appointed to facilitate. He said the state elections are estimated to cost RM420 million. This will be the first state elections for PH and BN as the unity government as well as the emergence of PN’s “green wave” in GE15.
THURSDAY JULY 6, 2023 3 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (July 5): The US economy is not anywhere close to recession in the next six- to 12 months, with the country’s labour market remaining strong and with renewed demand for houses, says UOB Asset Management (UOBAM). Dharmo Soejanto, chief investment strategist of UOBAM Invest in Singapore, said that there were 10 million job openings even after the US Federal Reserve (Fed) raised interest rates by 500 basis points since March 2022. “It is very difficult for us to envisage a recession coming from such a situation when the labour market is still tight; people can still demand higher wages,” Dharmo said at the UOBAM Mid-Year 2023 Outlook Forum on Wednesday (July 5). He added that there is a re-acceleration of new home sales, as people expect the interest rates in the US to have stabilised. “Basically, that suggests construction activity would be fairly strong in the second half of 2023 (2H2023), which is another engine of growth that would prevent recession,” Dharmo said. In light of a no recession scenario, Dharmo said interest rate will then depend on the inflation rate. He believes that the Fed would put a pause on interest rate hikes if the inflation rate falls to 3%, cut interest rates if the inflation rate falls below 2%, and continue to raise interest rates if the inflation rate does not drop. The consumer price inflation in the US declined to 4% in May 2023, the lowest since March 2021. “If what I believe [no recession] is true and the fact that core inflation remains sticky, then the situation would be that the Fed [might] hike rates more aggressively in 2H2023, than what the market is expecting. That would have implications. “In my mind, a 6% Fed funds rate is not impossible,” said Dharmo, adding that the bond market would sell off and equity markets would be volatile under the scenario. No recession expected in the US over the next 12 months, says UOB Asset Management KUALA LUMPUR (July 5): The depreciation of the ringgit over the past two decades has revealed an underlying structural issue with the nation’s currency valuation that is more than what Bank Negara Malaysia (BNM) can manage, economists say. “We are putting too much [emphasis] on BNM. If it is a structural matter, the answer is in Putrajaya and not in BNM,” said University Kebangsaan Malaysia economics professor Tan Sri Dr Noor Azlan Ghazali at the UOB Asset Management Mid-Year 2023 Outlook Forum on Wednesday (July 5). Noor Azlan broke down the ringgit depreciation path into two phases since Malaysia stopped pegging the local currency to the US dollar at 3.8000 in 2005, saying that the USD-MYR pair has been hovering within the first band of around 3.8000 up to 2015, before it moved to the next band, fluctuating between 3.8000 and 4.6000. “When you see the shift in the band, that is likely more [of a] structural problem, are we going to the third band? We have to be careful, everyone is talking about the federal reserve, but no one is talking about whether Malaysia is still there in terms of being a preRinggit’s depreciation exposes a structural issue beyond BNM’s control, say economists ferred destination [for investors],” he said. Noor Azlan also referred to the International Institute for Management Development World Competitiveness report which saw Malaysia’s ranking at 27th place in the 2023 report, stating that the nation was far from being top 15 back in 2010 to 2016. “My concern is whether this movement in the exchange rate is a reflection of the interest rate differential per se or is it telling us more than that,” he said during the panel discussion titled “Malaysia at Crossroads” with UOB senior economist Julia Goh. “BNM has a role to play, they have a mandate [but] there is a limit as well. If we look at the international reserve, are we crossing below US$100 billion soon? Things are not looking good, [the emphasis is] less on BNM, more on Putrajaya,” said Noor Azlan. UOB’s Goh, meanwhile, added that while “BNM’s hands are tied” in mitigating the ringgit’s depreciation, the central bank has provided corporations, businesses and individuals the avenue to hedge if volatility continues. Based on UOB’s house view, she said the US dollar strength may start to abate in the next six months, “and if China’s economy recovers, we could see renminbi improve, that is positive in terms of the spillover to the ringgit”. Read also: Despite volatile ringgit, Malaysian economy remains firm, with access to credit widely available BNM can afford to be more gradual in raising OPR — economists BY HAILEY CHUNG theedgemalaysia.com BY HAILEY CHUNG theedgemalaysia.com University Kebangsaan Malaysia economics professor Tan Sri Dr Noor Azlan Ghazali UOB senior economist Julia Goh PHOTOS BY SAM FONG/ THE EDGE CONTINUES ON PAGE 4
THURSDAY JULY 6, 2023 4 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (July 5): The Employee Provident Fund (EPF) said it will remain guided by its Strategic Asset Allocation (SAA) framework, amid the recent depreciation of the ringgit. EPF chief executive officer Datuk Seri Amir Hamzah Azizan said that the weakening of the local currency would not dramatically shift its investments, as they are made for the long-term, based on the fund’s trading ranges and capabilities. “For now, about 64% of total assets are invested locally, so that base is always [denominated] in ringgit,” he said at the International Social Wellbeing Conference 2023 on Wednesday (July 5). He noted that foreign currency exchange only comes into play for its realised global investments. In terms of market outlook for the second half of 2023, Amir said: “Even if there is market volatility and downwards trends, there is still opportunity for us to make money — as long as we pick the right stocks and we can trade it”. “The key for EPF is that it must be flexible; it must be nimble, so we can manage.” When asked about plans to sell assets, Amir said such divestments are part and parcel of normal business conditions and would depend on the market price at the given time. “You must remember that EPF is a long-term investment, so we looked at it from that — we are guided by our strategic asset allocation,” he said. According to EPF’s annual report of 2021, the SAA is a framework with a goal to create a diverse asset mix that can provide an optimal balance between expected risk and return, which has contributed to the fund’s positive investment performance. This is to ensure that the fund remains resilient to unprecedented shocks to the financial ecosystem. KUALA LUMPUR (July 5): The Employees Provident Fund (EPF) is exploring more options to enhance the national pensions and retirement landscape, including a basic income drawdown. “This includes a basic income drawdown option to strengthen our decumulation offerings to provide members with an additional source of retirement income,” said EPF chief executive officer Datuk Seri Amir Hamzah Azizan during his opening speech at the EPF explores basic income drawdown option BY SUFI MUHAMAD theedgemalaysia.com BY SUFI MUHAMAD theedgemalaysia.com No changes in asset allocation strategies amid ringgit depreciation, says EPF CEO International Social Wellbeing Conference 2023 on Wednesday (July 5). Amir said the EPF’s current disbursal of its member’s savings in a lump sum at 55-years old may not be a wise step from In terms of overall market view, UOBAM Singapore head of multi asset strategy Anthony Joseph Raza said both fixed income and equities can perform in 2H2023. “Within equities, we believe momentum in the next few months would be good. Region wise, we still like Asia but we have put a pause on China. For North Asian markets like Taiwan, we are still overweight,” Raza said. “Bond yields are as high as I have seen in a decade. If you buy bonds, you can get 5% to 7% type returns over the next year; that looks pretty safe, with the fact that there is a global slowdown,” he said. Dharmo, meanwhile, acknowledged that China’s valuation is relatively cheap, but there are still uncertainties that lie in the outlook of the world’s second largest economy, amid continued tension with the US. “China is cheap relative to a lot of places from a valuation point of view, in terms of its economy still growing and monetary policy relaxing. Unfortunately, the whole tension between the US and China is dragging part of that performance,” he said. “If that doesn’t resolve, we have a structural discount on China. Ultimately, it would be too cheap to ignore but for the next six months, it’s probably still uncertain.” FROM PAGE 3 a social protection standpoint, as the savings will not last long. “We have ways to encourage members to take out their savings periodically. This means they do not have to take it all at once, maybe each month, enough for their livelihood while the remaining savings can be compounded.” “That is basic income draw down.” He noted that the compounded savings could also continue to earn dividends. “Schemes such as this will enable our members to received better returns in the future and they may live a better life.” However, Amir noted that the basic income draw down needed further study and will be further discussed with the government. “For now, we focus on encouraging members to use existing schemes.” Amir noted that the pension fund is focused on extending its social protection coverage, as well as enhancing members’ retirement savings adequacy. According to him, the EPF is also looking into Pillar 1 of the International Labour Organisation’s Multi-Layer Framework, through the introduction of a contributory national pension. Amir also said that a more inclusive form of social protection is needed, as only 9.1% of intended beneficiaries are covered in Malaysia, versus an average of 55.1% for Asia and 12.8% for the world. “Old-age dependency is also showing an increase from every 10 working age adults needed to support one older person in 2020, to three working age adults in 2050.” He noted that the benchmark used to determine basic savings achievement by age is RM240,000, which served as the minimum target upon reaching the age of 55. “This translates to RM1,000 per month, over a 20-year retirement period.” “As of May 2023, only 30% of our active formal members meet basic savings by age, while only 18% of our total members meet the same threshold.” “To compound matters is the blend of other multiple factors, such as a low wage structure, misalignment between full withdrawal age and retirement age, inconsistent contributions and under-employment, as well as a low rate of financial literacy.” EPF chief executive officer Datuk Seri Amir Hamzah Azizan SHAHRILL BASRI/ THE EDGE
THURSDAY JULY 6, 2023 5 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (July 5): Farm Fresh Bhd (FFB) clarified that it willingly released information regarding the recent current market price fluctuation and volume of its shares to the public, and not in response to any unusual market activity (UMA) query from Bursa Malaysia. “... the announcement made by the company yesterday (July 4) was voluntary to provide clarity to the public in relation to the market price volatility and trading volume of the FFB shares in Bursa Malaysia vis-a-vis the recent development concerning Australian milk production as mentioned in Bega Group’s recent announcement...” it said in a filing at noon break on Wednesday (July 5). Farm Fresh clarifies its UMA explanation is voluntary, not due to query KUALA LUMPUR (July 5): Scientex Bhd is buying 960 acres of prime freehold land in Tebrau, Johor Bahru from S P Setia Bhd for RM547.65 million, after previously attempting to buy the same plots of land but having to abort the deal due to a condition not being fulfilled. In 2021, the group’s wholly owned subsidiary Scientex Quatari Sdn Bhd proposed to buy the land for RM518.1 million, but the purchase was terminated in March 2023 after it failed to obtain a waiver of the bumiputera equity condition imposed by the Economic Planning Unit (EPU). In a statement on Wednesday (July 5), Scientex said the acquisition is subject to approval by the Estate Land Board and the EPU of the Prime Minister’s Department and if required, the approval of Scientex’s shareholders. Scientex intends to launch a new mixed township development project on the land, where an estimated 12,000 affordable homes would be built. The project’s gross development value is yet to be determined. Its indirectly owned Scientex Lestari Sdn Bhd on Wednesday inked a conditional sale and purchase agreement with Pelangi Sdn Bhd, a wholly owned unit of S P Setia. Scientex Lestari is a joint venture between Scientex Quatari, which holds a 70% stake, and Datuk Azman Mahmud, who holds the remaining 30% stake. According to Scientex, the proposed acquisition will be financed by internally generated funds and bank borrowings, with completion targeted for the first half of 2024. At end-April, the group had RM621.4 million in short-term borrowings and RM250 million in long-term borrowings. The land is accessible from major highways such as the Senai Desaru Expressway, and falls under the jurisdiction of the Johor Bahru City Council. Scientex said the land acquisition will significantly expand its property development footprint in Johor. Meanwhile, its total land bank — across Johor, Melaka, Negeri Sembilan, Selangor, Perak, Penang and Kedah — would expand from approximately 6,700 acres to around 7,660 acres. “The anticipated new mixed township development in Tebrau district aligns with our vision of constructing 50,000 affordable homes across Peninsular Malaysia by 2028. As of June 30, 2023, we have reached the milestone of delivering 29,000 homes which reflects our steady progress. This strategic expansion enables us Scientex inks new deal to buy Johor land from S P Setia, now for RM548 mil BY SYAFIQAH SALIM theedgemalaysia.com BY ISABELLE FRANCIS theedgemalaysia.com From left: Scientex chief operating officer — property Datuk Alex Khaw Giet Thye, Scientex MD/CEO Lim Peng Jin, S P Setia CEO Datuk Choong Kai Wai, and S P Setia chief operating officer Datuk Zaini Yusoff to create a vibrant township in Tebrau district and contribute to Johor’s development,” said Scientex chief executive officer Lim Peng Jin. S P Setia to realise an estimated gain of about RM438 mil Separately, S P Setia said, the sale consideration of RM547.65 million, calculated at the rate of RM13.10 psf on gross land area, was arrived at between the parties on a “willing-buyer willing-seller” basis. Upon completion of the land disposal, the property developer will receive an estimated gain of approximately RM438.3 million while its net assets will increase by about RM320.3 million and cash balance will rise by RM441.4 million, its filing showed. The proceeds from the exercise are expected to be used for investment into strategic project developments and repayment of bank borrowings, S P Setia said. “The proposed disposal will improve the group’s gearing level and allow acceleration of project development and growth of S P Setia’s remaining townships in Johor,” it said, adding that the exercise is in line with the group’s direction to optimise and rebalance its land bank while maintaining an efficient capital structure. Less than a month ago, S P Setia signed three inter-conditional sale and purchase agreements with Mah Sing Group Bhd for the disposal of about 500 acres of land in the Beranang district in Ulu Langat for RM392.04 million. S P Setia will receive an estimated RM31 million gain on completion of the disposal in the second quarter of 2024. At Wednesday’s closing bell, Scientex’s share price was up five sen or 1.46% at RM3.47, giving it a market capitalisation of RM5.38 billion. S P Setia increased half a sen or 0.89% at 56.5 sen, valuing it at RM2.28 billion. Read also: S P Setia launches Setia i-Home sustainable features for future homes Notably, Australia’s Bega Group warned earlier this week that it could be facing a non-cash impairment of between A$180 million-A$280 million (RM559.5 million-RM870.3 million) due to a decline in milk production volumes and rising dairy ingredient prices. In a filing with Bursa Malaysia on Tuesday (July 4), Farm Fresh clarified that its exposure to falling milk production is lesser in Australia, compared to that of Bega, which sources 100% of its milk requirement from Australian farmers. Farm Fresh’s share price settled at 2.6% lower or three sen at RM1.10 at noon break, valuing the company at RM2.08 billion with 12.9 million changing hands.
THURSDAY JULY 6, 2023 6 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (July 5): Koh Poh Seng, who controls 46.13% in KPS Consortium Bhd, has emerged as a substantial shareholder of BTM Resources Bhd, a day after it was announced that Bioalpha Holdings Bhd’s founder William Hon Tian Kok has taken up a substantial stake in the company. BTM Resources, which tops the most actively traded list on Wednesday following the news of Hon’s share acquisition, is principally involved in the logging, saw milling and trading of sawn timber, logs and plywood. KPS Consortium is primarily engaged in the manufacture of tissue-related products. BTM Resources’ bourse filing on Wednesday (July 5) showed Koh bought 137.78 million shares or 10.97% stake in the loss-making timber company on July 3 (Monday). The purchase raised Koh’s stake in the company to 13.19% or 165.78 million shares. A back-of-envelope calculation indicated that the shares could have cost Koh RM12.40 million, based on BTM Resources’ closing price of nine sen a share on Monday. On Tuesday, BTM Resources announced that Hon, who is also Bioalpha’s managing director and chief executive officer, has acquired 60.51 million shares in BTM Resources via off-market trades last Friday (June 30). The purchase gave Hon a total shareholding of 95.57 million shares representing a 7.606% direct stake in the company. Meanwhile, two other substantial shareholders have exited the company, according to separate BTM Resources filings on Wednesday, namely Yong Emmy and Modern Mode Sdn Bhd. Yong disposed of 12.10 million shares or a 0.96% stake in the company on Monday. Post disposal, Yong was left with 56.27 million shares or a 4.48% stake in the company. Modern Mode offloaded 97.45 million shares or a 7.76% stake in BTM Resources on the same day, leaving it with just 500,599 shares or some 0.03% equity interest in the company. Another substantial shareholder, Datuk Woo Thin Choy, has pared down his shareholdings after disposing of 39.33 million shares or a 3.13% stake. After disposing of the shares, Woo was left with a 5.72% stake, comprising a directly held 2.87% (36 million shares) and an indirectly held 2.85% (35.85 million shares). BTM Resources has been loss-making for six consecutive years between FY2017 and FY2022. In its latest quarter ended March 31, 2023 (1QFY2023), the group’s net loss swelled to RM14.84 million, from RM1.86 million in 1QFY2022, due to lower revenue and its share-based payments under a Long Term Incentive Plan. The share-based payments under its executive share grant scheme amounted to RM11.47 million in 1QFY2023. Revenue, meanwhile, dropped 41.38% to RM1.28 million, from RM2.18 million in 1QFY2022. BTM Resources shares settled 0.5 sen or 5.56% higher at 9.5 sen on Wednesday, giving the company a market capitalisation of RM119 million. The stock, which rose to 11 sen a share at the start of the year, dropped to a low of six sen in mid-January, before gradually rising to its current level. After Bioalpha founder, KPS Consortium’s major shareholder takes up substantial stake in BTM Resources KUALA LUMPUR (July 5): National carmaker Proton Holdings Bhd posted its best cumulative sales numbers since 2012 in the first half of 2023, with total sales reaching 77,321 units. In a statement on Wednesday (July 5), the company said it sold 14,351 units in June (domestic and export), a 28.6% yearon-year increase. Proton said that for June, total industry volume (TIV) is estimated to be 61,900 units and as a result, market share for the carmaker is estimated at 23.2% while the year-to-date market share figure has increased again to 21.3%, an improvement of 3.2% over the corresponding period from 2022. It added that this is the highest growth figure amongst the top five brands in Malaysia’s automotive market, which also grew by 9.4% in the first half on the year. Proton said its models performed outstandingly in June with five models leading sales in their individual market segments. It said the Proton Saga retook the lead for A-segment sedans by going over the 6,000-unit threshold for the third time this year and ending the month with 6,111 units. Cumulatively, 33,325 units have been sold thus far, which is the model’s best performance since 2012. Proton Edar chief executive officer Roslan Abdullah said the company’s performance in the first half of 2023 is noteworthy as it achieved its best start to a year Proton posts best sales since 2012 in first half of 2023 since 2012 and was also on track for a fifth consecutive year of sales growth. “The numbers show demand for our products remains strong despite projections of a reduction in liquidity for consumers, and this is proven by our growth rate outpacing the overall market by over three times. “For the second half of the year, Proton is confident we have the products and promotional strategies in place to continue our growth trajectory. “We will also execute our plans to update our range, launch our entry into the Malaysian EV market with PRO-NET and further improve the quality of our products via investments announced this year to improve our production capabilities,” he said. BY SURIN MURUGIAH theedgemalaysia.com BY JUSTIN LIM theedgemalaysia.com Proton June 2023 – Individual model performance (including export) Model No of Total Sales achievement for the month units sold sales 2023 Saga 6,111 33,325 • Highest volume A-segment sedan Persona 2,254 12,580 • Highest volume B-segment sedan Exora 368 2,367 • Highest volume C-segment MPV Iriz 842 4,032 • 3rd highest volume B-segment hatchback X70 1,245 6,116 • 2nd highest volume C-segment SUV X50 2,449 17,562 • Highest volume B-segment SUV and overall best-selling SUV X90 1,082 1,339 • Highest volume D-segment SUV Total 14,351 77,321 Source: Proton
THURSDAY JULY 6, 2023 7 THEEDGE CEO MORNING BRIEF S unway Medical Centre, Sunway City (SMC) became the first Southeast Asian hospital to run a robotic partial knee replacement surgery using the ROSA Robotic System with its first surgery successfully performed on May 31, 2023. The private hospital in Sunway City, Selangor, is familiar with using robotics technology for patient treatment as it has treated over 550 patients in the past three years for surgeries involving total knee replacement, total hip replacement and partial knee replacement. In fact, SMC had initiated a total hip replacement with Mako SmartRobotics in Malaysia. It was also the first hospital to acquire both Mako SmartRobotics and ROSA Knee System machines in the country. Dr Suhail Suresh, a consultant orthopaedic surgeon at SMC since 2009, says the robotic knee operations under his account had a 100% success rate with zero mishaps. “That’s a testimony to the fact that we are used to the system and can deliver good results. We’re not just starting out on robotic surgery and we have experienced surgeons doing it,” he says. Suhail himself has performed knee replacements for over 20 years. His initial years involved manual replacements before he embarked on computer-aided replacements in 2005, and now robotic surgeries. As an expert, he confidently assures that robotic-assisted surgeries brought in finer results, providing better alignment, improved placement, less blood loss and reduced soft tissue damage in patients. “With its precision, the quicker recovery of robotic knee replacement surgeries led to patients’ hospital stays likely shortened by half,” Suhail attests. On average, patients typically get discharged from the hospital within seven days after their knee replacement surgeries, depending on their health. However, Suhail has observed patients who underwent total knee replacement robotic surgery being discharged in just three days. “For patients under partial knee replacement robotics treatment, they can even go back as soon as the day after the surgery,” he says. While a manual surgery could require revisions for the knee implants within 15 to 20 years, he says that research showed robotic-assisted replacement surgeries had far lower revision rates, which meant extending the longevity of the successful treatment. The ROSA Knee System used in SMC incorporates artificial intelligence (AI) and robotics, with the former making up a big portion of the system. In a walk-through of the process, he says patients who require a robotic knee replacement will first be given a consultation before an X-ray procedure for diagnosis. The X-ray is conducted with software calibration, which makes precise marking points on the patient’s bone and provides technical measurements to allow surgeons to calibrate the patient’s size and alignment. While the ROSA Robotic System has helped improve the effectiveness of a doctor’s practice in knee operations, Suhail says doctors are still principally in the driver’s seat of the surgery. “As a surgeon, I will run through the plan suggested by the system and see if this suits my patient. If I want any positions changed, I can always overwrite the system, as I am in control of it,” he explains. Adopting robotics technology in knee operations is vital, as according to Suhail, statistics have shown that 30.5% of people aged 50 and above within Greater Kuala Lumpur suffer from osteoarthritis. Partial knee replacement surgery, an alternative to total knee replacement surgery for osteoarthritis knees with damage that involves one or two components of medial, lateral or patellofemoral compartments, brings great value, especially for young osteoarthritis patients and osteoarthritis patients with early diagnosis. However, it is estimated that only one in ten patients will undergo a partial knee replacement surgery as most cases are not diagnosed early and has shown signs of late representation. Therefore, SMC’s investment in robotic technology is truly a game changer for partial knee replacement surgery. Example of a technical measurement done with the ROSA Robotic System software to determine the resection margin of the defected bone, the size of the implant based on the bone cutting, as well as to assess joint balancing and alignment. SUNWAY MEDICAL CENTRE, SUNWAY CITY SPEARHEADS ROBOTIC PARTIAL KNEE REPLACEMENT SURGERY IN SOUTHEAST ASIA Dr Suhail Suresh
THURSDAY JULY 6, 2023 8 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (July 5): LBS Bina Group Bhd has partnered with a land owner to jointly undertake a RM1 billion gross development value (GDV) mixed development in Sungai Penchala, Kuala Lumpur. The development will be carried out atop six parcels of land measuring 6.97 acres, owned by Saga Tunas Sdn Bhd, in phases over a five-year period, said LBS Bina in a bourse filing. “The development land is strategically located within notable landmarks such as Empire Damansara, IKEA Damansara, eCurve, Bandar Utama, Mont’Kiara and Sri Hartamas,” the property developer said, adding that it is 8km and 7km away from Mont’Kiara and Sri Hartamas respectively. LBS Bina said its indirect wholly-owned subsidiary Sejuta Bina Sdn Bhd inked an agreement with Saga Tunas on Wednesday (July 5) for the joint development. It said Saga Tunas is also a property developer, and its director and shareholder Datuk Azizulkhir Abdul Wahab is also a director and shareholder of four of LBS Bina’s indirect subsidiaries. LBS Bina said the development will be funded via a combination of internally generated funds and bank borrowings. The group did not disclose any further details on the mixed development. Touching on the terms of the agreement, LBS Bina said Saga Tunas is entitled to a cash consideration of RM67 million — forming part of the land cost and 10% gross profit generated from the development — upon completion of the project, while Sejuta Bina is entitled to all remaining sale proceeds. The group said Saga Tunas’ entitlement was arrived at based on negotiations after taking into consideration an internal feasibility study on the development potential and prospects of the land, as well as the indicative valuation of the land. Shares in LBS Bina ended half a sen or 1.14% lower at 43.5 sen on Wednesday, giving the group a market capitalisation of RM674.68 million. LBS Bina teams up with land owner to undertake RM1 bil GDV mixed development in Sungai Penchala KUALA LUMPUR (July 5): The RAMCTOS Business Confidence Index (BCI) continues to rise, climbing to 54.8 in the second quarter (2Q) 2023 from 51.4 in the previous quarter, indicating businesses remain sanguine about prospects for the next three months. The improvement in sentiment was led by a positive outlook for sales and profitability, with the latter finally reverting to a positive reading (51.6) after languishing in a pessimistic territory in the last three quarters. “Following a round of price increases in late 2022 to maintain margins, the cost pressure faced by businesses may have started to ease this year,” said RAM Holdings and CTOS in a joint statement on Wednesday. Commenting on the improved sentiment, CTOS Digital Bhd group chief executive officer Erick Hamburger said CTOS SME subscribers accessed 5% more credit reports in 2Q compared to 1Q to evaluate new customers, a good indicator that they are ramping up operations and productivity in line with the improved 2Q BCI sentiment. The average CTOS SME Score rose by two points from 307 in 1Q to 309 in 2Q. This meas the average Malaysian SME has “good” credit standing, which is important to access credit, Hamburger said. Meanwhile, RAM Holdings GCEO and executive director Chris Lee said firms may be able to shift from “survival mode” to growing their business again with a sales pick-up in 2023. Aside from pursuing operational improvements, an increasingly important development that businesses should heed is sustainability practices. “In particular, firms with export dealings or which are part of the global supply chain will have to comply with new global and domestic environmental, social and governance (ESG)-related regulations that are being rapidly introduced,” he said. Businesses sanguine on next three months’ outlook — RAM-CTOS survey Most firms observing some sustainability practices Of the 146 firms surveyed in 2Q, about 75% said they had adopted at least one sustainability practice, with waste reduction and recycling being the most cited. Not surprisingly, ESG practices are more common among firms that are part of a global supply chain (80%) as they may need to meet clients’ compliance requirements versus those that are not (68%). Energy and resource conservation initiatives are also popular among the firms surveyed, the statement said. Meanwhile, 26% of respondents have not adopted any sustainability practice. This is more prevalent among small and medium enterprises (27%) and micro firms (30%) as they face various impediments to progress on this front. “A lack of incentives was the most common hurdle, as cited by 45% of firms surveyed. About 40% of respondents said it is too expensive to adopt green practices,” it said. However, over half of the firms surveyed, particularly those with multinational clients, are keen to further adapt to sustainability initiatives to become ESG-compliant but the cost of compliance is a concern, it added. Bernama BY IZZUL IKRAM theedgemalaysia.com
THURSDAY JULY 6, 2023 9 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (July 5): A week after claiming that the recent damage to its plant site was an act of sabotage by an unidentified crew of men, Bahvest Resources Bhd has obtained a court order barring its mining lease land owner Southsea Gold Sdn Bhd from hindering its operations. The gold miner said the ex parte (without notice to the other party) injunction order issued by the Sandakan High Court on Tuesday (July 4) also restrains Southsea from advancing its demands and resolution with Bahvest’s wholly owned unit and mining lease land operator, Wullersdorf Resources Sdn Bhd, over their wrongful occupation dispute, until the full disposal of the injunction. The injunction application will be heard inter partes (in the presence of both parties) on July 17, said Bahvest in a filing with Bursa Malaysia on Wednesday. Meanwhile, Southsea said in a statement that it has filed a lawsuit at the Tawau High Court seeking an order to compel Bahvest to pay the remaining RM7 million it is owed, as well as the removal of Bahvest’s building, equipment, machineries and related structures. The RM7 million is a tranche of the RM13 million non-refundable deposit Bahvest agreed “We found out about the purported court order vide the Bursa announcement,” he added. Addressing Bahvest’s claims that an unidentified crew of men disrupted its operations, Southsea said it will enforce the implementation of enhanced security measures at the two entrances of the mining lease land. “All individuals wishing to enter Southsea’s mining lease land are required to pre-register for a gate pass which must be presented at the security checkpoints together with their identity cards or passports for verification,” the company said in its statement, adding the gate pass will help track a record of all individuals entering the land to be presented to authorities as and when required. “It is an added measure to protect against any wrongful allegations, in light of recent events, including investigations into alleged missing and/or stolen gold and Bahvest’s announcement of the presence of unauthorised crew,” said Southsea. Bahvest shares closed half a sen higher at 23 sen on Wednesday, giving the group a market capitalisation of RM278.36 million. Bahvest secures injunction barring Southsea from hindering ops KUALA LUMPUR (July 5): KYM Holdings Bhd expects its financial year ending Jan 31, 2024 (FY2024) to continue to be challenging, amid continued volatility in paper roll prices, the rise in the overnight policy rate and the group’s foreign exchange exposure, according to newly appointed chief executive officer Darren Lee. The group is dependent on paper rolls it sources from Northern Europe as its raw material, which means a lot of its purchases are denominated in euros and US dollars while the ringgit has been declining. “It’s a difficult year, but we are cautiously optimistic [about our financial performance]. “We see a recovery in 3Q and 4Q as we expect our export sales to pick up,” he told reporters after the group’s annual general meeting on Wednesday (July 5). The industrial paper bag maker’s net profit more than doubled to RM11.37 million in the first quarter ended April 30, 2023 (1QFY2024) from RM4.69 million a year earlier, mainly due to a one-time gain on the sale of a piece of land and building. Revenue wise, the group saw a decline to RM22.9 million from RM29.8 million, due to lower selling prices and sales volumes as the export market weakened. Looking ahead, KYM aims to increase export sales for its multiwall industrial paper bags and gain more customers from overseas markets, said the CEO. The group’s exports amounted to 30% in FY2023, led by Indonesia (22%), Thailand (4%), and Singapore (4%). “Export is an important strategy that I want to deploy as many countries have not moved to paper bags yet. We will intensify our business development and marketing activities to further increase sales volume KYM: FY2024 a difficult year but export sales recovery seen from 3Q onwards and orders from existing and new customers. In the next few years, we will see 50%-50% for imports and exports,” he said. KYM also plans to roll out its new sustainable and innovative product, its Top Daeration Plastic Free Film ESG Sacks, to the market in the second half of 2023. Too early to talk about RE, EVs and tech venture It is too early to reveal the group’s plans for diversifying its business into renewable energy (RE), electric vehicles (EVs) and technology sectors. Lee said. The Edge reported last August that KYM was looking to venture into these three business segments in a bid to future-proof the business and effect a valuation shift. “Looking at our current valuation right now, we are trading at a 21.5% discount to net assets per share of 65 sen. Price-earnings valuation is only less than six times. So I have to go raise cash for my maiden acquisitions. These plans actually take time [because] we scout the entire landscape and see where we can get the best value and returns,” he said. As at end-April, KYM’s short-term investments, fixed deposits with licensed banks and cash and bank balances stood at RM23.155 million. Short-term borrowings were at RM27.78 million, while longterm borrowings totalled RM13.85 million. KYM’s share price closed unchanged at 51 sen on Wednesday, valuing the group at RM77.83 million. BY SYAFIQAH SALIM & KAYLA CHAN theedgemalaysia.com BY IZZUL IKRAM theedgemalaysia.com to pay Southsea as part of the RM20.4 million temporary settlement for the wrongful occupation of the Bahvest’s mining structures on Southsea’s mining lease land after the company’s sublease ended in April. Southsea said Bahvest paid the RM6 million tranche on May 10, while RM7 million was to be made on May 29. Southsea unaware of injunction order, says Fui Ming In response to Bahvest’s injunction order, Southsea’s main shareholder Datuk Lo Fui Ming told The Edge that it came as a surprise to Southsea. KYM: FY2024 a difficult year but export sales recovery seen in 3Q onwards
THURSDAY JULY 6, 2023 10 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (July 5): Bursa Malaysia announced on Wednesday (July 5) that it will serve as the single point of reference for investor relations (IR) matters to prevent redundancy and duplication of functions. In a statement, the exchange said it has assumed the role of Malaysian Investor Relations Association (Mira), following the discontinuation of the association on July 1. Mira was established in 2007 by Bursa Malaysia to develop and enhance IR capabilities of public listed companies (PLCs) through effective communication and the cultivation of stronger relationships between PLCs and the investor community. Bursa Malaysia said investor relations practitioners or professionals in Bursa Malaysia PLCs, including former Mira members, can expect further capacity building support and guidance from the exchange to enhance their skills and knowledge. “Bursa Malaysia is pleased to assume the role previously held by Mira and looks forward to expanding our efforts in advancing PLCs’ investor relations capabilities and proactiveness, to raise the PLCs’ stature and appeal to investors globally,” said its chief executive officer Datuk Muhamad Umar Swift. “Investor relations is a strategic function, to importantly communicate in a credible and engaging manner on the company’s performance and growth plans. The exchange is committed to continue providing PLCs and IR practitioners with the necessary knowledge, training or workshops and other essential resources to effectively engage with their shareholders and wider stakeholders,” he added. In recent years, Bursa Malaysia has spearheaded several initiatives to enhance PLCs’ visibility and accessibility to the investment community through more active investor relations engagements. “Notable initiatives to elevate best practices from an IR standpoint include the PLC Transformation Programme, specifically through Guidebook 3 entitled Strengthening Stakeholder Management & Investor Relations, as well as the Investor Relations and Public Relations Incentive Programme,” the exchange said. Bursa now the sole reference for investor relations matters KUALA LUMPUR (July 5): Corporate entities need to come up with a clear policy to protect whistleblowers, and encourage reporting to address corporate misconduct within the organisation, said Bursa Malaysia chairman Tan Sri Abdul Wahid Omar. He said it is important for companies to have a whistleblowing policy, especially to provide trusted channels of communication for employees to report issues without fear of repercussions. “It is even more important [to create a] culture of trust because the people (employees) must trust the system. They must trust that their identity will be protected and there will not be any reprisals,” Abdul Wahid told reporters at the launch of the Deloitte 2023 Asia Pacific Whistleblowing (Conduct Watch) Survey Report on Wednesday (July 5). He said the whistleblowing policy within a company should be entrusted to independent parties. “Most organisations, they will report to someone internal or to an independent person in the system, for example to senior independent director, audit committee chairman, chief integrity officer, or chief auditor. So these are some of the people that commonly are the focal point for whistleblowing,” he added. Meanwhile, according to the Deloitte survey report, 93% of respondents have or plan to have a whistleblowing programme in the future, while the remaining 7% do not plan to have a whistleblowing programme. “The majority of these respondents were from private companies with less than 1,000 employees. “The reasons provided for not having Companies must come up with clear policy to protect whistleblowers, says Bursa chairman a whistleblowing programme were that management did not see a need for one, their organisations were too small, there was a lack of resources and expertise and there were no specific legal or regulatory requirements to have one,” the report said. The survey also showed that about 58% of respondents see whistleblowing as a high priority in their organisation, with the majority of both public listed companies and private organisations recognising the importance of whistleblowing. Conducted between March 31 and May 1, the survey received responses from over 500 organisations throughout the Asia Pacific region, including Japan, South Korea, China, and Southeast Asia. The respondents spanned over 10 different industries and ranged from organisations with less than 1,000 employees to those with over 50,000 employees. BY ANIS HAZIM theedgemalaysia.com BY SYAFIQAH SALIM theedgemalaysia.com Bursa Malaysia chairman Tan Sri Abdul Wahid Omar said it is important for companies to have a whistleblowing policy, especially to provide trusted channels of communication for employees to report issues without fear of repercussions.
THURSDAY JULY 6, 2023 11 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (July 5): Kenanga Research has upgraded the utilities sector to “overweight” following its upgrade on Tenaga Nasional Bhd (OP; TP: RM10.64). In a note on Wednesday (July 5), the research house said it likes the sector for its earnings defensiveness and decent dividend yields of 4%-6%. It said that furthermore, their earnings are backed by a regulated asset base model which offers recurring dividends for yield seekers. “Recent easing fuel prices are positive to Tenaga and Petronas Gas Bhd (MP; TP: RM17.13) but negative for Gas Malaysia Bhd (MP; TP: RM3.54) as lower gas prices erode retail margins. “Nonetheless, the earnings impact is neutral over the long term given the fuel cost pass-through mechanism. “Our top pick for the sector is YTL Power International Bhd (OP; TP: RM1.48) for the promising prospects of PowerSeraya, defensive Wessex’s earnings and its exciting new data centre and digital banking ventures,” it said. Kenanga Research upgrades utilities sector to ‘overweight’, YTL Power top pick KUALA LUMPUR (July 5): RHB Investment Bank research has cut its 2023 Brent crude oil price assumption to US$81/bbl (barrel), from US$85/bbl, and maintained its 2024-2025 projection at US$80/bbl. In a regional sector update on Wednesday (July 5), the research house said global oil demand is estimated to grow by two mbpd (million barrels per day) this year, thereby driving the market to a theoretical deficit of 0.5-0.6mbpd in 2H2023. “While it will take some time for the market to get past the negative sentiment arising from macroeconomic concerns and uncertainties, we believe Opec+ is ready for more severe production cuts — evidenced by the recent announcement of the extension of voluntary cuts by Saudi Arabia and Russia through August.” “We lower our 3Q2023 and 4Q2023 projections to US$80/bbl and US$85/bbl, largely premised on stronger fundamentals as a result of higher demand.” “We still expect a balanced market, with an average theoretical deficit of 0.1mbpd in 2023,” it said The research house said that as oil prices are projected to average at USD81/bbl this year, this will continue to encourage oil companies to maintain their capex and opex spending plans — a boon for upstream services players. “While we remain upbeat on the overall level of oil & gas activities, we turn more selective on stock picks. “We prefer companies with resilient earnings profiles, backed by solid order books. “For Thailand, we like Bangchak (BCP), and PTT Oil and Retail Business (OR), which should see the positive effects of the recovery of the retail business market,” it said. RHB IB said Thailand is in an economic and tourism recovery, leading to high demand for transportation and retail activities in these companies’ branches and service stations throughout the country. The research house, which maintained an “overweight” stance on the sector, said its top picks are Malaysia Marine & Heavy Engineering Bhd, Yinson Holdings Bhd, BCP, and OR. KUALA LUMPUR (July 5): Hong Leong Investment Bank (HLIB) research has maintained its “overweight” rating on the gaming sector and said although it had a dismal start in 2023, the research house believes the sector’s recovery trajectory remains intact as Malaysia and Singapore’s tourist numbers still have ample legs to go before returning to pre-pandemic levels. In its 2H2023 sector outlook, the research house said with more airlines reinstating capacities for international routes (especially from China), it expects casino operators to stage a meaningful recovery in 2H2023 as inflow of leisure travellers picks up steam. “Meanwhile, lingering fear over regulatory risks of number forecast operators (NFOs) is expected to subside in 2H2023 should operations remain status quo post-state polls. “Maintain overweight rating on the sector with top picks Genting Bhd and Genting Malaysia Bhd,” it said. HLIB said NFOs such as Sports Toto Bhd logged noticeable improvements in ticket sales per draw in 1QCY2023 (+12% q-o-q), recovering to circa 89% of pre-pandemic levels despite the Kedah ban and special draws reduction starting from January 2023, reinforcing house view that both measures have minimal impact on its ticket sales. “We think ticket sales of NFOs will remain resilient despite the Perlis government’s announcement to stop renewing operating licenses of NFO outlets in the state in 2024. “To note, Sport Toto’s four outlets in Perlis merely represent less than 1% of its total 657 outlets in Malaysia, implying miniscule impact to ticket sales. “However, we understand investors are jittery over the policy/regulatory risk due to the impending six state polls, which have led to share price of NFOs declining over the past year,” it said. RHB IB cuts 2023 Brent crude oil price assumption to US$81/bbl Gaming sector recovery trajectory remains intact, says HLIB BY SURIN MURUGIAH theedgemalaysia.com BY SURIN MURUGIAH theedgemalaysia.com BY SURIN MURUGIAH theedgemalaysia.com REUTERS
THURSDAY JULY 6, 2023 12 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (July 5): TA Securities Research has valued Main-Market bound MST Golf Bhd at RM1.20 a share — a 48.15% premium to its initial public offering (IPO) price of 81 sen a share — on the back of the group’s strong profit growth, coupled with its business plan to widen coverage in existing markets and penetrate regional countries amid robust demand for golf clubs and other equipment. MST Golf, which is slated to be listed on July 20, is primarily involved in specialty retail and wholesale of golf equipment which comprises golf clubs, golf apparels, and other accessories in Malaysia and Singapore. “We value the group at RM1.20/share premised on PER 22x FY2024F EPS of 5.4 sen, in line with the local specialty store peer MR DIY. “We believe this is fairly justified by the stock’s strong earnings growth of 26.7%/31.8% (which outperform its peer’s consensus earnings growth of 21.5%/16.4%) in FY2023/FY2024 and dividend payout of 30%, albeit the stock has relatively smaller market capitalisation,” said the research house in a note on Wednesday (July 5). TA Securities values Main Market-bound MST Golf at RM1.20 a share Priceworth plans RM210 mil capital reduction to eliminate accumulated losses based sports (where participants compete as individuals) played outdoors during the Covid-19 pandemic, coupled with increased in interest arising from growing popularity of the sport as a result of shifting paradigm in leisure activity behaviour,” it said. From FY2019 to FY2022, MST Golf’s revenue grew steadily by a three-year CAGR of 19.6% to RM300.9 million while net profit similarly grew 41.8% to RM29.1 million, mainly driven by the growing number of golf retail outlets, introduction of the ilovegolf membership programme, and strengthening of the US dollar, which led to higher selling prices. In line with the topline expansion, the group’s net profit margin also increased from 5.3% in FY2019 to 8.9% in FY2022, thanks to better cost efficiency after the deployment of digitalisation progress. TA Securities forecast the group’s revenue and net profit to grow to RM386.6 million and RM36.9 million in FY2023, while revenue and net profit for FY2024 is estimated at RM471.3 million and RM48.6 million. “For FY2025, we expect the group to record higher net earnings of RM60.8 million with a steady profit after tax margin of 10%,” said TA Securities. MST Golf’s IPO comprises a public issuance of 160 million new shares and an offer for sale of up to 68 million existing shares. At 81 sen a share, it is expected to raise RM184.68 million, of which RM129.6 million is from the issuance of new shares. RHB Investment Bank Bhd is the principal adviser, sole underwriter, and sole placement agent for its IPO. Read also: PIVB assigns 37 sen fair value to ACE Market-bound DC Healthcare BY SYAFIQAH SALIM theedgemalaysia.com BY ANIS HAZIM theedgemalaysia.com KUALA LUMPUR (July 5): Priceworth International Bhd has proposed a capital reduction to eliminate its accumulated losses. The Sabah-based timber manufacturer said the exercise entails the reduction of RM210 million of its issued share capital, which totalled RM441.85 million as at the latest practicable date of June 6. The corresponding credit of RM210 million, it said, will be used to eliminate the group's accumulated losses of RM202.6 million as of Dec 31, 2022. “The proposed capital reduction will eliminate Priceworth's accumulated losses via reduction and cancellation of the current issued share capital of the company to more accurately reflect the value of the underlying assets and the financial position of the company,” the group said in a filing with Bursa Malaysia on Wednesday (July 5). Priceworth said the exercise will also enhance its financial profile with its bankers, customers, suppliers, investors and other stakeholders following the elimination of the accumulated losses. Upon completion of the capital reduction, Priceworth will have an enlarged share capital of RM231.85 million, comprising 1.45 billion shares. The exercise is expected to be completed by the fourth quarter of 2023, the group said. Shares in Priceworth closed unchanged at 15 sen on Wednesday, valuing the group at RM232.27 million. According to TA Securities, MST Golf saw a return on equity (ROE) of 40% in FY2022 versus MR DIY’s ROE of 36.6%. Citing a report by the independent market research Vital Factor Consulting, the research house said the import value of golf equipment in Malaysia grew at a compound annual growth rate (CAGR) of 32.4% to RM132.1 million in 2022, while Singapore’s import value of golf equipment grew by 33.8% last year. “Both region’s import growth was mainly attributed by the increase in golf demand, as golf is one of the singular
THURSDAY JULY 6, 2023 13 THEEDGE CEO MORNING BRIEF
thursday july 6, 2023 14 The E dge C E O m o rning brief home news In brie f Bestinet appoints Tengku Muda Pahang as board chairman KUALA LUMPUR (July 5): Bestinet Sdn Bhd (Bestinet), the sole operator of the government’s Foreign Workers Centralised Management System, has appointed the Tengku Muda of Pahang, Tengku Abdul Rahman Sultan Ahmad Shah (pictured) as the chairman of its board. Tengku Abdul Rahman, who recently became a shareholder in the company, has also assumed the mantle of the company’s director effective June 30, 2023 — taking over from Datuk Seri Mohd Amin Abdul Nor who has resigned as both chairman and director, Bernama reported, citing a statement from Bestinet. Bestinet’s chief executive officer Ismail Mohd Noor was quoted as saying that Tengku Abdul Rahman’s fresh perspective is expected to drive the company to even greater heights. “Bestinet’s primary objective is to establish a strong collaboration with our new chairman, aiming to deliver enduring value to all public and private stakeholders. “The company has maintained a steadfast commitment to serving clients by providing comprehensive information technology solutions, with a particular focus on security, biometrics, and artificial intelligence,” he further said. — theedgemalaysia.com Malaysia’s end-June palm oil stocks seen at four-month high on slow exports KUALA LUMPUR (July 5): Malaysia’s palm oil inventories likely stood at 1.86 million metric tons by the end of June, rising by about 10.5% higher from a month earlier to stand at a fourmonth high amid sluggish exports, a Reuters survey showed on Tuesday. The median estimate for inventories from 10 traders and analysts polled by Reuters was 12% higher than the 1.65 million metric tons recorded in June 2022. Production was forecast to fall 0.8% to 1.51 million tons, with growing concerns over the impact of El Nino-induced hot and dry weather during coming months. However, output in the world’s second largest producer may improve in the months ahead as estates transition towards the peak crop season around September, Nagaraj Meda, Managing Director, TransGraph Consulting, said. Exports in June will likely remain little changed for a second month, with expectations centring on a gain of 0.7% to 1.09 million tons. Imports were expected to fall by 17%. The impact of El Nino weather conditions could put upward pressure on prices in July, as there are some expectations for reduced crop yields over July-September, particularly in top producer Indonesia, said Marcello Cultrera, director at Singapore-based commodities consultancy Apricus 8 Pte Ltd. The Malaysian Palm Oil Board (MPOB) is scheduled to release its data on July 10. — Reuters 10 Chinese nationals arrested over crypto scam KUALA LUMPUR (July 5): Police has arrested 10 Chinese nationals including the mastermind in connection with promoting a cryptocurrency investment scam at two condominiums around Cheras here, on Monday. All arrested suspects, aged 19 to 40, are believed to have been active in the scam since May. Cheras district police chief ACP Zam Halim Mohamed said the syndicate’s modus operandi was to target Chinese customers through phone calls and impersonate as customer service officers, and promote the investment in the Telegram application. Speaking at a media conference at the Cheras district police headquarters, he said victims who were deceived had to pay RM65 (100 yuan) to open an account on the Bitcoin website www.icoin.com to be registered. “After opening an account, they will be given an username and password to access the website,” he said. Zam Halim said victims would be asked after that to make a number of financial transactions with an investment package in the currency of the victim’s choice. He said the syndicate was believed to have been operating in China and the police is still investigating the matter to determine whether the group that was carrying out activities in Malaysia had any connection (with the syndicate in China). — Bernama Read the full story Former MP Abdul Aziz returns to Destini as independent director KUALA LUMPUR (July 5): Engineering solutions provider Destini Bhd has appointed Datuk Abdul Aziz Sheikh Fadzir (pictured) as an independent and nonexecutive director, effective Wednesday (July 5). Abdul Aziz, 60, previously held the same position at Destini from Aug 30, 2017 until May 18, 2018, according to the company’s filing. The Umno politician was the member of parliament (MP) for KulimBandar Bahru from 2013 to 2018, after having earlier served as a one-term Kedah State Legislative assemblyman for Kuala Ketil. Abdul Aziz is currently a non-independent and non-executive chairman of Priceworth International Bhd. — by Anis Hazim Apex Equity announces retirement of newly re-elected director Celine Leong KUALA LUMPUR (July 5): Apex Equity Holdings Bhd announced the retirement of Datuk Celine Leong Wai Leng as its executive director (ED) with immediate effect, less than three weeks after the 54-year-old was re-elected, albeit with opposition from certain substantial shareholders. The Kajang-based stockbroking firm made the announcement to Bursa Malaysia on Wednesday (July 5), which came on the heels of its Monday announcement that it had appointed former Export-Import Bank of Malaysia Bhd CEO Norzilah Mohammed, 58, as its new ED. Leong was appointed to Apex’s board in June last year as group deputy managing director and subsequently redesignated to group ED in December, when the group appointed Farhash Wafa Salvador as executive chairman. Her appointment into the board was made on the same day (June 20, 2022) as another ED Lim Kok Eng, independent non-executive directors Woon Wai En, Rozana Shamsuddin, and Datuk Ahmad Redza Abdullah. Leong was formerly group director of finance treasury at ACE Group, which was the substantial shareholder in Apex through ACE Investment Bank Ltd (September 2017-July 2019) and ACE Credit (M) Sdn Bhd (July 2019- December 2022). She was among five Apex board members offered for re-election in the group’s annual general meeting last month and managed to garner 55% support. The others who were re-elected are Farhash, Lim, Woon and Rozana. — by Chester Tay
thursday july 6, 2023 15 The E dge C E O m o rning brief home PUTRAJAYA (July 5): The Home Ministry (KDN) will hand over to the Malaysian Anti-Corruption Commission (MACC) the name of a National Registration Department (NRD) officer alleged to have solicited for money from applicants for Malaysian citizenship. Minister Datuk Seri Saifuddin Nasution Ismail said he himself had received a complaint regarding the alleged corruption involving the officer concerned. “I have contacted Tan Sri Azam Baki (MACC chief commissioner) to hand over Saifuddin said approvals for matters such as citizenship and birth certificates do not require any payment. “We have a committee in the NRD that will make decisions based on the law and circulars, from verifying the validity of documents, whether there is merit, to recommending whether to pass them or not. “Actually, they (applicants) need only to come to collect their documents once approved. If any officer contacts you asking for money (fees) to approve the document and so on, ignore it because this is not a practice in governance now,” he stressed. Earlier, Prime Minister Datuk Seri Anwar Ibrahim said he had received information that there was an element of abuse of power in the NRD when the process of obtaining a citizenship certificate required a certain fee for those who were eligible for citizenship. In response to the prime minister’s statement, the NRD said in a statement on Tuesday that it is committed to tackling corruption by implementing improvements to the procedure for issuing identification documents. Home ministry to submit name of NRD officer in alleged bribery to MACC PUTRAJAYA (July 5): More than 60% of the 156 investigation papers (IP) involving high-profile and public interest cases opened by the Special Operations Division (BOK) of the Malaysian Anti-Corruption Commission (MACC) between 2020 and June 8 this year involved politicians. BOK senior director Datuk Tan Kang Sai said the investigation resulted in the arrest of a total of 211 individuals, with 91 of them brought to court and involving 454 charges. “During the same period, the MACC also confiscated RM51,132,539 in cash, forfeited property and cash amounting to RM10,465,873.39 and issued compound amounting to RM128,968,750,” he told Bernama recently. He said investigating high-profile and public interest cases, especially concerning financial transactions involving banks and foreign financial institutions, had its own challenges. Investigating the money trail becomes difficult when the money involved is transferred to accounts abroad because each country has different laws to protect its banking system, he said, adding that the banks and financial institutions have the right not to cooperate and to refuse to provide information to facilitate the investigation. “As such, we see that most of the evidence on money trail brought to the court only involves local banks and financial institutions,” he said. Tan said among the high-profile cases which had been investigated by BOK were Op Mitra, Op Hire and Op Marii which involved misuse of funds amounting to hundreds of millions of ringgit provided by the government for the development of MACC: Over 150 investigative papers into high-profile cases opened since 2020, majority involved politicians the Indian community, workers and the country’s automotive industry. Another challenge facing BOK, he said, is when cases being investigated are sensationalised by the media and politicians. “This allows parties involved to take the opportunity to destroy important documents such as financial transactions, and to flee. “Today’s technological advancement also presents its own challenges where financial transactions involving local banks and financial institutions and even foreign financial institutions can be carried out using only mobile phones. “In view of the challenges, MACC engages experts in accounting, engineering and law as part of the BOK investigation team to ensure a comprehensive investigation before submitting the IPs to the Attorney General’s Chambers,” he said. He said BOK also uses Effective Investigation Management (EIM) and Management Team-based Investigation (MTI) to enhance public confidence in MACC’s authority as a relevant and pre-eminent anti-corruption agency. BOK is a special investigation unit under the MACC established to investigate high-profile and public interest cases as well as those affecting the country’s security. It was established in 2010 and is part of MACC’s transformation initiative to achieve the objectives of the National Key Result Area (NKRA) related to largescale corruption cases on procurement and enforcement. Bernama Bernama to the MACC the name of the individual for investigations to continue,” he said at a press conference here on Wednesday (July 5). He said the individual was alleged to have contacted applicants and asked for a large sum of money if they wanted their applications to be approved. the edge file photo the edge file photo
THURSDAY JULY 6, 2023 16 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (July 5): Former prime minister Tun Dr Mahathir Mohamad’s claim that efforts promoting a “Malaysian Malaysia” will destroy “Tanah Melayu” and replace it with a multiracial country is baseless from the aspect of the Federal Constitution, according to a legal expert. Professor Dr Nik Ahmad Kamal Nik Mahmood, the head of National Professors Council (MPN) Governance, Law and Management Cluster, said Article 153 of the Federal Constitution recognises the special position and rights of Malays and Bumiputeras without denying others their rights, and therefore there can be no oppression of any race in the country. “We live by the Constitution; all races enjoy equitable rights but the Malays enjoy privileges. We do not consider this nation as a Malay country; this is a multiracial country where the majority is Malay,” he told Bernama when contacted on Wednesday. The law lecturer at Taylors University said Article 153 of the Federal Constitution entrusts the Yang di-Pertuan Agong with the responsibility to protect the rights and privileges of Malays and Bumiputeras in the Borneo states as well as the legitimate interests of other races as specified in this provision. “He (Dr Mahathir) was speaking in the political context of attempts to make this country multiethnic and sideline the interests of the Malay race, (but) this is difficult to be implemented because there are constitutional provisions which clearly state that Malay privileges are protected by the Yang di-Pertuan Agong and Conference of Malay Rulers,” he added. In dismissing Dr Mahathir’s contention that disunity among the Malays would cause them to lose political power and dominance, Nik Ahmad Kamal said this was unlikely to happen because every government was bound by the Federal Constitution. “In the Malaysian context, Malays form the majority race, so the issue of Malays being controlled by other races does not arise. Every government that comes to power, regardless of how many Malay component parties it has, is still bound by the constitution,” he said. Nik Ahmad Kamal said it is indisputable that Malays enjoy dominance in the country because they comprise the majority in the Cabinet and the Prime Minister is a Malay. Read also: Malay NGOs argue High Court’s ruling on allowing use of Tamil, Chinese for teaching in vernacular schools is unconstitutional PUTRAJAYA (July 5): The Chinese nationals linked to the commotion at the Kuala Lumpur International Airport (KLIA) last week have returned to their home country on Wednesday (July 5), said Malaysian Anti-Corruption Commission (MACC) chief commissioner Tan Sri Azam Baki. “We have recorded statements from the two women, and we cannot stop them from returning home,” he told reporters here on Wednesday. Azam said the MACC had recorded statements from 14 individuals regarding the incident, namely the two Chinese nationals, one VIP, eight immigration officers and other witnesses. He said the issue of corruption emerged after one of the women was contacted by a Chinese man who claimed to be an agent of a company appointed by the KLIA management to handle those who had been given Not-To-Land (NTL) notices by the Immigration Department. “I confirmed that there is an external party involved in contacting the woman in question for the purpose of helping to buy a plane ticket and setting a management fee, so we will conduct an investigation and track down the agent,” he said. Azam Baki: Chinese nationals linked to KLIA commotion have returned home He further said the MACC’s investigation found that there is a company responsible for managing travellers who had been served with NTL notices at KLIA since 2017. However, he said the commission wants to find out whether it was done according to procedures or otherwise. Azam said 41 Chinese nationals, including the woman involved, were issued with NTL notices on the day of the incident. “MACC is also looking into the system and procedures concerning the issuance of NTL notices, including the process that must be followed until the Chinese woman is granted entry (into the country),” he said. In another development, Azam confirmed that the MACC had received information about a National Registration Department officer who allegedly asked for money to issue citizenship certificates. “We will start an investigation as soon as possible,” he said. Earlier on Wednesday, Home Minister Datuk Seri Saifuddin Nasution Ismail said he had received a complaint regarding the alleged corruption involving the officer concerned. Bernama Professor Dr Nik Ahmad Kamal Nik Mahmood Constitution guarantees rights of Malays without jeopardising others — law professor Bernama BERNAMA
THURSDAY JULY 6, 2023 17 THEEDGE CEO MORNING BRIEF HOME SEREMBAN (July 5): Pakatan Harapan (PH) is optimistic that its alliance with Barisan Nasional (BN) will enable it to retain Negeri Sembilan, Selangor and Penang in the coming state elections, said PKR deputy president Rafizi Ramli. He said the findings of monthly research done in these PH-held states showed a high level of voter satisfaction with the current state administrations. He said Negeri Sembilan, led by Menteri Besar Datuk Seri Aminuddin Harun, obtained the highest mark from voters with a 75% approval rating. “In the studies done from January to May, one common question asked is whether they support and are satisfied with the existing state government. “Seventy-five per cent of voters in Negeri Sembilan say they are satisfied with the current state government, the highest approval rating among the six states. We pray that this situation will persist,” he said when speaking at the MADANI Tour Ceramah for the Sikamat state constituency here on Tuesday night. Rafizi did not give the data for the other states but said he was confident with the level of support shown by voters, especially those aged 30 and above. PAS-ruled Kedah, Terengganu and Kelantan are also scheduled to hold their state elections soon. Meanwhile, Aminuddin, in his speech, said he believed that in line with the formation of the Unity Government at the federal level, the PH-BN cooperation had become stronger and could continue to lead the state. Aminuddin said PH and BN would campaign together in all seats to be contested by the two coalitions to ensure that candidates of Unity Government parties would win in the state polls. PH confident of retaining three states in coming polls GEORGE TOWN (July 5): The Unity Government is expected to remain in power in Penang, Selangor and Negeri Sembilan after the state elections on August 12, said political analyst Prof Dr P Sivamurugan. Sivamurugan said Perikatan Nasional (PN), meanwhile, will continue to govern Kedah, Kelantan and Terengganu. “It will probably be status quo in the six states involved in the polls, with probably reduced majority wins and Malay seats (constituencies) going to be more shaky. “If there is no internal sabotage, the parties in the coalition will be able to win, but each party must also look into the choice of candidates and internal party issues while not playing up issues pertaining to race, religion and royalty (3R). “This is to ensure that the country can move forward and political harmony is maintained. Only then will the next generation be able to see this is the mould that fits the current situation,” he told reporters when met at Universiti Sains Malaysia here on Wednesday. Meanwhile, Sivamurugan said Pakatan Harapan (PH) and Barisan Nasional (BN) need to enlighten voters as many are confused following their alliance after the 15th general election (GE15). He said it was important to inform that the coalition was necessary for political stability and that a strong and stable government is needed to govern the country. “This is because they (political parties) were rivals before suddenly joining forces, but this is not new, since 1969, this has been happening and it is important that the parties’ top leadership explain the importance of this cooperation,” he said. He said the PH and BH machinery must also meet and shed light on this matter with their loyal voter base and at the same time win the support of new voters. SHAH ALAM (July 5): Parti Amanah Negara (Amanah) has confirmed that it will contest eight seats in the Selangor state election next month. Selangor Amanah chairman Izham Hashim said the eight seats are the state constituencies won by the party in the 14th general election (GE14), namely Sabak, Meru, Pandan Indah, Hulu Kelang, Morib, Seri Serdang, Sungai Ramal and Taman Templer. “We (parties in the Unity Government) have already got our respective number of seats; in the current phase we are open to swapping seats (with other parties in the Pakatan Harapan-Barisan Nasional alliance) but that (process) will be on mutual agreement. “So far, we have heard (regarding seat swapping) but there is nothing yet, we still have time... We don’t just want to contest but also want to see if we can win at that place,” he said at a press conference after making a visit to the location of the Persiaran Mohktar Dahari road-widening project in Puncak Perdana here on Wednesday (July 5). He said the seat swapping based on mutual agreement is expected to be completed by the middle of next week. Commenting further, Izham said the party is expected to field 50% new faces, in addition to maintaining a 30% quota for female candidates. “Amanah candidates are expected to be balanced. I can’t announce any names yet, but I can tell you there will be a combination of incumbents, new faces and old people who have been given a new lease of life,” he said. Voters in Selangor, Kedah, Kelantan, Terengganu, Penang and Negeri Sembilan will go to the polls on Aug 12, following the Election Commission (EC)’s decision to hold simultaneous state elections in the six states. When announcing this on Wednesday, EC chairman Tan Sri Abdul Ghani Salleh said nominations would be held on July 29 and early voting on Aug 8. The Selangor State Assembly has 56 seats. Expect status quo in six states after state polls, says political analyst Sivamurugan Selangor polls: Amanah to contest eight seats Bernama Bernama Bernama
thursday july 6, 2023 18 The E dge C E O m o rning brief home JOHOR BAHRU (July 5): A recycling company director incurred a penalty of RM2,437,433, in addition to a fine of RM18,000 at the Magistrates Court here on Wednesday (July 5), for her failure to file tax returns for the assessment years of 2021 and 2022, involving a taxable income of more than RM3.3 million. Magistrate Nurzihan Abdul Rehman imposed the sentence on Wong Siew Lan, 49, who pleaded guilty as charged, and ordered an imprisonment of 12 months if she failed to settle the fine. Wong was charged under Section 77A(1) of the Income Tax Act 1967, which requires her to furnish a tax return in the prescribed form C for years of assessment 2021 to 2022 to the Director General of Inland Revenue. She failed to file the returns for the taxable income of RM1,827,149 for the assessment year 2021 and RM1,558,176 for 2022, which meant she should have paid a tax of RM812,478 for both the years combined. Under Section 112(1A) of the Income Tax Act 1967, the offence is punishable by a fine not exceeding RM20,000, or an imprisonment of up to six months, or both, in addition to a special penalty of triple the tax payable, upon conviction. Prior to sentencing, Wong, a mother of five, who was unrepresented, pleaded for leniency. She said her children were still in school, and her elderly mother and mother-in-law depended on her, adding that she had also paid taxes of RM120,000 (RM60,000 each) for both 2021 and 2022. However, Inland Revenue Board senior counsel Norhidayah Yasin requested a commensurate sentence due to the fact that the RM120,000 paid was a mere fraction of the payable tax of RM812,478. Nurzihan then ordered Wong to pay a fine of RM18,000 and a penalty of RM2,437,433, to be paid in installments to the Inland Revenue, with effect from July 5. Company director gets RM2.4 mil penalty for failure to file tax returns PUTRAJAYA (July 5): Datin Seri Rosmah Mansor’s lawyers filed a notice of motion to seek leave (permission) from the Federal Court to appeal over the June 22 Court of Appeal (COA) decision that dismissed her appeal to nullify her solar hybrid trial. The motion with five questions of law was filed by her solicitors from Messrs Akberdin & Co on Tuesday (July 4). This follows questions surrounding when the judicial review by Rosmah should have been filed to challenge the then senior deputy public prosecutor Datuk Seri Gopal Sri Ram’s (now deceased) fiat. The five questions are:- • Whether the computation of the three months period under Order 53 Rule 3(6) of the Rules of Court 2012, should take effect after the applicant (Rosmah) has exhausted a similar application at the criminal court, ie after the decision of the Federal Court on May 27, 2022, in keeping with the phrase “when the decision is first communicated to the applicant” under the said rule? • Whether the applicant should be granted an extension of time under Order 53 Rule 3(7) of the said Rules of Court 2012, to file a judicial review application given that she has given good reasons under the said rule, that is to exhaust a similar application first at the criminal court. • Bearing in mind that the primary issue in the judicial review application was the illegality of the criminal proceedings which rendered the entire criminal trial of the applicant to a nullity, whether the COA having regard to the overriding interest of justice and not only the technical compliance of Order 53 Rule 3(6) of the Rules of Court, ought to have granted an extension of time after invoking the three months date line to commence from May 21, 2021 (the third version of the fiat). • Which of the two conflicting decisions in the case of Menteri Besar Pahang vs Seruan Gemilang Sdn Bhd, (2010) where one of the two judges decided that the computation of the three months period under Order 53 Rule 3(6) of the Rules of Court should take into effect from the Federal Court’s decision, and the other judges disagreed is preferable? As such, which would be the correct interpretation of “when the decision is first communicated to the applicant” under the said rule? • Having made a finding that the High Court judge had erred in the decision that the leave application has to be filed within three months from Nov 15, 2018, the date Rosmah was charged in court, or within three months from the April 8, 2021 (the date the COA allowed her appeal) with the consent of the senior deputy public prosecutor for the applicant to obtain the first version of fiat dated July 8, 2020, whether the COA on its own motion impose a three months date line to commence from May 21, 2021, when the applicant was not given an opportunity to be heard on the new date? And the respondents had not raised the issue during submissions On July 22, a three-member COA bench, ruled there is no merit in Rosmah’s appeal, where it ruled the judicial review application was filed out of time and there were no valid grounds for the court to exercise its discretion to grant an extension. Rosmah’s lawyers had applied for her criminal appeal, scheduled to be heard from July 11 to 14 at the COA, to be adjourned pending the disposal of her leave to appeal and possibly the apex court to hear the merits of her appeal first. The COA has fixed Friday (July 7) to hear the application to adjourn. Rosmah, 71, had on Sept 1, last year been found guilty by the High Court in Kuala Lumpur on all three counts of graft relating to a solar hybrid project for 369 rural schools in Sarawak beginning 2016. For her guilt, she was sentenced to 10 years in jail and fined RM970 million. Rosmah files leave to appeal on failed judicial review to disqualify Sri Ram and nullify the solar graft case by Hafiz Yatim theedgemalaysia.com Bernama Low Yen Yeing/The Edge
THURSDAY JULY 6, 2023 19 THEEDGE CEO MORNING BRIEF WORLD BEIJING (July 5): China has cancelled a trip by European Union (EU) foreign policy chief Josep Borrell scheduled for next week, an EU spokesperson said on Tuesday (July 4). No reasons were given for the cancellation, which comes as Europe seeks to reduce risks created by its close economic relationship with China, which Brussels has dubbed an “economic competitor and a systemic rival”. “Unfortunately, we were informed by the Chinese counterparts that the envisaged dates next week are no longer possible and we must now look for alternatives,” spokesperson Nabila Massrali told Reuters write off hopes of another attempt at a visit. “We welcome High Level Representative Borrell to visit China at the earliest time convenient to both sides,” foreign ministry spokesperson Wang Wenbin told reporters. “We are willing to maintain communication with the EU about this.” Borrell was due to visit Beijing on July 10 to meet his Chinese counterpart and discuss “strategic issues” including human rights and Russia’s war in Ukraine, the EU’s ambassador to China said on Sunday (July 2). China cancels planned trip by Europe’s top diplomat Borrell BEIJING/SHANGHAI (July 5): China’s export controls on metals used in making semiconductors are “just a start”, an influential trade policy adviser said on Wednesday (July 5), as it ramps up a tech fight with the US days before US treasury secretary Janet Yellen visits Beijing. Shares in some Chinese metals companies rallied for a second session, with investors betting that higher prices on gallium and germanium, which Beijing’s export restrictions target, could boost revenues. Germanium is used in high-speed computer chips, plastics, and in military applications such as night-vision devices as well as satellite imagery sensors. Gallium is used in building radars and radio communication devices, satellites and light-emitting diodes (LEDs). China’s abrupt announcement of controls from Aug 1 on exports of some gallium and germanium products, also used in electric vehicles (EVs) and fibre optic cables, has sent companies scrambling to secure supplies and bumped up prices. Announced on the eve of US Independence Day and just before Yellen’s planned visit to Beijing from Thursday (July 6), analysts said it was clearly timed to send a message to the Biden administration, which has been targeting China’s chip sector and pushing allies such as Japan and the Netherlands to follow suit. China’s move has also raised concerns on whether restrictions on rare earth exports could follow, they said, pointing to how it curbed shipments 12 years ago in a dispute with Japan. China is the world’s biggest producer of rare earths, a group of metals used in EVs and military equipment. Analysts have described Monday’s (July 3) move as China’s second, and so far the biggest, countermeasure in the long-running US-China tech fight, coming after it banned some key domestic industries from purchasing from US memory chipmaker Micron in May. On Wednesday, former vice commerce minister Wei Jianguo told the China Daily newspaper that countries should brace for more should they continue to pressure China, describing the controls as a “well-thoughtout heavy punch” and “just a start”. “If restrictions targeting China’s high-technology sector continue then countermeasures will escalate,” added Wei, who served as vice commerce minister in 2003-2008 and is now the vice chairman of state-backed think tank China Center for International Economic Exchanges. China adviser warns chipmaking export curbs are ‘just a start’, as Yellen visit looms The Global Times state media tabloid, in a separate editorial published late on Tuesday, said that it was a “practical way” of telling the US and its allies that their efforts to curb China from procuring more advanced technology was a “miscalculation”. The Chinese commerce ministry did not respond to a request for further comment. Curbs on exports to China Washington is considering new restrictions on the shipment of high-tech microchips to China, following a series of curbs over the past few years. The US and the Netherlands are also expected to further restrict sales of chipmaking equipment to China, part of efforts to prevent their technology from being used by China’s military. A day after China unveiled the curbs, Chinese President Xi Jinping repeated a call for “stable and smooth functioning of regional industrial and supply chains” in a virtual address to leaders attending the Shanghai Cooperation Organisation summit, according to state media reports. Shares in Chinese metals companies such as Yunnan Lincang Xinyuan Germanium Industry Co and Yunnan Chihong Zinc & Germanium Co surged for a second session on Wednesday, with local media reporting that a rise in germanium prices would boost revenue growth for the firms. Gallium at 99.99% purity in China was trading at 1,775 yuan (RM1,155) a kg on Tuesday, unchanged day-on-day, but up 6% week-on-week and 4% year-on-year, respectively, Shanghai Metal Exchange Market data on Refinitiv Eikon showed. It was, however, 46% lower from the same period a year ago. China’s germanium ingot was priced at 9,150 yuan per kg on Tuesday, also flat on the day and on the week, Refinitiv data showed. It was down 4% month-on-month and up 4.6% year-on-year, respectively. BY BRENDA GOH Reuters BY YEW LUN TIAN & MARTIN QUIN POLLARD Reuters If restrictions targeting China’s high-technology sector continue then countermeasures will escalate. in a written statement on Tuesday. A spokesman for China’s foreign ministry declined to say why this visit was cancelled when asked at a daily briefing in Beijing on Wednesday (July 5), but did not Read the full story
THURSDAY JULY 6, 2023 20 THEEDGE CEO MORNING BRIEF WORLD (July 5): Global temperatures have smashed through records this week, underscoring the dangers of ever-increasing greenhouse gas emissions generated from burning fossil fuels. The average worldwide temperature reached 17°C on Monday (July 3), just above the previous record of 16.9°C in August 2016, according to data from the National Centres for Environmental Prediction. The threshold only lasted a day. On Tuesday (July 4), the average temperature hit 17.2°C. The new highs illustrate the extremity of 2023’s summer in the northern hemisphere, and bring into focus the slow pace of global progress on curbing emissions. “It’s a death sentence for people and ecosystems,” said Friederike Otto, a senior lecturer at the Grantham Institute for Climate Change and the Environment. The El Nino weather phenomenon is set to push global temperatures higher, she said. The heat this summer has already put millions of people around the world at risk. China is experiencing a scorching new heat wave less than two weeks after temperatures broke records in Beijing. Extreme heat in India last month has been linked to deaths in some of its poorest regions. Last week saw a dangerous heat dome cover Texas and northern Mexico, while the UK baked in its hottest June on record. El Nino conditions have developed in the tropical Pacific for the first time in seven years and will trigger a surge in temperatures, according to the World Meteorological Organisation (WMO). “The onset of El Nino will greatly increase the likelihood of breaking temperature records,” WMO secretary-general Petteri Taalas said in a Tuesday statement. It’s likely the world will exceed 1.5°C of warming “in the near term,” with efforts on climate action still insufficient, the Intergovernmental Panel on Climate Change said in March in a report summarising five years of its own research. Global greenhouse gas emissions need to be cut to 60% below 2019 levels by 2035, according to the report, and climate-related risks are rising with every increment of warming. “Our world needs climate action on all fronts — everything, everywhere, all at once,” UN Secretary General António Guterres said in a statement at the time. Guterres has urged nations to rapidly accelerate plans to phase out the use of fossil fuels. Attention will focus on the state of efforts to limit global warming as nations gather for the COP28 annual UN climate summit in Dubai later this year, with expectations already low on the potential outcomes. Diplomats left a two-week preparatory meeting from COP28 held in Germany last month disappointed by inter-country bickering and what some described as a lack of ambition from the United Arab Emirates, this year’s host nation. Any failure to achieve progress that significantly boosts the prospects for holding the global average temperature below 1.5°C of warming could see some countries, particularly vulnerable small island states, start to question the multilateral climate process. Earth keeps breaking temperature records due to global warming NEW DELHI (July 5): India has discussed a possible deal to supply more than 11 million metric tonnes a year of green hydrogen to the European Union and Singapore, who in turn would invest in these Indian clean energy projects, three government officials and one industry source said. Reuters reported on Tuesday that New Delhi will consider bilateral agreements which would allow countries to use carbon credits linked to producing so-called green hydrogen, which is made using renewable energy. India and the EU explored green hydrogen agreements for 10 million metric tonnes per annum, under which businesses in the bloc could invest in projects in India and claim carbon credits, one of the officials, who attended a meeting on Wednesday in New Delhi, told Reuters. Singapore is looking to get 5 million metric tons per annum of green ammonia through similar bilateral agreements, which is equivalent to another 1-1.5 million metric tons a year of green hydrogen, another official said. The officials did not give details on the length or the starting year of such contracts. Green ammonia, generally the preferred form in which the fuel is transported, is a green hydrogen derivative. India in talks to supply green hydrogen to EU, Singapore — sources None of the officials wanted to be named, as talks are ongoing. India’s renewable energy ministry, an Indian government spokesperson and a communications officer at the EU office in New Delhi did not immediately reply to requests for comment. The meetings hosted by the Indian government on Wednesday were also attended by Indian renewable companies including Avaada Group, Renew Power and ACME Group. “The bilateral agreements being discussed with the EU and Singapore present a significant business opportunity for Indian green hydrogen manufacturers,” Avaada chairman Vineet Mittal said. Indian companies such as Reliance Industries, Indian Oil and Adani Enterprises have big plans for green hydrogen. Countries around the globe are turning to hydrogen to drive a transition away from fossil fuels to address global warming. India last year sought to further its ambitions to become a major green hydrogen exporter through the approval of a 174.9 billion rupees (US$2.13 billion) incentive plan and a target to produce five million tonnes of green hydrogen by 2030. Read also: Singapore’s central bank pumps US$6 bil into climate transition BY SARITA CHAGANTI SINGH Reuters BY WILL MATHIS & AARON CLARK Bloomberg Singapore is looking to get 5 million metric tons per annum of green ammonia through bilateral agreements. REUTERS
THURSDAY JULY 6, 2023 21 THEEDGE CEO MORNING BRIEF WORLD BANGKOK (July 5): Thailand’s parliament will vote for a new prime minister on July 13, house speaker Wan Muhamad Noor Matha said on Wednesday (July 5). The announcement comes a day after Wan Noor was endorsed as house speaker, a role in which he is able to call for a joint sitting of the country’s bicameral legislature to vote on the next prime minister. The election-winning Move Forward party and populist Pheu Thai trounced conservative rivals in a May ballot, securing 151 and 141 seats in the 500-member lower house, respectively. Together with six other parties they are expected to propose Move Forward leader, the US-educated Pita Limjaroenrat as the next premier to replace the incumbent Prayuth Chan-ocha. However, with 312 votes the alliance is short of the 376 votes that Pita needs in the joint sitting, which includes a conservative-leaning 250-member senate, who were appointed during military rule. Thai parliament to vote for prime minister on July 13 SINGAPORE (July 5): The Monetary Authority of Singapore (MAS) has recorded a net loss of S$30.8 billion (RM106 billion) for the financial year ended March 31, recording a small investment gain amid a challenging market environment of bond and equity markets’ poor performance. This was, however, outweighed by negative currency translation effects and interest expenses on domestic money market operations. The MAS tightened monetary policy three times over the period to dampen inflationary pressures. This led to a broad appreciation of the SGD against the currencies that the OFR (Official Foreign Reserves) held, resulting in significant negative currency translation effects as the MAS’ financial results are reported in the SGD. Total expenditure of S$13.7 billion was largely due to interest expenses on MAS bills and other borrowings for domestic money market operations. As the SGD interest rates rose together with the increase in global interest rates, the MAS incurred higher interest expense in its conduct of money market operations. For this financial year, there is no contribution to the consolidated fund, nor return of profits to the government. As a conservative measure to ensure that the MAS remains well-capitalised relative to its assets, the central bank increased its issued and paid-up capital by S$25 billion to S$50 billion in this financial year. As at March 31, total capital and reserves of MAS was S$34.3 billion, down from S$40.1 billion the year prior. Singapore’s central bank posts net loss of US$30.8 bil for FY22/FY23 amid depressed market environment Singapore struggles to fix power market after wild price swings BY KHAIRANI AFIFI NOORDIN theedgesingapore.com BY ISABEL JOY KUA & STEPHEN STAPCZYNSKI Bloomberg Reuters (July 5): Singapore is struggling to attract new players to its volatile power market, threatening to unwind reforms aimed at boosting competition and reducing electricity bills for consumers. Surging spot power prices over the last two years prompted an exodus of retailers, after it became unprofitable to continue operations. The nation’s regulator introduced a price cap last month to help tame these wild price swings, but participants are calling for more action to help revive the fledgling futures market. “I haven’t seen any new entrants in the last two years,” said Matthijs Guichelaar, chief executive officer of Flo Energy, one of the few independent retailers still active in the market along with seven incumbent power generation companies. “The futures market has zero liquidity.” Singapore fully liberalised its power sector in 2018, for the first time allowing consumers to choose electricity providers. This resulted in a slew of independent retailers entering the wholesale electricity market to compete with the stateowned utility. Most, however, were forced to bow out from operations after spot power prices spiked. The global energy crisis, which started to gain pace in 2021, dealt a heavy blow to energy retailers not just in Singapore but across the world in countries like the UK and Japan. Independent retailers don’t have power plants, and instead purchase electricity from the spot market for customers, like households and businesses. That leaves the retailers particularly exposed as prices have jumped as much as 3,000% intraday. Singapore consumers are somewhat protected, as they are charged at a fixed rate. REUTERS
THURSDAY JULY 6, 2023 22 THEEDGE CEO MORNING BRIEF WORLD NEW YORK (July 5): The collapse of two US auto dealers and a growing pile of delinquent car loans are threatening to deliver losses in a corner of Wall Street that, until now, has been a sea of calm: the asset-backed securities market. Bonds backed by car loans made by US Auto Sales and American Car Center, two used-car dealers that shut their doors earlier this year, have been veering into distress in recent weeks. Borrowers have been falling behind on payments, and Citigroup believes that some of the riskiest parts of three different asset-backed deals could fail to return principle to investors. Any lost principle would be a rare event in the ABS market, where subprime auto bonds haven’t failed to return investors’ money since the 1990s, Citigroup said. Prices on a bond issued by US Auto Sales, owned by private equity firm Milestone Partners, have dropped to distressed levels, trading at a little over 18 cents on the dollar on June 26, according to Trace data. The disruption is a major test for the subprime auto ABS market, where issuance grew by more than 70% to US$40.5 billion (RM188.5 billion) in the five years through 2021, according to data compiled by Bloomberg News. “The economy is not doing well and there’s a flood of shaky issuers that are going out of business” in the auto market, John Kerschner, head of US securitised products at Janus Henderson, said in an interview. When lenders do fail, “it’s hard to get borrowers to pay back their debt, especially because sometimes it’s not clear where to send the payments”. Milestone Partners didn’t reply to a request for comment, while a spokesperson for York Capital, which backed ACC before the bankruptcy filing, declined to comment. As the Federal Reserve ends quantitative easing and tightens the money supply, credit is harder to come by across the economy. Consumers, meanwhile, are burning (July 5): The Monetary Authority of Singapore (MAS) will change the tax incentives it gives to single family offices in an effort to boost the hiring of locals and investment in the country’s equity markets. Tax incentives will also be adjusted to encourage these firms to invest in climate-related projects and undertake more philanthropy through Singapore, MAS managing director Ravi Menon said at a briefing after the release of its annual report. “Given our great success in being able to attract so much wealth here, we can afford to ask wealth to play a bigger role in our society and in our economy,” Menon said. His comments come after outgoing MAS chairman Tharman Shanmugaratnam said last month that the firms’ contributions to these areas will be recognised. Family offices — the firms set up by the ultra rich to manage their affairs and investments — are currently able to get tax exemptions on a range of investments in Singapore. That’s helped fuel a surge in the number of single family offices based in the city-state from 400 at the end of 2020 to 1,100 in 2022. Even though the increase of family offices has boosted the overall assets under management, much of that wealth isn’t seen to be invested within Singapore — blunting expectations that their enlarged presence would result in a flood of local Singapore to change tax rules to attract the super rich Subprime auto bondholders face possible first hit in decades BY CARMEN ARROYO Bloomberg BY DAVID RAMLI & CHANYAPORN CHANJAROEN Bloomberg through their pandemic-era savings. The deterioration of the bonds issued by ACC and US Auto Sales comes months after both companies announced they were closing their dealerships. Both firms transferred the collection of payments on their loans, known as servicing, to Westlake Portfolio Management after going bust. A spokesperson for Westlake declined to comment. “The bonds are deteriorating in part” because it takes a few months to transfer the servicing of the loans “and meanwhile consumers may cease making payments,” Eugene Belostotsky, a securitised products strategist at Citi, said in an interview. “The lenders went under because borrowers were not paying back the debt, now that’s just accelerating.” Moody’s Investors Service further downgraded some of US Auto Sales ABS in late June, for moving the E note of the 2022 deal to a C rating. The ratings firm noted that there are shortfalls in the pools of money available to pay bondholders, because dealerships haven’t fully reimbursed trusts for items like unearned vehicle service contract payments. Read the full story jobs. The planned measures aim to fix this. Single family offices seeking so-called 13O and 13U tax exemptions must meet minimum asset under management and business spending requirements. Some of the changes to the tax structure are: • Encouraging participation in blended finance structures, including those supporting the region’s transition to net zero. For grants that these entities provide to support such structures with no expectations of income or return of principal, authorities will recognise as S$2 (RM6.89) for every dollar spent, among incentives • All investments in non-listed Singapore operating companies including private credit will be recognised • Recognition of twice the amount invested in Singapore-listed equities, and eligible exchange traded funds, as well as unlisted funds that invest primarily in locally listed equities The bulk of wealth flows into Singapore is from institutional investors, rather than family offices or wealthy people, according to Menon. The single family offices, that apply for and are granted tax incentives, managed about S$90 billion of assets as at 2021, less than 2% of the S$5.4 trillion total assets managed in Singapore, he said. Separately, the MAS said that it will take more action to boost surveillance and defence against money laundering risks in the sector. Among the measures, it will require all single family offices to notify the regulator when they start operations as well as maintain a business relationship with a MAS-regulated financial institution. A public consultation on these proposals will be released soon, Menon said. Tax incentives will also be adjusted to encourage these firms to invest in climate-related projects and undertake more philanthropy through Singapore.
THURSDAY JULY 6, 2023 23 THEEDGE CEO MORNING BRIEF WORLD TOKYO/SINGAPORE (July 5): Japan’s biggest maritime port was crippled by an alleged Russian cyberattack, disrupting cargo as operators rushed to prevent a wider delay in shipments. Ransomware — used by hackers to lock access to files or systems unless a payment is made — caused a container terminal at the Port of Nagoya in Aichi Prefecture to suffer an outage on Tuesday morning, the Nagoya Harbor Transportation Authority said on Wednesday. The authority said operations are expected to resume on Thursday at 8:30 am local time. As more Asian ports automate and move away from paper documentation, hackers pose a growing problem to the region’s shipping networks. Cyber criminals have been targeting European ports in recent years, with pro-Russia groups claiming responsibility for an attack on one of the continent’s biggest ports just last month. The Nagoya port authority said Russia-based ransomware group Lockbit 3.0 was responsible for the hack, Kyodo News reported on Wednesday. Ransomware attackers tend to target vulnerabilities in VPNs and remote desktop protocols, said Mihoko Matsubara, NTT Corp’s chief cybersecurity strategist. She said such breaches account for 80% of ransomware attacks in Japan. “Its crucial for companies to update or patch software they use for their business operations,” Matsubara said. Ransomware attack hits Japan’s biggest port, delaying cargo (July 5): South Korea will allow new domestic players to enter its banking industry for the first time in 30 years, a move meant to boost competition in a sector dominated by five major lenders. The country’s financial regulator will allow financial firms to apply for nationwide commercial bank licenses, the Financial Services Commission said in a statement on Wednesday (July 5), the first time it’s doing so since 1992. The move is seen paving the way for competition that could help lower interest rate costs for consumers. Lenders made record profits during the Covid pandemic and “paid their interest income as bonuses and dividends for employees and shareholders rather than returning it to citizens,” the FSC said in the statement. Daegu Bank, a regional banking unit of DGB Financial Group Inc, may become the first firm to take advantage of the expanded rule, with an intention to transform into a nationwide bank, according to the statement. The government’s move comes after President Yoon Suk Yeol earlier this year criticised banks for having what it called a “money feast”: booking “easy” profits from the gap between interest rates on deposits and those on loans, while paying their executives big bonuses as borrowers struggled to pay high interest rates. The top five Korean banks — Kookmin Bank, Shinhan Bank, KEB Hana Bank, Woori Bank and NongHyup Bank — posted a combined 12.7 trillion won (RM45.1 billion) in net income last year, surging about 18% from the prior year. The lenders handed out two trillion won in bonuses to employees last year, according to the regulator. Following President Yoon’s criticism, financial regulators launched a task force to prepare measures to break down what they view as an oligopoly in the industry. Meanwhile, the antitrust watchdog began a probe into major lenders to assess whether they colluded on loan rates. South Korean banks aren’t alone in facing criticism for excessive profits during a time of surging inflation and high costs for consumers. New Zealand is starting a market study into competition in the sector for personal banking services to ensure the market is working well for citizens. UK lawmakers have criticised the largest banks for offering stingy savings rates to customers. And in the US, President Joe Biden called out banks, among other companies, for charging excessive fees. New players can enter Korea’s banking sector for first time in 30 years Japan’s firms offer biggest pay hikes in 30 years, wage growth BY SHINHYE KANG broadens Bloomberg Reuters BY NICHOLAS TAKAHASHI, ANN KOH & GRACE HUANG Bloomberg TOKYO (July 5): Japanese firms offered the biggest pay hikes in three decades at this year’s negotiations with workers, the country’s largest trade union group said on Wednesday (July 5), a development economists say will help revive anaemic consumer demand. A survey conducted by Rengo, Japan’s umbrella trade union group, showed pay hikes first reported by unions at the largest employers in March were now broadening to workers at small and medium enterprises (SMEs), or those with unions of 300 or fewer members. The final survey of 5,272 unions affiliated with Rengo showed an average pay hike of 3.58%, or 10,560 yen per month, the biggest increase since 3.9% seen in 1993. Among them, SMEs raised wages by 3.23%, also the fastest pace in three decades. Wage growth is one of the key trends the Bank of Japan (BOJ) is closely watching as it considers if and when it should unwind its ultra-loose monetary stimulus. BOJ governor Kazuo Ueda has repeatedly stressed the need to keep policy accommodative until wages increase enough to keep price growth sustainably around its 2% target. “Rising prices and a chronic labour crunch are driving up wages, which will continue to rise next year. What’s important from now on is to bring real wages to positive territory,” said Hisashi Yamada, economist and Hosei University professor. “Rising wages will help stabilise inflation at 2% towards next year, keeping the central bank under pressure to scrap yield curve control sooner or later.”
THURSDAY JULY 6, 2023 24 THEEDGE CEO MORNING BRIEF WORLD FRANKFURT (July 5): Germany’s market for commercial real estate plunged to the lowest level since at least 2017, in the latest sign of the turmoil triggered by soaring interest rates. Deal volumes in the first half of 2023 declined 50% from the previous six months to €14.9 billion (US$16.2 billion), according to data provided by real estate firm JLL. The figure was about two-thirds below the average over the past five years. The standstill in Germany mirrors developments across European countries such as Sweden, Ireland and the UK. Commercial property markets have seized as buyers and sellers struggle to agree on pricing. Rising interest rates have driven up borrowing costs, prompting potential property investors to demand higher yields. That results in lower offer prices, and owners are resisting granting steep discounts to book values on concerns that could cause debt ratios to surge. The effects are also visible in the German market for residential real estate, with BNP Paribas Real Estate saying in separate release Wednesday that deals in the segment plunged 69% below the 10-year average in the first half of the year. The industry may even face a decade of limited earnings growth, investment bank Stifel said in a note on Wednesday, downgrading the ratings on German residential landlords LEG Immobilien SE, TAG Immobilien AG and Vonovia SE to sell and prompting their shares to decline. The “seemingly endless party of growth” in real estate supported by ever-cheaper finance has reached an end, with a “protracted hangover” now ahead, analysts including Denese Newton said in the note. Still, there are signs the pace of the contraction in commercial property deals is slowing, with year-on-year drops getting less severe, according to the JLL data. Halting the declines would be the first step toward an eventual rebound. Certainty about the future path of interest rates could help get the market going again by making it easier for buyers and seller to find common ground. Markets currently expect the European Central Bank to end the historic series of interest rate hikes later this year. “There is a realistic chance that price expectations could converge by the end of the year” if the ECB stops raising rates, BNP said. This “would significantly improve planning security for both buyers and sellers” and usher in a rebound. Still, deals volumes will likely remain at a low level for the rest of the year,since the flagging German economy will provide “very little, if any, tailwind” to the real estate industry, BNP said. German commercial property deals tumble 50% to five-year low SHANGHAI/HONG KONG (July 5): Fresh signs emerged on Wednesday that China is facing yet more challenges in its property debt crisis. Defaulted developer Shimao Group Holdings Ltd failed to find a buyer for a US$1.8 billion project at a forced auction, even at a heavy discount. Sino-Ocean Group Holding Ltd saw its bonds tumble on news that the state-backed builder told some creditors it has been working with two major shareholders on its debt load. They’re the latest indications that China’s two-year real estate crisis is likely to remain one of the biggest drags on the world’s second-largest economy. A brief rebound after the nation scrapped Covid restrictions has quickly faded, with home sales resuming declines and property investment worsening — hurting markets ranging from iron ore to high-yield bonds. “Investors are disappointed with the slow recovery of the housing market,” said Anitza Nip, Union Bancaire Privee (UBP)’s head of fixed income research for Asia. “The recovery path appears to be even longer than what the market had initially anticipated earlier this year.” The nation’s second-largest developer by sales, China Vanke Co, said last week that the home market is “worse than expected,” joining a chorus of investors and analysts who have become bearish on the sector. Goldman Sachs Group Inc recently raised its projected default rate for Chinese highyield property dollar bonds. No buyers bid for Shimao’s land portfolio in Shenzhen, even though the asset was offered at a price 20% lower than its appraised value, according to results posted on online auction site JD.com. That will likely add hurdles to Shimao’s debt restructuring, Bloomberg Intelligence property analysts Kristy Hung and Lisa Zhou wrote in a note. The developer’s onshore commercial property unit purchased the land — spanning an area equivalent to 34 football fields — in 2017 for 24 billion yuan (US$3.3 billion), a record in Shenzhen at the time. Its original plan was to build a landmark complex with a 500-metre skyscraper, but the project ran into trouble last year after the company missed some payments on highyield trust products used to fund the construction. Citic Trust Co, which manages the trust project, seized the asset and sued Shimao’s unit, according to the auction documents and Shimao’s company filing. China property pain worsens with failed auction, Sino-Ocean rout Meanwhile, China Life Insurance Co and Dajia Life Insurance Co sent a working group to Sino-Ocean regarding a holistic risk mitigation plan, people familiar with the matter said. That added to concerns that even China’s state-backed developers aren’t immune to the industry’s unprecedented liquidity squeeze. Sino-Ocean bonds slumped further Wednesday, putting prices at just half their start-of-week levels. A two billion yuan onshore note due next month, the company’s next maturity, plunged 34.6% and saw trading suspended twice. A Sino-Ocean dollar bond due 2024 fell to a record low at about 15 cents. Shares dropped as much as 4.4% in Hong Kong. This week’s bond selloff at Sino-Ocean was kicked off by people familiar with the matter saying that a state-owned shareholder-led working group of the developer had engaged China International Capital Corp to conduct due diligence on the firm. China’s renewed housing slump has fuelled expectations for the government to issue more stimulus measures. Adding to the economy’s woes, figures on Wednesday showed China’s services sector slowed in June. Yet, support measures have so far been modest, keeping pressure on developers facing mounting debts. “Investors are concerned not only about credit risk on individual names now, but also about the sector as whole, as the restructuring process remains slow,” UBP’s Nip said. BY CHARLIE ZHU, EMMA DONG, JACKIE CAI, WEI ZHOU, DOROTHY MA & PEARL LIU Bloomberg BY STEVEN ARONS & JACK SIDDERS Bloomberg
THURSDAY JULY 6, 2023 25 THEEDGE CEO MORNING BRIEF WORLD LONDON (July 5): Investors in ailing British water company Thames Water appear to be reluctant to put in more cash, the country’s regulator Ofwat said on Wednesday (July 5), as its boss defended the oversight of the heavily indebted sector. Thames Water, which supplies about 27% of Britain’s population, is seeking to raise an additional £1 billion (RM5.91 billion) in equity to help upgrade its infrastructure and cope with the rising cost of its £14 billion debt pile. Its fate has shone a light on the wider water sector in Britain which racked up debt after it was privatised and which has sparked a public outcry in recent years by releasing raw sewage into rivers and seas. “The company is talking to investors about securing new equity,” Ofwat boss David Black said. When asked by BBC radio if investors were reluctant, he said: “yes.” “Thames are looking for new finance to come to the business in the early part of next year.” He added that he expected companies to want to charge higher consumer bills in the next regulatory cycle, to fund upgrades to infrastructure, and that while it had been the job of water companies to control their debt levels, the regulator now had stronger powers to manage the sector. Thames Water investors appear reluctant to fork out fresh cash, says Ofwat (July 5): Franklin Templeton-managed Fondul Proprietatea raised 8.1 billion lei (US$1.8 billion or RM8.37 billion) in Romania’s largest ever initial public offering (IPO) and this year’s biggest share listing in Europe. About 78 million shares, or 17.3%, in hydropower utility Hidroelectrica SA will be sold at 104 lei each in the IPO, close to the middle of the indicated range, according to a regulatory statement on Wednesday. Romania’s biggest producer of electricity is set to start trading on the Bucharest Stock Exchange on July 12. The proceeds of Europe’s biggest public offering since Porsche AG will go directly to Fondul’s coffers and are likely to be distributed to shareholders. Hidroelectrica, valLONDON: American Equity Investment Life Holding Co accepted a US$4.3 billion (RM20 billion) cash and stock takeover bid from an arm of Canadian investment giant Brookfield. Brookfield Reinsurance Ltd agreed to buy all the shares in the US insurer it does not already own for US$55 apiece, according to a statement on Wednesday (July 5). The offer represents a 35% premium to American Equity’s closing price on June 23, the last full trading day before Bloomberg revealed Brookfield’s interest. The deal to snap up one of the last remaining independent annuities proEurope’s biggest IPO raises US$1.8 bil for Templeton-led fund American Equity accepts Brookfield’s US$4.3 bil takeover BY IRINA VILCU & ANDRA TIMU Bloomberg BY DINESH NAIR Bloomberg BY MUVIJA M & WILLIAM JAMES Reuters Blackstone Inc to KKR & Co and Apollo Global Management Inc have invested in such companies as a way of gathering more capital they can plow into alternative assets. Brookfield has emerged as the world’s most acquisitive investment firm this year as the biggest private equity funds slow down amid a dearth of financing. The Canadian group agreed in June to buy Middle Eastern payment processor Network International Holdings plc for £2.2 billion (RM12.98 billion), and it’s leading a consortium that struck an A$18.7 billion (RM57.91 billion) deal for Australia’s Origin Energy Ltd. ued at about 47 billion lei, is poised to gain from the increased visibility and potential new funding opportunities for its ambitious renewable energy investments. The boost in liquidity following the listing may help the Bucharest Stock Exchange secure a long-awaited upgrade by MSCI to emerging-market status. The sale of a minority stake in the company also fulfills one of the milestones in Romania’s recovery and resilience plan, helping to unlock €29 billion (RM146.86 billion) in European Union (EU) funding. “We have been waiting for this listing for over 10 years,” Energy Minister Sebastian Burduja said in a statement. “Listing means transparency, capitalisation and is an indicator of a modern economy. This is the path to follow for other state-owned companies in the energy sector.” The Romanian IPO — the world’s third-largest of 2023 — according to data compiled by Bloomberg, could help rekindle Europe’s market for share listings. Thyssenkrupp AG’s Nucera hydrogen unit is raising €526 million, while transaction processor CAB Payments Holdings aims to raise as much as £333 million in its IPO. Read the full story viders in the US boosts Brookfield Reinsurance’s assets under management to around US$100 billion. In recent years, private equity heavyweights ranging from
THURSDAY JULY 6, 2023 26 THEEDGE CEO MORNING BRIEF WORLD NEW DELHI (July 5): Africa has become the second-largest recipient of credit from India as the country tries to catch up with China in expanding its influence in the resource-rich continent. Forty-two African nations received about US$32 billion (RM148.9 billion) or 38% of all credit extended by India in the last decade — just a few percentage points below its neighbours, Harsha Bangari, the managing director of India’s Export Import Bank said in an interview. The bank is an instrument of India’s “economic diplomacy”, Bangari said, adding that the South Asian nation has also opened up 195 project-based lines of credit worth about US$12 billion across Africa, three times the number it has in its own region in the last decade. “Africa has made good use of credit lines,” extended for projects that include health care, infrastructure, agriculture and irrigation and India is seeing a steady increase in demand, she said. Despite the recent efforts by India to engage with countries in the world’s second-largest continent, the nation has lagged behind its bigger and wealthier neighbour in making inroads in Africa. While China’s loans to Africa have dipped since 2016, overall in the 10 years to 2020, it pledged US$134.6 billion to African nations, according to data from Boston University’s Global Development Policy Center. That’s almost 11 times more than what India has offered. China has also made an early move to tap mineral resources in Africa. The North Asian nation is tapping new centres of lithium supply, helping it navigate a tight market for a key metal for electric vehicles. The country is also the biggest buyer of bauxite from Guinea, which holds one of the world’s largest reserves of the ore used to make alumina and is invested in developing the world’s biggest untapped deposit of highgrade iron ore in the West African nation. The Foreign Ministry in Beijing didn’t reply to a request for comment. However, Prime Minister Narendra Modi’s government has pushed for greater reach into Africa, boosting both economic and diplomatic links. As the continent deals with the economic fallout of the pandemic and Russia’s war in Ukraine, New Delhi is seeing an opportunity to push deeper into the continent. In the last nine years, 18 of the 25 new Indian embassies or consulates were in Africa. In February, India hosted 48 African countries at the Voice of Global South summit. Modi has also been championing India as a representative of the Global South and using platforms like its presidency of the Group of 20 nations to draw attention to the debt crises in developing economies. “We are trying to think 25 years from now,” India’s Foreign Minister Subrahmanyam Jaishankar said in a speech on June 28. “And ask ourselves where are we likely to be in 2047 and what should we be doing now to prepare for it.” China’s quantum of financing is bigger than India, but New Delhi let’s governments decide what they need and doesn’t burden them with the sort of vanity projects Beijing is often critiqued for, Bangari said. “If you see the projects which India has supported you will see they bring a lot of benefits to the economy.” India increases Africa lending in the race to counter China (July 5): China’s largest banks cut rates for the nation’s US$453 billion (RM2.11 trillion) corporate US dollar deposits for the second time in a matter of weeks, according to people familiar with the matter, as authorities intensify measures to shore up the struggling yuan. At least nine banks, including the four big state lenders, removed the spread they previously offered over the US Secured Overnight Financing Rate (SOFR) for corporate clients, the people said, declining to be identified discussing private information. Before the latest reduction, banks were offering 5.7% for oneyear deposits, down from 6% about a month ago. The SOFR stands at 5.09%. Retail investors have seen even bigger reductions. State lenders this week slashed one-year rates on household deposits to about 2.8% from 4.5-5% earlier. That compares to 1.65% for similar period yuan deposits. Lower deposit rates may help support the yuan by making it less attractive for companies and consumers to convert their cash holdings into dollars. The move to cut rates on corporate deposits “will help narrow the rate differential to some extent, but the gap is still quite large,” said Xiaojia Zhi, head of research, Credit Agricole CIB Hong Kong Branch. “Many clients have some flexibility to move between onshore/offshore accounts for liquidity management.” Chinese authorities are stepping up efforts to stabilise the nation’s currency after it dropped toward the lowest level in 15 years against the greenback amid concern about the strength of the economic recovery. While other major economies have been raising benchmark interest rates, China cut policy interest rates last month for the first time in nearly a year, signalling looser monetary policy. Banks have limited room to further lower the deposit rate for corporate clients due to the risk companies will shift funds offshore to capture the better yield, the people said. The recent move was made under the guidance of the nation’s forex market self-disciplinary mechanism, they said. While China’s capital controls prevent individuals from moving sizable funds outside China banks cut rates for US$453 bil corporate US dollar deposits of the mainland, including to Hong Kong, companies have more leeway to do so. The China FX Market Self-Regulatory Framework didn’t immediately reply to a Bloomberg fax seeking comment. Chinese banks increased dollar deposit rates earlier this year to lure clients, as rising yields on the greenback boosted the appeal of dollar-denominated assets at the expense of yuan securities. Chinese firms held US$453 billion of foreign currency deposits at the end of May, according to central bank data, while households had US$125 billion. The size of corporate deposits may be larger than official data shows. China’s firms have around US$912 billion parked as US currency deposits in the country’s banking system, up from US$758 billion at the end of 2019, according to a recent research note by Eurizon SLJ Capital Ltd. The moves show the People’s Bank of China (PBOC) will consider “multiple options” to rein in the pace of yuan depreciation, Zhi said. The PBOC said last week it will adopt “comprehensive measures and stabilise expectations” about the currency. The central bank will also “resolutely prevent risks of big fluctuations”, it said in its quarterly monetary policy report. The yuan was last down 0.3% to about 7.24 per dollar after touching a low of 7.27 last week. Bloomberg BY SUDHI RANJAN SEN Bloomberg
THURSDAY JULY 6, 2023 27 THEEDGE CEO MORNING BRIEF MARKETS Top 20 active stocks World equity indices Top gainers (ranked by %) Top losers (ranked by %) Top gainers (ranked by RM) Top losers (ranked by RM) NAME VOLUME CHANGE CLOSE YTD MARKET (MIL) (RM) CHANGE CAP (%) (RM MIL) BTM RESOURCES BHD 71.86 0.005 0.095 11.76 119.4 SARAWAK CONSOLIDATED 67.89 0.005 0.475 227.59 304.10 PARKSON HOLDINGS BHD 52.79 0.025 0.215 59.26 247.0 TWL HOLDINGS BHD 46.55 0.000 0.035 0.00 146.6 WIDAD GROUP BHD 41.09 -0.005 0.415 -3.49 1,216.9 MALAYSIA BUILDING SOCIETY BHD 39.70 0.040 0.695 13.01 4984.2 KNM GROUP BHD 33.92 0.000 0.080 60.00 323.5 CLASSITA HOLDINGS BHD 31.60 0.000 0.085 -76.71 29.9 AHB HOLDINGS BHD 29.11 -0.005 0.150 25.00 91.2 UEM SUNRISE BHD 27.94 0.005 0.310 21.57 1,568.1 ARTRONIQ BHD 27.58 -0.040 0.775 9.15 254.4 BUMI ARMADA BHD 26.70 -0.005 0.49 2.08 2902.1 CYPARK RESOURCES BHD 26.49 0.065 0.805 71.28 629.6 AHMAD ZAKI RESOURCES BHD 25.98 0.000 0.250 51.52 149.1 JADI IMAGING HOLDINGS BHD 25.86 -0.015 0.030 -64.71 32.3 WCE HOLDINGS BHD 25.58 -0.030 0.650 113.11 1,942.0 MY EG SERVICES BHD 25.29 0.000 0.740 -14.12 5,480.0 VELESTO ENERGY BHD 24.33 0.015 0.235 56.67 1,930.7 FARM FRESH BHD 23.44 -0.040 1.100 -31.68 2,059.1 TANCO HOLDINGS BHD 22.30 0.010 0.525 56.72 1009.2 Data as compiled on Jul 5, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) FINTEC GLOBAL BHD 0.010 100.00 1,163.5 0.00 59.2 DGB ASIA BHD 0.010 100.00 411.5 -33.33 18.8 XOX BHD 0.015 50.00 1,575.3 0.00 75.8 NEXGRAM HOLDINGS BHD 0.015 50.00 2,672.4 -78.57 9.7 BCM ALLIANCE BHD 0.015 50.00 22.2 -40.00 30.5 SCOMI ENERGY SERVICES BHD 0.045 28.57 10,337.7 -18.18 21.1 CME GROUP BHD 0.030 20.00 310.0 0.00 31.0 G3 GLOBAL BHD 0.030 20.00 2,870.5 0.00 113.2 SDS GROUP BHD 0.690 15.00 4,738.6 -6.76 282.6 BINA PURI HOLDINGS BHD 0.040 14.29 253.1 0.00 134.8 MERIDIAN BHD 0.080 14.29 13.4 -33.33 18.1 SAPURA ENERGY BHD 0.040 14.29 1,361.2 14.29 639.2 EG INDUSTRIES BHD 1.340 13.56 9,722.3 148.15 555.1 PARKSON HOLDINGS BHD 0.215 13.16 52,794.8 59.26 247.0 YLI HOLDING BHD 0.390 13.04 1,383.3 30.00 40.1 INDUSTRONICS BHD 0.045 12.50 1,144.2 -40.00 31.8 GDB HOLDINGS BHD 0.190 11.76 7,076.5 -19.15 178.1 EVERSENDAI CORP BHD 0.145 11.54 7,620.8 -6.45 113.2 PAPPAJACK BHD 0.880 11.39 8,360.5 55.75 676.0 MULTI-USAGE HOLDINGS BHD 0.540 11.34 5.1 -7.69 30.5 Data as compiled on Jul 5, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) JADI IMAGING HOLDINGS BHD 0.030 -33.33 25,864.5 -64.71 32.3 MMAG HOLDINGS BHD 0.01 -33.33 687.5 -60.00 24.2 COMPUGATES HOLDINGS BHD 0.010 -33.33 70.0 0.00 55.0 REACH ENERGY BHD 0.030 -14.29 85.1 -33.33 63.9 MTOUCHE TECHNOLOGY BHD 0.040 -11.11 164.3 -20.00 37.1 MERCURY INDUSTRIES BHD 0.970 -11.01 39.4 0.52 62.4 JAG BHD 0.305 -10.29 17,996.7 -9.56 193.3 KNUSFORD BHD 0.450 -10.00 2.0 -25.00 44.8 VIZIONE HOLDINGS BHD 0.050 -9.09 832.8 -9.09 102.3 INGENIEUR GUDANG BHD 0.105 -8.70 634.3 -12.50 145.3 SINARAN ADVANCE GROUP BHD 0.055 -8.33 64.1 -26.67 50.3 NETX HOLDINGS BHD 0.065 -7.14 1,152.6 8.33 59.8 CABNET HOLDINGS BHD 0.195 -7.14 29.0 -13.33 34.9 LIEN HOE CORP BHD 0.280 -6.67 21.9 -18.84 93.1 ICON OFFSHORE BHD 0.070 -6.67 880.7 -26.32 189.5 PAN MALAYSIA HOLDINGS BHD 0.070 -6.67 12,863.3 0.00 65.0 YGL CONVERGENCE BHD 0.140 -6.67 4.0 7.69 35.8 SPRING ART HOLDINGS BHD 0.150 -6.25 100.3 -16.67 62.4 SEALINK INTERNATIONAL BHD 0.075 -6.25 137.0 -25.00 37.5 SELANGOR DREDGING BHD 0.450 -6.25 20.0 3.45 191.8 Data as compiled on Jul 5, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) NESTLE MALAYSIA BHD 130.300 -1.500 60.1 -6.93 30,555.4 DUTCH LADY MILK INDUSTRIES 21.500 -0.500 26.5 -28.90 1,376.0 PETRONAS DAGANGAN BHD 21.880 -0.320 68.4 -4.24 21,736.8 VITROX CORP BHD 7.800 -0.200 132.6 1.96 7,373.1 RAPID SYNERGY BHD 21.100 -0.180 19.1 32.21 2,255.5 MERCURY INDUSTRIES BHD 0.970 -0.120 39.4 0.52 62.4 GREATECH TECHNOLOGY BHD 4.450 -0.110 904.8 -8.06 5,575.1 QL RESOURCES BHD 5.290 -0.110 1,085.3 -3.99 12,874.0 HONG LEONG CAPITAL BHD 6.060 -0.100 2,994.8 -3.50 1,496.2 HEINEKEN MALAYSIA BHD 26.200 -0.100 21.4 3.97 7,915.0 TELEKOM MALAYSIA BHD 4.870 -0.080 2,372.8 -9.81 18,613.0 PERTAMA DIGITAL BHD 2.720 -0.070 9,882.2 54.55 1,189.2 HONG LEONG INDUSTRIES BHD 8.880 -0.060 90.1 -3.48 2,836.9 CI HOLDINGS BHD 3.150 -0.060 22.0 7.51 510.3 MR DIY GROUP M BHD 1.530 -0.060 7,127.4 -23.50 14,433.8 YOONG ONN CORP BHD 1.320 -0.050 3.0 4.76 209.4 KNUSFORD BHD 0.450 -0.050 2.0 -25.00 44.8 PJBUMI BHD 0.870 -0.050 3,907.8 -3.33 71.3 TENAGA NASIONAL BHD 9.080 -0.050 2,250.1 -5.71 52,549.0 NEGRI SEMBILAN OIL PALMS BHD 3.500 -0.050 16 0 245.7 Data as compiled on Jul 5, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) KUALA LUMPUR KEPONG BHD 22.960 0.680 1,467.2 2.68 24,760.9 SAM ENGINEERING & EQUIPMENT 4.880 0.180 424.2 -1.01 2,643.0 EG INDUSTRIES BHD 1.340 0.160 9,722.3 148.15 555.1 HENGYUAN REFINING CO BHD 3.200 0.150 406.5 -9.09 960.0 LPI CAPITAL BHD 11.980 0.140 67.2 -5.22 4,772.6 BRITISH AMERICAN TOBACCO 10.260 0.120 68.9 -8.56 2,929.5 MALAYSIAN PACIFIC INDUSTRIES 28.700 0.100 117.5 -0.21 5,708.3 FRASER & NEAVE HOLDINGS BHD 25.400 0.100 33.7 17.70 9,316.2 PAPPAJACK BHD 0.880 0.090 8,360.5 55.75 676.0 SDS GROUP BHD 0.690 0.090 4,738.6 -6.76 282.6 CHIN HIN GROUP BHD 4.480 0.090 2,406.3 38.70 7,927.0 AMWAY MALAYSIA HOLDINGS BHD 5.370 0.090 0.3 10.93 882.8 MALAYAN CEMENT BHD 3.200 0.090 788.5 50.94 4,192.6 UWC BHD 3.280 0.080 902.0 -18.41 3,613.5 ECONFRAME BHD 0.930 0.075 3,447.0 2.76 315.8 SIME DARBY PLANTATION BHD 4.370 0.070 1,322.5 -6.02 30,221.7 CYPARK RESOURCES BHD 0.805 0.065 26,486.9 71.28 629.6 SUNWAY CONSTRUCTION GROUP 1.630 0.060 269.5 4.49 2,101.7 MALAYSIA SMELTING CORP BHD 2.060 0.060 459.4 34.64 865.2 MULTI-USAGE HOLDINGS BHD 0.540 0.055 5.1 -7.69 30.5 Data as compiled on Jul 5, 2023 Source: Bloomberg CLOSE CHANGE CHANGE (%) CLOSE CHANGE CHANGE (%) DOW JONES 34,291.72 -126.75 -0.37 S&P 500 4,447.94 -7.65 -0.17 NASDAQ 100 15,255.85 47.16 0.31 FTSE 100 7,446.73 -72.99 -0.97 AUSTRALIA 7,253.17 -25.87 -0.36 CHINA 3,222.95 -22.40 -0.69 HONG KONG 19,110.38 -305.30 -1.57 INDIA 65,446.04 -33.01 -0.05 INDONESIA 6,718.98 37.22 0.56 JAPAN 33,338.70 -83.82 -0.25 KOREA 2,579.00 -14.31 -0.55 PHILIPPINES 6,512.39 -2.08 -0.03 SINGAPORE 3,185.38 -18.39 -0.57 TAIWAN 17,056.43 -84.34 -0.49 THAILAND 1,508.87 -6.44 -0.42 VIETNAM 1,134.62 2.62 0.23 Data as compiled on Jul 5, 2023 Source: Bloomberg CPO RM 3,896.0034.00 OIL US$ 76.600.35 RM/USD 4.6520 RM/SGD 3.4407 RM/AUD 3.1041 RM/GBP 5.9148 RM/EUR 5.0682