The Edge 01022023

CEOMorningBrief WEDNESDAY, FEBRUARY 1, 2023 ISSUE 516/2023 www. theedgemarke ts. com HOME: Anwar on being PM, divisive politics and China p3 Pestech confirms two top execs charged for allegedly abetting in misappropriation of a subsidiary’s funds p4 Zafrul: Miti bags RM13 bil in FDI via investment mission to Singapore p6 Scomi Energy says defaults resolved after RM120 mil debt waiver, sale of core biz p12 WORLD: India is likely to cap sugar exports, tightening global supplies p20 NORWAY WEALTH FUND POSTS RECORD US$164 BIL LOSS p20 REUTERS Adani pulls off US$2.5 bil share sale after jump in final bids Report on Page 2. Report on Page 4. Syed Mokhtar-linked Lotus to list EV unit in US

wednesday february 1, 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] Adani pulls off US$2.5 bil share sale after jump in final bids (Jan 31): Gautam Adani pulled off a closely watched US$2.5 billion equity sale for his flagship company, largely thanks to existing shareholders, earning the Indian billionaire some reprieve after his empire was rocked by fraud allegations by short seller Hindenburg Research. The offering by Adani Enterprises Ltd was India’s largest follow-on share sale, and was fully subscribed on the final day, aided by a last-minute surge in demand from institutional investors. Interest from retail investors — who Adani was hoping to attract — was notably weak. While the share sale’s completion is a victory for Adani after Hindenburg’s allegations put the offering in doubt, that’s unlikely to fully dispel investor concerns about the conglomerate’s corporate governance. Apart from existing Adani shareholder — Abu Dhabi’s International Holding Co, which accounted for 16% of the purchases in the offering, anchor investors like Life Insurance Corp of India and an arm of Goldman Sachs Group Inc also ploughed money in. Market values of Adani’s listed companies have plunged in recent days after Hindenburg alleged the conglomerate used a web of companies in tax havens to inflate revenue and stock prices. Adani has denied the short seller’s allegations. “One concern of the market seems to be out of the way now,” said Deepak Jasani, head of retail research at HDFC Securities Ltd. “They have been able to convince high-net-worth individuals and deep-pocketed people to take exposure.” The fully subscribed offering removes one overhang for India’s US$3.2 trillion stock market, which recently dropped out by Filipe Pacheco Bloomberg Please be informed that there will be no CEO Morning Brief on Thursday, Feb 2, 2023, following the closure of Bursa Malaysia a day earlier for the Federal Territory Day. Publication will resume on Friday, Feb 3, 2023. For the latest news during the holidays, check out https://www.theedgemarkets.com/. of the world’s five biggest by value. The benchmark S&P BSE Sensex has eked out gains over the past two days after tumbling on the Adani allegations last week. A team of more than 60 people at the Adani Group worked on the share sale, with some asked to regularly brief global and domestic investors to allay concerns raised by the short-seller’s report, according to a person familiar with the matter. On Saturday, the group had major roadshows with regional investors in Gujarat to convince them about the stock’s potential, another person said. Several high-net-worth individuals, including in the state where Adani hails from, offered help to the Adani Group, that person said. A representative for the Adani Group didn’t comment. However, the weak uptake from individual investors — they bid for a little over 10% of the shares offered to them — undermines the group’s key goal of broadening its investor base. Adani Group Chief Financial Officer Jugeshinder Singh had said in November that after tapping strategic investors in recent years, the conglomerate was looking for a wider investor base that doesn’t mind a company investing in long-term projects that can take time to show returns. The order books for institutional and retail investors opened within days of US short seller Hindenburg’s scathing report. The attack led to a massive selloff in the shares of the Adani Group, eroding more than US$69 billion in combined market value of 10 companies, and sending the flagship’s stock below the offer price of the sale. A failure to meet the fundraising goal would have been a major blow to Adani’s prestige and would have heightened concerns about the conglomerate’s debt load. Among the most notable buyers is International Holding Co, which said Monday it will invest about US$400 million. The funding from IHC, which is controlled by a key member of Abu Dhabi’s royal family, follows an almost US$2 billion investment in Adani’s companies last year. “Our interest in Adani Group is driven by our confidence and belief in the fundamentals of Adani Enterprises,” IHC’s Chief Executive Officer Syed Basar Shueb said in a statement. “We see a strong potential for growth from a longterm perspective and added value to our shareholders.” “Now that Adani’s FPO is out of the way, investors’ focus may start shifting back to India growth story,” said Sumeet Rohra, a fund manager at Smartsun Capital Pte in Singapore. bloomberg

wednesday february 1, 2023 3 The E dge C E O m o rning brief home (Jan 31): Prime Minister Datuk Seri Anwar Ibrahim demanded Goldman Sachs Group Inc honour its settlement with the government for its role in the 1Malaysia Development Bhd (1MDB) scandal and vowed to gradually lower the nation’s debt during an interview with Bloomberg Television. In the wide-ranging interview, his first with international media since taking office last year, Anwar spoke about his fragile coalition, the role of his family in the government and Malaysia’s desire to balance geopolitical competition between the US and China. Below is a transcript of the interview with Anwar. Some of the questions and answers on a variety of topics have been edited for length and clarity: Q: Your political journey has been extraordinary to say the least. You were touted as the future prime minister of the country from as far back as 1997. More than 20 years on how does it feel to finally be premier? Waiting in the corridors of power is of course an experience by itself because you observe the players. It’s like King Lear with Cordelia looking at the stage and you learn from the strengths and weaknesses of your foes, and hopefully when you’re in office you try and improve, and do your best to serve. You’ve inherited a nation that’s so divisive. You saw the first hung parliament, a country tainted by the long-standing 1MDB scandal. How do you regain credibility? It’s not just 1MDB but this corruption is systemic, as I’ve said, which means it cuts across the whole spectrum of particularly the political elite, and therefore you have to set a good example. There are political leaders who are not there for money and avoid all cases of corruption, abuse. People are fed up with the situation and Malaysia shouldn’t be known for its financial scandals or malfeasance. It should be known for its vibrant, multiracial society with a capacity to move forward. So what can be done in the first 100 days of your government? From the first day you must give a clear message: no more corruption, no more negotiating tenders, no more abuse, and you remain consistent for days and weeks and months and years. I’m sure the people will decide not only your favour, but the favour of a new narrative, a new policy. No more corruption you say, and yet here you are tied up with Barisan Nasional whose party chief faces multiple charges. Is there a disconnect there? He has been investigated and charged — is undergoing trial and the court should decide independently. I made very clear that the courts are independent and I do not think I should prejudge the case. But it shouldn’t be just purely political. Why refer to him personally when I’ve said that the system is corrupt. There’s so many other political leaders who have been abusing their positions: former prime ministers, former finance ministers, by the hundreds and millions of dollars. Ahmad Zahid Hamidi faces 47 counts of corruption. He is your deputy prime minister. I’m not here to discuss his case. I am here to suggest that the court process must be independent and he must be given a chance — the fairness to be adjudicated by an independent, impartial court. What if you lose your deputy prime minister? What if Zahid is found guilty and sent to prison? Let us move on. We have to work from day by Philip J Heijmans Bloomberg Anwar on being PM, divisive politics and China one, to ensure that the system that we have has good governance, and that the system is free from corrupt leaders. And I think to be fair, they have observed these rules now. There’s not one trace I can find from any of my team now trying to squander through contracts or projects and I’m fine with that. People should judge me from the last two months. How stable is your government? What is important is has been tested in Parliament and we secured a two-thirds majority which is stronger. I don’t need a two-thirds majority. I need a comfortable or strong majority. There is no indication that there is friction within the coalition. For now the government is stable. It has not been this stable for the last 10-15 years. That’s good enough for Malaysia. Some people are taking issue that your daughter Nurul Izzah is a senior adviser to economic and financial affairs. Your wife is a member of parliament. Is that too much family in the government? Izzah is in her own evolution. She is not just pampered. She struggled, stood the test with the party, with “reformasi” over the last 20 over years. She is no ordinary member of parliament. She’s not being paid for the job. She’s someone I trust to help me out. She can deliver. She’s not abusing her position. She’s not using it to try and abscond some funds to give your cronies. That is a sickness and the rotten system we inherited, and she is there together with many other colleagues of mine to try and dismantle that. Is there is too much competition against China? We don’t have that problem. We would use our potential and whatever little influence to try and engage with everyone. We also express in private some of our concerns with China or the United States for that matter, but then overall we want to remain good friends to both. On Ukraine, do you see the need for President Zelenskiy to start negotiating earlier rather than later for the greater good of the world? We have been consistently in favour of negotiations. However tough and difficult you must never fear to negotiate. bloomberg

wednesday february 1, 2023 4 The E dge C E O m o rning brief home by Chester Tay theedgemarkets.com Pestech confirms two top execs charged for allegedly abetting in misappropriation of a subsidiary’s funds KUALA LUMPUR (Jan 31): Pestech International Bhd has confirmed that two of its top executives have been charged for allegedly abetting the misappropriation of RM10.6 million related to its wholly-owned subsidiary, PESTECH Technology Sdn Bhd. Pestech said both executive chairman Lim Ah Hock and managing director-cum-group chief executive officer (CEO) Lim Pay Chuan were charged at Shah Alam Sessions Court last Friday (Jan 27). The charges were framed under Section 109, read together with Section 403 of the Penal Code, which states that those found guilty of misappropriation could be jailed for up to five years, whipped, and/or fined. Ah Hock was charged with one count of the alleged offence while Pay Chuan was slapped with three charges, said Pestech in a bourse filing on Tuesday (Jan 31). The duo “strenuously” denied all allegations and claimed trial in respect of all the charges against them, the group said. “They will defend and clear themselves of the said charges and allegations in court, as both individuals have represented that neither of them had benefited from the payments,” said Pestech. “The directors have provided comprehensive explanations to the board and the board, after due consideration, decided and concurred unanimously that it is not necessary to take any action against them until the court decides otherwise,” it added. According to Pestech, the duo, together with PESTECH Technology’s CEO, were investigated on four payments amounting to RM10.6 million to a consulting company. PESTECH Technology allegedly made payments for works not rendered by the consulting company, and Ah Hock and Pay Chuan have been accused of abetting in these payments. Pestech, meanwhile, did not disclose the name of the CEO in PESTECH Technology, which is a unit set up in 2013 and houses the group’s power generation, rail electrification and signalling businesses. Based on the group’s latest annual report disclosures, its power generation and rail electrification, signalling and communication system businesses are currently headed by Paismanathan Govindasamy. Last Friday, Bernama reported that the case was prosecuted by Malaysian Anti-Corruption Commission (MACC) deputy public prosecutor Muaz Ahmad, while lawyer Gobind Singh Deo represented the two accused. It was also reported that Judge Rozilah Salleh had allowed bail at RM200,000 in one surety each, and ordered them to surrender their passports to the court. Pestech shares, which fell 62% last year, closed half a sen or 1.6% lower at 31 sen, giving the group a market capitalisation of RM307.6 million. KUALA LUMPUR (Jan 31): Sports car maker Lotus, in which tycoon Tan Sri Syed Mokhtar Albukhary owns a 49% stake via Etika Automotive Sdn Bhd, is planning a listing of its luxury electric vehicle (EV) unit in the US. Lotus Technology Inc, the luxury EV division of Lotus, said the listing exercise will be carried out via a merger between Lotus Tech and special purpose acquisition firm L Catterton Asia Acquisition Corp (LCAA). The merger will value the combined company at US$5.4 billion, taking into account the US$288 million cash in LCAA’s trust account, said Lotus Tech in a statement on Tuesday (Jan 31). It said all its existing equity holders, including Zhejiang Geely Holding Group, Etika and NIO Capital, are expected to retain their interest, collectively owning an 89.7% stake in the combined company. Geely owns the remaining 51% interest in Lotus. The Edge Malaysia, in its Jan 23-29 issue, reported that Geely was mulling over a listing exercise amid market talk that Syed Mokhtar was also looking at undertaking a strategic review of his businesses, which includes the possibility of privatizing DRB-Hicom Bhd. On Tuesday, Lotus Tech said that upon completion of the merger, it will retain its current name, and its current leadership team led by CEO Qingfeng Feng will continue to lead the combined company, aiming to deliver its first electric SUV in the first quarter this year. Deutsche Bank is acting as financial Syed Mokhtarlinked Lotus to list EV unit in US advisor for the corporate exercise, with Skadden, Arps, Slate, Meagher & Flom as international legal counsel. Credit Suisse Securities (USA) LLC is serving as the capital markets advisor, and Shearman & Sterling LLP is acting as international legal counsel to Credit Suisse Securities (USA) LLC. Lotus Tech has also formed a manufacturing partnership with Geely to leverage on the Chinese automaker’s production capacity. “This partnership with Geely Holding will enable Lotus Tech to operate with an asset-light business model, focusing on the research and development and distribution of EVs globally (upon integration with the Lotus brand’s existing distribution networks),” it said. Lotus Tech said proceeds raised from the merger are expected to be used for further product innovation, next-generation automobility technology development, global distribution network expansion and general corporate purposes. “This is an exciting time for Lotus Tech as we work towards delivering our first fully electric hyper SUV, applying our innovation and engineering expertise to meet the rising global demand for luxury EVs,” said Lotus Tech CEO Feng. Read the full story by Chester Tay theedgemarkets.com The Edge file photo

wednesday febru ARY 1, 2023 5 The E dge C E O m o rning brief

wednesday february 1, 2023 6 The E dge C E O m o rning brief home KUALA LUMPUR (Jan 31): The government has decided to initiate an administrative review of anti-dumping duties on trade imports of cold-rolled stainless steel (CRSS) from China, South Korea, Taiwan and Thailand. The Ministry of International Trade and Industry (Miti) said in a statement that the review is in line with Subsection 28(6) of the Countervailing Duty and Anti-Dumping Act 1993 (Act 504), and Regulation 34 of the Countervailing Duty and Anti-Dumping Regulations 1994 (Rules). “Local producers are requesting an administrative review, and based on the evidence, the termination of anti-dumping duties is likely to cause dumping and harm, [which] will continue or recur for the local producers,” the ministry said. Miti said the decision was taken after considering the application and information submitted by local manufacturer Bahru Stainless Sdn Bhd. The company is seeking an administrative review of the anti-dumping duties imposed on imports of CRSS in coils, sheets or any other forms with a thickness of between 0.3 millimetre and 6.5 Miti to begin administrative review of antidumping duties on cold-rolled stainless steel imports KUALA LUMPUR (Jan 31): The Ministry of International Trade and Industry (Miti) has secured an additional RM13 billion in committed foreign direct investment (FDI) from three investors via its investment mission to Singapore. Minister Tengku Datuk Seri Zafrul Abdul Aziz said the three companies — Sea Ltd, Yondr Group, and INSEACT — had collectively committed to investing RM13 billion in Malaysia. These investments are scheduled to be operationalised within the next three years, said Tengku Zafrul, who led the mission during Prime Minister Datuk Seri Anwar Ibrahim’s visit to Singapore recently. The cumulative value of RM13 billion reflects Malaysia’s attractiveness as an investment destination, Tengku Zafrul added. “It is also a testimony to the long-standing, mutually beneficial relationship between Malaysia and Singapore in trade and investments,” he said in a statement here on Tuesday (Jan 31). Miti intends to grow and strengthen this special relationship, particularly in building supply chain resilience for the respective industries, premised on cooperation in the digital and green economies, the minister added. Shopee Sea Ltd, the parent company of Shopee and the largest pan-regional e-commerce platform in Southeast Asia and Taiwan, has committed to expanding its investments in Malaysia, creating over 2,000 job opportunities. The company intends to set up cloud services, data hosting and processing, and a new e-commerce logistics warehouse in the country. Yondr Group Another investor is Yondr Group, a UK-headquartered global leader in the development and operation of data centres. The group, which has delivered more than 500MW globally to leading hyperscale clients, has entered the Malaysian market with the acquisition of a 75-acre (30.35-hectare) plot in Johor, and is developing a 300MW IT load hyperscale data centre campus. Zafrul: Miti bags RM13 bil in FDI via investment mission to Singapore Its deployment in Johor is expected to become Southeast Asia’s largest hyperscale data centre campus, and will be a major part of Malaysia’s growing digital ecosystem, said Miti. INSEACT The third company, INSEACT, is a Singapore-based alternative protein company specialising in insect protein for aquaculture feed. It intends to set up a production facility in Johor, its first in Southeast Asia. The company’s unique approach to alternative protein production has the potential to address Asia’s growing demand for sustainable food sources. “We are determined to prove to investors that Malaysia is pro-trade, pro-business, and pro-investment. “Miti and its agencies like Mida (the Malaysian Investment Development Authority) will continue to pursue high-quality, strategic and sustainable investments that will not only grow our gross domestic product and boost the development of the local digital economy, but also create new job opportunities for our people,” Tengku Zafrul continued. The investment mission, attended by senior officials of Miti and Mida, is an important milestone towards realising Malaysia’s goal of becoming a hi-tech, global innovation hub with a resilient and sustainable investment ecosystem. Bernama Bernama millimetres, and a width not exceeding 1,600 millimetres, excluding CRSS with a glossy gilt finish, No 8 (mirror finish), embossed, hardened, scratched or coloured, or CRSS with a hardness value exceeding 250HV originating or exported from the countries involved. The current anti-dumping duties imposed on imports of the subject merchandise originating in or exported from China, South Korea, Taiwan and Thailand, ranging from zero to 111.16%, will expire on Feb 7, 2023. “In accordance with the provisions under Act 504 and regulations, the final determination of the administrative review will be made within 180 days from the initiation date,” said Miti. The ministry will distribute questionnaires and related documents to stakeholders, such as local producers, exporters/foreign producers of subject merchandise and importers, and the governments of China, South Korea, Taiwan and Thailand. Other interested parties who wish to participate in the administrative review should apply for questionnaires in writing to Miti no later than Feb 11, 2023, the ministry said. Miti said interested parties are invited to submit written views, answer questionnaires, and submit supporting information no later than Feb 26. “If the interested parties do not submit the necessary information, or the information and views are not received in an adequate form within the specified time limit, the government will make a final determination based on the existing facts,” said the ministry.

wednesday february 1, 2023 7 The E dge C E O m o rning brief home KUALA LUMPUR (Jan 31): Bursa Malaysia is expecting average daily value (ADV) of stock trading to improve slightly to between RM2.3 billion and RM2.4 billion this year, up from RM2.07 billion in 2022, supported by gradual improvements in trading activities. Its chief executive officer Datuk Muhamad Umar Swift said that with recent improvements in the ringgit and listed companies’ valuations, the stock exchange operator is expecting more foreign and domestic investments going forward. “If you look at the support [that] we have seen from listings this month, trading is increasing and improving, but it is a step-bystep [process],” said Umar at a media briefing on Tuesday (Jan 31). Bursa Malaysia’s net profit contracted 36% last year to RM226.57 million from RM355.25 million in 2021, weighed down by lower securities trading revenue as ADV normalised to RM2.07 billion in 2022 from RM3.55 billion in 2021. The company is targeting a profit before tax (PBT) of between RM295 million and RM326 million this year. Bursa Malaysia reported a PBT of RM310 million in 2022, which is 35% lower than RM478.44 million in 2021, while revenue contracted 21% to RM603.25 million from RM767.54 million, weighed down by lower trading activities by the retail and domestic institutional investors. Umar told reporters on Tuesday that the Bursa Malaysia will continue to expand its product offerings, particularly by bringing in more initial public offerings (IPOs). It is aiming for 39 IPOs with a combined market capitalisation of RM10 billion this year, compared with 35 IPOs with combined market capitalisation of RM11.5 billion in 2022, said Umar. Last year, the local bourse saw two large cap companies listed on the Main Market, namely Senheng New Retail Bhd (with a market capitalisation of close to RM1.61 billion at the time of listing) and Khazanah Nasional Bhd-backed Farm Fresh Bhd (with a value of nearly RM2.51 billion). Bursa Malaysia chairman Tan Sri Abdul Wahid Omar said there is rising interest from small-and-medium enterprises (SMEs) seeking listing this year, and this explains the lower estimated combined market capitalisation. “If you see the first month, in January itself, there were seven listings, six ACE and one on Main Market. Given the level of oversubscription, it has attracted a lot of interest from other SMEs, which is the target market for ACE. “The idea is to allow these companies that are growing to come to the market and undertake primary offerings, raise some capby Chester Tay theedgemarkets.com by Syafiqah Salim theedgemarkets.com ital for them to grow. Some of them may be small at the outset, but by having access to the capital market, it will enable them to grow,” he explained. Apart from bringing in more new listings, Bursa Malaysia will continue to enhance the public’s accessibility to market information in order to sustain retail investors’ trading interest, said Umar. “We have two initiatives, one is to bring new interesting products to market through IPOs. The other is to enhance the products that we have through PLC transformation. The other thing that you will see going forward is access to research, access to information. “The idea is to create things to have conversation. Whether you like the company or dislike the company, we encourage you to have a conversation because when you talk about it, you create interest in it,” he said. Umar also warned against any attempt for market manipulation activities as the exchange operator strives to build an orderly and vibrant capital market. “We want an orderly market. Within an orderly market, we want to ensure there is healthy speculation and an informed market. Bearing in mind, every trade made on the exchange runs through an AI filter. Our team will actually look into these [filtered] trades. Believe it or not, we know who you trade with, how you trade. “If you overstepped boundaries, there is a whole escalation process. We are trying to ensure there is, if you like, an orderly, stable market that is vibrant,” he said. Shares of Bursa Malaysia closed seven sen or 1% lower at RM6.71 on Tuesday, giving it a market capitalisation of RM5.43 billion. Bursa’s 4Q net profit drops 25%; pays 11.5 sen dividend KUALA LUMPUR (Jan 31): Bursa Malaysia Bhd’s net profit for the fourth quarter ended Dec 31, 2022 (4QFY2022) declined by 24.55% to RM49.005 million from RM64.95 million a year ago, due to lower trading revenue in the securities market. Trading revenue in the securities market decreased by 27.1% to RM60.5 million in the quarter under review, from RM83 million in 4QFY2021, mainly due to lower average daily trading value (ADV) for on-market trades and direct business trades that declined 21.4% to RM2.09 billion from RM2.66 billion. The exchange’s overall revenue for 4QFY2022 fell 11.79% to RM145.7 million from RM165.18 million, its bourse filing showed. Earnings per share declined to 6.1 sen from 8 sen. Bursa declared a final dividend of 11.5 sen per share, amounting to about RM93.1 million, to be paid on March 1. This raised its total dividend payout for FY2022 to 26.5 sen per share. For the full FY2022, Bursa’s net profit dropped 36.22% to RM226.57 million from RM355.25 million, as revenue for the year fell 21.4% to RM603.24 million from RM767.54 million, with trading revenue in the securities market contracting 40.5% to RM263.5 million from RM442.9 million. Billion Source: Bursa Malaysia Bursa Malaysia annual earnings Net prot Revenue 0 200 400 600 800 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 (RM mil) 198.61 518.50 506.78 556.83 550.00 502.49 798.97 767.54 603.24 193.62 223.04 224.04 185.85 377.75 355.25 226.57 Bursa Malaysia expects daily volume of RM2.3 bilRM2.4 bil in 2023

wednesday february 1, 2023 8 The E dge C E O m o rning brief home PUTRAJAYA (Jan 31): Malaysia and Singapore will discuss the need to hold a Malaysia-Singapore round table on cybersecurity every year in an effort to boost cybersecurity, said Communications and Digital Minister Fahmi Fadzil. He said this would be among the matters to be discussed with his Singapore counterpart Josephine Teo during her visit to Malaysia on Feb 4. The bilateral meeting will also cover several matters in the memorandam of understanding signed between Malaysia and Singapore in the island republic on Monday, especially those concerning cybersecurity, personal data protection and the digital economy, Fahmi told reporters after the ministry’s monthly gathering here on Tuesday (Jan 31). He said they would also explore closer cooperation between agencies of the two countries to jointly overcome cybersecurity problems and related issues. The agencies involved are the Malaysian Communications and Multimedia Commission (MCMC) and Singapore’s equivalent regulatory body, as well as CyberSecurity Malaysia, and the authority in charge of cybersecurity in Singapore. “Singapore has expressed its readiness for closer cooperation, and to bring investments to Malaysia, and the government will intensify discussions with our neighbouring country, so that the economic impact can be felt by the people,” Fahmi added. Malaysia, Singapore mull cybersecurity round table, says Fahmi PUTRAJAYA (Jan 31): The government plans to establish the Malaysian Cyber Security Commission as part of efforts to strengthen cybersecurity in the country, said Communications and Digital Minister Fahmi Fadzil. Speaking at the monthly gathering of his ministry here on Tuesday (Jan 31), he said the ministry will cooperate with related agencies like CyberSecurity Malaysia (CSM) to set up the commission. “There are big plans, the hope of [realising] efforts to establish the Malaysian Cyber Security Commission,” he said. Fahmi also said several amendments affecting the ministry’s agencies, such as the Personal Data Protection Department, National Film Development Corporation Malaysia (Finas), and Malaysian Communications and Multimedia Commission (MCMC), will be tabled in the coming Dewan Rakyat session, which begins on Feb 13. “There is no point in having data but it is not safe. The Personal Data Protection Department needs to be strengthened, and CSM too should make a leap. Basic matters need to be settled fast,” he said. Meanwhile, Fahmi also said that the review of 5G network implementation in Malaysia will be completed by the end of March, and the process is now in the stage of gathering feedback and meeting with all relevant parties. “5G not only plays the role of service access, but also as a way of managing technology, and is capable of helping to provide a better and more Madani (civil) future,” he said. On Jan 13, Fahmi said the policy on 5G implementation by Digital Nasional Bhd will be tabled before the Cabinet by the end of March. Bernama Bernama Fixed-line internet Unity Package for B40 to be introduced, says minister PUTRAJAYA (Jan 31): A fixed-line internet Unity Package will be introduced specifically for the bottom 40% household income group (B40) in the country, said Communications and Digital Minister Fahmi Fadzil. Speaking at the monthly gathering of his ministry here on Tuesday (Jan 31), he said ministry secretary general Datuk Seri Mohammad Mentek had been directed to hold negotiations with the relevant parties concerning the package. “Earlier, we had announced the portable internet prepaid Unity Package for handphones. After this, we will send our negotiator, the secretary general, to ensure the Unity Package for fixed-line broadband internet becomes a reality,” he said. Before this, Fahmi unveiled the portable internet prepaid Unity Package data plan, which is two times cheaper at RM5 per month but is three times faster. It is scheduled to hit the market in February. The implementation of this package reportedly involves five telecommunications service providers, namely CelcomDigi, Maxis, U Mobile, Telekom Malaysia (TM) and YTL Communications. Fahmi said telecommunications service providers play an important role in completing internet connectivity for the 3% of areas yet to have access, as well as the remaining 97% detected with “potholes”. Fahmi said he and his deputy Teo Nie Ching would ensure that internet issues are resolved as soon as possible. Fahmi: Govt plans to set up Malaysian Cyber Security Commission Bernama Bernama

wednesday february 1, 2023 9 The E dge C E O m o rning brief home KUALA LUMPUR (Jan 31): Perusahaan Otomobil Kedua Sdn Bhd (Perodua) will not increase the prices of its existing models in 2023, despite the rise in material prices. Perodua president and chief executive officer Datuk Seri Zainal Abidin Ahmad said the company is resolving internal cost deductions to manage inflation. “We raised the prices of new models. However, it was not because of the inflation impact, but additional features in place, such as safety features,” he said on Tuesday (Jan 31) during Perodua’s 2023 outlook media conference. Based on Zainal’s personal forecast, he believes that the rise in material prices is at its peak in 2023, and will stabilise by mid2023, due to economic recovery. He said that risk factors in 2023 include higher inflation, further increases in interest rates, and higher external cost factors, such as fuel, power, commodities and raw materials. “These cost factors, if raised too steeply, will have a negative impact on the momentum that we are currently on. The increase may not only have the potential to depress the market, but also erase gains made by the industry, as it was just getting its second wind,” Zainal said. He added that semiconductor chip supply is still a concern for manufacturers, but is positive that Perodua would have enough chips to meet its targets. Perodua earmarks RM1.15 billion capex for 2023 Zainal said that Perodua had allocated RM1.15 billion in capital expenditure (capex) for 2023 to improve its group operations, 35.2% higher than the RM850.5 million spent in 2022. by Hailey Chung theedgemarkets.com He said that RM537.1 million in capex will be allocated towards the development of a new model. Meanwhile, another RM 247.1 million will be spent on modernising the company’s operations, which includes upgrading its showrooms and service centres. Listed UMW Holdings Bhd has a 38% effective interest in Perodua, based on the group’s 2021 annual report. At the close on Tuesday, UMW was down 10 sen at RM3.70 a share, giving it a market capitalisation of RM4.32 billion. KUALA LUMPUR (Jan 31): Perusahaan Otomobil Kedua Sdn Bhd (Perodua) is prepared to absorb the sales and service tax (SST) for customers who will not receive their orders by March 31. Perodua president and chief executive officer Datuk Seri Zainal Abidin Ahmad said that to date, there are about 15,000 to 20,000 outstanding units of vehicles booked before June 30, 2022, which are entitled to SST exemptions. During Perodua’s 2023 outlook media conference on Tuesday (Jan 31), Zainal said that “there will definitely be spillover” as Perodua had difficulty in delivering the outstanding units in time. “Customers are very important. It is our problem that we cannot deliver [the units] by March. That is why we have to honour them,” he told the press here. Zainal said Perodua is expected to shoulder a cost of RM45 million in SST payment, based on an estimated 15,000 units of vehicles yet to be delivered. “I do not have the total number of units yet. We will have to wait until the end of March, but we will make sure they enjoy their SST exemption,” he said, indicating that the Bezza variant had the highest number of units on the waiting list. However, he said that on a positive note, Perodua’s order cancellation rate Perodua plans to absorb SST payment for spillover orders by Hailey Chung theedgemarkets.com Zainal said Perodua estimates its market share to be 44.5% in 2023, higher than the 39.1% achieved in 2022. On Perodua’s export market, he said the company predicts a gradual export growth to 3,300 units in 2023, 4,680 units in 2024, and 8,410 units in 2025. Perodua exported 1,137 units in 2022. Zainal said that Perodua’s cost and quality competitiveness is still not at the desired level in the export market. Among strategies that Perodua will undertake to revive its export market in 2023 include continuing cost-efficiency activities and strengthening its export organisational structure. In conjunction with the media outlook conference on Tuesday, Perodua announced that the latest Axia model, under the Perodua Smart Build, is now available for bookings across the country. “The tentative price range of the allnew Perodua Axia is between RM38,600 and RM49,500 [without insurance and in West Malaysia]. Full specifications will be shared during the launch [in mid-February],” Zainal said. Listed UMW Holdings Bhd has a 38% effective interest in Perodua, based on the group’s 2021 annual report. At the close on Tuesday, UMW was down 10 sen at RM3.70 a share, giving it a market capitalisation of RM4.32 billion. was only 2% in 2022. In terms of overall outstanding bookings brought forward from 2022, Zainal said there are 220,000 units which Perodua will fulfil in 2023. Perodua aims to exceed 2022’s production and sales Perodua aims to maximise its production to 330,000 units in 2023, up 14.2% from the 289,054 units produced in 2022. It also targets sales of 314,000 units this year, 11.3% higher than the 282,019 units sold last year. Zainal said the normal installed annual production capacity of the company’s plants is 320,000 units on a two-shift cycle. “We can still increase our volume by improving productivity, and by instituting overtime,” he said. He added that Perodua had earmarked RM10 billion to purchase parts from local suppliers to meet its 2023 targets. Zainal believes that the total industry volume (TIV) in 2023 can go beyond the 650,000 units forecast by the Malaysian Automotive Association, with potential to reach 705,000 units in 2023. Notably, Malaysia achieved a record high TIV of 720,658 units in 2022. Perodua’s investments RM mil Source: Perodua 0 400 800 1200 2018 2019 2020 2021 2022 2023 (forecast) 549.1 569.2 675.4 937.5 850.5 1,150.3 Perodua plans RM1.15 bil annual capex; maintains price for existing models for 2023

wednesday february 1, 2023 10 The E dge C E O m o rning brief home BANGI (Jan 31): Malaysia will continue to collaborate with Indonesia to counter the European Union’s (EU) criticism against palm oil, said Deputy Prime Minister and Plantation and Commodities Minister Datuk Seri Fadillah Yusof. He said Malaysia and Indonesia will talk about the laws which ban the sale of palm oil and other commodities linked to deforestation unless importers can demonstrate that their production of goods does not involve deforestation. “The collaboration strategy with Indonesia to counter the anti-palm oil campaign is seen to be able to put pressure on the EU. “The Council of Palm Oil Producing Countries will also formulate a strategy to put pressure on the EU, so that Malaysia and Indonesia are not bullied,” he said. Speaking at the Malaysian Palm Oil Board’s (MPOB) Excellence Awards ceremony 2022 here on Tuesday (Jan 31), Fadillah noted that palm oil producing countries must agree on how to handle global issues, so that objections to palm oil discrimination can be made in a unified, effective and firm manner. The minister said that while this is not Malaysia, Indonesia to continue collaboration to counter palm oil criticism, says Fadillah PUTRAJAYA (Jan 31): Malaysia can withstand global economic challenges, evidenced by its improved labour market and continuous external demand, coupled with other positive key indicators, said the Department of Statistics Malaysia (DOSM). The DOSM in a statement on Tuesday (Jan 31) cited chief statistician Datuk Seri Dr Mohd Uzir Mahidin as saying: “Summarising the year 2022, Malaysia’s trade exceeded the RM2 trillion mark for the second year in a row, and surged 27.8% year-on-year (y-o-y) to RM2.8 trillion.” Mohd Uzir noted Malaysia’s trade at RM238.2 billion in November 2022, with a growth of 15.6% y-o-y. Exports were valued at RM130.2 billion, surpassing imports valued at RM107.9 billion, yielding a trade surplus of RM22.3 billion. In December 2022, the trade surplus increased to RM27.8 billion, with exports of RM131.9 billion and imports of RM104.1 billion. Adding to this, Malaysia’s industrial production index in November 2022 recorded a 4.8% y-o-y increase, propelled by growth in the manufacturing index (4.8%), mining index (6.1%), and electricity index (1.2%). Similarly, the manufacturing sector’s sales soared by 11.8% to reach RM159.2 billion in November 2022, compared with RM142.4 billion a year ago. The positive growth was driven by increases in the sub-sectors of electrical and electronics products, up 19.0% y-o-y (October 2022: 16.6%), and petroleum, chemical, rubber and plastic products, up 15.0% y-o-y (October 2022: 23.8%). He also said that wholesale and retail trade sales value recorded a double-digit growth of 13.9 % y-o-y, reaching RM133.9 billion in November 2022. The increase was predominantly contributed by the retail trade sub-sector, which rose 22.8% to RM58.7 billion. This was followed by the wholesale trade sub-sector, which grew 5.6% (+RM3.1 billion) to RM59.5 bilDOSM: Malaysia can withstand global economic challenges after strong trade performance by Isabelle Francis theedgemarkets.com Bernama lion, and the motor vehicle sub-sector, up 17.2% (+RM2.3 billion) to RM15.7 billion. Commenting on the current labour force situation, he said, “The number of employed persons increased by 498,300 persons, or 3.2% y-o-y, to 16.11 million persons, while the unemployment rate remained at 3.6 % for the third consecutive month.” For the full year of 2022, inflation rose to 3.3%, from a rate of 2.5% in the preceding year. Concurrently, the producer price index (PPI) for local production eased further to record 3.2% y-o-y in November 2022, and inched up to 3.5% in December 2022, with the overall PPI increasing 7.8% in 2022. In concluding his statement, Mohd Uzir said, “Going forward, Malaysia’s economic indicators are expected to moderate, despite the risk of a global economic slowdown, signalled by the leading index (LI), which decreased by 0.4% to 110.5 points in November 2022, compared with 110.9 points in November 2021. “Conversely, the LI’s monthly performance recorded an increase of 0.8% in November 2022, compared to a negative 0.3% in the previous month. Looking at the smoothed long-term trend in November 2022, the LI remained below 100.0 points.” an easy task, the ministry and its agencies will boost efforts to counter the anti-palm oil campaign by reporting unassailable facts about the sustainability and benefits of palm oil. “We need to show them the fact that palm oil does not harm the environment, causing negative impacts on humans and the wildlife,” he said. He said that the Malaysian palm oil industry is expected to continue its impressive performance in 2023, supported by strong demand and higher crude palm oil (CPO) production. Palm oil exports are expected to increase by 3.7% to 16.3 million tonnes in 2023, from 15.72 million tonnes last year, driven by continuous demand from importing countries, such as the United Arab Emirates, Saudi Arabia, Japan, Bangladesh and Egypt. Meanwhile, Fadillah said the ministry will ensure a smooth process for the entry of foreign workers to help boost CPO production this year. Read also: Khazanah Research: Fed govt should recognise East Malaysia’s specialty rice Shahrill Basri/The Edge

wednesday february 1, 2023 11 The E dge C E O m o rning brief

wednesday february 1, 2023 12 The E dge C E O m o rning brief home KUALA LUMPUR (Jan 31): The Malaysian Aviation Commission (Mavcom) said 44 air traffic rights (ATRs) have been allocated in the fourth quarter of 2022 (4Q2022), with most of them granted to MYAirline. Mavcom in a statement on Tuesday (Jan 31) said MYAirline was awarded the highest number of approvals, receiving 12 out of 16 domestic ATRs. This was followed by AirAsia, AirAsia X, and Batik Air Malaysia with nine ATRs each. Meanwhile, both Firefly and Raya Airways were granted two ATRs each, and Malaysia Airlines was awarded one ATR approval. In total, Mavcom said, it received a 15.8% increase in ATR applications compared to 3Q2022, in which 100% of ATRs applied were approved by the commission. It said the ATR allocations for 4Q2022 consisted of 28 international and 16 domestic routes. Furthermore, Mavcom said it recorded its highest number of ATR allocations in 4Q2022, against the same quarter over the past four years, which saw 27 ATRs awarded in 4Q2021, 40 ATRs in 4Q2020, and 37 ATRs in 4Q2019. Mavcom’s executive chairman Datuk Seri Saripuddin Kasim said the ATR applications submitted in 4Q2022 reached 12.8% of ATR applications received before the pandemic in 4Q2019. “The gradual resumption of air travel since the re-opening of regional and international borders has boosted the ATR applications rate for the quarter, which was especially driven by the opening of new domestic routes. “Reflecting this is the significant 220% increase in ATR applications received and awarded for local destinations in 4Q2022, which is mostly attributed to MYAirline, Malaysia’s newest low-cost passenger airline that began operating in December 2022,” he added. In terms of year-on-year (y-o-y) comparison, the commission reported a 31% jump in ATR applications in 2022 compared to 2021, and an increase of 29% compared to 2020. Following the steady recovery throughout 2022, ATR applications reached 78% of pre-pandemic ATR applications received by the commission in 2019. Moreover, Mavcom approved 52 more ATRs in 2022 than in 2021 for international passenger travel, indicating the positive impact of worldwide border re-openings that set the industry on the path of recovery. Mavcom: 44 air traffic rights allocated in 4Q2022, most to MYAirline KUALA LUMPUR (Jan 31): Practice Note 17 (PN17) outfit Scomi Energy Services Bhd said it no longer has any defaults in payment following the resolution of its debt obligations to its secured lenders. This comes after the completion of the sale of the company’s drilling services business on Sept 6 last year for RM21 million, with the bulk of proceeds used to repay the defaulted debt. “The company no longer has default in payment pursuant to Paragraph 9.19A of the Main Market Listing Requirements of Bursa Malaysia Securities,” Scomi Energy said in a filing on Tuesday (Jan 31). Scomi Energy first defaulted in December 2019, after its indirect wholly owned unit KCOB Capital Bhd defaulted in parts of its Series E bonds amounting to RM55 million. That episode subsequently triggered cross default in the company, bringing the total to RM147.8 million. Scomi Energy fell into PN17 status in January 2020, after having triggered the criteria in October 2019, when its shareholders’ equity on a consolidated basis fell below 50% of its issued share capital. The company subsequently applied for judicial management in April 2020. It then disposed of multiple subsidiaries for a combined sum of RM21 million. This includes its core business in offshore drilling services, which provided 75% of its revenue, to several parties including subsidiaries of Cahya Mata Sarawak Bhd . The disposal, according to Scomi Energy’s circular when it was first proposed, is conditional upon approval of its secured lenders to its scheme of arrangement. The secured lenders that approved the disposal included Danajamin Nasional Bhd (with an outstanding debt of RM68.52 million), Malayan Banking Bhd (17.53 million), OCBC Bank (M) Bhd (RM14.99 million), Hong Leong Investment Bank Bhd (RM9.04 million), CIMB Bank Bhd (RM2.66 million), and Al-Rajhi Bank & Investment Corp (RM393,887). The circular further said that the disposal consideration of RM21 million will Scomi Energy says defaults resolved after RM120 mil debt waiver, sale of core biz enable Scomi Energy to “fully resolve the indebtedness” due to its secured lenders via a one-time debt waiver of “approximately RM122.1 million”. With the debt default resolved, the next step for Scomi Energy — now without a core business — is to furnish a regularisation plan to the regulators by May this year, following a deadline extension by Bursa Securities. In October last year, PJD Link (M) Sdn Bhd — owned by PJD Link Holdings Sdn Bhd and Noblemax Resources Sdn Bhd — announced plans for the reverse takeover of Scomi Energy. According to the company, it is a concessionaire of the proposed Petaling Jaya Dispersal Link. Scomi Energy also said on Jan 5 that it intends to raise its stake in its power generation solutions unit JV Haratamas Megah Sdn Bhd to 80% (from 20%) as part of its regularisation plan. Scomi Energy’s shareholders comprise Tan Sri Wan Azmi Wan Hamzah (18.11%), Datuk Mohd Zakhir Siddqy Sidek via Gelombang Global Sdn Bhd (12.77%), and Scomi Group Bhd (29.43%). As of end September 2022, Scomi Energy had no debt, against a cash amount of RM15.96 million. Total liabilities stood at RM14.43 million, against total assets of RM24.31 million. The company carried a total equity of RM9.88 million, with retained losses of RM430.33 million, against a share capital of RM445.54 million. Shares of Scomi Energy closed unchanged at six sen on Tuesday, giving the company a market capitalisation of RM28.1 million. by Adam Aziz theedgemarkets.com by Isabelle Francis theedgemarkets.com After RM122m debt waiver and sale of core business, Scomi Energy says payment default resolved.

wednesday february 1, 2023 13 The E dge C E O m o rning brief home KUALA LUMPUR (Jan 31): CTOS Digital Bhd’s net profit rose 13.1% to RM13.7 million for the fourth quarter ended Dec 31, 2022 (4QFY2022), compared to the RM11.9 million it earned in the same period in 4QFY2021, driven by stronger demand for its products and services. The credit reporting group’s revenue for the quarter expanded 36% to RM 52.7 million from RM38.8 million from a year ago, thanks to stronger contribution from its CTOS Data Systems Reports, digital solutions and comprehensive portfolio review, and growth in new CTOS Credit Manager subscribers, its bourse filing on Tuesday (Jan 31) showed. Earnings per share for the quarter improved to 0.6 sen from 0.5 sen in 4QFY2021. For the full FY2022, CTOS reported a 66% jump in net profit to RM71.4 million from FY2021’s RM43.1 million, as revenue climbed 27% to RM194.8 million from RM153.2 million a year ago, underpinned by solid organic and inorganic growths. All key business units — key accounts, commercial and direct-to-consumer — registered strong double-digit revenue growths, while its share of profits from associates increased by 212%. CTOS declared a fourth interim dividend of 0.36 sen per share, to be paid on March 15. This brings its FY2022 dividend to 1.87 sen per share or RM43.3 million. “CTOS’s business has proven to be relevant and resilient — the adoption of credit risk management and innovative digital solutions is more paramount than ever, as everyone seeks to make more informed decisions during challenging circumstances and automate their processes to drive business growth,” said CTOS’s executive director and group CEO Erick Hamburger in a statement. The group expects its subsidiaries and business segments to continue with its growth momentum into 2023, on the back of continued recovery of the Malaysian and regional economies. “Growth in the key accounts segment is expected to be driven by continued adoption of our leading digital solutions and analytical insights, and organic growth in the BAU (business-as-usual) business. “The commercial segment should see growth through new account activations, as well as increasing consumption of products and solutions as SMEs look to onboard and assess creditworthiness of customers more seamlessly,” CTOS said. CTOS plans to expand its direct-to-consumer business through financial literacy programmes and partnerships targeting the estimated 15 million credit active consumers in Malaysia. Shares of CTOS closed 0.65% or one sen higher at RM1.54 on Tuesday, giving the group a market value of RM3.65 billion. CTOS ends FY2022 with 66% jump in 4Q profit, pays 0.36 sen dividend KUALA LUMPUR (Jan 31): Lotte Chemical Titan Holding Bhd (LCT) posted a net loss of RM317.22 million in the fourth quarter ended Dec 31, 2022 (4QFY2022) — its third consecutive quarter of losses — versus a net profit of RM168.89 million a year earlier. This was due to a decline in margin spread amid weakened market demand resulting from a volatile external environment, higher foreign exchange (forex) losses of RM32.7 million, and its share of loss from Lotte Chemical USA Corporation (LC USA) of RM6.4 million. Quarterly revenue declined 22.97% to RM2.07 billion from RM2.68 billion, on lower average product selling price and sales volume. On a quarter-on-quarter basis, LCT trimmed its net loss by 10.77% from RM355.5 million in 3QFY2022, mainly contributed by a reversal of royalty expenses, a reversal of write down of inventories to net realisable value, and a lower share of loss from an associate company. Revenue decreased 16% q-o-q from RM2.37 billion, due to lower average product selling prices and sales volume. For FY2022 as a whole, LCT registered a net loss of RM714.64 million against a net profit of RM1.04 billion in FY2021, despite revenue increasing 1.91% to RM10.02 billion from RM9.83 billion on higher product selling prices. The group said its outlook is expected to remain challenging in the near term in view of the market situation, and has implemented an optimisation plan to better balance production costs and economic efficiencies, president and chief executive Lotte Chemical Titan wraps up FY2022 with another lossmaking quarter officer Park Hyun Chul commented. “We have also conducted rigorous cost management and financial liquidity to ensure the financial positions of the group remain healthy. “As at Dec 31, 2022, LCT has cash and bank balances of RM1.32 billion. To reward our shareholders for their continued and unwavering support, LCT declared a special dividend of 13.98 sen per share, which amounted to a dividend payout of RM318.4 million, on Nov 24, 2022,” he said. In addition, the Lotte Chemical Indonesia Ethylene (LINE) project that will be completed in 2025 will strengthen LCT’s market presence in the petrochemical industry with a 65% increase in total production capacity, said Park. “Indonesia is a net importer of petrochemical products. The project will enable us to capitalise on the anticipated increase in demand for our products in the country,” he added. LCT holds an effective equity interest of 51% in PT Lotte Chemical Indonesia (LCI), the owner of the LINE Project, while Lotte Chemical Corp (LCC) holds the remaining 49%. As of Jan 6, 2023, LCT and LCC had completed their portion of equity injection of US$1.6 billion into LCI. At Tuesday’s (Jan 31) market close, LCT was down one sen or 0.63% at RM1.57, giving the group a market capitalisation of RM3.63 billion. by Syafiqah Salim theedgemarkets.com by Priyatharisiny Vasu theedgemarkets.com

wednesday february 1, 2023 14 The E dge C E O m o rning brief home KUALA LUMPUR (Jan 31): Cypark Resources Bhd said it is not aware of any explanation for the unusual trading volume of its shares recently, except for the completion of its private placement and the emergence of Jakel Group’s investment arm as its new substantial shareholder, which may have boosted investor confidence. Replying to an unusual market activity query from Bursa Malaysia, Cypark said it is not aware of any rumour or report concerning its business or affairs that may account for the activity. On Tuesday (Jan 31), Cypark’s share price closed down 0.96% or one sen at RM1.03, giving the renewable energy firm a market capitalisation of RM796.3 million. It is currently trading at a historical price-to-earnings ratio of 17.51 times. The stock has risen 90.74% from 54 sen on Jan 4, after the group announced the emergence of Jakel Capital Sdn Bhd as its largest shareholder with a 27.33% stake. This came after Cypark completed the placement of 176.65 million new shares, with all the shares taken up by Jakel Capital for RM67.1 million or 38 sen per share. Over the past two weeks, Jakel Group managing director Datuk Seri Mohamed Faroz Mohamed Jakel bought 2.68 million shares in Cypark, raising his direct shareholding to 27.02 million shares, or a 3.53% stake. He also has an indirect interest of 203.67 million shares or 23.077% in Cypark through Jakel Capital. Cypark’s net profit dropped 35.42% to RM48.7 million for the financial year ended Oct 31, 2022, from RM75.41 million a year earlier, as revenue decreased 21.7% to RM246.89 million from RM315.32 million. Cypark points to Jakel’s emergence as largest shareholder in answer to UMA query KUALA LUMPUR (Jan 31): KLCCP Stapled Group Bhd has recorded a near fourfold rise in net profit to RM279.47 million for the fourth quarter ended Dec 31, 2022 (4QFY2022), from RM70.33 million a year earlier, boosted by strong recovery in the retail and hotel segments. The group — comprising KLCC Property Holdings Bhd (KLCCP) and KLCC Real Estate Investment Trust (KLCC REIT) — saw its quarterly revenue increasing 18.69% to RM413.26 million, from RM348.17 million. KLCCP Stapled declared a dividend of 14 sen per stapled security, bringing the fullyear dividend payout to 38 sen per security or a total of RM686 million. For FY2022 as a whole, KLCCP Stapled’s net profit grew 57.84% to RM782.66 million from RM495.85 million in the previous year, as revenue increased 24.61% to RM1.46 billion from RM1.17 billion. The group’s retail segment (represented by Suria KLCC and the retail podium of Menara 3 Petronas) saw revenue increase 4.49% to RM125.37 million from RM119.99 million, as profit before tax (PBT) rose 11.04% to RM96.85 million from RM87.23 million, mainly driven by the higher rental revenue and advertising income, improved tenants’ sales which surpassed the pre-pandemic levels, and lower rental assistance to retail partners. “Mandarin Oriental, Kuala Lumpur, which represents the hotel segment, recorded a robust performance with a two-fold increase in revenue from RM23.0 million to RM49.1 million,” said KLCCP Stapled in a bourse filing, adding that the improvement was mainly contributed by higher occupancy rate from the pent-up demand of high-yielding rooms and suites, and an increase in business demand for food and beverages and banqueting events. “The office segment, comprising the Petronas Twin Towers, Menara 3 Petronas and Menara ExxonMobil, remained stable, as the iconic, high-quality assets are backed by triple net lease (TNL) and long-term leases. The segment recorded stable revenue of RM146.0 million, while PBT fell marginally to RM110.5 million due to preservation costs incurred for Kompleks Dayabumi,” said KLCCP Stapled. Meanwhile, the group’s management services segment (comprising facility management and car parking management services), saw higher revenue of RM112.1 million compared with RM80.5 million a year earlier, while PBT improved significantly by 30% to RM21.5 million from RM16.6 million, thanks to completion of one-off works from the facilities management, and increased customer counts in the malls, contributing to higher car parking income. Moving forward, KLCCP Stapled expects the healthy economic recovery to continue into 2023, supported by the stability of the office segment and the strong footing of its retail and hospitality segments. But, the group remains cautious as headwinds such as inflationary pressures, rising labour costs, and the lingering pandemic will continue to persist. “Suria KLCC will continue to drive innovative marketing programmes to bring more quality traffic into the mall, to drive sales for its retail partners. “Mandarin Oriental will focus on delivering world class hospitality and (on) enhancing brand value, capitalising on the returns of tourists,” it added. Shares of KLCCP Stapled closed up six sen or 0.86% to RM7.05 on Tuesday (Jan 31), giving it a market capitalisation of RM12.73 billion. KLCCP Stapled sees four-fold rise in 4Q profit, declares 14 sen dividend by Syafiqah Salim theedgemarkets.com by Syafiqah Salim theedgemarkets.com KLCCP Stapled Group annual earnings in the last five years (RM mil) Source: Bursa Malaysia 0 300 600 900 1200 1500 FY2018 FY2019 FY2020 FY2021 FY2022 Net prot Revenue 724.91 790.15 432.17 495.85 782.66 1,405.94 1,423.02 1,239.15 1,171.06 1,459.25

wednesday february 1, 2023 15 The E dge C E O m o rning brief home KUALA LUMPUR (Jan 31): Lambo Group Bhd’s external auditor has expressed a disclaimer of opinion in the group’s financial statement due to lack of audit evidence on financials relating to its subsidiary Fujian Accsoft Technology Development Co Ltd. CAS Malaysia PLT expressed the disclaimer of opinion in Lambo’s financial statement for the 16-month period ended Sept 30, 2022, said Lambo in a bourse filing. China-based Fujian Accsoft, an indirect wholly-owned subsidiary of Lambo, was in the spotlight in July last year when China’s Ministry of Finance said the company’s audited financial statements for 2016, 2017 and 2018 were falsified and a penalty was imposed on its auditor. CAS Malaysia said it was not able to gather sufficient appropriate audit evidence to verify Fujian Accsoft’s financials up to the date it was deregistered or wound up in China last May. “We have tried to communicate with the legal representative of the Fujian Accsoft to request for the management account for current period and prior year. However, there has been no reply from the legal representative of Fujian Accsoft,” said the auditor. “Furthermore, we have communicated with the prior year component auditor of Fujian Accsoft in regards to this matters. They had informed us that they were not appointed as the current financial period auditor and they were unable to contact the legal representative of Fujian Accsoft,” it added. CAS Malaysia also said it has not received satisfactory responses from Lambo’s directors. “As we were unable to obtain sufficient appropriate audit evidence on the findings by China’s Finance Ministry and inability of the management to provide the relevant financial statements of Fujian Accsoft, we therefore do not express an opinion on these financial statements,” it said. CAS Malaysia noted that with Fujian Accsoft deregistered, Lambo has booked a loss on deregistration of RM3.96 million as at Sept 30, 2022. However, the auditor said it was not able to ascertain the accuracy, completeness and validity of this amount due to the non-availability of Fujian Accsoft financial statements. CAS Malaysia also raised a matter relating to Lambo’s other investment as its basis for disclaimer of opinion. The auditor pointed out that Lambo had acquired 212.96 million shares or a 23.27% stake in a public-listed company. CAS Malaysia opined that this investment should be recognised as “investment in associates and to be equity accounted in Lambo’s financial statements. However, Lambo’s directors are of the view that this investment should be classified as “financial instruments”. Read the full story Lambo Group’s external auditor expresses disclaimer of opinion KUALA LUMPUR (Jan 31): Vestland Bhd made its debut on the ACE Market of Bursa Malaysia on Tuesday (Jan 31), with an opening price of 38 sen against its initial public offering (IPO) price of 33 sen. The construction company later closed 18.18% higher at 39 sen on its maiden trading day, with a trading volume of 352.06 million, making it the most active stock on Bursa. Its market capitalisation stood at RM368.28 million. No dividend policy was announced by the group. “Being listed on the capital market will provide us with greater visibility, access to a wider pool of investors, and the ability to raise capital to drive our business forward,” said Vestland group managing director Datuk Liew Foo Heen. “It also demonstrates the confidence that investors have in Vestland’s growth prospects and future potential, especially in the design and build industry. This is an exciting time for Vestland, and we look forward to continuously deliver value to our shareholders as we move forward.” At a press conference, Liew added that the group is looking forward to the year for more contracts in Malaysia and from the private sector, while a transfer to the Main Market will be considered. Vestland opens on ACE Market at 38 sen, closes 18% higher amid heavy trade “Apparently now, we have RM2 billion in our tenders in progress. We are looking forward for more and more contracts. Last night (Monday), we just announced another contract of RM63 million [for a] condominium project. “I believe this year, we will be able to grow further. There will be a 30-40% growth, hopefully. “I think with the current book order and tenders we are going through, I think we are good enough to be seen in the Malaysian market. “Now our market covers Sabah, Johor, Penang, Perak, the Cameron Highlands, [in a] few states we are already operating, and Selangor and Kuala Lumpur as well.” When asked whether fewer government contracts might be a headwind for the group, Liew is confident that it will not be the case. “We are well diversified. If you look at the tender book we have now, the private sector is growing very strong, not only for residential and commercial but industrial buildings as well. “If you are looking at the foreign direct investment coming into Malaysia in the past one to two years, we foresee, moving forward, there will be more industrial buildings coming.” The group’s IPO included a public issue of 170 million new shares and an offer for sale of 70.8 million existing shares. by Sufi Muhamad theedgemarkets.com by Chester Tay theedgemarkets.com Vestland Bhd 0 20 40 60 80 9:00am 5:00pm Jan 31, 2023 30 36 42 48 Vol (mil) Sen Source: Bloomberg IPO share price: 33 sen 39 sen 38 sen

wednesday february 1, 2023 16 The E dge C E O m o rning brief home KUALA LUMPUR (Jan 31): Kuala Lumpur Kepong Bhd (KLK) and IOI Corp Bhd are among the plantation companies that should be able to recognise better crude palm oil (CPO) prices than their peers for the fourth quarter of 2022 (4Q2022), as they undertook more aggressive forward-selling activities, according to RHB Investment Bank Bhd. RHB maintained its “neutral” stance on the plantation sector, and named KLK and IOI Corp as its top picks. Spot CPO prices in 4Q2022 declined 24% year-on-year (y-o-y) to RM3,931 per tonne, despite average fresh fruit bunch (FFB) output rising by 5% y-o-y, RHB said in a note on Tuesday (Jan 31). On another note, earnings trends between Malaysian and Indonesian planters could have varied in 4Q2022, due to a change in the tax structure in Indonesia in mid-November last year, according to the research house. “For Indonesia, we estimate that FFB output rose 11.6% y-o-y in 4Q2022, while net CPO prices were relatively flat y-o-y (-1.6%), due to the change in tax structure. As such, we may see Malaysian planters post weaker y-o-y earnings, while Indonesian planters post stronger y-o-y earnings for 4Q2022,” it said. “For those with downstream operations in Indonesia, we expect margins to have improved quarter-on-quarter (q-o-q) in 4Q2022, as the tax levy holiday ended in mid-November. As such, the tax differential between upstream and downstream products should widen, resulting in better downstream margins. “However, their Malaysian downstream counterparts should see narrower q-o-q margins with the reinstatement of the levy, as stiff competition from Indonesia resumed,” RHB added. Better CPO prices for KLK, IOI Corp in 4Q2022 amid aggressive forward selling activities — RHB KUALA LUMPUR (Jan 31): MIDF Research maintained its FBM KLCI year-end target at 1,700 points, implying a financial year 2023 (FY2023) price-to-earnings of 15 times, ahead of the US Federal Reserve (Fed) meeting and upcoming Budget 2023. “As earlier stated, despite the prevalent fears of impending recession, we posit the risk asset markets (and equity in particular) are tilting toward the upside in the short to medium term. “This is [in] view of the unwinding or subsiding pressure on equity required return (as the upside risk diminishes) with the end of tightening cycle, and equity earnings (and macro data) would remain buoyant as the anticipated (looming) recession is still either one or two years away,” said the research house. Hence, the intervening period between the end of US Fed rate hikes and the ensuing recession could prove attractive for equity pricing, said MIDF. Meanwhile, it expects Bank Negara Malaysia will proceed to raise the overnight policy rate towards 3.00% in the first quarter of calendar year 2023 (1QCY2023) because core inflation remains elevated and strength in domestic demand to continue pressure prices. “With the Fed pivoting and then keeping high borrowing costs for some time this year, interest differentials and more favourable outlook for emerging markets (EM) currencies add to positive factors supporting stronger ringgit,” it said. MIDF said despite the prevalent fears of recession, the world’s equity market has been gradually gaining ground MIDF eyes FBM KLCI at 1,700 for 2023, mid-cap stocks ahead of US Fed meeting by Isabelle Francis theedgemarkets.com by Syafiqah Salim theedgemarkets.com since October while the US dollar was retreating since November 2022. It noted the FBM KLCI climbed from a low of 1,370 points level in October to a tad below 1,500 points presently. Concurrently, the ringgit has been strengthening swiftly against US dollar from 4.74 in early November to 4.24 level presently. “We reckon the underlying dynamics began to shift arguably when the pace of US Fed rate hike was anticipated to be pared down during its recent December meeting,” it added. MIDF further said this may also be an opportune time for investors to consider mid-caps stocks. On year-to-date basis, the mid and small caps have been leading the upward charge, with midcaps FBM70 recording 5.7% gains and FBM Smallcap rising 8.5%. Meanwhile, heavyweight FBM KLCI advanced by mere 0.1%. The key heavyweight sectors, particularly plantation and finance, were major underperformers thus far this year. Meanwhile, the energy, transport and technology sectors were the notable outperformers. Similarly, the smaller caps have been outperforming on Wall Street. MIDF said eyes are on new measures and policy actions announced by the government, including the re-tabling of Budget 2023, will provide additional positive points to ringgit outlook this year. In addition, if political stability can be maintained, this will also be support for the ringgit this year, it added. More from brokers: MIDF sees lower cost pressures for Malaysia’s producers CGS-CIMB ups Sunway REIT’s target price to RM1.66 after solid 4Q results Suhaimi Yusuf/The Edge

wednesday february 1, 2023 17 The E dge C E O m o rning brief home Aqil Ahmad Azizuddin is new MBM Resources chairman KUALA LUMPUR (Jan 31): MBM Resources Bhd has appointed Aqil Ahmad Azizuddin as its new chairman with immediate effect, succeeding Datuk Dr Aminar Rashid Salleh. Aqil, 64, is no stranger to the group, as he had previously sat on the board from 2001 till 2017, and is currently chairman of MedBumikar MARA Sdn Bhd and Daihatsu (Malaysia) Sdn Bhd. Aqil is also a board member in Perusahaan Otomobil Kedua Sdn Bhd and Perodua Sales Sdn Bhd, said MBM Resources in a bourse filing. In a separate filing, MBM Resources announced the appointment of Nik Fazila Nik Mohamed Shihabuddin as an independent non-executive director. Nik Fazila currently sits on the boards of FGV Holdings Bhd and MSM Holdings Bhd. — by Chester Tay Mohamad Noor Abdul Rahim resigns as TSR Capital chairman KUALA LUMPUR (Jan 31): TSR Capital Bhd has announced the resignation of its independent, non-executive chairman Tan Sri Mohamad Noor Abdul Rahim. Mohamad Noor, 77, resigned due to personal reasons, the group said. He has been chairman of the construction group since October 2015. He was first appointed to the board as an independent non-executive director in August 2008. Currently, he sits on the board of Mitrajaya Holdings Bhd as an independent non-executive director. He is also vice-president of the Olympic Council of Malaysia. The group’s senior independent non-executive director Tan En Chong, 73, has also resigned due to personal reasons. The group appointed Lee Siew Chen, who has several years of experience in taxation, as its new independent non-executive director. According to TSR Capital’s bourse filings, all changes took effect on Tuesday (Jan 31). — by Syafiqah Salim Gamuda names former AG Ambrin Buang as new chairman KUALA LUMPUR (Jan 31): Gamuda Bhd has redesignated former auditor general Tan Sri Ambrin Buang (pic) as the group’s new chairman, succeeding from Datuk Mohammed Che Hussein, who retired in December 2022. Ambrin, 74, joined Gamuda’s board in September 2018 as the construction giant’s independent non-executive director. Ambrin was appointed the country’s auditor general in February 2006, and completed his tenure in February 2017. “For the past 15 years, Tan Sri has been a frequent speaker presenting his views and perspective on public sector auditing, good governance and integrity at many seminars and conferences organised domestically and internationally,” said Gamuda in a stock exchange filing. Upon his appointment as Gamuda’s chairman, effective Wednesday (Feb 1), Ambrin will relinquish his audit committee chairmanship and his membership in the group’s nomination committee. — by Chester Tay Nova MSC teams up with Theta Edge to market healthcare, AI solutions in Asean KUALA LUMPUR (Jan 31): Nova MSC Bhd and Theta Edge Bhd have teamed up to jointly market and promote healthcare, public sector and applied artificial intelligence (AI) solutions and products in Malaysia and other Asean countries. In a joint statement, the two companies said they signed a memorandum of understanding (MOU) on Tuesday (Jan 31), and have agreed to hold commercial discussions at a later stage to determine the sharing of revenue derived from the collaboration. Nova MSC will play the role of a technology partner to Theta, jointly assessing the solution, architecture, suitability of technical components and interoperability with third-party systems or the existing IT infrastructure. Meanwhile, Theta will develop business plans for the products in Malaysia and other Asean countries, alongside marketing and commercial plans with delivery timelines. Aside from that, Nova MSC will also take the lead in technical sales, pre-sales and sales activities to support Theta. Nova MSC is a provider of ready-to-deploy, industry-focused application software and services for the government and healthcare sectors, with an international track record. Theta, a member of the Tabung Haji group, has expertise in the technology and telecommunication engineering industries. “We believe that the collaboration will help provide a win-win situation for both companies and help us expand our businesses in the healthcare (and) public sectors, and applied AI businesses in Malaysia and other Asean countries,” said Nova MSC’s group CEO Lai Teik Kin. Theta Edge’s group CEO Nuraslina Zainal said the collaboration is timely for digital transformation across every industry and market. — by Priyatharisiny Vasu news In brie f Continuous rain warning in Sarawak, Johor and Pahang until Wednesday KUALA LUMPUR (Jan 31): The Malaysian Meteorological Department (MetMalaysia) on Tuesday (Jan 31) issued a severe warning of continuous rain in several parts of Sarawak, namely Kuching, Serian, Samarahan, Sibu, Mukah and Kapit (Song and Kapit) until Wednesday (Feb 1). In the warning notice issued at 6.45am on Tuesday, MetMalaysia also forecast continuous rain at the alert level until Wednesday in Pahang (involving Kuantan, Pekan and Rompin), Johor (Mersing and Kota Tinggi), as well as Sarawak (Sri Aman, Betong, Sarikei and Bintulu). Continuous rain is also expected to occur in Kudat, Sabah, on Tuesday. — Bernama Teladan Setia buys Melaka land to build health and wellness centre, serviced apartments KUALA LUMPUR (Jan 31): Teladan Setia Group Bhd — through its wholly owned subsidiary Asal Harta Sdn Bhd — has entered into a sales and purchase agreement with Megan Mastika Sdn Bhd to purchase a vacant commercial land in Melaka Tengah for RM48.54 million. According to a filing on Tuesday (Jan 31), the land — which measures approximately 7.54 acres — will be developed into a health and wellness centre, as well as serviced apartments. “... the TSG Group intends to fund the proposed acquisition of land through bank borrowings and internally generated funding which the exact mix has not been finalised. Hence, the effect of the proposed acquisition of land on the gearing of the group cannot be ascertained at this juncture,” it said. The acquisition is expected to be completed by the fourth quarter of 2023. — by Sufi Muhamad

wednesday february 1, 2023 18 The E dge C E O m o rning brief home KUALA LUMPUR (Jan 31): A total of 11 election petitions have been filed nationwide to challenge the outcomes of contests for parliamentary seats in the 15th general election (GE15) last November. According to sources, four of the 11 petitions were filed in Sabah. Three were filed in Terengganu, followed by one each in Kelantan, Johor, Melaka and Sarawak. Those filed in Sabah are for the constituencies of Putatan, Sandakan, Tenom and Tuaran, where the Election Commission (EC) is named as a respondent besides the winning candidates. Meanwhile, in Terengganu, the results for Kuala Terengganu, Marang and Kemaman are being challenged. The rest are in Gua Musang (Kelantan), Segamat (Johor), Masjid Tanah (Melaka), and Lubok Antu (Sarawak). For Segamat, Lubok Antu and Gua Musang, the applicants also named the EC as a respondent besides the winning candidates. Petitions to challenge the outcomes of the GE15 must be filed within 21 days after election results are gazetted. The GE15 results were gazetted on Dec 14 last year. For these 11 challenges, the Election Court, which is mainly the High Court, will listen to the petitions filed in the respective states, and following the outcomes of the petitions, the losing party can file an appeal straight with the Federal Court, where it would be heard. Election petition cases must be disposed of within six months of the petitions being filed, as stipulated under the Election Offences Act. Some of the election petitions, namely the ones in Terengganu, were heard on Monday (Jan 30), followed by the hearing for the Kuala Terengganu constituency on Tuesday. Read also: Masjid Tanah election petition: Decision on preliminary objection postponed to Feb 7 Eleven election petitions filed nationwide, four in Sabah KUALA LUMPUR (Jan 31): A man has filed a lawsuit against former prime ministers Tun Dr Mahathir Mohamad and Tan Sri Muhyiddin Yassin for alleged abuse of public office and negligence over the cancellation of the Kuala Lumpur-Singapore High-Speed Rail (HSR) project. Mohd Hatta Sanuri, 47, who filed the suit through Messrs Mohaji, Hazury & Ismail on Dec 30 last year, also named former minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed, former transport minister Datuk Seri Dr Wee Ka Siong and the government as three other defendants. In the statement of claim, Mohd Hatta said Mahathir, who was then the seventh PM, had committed tort misfeasance in public office when he decided to postpone the HSR project, causing the government and the Malaysian people to pay compensation of almost RM46 million to the Singapore government. Ex-PMs Mahathir and Muhyiddin sued over termination of KL-Singapore HSR project He claimed that Muhyiddin, who was then the eighth PM, also committed tort misfeasance in public office for terminating the project, causing the government and the people to pay RM320,270,519.24 as compensation for the cancellation of the bilateral agreement between Malaysia and Singapore. Mohd Hatta also claimed that Mustapa, who was responsible for managing the project, had committed a similar offence by shelving the project, while Wee committed tort misfeasance in public office for denying Malaysians their right to enjoy a first-class transport system with the cancellation of the HSR project. Mohd Hatta is seeking a court order to declare the cancellation of the project null and void, as well as for all the defendants to pay RM1 million in compensation to him and all Malaysians for wrongfully and negligently cancelling the HSR project. On Jan 1, 2021, Malaysia and Singapore announced the termination of the 350km HSR project, as the two countries failed to reach an agreement on changes proposed by Malaysia before the expiry of the project agreement on Dec 31, 2020. Accordingly, Malaysia paid S$102.8 million (RM320.27 million) to Singapore for costs incurred during the development of the HSR project. The 350km HSR would have shortened travelling time from Kuala Lumpur to Singapore to 90 minutes. Case management of the suit has been set for Feb 2, before High Court senior assistant registrar Nur Shasha Hidayah Nor Azahar. Bernama by Hafiz Yatim theedgemarkets.com With the EC being named, representatives of the Attorney General’s Chambers are expected to be pulled in to represent the commission. Four of the election petitions seek to strike out the results due to purported corruption, namely for Kuala Terengganu, Kemaman, Gua Musang and Masjid Tanah. The four seats were all won by the Perikatan Nasional coalition, namely three by PAS and one by Bersatu. Tun Dr Mahathir Mohamad (right) and Tan Sri Muhyiddin Yassin the edge file photo

wednesday february 1, 2023 19 The E dge C E O m o rning brief

wednesday february 1, 2023 20 The E dge C E O m o rning brief world NEW DELHI (Jan 31): India, the world’s second-biggest sugar grower, will likely cap exports at a little over six million tonnes this season, exacerbating concerns about tight supplies that have pushed global prices to a more than six-year high. Exports will total 6.1 million tonnes in the current crop year that started Oct 1, according to the Indian Sugar Mills Association, which cut its forecast from nine million. This may signal that the government — which already allowed six million tonnes to be shipped this season — is unlikely to approve additional volumes. Global sugar prices climbed to the highest since late 2016 this week, as traders bet that weaker production in India will prompt the government to restrict exports. The country wants to safeguard domestic supply and ensure prices remain stable. Food Secretary Sanjeev Chopra has said that a decision on exports will be made in February, after taking into account local output and demand. India’s production may decline to 34 million tonnes this season, the sugar mills association said on Tuesday. That’s down from the group’s previous estimate of 36.5 million tonnes, and production of 35.8 million tonnes a year earlier. “Sugar cane yields in Maharashtra are less than expected due to adverse weather and that’s going to reduce (the) country’s overall production,” Aditya Jhunjhunwala, president of the association, said in a phone interview. “We are not going to request the government for more exports. We will now concentrate on completing the current quota. We will again review in March, after looking at the actual production,” he said. The country is the world’s biggest sugar exporter after Brazil. Its customers include Indonesia, Bangladesh, Malaysia and the United Arab Emirates. India is also the top consumer and diverts some supply to producing ethanol. India is likely to cap sugar exports, tightening global supplies OSLO (Jan 31): Norway’s wealth fund, one of the world’s largest investors, posted a record loss of 1.64 trillion crowns (US$164.4 billion) for 2022, bringing to an end a three-year run of soaring profits as stocks and bonds were hit by the Ukraine war and inflation. The previous largest loss was 633 billion crowns in 2008. It ends a record-breaking streak for the fund, where annual returns exceeded one trillion crowns in each of the three years from 2019 to 2021, amounting to more than four trillion crowns combined. “We are invested in 9,000 companies in 70 countries. There is just nowhere to hide,” fund chief executive Nicolai Tangen told a news conference. The single biggest stock market loss came from the fund’s stake in Amazon, which declined in value by 56 billion crowns, followed by a loss in shares of Facebook owner Meta Platforms of 52 billion and in Tesla with 47 billion. Norway wealth fund posts record US$164 bil loss Still, despite the record loss, the value of the fund rose overall by 89 billion crowns or US$8.9 billion year-on-year, partly due to the weak Norwegian currency and a record 1.1 trillion crowns of cash inflows. The inflows in 2022 were nearly three times the previous record, of 386 billion crowns, set in 2008. The fund invests the Norwegian state’s revenues from petroleum production. As a major crude exporter and Europe’s largest gas supplier after a drop in Russian gas flows, Norway benefited from high energy prices due to the war in Ukraine. “We have to be very conscious of the fact that the inflow came against a tragic backdrop in Europe,” Tangen said. “But it is an isolated mathematical fact that when oil and gas prices are higher, there is more revenue to the (Norwegian) government and more inflow into the fund.” The fund owns on average 1.3% of all listed stocks. It also invests in bonds, unlisted real estate and renewable energy projects. Looking ahead, Tangen said inflation would continue to be a worry. “Inflation remains a risk factor and, in particular, tied into what will happen when China really kicks in on the consumption side because it could drive a lot of prices globally,” Tangen told Reuters. “And then of course, we have still geopolitical hotspots.” The fund’s return on investment in 2022 stood at minus 14.1% for the year, which was 0.88 percentage point better than the return on the fund’s benchmark index. by Victoria Klesty Reuters by Pratik Parija Bloomberg The single biggest stock market loss came from the fund’s stake in Amazon, followed by a loss in shares of Facebook owner Meta Platforms and in Tesla. bloomberg reuters

wednesday february 1, 2023 21 The E dge C E O m o rning brief world (Jan 31): UBS Group AG reported fourth-quarter profit that beat expectations, and announced plans to repurchase more than US$5 billion (RM21.33 billion) of shares this year, as rising interest rates helped offset a slump in trading revenue and wealth-management fees. The Zurich-based bank reported net income of US$1.65 billion on Tuesday (Jan 31), aided by a 35% surge in interest income at the wealth management unit, the margin that the company makes on loans. Divisional results elsewhere were mixed however, with the investment bank under-performing US peers and revenue down in asset management. While UBS has stood out among global peers in its confidence that large-scale job cuts seen at Goldman Sachs Group Inc and elsewhere can be avoided, it is still contending with the impact of a slowdown in client activity and volatile markets. Cost pressures playing out across the industry were particularly acute at the investment bank, while wealth management earnings fell, as clients again held back from trading amid geopolitical uncertainty. UBS chief executive officer Ralph Hamers said that inflation, the war in Ukraine and the impact of Covid-19 in China kept investors in wait-and-see mode during the quarter. “We see positive news on China, we see positive news also on inflation,” Hamers said in an interview with Bloomberg Television’s Manus Cranny. “The next couple of weeks, from different sides, will give us much more data points to get a feel for should we be risk on or not.” The bank increased the dividend for 2022 to US$0.55 per share. UBS’s investment banking unit posted UBS announces US$5 bil buy-back as rate tailwind lifts results HOUSTON (Jan 31): Exxon Mobil Corp dropped almost 4% after signaling investors won’t see any additional rewards from the oil giant’s record US$59 billion annual profit. Exxon’s full-year profit, excluding one-time items, jumped 157% from 2021 to US$59.1 billion, far exceeding the driller’s prior record of US$45.2 billion in 2008, which at the time marked the biggest in US corporate history. But investors looking past the top-line numbers were disappointed that the company failed to announce plans to funnel more of that windfall into additional share repurchases. The stock fell almost 4% in pre-market US trading. Exxon’s results on Tuesday followed those of US rival Chevron Corp, which posted a surprise earnings miss last week, just days after announcing a mammoth US$75 billion share-buyback programme. The five so-called supermajors are swimming in cash after a record 2022 but pressure is mounting on executive teams to satisfy competing demands: investor appetite for bigger payouts and buybacks versus political outrage over windfall profits during a time of war and economic dislocation. Chevron was excoriated by the White House and Democratic members of Congress, when it disclosed plans last week to funnel US$75 billion to investors in the form of stock repurchases. Exxon expanded buybacks multiple times last year and has already signaled its intention to repurchase US$50 billion of stock through 2024. Chief executive officer Darren Woods is likely to be probed on whether Exxon can increase the pace of buybacks again when he hosts a conference call with analysts at 8:30 a.m. New York time. There are also signs that Wall Street, after a long hiatus, is once again keen to see oil explorers increasing crude output. Chevron executives faced multiple questions about growth plans last week, and several analysts noted their disappointment at the CaliforExxon’s US$59 bil profit clouded by disappointment on buybacks by Kevin Crowley Bloomberg by Myriam Balezou & Marion Halftermeyer Bloomberg nia-based company’s outlook for a flat-to-3% increase this year. A slowdown in Chevron’s Permian Basin annual growth to 10% probably will be an “overhang” on the stock, Cowen & Co said in a note to clients. That said, Exxon has less reason to be concerned about when it comes to growth than some of its peers. The company has a “differentiated upstream project queue” that should increase return on capital over the coming years, Goldman Sachs wrote in a Jan 20 note. On a quarterly basis, Exxon surpassed expectations for the ninth time in 10 periods, posting adjusted fourth-quarter profit of US$3.40 a share that was 10 cents higher than the median estimate by analysts in the Bloomberg Consensus. The Texas oil giant has continued to invest in major projects in Guyana and the Permian region during the pandemic, which by Exxon’s own estimates should have the knock-on effect of driving production to the equivalent of more than four million barrels a day by 2027, up about 8% from current levels. Alongside fossil-fuel growth, Exxon plans to ramp up spending on clean-energy investments by focusing on carbon capture, hydrogen and biofuels. The company cited the Biden administration’s Inflation Reduction Act as a key policy pillar that improves profitability of decarbonising existing operations, but has said that more government support is needed for big projects such as its proposal to capture emissions from industrial facilities along the Houston Ship Channel. US$1.68 billion in revenue for the fourth quarter, down 24% from a year ago. Operating expenses increased 3% on higher variable pay, while the cost-to-income ratio jumped more than 24 percentage points. Revenue from advisory and capital markets slumped 52% for the quarter, broadly in line with Wall Street peers. While rich clients are continuing to bring assets for UBS to manage, on average they were less active in seeking trading and investment services against the uncertain market backdrop. Revenue from the key wealth management unit declined 5% from the previous year, driven partly by transaction-based income, which fell 19% in the quarter. UBS has said that it has benefited as clients transferred assets away from struggling Swiss rival Credit Suisse Group AG, in particular during the fourth quarter, amid a crisis of confidence at the Zurich competitor. Credit Suisse saw an unprecedented US$88 billion in outflows in just a few weeks from the beginning of October, underlining ongoing concerns over the lender’s restructuring efforts. Read the full story bloomberg

wednesday february 1, 2023 22 The E dge C E O m o rning brief world (Jan 31): KPMG expects to increase its audit fees this year as the accounting firm looks to offset higher costs from regulatory requirements and operating expenses. “The price of audit will have to increase this year,” the firm’s UK chief executive officer Jon Holt said in an interview with Bloomberg as the firm published its annual results. “The sector is facing a number of upward cost drivers, from new audit and accounting standards to inflationary pressures.” Clients will likely bristle at the remarks. Chief financial officers at some of the UK’s largest companies have already complained to the Big Four, as the top accounting firms are known, about the high costs of audits, arguing they shouldn’t have to pick up the tab for pay rises handed out to accountants. KPMG UK said Tuesday revenue increased 12% to £2.72 billion (US$3.3 billion) in the year through September. The gains were fueled by a 24% increase in deal advisory and a 22% rise in consulting. Pretax profit rose 3% to £449 million, excluding disposals. Consulting will continue to be the main engine of growth in 2023, while deal advisory is expected to grow at a slower pace, Holt told Bloomberg. Partner pay KPMG said it paid UK partners £717,000 last year, a rise of about 4% as the firm sold more consulting and deal advice. Still, the firm’s 786 UK partners made less than rivals at Deloitte, PwC and EY. KPMG UK said it invested £130 million into new hires and technology in 2022 as part of a push to expand the range of services it offers to clients. The firm also increased its bonus pot to over £105 million. The firm hired over 4,500 people in the 12 months to September, and has a total of 16,036 employees on its payroll. “Every area of the business contributed to our growth, showing the important role our multi-disciplinary model plays to support our clients,” said Jon Holt, KPMG’s UK chief executive officer. KPMG UK CEO says audit fees will increase despite complaints (Jan 31): Food giant Wilmar International Ltd will continue to support its joint venture with India’s under-fire Adani Group, saying a report from short-seller Hindenburg Research had not raised any issues specific to the unit. The day-to-day operations of Adani Wilmar Ltd are managed by an independent team of professional managers and the board is chaired by an independent director, Singapore-based Wilmar said in an emailed response to questions from Bloomberg News. In running the venture, Wilmar contributes expertise on the commodity and consumer-food-products busiJAKARTA/BEIJING (Jan 31): China’s JD.com is to close its e-commerce services in Indonesia and Thailand, retreating from Southeast Asia after a bruising year for China’s retail and technology sectors. JD.com will end its services in Thailand from March 3 and in Indonesia from the end of the same month, its local websites showed. Both units will stop taking orders on Feb 15. A spokesperson for JD.com said in a statement on Monday that the company will continue to serve global markets, including Southeast Asia, through its supply chain infrastructure. The company, which did not give a reason for the closures, started its e-commerce operation in Indonesia under the name JD.ID in 2015 as a joint venture with Provident Capital, while the Thai platform was launched two years later with the country’s largest retailer Central Group. But JD.com failed to gain traction against larger players such as Alibaba Group’s Lazada, Sea Ltd’s Shopee and GoTo Group’s Tokopedia. Nattabhorn Buamahakul, a Bangkok-based partner at Asia Group Advisors, said JD’s exits reflected the highly competitive e-commerce landscape in Southeast Asia, especially Thailand. “Online platforms don’t only compete with each other but also local operators, small businesses which have risen as payments become simpler, using social media like TikTok and Instagram as customer touch points,” she said. But Jeffrey Towson, a Beijing-based partner at TechMoat Consulting said JD.com had behaved more prudently than its competitors in Southeast Asia when it came to spending on marketing and subsidies, and he believed they were exiting without losing too much money. “JD is now exiting the consumer side and focusing on Southeast Asian merchants, brands and logistics infrastructure that connect with Chinese consumers. That plays to their strengths,” he said. nesses, while Adani provides local logistical and regulatory support, the company said on Tuesday (Jan 31). The sprawling Adani Group, controlled by tycoon Gautam Adani, has been rocked to its core in recent days after Hindenburg Research accused the conglomerate of widespread corporate malfeasance, including market manipulation and accounting fraud. In a bitter showdown that’s riveted investors worldwide, the allegations have prompted steep falls in the companies’ share prices despite a lengthy rebuttal from Adani Group. “We will continue to support our Indian associate,” Wilmar said, adding that Adani Wilmar, which was recently listed India’s National Stock Exchange and Bombay Stock Exchange, had undergone a full initial public offering process under the scrutiny of regulators. The joint venture was incorporated in 1999, and is now one of India’s fastest-growing packaged-food companies, supplying essentials such as edible oil, wheat flour, rice, pulses, and sugar. Wilmar’s response comes as Abu Dhabi’s International Holding Co pledged to invest about US$400 million (RM1.7 billion) in a follow-on share sale at Adani Enterprises Ltd, voicing confidence in the billionaire’s businesses despite the market turmoil. Food giant Wilmar vows to stand by its venture with Adani Group China’s JD.com to shut e-commerce sites in Indonesia, Thailand by Anuradha Raghu Bloomberg by Stefanno Sulaiman & Sophie Yu Reuters by Irina Anghel Bloomberg Read also: Tesco axes manager roles, closes deli counters to cut costs

wednesday february 1, 2023 23 The E dge C E O m o rning brief world (Jan 31): Tesla Inc confirmed it has received requests for documents from the US Justice Department related to driver-assistance features, part of the escalating legal and regulatory scrutiny being given to its technology. The automaker acknowledged in its annual 10-K filing what Bloomberg and other media outlets reported in October: that the Justice Department is looking into claims the company has made about features it markets as Autopilot and Full Self-Driving, or FSD. Both require drivers to remain fully engaged at the wheel. Chief Executive Officer Elon Musk has for years said Tesla is on the verge of offering self-driving capability, only for Tesla to continue to tell customers that they need to keep their hands on the wheel. In 2016, he said he considered autonomous driving to be “basically a solved problem.” He’s repeatedly claimed — including as recently as this month on the company’s earnings call — that when Teslas on the road become fully autonomous, it will trigger one of the biggest asset-value increases in history. Those predictions have clashed with crashes where Autopilot or FSD were engaged, which have been getting significant public attention, Tesla said in its filing. The US National Traffic Safety Administration recently ordered automakers to begin regularly reporting collisions involving Tesla reveals DOJ inquiry over autopilot, self-driving HOUSTON (Jan 31): Federal Reserve officials are on track to consider pausing interest-rate hikes following their March meeting if more evidence of cooling inflation rolls in. That’s based on a timeline sketched out by one of the Fed’s most closely watched hawks, Governor Christopher Waller, who was an early advocate of the Fed’s front-loading rate-hike strategy last year. Policymakers are widely expected to raise rates by a quarter percentage point at the conclusion of a two-day gathering on Wednesday, to a range of 4.5% to 4.75%, slowing from December’s 50-basis-point increase after four straight 75-basis-point moves. Fed officials projected in December that they would pause when rates move above 5%, but Wall Street traders bet they will halt slightly below that level. US central bankers have said that October, November and December inflation data, which all showed steady declines in price increases, was welcome news but they still needed to see more. Waller, in recent comments, spelled out how much more evidence he needed to call a halt. “The argument is just whether you should pause after three months of data or pause after six months of data,” Waller said on Jan 20. “From the risk management side — I need six months of data, not just three.” The core personal consumption expenditures index rose 2.2% in the three months through December on an annualised basis, and 3.7% over the past six months, a slowdown from its 4.4% pace in the last 12 months, a report on Friday showed. Vice Chair Lael Brainard, speaking a day before Waller, also pointed to declines in three- and six-month measures of inflation. May meeting Should these trends continue for three more months, per Waller’s benchmark, policymakers could have seen enough to be confident of pausing by their May 2-3 meeting, when they will have data for January, February and March in hand. “The messaging shifts — before it was you’ve got to get moving quickly and hunker down because we’re going to be jacking rates,” said Brett Ryan, a senior US economist at Deutsche Bank. “Now it’s not about the pace, it’s about the end point and we have to feel our way around where the end point is.” A report on Tuesday showed that the US employment cost index, a broad gauge of wages and benefits, rose 1% in the fourth quarter, a slower pace than economists had forecast. That adds to evidence that demand cooled in the last three months of 2022. First quarter ECI data will be released on April 28. Mindful of how they got head-faked in 2021 when prices cooled and then heated US Fed points toward a pause in May after run of hikes sinks in by Catarina Saraiva Bloomberg by Craig Trudell Bloomberg automated-driving systems, and Tesla has reported the vast majority of such crashes. While NHTSA has cautioned that it’s too early to draw conclusions from manufacturers’ reports, it’s conducting two investigations into possible Autopilot defects. “We have experienced, and we expect to continue to face, claims and regulatory scrutiny arising from or related to misuse or claimed failures or alleged misrepresentations of such new technologies that we are pioneering,” Tesla said in its filing. The carmaker said it’s unaware of a government agency in any ongoing investigation concluding that wrongdoing has occurred. Bloomberg reported last week that the the US Securities and Exchange Commission is investigating Musk’s role in shaping the company’s self-driving claims, citing a person familiar with the matter. Tesla’s shares slipped 1.1% as of 9.04am Tuesday in New York, before the start of regular trading. back up, officials have stressed the need to see a few more months of similar soft readings to convince them that the gauges are on a meaningful decline back to their 2% target. Waller pointed to encouraging trends in wage numbers that show a deceleration over the past few months. But he noted that some monthly measures of inflation are largely unchanged from where they were at the start of 2022. He was among officials who explicitly said they were on board with slowing to 25 basis points this week, while continuing to tighten. The change in tone and appearance of consensus about slowing the pace of rate increases as they coast to a halt, was eye-catching. “December was still early enough that they were trying to be very grumpy and resistant to any kind of optimism that they might be able to pause,” said Julia Coronado, president of MacroPolicy Perspectives in Austin, Texas. “But now it’s kind of noteworthy that coming into this meeting, both the more dovish members and the not dovish members are comfortable with 25,” she said. Shifting to a slower pace of increases allows policymakers to transition policy into a risk-management mode in which they keep putting pressure on demand, while reducing the risk of overtightening. “In this environment, I believe we need a strategy that is both flexible and robust,” Lorie Logan, president of the Dallas Fed, said earlier this month. “We need to continually and carefully assess what the incoming data imply about the economic outlook and adjust course accordingly.”

wednesday february 1, 2023 24 The E dge C E O m o rning brief world (Jan 31): UK mortgage approvals fell to their lowest level in 2½ years as higher borrowing costs took their toll on the property market. Banks and building societies authorized 35,612 home loans in December, the fewest since May 2020 when the housing market was shut due to the coronavirus pandemic, Bank of England figures published Tuesday show. Excluding the turbulence at the start of the pandemic, it was the weakest month for house purchase approvals since January 2009, in the depth of the financial crisis, and was around 45% below pre-pandemic levels. Weakening demand is feeding through to house prices, which are on course to fall this year after booming during the pandemic. Nationwide Building Society is predicting a 5% drop, while Halifax thinks 8%. An unprecedented series of interest-rate hikes from the Bank of England has bumped up the cost of mortgages. The effective rate on new loans rose 32 basis points to 3.67% last month. A year earlier, this was just 1.58%. This is the both the highest rate and the largest month-on-month jump since the end of 2015, when comparable BOE data began. December marked the fourth consecutive month in which mortgage approvals — an indicator of future borrowing — fell, and was well below the 45,000 expected by economists. Net borrowing of mortgage debt dropped from £4.3 billion to £3.2 billion. Unsecured credit such as personal loans and credit-card debt rose just £500 million (US$615 million) after hitting a five-month high of £1.5 billion in November. The sharp slowdown tallies with a fall in retail sales during the month and suggests consumer spending is weakening. Consumers paid off almost half a billion pounds of credit-card debt over the Christmas period — excluding the pandemic years, this was the first time they reduced their debt on plastic over a December since 2011. This follows several months of rapid rises in credit-card borrowing, in part driven by struggling households taking on debt to help them through the cost-of-living crisis. Consumers still borrowed £1 billion in other forms of debt, such as car dealership finance and personal loans, the highest since October 2019. UK mortgage approvals at lowest since pandemic as rate rises bite (Jan 31): The International Monetary Fund (IMF) sees a “turning point” for the global economy as it raised its growth outlook for the first time in a year, with resilient US spending and China’s reopening buttressing demand against a litany of risks. Gross domestic product will likely expand 2.9% in 2023, 0.2 percentage point more than forecast in October, the fund said on Tuesday (Jan 31) in Singapore in a quarterly update to its World Economic Outlook. While that’s a slowdown from a 3.4% expansion in 2022, the IMF said it expects growth will bottom out this year before accelerating to 3.1% in 2024. Central banks’ interest-rate hikes and Russia’s invasion of Ukraine will continue to weigh on economic activity this year amid a protracted inflation crisis, the Washington-based institution said. While the slight upgrades are hardly cause for celebration, the IMF’s latest messaging signals a tonal shift as the fund’s top officials spent much of last year warning about the risks of widespread recession. The fund sees world consumer-price increases slowing to 6.6% this year, 0.1 percentage point higher than the October projection, following 8.8% in 2022. It forecast further slowing to 4.3% in 2024. Inflation rates are expected to be lower in about 84% of countries in 2023 than in 2022. “The outlook is not worsened this time around, which in itself is good news,” chief economist Pierre-Olivier Gourinchas said. The fund cut its 2023 outlook three times last year. “But it’s not enough. There are still some challenges to get on our way to a sustainable recovery that is broad and long-lasting.” The fight against inflation is not yet won: Monetary policy will need to remain contractionary, and some countries will need to tighten further before there’s a slowdown in broad measures of cost of living increases, Gourinchas said in a briefing. Downside risks include China’s recovery stalling, the war in Ukraine escalating, and more emerging and developing economies entering debt distress. Inflation could also prove more persistent. Financial markets may become volatile, and international tensions spurred by Russia’s aggression could cause the global system to fragment, hampering cooperation between nations. “We’re well away from any kind of global recession marker,” although the risks materialising could change that, Gourinchas said. IMF eyes ‘turning point’ for world economy as growth bottoms The IMF boosted its forecast for emerging-market and developing economies, saying they will grow 4%, a 0.3 percentage-point upgrade from October and compared with 3.9% for 2022. It raised the estimate for China’s expansion by 0.8 percentage point to 5.2%. China and India will account for about half of world growth in 2023, Gourinchas said. The IMF’s slightly more upbeat tone contrasts with a more dire view from its sister Bretton Woods institution, the World Bank. The development lender on Jan 10 slashed its growth forecasts for most countries and regions, and warned that new adverse shocks could tip the global economy into a recession. Gourinchas said that part of the difference is explained by the IMF’s use of purchasing-power-parity weights, which give a greater emphasis to emerging-market economies, differing from the World Bank’s use of market-based exchange rates. The World Bank is also more pessimistic than the IMF on growth in advanced economies and European economies, he said. Read also: Global inflation fight far from over, IMF chief economist says Sri Lanka’s inflation cools to eight-month low as supply snarls ease by Eric Martin Bloomberg by Andrew Atkinson & Lucy White Bloomberg

wednesday february 1, 2023 25 The E dge C E O m o rning brief world (Jan 31): Brexit is costing the UK economy £100 billion (US$124 billion or RM525.2 billion) a year, with the effects spanning everything from business investment to the ability of companies to hire workers. An analysis by Bloomberg Economics three years after Britain left the European Union (EU) paints a bleak picture of the damage done by the way the split has been implemented by the Conservative government. Economists Ana Andrade and Dan Hanson reckon the economy is 4% smaller than it might have been, with business investment lagging significantly and the shortfall in EU workers widening. “Did the UK commit an act of economic self-harm when it voted to leave the EU in 2016? The evidence so far still suggests it did,” Andrade and Hanson wrote in a note published on Tuesday (Jan 31). “The main takeaway is that the rupture from the single market may have impacted the British economy faster than we, or most other forecasters, expected.” The findings chip away at Prime Minister Rishi Sunak’s assertion that Brexit is a “huge opportunity” for the UK that’s starting to be realised. Cutting ties with the EU allows Britain to create freeports to spur trade and reform financial services rules to the benefit of banks in the City of London, according to him. “We’ve made huge strides in harnessing the freedoms unlocked by Brexit to tackle generational challenges,” Sunak said in a statement on Monday night. “Whether leading Europe’s fastest vaccine roll-out, striking trade deals with over 70 countries or taking back control of our borders, we’ve forged a path as an independent nation with confidence.” The Bloomberg study acknowledges that calculating how much output has been lost due to Brexit is neither “easy nor precise”, not least because leaving the EU coincided with the seismic disruptions caused by the coronavirus pandemic. However, it is clear that UK economic performance started to diverge from the rest of the Group of Seven (G7) following the 2016 vote to leave the EU, and has widened since. The underperformance is partly explained by business investment as firms put spending decisions on hold because of uncertainty about what life outside the EU would mean. Though some of that caution is dissipating, the UK has a long way to go to close the gap with its major peers. At about 9% of gross domestic product, business investment lags the G7 average of 13%. The UK economy continues to be blighted by shortages of workers — and Brexit has played no small part. Hanson and Andrade estimate that there are 370,000 fewer EU workers in employment in the UK than might have been the case had Britain stayed in the single market, a figure only partially offset by the arrival of non-EU citizens. “Scarcity of labour adds to inflationary pressure in the short term and constrains potential growth further out,” the economists wrote, “That’s not good news for an economy facing bleak long-term prospects, with trend growth of a little over 1%.” When it comes to trade, the picture is slightly less negative, with the economists concluding that Brexit doesn’t seem to be leaving a clear mark. “If for a while it looked like the barriers imposed with the EU in 2021 were driving a wedge between the UK and the G7’s trade performance, that gap no longer looks as significant,” they wrote. “Still, trade data has been subject methodological revisions, potentially clouding the comparison. Over the longer term, we would expect trade to bear the brunt of the impact of leaving the single market.” Brexit costing UK up to £100 bil a year in lost output (Jan 31): Foreigners are returning to China’s stock market with a vengeance, snapping up more shares in January alone than they did for the whole of 2022. Offshore funds have added a net 141.2 billion yuan (US$20.9 billion or RM89.08 billion) worth of stocks listed in Shanghai and Shenzhen through trading links with Hong Kong this month, even with a weeklong holiday trading break. That’s more than 50% above the previous monthly record, according to Bloomberg-compiled data going back to 2017. The fervour has helped drive the CSI 300 Index, a benchmark for mainland stocks, to the brink of a bull market as traders returned from the Lunar New Year holiday this week. Analysts expect foreign buying to propel an outperformance in mainland shares in the coming months, a catch-up to the massive rally seen in overseas Chinese stocks since the start of November. Solid holiday spending data will “continue to be a theme offering a shot in the arm throughout the first quarter and enhance investor confidence toward a recovery”, Kaiyuan Securities analyst Zhang Chi wrote in a note. The buying streak continued into Tuesday (Jan 31), even as the CSI 300 fell 1.1%. The benchmark has risen 18% over the past three months as sentiment improved following Beijing’s Covid Zero policy pivot and moves to support growth. While a world-beating feat by itself, the gains have still trailed the 49% surge in the Hang Seng China Enterprises Index, which tracks Chinese firms traded in Hong Kong. Foreigners scoop up China shares with January inflow at record The months-long rally has led to some investors booking in gains — as illustrated on Monday and again on Tuesday, when the CSI 300 pulled back from the verge of a bull market. However, few doubt that Chinese stocks will shine this year. There’s been a flurry of forecast upgrades for the nation’s economy, with Goldman Sachs Group Inc seeing a 5.5% expansion, even as most developed economies grapple with the fear of a recession. There’s still room for further purchases. Hedge fund investors have boosted holdings of Chinese stocks for three straight months but positioning hasn’t yet caught up with the improving investment, Goldman strategists wrote on Sunday. A research by Morgan Stanley earlier this month also showed US funds remain underweight on Chinese stocks. And as the economy recovers, earnings growth will likely follow and add impetus to the stock market. “China’s earnings-per-share forecasts have not incorporated any of the upside to revisions,” Jefferies Financial Group Inc strategists including Sean Darby wrote in a Monday note. “There will be a slew of upgrades that will force investors to chase the market.” Bloomberg by Andrew Atkinson Bloomberg Offshore funds have added a net US$20.9 billion worth of stocks listed in Shanghai and Shenzhen through trading links with Hong Kong this month.

wednesday february 1, 2023 26 The E dge C E O m o rning brief world (Jan 31): The Biden administration is considering cutting off Huawei Technologies Co from all of its American suppliers, including Intel Corp and Qualcomm Inc, as the US government intensifies a crackdown on the Chinese technology sector. Sales from US firms to Huawei have been limited for four years, since former president Donald Trump added the Shenzhen, China-based company to the so-called US “entity list” out of national security concerns. US suppliers have since required government approval to sell to the telecom equipment giant. Now, some officials in the Biden administration are advocating for banning all sales to Huawei — long suspected of ties to the Beijing government and Chinese military — as the administration debates whether and how to adjust its licensing policy, according to people familiar with the matter. The people asked not to be identified because a decision hasn’t been made. Tensions with China have been rising throughout Joe Biden’s presidency, and he’s under pressure from Republicans controlling the House to continue squeezing Beijing, particularly to limit the country’s technological advances. Last week, the Biden administration persuaded the Netherlands and Japan to join with the US in restricting exports of advanced semiconductor manufacturing machinery to China. Beijing “is gravely concerned about the report”, Chinese Foreign Ministry spokesperson Mao Ning said on Tuesday (Jan 31) at a regular press briefing in Beijing. “China is strongly against the US’s abuse of state power to hobble Chinese by Jenny Leonard & Ian King BLoomberg Biden team weighs fully cutting off Huawei from US suppliers companies by stretching the concept of national security,” she said, adding the Asian nation would protect its companies without saying how. Huawei was once one of the world’s largest buyers of electronic components and a hugely important part of the supply chain because of its position in the handset and networking equipment industries. Trump’s ban on certain sales crippled the Chinese company, while wiping out huge amounts of revenue for US suppliers such as Broadcom Inc. But the Commerce Department continued to allow some other products to be supplied to Huawei. The company remains a US$100 billion (RM424.7 billion) behemoth that’s spearheading the expansion of the world’s largest 5G network at home, while aiding construction of critical broadband from Africa to the Middle East. In December, the firm declared it was “business as usual” after successfully weathering US tech sanctions. Stalled applications Under the new policy some officials advocate, all licence requests to supply the company would be denied. Meanwhile, most current applications for new licences are languishing in a stalled approval process, the people said, creating a de facto halt. The longer-term impact on Huawei from that action is uncertain. It still derives enormous revenue from local wireless carriers such as China Mobile Ltd and state enterprises that rely on Huawei to build local-level and corporate networks. China operates more than two million 5G base stations, or more than 60% of the world’s total, according to industry officials. Huawei’s also been stockpiling foreign components such as chips and sourcing or researching alternatives to American circuitry. Representatives for the company didn’t immediately respond to requests for comment. Intel and Advanced Micro Devices Inc provide Huawei with processors it uses in its Mate range of laptops, while Qualcomm sells Huawei processors and modems that are the core components of its diminished range of smartphones. Spokespeople for the National Security Council and the Commerce Department didn’t immediately respond to requests for comment. Representatives for Intel, Qualcomm and AMD declined to comment. It’s not clear how soon the administration may act on a policy change, the people familiar with the matter said. They cautioned that discussions are at an early stage, and some of them said timing for a decision could coincide with the fouryear anniversary of Huawei’s addition to the entity list in May. Shutting off sales to Huawei wouldn’t be as devastating for US companies as it once was. The Chinese company has spun off a large chunk of its smartphone business, mostly offers only lower-bandwidth 4G phones under its own name and has seen its brand damaged by the US campaign against it. Underlining the decline in its importance, Huawei represents less than 1% of revenue for Qualcomm, Intel and AMD, according to Bloomberg supply chain analysis. China is strongly against the US’s abuse of state power to hobble Chinese companies by stretching the concept of national security,” said Chinese Foreign Ministry spokesperson Mao Ning. Bloomberg

wednesday february 1, 2023 27 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) Vestland Bhd 352.11 0.000 0.390 0.00 368.3 Borneo Oil Bhd 154.46 0.000 0.020 -20.00 193.5 G3 Global Bhd 139.93 0.000 0.030 0.00 87.1 ZEN Tech International Bhd 105.41 0.000 0.065 225.00 84.9 Sapura Energy Bhd 102.79 0.000 0.050 42.86 799.0 Hong Seng Consolidated Bhd 90.61 -0.005 0.200 -9.09 1,021.7 Ancom Logistics Bhd 80.56 0.000 0.225 87.50 106.5 Top Glove Corp Bhd 67.60 -0.070 0.830 -8.29 6,646.1 Econpile Holdings Bhd 53.73 0.020 0.220 29.41 311.9 Velesto Energy Bhd 52.09 0.000 0.230 53.33 1889.6 MMAG Holdings Bhd 48.90 0.000 0.020 -20.00 48.4 Bumi Armada Bhd 48.24 0.005 0.575 19.79 3402.9 Perdana Petroleum Bhd 40.30 -0.005 0.190 52.00 421.3 ATA IMS Bhd 40.13 0.005 0.435 93.33 523.2 KNM Group Bhd 39.39 0.000 0.060 20.00 220.6 Barakah Offshore Petroleum 37.20 0.005 0.060 140.00 60.2 Public Bank Bhd 33.80 -0.020 4.240 -1.85 82301.3 Minda Global Bhd 32.75 0.005 0.070 0.00 117.5 Dagang NeXchange Bhd 30.81 -0.010 0.655 28.43 2067.4 Cypark Resources Bhd 29.95 -0.010 1.03 119.15 788.4 Data as compiled on Jan 31, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) AE Multi Holdings Bhd 0.030 50.00 12,048.2 20.00 64.9 LYC Healthcare Bhd 0.310 44.19 23,208.0 55.00 184.1 DGB Asia Bhd 0.020 33.33 326.9 33.33 35.7 XOX BHD 0.025 25.00 2,846.6 66.67 126.3 Alam Maritim Resources Bhd 0.030 20.00 17,720.7 20.00 46.0 TSR Capital BHD 0.235 17.50 603.8 17.50 41.0 Olympia Industries Bhd 0.085 13.33 7,008.7 13.33 87.0 Hubline Bhd 0.045 12.50 727.5 12.50 193.0 PJBUMI Bhd 1.180 11.32 2,868.8 31.11 96.8 XOX Technology Bhd 0.050 11.11 316.3 11.11 44.7 Econpile Holdings Bhd 0.220 10.00 53,730.4 29.41 311.9 Permaju Industries Bhd 0.055 10.00 867.1 22.22 106.5 GIIB HOLDINGS Bhd 0.115 9.52 2,025.8 27.78 68.0 Barakah Offshore Petroleum 0.060 9.09 37,228.2 140.00 60.2 mTouche Technology Bhd 0.060 9.09 1,171.7 20.00 55.6 Vizione Holdings Bhd 0.065 8.33 7198.5 18.18 133.0 Xin Hwa Holdings Bhd 0.270 8.00 698.7 12.50 69.0 Minda Global Bhd 0.070 7.69 32,751.6 0.00 117.5 Asia Brands BHD 0.590 7.27 3.0 7.27 137.3 Jentayu Sustainables Bhd 0.820 7.19 12,529.5 13.10 313.0 Data as compiled on Jan 31, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) Pegasus Heights Bhd 0.005 -50.00 626.4 -50.00 54.1 Vsolar Group Bhd 0.005 -50.00 2,803.7 -50.00 24.2 Compugates Holdings BHd 0.010 -33.33 905.0 0.00 51.2 Eduspec Holdings Bhd 0.015 -25.00 16,358.4 -25.00 45.7 JOE HOLDING BHD 0.020 -20.00 3,021.0 0.00 61.2 Perak Corp BHD 0.200 -20.00 1.0 -20.00 20.0 TECHNA-X Bhd 0.025 -16.67 20,968.8 0.00 55.4 Meridian Bhd 0.030 -14.29 1,016.8 0.00 27.1 XOX Networks Bhd 0.030 -14.29 313.8 0.00 34.1 SMTrack Bhd 0.040 -11.11 2,216.3 -20.00 46.8 PDZ Holdings Bhd 0.040 -11.11 308.0 0.00 23 Nexgram Holdings Bhd 0.045 -10.00 15,448.6 -35.71 19.9 MQ Technology Bhd 0.050 -9.09 18,821.5 0.00 62.6 Lambo Group BHD 0.050 -9.09 4,214.2 -9.09 77.0 Minetech Resources Bhd 0.050 -9.09 431.7 -9.09 76.1 Fibon Bhd 0.435 -8.42 850.6 20.83 42.5 Komarkcorp Bhd 0.055 -8.33 635.5 0.00 31.8 Tower Real Estate Investment 0.465 -7.92 141.5 2.20 130.4 Mclean Technologies Bhd 0.175 -7.89 661.5 2.94 34.5 Top Glove Corp Bhd 0.830 -7.78 67599.515 -8.29 6646.1 Data as compiled on Jan 31, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) Petronas Dagangan Bhd 21.800 -1.080 1,226.90 -5.22 21,657.3 Nestle Malaysia Bhd 135.200 -0.800 212.80 -3.43 31,704.4 Petronas Gas Bhd 16.820 -0.780 1,260.10 -1.75 33,282.3 Malaysian Pacific Industries 33.180 -0.720 147.30 15.37 6,599.4 Hong Leong Bank Bhd 20.520 -0.680 3,318.90 -0.19 44,481.6 Kesm Industries Bhd 7.300 -0.400 14.60 3.99 314.0 Hong Leong Financial Group 18.500 -0.340 371.50 -0.54 21,187.0 ViTrox Corp Bhd 7.840 -0.240 198.90 2.48 7,406.4 Kuala Lumpur Kepong Bhd 21.420 -0.200 1,406.80 -4.20 23,094.1 Malaysia Airports Holdings 7.060 -0.190 3,694.30 7.62 11,713.9 Pentamaster Corp Bhd 4.830 -0.160 1,328.70 9.03 3,435.7 United Plantations BHD 15.500 -0.160 1,172.90 1.31 6,406.2 SFP Tech Holdings Bhd 2.500 -0.150 8,823.30 38.89 2,000.0 Carlsberg Brewery Malaysia 23.540 -0.140 109.00 2.88 7,197.3 Southern Acids Malaysia BHD 3.670 -0.120 5.0 0.55 502.5 DiGi.Com Bhd 4.210 -0.110 7,056.00 5.25 49,389.6 Maxis Bhd 3.960 -0.100 4,128.50 3.13 31,007.4 Petronas Chemicals Group Bhd 8.350 -0.100 7,711.00 -2.91 66800 PPB Group Bhd 17.600 -0.100 1,449.10 0.92 25,037.8 UMW Holdings Bhd 3.700 -0.100 825.6 6.63 4322.7 Data as compiled on Jan 31, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) Fraser & Neave Holdings Bhd 24.800 0.580 194.9 14.92 9,096.1 Rapid Synergy Bhd 16.280 0.360 6.8 2.01 1,740.3 Batu Kawan Bhd 22.800 0.240 3.0 2.24 8,969.1 Heineken Malaysia Bhd 28.000 0.200 463.3 11.11 8,458.7 Harrisons Holdings Malaysia 6.900 0.190 7.8 4.07 472.5 British American Tobacco 12.660 0.180 254.1 12.83 3,614.8 Bintulu Port Holdings Bhd 5.180 0.160 28.4 7.92 2,382.8 Hong Leong Industries Bhd 8.860 0.160 252.1 -3.70 2,830.5 Amway Malaysia Holdings Bhd 5.460 0.120 19.1 9.20 897.5 Malayan Cement Bhd 2.460 0.120 821.5 16.04 3,223.1 PJBUMI Bhd 1.180 0.120 2,868.8 31.11 96.8 Sam Engineering & Equipment 4.950 0.110 1,064.5 0.41 2,680.9 LYC Healthcare Bhd 0.310 0.095 23,208.0 55.00 184.1 Gamuda Bhd 3.920 0.090 6,688.0 4.53 10,271.6 FAR East Holdings BHD 3.800 0.080 27.5 2.70 2,256.6 Panasonic Manufacturing 23.080 0.080 47.2 0.79 1,402.0 UMS Holdings BHD 2.180 0.080 6.5 9.00 88.7 Bermaz Auto Bhd 2.170 0.070 5585 1.88 2527.2 Chin Teck Plantations BHD 8.290 0.070 0.7 -2.92 757.4 D&O Green Technologies Bhd 4.720 0.070 1,105.7 10.28 5,840.2 Data as compiled on Jan 31, 2023 Source: Bloomberg CLOSE CHANGE CHANGE (%) CLOSE CHANGE CHANGE (%) DOW JONES 33,717.09 -260.99 -0.77 S&P 500 4,017.77 -52.79 -1.30 NASDAQ 100 11,912.39 -254.21 -2.09 FTSE 100 7,715.61 -69.26 -0.89 AUSTRALIA 7,476.66 -4.99 -0.07 CHINA 3,255.67 -13.65 -0.42 HONG KONG 21,842.33 -227.40 -1.03 INDIA 59,549.90 49.49 0.08 INDONESIA 6,839.34 -33.14 -0.48 JAPAN 27,327.11 -106.29 -0.39 KOREA 2,425.08 -25.39 -1.04 PHILIPPINES 6,793.25 -177.72 -2.55 SINGAPORE 3,365.67 -12.62 -0.37 TAIWAN 15,265.20 -228.62 -1.48 THAILAND 1,671.46 -9.76 -0.58 VIETNAM 1,111.18 8.61 0.78 Data as compiled on Jan 31, 2023 Source: Bloomberg CPO RM 3,788.0035.00 OIL US$ 86.370.25 RM/USD 4.2457 RM/SGD 3.235 RM/AUD 3.0143 RM/GBP 5.2556 RM/EUR 4.6270