TheEdge-141223

ceoMorningBrief thursday, DECEMber 14, 2023 Issue 686/2023 theedgemalaysia.com SUNWAY MEDICAL CENTRE SDN BHD 199501012653 (341855-X) No.5, Jalan Lagoon Selatan, Bandar Sunway, 47500 Subang Jaya, Selangor, Malaysia. +603-7491 9191 EMAIL: [email protected] Thank You FOR ALL YOUR SUPPORT For close to 25 years, Sunway Medical Centre, Sunway City, has grown from strength to strength. As a leading private quaternary hospital in Malaysia, we are committed to becoming an international healthcare institution of choice by offering a comprehensive range of medical services with state-of-the-art facilities and technologies that will cater to your every healthcare needs. TOWER D TOWER F TOWER C TOWER B TOWER A TOWER E

CEOMorningBrief THURSDAY, DECEMBER 14, 2023 ISSUE 686/2023 theedgemalaysia.com COP28 ENDS WITH DEAL ON TRANSITION AWAY FROM FOSSIL FUELS p17 SC relaxes rules for transfer of ACE Market firms to Main Market HOME: Fahmi: MCMC under Communications Ministry, DNB still undecided p3 Sapura Energy thrown lifeline as financiers give nod-in-principle for debt restructuring scheme p4 Investors’ lawsuit against MYAirline co-founder, four companies to proceed to full trial p6 MACC officers charged with gang robbery p15 Health Ministry tells Malaysians to mask up again as Covid-19 cases jump p15 Report on Page 4. ACE Market-listees that have maintained a market cap of at least RM1 bil for six months can now transfer to the Main Market if they meet the profit rules BLOOMBERG

THURSDAY DECEMBER 14, 2023 2 THEEDGE CEO MORNING BRIEF published by ( 2 6 6 9 8 0 - X ) tel . 603-77218000 Level 3, Menara KLK, 1 Jalan PJU 7/6, Mutiara Damansara, 47810, Petaling Jaya, Selangor, Malaysia publisher + ceo . Ho Kay Tat editor-in-chief . Kathy Fong chief commercial officer . Sharon Teh chief operating officer . Lim Shiew Yuin editors . Jenny Ng . Tan Choe Choe Lam Jian Wyn to contact editors: [email protected] to advertise: [email protected] the edge ceo morning brief Read from desktop or mobile device. You can print in A4 to read. Set print mode to fit or shrink oversize page. to get on emailing list [email protected] No honeymoon period for Cabinet members — PM Govt assures retired civil servants’ pension amount will not decrease KUALA LUMPUR (Dec 13): Prime Minister Datuk Seri Anwar Ibrahim has reminded all Cabinet members, including those newly appointed, that there is no honeymoon period and they must continue to carry out their duties to address the issues facing the people. He said that Cabinet members and the government are also required to eradicate hardcore poverty, master key areas, drive economic growth, and ensure the prosperity of the country. Anwar noted that these were among the points conveyed during the first meeting of the new Cabinet on Wednesday morning. “In this meeting, I emphasised the new responsibilities of each ministry. The meeting also expressed appreciation to former Human Resource Minister V Sivakumar for his contributions. “I also emphasised that the focus and priorities must now be more directed and swift in translating the aspirations of the people,” he said in a Facebook post. The meeting was also attended by new Bernama KUALA LUMPUR (Dec 13): The gov- Bernama ernment has given an assurance that it will top up the pension amount for retired civil servants to ensure that it is not be less than what they currently receive, Prime Minister Datuk Seri Anwar Ibrahim said. “Although there is a court decision, the government, specifically the Treasury, has decided to top up the amount considered insufficient so that it is not less than the (pension) salary that should be received,” he said. He said this at the Administrative and Diplomatic Officers Alumni (Alumni PTD) and Yayasan Alumni PTD dinner at the World Trade Centre here on Wednesday night. On June 27, the Federal Court affirmed the Court of Appeal’s decision to declare the Pensions Adjustment (Amendment) Act 2013 (Act A1447) as null and void, rendering the amendments no longer applicable to government retirees. However, in July, the government decided that the July pension and derivative pension for civil servants who retired before and from 2013 be paid using the original pension amount. This resulted in the pension payments for civil servants who retired before 2013 being restored to the December 2012 amount, while civil servants who retired from 2013 onwards had their pension payments restored to the original amount at the time of retirement. Anwar had said that the difference between the current pension amount and the original figure will continue to be paid in the form of a special aid known as Special Recognition for Retirees (PKKP) to enable the amount received by pensioners to be the same as the one received in June 2023. Earlier, in his speech at the dinner, Alumni PTD president Tan Sri Abdul Halim Ali expressed concern that there would be a decrease in the pension amount next year following the Federal Court’s decision. Meanwhile, touching on the study of the Public Service Remuneration System (SSPA), Anwar said the government is committed to thoroughly look into the matter but added that this would require some time. “On salary adjustments, the issue will certainly be looked into and studied, and I believe the SSPA has not been reviewed for 11 years. This is not about winning over the civil servants, but this is the reality. “It should be reviewed every 10 years, but because there is non-stop politicking going on, there was no opportunity to think about civil servants’ issues. But now, there is a committee to review the salary and allowance scheme for civil servants, Insya-Allah, this will be resolved,” he said. At the event, the prime minister also approved an allocation of RM500,000 to Alumni PTD to continue the association’s activities in helping strengthen public administration and services. Cabinet ministers, namely Minister of Finance II Datuk Seri Amir Hamzah Azizan, Plantation and Commodities Minister Datuk Seri Johari Ghani, Health Minister Datuk Seri Dr Dzulkefly Ahmad, Digital Minister Gobind Singh Deo and Human Resource Minister Steven Sim. On Tuesday, Anwar announced a Cabinet reshuffle, which saw the appointment of five new faces to ministerial and deputy ministerial positions. The Cabinet reshuffle and restructuring of ministries involved the Ministry of Natural Resources, Environment and Climate Change, which is now divided into the Ministry of Energy Transition and Public Utilities and the Ministry of Natural Resources and Sustainability. The Ministry of Communications and Digital was also separated into the Ministry of Digital and the Ministry of Communications. The reshuffle increased the number of Cabinet members from 28 to 31, while deputy ministers increased from 27 to 29, bringing the total number of members in the Unity Government administration to 60. Read also: Anwar urges caution after sultan’s government comments, report says The PM urged caution after the country’s incoming king set teeth on edge in Kuala Lumpur and beyond last weekend, with suggestions that the monarchy ought to have a bigger say in federal government matters. HOME

THURSDAY DECEMBER 14, 2023 3 THEEDGE CEO MORNING BRIEF HOME PUTRAJAYA (Dec 13): Newly appointed Minister of Plantation and Commodities Datuk Seri Johari Abdul Ghani is still leading the task force to resolve several issues involving 1Malaysia Development Bhd (1MDB). “Insya-Allah, so far I’m still (heading the task force),” he told reporters after clocking in with his deputy Datuk Chan Foong Chin at the lobby of the Ministry of Plantation and Commodities (KPK) to officially start his duties on Wednesday. Asked about the possibility that the position could be handed over to another person after he was appointed minister, Johari, who is also a Member of Parliament for Titiwangsa, said: “See who dares to do it, go ahead.” At the same time, he said the progress of the government’s claims against Goldman Sachs, which had been completed, was also being monitored. In July 2020, Goldman Sachs agreed to pay US$3.9 billion (RM16.6 billion) to settle a criminal investigation by Malaysia against the investment bank in the multi-billion dollar 1MDB issue. “After four (payment) delays, they still haven’t paid the first payment of US$250 million. “Their reason is that every settlement made through AmBank and International Petroleum Investment Company (IPIC of Abu Dhabi) is counted as asset recovery. “That is wrong. Recovery is that we look for things (assets) that have been lost through 1MDB,” he said. Meanwhile, Johari is determined to continue with all plans to further strengthen the KPK. “They have done a good job because when I look at the ministry’s website, everything is very comprehensive. “So, I just want to consolidate ties by increasing the number of meetings with industry players and stakeholders in the plantation and commodity sectors,” he said, adding that the sectors had contributed as much as 5% to the gross domestic product. Johari Ghani still heads 1MDB task force Sim determined to lift dignity of workers in Malaysia KUALA LUMPUR (Dec 13): The Malaysian Communications and Multimedia Commission (MCMC) is under the purview of Communications Ministry, according to its minister Fahmi Fadzil, while the custodian ministry of fifth-generation (5G) infrastructure outfit Digital Nasional Bhd (DNB) is still undecided. During a press conference on Wednesday (Dec 13), Fahmi said while the Cabinet has yet to conclude its discussion on the allocation of government agencies, he was able to disclose how the agencies are split between the Communications Ministry and Digital Ministry. He said agencies that will remain under the Communications Ministry are: MCMC, Bernama, Institute of Broadcasting and Information Tun Abdul Razak (IPPTAR), the Information Department (JaPen), the Broadcasting Department including RTM, National Film Development Corp (Finas), and MyCreative Ventures. The Community Communications Department (J-KOM) is to be moved from the Prime Minister’s Department to the Communications Ministry. Agencies to be transferred to the Digital Ministry, headed by Gobind Singh Deo, include Malaysia Digital Economy Corp (MDEC), MYNIC, and the Department of Personal Data Protection, according to Fahmi. “Meanwhile, DNB is still under discusPUTRAJAYA (Dec 13): New Human Resources Minister Steven Sim Chee Keong is determined to lift the dignity of workers in Malaysia, irrespective of race and religion. “We will stand together with the workers,” he told reporters after clocking in to mark his official start at the ministry here on Wednesday. Sim, who was previously the deputy finance minister, was appointed as minister of human resources following a Cabinet reshuffle that was announced by Prime Minister Datuk Seri Anwar Ibrahim on Tuesday, replacing V Sivakumar who was dropped. Sim arrived at the Ministry of Human Resources at about 1.15pm and was greeted by the ministry staff. Also clocking in was Deputy Human Resources Minister Datuk Seri Abdul Rahman Mohamad, who was previously the deputy works minister. Sim said the fate of employers and worksion and will be decided later,” he added. He noted that a Ministerial Functions Order is expected to be issued in January 2024 once the Cabinet’s discussion on agency allocation is completed. Further agency allocation rationalisation to be done On Putrajaya’s decision to split the Communications and Digital Ministry into two separate ministries, Fahmi suggested that agencies that will be transferred to the Digital Ministry may include those outside the portfolio held by the old ministry. He explained that the portfolio was split due to the New Industrial Master Plan (NIMP) 2030, which emphasises the digital economy as a major economic driver, and a need to make adjustments as government functions under the digital sector fell under various ministries. “For example, in terms of reporting on the digital sector, the agency is MyDIGITAL Corp under the Ministry of Economy, while startups are under the Ministry of Science, Technology and Innovation. There are also several investment aspects under Malaysian Investment Development Authority, which is under Miti (Ministry of Investment, Trade and Industry). “There needs to be an adjustment since NIMP 2030 has emphasised the important role the digital economy will have in the development of our country’s economy, and thus the decision to separate and make digital its own ministry is not only correct but also timely,” Fahmi said. “With all these agencies to be coordinated by a minister (Gobind) who is fluent in law and understands the importance of regulatory aspects, especially in emerging technologies — not just artificial intelligence, but artificial general intelligence — I believe the digital ministry will be able to coordinate many things better,” he added. MCMC under Communications Ministry, DNB still undecided BY IZZUL IKRAM theedgemalaysia.com Bernama Bernama Read also: Wanita Umno vice-chief named KUB chairman as Johari Ghani relinquishes post ers is interlinked and is not egocentric, adding that if workers are not protected, it will affect the company in terms of productivity. “In an era of restructuring the economy under the Malaysia Madani framework, the focus is generally on the development of skills, worker welfare and productivity,” he said. Sim said that he, Abdul Rahman and the ministry’s staff would scrutinise efforts carried out previously and study plans for the future.

THURSDAY DECEMBER 14, 2023 4 THEEDGE CEO MORNING BRIEF HOME Sapura Energy thrown lifeline as financiers give nod-inprinciple for debt restructuring scheme KUALA LUMPUR (Dec 13): Practice Note 17 (PN17)-classified Sapura Energy Bhd has been thrown a lifeline, as at least 75% of the financiers of its approximately RM10.3 billion multi-currency financing facilities have provided the requisite approval-in-principle for a proposed debt restructuring scheme. In a statement on Wednesday, the oil and gas service provider said it had received written confirmation from the Corporate Debt Restructuring Committee, marking a significant milestone for the group to address its unsustainable level of debt and amounts owed to trade creditors, particularly Malaysian vendors who are small and medium enterprises. The exercise involves approximately RM1.5 billion in claims from vendors. In a separate filing with Bursa Malaysia on Wednesday, the group reported that its net profit trebled to RM30.89 million or 0.19 sen per share in the third quarter ended October 31, 2023 (3QFY2024) from RM10.18 million or 0.06 sen per share a year ago. The better performance was mainly due to lower depreciation, higher share of profit from joint venture and associate, as well as favourable foreign exchange gain from the appreciation of the US dollar against the ringgit. However, its quarterly revenue dropped by 13.42% to RM1.1 billion, from RM1.28 billion in 3QFY2022, due to lower revenue recognised from the engineering & construction (E&C) business segment arising from slower project progress. For the nine months of 2023 (9MFY2023), the group’s net profit more than doubled to RM219.78 million from RM99.53 million year-onyear, while revenue slipped by 4.06% to RM3.2 billion from RM3.33 billion in 9MFY2022. KUALA LUMPUR (Dec 13): Companies listed on the ACE Market of Bursa Malaysia that have managed to maintain a market capitalisation of at least RM1 billion for six months, and meet the profit requirements for companies seeking to list on the Main Market, will be eligible for an accelerated transfer to the Main Market. This means an applicant must record audited profits for at least the most recent three full financial years, with an aggregate after-tax profit of at least RM20 million, and an after-tax profit of at least RM6 million in its most recent financial year. These are among the criteria of the accelerated transfer framework, unveiled by the Securities Commission Malaysia (SC) in a statement on Wednesday, that will take effect on Jan 1, 2024, through amendments to the Equity Guidelines. The applicant must also have been listed on the ACE Market for at least one year, and been operating in the same core business for the most recent three full financial years. The announcement came after the SC said last week that it would introduce a mehcanism to streamline the transfer of qualified ACE Market listees to the Main Market. SC relaxes rules for transfer of ACE Market firms to Main Market BY SYAFIQAH SALIM theedgemalaysia.com BY LUQMAN AMIN theedgemalaysia.com Sapura Energy attributed the topline contraction to lower revenue posted by its E&C division following slower progress of its projects. Sapura Energy group chief executive officer Datuk Mohd Anuar Taib said with the approval-in-principle, the group is quite confident towards approaching the last few milestones of its journey in exiting the status as a PN17 company. Earlier, the group reported that it had applied with Bursa Securities for an additional six-month extension to submit its regularisation plan to exit from PN17 status, stretching from Nov 30, 2023 to May 31, 2024, pending a decision by Bursa Securities. “Given the hurdles we faced, it’s understandable that not everyone could give us their backing. Hence, we are immensely grateful to the valued partners who have consistently demonstrated their unwavering support,” Anuar Taib said. Sapura Energy shares closed half a sen or 11.11% up at 5 sen on Wednesday’s close, with 9.61 million shares changing hands. Its market capitalisation stood at RM798.95 million. Read also: Sapura Energy’s 3Q profit more than doubles, lifted by associates, JVs and forex gain The initiative is part of a slew of capital market measures introduced to improve stock market vibrancy and reduce market friction, the SC said in its Wednesday statement. The regulator said the newly simplified and accelerated transfer process should incentivise more companies listed on the ACE Market to make continuous efforts to improve their corporate values and achieve sustainable growth for shareholders. Transferring to the Main Market, which is the prime market for established companies, demonstrates that the ACE Market public listed companies (PLCs) have achieved the standards in terms of quality, size and operations, it added. “This accelerated transfer process will benefit sizeable, qualified ACE Market PLCs by accelerating the transfer to the Main Market for greater visibility and access to a larger pool of investors, including foreign and institutional investors,” said SC chairman Datuk Seri Dr Awang Adek Hussain. He also noted that the ACE Market has remained a significant source of financing within the Malaysian equity capital market, with 20 ACE Market listings raising RM1.26 billion through initial public offerings from January to October this year. THE EDGE FILE PHOTO SC has unveiled a framework that speeds up the promotion of eligible ACE Market-listed companies to the Main Market of Bursa Malaysia.

thursday december 14, 2023 5 The E dge C E O m o rning brief

THURSDAY DECEMBER 14, 2023 6 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Dec 13): The High Court has dismissed an application by Datuk Allan Goh Hwan Hua, a co-founder of the now-defunct MYAirline, and four companies to strike out a suit brought against them by 15 investors. The matter will now go for full trial. In her decision on Wednesday, High Court judge Adlin Abdul Majid said that this is not a “plain and obvious” case to be summarily dismissed, and that there are issues that need to be thrashed out during a trial. This includes the issue of whether Goh and the four defendants have committed fraud as alleged by the plaintiffs. The investors had sued Goh and the four companies over their alleged failure to pay monthly redemption value sums and financing returns from the investors’ outlay of about RM8 million. The companies being sued are i-Serve Online Mall Sdn Bhd (ISOM), Bright Moon Venture PLT (BMV), QA Smart Partnership PLT (QAS), and Trillion Cove Holdings Bhd (TCH). Goh, 57, is a shareholder of ISOM and director and shareholder of TCH. In response, the defendants have filed an application to strike out the suit on the basis that the legal action was a nullity and an abuse of the court process. To support their application, some defendants contended that the plaintiffs were “statutorily prohibited” from filing the legal action, as the sum demanded was part of the monies seized by Bank Negara Malaysia under the Anti-Money Laundering Act (AMLA) in late 2021. In her judgement on Wednesday, Adlin noted that it was not evident that the repayments claimed by the plaintiffs were part of the monies seized. “I’m unable to agree with the defendants’ arguments that the target of the claim are the funds subject to the seizure orders. The cases pleaded and documentary evidence at this stage of proceedings are insufficient [to determine] that these monies do form part of the accounts [..] which are subject to the seizure order,” she said. She added that such a determination can only be made at a full trial, taking into account the movement of the plaintiff’s monies paid under the agreement. Goh and ISOM also pleaded that they were not a party to the contracts between the plaintiffs and BMV, QAS, and TCH. However, the plaintiffs alleged that there were representations made by Goh and ISOM regarding their investments in the three companies. Addressing this, the judge said that these allegations have not been sufficiently rebutted and needed to be looked at further. “With the allegations raised, the true nature of the transactions between the plaintiff and [BMV, QAS, and TCH] and [Goh and ISOM]’s involvement in them, if any at all, can only be determined at a full trial,” she said. The judge also said that she did not agree with the defendants’ argument that the plaintiffs’ statement of claim (SOC) was not “sufficiently particularised” and did not disclose a cause of action. She said that the SOC contained issues to be determined at a full trial. She dismissed the striking out application, ordering the defendants to pay costs of RM8,000. With the decision, the court also set nine initial dates for trial in October and BY TARANI PALANI theedgemalaysia.com Investors’ lawsuit against MYAirline co-founder, four companies to proceed to full trial December next year. The dates are Oct 14,15, 21, 22, 23 and Dec 16 to 19. In the suit, the plaintiffs claim that the companies had failed to make the agreed upon monthly payments from November 2021 to June 2022, despite having been sent letters of demand by their solicitors. They also noted that the payments to them stopped around the time BNM raided ISOM, TCH and other companies and subsequently froze their banking accounts. Goh, who is also the co-founder and majority shareholder of troubled budget airline MYAirline Sdn Bhd, has initiated a judicial review application challenging BNM’s freeze order. In September, BNM said it had imposed a RM50 million compound against the i-Serve Group for accepting deposits without a licence. BNM said it imposed the compound for seven entities under the i-Serve Group per Section 137(1) of the Financial Services Act (FSA) and for money laundering under Section 4(1) of Anti-Money Laundering, AntiTerrorism Financing and Proceeds of Unlawful Activities Act (AMLA). The central bank said the compound was imposed on Oct 19, 2022, with the written consent of the public prosecutor under a joint enforcement action that followed its investigation, which found that the offences were committed between June 2018 and September 2021. The seven entities are ISOM (RM12.5 million), i-Serve Technology and Vacations Sdn Bhd (RM12.5 million), QAS, QA Elite Partnership PLT, QA Premium Partnership PLT and MM2217 PLT and Valuewise PLT (RM5 million each). BNM added that the entities paid the compound on Nov 16. High Court judge Adlin Abdul Majid said that this is not a “plain and obvious” case to be summarily dismissed, and that there are issues that need to be thrashed out during a trial, including whether Goh and the four defendants have committed fraud as alleged by the plaintiffs. LOW YEN YEING/THE EDGE

THURSDAY DECEMBER 14, 2023 7 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Dec 13): The government has established a committee to review the Petroleum (Income Tax) Act 1967 (Pita), according to Deputy Finance Minister Lim Hui Ying. She said the government had always ensured that the tax system is relevant to the upstream petroleum industry, including Malaysian oil and gas company Petroliam Nasional Bhd (Petronas) and international players. “The government will also study best taxation practices abroad and the revenue angle for the country,” Lim told the Dewan Negara on Wednesday. Organisations carrying out major petroleum operations are bound to comply with the regulations of Pita. Since 2010, the assessment system under Pita has changed to a current yearbased and self-assessment system. Govt forms committee to review Petroleum (Income Tax) Act 1967 KUALA LUMPUR (Dec 13): BMI, a Fitch Solutions company, said that Malaysia’s upstream sector is gathering momentum as investors commit to exploration and production investments. International and regional oil companies, including Shell, Inpex Corp, and PTT Exploration and Production (PTTEP), are reinforcing their commitment to investing in Malaysia’s upstream sector, following the government’s launch of successive petroleum bidding rounds in 2021, 2022, and 2023. In a report on Tuesday, the firm said that currently, more than 30 foreign companies, including oil and gas majors and independent players, are currently operating in Malaysia’s upstream business. It said Malaysia’s bidding round 2021 (MBR 2021) offered 13 exploration blocks, of which six were awarded. The six blocks awarded to both existing and new players were SB412, 2W, X, SK427, SK439, and SK440. BMI said Petronas had signed production sharing contracts (PSCs) for nine out of fourteen blocks and three out of six discovered resource opportunities (DROs) offered under the MBR 2022. It said this represented the highest number of awards since 2009. “The MBR 2023 is offering 10 exploration blocks and two DROs. “More than 50 oil and gas companies are reported to have participated in the MBR 2023, according to Petronas. “The awards for the MBR 2023 blocks are expected to be announced in 2024,” it said. BMI said that in total, Malaysia had awarded 17 PSCs during the MBR 2021 and MBR 2022, excluding other PSCs separately signed with TotalEnergies and Shell. New PSCs BMI said new PSCs are providing the impetus for increased investments in MalayForeign investors brightening Malaysia’s upstream O&G outlook, says BMI BY SURIN MURUGIAH theedgemalaysia.com Bernama sia’s upstream exploration and production. The firm said that in 2023, Petronas alone is reported to have spent RM10.5 billion in the upstream segment, not including RM2.6 billion in the natural gas business. “Apart from Petronas, a significant portion of investments comes from Shell, which announced a final investment decision on the Rosmari and Marjoram sour gas project in September 2022. “Shell also signed three new PSCs for exploration blocks offered in both the MBR 2021 and MBR 2022. “Additionally, Shell has signed two new PSCs for the SB2K and SB2V blocks in Sabah,” it said. BMI said Thailand’s PTTEP is emerging as one of the largest foreign investors, followed by Japan’s Inpex Corp, which signed two PSCs for exploration in the MBR 2022. It said other foreign companies, including Skye UMDP Exploration, SapuraOMV Upstream, Topaz Number One, and Longboat Energy, are expanding their presence in Malaysia by investing in exploration blocks offered in the MBR 2021 and MBR 2022. “These developments all indicate renewed interest and long-term commitment from foreign investors in Malaysia’s upstream oil and gas exploration,” it said. Malaysia’s upstream attracting strong interest from foreign players State Location Block PSC partners Sarawak Offshore SK427 SK earthon (85%), Petroleum Sarawak Exploration & Production (PSEP) (15%) Sarawak Offshore SK439 Sarawak Shell (92.5%) and Petroleum Sarawak Exploration & Production (PSEP) (7.5%) Sarawak Offshore SK440 Sarawak Shell (92.5%) and Petroleum Sarawak Exploration & Production (PSEP) (7.5%) Sabah Offshore SB412 PTTEP HK Offshore (60%) and SapuraOMV Upstream (40%) Sabah Offshore SB2W Sabah Shell Petroleum Company Ltd & Shell Sabah Selatan Sdn Bhd (50%), Petronas (50%) Sabah Offshore X Sabah Shell Petroleum Company Ltd & Shell Sabah Selatan Sdn Bhd (50%), Petronas (50%) State Location Block PSC partners Peninsular Malaysia Offshore PM327 Petronas and E&P Malaysia Venture (EPMV) Peninsular Malaysia Offshore PM340 Skye UMDP Exploration (50%) and Petronas (50%) Sarawak Offshore SK325 Petronas (60%), PTTEP (32.5%), PETROS (7.5%). Sarawak Offshore SK328 Petronas , EPMV, PETROS. Sarawak Offshore SK418 Petronas (52.5%), INPEX (40%), PETROS (7.5%). Sarawak Offshore SK2A Longboat Energy (36.75% + operator), Topaz Number One (15.75%), Petronas (40%), PETROS (7.5%). Sarawak Offshore SK3B Shell (45%), Petronas, PETROS. Sarawak Offshore SK4E INPEX (52.5%), Petronas (40%), PETROS (7.5%). Sabah Offshore SB409 Petronas , EPMV, SMJ Sdn Bhd. Sources: Petronas, local sources, BMI Malaysia bidding round 2021 Malaysia bidding round 2022

THURSDAY DECEMBER 14, 2023 8 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Dec 13): Scientex Packaging (Ayer Keroh) Bhd’s net profit shrank by 37.2% to RM7.71 million in the first financial quarter ended Oct 31, 2023 (1QFY2024) from RM12.28 million a year ago due to lower revenue and higher electricity costs. The group’s quarterly revenue declined by 19% to RM172.97 million from RM213.92 million because of lower export sales. Its earnings per share dropped to 2.2 sen from 3.5 sen, according to its filing with Bursa Malaysia. On a quarterly basis, the group’s net profit came in higher than the RM149,000 registered in the immediate preceding quarter (4QFY2023). However, its revenue was lower against RM185.32 million in 4QFY2023. Scientex Packaging said the ongoing political uncertainties, rising inflationary pressures as well as soft market sentiments continue to weigh on its operational costs and market demand. “The group continues on its actions to address operational efficiency, with a focus on waste reduction, machine and labour optimisation. Our investment in technology and innovation has enabled us to make good progress in our development of customer-centric packaging products, meeting their requirements on functional performance and sustainability. “Our commitment towards sustainable packaging remains unwavered with our increasing portfolio of fully recyclable packaging solutions as well as packaging solutions which incorporate post-consumer recycled resin content. “The socioeconomic conditions in Myanmar remain challenging in the foreseeable short and medium term. The group will nonetheless continue to observe the conditions and changes within the locality in order to manage its operations to minimise adverse effects whilst exploring options pertaining to its Myanmar operations,” it said. The group added that it will continue to improve its competitive edge and keep to its long-term growth strategy, and is optimistic that it will be able to sustain its performance in the current financial year. At the time of writing, shares in Scientex Packaging traded unchanged at RM2.25, giving it a market capitalisation of RM758.53 million. Higher electricity bill, lower exports weigh on Scientex Packaging’s 1Q profit KUALA LUMPUR (Dec 13): Eco World International Bhd’s (EWI) net loss narrowed to RM37.69 million for the fourth quarter ended Oct 31, 2023 (4QFY2023), from RM95.73 million in the previous year’s corresponding period. The improvement is thanks to a foreign exchange (forex) gain of RM15.53 million in the quarter under review, compared to a forex loss of RM5.33 million in 4QFY2022 due to the appreciation of the British pound against the ringgit as a result of the repayment of advances by its UK joint venture (JV) EcoWorld-Ballymore and the conversion of British pound-denominated bank balances. There was also a reversal of impairment on investment in EcoWorld-Ballymore of RM64.67 million following significant progress in monetisation of inventories during the year — although this was offset by impairment losses on the amount owing by Eco World London of RM90.96 million — as well as lower finance costs as a result of full settlement of all borrowings in the previous quarter, said EWI in a bourse filing. Revenue for 4QFY2023, however, dropped 33.82% to RM28.55 million from RM43.14 million, mainly due to the lower number of units sold and handed over to customers. EWI declared a final dividend of six sen per share in the quarter, which translates to RM144 million, payable on Jan 14. Combined with the RM792 million dividend already distributed, the group’s total dividends for FY2023 amounted to RM936 million, surpassing the targeted excess cash distribution of RM900 million set last year. For FY2023, EWI’s net loss was lower at RM85.37 million from RM234.42 million a year ago, despite revenue declining 34.49% to RM104.8 million from RM159.96 million. The group achieved RM1.18 billion in sales plus reserves of RM114 million, EWI posts lower 4Q losses, declares another RM144 mil dividends, bringing YTD amount to RM936 mil bringing total sales for FY2023 to RM1.30 billion, with Embassy Gardens being the largest contributor at RM617 million, followed by RM215 million from Wardian and RM107 million from London City Island. As at end-October, EWI still has about RM850 million of completed and nearly completed stocks that are available for sale, said its president and chief executive officer Datuk Teow Leong Seng. “EWI’s effective share of these stocks is approximately RM650 million. With regard to all launches for the remaining sites, these will continue to be put on hold given the ongoing weak sentiment amongst homebuyers and significant cost inflation in the UK. We will consider proceeding with launches only when market conditions improve, cost pressures stabilise and expected returns that meet the group’s requirements can be forecast with greater certainty,” he said. “As such, EWI’s target for FY2024 is to sell out all our remaining completed and near completed stocks with the aim of distributing the excess cash generated back to our shareholders, net of the amounts required for the group’s pared down operational requirements,” he added. Shares of EWI closed up half a sen or 1.41% at 36 sen on Wednesday, giving the group a market capitalisation of RM864 million. BY SYAFIQAH SALIM theedgemalaysia.com BY SULHI KHALID theedgemalaysia.com SCIENTEXPACKAGINGAK.COM.MY

thursday december 14, 2023 9 The E dge C E O m o rning brief

THURSDAY DECEMBER 14, 2023 10 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Dec 13): UMW Holdings Bhd’s automotive sales increased by 8% to 42,315 units in November, compared to 39,034 units a year earlier, as its associate company Perusahaan Otomobil Kedua Sdn Bhd (Perodua) continued to deliver its outstanding orders. Accordingly, the group’s year-to-date (YTD) sales performance rose 16% to 396,820 units from 341,390 units registered the prior year, according to UMW’s statement on Wednesday. UMW Toyota Motor (UMWT) sold 10,263 units in November, 1.71% lower than the 10,442 units delivered last year. However, YTD sales expanded 8% to 97,705 units from 90,595 units registered in the previous year. “To further strengthen its order book, UMWT is offering special promotions for the purchase of selected Toyota models through its ‘Drive into the New Year with Toyota’ campaign for December,” said UMW. Perodua, meanwhile, registered 32,052 units in November 2023, 12% higher comPrerequisites for Kulim International Airport almost met, says Kedah MB UMW’s auto sales up 8% to 42,315 units in November 2023, rises 16% YTD KUALA LUMPUR (Dec 13): Mustamir Mohamad is stepping down from his position as the group chief financial officer (CFO) of Sime Darby Bhd, to assume the role of president & group chief executive officer at UMW Holdings Bhd, which is now a 61.18%-owned indirect subsidiary of Sime Darby. Mustamir’s appointment to UMW Holdings takes effect on Wednesday. He is replacing Datuk Seri Ahmad Fuaad Mohd Kenali, whose tenure expired on Oct 31. Replacing Mustamir as group CFO of Sime Darby is Muhammad Noor Abd Aziz, who was previously the CFO of Sime’s Motors division from September 2020 to October 2023, also effective Wednesday, according to a filing with Bursa Malaysia. Sime Darby’s group chief executive officer Datuk Jeffri Salim Davidson is also joining UMW Holding’s board as director, along with Tan Sri Muhammad Shahrul Ikram Yaakob, who is currently an independent non-executive dirctor at Sime Darby. The announcements came as Sime Darby, via its wholly owned Sime Darby Enterprise Mustamir steps down as Sime Darby CFO to lead UMW BY ISABELLE FRANCIS theedgemalaysia.com Bernama BY SYAFIQAH SALIM theedgemalaysia.com pared with the 28,592 units delivered a year ago, mainly due to the improving supply chain as well as enhancement of production and logistics. YTD sales climbed 19% to 299,115 units, from 250,795 units, with top selling models being the Bezza, followed by the Axia and Myvi. “The UMW Group is encouraged by the sustained strong sales registered by both UMWT and Perodua in November 2023. Year-to-date November 2023, both companies registered higher sales compared with the same period of 2022. The strong sales achieved was driven by the introduction of competitive and exciting new models as well as attractive sales Promotions,” UMW added. UMW has become an indirect subsidiary of Sime Darby Bhd, as Sime Darby has completed the acquisition of a 61.18% stake in the company on Wednesday through a takeover exercise at RM5 per share. UMW’s share price was up two sen or 0.4% to RM4.97 at the time of writing, giving it a market capitalisation of RM5.79 billion. The counter has risen over 44% YTD, and 50% in the past year. ALOR SETAR (Dec 13): All the prerequisites for the development of the Kulim International Airport (KXP) project have almost been met, Kedah Menteri Besar Datuk Seri Muhammad Sanusi Md Nor said. Based on this development, the state government now hopes for approval for the project from its federal counterpart. Muhammad Sanusi said there is encouraging confidence shown by foreign investors currently towards Kedah’s plans. He said recently, Kedah had gained the trust of investors from Italy by collaborating with Enav Group, a company focused on providing air navigation services and air traffic management. Sdn Bhd, completed its acquisition of 714.81 million shares representing the 61.18% equity interest in UMW Holdings from Permodalan Nasional Bhd (PNB), making the latter an indirect subsidiary of the Sime Darby group. Sime Darby paid RM5 per share cash to PNB for the stake buy, or a total of RM3.57 billion. PNB, which had assets under management of RM341.6 billion as at end-2022, is a major shareholder of both Sime Darby and UMW — making the deal a related party transaction. Followng the transaction, Sime Darby extended a mandatory general offer to take over the rest of the shares it does not own in UMW Holdings at the same price, with the intention of taking the company private. PNB, one of the country’s largest fund management companies, held a 37.7% stake in Sime Darby as at Sept 8, according to the Sime Darby’s annual report. UMW shares gained 1 sen or 0.2% to settle at RM4.96 at noon break, translating into a market capitalisation of some RM5.8 billion. “I was in Italy recently to look at the sophisticated technology offered by the company, and I feel it will be cutting-edge technology that can be used in the aviation industry. “Besides that, they also provide training, technology transfer and the latest equipment that can help realise KXP. The collaboration is also aimed at the implementation of ‘Digital Tower Technology’ for us later,” he said after chairing the state executive council meeting here on Wednesday. Muhammad Sanusi said KXP, a high-impact project, will be developed through local private company investments without involving federal government allocations. “Previously, the Minister of Economy said that the project would eventually need federal government funds, especially in land acquisition matters. That is not accurate because land acquisition will be done by investors,” he said. Mustamir Mohamad UMW HOLDINGS BHD

THURSDAY DECEMBER 14, 2023 11 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Dec 13): Tower Real Estate Investment Trust (Tower REIT) has proposed a rights issue to raise gross proceeds of up to RM66 million to repay its bank borrowings and refurbish its existing properties. The rights issue will involve the issuance of up to 280.5 million units, the group said. The sum it expects to raise is based on an illustrative price of 35 sen per unit, on the basis of two rights units for every three existing ones held. The actual issue price and the entitlement basis of the issuance have yet to be fixed. As at Sept 30, the REIT’s borrowings totalled RM272.75 million, for which it plans to use up to RM40 million from the rights proceeds to pare down. The REIT’s manager plans to obtain irrevocable and unconditional undertakings from its major unitholder GLM Equities Tower REIT plans cash call to raise up to RM66 mil Al-‘Aqar to sell aged care facility in Australia for A$24 mil cash IPOH (Dec 13): The Automotive HiTech Valley (AHTV) project in Tanjung Malim, Perak, involving an investment of RM40 billion, is expected to start next year, said Menteri Besar Datuk Seri Saarani Mohamad. He said the state government is waiting for the outline of the AHTV development master plan to be submitted by the parties involved, namely DRB-Hicom Bhd and Zhejiang Geely Holding Group Co Ltd (Geely). Saarani noted that the state government was informed of the new master plan during a meeting with Geely on Tuesday. “Once we have determined the master plan, we (the state government) will be able to launch the next implementation steps. “There are some matters about land and utility issues involving the Perak Water Board and Tenaga Nasional Bhd as well as regulations related to the Tanjung Malim district council,” he told reporters after the awards ceremony for the Kinta district’s ‘Teacher Saarani’s Foster Children’ and ‘Teacher Saarani’s Tuition Students Initiative’, which are programmes under the Transition Towards A Prosperous Perak 2022-2023, here on Wednesday. Saarani noted that the state government is ready to provide and improve facilities and infrastructure around the AHTV area. “The state government will facilitate the implementation of the development as Geely would want to expedite the development of AHTV,” he said. Previously, Prime Minister Datuk Seri Anwar Ibrahim had said that the AHTV would transform Tanjung Malim into a global automotive hub for new energy vehicles. RM40 bil Automotive Hi-Tech Valley project on track to start next year — Saarani Bernama BY SULHI KHALID theedgemalaysia.com BY ADAM AZIZ theedgemalaysia.com Sdn Bhd (GLME) as well as Associated Land Sdn Bhd (ALSB) to subscribe to the minimum amount of RM14.18 million, and RM3.13 million, to raise at least RM17.31 million from the cash call. In addition, the REIT’s manager plans to obtain an additional undertaking from GLME to take up rights units not subscribed by other entitled shareholders for RM48.14 million — providing it manages to obtain an exemption for GLME from having to undertake a mandatory offer to take up the rest of the units it does not own from non-interested unitholders and the Securities Commission of Malaysia. GLME is a subsidiary of Guocoland (Malaysia) Bhd. As at Nov 21 GLME held 21.66% in Tower REIT while ALSB had 4.78%. GLME’s stake could rise to 30.7% following the minimum subscription with ALSB reaching 6.77%. With the additional subscription, GLME’s stake could reach 51.09% while ALSB’s could be diluted to 4.78%. It expects the proposed exercise for which Hong Leong Investment Bank Bhd has been appointed the adviser to be completed by the first quarter of next year. Among the notable properties under Tower REIT’s portfolio are Menara HLX, Plaza Zurich and Menara Guoco — all located in the capital city. Units in Tower REIT closed 0.5 sen or 1.33% higher at 38 sen, giving it a market capitalization of RM106.59 million. KUALA LUMPUR (Dec 13): Johor Corplinked Al-‘Aqar Healthcare REIT is disposing of its land and buildings of Jeta Gardens Aged Care Facility in Australia for AU$24.2 million (RM74.9 million) cash to Principal Healthcare Finance Pty Ltd. The divestment, it said in a bourse filing, is driven by the shift from residential aged care to home care since 2019, which has resulted in the facility’s market value dropping by one-third to A$27.3 million as at December 2023. It anticipates the “acquisition of several local mature healthcare assets in the near term” as part of its capital recycling following the disposal, with a long-term view to raise its portfolio value to RM3 billion by 2028, from RM1.7 billion. Proceeds from the land sale contract, expected to be completed by 2H2024, will be used for capital recycling or redemption of financing facilities (A$18.83 million), apportionment of proceeds to the Jeta Gardens facility (A$3.91 million), and related expenses (A$1.66 million), the REIT said. The sale is expected to result in a proforma loss of RM3.4 million, based on Al-‘Aqar’s latest full-year audited financial statement. The Jeta Gardens facility is leased by a unit of KPJ Healthcare Bhd, which is also linked to Johor Corp. In relation to the transaction, KPJ through its subsidiaries are disposing of its residential aged care business in Jeta Gardens to DPG Services Pty Ltd for A$700,000.

THURSDAY DECEMBER 14, 2023 12 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Dec 13): Malayan Banking Bhd’s insurance and takaful arm Etiqa Insurance and Takaful remains on track for a “strong rebound” this year, with gross written premiums (GWPs) projected to reach a new record after a blip in 2022, its group chief executive officer Kamaludin Ahmad said. This was despite Etiqa posting lower GWPs of RM5.5 billion in the first half of the year ended June 30, 2023 (1H2023) — down 6.8% from RM5.9 billion a year earlier. Kamaludin said for full year 2023, the group is expecting to achieve record top line (GWPs) as its performance in 2H2023 is likely to be stronger than in 2H2022. Etiqa, which operates in Malaysia, Singapore, the Philippines, Indonesia and Cambodia, saw total GWPs dip 3.3% to RM11.09 billion last year, from RM11.47 billion in 2021. In March this year, Kamaludin told The Edge weekly in an interview that the group expects a strong rebound this year, with GWPs likely to grow by more than 10%. “As for our bottom line, it would be a recovery year...a rebound from the issues that we faced last year,” its chief strategy officer Chris Eng Poh Yoon told The Edge after Etiqa’s media luncheon 2023 here on Wednesday. Profit before tax (PBT) for 2022 contracted 48% to RM472 million, from RM907.6 million in 2021, dragged down by its operations in Singapore, which suffered from volatile investment market conditions that year. However, Etiqa has seen profit returning to normal this year after it booked a PBT of RM503.9 million in 1H2023 — surpassing the whole of last year. “Last year our profitability was impacted by some of the investments made in China by our Singapore operations. Those have been disposed of and the investments pivoted to the right markets. We still have some holdings in China. These are assets (stocks and bonds) held by our fund managers for Etiqa Singapore. But our operating entities in Malaysia have been doing well all this while,” Eng said. He also said as the Malaysian economy is expected to grow in 2024, the insurance industry is also forecast to do well. “There’s a lot of excitement in the infrastructure and green energy space, which offer opportunities for corporate insurance. Etiqa, as the largest corporate insurance company in Malaysia, should naturally do well.” BY KANG SIEW LI theedgemalaysia.com Etiqa says profit rebound underway after 2022’s blip But global macroeconomic trends, such as increases in US interest rates, might pose challenges next year, he said, as they could drive a selldown in markets, which in turn would dampen interest in investment-linked policies and impact life insurance sales. To enter the Philippines, Singapore takaful markets During a presentation earlier, Eng said Etiqa, which holds the pole position in the general insurance and Islamic insurance/ takaful market in Malaysia with a 16% share, is set to enter the takaful markets in the Philippines and Singapore in the first half of 2024. The group is now in discussion with regulators in the two countries to potentially bring its takaful expertise there. “It is still a journey, the takaful products have yet to be launched, but we have been advising the local regulators there as well as our operating entities in the two countries on this potential,” he said. In January 2022, the Insurance Commission of the Philippines issued the baseline regulatory framework for takaful undertakings, permitting insurers to explore takaful windows. But currently, there is no established takaful or retakaful market in the Philippines. Eng noted that Muslims account for 6% of the Philippines’ population of 109 million, with 93% of them in Mindanao. “We are looking at how we can meet the needs of the Muslims in the Philippines. The Insurance Commission of the Philippines has been very encouraging towards the launch of some simple general takaful products (that will take place) in the coming months. We are also advising them on establishing a regulatory framework for takaful operators,” he said. As for Singapore, Eng said Etiqa is exploring the reintroduction of takaful offerings there. “Our plan is to initially launch a family takaful product and gradually introduce other takaful products based on market demands,” he said, adding that Muslims account for 15.6% of the city state’s population. “In Indonesia, we currently do only general insurance as you need a separate shariah licence to offer takaful products there, unlike the Philippines and Singapore. For that, we are always on the lookout for potential licences. But there is nothing concrete,” he added. Last year our profitability was impacted by some of the investments made in China by our Singapore operations. Those have been disposed of and the investments pivoted to the right markets…” — Chris Eng Poh Yoon, Etiqa’s chief strategy officer THE EDGE FILE PHOTO

Thursday december 14, 2023 13 The E dge C E O m o rning brief

THURSDAY DECEMBER 14, 2023 14 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Dec 13): Analysts remain “neutral” on the plantation sector, amid palm oil stockpile data indicating a dip of 1.1% month-on-month (m-o-m) to 2.45 million metric tons (MT) due to lower production and a drop in exports, marking the first decline after six consecutive months of increases. In a sector update on Wednesday, Hong Leong Investment Bank (HLIB) maintained its crude palm oil (CPO) price assumptions for 2023 at RM3,850 per MT, and RM4,000 per MT for 2024. The research house expects stockpiles to remain flattish in December 2023, as seasonally low production will be offset by weak near-term demand sentiment arising from weak demand sentiment in China and price competition from other competing oils. “We maintain our ‘neutral’ stance on the sector, given the absence of a notable demand catalyst. For exposure, our top picks are IOI Corp Bhd (buy; target price or TP: RM4.66) and Hap Seng Plantations Holdings Bhd (buy; TP: RM2.06),” HLIB said. Likewise, TA Securities expects the low-yielding season to persist until the first quarter of 2024 (1Q2024), before production picks up again in 2Q2024. The research house maintained its average CPO price estimate at RM4,000 per tonne for 2024, following price fluctuation ranging between RM3,600 and RM3,800 per tonne. The research house put “buy” calls on TSH Resources Bhd (TP: RM1.41) and Wilmar (S$4.58), followed by a “hold” stance on Sime Darby Plantation Bhd (RM4.67), IOI Corp (RM4.27) and Kim Loong Resources Bhd (RM1.95), and “sell” calls on Kuala Lumpur Kepong Bhd (RM21.50), FGV Holdings Bhd (RM1.41) and United Malacca Bhd (RM4.01). “Cargo surveyors estimated that palm oil exports for the first 10 days of December 2023 decreased by 7.38% m-o-m to 369,000 tonnes (Intertek Testing Services), and 4.09% m-o-m to 387,000 tonnes (AmSpec Agri),” TA Securities said. “In terms of fresh fruit bunch (FFB) yield, the average FFB yield in Sarawak decreased the most by 9.8% m-o-m to 1.38 tonnes/hectare, followed by Sabah (-5.5% m-o-m to 1.56 tonnes/ha) and Peninsular Malaysia (-5.2% m-o-m to 1.63 tonnes/ ha),” the research house added. More from brokers: Analysts raise Bermaz Auto’s target prices following better-than-expected half-year earnings CGS-CIMB stays upbeat on Power Root given its strong brand building to drive growth Analysts see CPO at RM4,000 in 2024, name IOI Corp as top sector pick KUALA LUMPUR (Dec 13): Maybank Investment Bank Research (Maybank IB) has upgraded Hartalega Holdings Bhd to a tactical “buy” at RM2.29, with a higher target price (TP) of RM3.02 (from RM2.25). The research house said that while the glove maker remains cautious on the sector outlook, it had turned more positive and expects a better second half ending March 31, 2024 (2HFY2024) on better cost efficiency and a higher utilisation rate post the decommissioning of the Bestari Jaya facility. In a note on Wednesday, the research house said the utilisation rate is expected to improve to about 50% in the coming quarters, leading to lower production cost. It said the average selling price of gloves is expected to remain under pressure due to stiff competition. However, Maybank IB said raw material prices are showing signs of stabilising, with the natural latex price declining by 3% and the nitrile latex price 1% lower, since November 2023. Additionally, it said Hartalega’s natural gas cost will likely trend down after an expected increase in the first quarter of 2024, following international pricing adjustments. “Since Hartalega has limited bargaining power in pricing for lightweight nitrile gloves, it would be paramount for Hartalega to focus on cost efficiency and sales volumes. “We raise our FY2024/25/26 core earnings forecasts by 116%/2%/3% after factoring in: i) a higher utilisation rate assumption Maybank IB upgrades Hartalega to ‘buy’, raises TP to RM3.02 of 54.5% (from 49%) for FY2024; and ii) lower natural latex (-6%) and nitrile latex (-14%) price assumptions. “Our TP is raised to RM3.02 (+77 sen) on a higher 2.2 times calendar year 2025 price-to-book value ratio (-0.5 standard deviation to the mean, from 1.6 times), with the rerating reflecting an improved earnings outlook,” it said. The research house said that Hartelaga had the lowest impairment risk among the glove makers under its coverage post the decommissioning of the Bestari Jaya facility. “Its balance sheet remained strong as at end-September 2023, with RM1.5 billion in net cash (44 sen per share),” the research house added. For the first half ended Sept 30, 2023 (1HFY2024), Hartalega posted a net loss of RM24.77 million, versus a net profit of RM116.62 million a year ago, largely due to exceptional items. Revenue for 1HFY2024 fell 37% to RM892.12 million from RM1.43 billion. According to its results filing, the group said it would have recorded a pre-tax profit RM38 million for 1HFY2024, compared with RM171 million a year ago, if the one-off provision for severance pay of RM47 million for its Bestari Jaya facility decommissioning, recognised in 1QFY2024, was excluded. Shares in Hartalega jumped 24 sen or 10.48% to close at RM2.53 on Wednesday, with 17.17 million shares traded. It was the second top gainer of the day. BY SURIN MURUGIAH theedgemalaysia.com BY LUQMAN AMIN theedgemalaysia.com Hartalega Holdings Bhd 0 50 100 150 200 250 Dec 13, 2022 Dec 13, 2023 1 2 3 Vol (mil) RM Source: Bloomberg RM1.57 RM2.53 Hartalega Holdings B0 50 100 150 200 250 Dec 13, 2022 Dec Vol (mil) *As at 10.05am on Dec 13, 2023 Source: Bloomberg RM1.57

THURSDAY DECEMBER 14, 2023 15 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Dec 13): Two officers of the Malaysian Anti-Corruption Commission (MACC) on Wednesday pleaded not guilty to a gang-robbery charge over an incident involving a foreigner in the city centre two years ago. Muhamad Haffiz Mohd Radzi, a 33 year-old investigating officer, and Mohd Fahmee Mohamad Nor, 41, an officer with the anti-graft body’s academy, were charged with one count of gang robbery before Sessions Court judge Izralizam Sanusi. Another former MACC officer, Azwan Asli, was also charged over the same incident in a separate Sessions Court on Wednesday. They were accused of stealing cash amounting to RM952,690, 1,225 yuan, a silver baggage and a black Louis Vuitton bag on Dec 10, 2021 from the foreigner. The charge, framed under Section 395 of the Penal Code, carries an imprisonment term not extending 20 years and whipping. Deputy public prosecutor Izalina Abdullah said that this is a non-bailable offence, but left it to the court’s discretion. She proposed bail of RM30,000 each with one surety. She also asked for additional conditions — for the accused to report to the closest police station once a month, and for their passports to be impounded to the court. MACC officers charged with gang robbery BY TARANI PALANI theedgemalaysia.com KUALA LUMPUR (Dec 13): The Health Ministry is telling Malaysians to mask up again and resume Covid-19 prevention measures after reported Covid-19 cases in the country nearly doubled in a week to 12,757 cases last week (Dec 3 to 9), from 6,796 cases in the prior week (Nov 26 to Dec 2). In a statement, health director general Datuk Dr Muhammad Radzi Abu Hassan advised the public, especially those with symptoms and high risk groups such as the elderly and pregnant women, to always mask up — particularly in closed, narrow, or crowded spaces. The Health Ministry, he said, is anticipating a further rise in Covid-19 cases in the upcoming Christmas and New Year celebrations, as well as the school holiday season that is starting on Dec 16. He said Covid-19 cases have been on the rise globally, including in a few neighbouring countries, and the increase in reported cases in Malaysia reflects this trend, which seems to occur towards the end of each year, as has been reported in other countries. Nevertheless, he said the majority of Covid-19 cases in Malaysia experience light symptoms and do not need hospital treatment. He also assured that the overall situation in Malaysia remains under control and does not burden the country’s existing health facilities. “In terms of hospital capacity, the number of Covid-19 patients admitted (including suspected cases) to health facilities for the use of non-critical beds have risen to 1.4% last week compared to the week before that. Likewise, the use of beds in intensive care units for Covid-19 cases has risen to 1.4%, while the percentage of patients needing the use of respiratory aid devices has risen to 0.5%,” he said. A total of 26 cases of the latest Omicron variant was reported last week, comprising 21 cases of variants of concern, and five cases of variants of interest. The Omicron subvariants found are mostly XBB.1.16, XBB.1.5 and EG.5. These variants are highly infectious but do not result in severe cases, said Radzi. He further recommended that those infected — especially those aged 60 and above, have low immune system or any comorbidities, are obese or have a compromised immune system — to be treated with Paxlovid. “Paxlovid is effective when taken within five days from the day symptoms start. Therefore, it is recommended that highrisk patients undergo testing as soon as they have symptoms. If found to be positive, please seek an initial medical evaluation at the nearest health facility to determine if you should take Paxlovid,” he added. Health Ministry tells Malaysians to mask up again as Covid-19 cases jump theedgemalaysia.com Mohd Fahmee Mohamad Nor, 41, an officer with the Malaysian Anti-Corruption Commission's academy, pleaded not guilty to a gang-robbery charge on Wednesday. S Ravinchandaran, who appeared for Muhamad Haffiz, and R Vikraman, who appeared for Mohd Fahmee, argued for a lower bail, saying bail should not be a form of punishment, and that the court should consider the surrounding circumstances. Ravichandran said that his client’s monthly salary is only RM3,000, needs to care for his two children aged two and five, and had no prior convictions. The lawyer suggested a bail of RM5,000. Vikraman, meanwhile, told the court that his client is a single father, who earns about RM3,500 a month and pays RM2,000 in alimony to his exwife and children. He suggested a bail of RM4,000. Izralizam then set bail at RM12,000 with one surety, along with the additional terms proposed by the prosecution. The judge also warned the accused not to harass any potential witnesses. Meanwhile, Azwan, 38, was charged with the same offence before Sessions Court judge Siti Aminah Ghazali. He pleaded not guilty to the charge, and the court set bail at RM10,000 with one surety, and for him to report to the nearest police station. His case was also transferred to Izralizam’s court. The next case management is set for Feb 5 for the prosecution to hand over documents. LOW YEN YEING/THE EDGE

THURSDAY DECEMBER 14, 2023 16 THEEDGE CEO MORNING BRIEF HOME PUTRAJAYA (Dec 13): The Registrar of Societies (ROS) has been instructed to prepare a report on the non-compliance of associations, including their involvement in illicit activities, said Home Minister Datuk Seri Saifuddin Nasution Ismail. He said the Cabinet on Wednesday ordered the Home Ministry to provide an initial report on the non-compliance following an incident involving an association that has been accused of misusing public donations. “We will prepare and present (the report) to the Cabinet in the first quarter of next year as instructed,” he told reporters, after the presentation of the Pertubuhan Prihatin Komuniti Grant (GPPK) 2023 here on Wednesday, which was also attended by ROS director Datuk Mohd Zulfikar Ahmad. Saifuddin Nasution said the ROS was also ordered to carry out random monitoring on registered associations starting next year to ensure compliance with the Societies Act 1966 and as a precautionary measure to prevent registered societies from being used as a platform for unlawful activities such as money laundering or funding activities that threaten security. ROS to prepare report on associations’ non-compliance, illicit activities KUALA LUMPUR (Dec 13): Datin Seri Rosmah Mansor’s lawyers sent a third representation letter to the attorney general on Tuesday for the AG to consider dropping the 17 money-laundering and tax evasion charges against the wife of jailed former prime minister Datuk Seri Najib Razak. Lead defence counsel Datuk Firoz Hussein Ahmad Jamaluddin, representing Rosmah, said as the letter had been sent, the defence was seeking an adjournment of Wednesday’s hearing, as it would be improper for the court to hear Rosmah’s bid to strike out the charges when it’s similar to what they wanted the AG to consider. “If it is to be argued today (Wednesday), it would force the prosecutors to take a stand on the issue,” Firoz Hussein added. Deputy public prosecutor (DPP) Ahmad Akram Gharib confirmed to judge Muniandy Kanyappan that the prosecution had received the representation letter on Tuesay, and as it was new, the prosecution had no time to brief AG Datuk Ahmad Terrirudin Mohd Salleh on the matter. Hence, he agreed with the defence that the prosecution needed time to consider the third representation letter. No decisions had been made on Rosmah’s past two representations as the AG had yet to consider them. Normally, representation letters are sent to reduce or drop the charges, but in Rosmah’s case, they seek to withdraw the charges against her. In fact, Muniandy had on Aug 24 directed the trial to proceed with two witnesses testifying. The previous representation letters were sent in May and August respectively. While both the defence and prosecution were alluding to postpone the hearing of the striking out application, Muniandy directed both parties to proceed with their submissions. Rosmah, who turned 72 three days ago and wore an orange dress on Wednesday, is facing 17 charges involving RM7.1 million Judge orders trial to proceed as Rosmah sends third request to AG to drop graft charges against her BY HAFIZ YATIM theedgemalaysia.com Bernama transferred into her personal bank account between 2013 and 2017. The charges were framed under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (Amla). On the first eight counts, Rosmah is charged with money laundering by directly engaging in a transaction involving proceeds of unlawful activities amounting to RM1.1 million that were deposited into her account. On the ninth to 12th counts, she is charged with directly engaging in 227 transactions involving proceeds of unlawful activities totalling RM6 million, which were also deposited into her account. On the 13th to 17th counts, she is charged with engaging in money laundering by failing to file a return on the sum that was deposited into her account as required under the Income Tax Act 1967 (ITA). According to Saifuddin Nasution, a total of 54,642 organisations have been deregistered since 1966. He said the ROS has been implementing a rigorous screening process for registration applications for the past three years to ensure registered associations carry out beneficial activities for the members and show high compliance with the law. Meanwhile, Mohd Zulfikar said the ROS has conducted checks on 1,118 registered associations as of Dec 10, covering four categories namely religion, recreational, welfare and social. “Out of the number, a total of 26% of the societies were found to have breached the laws governing the formation or the constitutions of the associations,” he said. On GPPK, Mohd Zulfikar said it was an initiative approved in Budget 2023 whereby the government allocated RM20 million to registered associations under the social category and residents sub-category. Read the full story SAM FONG/THE EDGE

thursday december 14, 2023 17 The E dge C E O m o rning brief world (Dec 13): For the first time in more than a year the oil market is flashing bearishness in every key global pricing hub. On Wednesday, several Dubai crude timespreads flipped into contango, a structure where nearby prices trade at a discount to later ones, after similar moves in the Brent and West Texas Intermediate benchmarks. As well as pointing to an oversupplied market, contango also tends to provide trend-following funds with a signal to sell more futures. Crude markets are being pressured by higher supplies, particularly exports from the US, which have countered a decision by Opec+ producers to curb output. It’s a weakness that has helped drag headline Brent futures prices to the lowest since June. Until now, Dubai spreads had been trading in the opposite structure, known as backwardation, all year. That was a result of supply curbs from Opec+, which reduced supplies of the heavy sulphurous — or sour — crude pumped in the Middle East and shipped mainly to Asia. “It was the strongest and most supply-starved crude out there, and yet here we are,” said Keshav Lohiya, founder of consultant Oilytics. “It’s possible sour markets are not as tight as previously thought, with a potential slowdown in Asia.” On Wednesday, the nearest two Dubai swaps were trading at parity with one another, according to data from brokerage PVM Oil Associates Ltd. But the subsequent five spreads were all in contango, the first time there’s been such a market structure in Dubai since late last year, according to data compiled by Bloomberg. In another sign of a softening Asian market, Oman crude is also trading below the Dubai benchmark for the first time since November. Physical markets have generally remained well supplied in the face of softening oil demand in the region, traders said. The oil market’s latest setback: contango everywhere (Dec 13): The COP28 climate talks in Dubai ended in a deal that saw a commitment to transitioning away from all fossil fuels for the first time. The president of this year’s United Nations-sponsored summit, the United Arab Emirates’ (UAE) Sultan Al Jaber, brokered an agreement that was strong enough for the US and European Union on the need to dramatically curb fossil fuel use, while keeping Saudi Arabia and other oil producers on board. The agreement calls for countries to quickly shift energy systems away from fossil fuels in a just and orderly fashion, qualifications that helped convince the sceptics. Under the deal, countries also are called to contribute to a global transition effort — rather than being outright compelled to make that shift on their own. “Together we have confronted the realities and sent the world in the right direction,” said Al Jaber, who’s also the chief executive officer of Abu Dhabi National Oil Co. He brought the gavel down to confirm the deal on Wednesday, a day later than scheduled. It was met with applause and cheers by delegates. While the outcome falls short of the phase out most countries wanted, it does break new ground, as no previous COP text has mentioned moving away from oil and gas, the fuels that have underpinned the global economy for decades. How quickly that becomes a reality won’t be decided by the diplomatic horse-trading that clinched Wednesday’s deal, but by investors, consumers and national governments. After a pledge to phase down coal in Glasgow two years ago, consumption has continued to rise, and the world remains very unlikely to limit warming to the Paris Agreement’s target of 1.5°C. Still, the Dubai decision is an important marker in the global direction of travel towards a low-carbon energy system. The text also includes agreements to triple the deployment of renewable power, and double the rate of efficiency gains by the end of the decade. A separate COP28 agreement, reached earlier, makes operations a hardfought fund for addressing the losses and damages of climate change. “An agreement is only as good as its implementation. We are what we do, not what we say,” Al Jaber said. “We must take the steps necessary to turn this agreement into tangible actions.” The COP28 language pushing a decline in fossil fuel use will send “a signal” that “the world is now thinking about it”, and change the way investors assess the risk of COP28 ends with deal on transition away from fossil fuels those ventures, said Jonathan Pershing, the environment programme director at the William and Flora Hewlett Foundation, and a veteran US climate negotiator. Diplomatic win The last-minute deal is a diplomatic win for the UAE and Al Jaber, whose role at Adnoc made him a controversial choice to preside over this year’s talks. There have been hiccups — allegations he used his role to lobby for oil deals, and an argument over the science of climate change — but in the end, he will argue he delivered. Al Jaber also used his presidency to bring the oil and gas industry firmly into the COP process, and there were more representatives of fossil fuel companies than at any previous summit, drawing criticism from climate activists. He forged a pact between more than 50 companies to reduce emissions from their own operations. It said nothing about levels of oil and gas production, but a pledge to reduce pollution from methane — 80 times more dangerous than carbon dioxide — to near zero by the end of decade could have a material impact on emissions. That didn’t prevent Saudi Arabia leading a rearguard action against any attempt to include a fossil fuel phase-out in the text. As COP28 got into full swing, the kingdom’s energy minister was asked by Bloomberg News if he’d be happy to see a phase-down in the text. “Absolutely not,” he replied. The Organization of the Petroleum Exporting Countries (Opec) later sent a letter to members, asking them to lobby against any text that targets fossil fuels rather than emissions. While the final language was watered down to reflect their concerns, ultimately the coalition of oil producers was left too isolated to resist. by Jennifer A Dlouhy, Jessica Shankleman & Laura Millan Bloomberg by Alex Longley & Sharon Cho Bloomberg The standing ovation after COP28 president Sultan Al Jaber brokered an agreement to a commitment to transitioning away from fossil fuels. bloomberg

thursday december 14, 2023 18 The E dge C E O m o rning brief world WASHINGTON (Dec 13): The Federal Reserve (Fed) is widely expected on Wednesday to leave interest rates unchanged for a third straight time, but also signal that a pivot to monetary policy easing will neither come soon nor be sharp, given inflation’s bumpy progress downward. In quarterly economic projections due to be released at the end of a two-day meeting, US central bankers are still likely to pencil in at least a couple of rate cuts by the end of next year, as they seek to strike the right balance between policy that’s restrictive enough to slow spending and hiring but not so tight that it sends them into a tailspin. Fed Chair Jerome Powell, however, is expected in a press conference to emphasise that any cuts in borrowing costs are contingent on further improvement on inflation, which despite a rapid decline this year is still above the Fed’s 2% goal. The Fed chief is scheduled to begin speaking at 2.30pm EST (1930), half an hour after the release of the policy statement and projections. “Powell will have to walk a fine line by recognising the ground gained towards the normalisation of the economy while pushing back on the idea of early rate cuts,” and even warn that the Fed could yet raise rates again if needed, TD Securities analysts wrote as the Fed meeting got underway on Tuesday. And, indeed, the economy has normalised a lot. Inflation by the Fed’s preferred measure, the personal consumption expenditures price index, dropped to 3% in the latest reading, from more than 7% at its peak in the summer of 2022. Meanwhile, the unemployment rate in November fell to 3.7%, barely above where it was when the Fed began raising interest rates Fed likely to hold rates steady, signal couple of cuts in 2024 (Dec 13): Hedge funds and brokerages are getting new requirements from the Securities and Exchange Commission to centrally clear far more of their US Treasuries trades in a major structural overhaul for the US$26 trillion market. The SEC will vote Wednesday to require that all transactions involving repurchase agreements use clearing houses, which serve as a backstop by sitting between buyers and sellers. In a partial win for hedge funds, they would be exempt from having to centrally clear their cash Treasuries trades, according to the agency. Still, the new rules could bolster oversight of highly leveraged strategies such as the so-called basis trade — which use the repo market and that US officials say can pose broad dangers. The new regulation is a signature policy effort for Chair Gary Gensler, who has argued that central clearing reduces risks and that trading by private funds is too opaque. He has also said only a fraction of Treasuries transactions goes through clearinghouses, even as they have become a fixture in other assets. Although there hasn’t been a major blowup in the Treasuries market since the pandemic-sparked chaos of early 2020, concerns over liquidity persist. Massive Federal Reserve buying of the government debt helped stabilize the market. For government securities dealers and brokers, the SEC’s new central clearing mandate would apply to Treasuries transactions in both the cash and repurchase markets, according to the SEC. In a repo agreement, one party provides securities as collateral to another in exchange for cash. The SEC had proposed last year that hedge funds also would have to centrally clear Treasuries trades in the cash market. It’s unclear whether the decision to drop that from the final rule will satisfy critics, who called the original plan unworkable and said it may force companies to exit the market. Hedge funds are already challenging multiple SEC regulations. Ahead of Wednesday’s meeting, an SEC official told reporters that the agency wasn’t including cash Treasuries transactions by hedge funds in the central-clearing mandate because most of the perceived risks from trading by those firms would be addressed in the repo market. Gensler has said central clearing for Treasuries is a way to reduce risks of inHedge funds to get new SEC mandate to centrally clear US Treasuries trades by Lydia Beyoud & Liz Capo McCormick Bloomberg by Ann Saphir Reuters from the near-zero level in March 2022. Fed policymakers will give their views on where inflation, unemployment and gross domestic product are likely to be in coming years as part of the updated projections. Still, a reminder of why Powell may be loathe to signal the end of the Fed’s rate hiking campaign came on Tuesday after the Labor Department reported US consumer prices unexpectedly rose and underlying inflation pushed higher in November. Even so, financial markets continue to price in a full percentage point of reductions in the Fed’s benchmark overnight interest rate next year, starting in May. The US central bank’s policy rate is currently in the 5.25%-5.50% range. Those bets and a decline in the 10-year Treasury yield since the Fed’s Oct 31-Nov 1 meeting reflect a recent broad easing in financial conditions that, if ongoing, could complicate the Fed’s efforts to bring inflation under control. Fed policymakers said at their last policy meeting that they believed the rise in longterm bond market rates was doing some of the work of slowing the economy for them. stability for the broader financial system. The SEC chief has expressed particular concern with the basis trade, which involves using leverage to profit from the price gap between Treasury futures and the underlying cash market. Borrowing in the repurchase market using Treasuries as collateral has soared in recent years to almost US$3 trillion. Executives at Citigroup Inc and CME Group Inc, among others, have voiced support for the popular trade, which they say provides needed liquidity for government bonds. Recent spikes Some in the industry are likely to welcome the new SEC mandate. Recent spikes in repo lending rates caused a stir in the overnight funding market, unsettling some traders. Some Wall Street strategists have said that they see more benefits to expanding central clearing to just the repo side of Treasuries, whereas the cost of centrally clearing cash Treasuries might outweigh the benefits. The SEC plans to give clearinghouses until March 31, 2025 to update their procedures and infrastructure to comply with the rule. Market participants would have to start clearing their cash Treasuries trades by Dec 31, 2025, and their repo transactions by June 30, 2026, according to the SEC. Currently, only one clearing house exists for Treasuries, the Fixed Income Clearing Corp, a subsidiary of the Depository Trust & Clearing Corp. The DTCC has urged the SEC to require more parties to centrally clear their Treasuries transactions.

thursday december 14, 2023 19 The E dge C E O m o rning brief world WASHINGTON (Dec 13): A Chinese chip designer, part-owned by the country’s top sanctioned chipmaker, is purchasing US software and has American financial backing, relationships that underscore the difficulty Washington faces applying new rules meant to block American support for Beijing’s semiconductor industry. The company, Brite Semiconductor, offers chip design services to at least six Chinese military suppliers, a Reuters examination of company statements, regulatory filings, tenders and academic articles by People’s Liberation Army (PLA) researchers and institutions found. Its second largest shareholder and top supplier, chipmaker SMIC, was placed on the so-called US entity list over alleged ties to Beijing’s military, effectively barring it from receiving some goods from US suppliers. Despite those relationships, Brite boasts funding from a US venture capital firm backed by Wells Fargo and a Christian university, and has continued access to sensitive US technology from two California-based software companies, Synopsys and Cadence Design, documents showed. Reuters has found no evidence that Brite’s relationships with US firms violate any regulations. The Biden administration, with bipartisan support, has taken pains to stop the flow of technology and investment to Bejing’s chip sector, unveiling rules last October to halt some US exports of chips and chipmaking tools to China and in August announcing a ban on certain new US investments in the industry. It has also added dozens of Chinese companies to the entity list, many overties to China’s military. Brite did not respond to requests for comment. The Commerce Department and the White House declined to comment. The Chinese Embassy in Washington did not comment on Brite but accused the United States of “blatant economic coercion and bullying in the field of technology.” Although not an apparent breach of any US rules, Brite’s access demonstrates the challenges facing Washington’s bid to keep US equipment and money from being used to advance China’s military ambitions, and suggests the US will struggle to succeed unless it targets many more companies that have slipped under its radar. Republican Senator Marco Rubio, an influential China hawk and member of the foreign relations committee, characterized Reuters’ findings on Brite as “concerning.” Read the full story China chip firm powered by US tech and money avoids Biden’s crackdown HANOI (Dec 13): China and Vietnam agreed to step up co-operation on security matters in their move toward becoming a community with a “shared future”, they said on Wednesday, as Chinese President Xi Jinping wrapped up a visit to Hanoi. On Xi’s two-day trip, the Communist-ruled neighbours, close in economic areas but at odds over boundaries in the South China Sea, signed dozens of co-operation pacts and agreed to set up more hotlines to defuse any emergencies in the contested waters. In a 16-page joint statement, the countries, which share a millennia-long history of conflict, vowed to work more closely to strengthen defence industry ties and intelligence exchanges. They said their aim was partly to avert the risk of what they called a “colour revolution” promoted by hostile forces, using a term for popular uprisings that have shaken former Communist nations. They “announced the establishment of a strategic China-Vietnam community of ‘shared future’ to promote the upgrading of China-Vietnam relations,” Xi told the chairman of Vietnam’s Parliament Vuong Dinh Hue at a meeting earlier. The decision was a historic milestone, and joining such a community was a “strategic” choice, Prime Minister Pham Minh Chinh said when he met Xi, who was making his first visit this year to an Asian nation. The warm comments followed months of talks on how best to describe ties. In Chinese, the “shared future” phrasing uses a word meaning “destiny”, but is translated in Vietnamese and English as the more prosaic “future”. Xi has pushed hard for the upgrade in ties, especially after Vietnam elevated the United States in September to the highest tier of its diplomatic ranking, the same as China’s. China, Vietnam hail upgrade of ties; agree to boost security efforts As China and the United States vie for influence in the strategic nation, the pacts mark an achievement for Vietnam’s “Bamboo” diplomacy, although analysts and diplomats said the improvement in relations could be more symbolic than real. Xi’s visit to Vietnam, which is home to a growing number of Chinese manufacturers, is only his fourth overseas this year, after trips to Russia, South Africa and the United States. Focus on data, rare earths The pacts signed cover possible investments in rail links and security, as well as three on telecoms and “digital data co-operation”, a list from Vietnamese authorities showed. Details of the deals have not been revealed, but experts and diplomats said digital economy pacts could pave the way for Chinese support to build a 5G network in Vietnam and investments in undersea infrastructure. The deals reflect the interests of both sides, said Hung Nguyen, a specialist in supply chain issues at RMIT University Vietnam, as China has recently built an undersea data centre off its southern island of Hainan, while Vietnam wants to develop its infrastructure. Key targets for investment could be areas such as telecoms infrastructure, satellite ground tracking stations and data centres, he added. Read the full story by Francesco Guarascio, Phuong Nguyen, Khanh Vu & Minh Nguyen Reuters by Alexandra Alper & Eduardo Baptista Reuters A rare earth minerals mine reuters

thursday december 14, 2023 20 The E dge C E O m o rning brief world (Dec 13): Economy chief Luis Caputo spent the better part of his first televised address explaining how Argentina got into such a dire economic situation: An “addiction” to debt, for which the only medicine is a shock treatment. “There is no more money,” Caputo said repeatedly in the recorded video published Tuesday night, echoing President Javier Milei’s words during his inaugural speech on Sunday. The Wall Street veteran then outlined 10 initial measures designed to jolt the stagnant economy, starting with a massive 54% devaluation of the peso’s official exchange rate and austerity measures including halving the number of ministries, cutting transfers to provinces, suspending public works and reducing subsidies. Total spending cuts will amount to 2.9% of gross domestic product, a senior government official said later. The goal is to eliminate the primary budget deficit, which doesn’t take into account interest payments, by the end of 2024. The International Monetary Fund praised the government’s “bold initial actions” and many investors welcomed the measures as steps in the right direction. Yet many also remained skeptical, considering the moves either insufficient or hard to implement — or both. “Are these measures good? Yes. Are they enough? It doesn’t seem so. Would they work? It really depends on people’s reactions,” said Diego Ferro, founder of M2M Capital in New York. “Let’s cross our fingers and hope that in the next two, three months people accept this and this works.” Ferro’s reaction encapsulates the essence of Milei’s challenge. The libertarian leader needs to move fast because Argentina has run out of options to finance itself without resorting to the money printing that has sent annual inflation soaring to more than 140%. But at the same time, he can’t easily jettison all the capital controls imposed over the years, as allowing the currency to float would risk triggering even faster inflation. Gradual changes For now, those controls remain in place, and the crawling peg regime will be overhauled to allow the peso to weaken 2% per month. Some social programs will also receive a boost in a bid to ease the pain caused by austerity. In a statement published overnight, the central bank maintained the benchmark Leliq rate at 133% while lowering the interest rate at one-day repo notes to 100% from 126%. Read the full story ‘There is no money’: Argentina begins economic shock remedy TOKYO (Dec 13): Japanese Prime Minister Fumio Kishida on Wednesday announced he would make changes to his cabinet as he seeks to stem the fallout from a fundraising scandal that has further dented public support for his embattled administration. The premier told a press conference he would make the changes on Thursday, just three months after a previous cabinet overhaul. “I will take the lead in fighting to rebuild the ways of the Liberal Democratic Party (LDP) to restore trust in politics,” he said referring to his ruling LDP party. Chief Cabinet Secretary Hirokazu Matsuno, a powerful figure who coordinates policy across government on his behalf, is among four ministers and several deputy ministers expected to go, according to media reports. Kishida said the changes were still being finalised. The shake-up comes as prosecutors investigate whether some lawmakers in the ruling party received thousands of dollars in fundraising proceeds missing from official party accounts, according to media reports. But analysts say a cabinet clearout is unlikely to draw a line under a scandal that has raised serious questions about Kishida’s leadership and thrown his government into disarray. Koichi Hagiuda, a high-ranking official from the LDP who oversees budget proposals, has decided to resign, broadcaster NHK and Kyodo news agency reported. Kishida is also considering shelving a planned trip to Brazil and Chile next month, the Mainichi newspaper said. “The most Mr Kishida can hope for is to arrest the current decline in his personal support. Increasing it, however, will require more than cosmetic changes to personnel,” said Corey Wallace, a political science scholar at Kanagawa University. Japan PM to axe ministers over fundraising scandal “There’s only so many times this tactic works over a short period until diminishing returns sets in.” Public support for Kishida’s administration has slipped as low as 23% in recent polls, the lowest since he came to office in 2021. He has twice reshuffled his cabinet, replacing ministers linked to a previous scandal in late 2022, and again in September as he looked to shore up his sagging ratings. Support for his ruling LDP has fallen below 30% for the first time since 2012, when it returned to power after a blip in its near total post-war dominance of Japanese politics, an NHK survey on Tuesday showed. The prime minister does not need to hold an election until October 2025, and a fractured and weak opposition has historically struggled to make sustained inroads into the LDP’s hold on power despite its at times fractious factional politics. Read the full story Read also: Japan’s Kishida faces biggest political scandal in decades by Sakura Murakami & Kantaro Komiya Reuters by Manuela Tobias & Ignacio Olivera Doll Bloomberg Argentine President Javier Milei (centre) with a chainsaw during his electoral campaign. The dramatic first steps follow a sombre inauguration speech on Sunday, when Milei warned that Argentines will have to endure months of pain while he works to pull the country from the economic crisis inherited from his predecessor. reuters

thursday december 14, 2023 21 The E dge C E O m o rning brief world (Dec 13): Three Arrows Capital co-founder Su Zhu was for the first time faced with questioning at a Singapore court about the crypto fund’s collapse, giving liquidators their best chance yet to gather information as they seek to recoup billions of dollars for creditors. The two-day court hearing this week required Zhu to respond to lawyers for the liquidator, Teneo, people familiar with the matter said. The lawyers sought details including how the fund failed and the whereabouts of assets, the people said, asking not to be named as the proceedings were private. The questioning was approved at court in the city-state earlier, the people said, after Zhu was arrested at the airport in Singapore on Sept 29 and jailed for four months for failing to cooperate with the task of winding up Three Arrows. Zhu is set to be released this month based on standard provisions for good behavior, the people said. Zhu, who appeared at the High Court on Wednesday dressed in a slim suit and closely-cut hair, acknowledged the questioning ahead of its morning commencement when asked by a Bloomberg News reporter. His legal representative didn’t respond to requests for comment, nor did the court or the prison service. A spokesperson for Teneo declined to comment. Three Arrows imploded in 2022 as leveraged bets blew up, stoking a US$2 trillion crypto rout, as well as a spate of other collapses in the sector. Liquidators have accused Zhu and the fund’s other founder, Kyle Davies, of failing to cooperate meaningfully with their probe and are seeking to recover US$1.3 billion from the two men. Teneo estimates creditors are owed roughly US$3.3 billion overall. The proceedings between Zhu and Teneo’s representatives are a civil matter. Zhu and Davies haven’t faced any criminal charges in Singapore. Details obtained from the questions in court will be shared with creditors under the aim of maximThree Arrows’ Su Zhu probed in Singapore court as liquidators step up hunt for assets WASHINGTON (Dec 13): Tesla Inc filed a recall covering more than two million vehicles after the top US auto-safety regulator determined its driver-assistance system Autopilot doesn’t do enough to prevent misuse. The move is the result of a years-long defect investigation by the National Highway Traffic Safety Administration (NHTSA) that will remain open as the agency monitors the efficacy of Tesla’s fixes. A NHTSA spokesperson said the probe found that Tesla’s means for keeping drivers engaged were inadequate. “Automated technology holds great promise for improving safety, but only when it is deployed responsibly,” NHTSA said Wednesday. “Today’s action is an example of improving automated systems by prioritising safety.” Tesla said in its recall report that it expected to start deploying an over-the-air software to incorporate additional controls and alerts on or shortly after Dec 12. The carmaker’s shares fell as much as 1.6% to US$233.30 (RM1,098.38) before the start of regular trading. The recall is the second this year involving Tesla’s automated-driving systems, which have come under escalating scrutiny after hundreds of crashes — some of which resulted in fatalities. While chief executive officer Elon Musk has for years predicted the carmaker is on the verge of offering complete autonomy, both Autopilot and the beta features Tesla markets as Full Self-Driving require a fully attentive driver to keep their hands on the wheel. Autopilot comes standard on every new Tesla. It uses cameras to match vehicle speed with surrounding traffic and assists drivers with steering within clearly marked lanes. Tesla has marketed higher-level functionality it calls FSD Beta since late 2016. That Tesla recalls 2 mil cars to fix autopilot safety flaws by Keith Laing Bloomberg by Joyce Koh & Suvashree Ghosh Bloomberg ising recoveries, according to the people. Zhu has previously said that his and Davies’ good-faith efforts to cooperate with liquidators “was met with baiting”. In email correspondence submitted to a New York bankruptcy court by the liquidators, counsel to Davies and Zhu have said that court orders which the liquidators have obtained are “baseless”. Singapore’s central bank in mid-September imposed nine-year prohibition orders on both men for transgressions at Three Arrows, faulting the fund for risk management failings and providing false information. Three Arrows was viewed as among the largest and most successful crypto hedge funds before it collapsed. It shifted registration to the British Virgin Islands, after having previously operated out of Singapore. A British Virgin Islands court appointed Teneo in June last year to liquidate the fund’s assets. Zhu and Davies are among the onetime darlings of crypto’s pandemic-era bull run, whose reputations subsequently evaporated as boom turned to bust, exposing risky practices. Liquidators are in touch with authorities around the world in their effort to locate Davies, a person familiar with the matter said in October. suite of features was recalled in February, after NHTSA raised concerns about Teslas using the system travelling in unlawful or unpredictable ways, including exceeding speed limits and not coming to complete stops. Late last year, Musk suggested on X, the social media platform formerly known as Twitter, that Tesla would update FSD Beta to give some drivers the option to disable alerts to put their hands on the steering wheel. NHTSA asked the company for more information days later. NHTSA first conducted a defect investigation of Autopilot after a 2016 fatal crash, only to clear the system early the following year. Its two ongoing defect probes — initiated in August 2021 and February 2022 — were precipitated by Teslas crashing into first-responder vehicles and suddenly braking on highways. The agency has opened more than 50 special crash investigations involving Tesla cars that are suspected to be linked to Autopilot, with the pace of probes picking up under the Biden administration. Regulators scrutinising Tesla’s driving systems go beyond NHTSA. The company disclosed in January that it had received requests for documents from the Justice Department related to Autopilot and FSD Beta. Bloomberg also reported that month that the Securities and Exchange Commission was investigating Musk’s role in shaping Tesla’s self-driving claims. • More prominent visual alerts • Simplifying how drivers engage and disengage the Autopilot feature Autosteer • Additional checks on using Autosteer outside controlled-access highways • Eventual Autosteer use suspension if drivers repeatedly misuse the feature Tesla’s Autopilot Remedies Source: Tesla’s recall report

thursday december 14, 2023 22 The E dge C E O m o rning brief world (Dec 13): Regulators in the UK are weighing a cap on some of the fees that Visa Inc and Mastercard Inc charge local merchants for each card transaction, seeking to rein in charges that have risen fivefold since Brexit. After a monthslong review, the UK’s Payment Systems Regulator (PSR) said it’s concerned that the payment giants have no effective competition, especially when it comes to the interchange fees they charge UK merchants when a consumer carrying a card issued by a bank in the European Economic Area (EEA) makes an online purchase. For now, the PSR is proposing to restore those fees to the pre-Brexit levels of 0.3% of a purchase price for credit cards and 0.2% for debit cards. For credit cards, those fees have risen in recent years to as high as 1.5% and the PSR estimated that the increases cost UK businesses as much as £200 million (RM1.18 billion) last year. The two companies have been under fire from a bevy of regulators and lawmakers around the world for the fees they charge. While it usually amounts to just pennies per purchase, the fees do add up: US merchants spent a record US$160.7 billion on swipe fees last year, up 16.7% from 2021, according to the Nilson Report, an industry publication. “Cards are the most popular way for consumers to pay for goods and services UK proposes capping some Visa, Mastercard fees after fivefold jump since Brexit LONDON (Dec 13): The pound was among the worst performing major currencies against the dollar on Wednesday, after data showed the UK economy shrank in October, raising the risk of recession and possibly complicating the Bank of England’s messaging on rates. The Office for National Statistics said UK gross domestic product contracted by 0.3% in October, against forecasts for a no change. Britain’s economy avoided a contraction in the July-to-September period - when it also showed no change - but some analysts think it remains at risk of a shallow recession in late 2023 and early 2024 after the BoE’s increases in interest rates. Sterling was last down 0.3% against the dollar at $1.2526, compared with a decline of 0.1% in the euro and 0.2% in the yen. The futures market showed traders now believe there could be almost a full percentage point in rate cuts next year, from around 75 basis points at the start of the week. Consumers and businesses alike are feeling the pinch from still-hot inflation and interest rates at their highest in nearly 16 years. “This data is historic but it’s all about what happens next, and we will hear the Sterling tumbles after UK economy shrinks by Amanda Cooper Reuters Read also: German government to keep debt brake in 2024 budget in the UK and the EEA, so it is crucial that the market works well,” the UK agency said in a statement on Wednesday. Disputing findings Shares of Visa and Mastercard fell slightly in early New York trading. Both companies disputed the regulator’s findings. Though the two companies set the level for the fees, it’s the bank that issues the card that collects most of that revenue. “In an extremely competitive payments market, interchange reflects the value provided to consumers and businesses,” Mastercard said in an emailed statement, adding it will “continue to educate” the regulator. Visa said the proposed remedies aren’t justified, and noted the interchange rates on EEA online card transactions apply to less than 2% of UK card payments and reflect “the fact that these transactions are more complex and carry far greater risk of fraud”. “Accepting reliable, secure, and innovative digital payments represents enormous value to UK businesses, especially when selling overseas,” Visa said. For years, transactions in the UK were subject to price caps introduced by the European Union. After the UK withdrew from the European Union in 2020, those restrictions no longer applied. thoughts of major central banks in the next two days. The Bank of England will be pleased that their actions have worked, but worried that they have gone too far. We will find out tomorrow,” Neil Birrell, chief investment officer at Premier Miton Investors, said. So far this year, the pound has risen by around 3.8% against the dollar, marking its best annual performance since 2019, driven in large part by an expectation that the Bank of England could be much slower in cutting rates than other central-bank counterparts. Goldman Sachs on Wednesday lowered Britain’s 2023 economic growth rate forecast to 0.5%, from its previous outlook of 0.6%, after the GDP data. Paul Dales, chief UK economist at Capital Economics, said the October data suggested Britain might be in a recession. “That may nudge the Bank of England a little closer to cutting interest rates, although when leaving rates at 5.25% tomorrow the Bank will probably push back against the idea of near-term rate cuts,” he said. by Jenny Surane Bloomberg reuters Bloomberg

thursday december 14, 2023 23 The E dge C E O m o rning brief world news In brie f Country Garden has remitted funds to repay yuan bond in full —filing (Dec 13): Embattled Chinese developer Country Garden Holdings has remitted more than 800 million yuan (US$111.42 million) to repay onshore bondholders, a company filing to the Shenzhen Stock Exchange late on Tuesday showed. Bondholders of a total of 8 million notes, each with a principal of 100 yuan chose to exercise the put option by Nov. 28, while Country Garden has wired funds that fully repaid the principal and interest, the filing showed. The repayment comes as Country Garden has defaulted on its US$11 billion offshore bonds and is working on a plan to restructurethe debt. The company in September won approval from creditors to extend the maturities of eight onshore bonds worth 10.8 billion yuan by three years. — Reuters Airbnb to pay €576 mil to settle Italian tax claim (Dec 13): Airbnb Inc’s Irish unit agreed to pay the Italian tax authorities €576 million (US$621 million) to settle allegations that it hadn’t paid enough tax. The San Francisco-based homesharing company doesn’t acknowledge “any liability” as part of the settlement, it said in a regulatory filing on Wednesday. Italy’s finance police had claimed that the company failed to pay taxes on about €3.7 billion of rental revenue and claimed that the company owed about €779 million after an audit of the tax years from 2017 to 2021. Airbnb is still in discussions about its taxes for 2022 and 2023, and the amounts involved may be “material,” the company said in a statement. The settlement, while lower than the amount Italian authorities had initially pursued, is still equivalent to about a third of the company’s quarterly adjusted earnings. Authorities are ramping up scrutiny of how global companies operating in Italy pay tax. In 2019, Italian prosecutors probed Netflix Inc. after the US streaming company failed to file a return, people familiar with the matter said at that time. Earlier this year, Milan prosecutors started investigating Facebook parent company Meta Platforms Inc. for alleged unpaid value-added taxes that totaled about €870 million, people familiar with the matter told Bloomberg last February. A spokesman for Italy’s tax agency declined to comment. — Bloomberg Agenda in the Southeast Asian country, strengthening primary healthcare and the public health laboratory system, said Xinhua. The project is expected to fully equip more than 10,000 primary healthcare facilities and more than 500 public health laboratories in Indonesia to meet the minimum service standards stipulated by the government. It will include equipment procurement, delivery, commissioning, user training, operations and maintenance services, and capacity development. The newly approved loan is the third in a series of ADB support to Indonesia in developing and implementing its post-pandemic Health System Transformation Agenda. The project, with a total investment of nearly US$4 billion (RM18.83 billion), is jointly financed with three other multilateral development banks — the Asian Infrastructure Investment Bank, the Islamic Development Bank, and the World Bank, according to the ADB. It “will address the critical gaps and disparities in service readiness of primary healthcare facilities, public health laboratories and referral hospitals in the country towards universal access to quality health services and improved health system resilience and robustness”, ADB human and social development director Karin Schelzig said. — Bernama-Xinhua ADB approves US$650 mil loan to boost Indonesia’s healthcare system MANILA (Dec 13): The Asian Development Bank (ADB) on Wednesday said it had approved a US$650 million (RM3.06 billion) investment loan to upgrade and enhance Indonesia’s primary healthcare facilities and public health laboratories nationwide to improve disease prevention, detection, and treatment. The ADB said the Primary Healthcare and Public Health Laboratories Upgrading and Strengthening (PLUS) project directly supports two government projects under the Health System Transformation South Korea’s Kakao appoints new CEO amid scrutiny of tech company SEOUL (Dec 13): South Korea’s Kakao Corp has picked a new chief executive officer (CEO), the company said on Wednesday, as part of its management reform efforts amid an ongoing crisis at the tech giant. The transition comes at a time when the company is facing a wide range of regulatory risks ranging from a probe into suspected stock market manipulation to complaints about monopolistic practices in its ride-hailing service. Shina Chung, 48, currently head of Kakao Ventures, Kakao’s venture capital arm, will be formally confirmed as Kakao’s new CEO after a board meeting and a general shareholders’ meeting in March, Kakao said in a statement. — Reuters Bloomberg Bloomberg

thursday december 14, 2023 24 The E dge C E O m o rning brief world CAIRO/GAZA (Dec 13): Israel faced growing diplomatic isolation in its war in Gaza as the United Nations demanded an immediate humanitarian ceasefire and US President Joe Biden said “indiscriminate” bombing of civilians was costing international support. With intense fighting now being waged simultaneously in the north and south of the enclave, Israeli troops on Wednesday reported their worst combat losses for more than a month, including a colonel, the highest-ranking officer yet killed in the ground campaign. Warplanes again bombed the length of Gaza and aid officials said the arrival of rainy winter weather worsened the conditions for hundreds of thousands of families sleeping rough in makeshift tents. The vast majority of Gaza’s 2.3 million people have already been made homeless. Israel launched its campaign to annihilate the Hamas militant group that controls Gaza with global sympathy after fighters stormed across the border fence on Oct 7, killing 1,200 Israelis, mostly civilians, and seizing 240 hostages. But since then, Israeli forces have besieged the enclave and laid much of it to waste, with more than 18,000 people confirmed killed according to Palestinian health authorities, and many thousands more feared lost in the rubble or beyond the reach of ambulances. Since a week-long truce collapsed at the start of December, Israeli forces have extended their ground campaign from the northern Gaza Strip into the south with the storming of the main southern city of Khan Younis. Meanwhile, fighting has only intensified amid the rubble of the north, where Israel had previously announced that its military objectives had been largely met. Israel reported 10 of its soldiers killed in the past 24 hours, including a full colonel commanding a forward base and a lieutenant-colonel commanding a regiment. It was the worst one-day loss since 15 were killed on Oct 31. According to Army Radio, most of the deaths came in the Shejaiya district of Gaza City in the north, when an infantry unit hunting Hamas gunmen entered a building and lost contact with the rear base. When another unit was sent in after them, bombs were set off in the building and gunmen opened fire. by Nidal al-Mughrabi & Bassam Masoud Reuters Israel faces growing isolation, Biden criticism, as Gaza deaths mount ‘Bringing destruction and death’ Hamas said the incident showed that Israeli forces could never subdue Gaza: “We say to the Zionists that your failed leadership has no regard for the lives of your soldiers,” it said. “The longer you stay there, the greater the bill of your deaths and losses will be, and you will emerge from it carrying the tail of disappointment and loss, God willing.” In the north, heavy fighting has also taken place in the Jabaliya district, where Gaza health officials say Israeli forces have besieged and stormed a hospital and detained and abused medical staff. In the south, Israeli forces storming Khan Younis advanced in recent days to city centre. Residents said there was heavy fighting there but no further attempts to advance in the last 24 hours. “The Israeli tanks have not moved further from the centre of the city. They are facing fierce resistance and we hear the exchanges of fire, explosions too,” Abu Abdallah, a father of five who lives 2 km away, told Reuters. The Israelis had brought bulldozers and were destroying the road near the Khan Younis home of the Hamas leader in Gaza, Yahya Al—Sinwar, Abu Abdallah said. “They are only bringing destruction and death wherever they go at the expense of our innocent defenceless civilians.” Hospitals in the north have largely ceased functioning altogether. In the south, they have been overrun by dead and wounded, carried in by the dozen throughout the day and night. “Doctors including myself are stepping over the bodies of children to treat children who will die,” Dr Chris Hook, a British physician deployed with medical charity MSF at Nasser hospital in Khan Younis, told Reuters. International agencies say the limited aid reaching Gaza is being distributed only in parts of Rafah near the Egyptian border. Even there, the situation has become far more extreme this week, with hundreds of thousands of people sheltering under tarps. Gemma Connell, based in Rafah as Gaza team leader for the U.N. humanitarian office OCHA, told Reuters in a message: “Heavy rains and winds overnight. So awful for all of these people in makeshift shelters.” Israel says it has been encouraging increased aid to Gaza through Egypt’s border, and is announcing daily four-hour pauses in operations near Rafah to help civilians get to it. The UN says cumbersome inspections and insecurity have slowed aid to a trickle. UN vote The UN General Assembly vote demanding a ceasefire has no legal force but was the strongest sign yet of eroding international support for Israel’s actions. Three-quarters of the 193 member states voted in favour and only eight countries joined the United States and Israel in voting against. Before the vote, Biden said Israel still has support from “most of the world” including the US and European Union for its fight against Hamas. “But they’re starting to lose that support by indiscriminate bombing that takes place,” he told a campaign donor event in Washington. Close US intelligence sharing allies Canada, Australia and New Zealand said in a joint statement: “The price of defeating Hamas cannot be the continuous suffering of all Palestinian civilians.” In the most public sign of division between the US and Israeli leaders so far, Biden said that Prime Minister Benjamin Netanyahu needed to change his hardline government and that ultimately Israel “can’t say no” to an independent Palestinian state, opposed by far-right members of the Israeli cabinet. Netanyahu said Israel disagrees with Washington about the future for Gaza after the war, and opposes US calls for Gaza to be governed by the Western-backed Palestinian Authority that now exercises partial self rule in the West Bank.

thursday december 14, 2023 25 The E dge C E O m o rning brief world (Dec 13): When Spanish bridewear designer Pronovias needed a bailout to make up for the sudden drop in demand during the pandemic, its private equity owner BC Partners was willing to oblige. In 2022, with the after-effects of lockdowns still hurting the business, the sponsor stepped in with another equity boost. But by the end of last year, BC decided to call it quits, and handed over the keys to creditors in a debt-for-equity swap. It’s a story that’s becoming increasingly common as higher interest rates raise the bar on which companies private equity firms are willing to keep supporting. While funds were prepared to keep injecting capital during the pandemic, believing that profits would stabilise again once normal operations resumed, now they are looking more selectively at the long-term viability of the companies they own. “Sponsors have to pick which businesses to keep supporting,” said David Morris, a senior managing director and head of the UK restructuring practice at FTI Consulting. “Part of that will depend on how far away they think they are from value and the speed at which they could go back to value. They aren’t going to back them all from a capital or time perspective.” Debt-for-equity swaps took place in 21 companies with publicly listed bonds or widely syndicated loans in Europe this year, according to data compiled by Bloomberg News. That helped make 2023 the second-worst year for distressed exchanges since 2009, with the worst year being 2020, according to S&P Global Ratings. With default rates expected to rise to 3.8% for European junk debt by September next year, according to S&P Global, the number of companies being cut off by their sponsors is only likely to increase. BC Partners and Carlyle were the private equity firms that went through the highest number of debt-for-equity swaps in the region in 2023, alongside KKR’s special situations arm, handing over the keys to firms including security-systems firm Praesidiad and Swedish mattress company Hilding Anders. The number of such transactions is higher still if you include firms that have been taken over by private credit funds, for which there isn’t adequate data available. French hair salon brand Dessange International, scuba diving and snorkelling equipment seller Aqualung by Giulia Morpurgo & Irene García Pérez Bloomberg Private equity owners hand over company keys as defaults rise International, payments firm Unzer and the UK’s Dobbies Garden Center are just some of the companies that have been handed to private lenders this year in debt-for-equity swaps. “In the last financial crisis, creditors were commercial banks less willing to take control,” said FTI’s Morris. “Now, on the other side of the table, they have creditors saying you either put new money in or we’ll take control.” The increase in debt-for-equity swaps can create new opportunities for creditors if they are able to buy debt at distressed levels and then convert it to equity. But lenders also face the risk that the company will never recover. Bondholders of call centre operator Atento face an uphill battle turning the firm around after they acquired it in a swap last month. Shares in the Brazilian company have already been swapped once before, but the creditors who took over in that transaction, which took place in 2020, didn’t manage to make it profitable. Several of the debt-for-equity swaps this year took place in family-owned businesses, which don’t always want to give up ownership. Lenders to Spanish steelmaker Celsa were only able to take control after a legal battle with the Rubiralta family that lasted more than three years. Usually, though, the threat of enforcement remains in the background and a deal is done where the private equity firm is offered some modest equity or other notional value instead of zero, said Jat Bains, a restructuring and insolvency partner at MacFarlanes LLP. “From a sponsor’s perspective, you don’t want to have a business that has been enforced over either,” Bains said. “So if the writing is on the wall, they are usually willing to co-operate.”

thursday december 14, 2023 26 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) TWL Holdings Bhd 145.5 -0.005 0.030 -14.29 147.4 Top Glove Corp Bhd 135.1 0.080 0.875 -3.31 7,007.1 Bina Puri Holdings BHD 132.3 0.010 0.095 137.50 320.1 Sarawak Cable Bhd 103.3 0.030 0.240 269.23 95.8 Sapura Energy Bhd 96.1 0.005 0.050 42.86 799.0 Ageson Bhd 87.0 0.010 0.065 -68.29 20.3 Velesto Energy Bhd 75.7 -0.010 0.215 43.33 1,766.4 Saudee Group Bhd 71.3 0.000 0.030 -33.33 44.6 Widad Group Bhd 64.1 0.000 0.465 8.14 1,439.9 Leform Bhd 60.4 0.020 0.375 81.69 555.4 Sarawak Consolidated Industries 52.8 0.035 0.805 455.17 515.4 Handal Energy Bhd 48.0 -0.005 0.125 -19.35 33.3 YTL Corp Bhd 46.2 0.030 1.860 220.69 20,393.8 Careplus Group Bhd 41.3 0.050 0.345 -27.37 201.7 Sime Darby Property Bhd 38.6 -0.010 0.575 27.78 3,910.5 PUC BHD 36.8 0.000 0.045 28.57 106.6 Minetech Resources Bhd 33.2 0.005 0.070 27.27 107.0 Asdion Bhd 32.9 -0.010 0.080 -15.79 37.1 Bioalpha Holdings Bhd 32.4 0.015 0.105 0.00 147.7 Artroniq Bhd 28.2 0.005 0.850 19.72 346.8 Data as compiled on Dec 13, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) AT Systematization Bhd 0.010 100.00 731.1 -33.33 67.9 BCM Alliance Bhd 0.020 33.33 351.1 -20.00 40.7 Barakah Offshore Petroleum 0.045 28.57 4,510.3 80.00 45.1 Xidelang Holdings Ltd 0.025 25.00 185.0 0.00 52.9 Lambo Group BHD 0.025 25.00 158.0 -54.55 38.5 Kanger International Bhd 0.060 20.00 8,518.7 50.00 39.0 Alam Maritim Resources Bhd 0.030 20.00 130.9 20.00 46.0 Ageson Bhd 0.065 18.18 87,045.8 -68.29 20.3 Careplus Group Bhd 0.345 16.95 41,280.5 -27.37 201.7 Ta Win Holdings BHD 0.035 16.67 330.7 -36.36 120.2 Bioalpha Holdings Bhd 0.105 16.67 32,403.8 0.00 147.7 EVD Bhd 0.110 15.79 4,516.7 -45.00 45.4 Flexidynamic Holdings Bhd 0.220 15.79 179.0 -2.22 62.6 HLT Global Bhd 0.185 15.63 9,659.9 -22.92 143.4 Majuperak Holdings Bhd 0.300 15.38 5.7 20.00 85.3 Sarawak Cable Bhd 0.240 14.29 103,257.7 269.23 95.8 Aldrich Resources Bhd 0.040 14.29 549.2 33.33 44.5 Daythree Digital Bhd 0.420 13.51 10,985.6 — 201.6 Landmarks BHD 0.260 13.04 5,513.5 33.33 174.6 Bina Puri Holdings BHD 0.095 11.76 132,274.6 137.50 320.1 Data as compiled on Dec 13, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) Hong Seng Consolidated Bhd 0.020 -20.00 3,323.0 -90.91 102.2 TWL Holdings Bhd 0.030 -14.29 145,541.0 -14.29 147.4 Green Packet Bhd 0.040 -11.11 615.2 -27.27 79.8 Asdion Bhd 0.080 -11.11 32,926.1 -15.79 37.1 Harn Len Corp Bhd 0.515 -10.43 19,253.3 -34.68 290.9 China Ouhua Winery Holdings 0.050 -9.09 110.0 -23.08 33.4 Rex Industry Bhd 0.110 -8.33 100.0 -21.43 72.3 Hhrg Bhd 0.360 -7.69 3,683.8 -24.21 311.7 Advance Information MKT Bhd 0.125 -7.41 193.1 -6.29 13.7 Key Asic Bhd 0.065 -7.14 4,757.3 0.00 90.9 InNature Bhd 0.325 -7.14 2,348.9 -44.44 229.4 Eduspec Holdings Bhd 0.065 -7.14 1,427.0 -35.00 69.3 Jadi Imaging Holdings Bhd 0.065 -7.14 300.0 -23.53 91.0 Boustead Heavy Industries Corp 0.550 -5.98 20.3 32.53 136.7 Asia Poly Holdings Bhd 0.080 -5.88 824.7 -27.27 76.7 Bintai Kinden Corp Bhd 0.080 -5.88 1,046.7 -11.11 75.0 Rapid Synergy Bhd 25.000 -5.37 433.2 56.64 2,672.4 Netx Holdings Bhd 0.100 -4.76 195.0 66.67 93.8 Green Ocean Corp Bhd 0.100 -4.76 278.6 -50.00 21.1 Pineapple Resources BHD 0.800 -4.76 9.1 -11.11 38.8 Data as compiled on Dec 13, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) Nestle Malaysia Bhd 116.000 -1.700 160.6 -17.14 27,202.0 Rapid Synergy Bhd 25.000 -1.420 433.2 56.64 2,672.4 HextarTechnologies Solutions 21.200 -0.800 10.1 24.27 2,727.4 Imaspro Corp Bhd 4.170 -0.180 1,698.9 -28.72 333.6 Ajinomoto Malaysia Bhd 16.100 -0.180 33.9 23.09 978.9 HAP Seng Consolidated Bhd 4.640 -0.110 547.2 -27.50 11,552.1 YNH Property Bhd 4.720 -0.110 1,050.4 11.58 2,494.5 Apollo Food Holdings Bhd 5.370 -0.100 122.5 39.12 429.6 Hong Leong Financial Group 16.280 -0.100 534.7 -12.47 18,644.6 Bursa Malaysia Bhd 6.720 -0.080 560.3 1.05 5,438.5 D&O Green Technologies Bhd 3.490 -0.080 2,034.7 -18.46 4,321.6 Hibiscus Petroleum Bhd 2.350 -0.070 4,318.7 -12.15 1,889.8 SHH Resources Holdings BHD 1.440 -0.070 48.8 118.18 144.0 Harn Len Corp Bhd 0.515 -0.060 19,253.3 -34.68 290.9 Allianz Malaysia Bhd 18.340 -0.060 37.4 29.52 3,264.0 YTL Power International Bhd 2.400 -0.060 27,949.3 235.66 19,445.2 AEON Credit Service M Bhd 5.600 -0.050 217.1 -10.97 2,859.4 Tenaga Nasional Bhd 9.880 -0.050 3,511.5 2.60 57,178.8 EG Industries Bhd 1.540 -0.050 2,514.9 185.19 693.3 Scientex Packaging Ayer Keroh 2.200 -0.050 19.1 -8.33 771.4 Data as compiled on Dec 13, 2023 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) Heineken Malaysia Bhd 22.700 0.320 280.5 -9.92 6,857.6 Hartalega Holdings Bhd 2.530 0.240 17,170.9 48.82 8,635.6 MBM Resources BHD 4.460 0.160 619.5 51.20 1,743.4 QL Resources Bhd 5.670 0.140 7,877.6 2.90 13,798.8 Fraser & Neave Holdings Bhd 27.460 0.140 148.7 27.25 10,071.7 Fima Corp BHD 1.850 0.100 11.0 -3.65 438.7 Eurospan Holdings BHD 1.440 0.100 9.1 27.43 64.0 ViTrox Corp Bhd 7.190 0.090 37.8 -6.01 6,797.1 Malayan Cement Bhd 4.210 0.090 1,383.2 98.58 5,515.9 Top Glove Corp Bhd 0.875 0.080 135,091.6 -3.31 7,007.1 Bintulu Port Holdings Bhd 5.100 0.080 0.7 6.25 2,346.0 Unisem M Bhd 3.360 0.080 274.7 21.74 5,419.9 Crescendo Corp Bhd 2.180 0.080 585.3 87.93 609.1 Petronas Gas Bhd 16.820 0.080 910.2 -1.75 33,282.3 Petronas Dagangan Bhd 21.700 0.080 244.0 -5.02 21,558.0 APB Resources Bhd 2.490 0.070 127.4 66.00 276.1 Kossan Rubber Industries Bhd 1.690 0.070 19,900.5 53.64 4,312.2 Unimech Group Bhd 1.880 0.070 2.0 17.50 276.2 Keck Seng Malaysia Bhd 4.650 0.070 65.8 29.89 1,670.8 MCE Holdings Bhd 2.070 0.070 531.3 53.33 127.9 Data as compiled on Dec 13, 2023 Source: Bloomberg CLOSE CHANGE CHANGE (%) CLOSE CHANGE CHANGE (%) DJIA * 36,577.94 173.01 0.48 S&P 500 * 4,643.70 21.26 0.46 NASDAQ 100 * 16,354.25 132.52 0.82 FTSE 100 * 7,542.77 22.95 0.30 AUSTRALIA 7,257.79 22.50 0.31 CHINA 2,968.76 -34.68 -1.15 HONG KONG 16,228.75 -145.75 -0.89 INDIA 69,584.86 33.83 0.05 INDONESIA 7,075.34 -49.97 -0.70 JAPAN 32,926.35 82.65 0.25 KOREA 2,510.66 -24.61 -0.97 PHILIPPINES 6,255.74 -36.65 -0.58 SINGAPORE 3,104.26 1.95 0.06 TAIWAN 17,468.93 18.30 0.10 THAILAND 1,357.97 -15.95 -1.16 VIETNAM 1,114.20 -13.43 -1.19 Data as compiled on Dec 13, 2023 Source: Bloomberg CPO RM 3,669.00 -66.00 OIL US$ 73.10 -0.14 RM/USD 4.7060 RM/SGD 3.5034 RM/AUD 3.0855 RM/GBP 5.8969 RM/EUR 5.0766 * Based on previous day’s closing