CEOMorningBrief FRIDAY, DECEMBER 15, 2023 ISSUE 687/2023 theedgemalaysia.com ECB RESISTS RATE CUT BETS WITH PLEDGE TO STAY TIGHT p18 HOME: Local media firms lose RM2 bil advertisement revenue annually to Meta, Google and TikTok p4 Astro posts its first quarterly net loss as VSS costs weigh p6 IDEAS flags patronage practices in Malaysia’s energy industry p8 WORLD: China’s central bank set to boost liquidity injection but keep key rate unchanged p21 Hong Kong corporate governance tumbles to lowest in decades p26 Report on Page 3. Report on Page 2. Tenaga names Megat Jalaluddin as next president and CEO Malaysia makes good start wooing some big names over, but it has lots more to do Economists say much still depends on the government to turn the sums pledged by investors — both domestic and foreign — into reality.
friday december 15, 2023 2 The E dge C E O m o rning 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] Tenaga names Megat Jalaluddin as next president and CEO Finance Minister II Amir Hamzah steps down from boards of MRCB, Sime Darby Plantation home by Chester Tay theedgemalaysia.com by Syafiqah Salim & Sulhi Khalid theedgemalaysia.com KUALA LUMPUR (Dec 14): Datuk Seri Amir Hamzah Azizan, the newly appointed finance minister II, has stepped down from his roles as the non-independent non-executive chairman of Malaysian Resources Corp Bhd (MRCB) and as a non-independent non-executive director of Sime Darby Plantation Bhd. MRCB and Sime Darby Plantation in bourse filings on Thursday cited Amir’s departure, following his recent appointment as the finance minister II in Prime Minister Datuk Seri Anwar Ibrahim’s Cabinet reshuffle on Tuesday. Amir’s appointment to the Cabinet position was followed by him relinquishing his position as the chief executive officer of the Employees Provident Fund (EPF), which is the largest shareholder of MRCB and has a substantial stake in Sime Darby Plantation. Amir, 56, joined MRCB’s board as a non-independent and non-executive director in September 2021, following his appointment to the EPF in March 2021. The EPF owns 36% of the construction outfit. Subsequently, in January 2023, he was redesignated as MRCB’s non-independent non-executive chairman. Meanwhile at Sime Darby Plantation, he assumed the role of a director in February 2023. The EPF holds a 13.33% direct stake in the plantation group. Amir started his career with the Shell Group of Companies, where he spent 10 years in various capacities in Malaysia, Singapore and the UK, before joining MISC Bhd in 2000 — where he held several senior management posts before being appointed as its president and CEO in January 2009. He also served as the president and CEO of Tenaga Nasional Bhd from April 2019 to February 2021. MRCB names ex-EPF deputy CEO Nasir Ab Latif as its new chairman In a separate announcement, MRCB announced the redesignation of Datuk Mohamad Nasir Ab Latif as its new chairman effective immediately. Nasir, 65, was previously the deputy chief executive officer (Investment) of EPF. Shares in MRCB closed one sen or 2.3% higher at 44 sen, giving the group a market capitalization of RM1.99 billion. Sime Darby Plantation finished one sen or 0.22% higher at RM4.54, valuing the group at RM31.4 billion. KUALA LUMPUR (Dec 14): Tenaga Nasional Bhd has appointed its chief operating officer Datuk Megat Jalaluddin Megat Hassan to be its next president and chief executive officer, succeeding Datuk Seri Baharin Din, whose tenure is expiring Feb 29, 2024. Megat Jalaluddin’s appointment by TNB’s special shareholder Minister of Finance (Inc) will be effective March 1 next year, for a period of two years until Feb 29, 2026, according to the utilities giant’s stock exchange filing on Thursday. Megat Jalaluddin, 58, first joined TNB in 2006, and left for Celcom in 2008, before returning to the utilities company in 2009. “[Megat Jalaluddin] built his career in TNB, [at] which he had served in various Datuk Megat Jalaluddin Megat Hassan The Edge file photo “The board of directors of TNB would like to express its appreciation to [Baharin] for his contribution to the company,” the group said. Shares of TNB closed nine sen or 0.9% higher at RM9.97 on Thursday, giving it a market capitalisation of RM57.7 billion. engineering and managerial positions within the company, including business and strategic planning, business development, project management, business process improvement, metering service and engineering service,” said TNB. Suhaimi Yusuf/The Edge
FRIDAY DECEMBER 15, 2023 3 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Dec 15): Malaysia’s efforts to bring in foreign investors appear to be paying off, going by the slew of investment announcements involving big names and significant sums this year, from Amazon cloud unit’s US$6 billion planned investment here by 2037 announced in March to July’s announcement of Chinese automotive player Geely’s US$10 billion outlay to transform Tanjung Malim, Perak, into the region’s largest auto city. Not forgetting also US semiconductor giant Texas Instruments’ RM14.6 billion expansion plan announced in June, followed by Tesla’s announcement in July of a strategic expansion into the Malaysian market, and the more recent AI facility venture that will see US chip giant Nvidia coming here. In terms of total approved investments that comprise both domestic and foreign investments, the country has, from the start of the year till end-September, recorded RM225 billion worth of investments — the highest January-September cumulative sum in the last 10 years. The sum is 6.6% more than the RM211 billion that was recorded in the corresponding nine months in 2022. The achievement is viewed positively by economists as they feel the Unity Government has managed to continue Malaysia’s trend of strong approved investment performance following the Covid-19 pandemic, but that same positivity is moderated by their expectation that plenty more needs to be done — both in facilitating the realisation of these investments, and attracting more investments. BY IZZUL IKRAM & LUQMAN AMIN theedgemalaysia.com Malaysia makes good start wooing some big names over, but it has lots more to do “It is heartening to see that (the approved investments) continues to remain at a high level as investments are one of the key indicators for the current year and future growth prospects,” said Sunway University Business School professor of economics Dr Yeah Kim Leng. This elevated investment performance will boost investor confidence, economic growth and the national transformation to higher value-added activities via investments, predominantly in the medium- to high-tech space, he said. Furthermore, he noted that Putrajaya had kept to its commitment of moving the share of investments between foreign and domestic sources closer to an equilibrium, with approved investments for 9M2023 comprising 55.9% (RM125.7 billion) foreign direct investment (FDI) and 44.1% (RM99.3 billion) domestic direct investment (DDI) . In comparison, FDI made up 61% (RM163.3 billion) of approved investments last year with 39% (RM104.4 billion) DDI. Note, however, the approved FDI figure of RM163.3 billion was still short of the RM230.07 billion committed FDI announced by the government last year, suggesting that some investments remained in the pipeline. Even after investments have been approved, a lot has to be done on the government’s part to translate these investments into realised investments that can in turn positively impact the economy, said Socio-Economic Research Centre (SERC) executive director Lee Heng Guie. So, walking the talk to make sure committed and approved investments are realised is key. Malaysia must walk the talk and act quickly In October, Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz said only close to 80% or RM593.5 billion of the RM753.9 billion in approved investments between 2018 and June 2023 were successfully implemented. Given Malaysia’s past performance, SERC’s Lee expects only 80% of the country’s approved investments this year to be realised. A lot is dependent on the government’s efforts in facilitating the implementation of the investments. “Depending on the type of investment — brown or greenfield — it will be realised at different rates. Greenfield investments will take longer as investors will have to look for land and build a factory, this will take time. Hopefully, the government realises this and understands the urgency for them — federal, state and local authorities — to work together. “These investments have been approved, so make sure they get the best support and facilitation until their projects commence operations. I am sure MITI (the Ministry of Investment, Trade and Industry) continues to monitor the progress and provides policy intervention as necessary,” Lee said. In other words, while approved investments serve as a good indicator of private investment levels that can be expected in the years ahead, these investments may still fall through or be delayed due to unexpected risks. Aside from the possible lack of facilitation on the part of the government, external factors, such as the potential US recession that looms on the horizon, may derail investment plans. Such a risk, coupled with a moderating implementation pace may result in a drop in approved realised investments to 70%, said Yeah. “The most important is to ensure that the facilitation of the investments is expeditious, as the quicker they are realised the less impact external developments will have in the event of a change in the form of an adverse downturn,” he added. Read the full story Source: Malaysian Investment Development Authority RM225 billion in approved investments in 9M2023 Domestic Direct Investment (DDI) Foreign Direct Invesment (FDI) % (DDI) % (FDI) 0 50 100 150 200 250 300 350 2015 2016 2017 2018 2019 2020 2021 2022 9M2023 156.9 59.0 54.7 80.5 82.9 64.2 208.6 163.3 125.7 193.0 207.9 197.1 201.7 211.4 167.4 309.4 267.7 225.0 36.1 148.9 142.4 121.2 128.5 103.2 100.8 104.4 99.3 18.70% 71.62% 72.25% 60.09% 60.79% 61.65% 32.58% 39.00% 44.13% 81.30% 28.38% 27.75% 39.91% 39.21% 38.35% 67.42% 61.00% 55.87% (RM bil)
FRIDAY DECEMBER 15, 2023 4 THEEDGE CEO MORNING BRIEF HOME PUTRAJAYA (Dec 14): The Malaysian Administrative Modernisation and Management Planning Unit (Mampu) will be placed under the newly created Ministry of Digital, said its Minister Gobind Singh Deo. Mampu was previously under the ambit of the Prime Minister’s Department. “Mampu is definitely under my ministry,” the newly minted minister told Bernama after visiting Mampu’s office at the Setia Perdana Complex here on Thursday. Gobind was accompanied by his deputy Datuk Ugak Anak Kumbong and Chief Secretary to the Government Tan Sri Mohd Zuki Ali. They were also briefed on Mampu’s structure and operations by its director general Datuk Rodzi Md Saad. Prime Minister Datuk Seri Anwar Ibrahim on Tuesday announced the restructuring of the Ministry of Communications and Digital, which was split into the Ministry of Communications and the Ministry of Digital. Gobind said there are still certain aspects that need to be clarified and finetuned in terms of job scopes that fall under his ministry. “Since the ministry is new, the areas that we are in charge of and which agencies come under us need to be fine-tuned,” he said, adding that he might call for a press conference very soon. On Wednesday, Communications Minister Fahmi Fadzil said that the Malaysia Digital Economy Corporation (MDEC), MYNIC Bhd and the Department of Personal Data Protection will be placed under Gobind’s ministry. Mampu to be placed under Ministry of Digital, says Gobind KUALA LUMPUR (Dec 14): It is estimated that the local media companies suffered about RM2 billion losses in annual advertisement earnings from a total of RM4.5 billion to three social media giants — Meta, Google and TikTok. Communications Minister Fahmi Fadzil said the matter is the biggest and most serious challenge faced by media companies in the country. He said the ministry takes a serious view of the matter which needed to be studied and given focus as advertising revenue is only paid to social media platform providers and not to media companies. “I think there should a balance so that there is a bit of return to media companies...it is still being discussed and I believe all parties can be brought to the negotiation table so that a more conducive environment could be established and realised. “We can apply on how we manage the issue of implementing 5G earlier when I managed to invite all telecommunications companies to discuss and eventually all us agreed, so this way of management can be used to solve this issue of advertising revenue,” he said. Fahmi said this when met by reporters after delivering the keynote address at the Opening Ceremony of ‘Transcending Disinformation: Towards Responsible Media Consumption’ organised by the Asia Pacific Broadcasting Development Institute (AIBD) here on Thursday. He also hopes that the social media platforms will hold many engagement sessions with media organisations to help them use Local media firms lose RM2 bil advertisement revenue annually to Meta, Google and TikTok Bernama Bernama the social media platform effectively and efficiently. Asked about the current vacant director-general position at the Community Communications Department (J-KOM), Fahmi said he would meet the department’s management on Thursday, among other things, to discuss new appointments to fill the position as soon as possible. He said in the meeting, he will get more information on whether the relevant department already has a replacement for the new director-general who was selected while under the supervision of the Prime Minister’s Department (JPM), since J-KOM has just been transferred to the Ministry of Communications with effect from Wednesday. “Previously, the Prime Minister once said that a successor had been identified, but in terms of his administration, whether it has come into effect or not will be confirmed in today’s meeting. There is no deadline but this appointment (director-general of J-KOM) will be made as soon as possible because it is important, give me some time,” he said When asked whether the appointment of the new J-KOM director-general would be among civil servants or external appointments, Fahmi said he did not know yet and the matter would be discussed during the meeting. On Nov 15, Datuk Dr Mohammad Agus Yusoff confirmed that he had sent his letter of resignation as director-general of J-KOM to the Prime Minister, just nine months after being appointed to lead the department on Feb 2. ZAHID IZZANI/THE EDGE LOW YEN YEING/THE EDGE Read also: CyberSecurity Malaysia, SatisGuard ink MOU to strengthen country’s cyber security Ransomware attacks increased twofold in Malaysia this year, IDC and Fortinet report
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friday december 15, 2023 6 The E dge C E O m o rning brief home KUALA LUMPUR (Dec 14): Yinson Holdings Bhd posted its highest quarterly net profit of RM248 million for the third quarter ended Oct 31, 2023 (3QFY2024), an increase of 60% compared with RM155 million a year earlier, underpinned by a higher revenue. Earnings per share increased to 7.3 sen from 4.2 sen, the floating, production, storage and offloading (FPSO) contracYinson posts highest quarterly net profit in 3Q KUALA LUMPUR (Dec 14): Astro Malaysia Holdings Bhd posted a net loss of RM47.05 million for its third quarter ended Oct 31, 2023 (3QFY2024) — the satellite pay-TV operator’s first ever loss-making quarter — compared with a net profit of RM5.80 million in 3QFY2023. The swing to the negative territory was largely due to the voluntary separation scheme (VSS) exercise to reduce its headcount by 20% that cost the group RM52 million, Astro said in a bourse filing on Thursday. The group’s quarterly revenue also dropped 10.54% to RM828.55 million from RM926.18 million a year prior, due to lower contribution from its television segment and as the group exited its home-shopping business. No dividend was declared for the current quarter under review. This marks the second consecutive quarter of no dividend for Astro’s shareholders, after the group in September revised its dividend policy to make yearly payouts from its consolidated profit after tax and non-controlling interests. Astro previously made dividend payments on a quarterly basis. For the nine months ended Oct 31 (9MFY2024), Astro registered a net loss of RM7.51 million against a net profit of RM204.29 million in the same period last year. Besides the latest VSS cost, the group’s earnings so far have been hit by higher operating costs and forex losses. Cumulative revenue dipped 5.62% to RM2.52 billion from RM2.67 billion. Astro chief executive officer Euan Smith said despite the weaker performance reported for 3QFY2024, the group’s strategic plans to transform Astro into a digital, streaming company are yielding results. KUALA LUMPUR (Dec 14): Eco World Development Group Bhd (EcoWorld) reported that its net profit for the fourth quarter ended Oct 31, 2023 (4QFY2023) nearly doubled to RM3.29 million from RM1.77 million a year ago on the back of higher revenue and gross profit. Earnings per share rose to 11 sen from six sen in the previous year’s corresponding quarter, according to the group’s bourse filing on Thursday. Quarterly revenue saw a 50.98% jump to RM844.45 million from RM559.28 million in 4QFY2022, primarily driven by the completion of a 92-acre land sale in Eco Business Park II. The property developer’s share of results from its Malaysian joint ventures included contributions from Eco Grandeur, Eco Business Park V, Eco Ardence, Bukit Bintang City Centre (BBCC), and Eco Horizon. For FY2023, the group’s net profit increased by 20.4% to RM189.3 million from RM157.2 million in FY2022, with revenue reaching RM22.26 billion. The group declared a final dividend of two sen per share in 4QFY2023, bringAstro posts its first quarterly net loss as VSS costs weigh EcoWorld’s 4Q net profit rises as sales hit RM3.61 bil by Sulhi Khalid theedgemalaysia.com by Choy Nyen Yiau theedgemalaysia.com by Sulhi Khalid theedgemalaysia.com Read the full story Read the full story tor’s filing with Bursa Malaysia showed. Quarterly revenue grew 62% to RM2.81 billion from RM1.74 billion a year ago. On a quarter-on-quarter basis, the group’s net profit came in 8% higher from the RM230 million registered in 2QFY2024, while revenue fell 10% from RM3.11 billion. For the first nine months of FY2024, net profit rose 64.11% to RM686 million from RM418 million, mainly due to an increase in engineering, procurement, construction, installation and commissioning (EPCIC) revenue. Nine-month revenue doubled to RM8.94 billion from RM4.36 billion, thanks to the higher EPCIC revenue. Moving forward, Yinson said that despite the ongoing recovery of global markets, it remains vigilant due to potential market reactions to restrictive monetary policies. ing total dividends declared for FY2023 to six sen per share. In a separate statement, Eco World announced that it had achieved RM3.61 billion in sales for FY2023 — exceeding its target of RM3.5 billion — with Eco Business Parks registering RM1.04 billion in industrial property sales, the highest in a single year. Eco Hubs contributed RM515 million in commercial property sales in FY2023, a 15% increase over FY2022. Total residential sales in FY2023 amounted to RM2.05 billion, led by the group’s Eco townships and Eco Rise. “This year, EcoWorld recorded RM1.47 billion from sales of homes within its Eco townships that were priced above RM650,000 and RM577 million from homes priced below RM650,000, mainly from the group’s duduk series of apartments,” it said. The group stated that potential dividends from Eco World International Bhd in FY2024 would boost EcoWorld Malaysia’s cash reserves, strengthening the group’s capabilities to acquire new land banks. astro.com.my ecoworld.my
FRIDAY DECEMBER 15, 2023 7 THEEDGE CEO MORNING BRIEF
FRIDAY DECEMBER 15, 2023 8 THEEDGE CEO MORNING BRIEF HOME Ranhill undertaking new Johor non-revenue water reduction project for RM284 mil KUALA LUMPUR (Dec 14): Ranhill Utilities Bhd is undertaking a project under a related party transaction to reduce non-revenue water (NRW) in Johor for RM283.89 million. The project was awarded by Ranhill’s 80%-owned unit Ranhill SAJ Sdn Bhd to another indirect wholly owned unit Ranhill Technologies Sdn Bhd, following a competitive tender process. The scope of the project include: establishment of new District Meter Areas (DMA) and re-establishment of existing ones; NRW meter and data logger troubleshooting and maintenance; pressure management; reservoir monitoring and maintenance; water supply system monitoring; meter, valve and pressure relief valve installation; maintenance of DMA monitoring system; repair works; NRW volume and leakage reduction. The project, which is Ranhill TechKUALA LUMPUR (Dec 14): The current regulatory system and high barriers to entry to Malaysia’s energy sector allegedly give way to patronage and rent-seeking practices, according to a report released by the Institute for Democracy and Economic Affairs (IDEAS) on Thursday. Authored by IDEAS senior fellow Dr Renato Lima de Oliveira, the report said the energy industry’s high barriers to entry and gatekeeping roles occupied by the government and the Energy Commission (EC) lead to a risk of lack of neutrality in how the licensing regime is applied. “All power installations must be licensed under the Electricity Supply Act 1990, and all licences are awarded by the Minister on the advice of the EC. It is notable that virtually all IPPs (independent power producers) are either directly state-controlled or are state-linked,” said Lima de Oliveira in the report entitled ‘Competitive Neutrality in the Malaysian Power Sector: Removing Barriers for a Greener and More Innovative Energy Industry’. “Although this reflects the fact that IPPs are typically among the largest firms in Malaysia and therefore likely to attract institutional investors, it may also reflect ongoing patronage practices in the industry,” said the assistant professor of management at the Asia School of Business. Citing former energy minister Yeo Bee Yin’s book published in 2022 entitled The (Un)Finished Business, Lima de Oliveira said it mentioned lobbying by well-connected companies to receive direct awards of IPPs, and how such practice led to rent-seeking. Another example of the politicisation of the licensing regime, he said, is the differential treatment of foreign IPPs — whereby prior to 2015, no power purchase agreements (PPAs) had ever been granted to a foreign company (a company owned and controlled by non-Malaysians) as IPPs are required to have no more than 49% of foreign-owned equity. He pointed out that the government made an exception in 2015 for China GenIDEAS flags patronage practices in Malaysia’s energy industry BY IZZUL IKRAM theedgemalaysia.com BY ADAM AZIZ theedgemalaysia.com eral Nuclear Power Corp’s near RM10 billion acquisition of 1Malaysia Development Bhd’s power assets. This was the largest acquisition by value in the history of Malaysia’s energy industry, as well as the only time the government allowed a non-Malaysian entity to acquire 100% equity in an IPP, Lima de Oliveira noted. “This exceptional decision was linked to the closer political, economic, and industrial cooperation between Malaysia and China as part of China’s expansive Belt and Road Initiative (BRI), which in many cases has manifested in an increased presence of Chinese SOEs (state-owned enterprises), either alone or in partnership with Malaysian GLCs (government-linked companies),” he said. “These examples suggest politicisation of the licensing regime, which is not consistent with the principles of regulatory neutrality,” he added. To address the purported lack of neutrality in the licensing regime, Lima de Oliveira urged the government to adopt a rigorous, transparent and objective criteria for awarding licences. Read also: Energy Ministry: Putrajaya is laying the groundwork to liberalise electricity market Experts warn of gas supply headwinds for Malaysia by 2030s nologies’ seventh successive NRW project in Johor, will span three years from Jan 1, 2024 to Dec 31, 2026. After taking such projects in Johor since 2011, the state’s NRW has reduced from over 37% in 2005 to 25.1% as at Nov 30 this year, Ranhill said. “Apart from Johor, Ranhill Technologies has successfully secured NRW reduction projects through competitive bidding process in several states such as Melaka, Kedah, Kelantan, Terengganu, Perlis and Pahang,” it added. “The award of this project is a testament of Ranhill Technologies’ capabilities and track records in the water industry. “The securing of this project further solidifies Ranhill Technologies’ reputation throughout Malaysia as a leader in holistic water network management and specifically the NRW reduction sector,” it added. Shares of Ranhill settled half a sen or 0.56% lower at 88 sen, giving the utilities group a market capitalisation of RM1.14 billion.
FRIDAY DECEMBER 15, 2023 9 THEEDGE CEO MORNING BRIEF
friday december 15, 2023 10 The E dge C E O m o rning brief home KUALA LUMPUR (Dec 14): Malaysia ranks first out of the 12 markets for quality of auditors and audit regulators at the 11th biennial corporate governance assessment by the Asian Corporate Governance Association (ACGA). Its audit regulators are also the country’s best performing category, followed by the strength of corporate governance rules and adoption of corporate governance practices by listed companies. In the latter two categories, Malaysia was ranked second, after Australia. ACGA which covers 12 Asia Pacific countries including Australia, in its ‘CG Watch 2023’ market rankings report, retained Malaysia’s position at 5th placing, with improvements recorded in six out of the seven assessment categories. SC: Malaysia ranks first for quality of auditors and audit regulators in regional corporate governance assessment Crest Builder secures RM314.5 mil construction contract from UEM Land KUALA LUMPUR (Dec 14): A total of US$17 billion (RM79.43 billion) of retail investor capital could be mobilised towards climate investments in Malaysia by 2030, according to Standard Chartered (StanChart)’s Sustainable Banking Report 2023. Of this, US$9 billion might go towards mitigation themes, particularly renewables, energy efficiency and storage. The remaining US$8 billion could be directed to adaptation, covering resilient infrastructure, biodiversity and food systems, according to the report released on Thursday. Based on a survey across 10 growth markets in Asia, Africa, and the Middle East, the research report suggests a global potential of US$3.4 trillion for climate investing, highlighting the significant impact individuals can have in combating climate change. In Malaysia, the report said that 93% of investors express interest in climate investing, with 83% aiming to increase capital flows towards climate-related iniKUALA LUMPUR (Dec 14): Crest Builder Holdings Bhd’s wholly-owned unit Crest Builder Sdn Bhd has secured a RM314.5 million contract from UEM Land Bhd to construct 1,334 units of serviced apartments in two 53-storey blocks in Cheras, Kuala Lumpur. In a statement on Thursday, the company said the project also comprised a level of sub-basement car park, elevated podium car parks, commercial retail and office spaces and a level of recreation facilities. It said that the construction works would take approximately 39 months to complete from its scheduled site possession date of June 1, 2024. Crest Builder Holdings group managing director Eric Yong Shang Ming said the latest contract elevated its year-to-date replenishment to RM566 million, surpassing the group’s 2023 target of RM500 million. “We have, in fact, secured over RM1.05 billion contracts in total over the last 12 months upon taking into consideration the RM478.9 million contract from Perdana Parkcity Sdn Bhd in late December last year,” he added. With the latest award, the group’s outstanding order book stands at about RM1.4 billion, which will provide earnings visibility for the next three years. tiatives. Motivations include adherence to social norms, personal values, improving investment returns and reducing portfolio risks. Despite this interest, Malaysian investors face barriers, with 66% citing comprehensibility and 63% noting comparability as significant challenges in climate mitigation and adaptation investments. The report emphasizes the industry’s critical role in overcoming these barriers and calls for collaborative efforts from financial institutions, regulators, companies and individuals to establish a broader range of climate assets. To address these challenges, the report recommends various actions, such as asset managers and banks being urged to create new climate assets aligned with emerging interests while financial institutions should attract retail capital by providing information, customizable products and outcome-based details. The report also highlights the importance of digital solutions for simplifying processes and emphasizes the need for global industry alignment on reporting standards and minimum disclosure requirements to boost investor confidence. Sammeer Sharma — managing director and head of consumer, private and business banking at StanChart Malaysia — emphasized the industry’s role in improving access to solutions, harmonizing reporting standards, and measuring impact to bridge the gap between investor interest and the scale of climate investments. “At StanChart Malaysia, we will continue to work closely with our clients to match their investments to their areas of interest, so they can help finance solutions for a more sustainable future,” he added. StanChart report: Malaysia could mobilize US$17 bil in retail investor capital for climate investments by 2030 by Choy Nyen Yiau theedgemalaysia.com Bernama Bernama In terms of the regulator category, the Securities Commission of Malaysia (SC) was recognised for among others, effective communication on its enforcement action. SC chairman Datuk Seri Dr Awang Adek Hussin said this is a positive outcome for Malaysia, especially the leading position across the markets in terms of auditors and audit regulators. “It is also a strong recognition of the Audit Oversight Board’s role in promoting audit quality. Good corporate governance will remain a priority for the SC and we will continue to act on areas which require reinforcement,” he said in a statement on Thursday. ACGA will be releasing the individual country reports in the coming months, with more details on the assessment observations.
FRIDAY DECEMBER 15, 2023 11 THEEDGE CEO MORNING BRIEF
friday december 15, 2023 12 The E dge C E O m o rning brief home KUALA LUMPUR (Dec 14): RHB Investment Bank Research (RHB IB) has maintained its “overweight” rating on the building materials sector and said that out of the three companies that reported results, one exceeded expectations, while two fell below estimates. In a sector update on Thursday, the research house said its top sector picks are Press Metal Aluminium Holdings Bhd and Malayan Cement Bhd. RHB IB said it is optimistic on the aluminium market, given the low inventory levels, increasing electric vehicles (EVs) adoption, and China’s economic upswing in 2H2024F. “Our confidence on the cement industry stems from its alignment with the construction sector and anticipated sustained demand, fuelled by major domestic infrastructure projects,” it said. RHB IB said Press Metal’s 9M2023 core earnings of RM877.3 million fell below house’s and consensus’ expectations at 58% and 67% of full-year estimates. It said the year-on-year (y-o-y) decline in quarterly earnings was attributed to a flattish-to-softer drop in London Metal Exchange (LME) aluminium prices — averaging at USD2,159/tonne (-4.6% q-o-q; -8.4% y-o-y). “Despite an 8.5% q-o-q (quarter-on-quarter)decline in revenue, core profit after tax and minority i nterest (Patami) remained stable, partially aided by lower input costs, stronger associate contributions, and improved sales volumes of value-added products. “In addition to the stabilisation of LME aluminium prices, we expect Press Metal’s to enjoy further savings in raw material costs moving forward, due to its lag effect,” it said. Meanwhile, among the two cement players under its coverage, RHB IB said that Malayan Cement surprised consensus with its quarterly performance, while Cahya Mata Sarawak Bhd fell short of expectations. It said Malayan Cement’s 1QFY2024 earnings of RM88.5 million were at 49% and 43% of its and consensus’ full-year forecasts. Revenue grew 13.6% q-o-q and 33.7% y-o-y to RM1.15 billion, driven by a spike in sales volumes and average selling prices (ASPs) for both domestic cement and ready-mixed concrete. “Cement and ready-mixed concrete volumes rose 15% q-o-q and 18% y-o-y. In contrast, Cahya Mata’s 9M2023 earnings of RM69.9 million were at only 62% and 50% of our and street’s full-year projections. “The weaker-than-expected results were due to widening losses in the phosphates division and weaker contribution from road maintenance, property development and strategic investments,” RHB IB said. The research house highlighted the risks of decline in LME aluminium prices, decelerating global economic growth, higher-than-expected raw material costs, lower-than-expected cement ASPs, and lower-than-expected cement production. Read also: Rakuten Trade positive on Kerjaya Prospek’s outlook, with target price of RM1.79 KPJ’s plan to sell Aged Care biz Down Under expected to cut operating costs, alleviate cash flow — analysts Phillip Capital upgrades TradePlus Shariah Gold Tracker, raises target price to RM3.24 RHB IB stays overweight on building materials sector, top picks Press Metal and Malayan Cement KUALA LUMPUR (Dec 14): Affin Hwang Investment Bank has upgraded its call on the local market to “overweight” from “neutral”, with an FBM KLCI target of 1,600 points by end-2024. In a strategy note on Thursday, the research house said there could be external headwinds in the first half of 2024 (1H2024) leading to market volatility, but expects a rebound in 2H2024. “Our positive view is on expectations of an accelerating real gross domestic product (GDP) growth, a stronger ringgit, rising foreign direct investment (FDI) inflows on the back of improving foreign investors’ confidence, and a rebound in corporate earnings growth in 2024,” it said. Affin Hwang upgraded the banking, plantation and property sectors to “overweight”, and rubber products to “neutral”. Meanwhile, it downgraded building materials to “underweight”. “We add CIMB Group Holdings Bhd, Kelington Group Bhd, Hong Leong Bank Bhd (replacing Public Bank Bhd), and Malaysia Airports Holdings Bhd as top market buys,” it said. Ringgit to strengthen in 2H2024 Affin Hwang expects advanced economies to start cutting interest rates in 2H2024. It said the US Federal Reserve could start easing in the fourth quarter of 2024, leading to dollar weakness. “Coupled with high FDI inflows and potential portfolio net inflows, we expect a stronger ringgit in 2H2024. “We expect US dollar-ringgit rates of 4.45-4.55 at end-2024, strengthening from Affin Hwang upgrades M’sian market to ‘overweight’, sets end-2024 KLCI target of 1,600 4.70 at end-2023. We believe this will be a key catalyst to improve sentiment in the Malaysian equity market, and support a KLCI rebound in 2H2024,” it said. Strong earnings rebound in 2024 The research house expects KLCI core earnings to rebound to a growth of 10.5% year-on-year (y-o-y) in 2024, from a contraction of 0.7% y-o-y estimated for 2023. Affin Hwang said the broader market is expected to see a stronger earnings rebound (based on the 102 stocks under its coverage) to a growth of 13.2% y-o-y in 2024, from a decline of 5.1% y-o-y estimated for 2023, mainly due to a surge in plantation (+24% y-o-y), oil and gas (+23% y-o-y) and utilities (+25% y-o-y) earnings. The research house expects foreign investors to shift their attention to emerging markets like Malaysia with relatively strong corporate earnings and real GDP growth, and attractive valuations in 2H2024. “On a 12-month view, we upgrade the market to ‘overweight’, and introduce our 2024 KLCI target of 1,600, based on a price-earnings ratio (PER) of 15.6 times (-0.5 standard deviation of the five-year historical mean PER),” it said. by Surin Murugiah theedgemalaysia.com by Surin Murugiah theedgemalaysia.com
friday december 15, 2023 13 The E dge C E O m o rning brief C M Y CM MY CY CMY K CEO MB ROP_275x190mm_OL.pdf 1 2023/11/7 10:28
FRIDAY DECEMBER 15, 2023 14 THEEDGE CEO MORNING BRIEF HOME Sapura Energy granted second extension to submit PN17 regularisation plan KUALA LUMPUR (Dec 14): Sapura Energy Bhd has been granted a second extension of up to May 31 next year to submit its Practice Note 17 (PN17) regularisation plan, which was supposed to be due on Nov 30, 2023. Shares of Sapura were the most actively traded on Thursday across all Bursa securities, with 193.68 million shares changing hands though its share price was unchanged at five sen, valuing it at RM798.95 million. The stock piqued investors’ interest after receiving inprincipal approval from its RM10.3 billion lenders for its proposed debt restructuring scheme. — by Syafiqah Salim & Chester Tay Read the full story Hiap Teck starts FY2024 in the red KUALA LUMPUR (Dec 14): Hiap Teck Venture Bhd slipped back into the red with a net loss of RM9.43 million or 0.54 sen per share for its first quarter ended Oct 31, 2023 (1QFY2024), after three consecutive profitable quarters, as its bottomline was dragged by its share of losses from a joint venture entity. The group recorded a loss of RM16.61 million from its equity-accounted investees in 1QFY2024, as opposed to a profit of RM17.13 million in 4QFY2023, its bourse filing showed. Nevertheless, compared to the corresponding 1QFY2023, the group has narrowed its net loss from RM49.14 million. — by Choy Nyen Yiau Read the full story Scientex 1Q profit up 29% KUALA LUMPUR (Dec 14): Packaging manufacturer and property developer Scientex Bhd kick-started its new financial year on a positive note, with its net profit for the first financial quarter ended Oct 31, 2023 (1QFY2024) climbing 28.6% to RM137.84 million, from RM107.18 million a year earlier, driven by its property division. — by Syafiqah Salim Read the full story Pestech JV bags RM110 mil project KUALA LUMPUR (Dec 14): Pestech International Bhd said its 60%-owned joint venture has secured an electrical substation construction project in Entinggan, Kuching, Sarawak from Syarikat SESCO Bhd for RM109.98 million. This is the fourth civil and engineering works project announced this year by Pestech, and its first after IJM Corp Bhd’s entrance as a 44.83% shareholder in Pestech for RM124 million or 15.5 sen per share in October. — by Adam Aziz Read the full story LTAT sells 8.16% direct stake in BHIC KUALA LUMPUR (Dec 14): The Armed Forces Fund (LTAT) has disposed of its entire direct stake of 8.16% in Boustead Heavy Industries Corp Bhd (BHIC) on Wednesday, leaving it with an indirect stake held via Boustead Holdings Bhd. LTAT sold the 20.27 million shares “to assist BHIC in meeting the public shareholding spread requirement pursuant to the proposed debt settlement” announced by BHIC on Dec 6, it said. Boustead Holdings holds 161.5 million shares in BHIC, representing a 64.99% stake in the shipbuilder. — by Adam Aziz Read the full story Read also: GoAuto Group, Careplus JV firm to set up EV plant ACE-bound Critical Holdings logs RM6.21 mil 1Q profit MIER: Malaysia should play more active role in chip exports Malaysian Life Reinsurance launches retakaful window NEWS IN BRIEF KLK acquires two Indonesian firms from Batu Kawan for RM276.5 mil KUALA LUMPUR (Dec 14): Kuala Lumpur Kepong Bhd (KLK) and its Singapore incorporated wholly-owned subsidiary, KLK Plantations and Trading Pte Ltd have proposed to acquire more than 90% stakes in two Indonesian palm oil companies for a total purchase price of RM276.55 million in a related party transaction. In a local bourse filing on Thursday, KLK said it has entered into a share sale agreement with Batu Kawan Bhd’s wholly-owned unit Whitmore Holdings Sdn Bhd. Batu Kawan is the parent company of KLK with a 47.72% stake. KLK is acquiring a 92% stake in PT Satu Sembilan Delapan (SSD) for RM264.1 million and a 90% stake in PT Tekukur Indah (TI) for RM12.42 million. — by Sulhi Khalid AirAsia leases four planes previously operated by MYAirline KUALA LUMPUR (Dec 14): Low-cost carrier AirAsia has leased four Airbus A320-200 aircraft previously operated by MYAirline Sdn Bhd. AirAsia Aviation Group Ltd group chief executive officer Bo Lingam (pic) said AirAsia had previously leased three of the aircraft before the Covid-19 pandemic from lessor Aircastle Ltd. They were subsequently returned to the lessor, and MYAirline leased the aircraft from the lessor. “When MYAirline stopped operating, the lessor asked if we wanted these planes. We also needed the capacity for next year,” he told Bernama, adding that all the leasing processes had been completed to date. — Bernama Read the full story BERNAMA
friday december 15, 2023 15 The E dge C E O m o rning brief
friday december 15, 2023 16 The E dge C E O m o rning brief home KUALA LUMPUR (Dec 14): The Social Security Organisation (Socso) needs to constantly keep its policies and employee protection programmes abreast with current developments, especially the latest risks such as climate change, technology, economic patterns and the employment market. The message was delivered by the new Human Resource Minister Steven Sim Chee Keong in his official working visit to Menara Perkeso in Jalan Ampang here on Thursday. “The world is changing fast. If we are still stuck in our old environment, we will be left behind. It’s time to double our efforts in the struggle to bring benefit to the people,” he said in a statement issued by Socso. Also present in the visit was Deputy Human Resources Minister Datuk Seri Abdul Rahman Mohamad According to Socso, the. minister’s delegation arrived at 11am and was brought to visit the operation at the counter before attending a briefing by Socso Group chief executive officer, Datuk Seri Dr Mohammed Azman Aziz Mohammed. The briefing touched on the development of current issues, including the cyber hacking incident on Dec 2, which is currently undergoing internal forensic investigation. Sim, who was previously Deputy Minister of Finance, was appointed as Minister of Human Resources following the Cabinet reshuffle announced by Prime Minister Datuk Seri Anwar Ibrahim on Tuesday, while Abdul Rahman was previously Deputy Minister of Works. Socso needs to review policies in line with current developments Covid-19: MOH recommends third booster shot for vulnerable people IPOH (Dec 14): The Perak government confirmed that the Cabinet had approved the construction of the 60km West Ipoh Span Expressway (Wise) linking Gopeng with Kuala Kangsar. Perak Menteri Besar Datuk Seri Saarani Mohamad said the cost of implementing the project will be fully borne under the Private Financing Initiative. “Wise is an approach to resolve the traffic woes on the North-South Expressway (PLUS), especially when an accident occurs at the Menora Tunnel, and highway users have no other alternatives apart from using the federal road in Sungai Siput. “With Wise, motorists could use the alternative route from Gopeng to Kuala Kangsar to avoid traffic congestion whenever there is an accident at the Menora Tunnel,” he said when met by reporters after opening the Perak Economic Outlook 2024 programme at Bangunan Perak Darul Ridzuan here on Thursday. PUTRAJAYA (Dec 14): The Ministry of Health (MOH) has recommended a third booster shot of the Covid-19 vaccine, especially for vulnerable and high-risk groups, following the recent increase in cases. Health Minister Datuk Seri Dr Dzulkefly Ahmad said there is a sufficient stock of vaccines available, which were effective in protecting the public from mutated infections and new Covid-19 variants. “The booster dose is necessary to protect vulnerable groups, including senior citizens and those with comorbidities, who are susceptible to risks and harmful effects. “I told the Cabinet yesterday (Wednesday) about the current situation, and that we should pay attention [to this],” he told reporters after attending the ministry’s monthly assembly here on Thursday. It was reported on Wednesday that a total of 12,757 Covid-19 cases were reported during the 49th epidemiological week of Dec 3 to 9, compared with 6,796 cases for the previous week. The rate of Covid-19 admissions (including patients suspected of Covid-19) to healthSaarani said the state government will give its full cooperation to implement the project, including the aspect of land acquisition from the state Lands and Mines Office. In this regard, he said the state government is optimistic that the opening of Wise will bring positive impact, apart from complementing the West Coast Expressway (WCE). “Wise will stimulate the state as a a major portion of the WCE has been opened to the public. As such, they will complement each other,” he said. On Sept 16, Malaysian Highway Authority chairman Datuk Seri Jalaluddin Alias said the construction of Wise was in the final stage of negotiations, and this would be finalised by December. In another development, Saarani said the state government is proposing to develop a non-radioactive rare earth element (NR-REE) laboratory in Simpang Pulai here, subject to the approval of the Ministry of Natural Resources and Sustainability. He said the location is seen as suitable, because it is fully owned by Menteri Besar Incorporated (MB Inc), which is also one of the mandatory agencies for the development of NR-REE projects in Perak. “Currently, we have submitted the application and paperwork related to the development of this laboratory to the ministry, and hopefully this (approval) process will be successful, and we can start. “This laboratory is shared between MB Inc, the Perak State Agricultural Development Corporation, and the Perak State Development Corporation (PKNP),” he said at a programme attended by more than 700 participants, which aims at focusing on efforts to increase the state’s economic growth as conceived in the Perak Sejahtera 2030 plan. Cabinet has approved construction of West Ipoh Span Expressway, says Perak MB Bernama Bernama Bernama Read also: AGC drafting proposed amendments to Federal Constitution over citizenship issues Collapsed crane: KTMB’s Komuter, ETS services restored care facilities for the use of non-critical beds and beds in the intensive care unit (ICU) each rose to 1.4% in the 49th epidemiological week, as compared to the week before. Dzulkefly said the surge in cases was due interstate movement of people during the yearend holiday season and weather conditions. “We should wear a face mask when in crowded places, and if experiencing symptoms,” he said. On the need for tight screening at the country’s entry points, he said appropriate intervention and mitigation measures would be taken immediately if necessary.
friday december 15, 2023 17 The E dge C E O m o rning brief home PUTRAJAYA (Dec 14): The Court of Appeal unanimously dismissed an appeal by Linsun Engineering Sdn Bhd managing director Datuk Natarejen Manohran, who was ordered by the Kuala Lumpur High Court to pay RM200,000 in damages for defaming the founder of Eversendai Group of Companies Tan Sri AK Nathan Elumalay. The decision was made by a three-member bench on Tuesday (Dec 12), led by judge Datuk Supang Lian, and also composed of judges Datuk Mohd Nazlan Mohd Ghazali and Datuk Dr Choo Kah Seng. The bench ruled that there were no merits in the appeal. In addition, the bench also ordered Natarejen to pay RM15,000 in costs. The decision was confirmed by Nathan’s counsel Rueben Mathiavaranam to The Edge. Natarejen was represented by counsel M Manoharan. Natarejen was found to have defamed Nathan by the Kuala Lumpur High Court judicial commissioner Dr John Lee Kien How @ Mohammad Johan Lee on June 3, 2022, and ordered to pay RM200,000 in damages. Nathan had sued Natarejen for publishing in a Whatsapp chat group comprising over Court of Appeal says Linsun Engineering MD defamed Eversendai founder KUALA LUMPUR (Dec 14): Datin Seri Rosmah Mansor’s application to include the government and the police as third parties in Lebanese jeweller Global Royalty Trading SAL’s suit against her will be heard in February next year. Rosmah’s counsel Rajivan Nambiar told the media that the hearing was fixed for Feb 19 before High Court judge Ong Chee Kwan. This is with regard to the international jeweller’s US$14.57 million (RM68.08 million) lawsuit against the wife of imprisoned former prime minister Datuk Seri Najib Razak. The Beirut-based firm, which boasts an A-lister clientele including celebrities Oprah Winfrey and Angelina Jolie, refiled its suit against Rosmah earlier in April for breach of contract over 43 pieces of jewellery allegedly missing, following a raid by the authorities after the May 2018 general election in Malaysia. The 72 year-old, meanwhile, countered that there were companies like Global Royalty which sought publicity for their products, and wanted her to be their customer. She added that items would be sent to her to attract buyers, and she was under no obligation to purchase them. She also contended that if the pieces of jewellery were indeed missing, the police or the Malaysian government should be made responsible for the losses. In her application to initiate third-party proceedings filed last month, Rosmah reiterated that the pieces of jewellery in contention were not in her possession and February hearing for Rosmah’s application to include govt, police in US$14 mil suit over ‘missing’ jewellery by Tarani Palani theedgemalaysia.com by Hafiz Yatim theedgemalaysia.com Read also: Kevin Morais murder trial: Defence implores the court to set aside personal sentiment Dec 29 case management for appeal against Bung Moktar, wife’s acquittal in graft case 200 chat participants, of a collage (screenshot) comprising chat messages between both of them, in which Natarajen had alleged and insinuated among others that Nathan had bribed the Shah Alam court staff to delay a certain court proceeding. Natarejen had also alleged that Nathan was a person who refused to pay his debts owed to contractors. At the High Court, Natarejen was ordered by Lee to pay RM60,000 in costs. had been confiscated by the authorities. In the event that the court rules against her, Rosmah is seeking for the authorities to return the jewellery back to the Beirut-based firm. If they fail to do so, she is asking for the government and the police to pay the sum demanded by the Lebanese firm. A defendant can initiate third-party proceedings against those not part of the main suit, in order to claim contributions, indemnity or any remedy which is claimed by the plaintiff. Late last month, the High Court dismissed the jeweller’s application for a summary judgement against Rosmah because there were triable issues which ought to be thrashed out in a full trial. The firm filed the summary judgement application on the grounds that Rosmah had failed to return or pay the amount sought, and that there is no merit in her defence. The court also allowed Rosmah’s security for cost application, and fixed the cost at RM75,000. Rosmah had filed the application on the grounds that if she is successful in the lawsuit, she would have trouble seeking costs from the Lebanese firm, as it is outside the jurisdiction of the Malaysian courts, and Malaysia would not have a reciprocal enforcement judgement in Lebanon. In this action, Rosmah is represented by Rajivan Nambiar and Mohamed Reza Rahim, while Global Royalty is represented by Datuk David Gurupatham and Venothani Rajagopal. Sam Fong/The Edge
friday december 15, 2023 18 The E dge C E O m o rning brief world Norway hikes rates by 25 basis points in surprise decision ECB resists rate cut bets with pledge to stay tight by Francesco Canepa & Balazs Koranyi Reuters by Victoria Klesty Reuters FRANKFURT (Dec 14): The European Central Bank (ECB) pushed back against bets on imminent cuts to interest rates on Thursday by reaffirming that borrowing costs would remain at record highs despite lower inflation expectations. The eurozone’s central bank left borrowing costs unchanged and did not even hint at a possible reduction, with ECB President Christine Lagarde highlighting instead that inflation would soon rebound and price pressures remain strong. That was in stark contrast to the more dovish tone taken by her US Federal Reserve (Fed) counterpart Jerome Powell on Wednesday. “Should we lower our guard? We asked ourselves that. No — we should absolutely not lower our guard,” Lagarde told a news conference after the decision. “We did not discuss rate cuts at all. No discussion, no debate,” said Lagarde, describing herself as “in Covid recovery mode” and speaking markedly more quietly than usual. While acknowledging that underlying price pressures were easing, Lagarde said domestic inflation, largely driven by wage costs across the 20 countries that use the euro, was “not budging”. “We need to better understand what is happening there,” Lagarde said of those wage dynamics, and to what extent any further wage gains would be absorbed by companies. Future inflation risks for Europe ranged from geopolitical tensions that could push energy prices higher in 2024 right through to the potential for more extreme weather that could damage next year’s food harvests. The cautious tone ran against investor bets on interest rate cuts in the first half of next year, in what would be a sharp reversal from the sequence of 10 consecutive increases that ended in September. In a smaller policy change, the ECB brought forward the end of its last surviving bond-buying scheme — a legacy of the Covid-19 pandemic. After Thursday’s decision, the ECB’s deposit rate stays at a record-high 4%. It was at a negative 0.5% only in July 2022. Investor expectations before the meeting pointed to a first rate cut in the spring, possibly as soon as March, which could make the ECB the first big central bank to reverse course after a concerted effort to bring down inflation since mid-2022. Lagarde’s push-back against rate-cut bets came after it took the ECB a year and a half to steer inflation onto a convincing downward path. Her job may have been made harder by the Fed, the world’s most influential central bank, which signalled late on Wednesday that lower borrowing costs would come next year, with policymakers indicating up to three cuts. After the ECB decision, traders trimmed bets on ECB rate cuts, which are now seen starting in April and totalling 140 basis points next year, compared to as much as 160 basis points earlier on Thursday. A slim majority of economists polled by Reuters before the meeting thought the first rate cut would come by June. Read the full story Read also: Bank of England pushes back against rate cut speculation Switzerland’s central bank calls end to hiking cycle Read the full story OSLO (Dec 14): Norway’s central bank raised its benchmark interest rate by 25 basis points to 4.50% in a surprise decision on Thursday as it sought to combat persistent inflation, and said it would likely stay put at that level until late 2024. Of 27 economists polled in advance by Reuters, 15 had expected rates to stay on hold on Thursday while a minority of 12 had forecast a hike to 4.50%. Norges Bank was ready to hike again if necessary but could also cut rates if inflation were to fall more quickly than expected, Governor Ida Wolden Bache told a press conference. “If the economy evolves as currently envisaged, there will not be a need for additional rate hikes,” Bache said. “The forecast indicates that the policy rate will continue to lie around 4.5% until autumn 2024 before gradually moving down,” she added. The Norwegian crown strengthened by about 1.5% to 11.51 against the euro at 1002 GMT, from 11.67 just before the announcement. The central bank had said last month it would likely raise the cost of borrowing in December, with the caveat that a decline in core inflation could change its monetary policymakers’ minds. “We see that the economy is cooling down, but inflation is still too high. An increase in the policy rate now reduces the risk of inflation remaining high for a long period of time,” Bache said in a statement accompanying the decision. Having peaked at 7.0% in June, Norway’s annual core inflation, which excludes energy costs, stood at 5.8% in November, below the central bank’s forecast of 6.1% but still far above the 2.0% target. The central bank raised its forecast for 2024 core inflation to 4.8% from a forecast of 4.7% made in September. The forecast for 2025 was raised to 3.5% from 3.4%. The Norwegian crown has been consistently weaker than predicted by the central bank, potentially stoking inflation. On a trade-weighted basis, the currency had weakened by around 9% this year until Wednesday’s market close. The decision to hike was “quite hawkish”, Nordea analysts said in a note to clients, having anticipated an unchanged rate. “The new interest rate path is slightly lower further out and shows a certain probability of an interest rate cut by the end of 2024,” Nordea said. “Norges Bank has placed more emphasis on the weak crown than soft macro data.” Underlying inflation has eased further. But domestic price pressures remain elevated, primarily owing to strong growth in unit labour costs.”
friday december 15, 2023 19 The E dge C E O m o rning brief world (Dec 14): The US Federal Reserve (Fed) pivoted towards reversing the steepest interest-rate hikes in a generation, after containing an inflation surge so far without a recession or a significant cost to employment. While chair Jerome Powell said on Wednesday policymakers are prepared to resume rate increases should price pressures return, he and his colleagues issued forecasts showing that a series of cuts would be likely next year. Powell said the topic came up in their meeting, where the Fed decided to keep rates at a 22-year high for a third straight time. Moreover, Powell’s lack of pushback during his press conference against growing investor expectations for 2024 rate cuts helped spark a massive rally in Treasuries, and sent the Dow Jones Industrial Average of stocks to a record high. Less than two weeks after saying it would be “premature” to speculate on the timing of rate cuts, Powell said officials were starting to turn to that question. “That begins to come into view, and is clearly a topic of discussions out in the world, and also a discussion for us in our meeting today (Wednesday),” Powell said. Officials decided unanimously to leave the target range for their benchmark federal funds rate at 5.25% to 5.5%, the highest since 2001. Policymakers penciled in no further interest-rate hikes in their projections for the first time since March 2021, based on the median estimate. Updated quarterly forecasts showed Fed officials expect to lower rates by 75 basis points next year, a sharper pace of cuts than indicated in September. While the median expectation for the federal funds rate at the end of 2024 was 4.6%, individuals’ expectations varied widely. “His presser certainly had a tone of finality to it,” said Derek Tang, an economist with LH Meyer/Monetary Policy Analytics. “He and the whole FOMC (Federal Open Market Committee) saw no need to push back with the dots against the market suspicion of earlier and deeper easing.” A tweak to the Fed’s post-meeting statement on Wednesday also highlighted the shift in tone, with officials noting they will monitor a range of data and developments to see if “any” additional policy firming is appropriate. That word was not present in the November statement from the US central bank’s policy-setting FOMC. In another shift, the committee also acknowledged that inflation “has eased over the past year but remains elevated”. In addition, most participants now see the risks to price growth as broadly balanced. Read the full story Read also: US retail sales unexpectedly rebound in November; weekly jobless claims fall Fed prepares to shift to rate cuts in 2024 as inflation eases (Dec 14): A global rally in corporate bonds that has dragged credit spreads down to their tightest in 22 months marched ahead in Asia on Thursday given the dovish signals from the Federal Reserve (Fed). Yield premiums on Asian investment-grade dollar notes narrowed at least two basis points, according to traders. That put the premiums near record lows touched last week, a Bloomberg index shows. Spreads on global corporate bonds tightened on Wednesday to their lowest since early February of last year, after quarterly projections showed Fed officials expect to lower rates by 75 basis points next year. The lack of a pushback by Fed chair Jerome Powell against a recent increase in bets for rate cuts next year and indications that policymakers are now turning their focus on when to cut, as inflation slows, triggered a broad rally in bonds and risk assets. “My view is that this could be a major inflection point for fixed-income markets” even if early days, said Omar Slim, a co-head of Asia ex-Japan fixed income at PineBridge Investments. “Investment-grade markets, with their relatively higher yields when compared to historical levels, will be among the main beneficiaries of this move.” Asian high-grade debt stands out beCredit rally extends on Fed with spreads at 22-month low cause of the region’s relatively better economic outlook in contrast with much of the rest of the world, he said. A further tightening in corporate spreads in December is extending the outperformance of credit versus government debt in 2023. But with issuance markets globally poised to ramp up aggressively next month, the tightness of spreads will be tested. January is traditionally one of the biggest months of the year for companies to tap debt markets with new bond deals. “The path of least resistance for Asian credit spreads is tighter as we head into year end” after a dovish Fed, said Mark Reade, the head of fixed-income desk research at Mizuho Securities Asia. “With valuations already stretched, global growth set to deteriorate, and the primary pipeline ready to explode in January, we doubt 2024 will be smooth sailing for Asian credit investors,” he added. by Finbarr Flynn Bloomberg by Craig Torres & Catarina Saraiva Bloomberg
friday december 15, 2023 20 The E dge C E O m o rning brief
friday december 15, 2023 21 The E dge C E O m o rning brief world MANILA (Dec 14): The Philippine central bank kept its benchmark interest rate steady at 6.5% for a second straight meeting on Thursday as price pressures have started to ease, but signalled policy would stay tight for longer to bring inflation back to target. All but one of the 24 economists in a Dec 5-11 Reuters poll expected the central bank to leave its target reverse repurchase rate unchanged on Thursday. One predicted a quarter-point hike. Bangko Sentral ng Pilipinas Governor Eli Remolona told a press conference the central bank deemed it necessary to keep monetary policy settings tight, but was ready to adjust that if necessary. Annual inflation rose at its slowest pace in 20 months in November at 4.1% versus the previous month’s 4.9%, bringing the average rate over the 11-month period to 6.2%, well outside the central bank’s 2%-4% target. The central bank lowered its risk-adjusted inflation forecast to 6.0% this year from 6.1%, and to 4.2% next year, from 4.4%. It said inflation expectations were broadly anchored, mid-term growth prospects were firm and risks to inflation overall were still tilted to the upside. Philippines central bank keeps benchmark rate unchanged at 6.5% SHANGHAI/SINGAPORE (Dec 14): China’s central bank is expected to ramp up liquidity injections while leaving the key interest rate unchanged when it rolls over maturing medium-term policy loans on Friday, a Reuters survey showed. Among 32 market participants polled this week, 29 or 91% expected the People’s Bank of China (PBOC) to keep the borrowing cost of one-year medium-term lending facility (MLF) loans unchanged, while the remaining three projected a marginal interest rate cut. The interest rate on the MLF loans currently stands at 2.5%. Additionally, 26 or 81% of all respondents predicted that the central bank would inject fresh funds to exceed the maturing 650 billion yuan (RM428.55 billion) worth of the MLF loans on Friday. “We look for an outsized MLF to buffer liquidity demand emanating from bond sales and loans; if there is no outsized MLF, then a reserve requirement ratio (RRR) cut is probably needed,” said Frances Cheung, rates strategist at OCBC Bank. Over recent months, China has started to unleash fresh stimulus to shore up the economy. In a surprise move, Beijing in late October approved one trillion yuan of sovereign bond issuance for this year — its first such budget deficit expansion in a fiscal year in 23 years — and passed a bill to allow local governments to frontload part of their 2024 bond quotas. The PBOC injected a net 600 billion China’s central bank set to boost liquidity injection but keep key rate unchanged “However, US yields have fallen and the renminbi has strengthened recently. The currency has now returned to levels that the PBOC is more comfortable with, which should open the door to a resumption of rate cuts.” With China’s economy sputtering and the US dollar surging until recently, the yuan has had a volatile year, having weakened 6.14% to the dollar at one point before giving back some of the losses on views that US interest rates have peaked. On Wednesday, the Federal Reserve took a decidedly dovish tilt by flagging rate cuts were on the way next year. The yuan strengthened 2.55% in November, its best month this year, but it is still down about 3.3% year-to-date. China will step up policy adjustments to support an economic recovery in 2024, state media said, following the annual Central Economic Work Conference held from Dec 11-12, during which top leaders set economic targets for next year. “This signals that the Chinese leadership wants to put more weight on the economy than it did earlier this year,” said Tommy Wu, senior China economist at Commerzbank. “Monetary policy will continue to be about providing sufficient but not excessive liquidity. This means any rate cuts and stimulus measures will likely be modest.” Reuters by Neil Jerome Morales & Karen Lema Reuters US yields have fallen and the renminbi has strengthened recently. The currency has now returned to levels that the PBOC is more comfortable with, which should open the door to a resumption of rate cuts.” — Capital Economics yuan of cash via MLF loans into the banking system in November, the biggest monthly increase since December 2016. Expectations of an interest rate reduction has increased slightly as China has been facing heightened deflationary pressure, with consumer prices falling the fastest in three years in November while factory-gate deflation deepened. “The main barrier to PBOC rate reductions since the middle of this year has been the strength of the dollar,” said Julian Evans-Pritchard, head of China economics at Capital Economics. reuters
friday december 15, 2023 22 The E dge C E O m o rning brief
friday december 15, 2023 23 The E dge C E O m o rning brief world Japan’s Kishida overhauls Cabinet in bid to weather financial scandal China condemns Canada’s support for Philippines on South China Sea incidents House Republicans authorise Biden impeachment inquiry Reuters by Sakura Murakami & Kaori Kaneko Reuters BEIJING (Dec 14): China condemned Canada’s support for the Philippines over what it said were violations of China’s sovereignty in the South China Sea, according to a statement by a Chinese embassy spokesperson in Canada. “The South China Sea is the common home of countries in the region and should not become a hunting ground for Canada, the United States [or] other countries to pursue their geopolitical interests,” the statement said. Over the past few months, China and the Philippines have had several confrontations centred around the Second Thomas Shoal, an atoll in the South China Sea. “As a country outside the region, Canada has emboldened the Philippines’ violation of China’s sovereignty, violated the purposes and principles of the UN Charter, and jeopardised regional peace and stability,” the Canadian embassy spokesperson said. Manila has accused Chinese coast guard and maritime militia vessels of repeatedly firing the water cannon at its resupply boats and deliberately ramming a vessel near the disputed waters. The United States has voiced opposition to the run-ins and sided with the Philippines. Over the weekend, a confrontation in the disputed waters drew condemnation from Canada, in a government statement denouncing “the actions taken by the People’s Republic of China against Philippine civilian and government vessels in the South China Sea”. China, which claims nearly the entire South China Sea as its own, has repeatedly said Philippine vessels were encroaching on its national sovereignty. TOKYO (Dec 14): Japanese Prime Minister Fumio Kishida set about replacing key Cabinet members on Thursday, as he battled to control the damage from one of the biggest scandals his ruling party has faced in decades. Chief Cabinet secretary Hirokazu Matsuno and Industry Minister Yasutoshi Nishimura were among those who announced their resignations on Thursday, after Kishida said he was finalising his third Cabinet shake-up in 16 months. Four ministers, all hailing from the biggest and most powerful faction within the ruling Liberal Democratic Party (LDP) that is being investigated by prosecutors, and several deputy ministers are set to be replaced. Ex-foreign minister Yoshimasa Hayashi confirmed that he had been tapped to replace Matsuno in the critical post responsible for coordinating policy across the government on the prime minister’s behalf. “In light of the various allegations made regarding political funds, which have shaken the public trust in politics, and the various allegations made regarding my own political funds, I have submitted my resignation,” Matsuno said at a press conference on Thursday. Prosecutors have launched a criminal probe into the LDP’s so-called Abe faction, named after late prime minister Shinzo Abe, and begun questioning dozens of lawmakers for allegations of receiving about ¥500 million (US$3.5 million or RM16.49 million) in fundraising proceeds missing from party accounts, news outlets reported. Investigators will start searching for evidence in lawmakers’ offices from as early as next week, according to broadcaster NTV. The probe will also examine whether other LDP factions — including one led by Kishida until last week — are involved, according to the reports. by Billy House Bloomberg (Dec 14): Republicans in the US House voted on Wednesday to formally authorise an impeachment inquiry into President Joe Biden, escalating a probe that has been underway for several months. The 221 to 212 party-line vote sets up a high-profile clash between Congress and the White House as the 2024 election approaches. Republican presidential front runner Donald Trump has urged GOP lawmakers to step up the impeachment inquiry against Biden. The investigation has focused on Biden family finances and business dealings of the president’s son, Hunter, and other relatives. Biden immediately denounced the inquiry as a “baseless” attack. “Instead of doing their job on the urgent work that needs to be done, they are choosing to waste time on this baseless political stunt that even Republicans in Congress admit is not supported by facts,” Biden said of Republicans. The resolution establishes the investigation’s procedures and powers, but doesn’t set a deadline or lay out any specific impeachable offences. “It’s time to get the American people answers,” said House Speaker Mike Johnson, who argued the formal approval will give congressional committees investigating Biden and his family greater legal authority to enforce subpoenas. The White House and many congressional Democrats say the inquiry is merely an effort to distract attention from Trump’s criminal trials. Read also: Putin vows to fight on in Ukraine until Russia achieves its goals What’s at stake for Ukraine at EU summit Read the full story bloomberg
friday december 15, 2023 24 The E dge C E O m o rning brief world NEW YORK (Dec 14): Alphabet Inc’s Google announced a slate of upgraded artificial intelligence features for its cloud-computing clients, as the technology giant tries to catch up with rivals, including the allied forces of Microsoft Corp and startup OpenAI, who have taken advantage of the AI boom. The company on Wednesday (Dec 13) unveiled Gemini Pro for enterprises, allowing developers to build applications using Google’s latest AI model, which was announced last week. Gemini is a large-scale AI system trained on vast amounts of data that can generate new content based on what users request. Google Cloud clients can use Gemini to create apps such as AI-powered chatbots, easy-to-query inventory databases and marketing presentations. The company also emphasised that Gemini Pro will be free at launch for cloud customers, with some limits. Ultimately, Google said it plans to ensure that its cloud AI offering will be “competitively priced”. The company said Gemini Pro’s text-based capabilities are four times less expensive for input and two times less expensive for output than the last iteration of its AI model, PaLM 2, which was released in June. The AI model is built to “generalise and seamlessly understand, operate across, and combine different types of information, including text, code, audio, image, and video, in the same way that humans see, hear, read, listen and talk about different types of information simultaneously,” Google Cloud chief executive officer (CEO) Thomas Kurian said. Google offers enhanced generative AI features for cloud customers BEIJING/HONG KONG (Dec 14): Beijing-based AI startup 01.AI is raising up to US$200 million (RM934.5 million) in fresh capital, two sources familiar with the matter said, building on a valuation of US$1 billion reached last month on the back of surging global interest in opensource AI models. It is one of several Chinese startups that opened, or plan to open, to public use their large language models (LLM), alongside larger firms Meta and Alibaba in a scramble to gain users and catch up with market leader OpenAI. One of the sources said 01.AI, officially launched by Lee Kai-fu, Google China’s former chief, in July after a three-month incubation period, hit a valuation of US$1 billion early in November. The other source said the company was seeking additional investments from US dollar-based investors. All the sources cited in this report sought anonymity, as the fundraising details were not public. The company did not immediately respond to a request for comment. 01.AI drew recognition in the opensource LLM community in November, when its Yi-34B model became the first Chinese LLM to top the leaderboard of Huggingface, a platform for tech firms to share LLMs, which then get rated for performance and popularity. Riding the interest in generative artificial intelligence (AI) has helped such startups raise significant funds from investors after promising to make their AI models open. For example, the valuation of Zhipu AI, founded in 2019 has crossed US$1 billion, Chinese media have said. Eight-month-old Baichuan Technology attained a valuation of US$1.2 billion after its last fundraising in October, said a third source who had direct knowledge of the exercise. The movement to open-source LLMs has been criticised by OpenAI, maker of hit chatbot ChatGPT, which has kept the codes of its models under tight wraps, invoking the risk of abuse by malicious actors that could bring danger to society. In China, tech giant Alibaba’s cloud arm has been active in making its LLMs open-source. Its latest LLM Qwen-72B recently topped Huggingface’s leaderboard, becoming the second model from China to do so. Qwen-72B is the latest, and most powerful, of eight AI models Alibaba has made open in the last four months. The company says Qwen-72B can outperform OpenAI’s flagship GPT4 in handling Chinese, going by some industry benchmarks. “Building up an open-source ecosystem is critical to promoting the development of LLM and AI applications building,” Jingren Zhou, the chief technology officer of Alibaba Cloud, told Reuters. Hunger for AI applications is growing across a wide range of industries, developers and businesses, he added. “Alibaba Cloud aspires to become the most open cloud and make generative AI capabilities accessible to everyone.” The company is also supporting smaller open-source AI LLM startups, including 01.AI, with which it is collaborating on aspects such as model training and deployment processes. AliCloud earlier committed funding in the current round, the sources said. Chinese AI startup 01.AI looks to raise US$200 mil — sources by Yelin Mo, Josh Ye & Kane Wu Reuters by Davey Alba Bloomberg reuters Read the full story
friday december 15, 2023 25 The E dge C E O m o rning brief world (Dec 14): The European Union (EU)’s imports of used cooking oil — a biofuel ingredient — are raising fears over fraudulent supplies and undermining the bloc’s sustainability push, according to an advocacy group. The region is overwhelmingly reliant on imports of used cooking oil and consumption more than doubled between 2015 and 2022, with the bulk being used in cars and trucks as biodiesel, Transport & Environment (T&E) said in a report. Some 60% of the shipments come from China, it said. Imports of ‘dodgy’ cooking oil threaten EU’s sustainability push Ban flavoured vapes, WHO says, urging tobaccostyle controls CAIRO/GAZA (Dec 14): Israel pounded the length of the Gaza Strip on Thursday, killing families in their homes even as Washington dispatched an envoy to encourage its ally to be more precise in its war against Hamas militants. Two weeks after a truce collapsed, the war is now raging across the entire Palestinian enclave and a humanitarian catastrophe is unfolding. In Rafah, jammed with people in makeshift tents on Gaza’s southern edge, people wept at a morgue where bodies of those killed in the latest overnight air strikes were wrapped in bloodied shrouds. Some were small children. The adjacent homes of the Abu Dhbaa and Ashour families had been obliterated by a massive air strike, and residents were picking forlornly through rubble. Gaza health authorities said 26 people had been killed there. Neighbour Fadel Shabaan had rushed to the area after the bombing. “It was difficult because of the dust and people’s screams. We went there and we saw our neighbour who had ten martyrs. This is a safe camp, there is nothing here, the children play soccer in the street,” he said. Israel has brushed off calls for a ceasefire, including a resolution at the UN Security Council blocked by a US veto last week and another that passed overwhelmingly in the General Assembly this week. Washington has provided diplomatic cover for its longstanding ally but expressed increasing alarm over civilian deaths. President Joe Biden this week called Israeli bombing “indiscriminate”. Israel strikes length of Gaza as US urges more accurate targeting by Nidal al-Mughrabi & Fadi Shana Reuters by Agnieszka de Sousa Bloomberg by Emma Rumney Reuters reuters But concerns have mounted that some suppliers in Asia are mixing fuels with cheaper feedstocks or less sustainable alternatives, and mislabeling them to benefit from renewables incentives. That could include palm oil, a major driver of deforestation in countries like Indonesia. That’s one of the commodities the EU is banning imports of, if the supplies were grown on deforested land. There isn’t a standardised EU method to test used cooking oil, and certification to ensure biofuel meets the bloc’s criteria is done by private programmes, making it hard to check, T&E said. With import needs set to grow amid rising demand for ingredients used in sustainable aviation fuel, more needs to be done to increase transparency and public disclosure of information about biofuels, the Brussels-based group said. “Europe is being flooded with dodgy used cooking oil,” Barbara Smailagic, biofuels expert at T&E, said in a statement. “We need greater transparency and a limit on imports to avoid UCO (used cooking oil) [from] simply becoming a back door for deforestation-driving palm oil.” LONDON (Dec 14): The World Health Organization (WHO) on Thursday urged governments to treat e-cigarettes similarly to tobacco and ban all flavours, threatening cigarette companies’ bets on smoking alternatives. Some researchers, campaigners and governments see e-cigarettes, or vapes, as a key tool in reducing the death and disease caused by smoking. But the UN agency said “urgent measures” were needed to control them. Citing studies, it said there was insufficient evidence that vapes helped smokers quit, that they were harmful to health and that they could drive nicotine addiction among non-smokers, especially children and young people. More 13- to 15-year-olds are using vapes than adults in all WHO regions helped by aggressive marketing, it continued. “Kids are being recruited and trapped at an early age to use e-cigarettes and may get hooked to nicotine,” said WHO Director-General Tedros Adhanom Ghebreyesus, urging countries to implement strict measures. The WHO called for changes, including bans on all flavouring agents like menthol, and the application of tobacco control measures to vapes. Those include high taxes and bans on use in public places. The WHO has no authority over national regulations, and only provides guidance. But its recommendations are often adopted voluntarily. The WHO and some other anti-tobacco organisations are pushing for stricter regulations on newer nicotine products, taking aim at the alternatives on which some cigarette giants like Philip Morris International and British American Tobacco are basing their future strategies. Tobacco company Imperial Brands and vape firm ANDS said vapes pose significantly lower health risks than tobacco and help reduce its harms, while flavours are key in encouraging smokers to switch — a position shared by some tobacco control advocates. “Regulating vapes like cigarettes would only serve to reinforce misunderstandings about the relative risks of vaping and send the wrong message to smokers,” said Marina Murphy, senior director of scientific and medical affairs at ANDS, adding the WHO’s position was “detached from reality”. The WHO said while long-term health risks were not understood, vapes generated some substances known to cause cancer, posed risks to heart and lung health and could affect brain development in young people.
friday december 15, 2023 26 The E dge C E O m o rning brief world SINGAPORE (Dec 14): The labour market in Singapore expanded in 3Q2023, with total employment for residents and non-residents increasing for the eighth straight quarter to 23,600, excluding migrant domestic workers, said the Ministry of Manpower (MOM) in its quarterly labour market report released on Thursday. Resident employment grew by 2,800, reversing from the contraction of -1,200 in the quarter before, while non-resident employment continued to grow at 20,800, albeit at a slower pace compared to the past quarters. Most of the increase in resident employment came from the growth sectors while the increase in non-resident employment was mainly from the construction, administrative & support services and food & beverage services sectors. At the same time, the number of retrenchments rose to 4,110 in the third quarter, up from 3,200 in the previous quarter. This came as more firms went through reorganisations or restructuring activities, or faced business and cost concerns. That said, re-entry into employment among retrenched residents improved to 65.3% in the 3Q2023, up from the rate of 59.4% in the 2Q2023, and unemployment rates remained low at 1.9% overall. However, the ministry highlighted the rise in resident long-term unemployment rate, which stood at 0.7% in September, up 0.2 percentage points q-o-q, “bears close monitoring”. While the number of job vacancies fell to 78,400 in September from 87,900 in June, the ratio of job vacancies to unemployed persons remained tight at 1.58 in September. Looking ahead, the ministry noted the slowing pace of growth in employment and warned that economic headwinds will continue to weigh on the labour market. (Dec 14): Japan’s Liberal Democratic Party (LDP) and its coalition partner Komeito agreed to offer more tax incentives to companies that administer large wage increases, potentially helping to boost the nation’s chances of achieving the virtuous cycle of pay gains and inflation needed for the central bank to pare stimulus. The two parties approved a reform plan for next fiscal year that extends tax incentives to large companies that raise wages by 7% or more, designating up to 35% of the value of those increases deductible from corporate taxes if the companies also qualify for credits related to training and childcare support. Companies that implement more modest salary increases will see smaller tax benefits. Companies will be able to deduct 15%-25% of salary increases ranging between 3% and 7%. Whether the new tax incentives will support sustainable wage growth is a major concern for the Bank of Japan. Governor Kazuo Ueda recently reiterated the importance of pay growth, explaining to Prime Minister Fumio Kishida that he’s monitoring the strength of overall demand, and whether any wage gains will support prices, one of the preconditions for normalising policy. Singapore retrenchments increase in 3Q Japan to use more tax incentives to encourage wage increases (Dec 14): Hong Kong’s corporate governance ranking in Asia tumbled to the lowest level in decades, falling behind those of Japan and Singapore, amid concerns about the deterioration of minority shareholder rights and the independence of the judiciary in the city, according to a research report. The financial hub dropped to the sixth place this year from second, according to the Asian Corporate Governance Association’s CG Watch rankings. It’s the first time Hong Kong dropped out of the top three spots in the rankings since they began in 2003, according to the report, which was released with CLSA on Wednesday. The report marks the latest setback to Hong Kong’s efforts to revive its image as the region’s premier international finance centre. Banks have been eliminating jobs in the city amid a slump in deals, while the city’s benchmark Hang Seng Index is one of the worst performers among major bourses this year. Hong Kong’s introduction of a Beijing-led national security law and its crackdown on political activists have also eroded perceptions of the strength of its institutions and the free flow of information in the city, according to the report. “The independence of the judiciary and a stifling of the press and academia have also contributed to its current ranking,” the report said. Hong Kong Chief Executive John Lee has repeatedly defended the merits of the security law, and government officials have balked at the idea that Hong Kong is losing its stature as an international hub. Meanwhile, Australia, which has ranked No 1 since 2016, kept its top spot. Japan jumped to No 2 for the first time since the study began, thanks to its “strong” government reforms and efforts by the local stock exchange to improve governance, according to the report. Singapore came third, tied with Taiwan, followed by Malaysia. Hong Kong corporate governance tumbles to lowest in decades by Kiuyan Wong Bloomberg by Felicia Tan theedgesingapore.com by Erica Yokoyama Bloomberg Tax incentives aimed at spurring wages have had mixed results in the past. They carried no benefit for the many small businesses that operated in the red, and therefore paid no taxes whatsoever. Kishida has been advocating for large wage hikes through various means, including holding a rare meeting with the heads of the country’s largest business lobby and labour union federation. The prime minister’s support continues to sag, as a slush fund scandal adds to general resentment over the soaring cost of living. Read the full story
friday december 15, 2023 27 The E dge C E O m o rning brief world (Dec 14): Chinese-owned online marketplace Temu sued fast-fashion rival Shein in the US over what it called “intensified” anticompetitive practices, reviving a legal fight between the e-commerce upstarts after both had dropped earlier lawsuits against each other. Whaleco Inc, which operates as Temu, accused Shein of hatching a “desperate plan” to undercut its business in a 100- page filing to the US District Court for the District of Columbia — nearly triple the length of its original lawsuit. The Wednesday complaint alleged that Shein filed tens of thousands of copyright takedown notices Temu files new lawsuit against Shein after ‘intensified’ clash OSLO (Dec 14): Norway’s Telenor said on Thursday that it had agreed to sell its Pakistan unit to state group Pakistan Telecommunications, in a transaction valuing the unit at 5.3 billion Norwegian crowns (US$490 million). The Norwegian group has been restructuring its Asian businesses, building bigger units in Thailand and Malaysia via local mergers, and had said that it hoped to decide on a solution for the Pakistan business by year-end. “We also tried to do a merger in Pakistan but we didn’t manage to get that, and when we saw this wasn’t happening, the second-best alternative was to arrange a sale,” Telenor chief executive officer Sigve Brekke told Reuters. “It was a combination of not getting the structure in place, and value. So, we found a sale was better for our shareholders,” he added. Telenor Pakistan, launched 18 years ago, has 45 million customers. Pakistan Telecommunications’ share price rose 8.3% on Thursday, while Telenor’s was up 1.1% at 0837 GMT. In the first nine months, Telenor Pakistan contributed 2.6 billion crowns in service revenue and 1.4 billion crowns in earnings before interest, tax, depreciation and amortisation (Ebitda) to the group. The deal is subject to regulatory approvals, and the aim is to close it during 2024. The sale was not estimated to have a significant impact on financials for 2023, Telenor said. Telenor’s remaining Asian portfolio consists of stakes in Grameenphone in Bangladesh, CelcomDigi in Malaysia and True Corp in Thailand, with close to 160 million customers combined. “Telenor Asia will remain an active owner for the three market-leading businesses which make up our Asian portfolio,” said the head of the company’s operation in the region, Petter-Boerre Furberg. (Dec 14): GoTo Group agreed to its tieup with ByteDance Ltd’s TikTok to avoid further market-share losses in online shopping in Indonesia, chief executive officer Patrick Walujo said. The Chinese social media company’s TikTok Shop more than doubled its marTelenor to sell Pakistan telecoms unit for US$490 mil GoTo struck TikTok deal to halt market share slide, CEO says by Victoria Klesty & Terje Solsvik Reuters by Norman Harsono Bloomberg by Sarah Zheng Bloomberg ket share to 11% this year, Walujo said on a conference call with investors on Thursday. GoTo’s share of the pie shrank to 23% from 28% over that span, he said. TikTok this week agreed to invest US$1.5 billion (RM7 billion) in a joint venture with GoTo that it will control, a pact aimed at addressing the Chinese company’s regulatory obstacles in its biggest online-retail market. GoTo becomes a passive backer of the venture, relinquishing control of its Tokopedia e-commerce arm. “We were going to lose even more market share if we didn’t do anything,” Walujo said. “Once we combine, we have a very high chance to become the No 1 player in a much bigger market.” GoTo shares advanced as much as 9% in Jakarta on Thursday. against Temu, forced fashion suppliers into exclusive agreements, and threatened or even detained Temu merchants. It detailed allegations about how Chinese suppliers who listed products on both platforms got called into Shein’s offices in Guangzhou and forced to provide phone passwords and transaction records related to Temu. “Temu has discovered that Shein’s anticompetitive behaviour has not only persisted but intensified,” the lawsuit said. “Shein’s persistent and increasingly aggressive use of anticompetitive conduct, coercion, and threatening behaviour necessitates this lawsuit.” Representatives for Shein didn’t respond to a request for comment. A Temu representative said the latest move was a result of Shein’s escalating anticompetitive behaviour. “Their actions are too exaggerated; we had no choice but to sue them,” the spokesperson said. The two rising stars, both of Chinese origin, pose a growing threat to e-commerce giants from Amazon.com Inc to Walmart Inc and fast-fashion incumbents like H&M and Zara. In October, Temu and Shein both dropped previous lawsuits that pulled the curtain back on the combative competition between the two often-secretive companies. Temu, owned by Chinese heavyweight PDD Holdings Inc, said its entry into the US market in late 2022 contributed to a decline of more than US$30 billion (RM139.86 billion) in the valuation of Shein, which had exceeded US$100 billion. “So Shein hatched a desperate plan to eliminate the competitive threat posed by Temu,” the lawsuit alleged. Read the full story The two rising stars, both of Chinese origin, pose a growing threat to e-commerce giants from Amazon.com Inc to Walmart Inc and fast-fashion incumbents like H&M and Zara. reuters
friday december 15, 2023 28 The E dge C E O m o rning brief world (Dec 14): Hong Kong police offered HK$1 million (RM600,000) rewards for information on five local dissidents residing overseas, doubling down on its controversial use of bounties to chase after pro-democracy activists for the sake of national security. “All of them, who have already fled overseas, have continued to commit offences under the national security law that seriously endanger national security,” Li Kwai-wah, chief superintendent of the police’s national security department, said in a press briefing on Thursday. The alleged offences include inciting secession and subversion, as well as colluding with foreign forces to endanger national security, Li said. The five, including Simon Cheng, Frances Hui and Joey Siu, betrayed their country through acts such as calling for sanctions against Hong Kong officials, Li said. “The National Security Law has extraterritorial effect,” the Security Bureau said in a separate statement. “The police have the responsibility to pursue those who have allegedly committed offences under the National Security Law outside Hong Kong.” In July, authorities placed similar HK$1 million bounties on eight democracy activists living abroad. The move immediately drew criticism from officials in the US, UK and Australia for being an attack on freedom of speech and democracy. (Dec 14): Credit Suisse dismissed its entire wealth management team in China, scrapping its ambition to become one of the biggest foreign money managers in the country as UBS Group AG decided not to take on the staff, people familiar with the matter said. Those let go included at least 20 relationship managers and investment consultants as well as Wang Jing, the chief executive officer of Credit Suisse’s securities venture, the people said, asking not to be identified because the matter wasn’t public. Some support roles were also affected, they said, without being specific on the numbers. The division at one point had about 40 staff, one of the people said. Spokespeople for UBS and Credit Suisse declined to comment. The dismissals come as Credit Suisse is trying to find a buyer for its securities business in China, which now consists of investment banking and brokerage operations after the wealth unit closed. UBS, which has yet to merge Credit Suisse’s entities in China, needs to sell the securities venture because it already controls one in the country and can’t hold two licences for the same business. The job reductions at the wealth unit started in October as UBS felt Credit Suisse’s strategy of selling wealth products through bank branches was incompatible with its current model, one of the people said. Wang was hired more than three years ago from China Merchants Bank Co to develop Credit Suisse’s wealth footprint on the mainland, and was made the CEO of the securities business last year after a reshuffle and an exodus of senior management. Credit Suisse’s push to build a wealth management business in China started to fall apart after it delayed the launch of its locally incorporated bank last year, the second postponement since the project was conceived in 2020. The firm had planned to build a branch network to distribute wealth products and fuel its money management business, joining other Wall Street firms that have poured billions into China. As recently as 2021, Credit Suisse had plans to triple its headcount in China within three years. The local bank project was delayed by a sluggish licensing process and was questioned by some senior Credit Suisse executives as China’s economy was reeling from Covid lockdowns and a crackdown on private enterprise, people familiar with the matter have said. Credit Suisse disbands China onshore wealth unit, dozens depart by Cathy Chan Bloomberg Read also: Country Garden staves off worsening of debt crisis with payment Hong Kong expands use of bounties to hunt democracy activists Bloomberg Bloomberg Credit Suisse’s push to build a wealth management business in China started to fall apart after it delayed the launch of its locally incorporated bank last year. Read the full story Wang, the former head of private banking at China Merchants Bank, was seen as a key hire by former Asia CEO Helman Sitohang. She had helped build the Shenzhen-based lender into the nation’s biggest manager for high net worth clients during her more than two decades’ stint. Credit Suisse won approval in 2020 to take full control of a securities venture it had run with Founder Securities since 2008. The firm last year agreed to buy the remaining 49% stake from Founder for US$160 million (RM746.18 million). The deal was scrapped after UBS acquired Credit Suisse in a rescue brokered by Swiss authorities, people familiar with the matter said.
friday december 15, 2023 29 The E dge C E O m o rning 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) Sapura Energy Bhd 193.7 0.000 0.050 42.86 799.0 Top Glove Corp Bhd 146.5 0.035 0.910 0.55 7,287.4 Velesto Energy Bhd 129.3 0.010 0.225 50.00 1,848.5 SMTrack Bhd 123.2 0.010 0.050 0.00 61.1 Minetech Resources Bhd 117.5 0.025 0.095 72.73 145.3 Widad Group Bhd 95.0 -0.005 0.460 6.98 1,424.4 Sarawak Consolidated Industries 88.5 0.025 0.830 472.41 531.4 Bina Puri Holdings BHD 64.1 0.000 0.095 137.50 320.1 Leform Bhd 63.3 0.010 0.385 86.53 570.2 Careplus Group Bhd 59.4 0.015 0.360 -24.21 210.4 Handal Energy Bhd 55.2 -0.005 0.120 -22.58 32.0 Sarawak Cable Bhd 51.7 -0.020 0.220 238.46 87.8 YTL Corp Bhd 50.9 0.050 1.910 229.31 20,942.0 Sime Darby Property Bhd 36.9 0.000 0.575 27.78 3,910.5 KNM Group Bhd 35.7 0.000 0.095 90.00 384.2 KPJ Healthcare Bhd 34.7 0.030 1.430 41.85 6,241.0 Tanco Holdings Bhd 33.5 0.005 0.585 74.63 1,175.7 Hartalega Holdings Bhd 32.4 0.230 2.760 62.35 9,420.6 Ekovest BHD 29.3 -0.005 0.460 35.29 1,364.1 My EG Services Bhd 25.5 0.005 0.820 -4.69 6,116.8 Data as compiled on Dec 14, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) Minetech Resources Bhd 0.095 35.71 117,453.0 72.73 145.3 Talam Transform Bhd 0.020 33.33 601.0 33.33 85.9 Metronic Global Bhd 0.020 33.33 1,067.3 0.00 30.6 SMTrack Bhd 0.050 25.00 123,201.9 0.00 61.1 Cheetah Holdings Bhd 0.135 22.73 1.0 22.73 65.6 MQ Technology Bhd 0.030 20.00 1,412.7 -40.00 44.1 Pensonic Holdings BHD 0.720 16.13 2,410.1 50.00 95.9 Harvest Miracle Capital Bhd 0.125 13.64 1,715.1 4.17 153.1 Pharmaniaga Bhd 0.375 13.64 4,344.0 -31.19 540.5 Aemulus Holdings Bhd 0.310 12.73 13,204.4 -34.74 207.7 Protasco Bhd 0.190 11.76 868.2 0.00 91.5 HB Global Ltd 0.095 11.76 463.6 -44.12 74.3 Meta Bright Group Bhd 0.195 11.43 5,921.0 14.71 466.6 Peterlabs Holdings Bhd 0.195 11.43 1,945.9 0.00 53.7 Permaju Industries Bhd 0.050 11.11 2,128.5 11.11 97.3 WMG Holdings Bhd 0.100 11.11 30.1 5.26 44.5 Classita Holdings Bhd 0.050 11.11 562.2 -86.30 61.6 Citra Nusa Holdings Bhd 0.055 10.00 905.1 -15.38 39.5 Perak Corp BHD 0.445 9.88 0.1 78.00 44.5 Kossan Rubber Industries Bhd 1.850 9.47 24,205.9 68.18 4,720.5 Data as compiled on Dec 14, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) EA Holdings Bhd 0.005 -50.00 3,506.4 -66.67 32.3 Mlabs Systems Bhd 0.005 -50.00 104.0 -75.00 7.2 AT Systematization Bhd 0.005 -50.00 2,242.0 -66.67 33.9 XOX BHD 0.010 -33.33 447.9 -33.33 50.5 Focus Dynamics Group Bhd 0.010 -33.33 199.8 -50.00 63.7 Barakah Offshore Petroleum 0.035 -22.22 733.0 40.00 35.1 Lambo Group BHD 0.020 -20.00 69.4 -63.64 30.8 Alam Maritim Resources Bhd 0.025 -16.67 770.0 0.00 38.3 Nexgram Holdings Bhd 0.025 -16.67 680.4 -64.29 16.2 XOX Networks Bhd 0.025 -16.67 10.0 -16.67 28.4 Industronics BHD 0.035 -12.50 536.1 -53.33 24.8 BSL Corp Bhd 0.035 -12.50 602.0 -48.22 67.6 Ivory Properties Group Bhd 0.075 -11.76 949.8 -6.25 36.8 PDZ Holdings Bhd 0.045 -10.00 1,046.4 12.50 26.5 Watta Holdings BHD 0.540 -10.00 15.1 0.93 45.6 CSH Alliance Bhd 0.045 -10.00 1,467.1 12.50 62.2 Vizione Holdings Bhd 0.050 -9.09 3,587.0 -9.09 102.3 Sarawak Cable Bhd 0.220 -8.33 51,744.2 238.46 87.8 Daythree Digital Bhd 0.385 -8.33 23,342.0 0.00 184.8 Milux Corp BHD 0.510 -8.11 4.1 -30.14 119.9 Data as compiled on Dec 14, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) Ajinomoto Malaysia Bhd 16.000 -0.100 43.0 22.32 972.8 Carlsberg Brewery Malaysia 19.100 -0.100 385.2 -16.52 5,839.8 Westports Holdings Bhd 3.520 -0.100 2,867.4 -7.37 12,003.2 PPB Group Bhd 14.500 -0.100 296.9 -16.86 20,627.7 Scientex Packaging Ayer Keroh 2.120 -0.080 28.0 -11.67 743.3 Master-Pack Group BHD 3.000 -0.070 26.7 27.66 163.9 PMB Technology Bhd 2.460 -0.070 1,370.7 -41.43 3,987.3 Watta Holdings BHD 0.540 -0.060 15.1 0.93 45.6 Hong Leong Capital Bhd 4.540 -0.050 985.4 -27.71 1,120.9 New Hoong Fatt Holdings Bhd 3.300 -0.050 29.0 14.98 272.8 Unisem M Bhd 3.310 -0.050 561.8 19.93 5,339.3 Padini Holdings Bhd 3.370 -0.050 303.4 0.99 2,217.2 Aurelius Technologies Bhd 2.690 -0.050 251.4 46.99 1,060.0 Milux Corp BHD 0.510 -0.045 4.1 -30.14 119.9 Metrod Holdings BHD 1.200 -0.040 2.0 -1.64 144.0 Berjaya Food Bhd 0.630 -0.040 5,314.8 -38.82 1,116.2 LPI Capital Bhd 11.980 -0.040 73.1 -5.22 4,772.6 IBRACO Bhd 0.820 -0.040 1,316.4 37.82 447.8 MHC Plantations Bhd 0.900 -0.035 19.0 -8.02 176.9 Innity Corp Bhd 0.465 -0.035 125.4 12.05 64.8 Data as compiled on Dec 14, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) Rapid Synergy Bhd 26.360 1.360 504.5 65.16 2,817.8 Malaysian Pacific Industries 28.160 1.060 153.2 -2.09 5,600.9 HextarTechnologies Solutions 22.000 0.800 41.5 28.96 2,830.3 Petronas Gas Bhd 17.200 0.380 1,062.2 0.47 34,034.2 Hartalega Holdings Bhd 2.760 0.230 32,384.1 62.35 9,420.6 United Plantations BHD 17.200 0.200 198.1 17.46 7,134.3 Hong Leong Bank Bhd 19.380 0.160 1,040.4 -5.74 42,010.4 Kossan Rubber Industries Bhd 1.850 0.160 24,205.9 68.18 4,720.5 Ideal Capital Bhd 2.540 0.140 2.0 49.41 1,270.0 Kotra Industries Bhd 4.690 0.140 2.9 -28.94 695.6 Pentamaster Corp Bhd 4.630 0.140 1,782.1 4.51 3,293.4 Greatech Technology Bhd 4.730 0.130 444.6 -2.27 5,932.4 QL Resources Bhd 5.800 0.130 5,539.3 5.26 14,115.2 Uchi Technologies Bhd 3.670 0.120 435.8 13.95 1,685.9 Pertama Digital BHD 2.570 0.100 9,275.4 46.02 1,126.2 Scientex BHD 3.600 0.100 329.3 11.80 5,584.6 Hong Leong Financial Group 16.380 0.100 644.9 -11.94 18,759.1 Press Metal Aluminium Holdings 4.930 0.100 4,390.0 1.02 40,621.3 Pensonic Holdings BHD 0.720 0.100 2,410.1 50.00 95.9 Panasonic Manufacturing MSIA 18.080 0.100 13.2 -21.05 1,098.3 Data as compiled on Dec 14, 2023 Source: Bloomberg CLOSE CHANGE CHANGE (%) CLOSE CHANGE CHANGE (%) DJIA * 37,090.24 512.30 1.40 S&P 500 * 4,707.09 63.39 1.37 NASDAQ 100 * 16,562.37 208.12 1.27 FTSE 100 * 7,548.44 164.47 2.18 AUSTRALIA 7,377.86 120.07 1.65 CHINA 2,958.99 -9.77 -0.33 HONG KONG 16,402.19 173.44 1.07 INDIA 70,514.20 929.60 1.34 INDONESIA 7,176.02 100.68 1.42 JAPAN 32,686.25 -240.10 -0.73 KOREA 2,544.18 33.52 1.34 PHILIPPINES 6,410.48 154.74 2.47 SINGAPORE 3,122.95 18.69 0.60 TAIWAN 17,653.11 184.18 1.05 THAILAND 1,378.94 20.97 1.54 VIETNAM 1,110.13 -4.07 -0.37 Data as compiled on Dec 14, 2023 Source: Bloomberg CPO RM 3,691.00 21.00 OIL US$ 75.82 1.56 RM/USD 4.6720 RM/SGD 3.5133 RM/AUD 3.1350 RM/GBP 5.9184 RM/EUR 5.0942 * Based on previous day’s closing