BNM’s international reserves up marginally to US$107.8b as at Jan 15 (Fri, 22 Jan 2021)
PETALING JAYA: Bank Negara Malaysia’s international reserves stood at US$107.8 billion (RM436 billion) as at Jan 15, 2020, up marginally from US$107.6 billion as at Dec 30, 2020.
“The reserves position is sufficient to finance 8.7 months of retained imports and is 1.2 times total short-term external debt,“ the central bank said.
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GDP forecast maintained at 6.5-7.5% for 2021, says Zafrul (Fri, 22 Jan 2021)
KUALA LUMPUR: Malaysia is maintaining its Gross Domestic Product (GDP) growth target of between 6.5 per cent and 7.5 per cent for 2021 despite the emergency declaration and the second round
of the Movement Control Order (MCO 2.0) enforcement, said Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.
"It is still early and we are still in the first quarter of the year. So we are maintaining it (for now) but our forecast is at risk given with (what is happening) during the MCO 2,0.
“It (the GDP) will be at the lower end of our forecast,” he said during an interview with Bloomberg today.
Tengku Zafrul said the stability and persistency of policies were crucial in controlling COVID-19 and enabling the country to be on this economic recovery path.
The government is committed to supporting businesses and the people as well, and ready to deploy more resources to combat the deadly virus if needed, he said.
“The impact (of loses on the economy) per day during the previous MCO was around RM2.4 billion, but this time around (MCO 2.0), it is about RM700 million per day.
“Additionally, we have also started to implement various stimulus packages that is still ongoing, and the recently approved Budget 2021 and the recent assistance package (Economic and Rakyat
Protection Assistance Package or PERMAI) will help to mitigate the impact on the economy,” the minister said.
Asked whether there would be moves to expand the debt ceiling potentially, Tengku Zafrul said the government has no plan to increase it at the moment as the situation is too early to make any
“If we look at where the debt level is today, we will continue to forecast that our debt level will be below the 60 per cent debt ceiling we set earlier on.
“In terms of our stimulus package PERMAI that we announced for this year, the fiscal injection is about RM15 billion, where most of the money will be coming from the allocation under Budget 2021,”
Updating the progress on the 1Malaysia Development Bhd (1MDB) scandal, Tengku Zafrul said Malaysia had recovered around RM15.4 billion in cash and physical assets that were linked to the strategic
He said Malaysia is committed to securing the remaining assets above and beyond what it has achieved today regardless of the COVID-19 situation.
“The Malaysian government remains committed to undertaking a responsible and pragmatic approach in the repatriation process that benefits the country and the people,” he said, citing 1MDB debt
servicing is already part of the government's projection under Budget 2021.
Commenting on Joe Biden’s presidential inauguration, Tengku Zafrul expressed hope that the trade tensions between the United States and China would be diffused under the new administration.
“We hope that global trade can function in a more orderly manner under the ambit of the World Trade Organisation,” he said.
The US is Malaysia’s third largest trading partner, accounting for 10 per cent of the total trade in the first three quarters of last year. - BERNAMA
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CPI declines 1.4% in December 2020 (Fri, 22 Jan 2021)
PETALING JAYA: The Consumer Price Index (CPI) declined 1.4% in December 2020 to 120.6 as against 122.3 in the same month of the preceding year, attributed by the decline in transport
(-8.4%); housing, water, electricity, gas & other fuels (-3.3%); clothing & footwear (-0.4%); restaurants & hotels (-0.2%) and furnishings, household equipment & routine household
maintenance (-0.1%) which contributed 48.6% to overall weight.
Chief statistician Malaysia Datuk Seri Dr Mohd Uzir Mahidin said out of 552 items covered in CPI, 339 items showed an increase in December 2020 as against December 2019. On the contrary, 145 items
declined, while 68 items were unchanged. Based on the performance of 552 items by category of goods and services, non-durable goods (296 items) is a category that experienced the most price increased
with 206 items, 73 items decreased and 17 items were unchanged as compared to services, semi-durable goods and durable goods.
Nevertheless, food & non-alcoholic beverages increased by 1.4% to 135.8 as compared to 133.9 in corresponding month of the preceding year. This group contributes 29.5% of CPI weight.
Similarly, miscellaneous goods & services inclined by 2.2%, followed by health (1.0%), alcoholic beverages & tobacco (0.6%), education (0.6%) and recreation services & culture (0.2%).
CPI without fuel fell 0.1% in December 2020 to 112.8 as compared to 112.9 in the same month of the preceding year. CPI without fuel covers all goods and services except unleaded petrol RON95,
unleaded petrol RON97 and diesel.
The average price of unleaded petrol RON95 in December 2020 decreased to RM1.74 per litre as compared to RM2.08 in December 2019. In addition, the average price of unleaded petrol RON97 decreased
to RM2.04 per litre as compared to RM2.63 while the average price of diesel declined to RM1.93 per litre from RM2.18 in the corresponding month of the preceding year.
Core index rose 0.7% in December 2020 as compared to the same month of the previous year. Among the major groups which influenced the increase were miscellaneous goods & services (2.2%); food
& non-alcoholic beverages (1.2%), health (1.0%); housing, water, electricity, gas & other fuels (0.6%) and education (0.6%). Core index excludes most volatile items of fresh food as well as
administered prices of goods and services.
Although year-on-year CPI decreased, CPI on a monthly basis increased by 0.5% as compared to November 2020, attributed by transport (3.0%) and alcoholic beverages & tobacco (0.5%).
Meanwhile, CPI for the fourth quarter of 2020 decreased 1.5% to 120.3 as compared to 122.1 in the same quarter of the previous year. On a quarterly basis, the CPI increased 0.2% as compared to the
third quarter of 2020. The CPI for the year 2020 registered a decrease of 1.2% as compared to last year.
The index for all states decreased between -0.9% to -2.2% in December 2020 as compared to December 2019. The highest decrease was recorded by Kedah & Perlis at -2.2%. This was followed by
Sabah & Wilayah Persekutuan Labuan (-2.0%), Johor (-2.0%), Malacca (-2.0%), Sarawak (-1.9%) and Negeri Sembilan (-1.9%).
However, all states registered an increase in the index of food & non-alcoholic beverages. The highest increase was recorded by Pahang at 2.3%. This was followed by Selangor & Wilayah
Persekutuan Putrajaya (2.2%), Perak (2.0%), Terengganu (2.0%) and Negeri Sembilan (1.7%).
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Asian markets step back from stimulus-driven record highs (Fri, 22 Jan 2021)
SYDNEY: Asian shares eased from record highs on Friday as investors took some money off the table after a recent rally that was driven by hopes a massive U.S. economic stimulus plan by
incoming President Joe Biden will help temper the COVID-19 impact.
"The markets had such a strong run yesterday after the presidential inauguration in the U.S. and the run-up to that, that the lead coming in from the U.S. is a bit messy," said Shane Oliver, chief
economist at investment manager AMP Capital in Sydney.
"A lot of the good news is out there. I suspect a fairly flat day."
MSCI's broadest gauge of Asia Pacific stocks outside of Japan was off 0.2% at 722.49 points, a whisker away from its all-time high of 727.31 touched on Thursday.
The index has jumped 3.7% so far this week, reflecting relief over an orderly transition of power in the United States and strong expectations that U.S. stimulus will provide continued support for
Republicans in the U.S. Congress have indicated they are willing to work with President Joe Biden on his administration's top priority, a $1.9 trillion U.S. fiscal stimulus plan, though some are
opposed to the price tag.
Democrats took control of the U.S. Senate on Wednesday, though they will still need Republican support to pass the program.
Australia's benchmark index was down 0.2% while Japan's Nikkei eased 0.4%.
Chinese shares started on the backfoot with the blue-chip CSI300 index down 0.1% and Hong Kong's Hang Seng was off 0.1%.
Overnight on Wall Street, both the S&P 500 and Nasdaq Composite closed at record highs.
The Dow Jones Industrial Average eased a touch, falling into negative territory in the final minutes of trading.
In currency markets, the U.S. dollar picked up against a basket of currencies after three straight days of losses. It is down 0.7% so far this week.
Against the Japanese yen, the dollar has slipped 0.25% so far this week.
The commodity-sensitive Australian dollar is up 0.6% this week while the euro has climbed 0.7% in the period.
The single currency was flat even as European Central Bank (ECB) President Christine Lagarde warned about a renewed surge in COVID-19 infections and the prospect of prolonged restrictions that
could challenge the region's economic outlook.
The ECB, which kept interest rates steady on Thursday, also pledged to provide more support for the economy if needed.
The greenback's recent slide has been led by investors ploughing money into higher-yielding currencies on optimism about a rapid economic recovery led by massive U.S. stimulus.
Popular cyptocurrency bitcoin fell to an almost three-week low on Friday on profit-taking and worries about extra regulations.
In commodities, oil prices slipped after an unexpected build-up in U.S. crude stockpiles.
Brent was off 23 cents at $55.86 a barrel while U.S. crude inched 26 cents lower to $52.86.
Spot gold was down 0.2% at 1,865.5 an ounce. - Reuters
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Earnings outlook for Malaysian banks intact – for now (Fri, 22 Jan 2021)
PETALING JAYA: Following Bank Negara Malaysia’s (BNM) decision to maintain its Overnight Policy Rate (OPR) at 1.75%, earnings forecasts for domestic
banks are intact for the time being, as there is still a possibility of an interest rate cut in the first half of the year.
In a note, CGS-CIMB Research said it is maintaining its net profit growth forecast of 19% for 2021, underpinned by a projected 30.2% drop in 2021 loan loss provisioning, and turnaround in net
interest income growth from a decline of 5.4% in 2020 to an expansion of 4.7% in 2021.
It is maintaining its overweight call on banks, premised on its view that local banks’ earnings growth will rebound this year and be supported by the expectation that gross domestic product growth
will also recover.
That said, the research house is expecting a possible OPR cut of 25 basis points (bps) in H1’21 should MCO 2.0 continue for a protracted period, which would lower its projected net profit growth
for banks in 2021 to 17.2% from 19% currently.
“Our economist’s change in view to now expecting a 25bp OPR cut in 2021 (from no cut previously) is negative for banks. However, this is much narrower than the 125bp cut in 2020, signifying a
better net interest margin outlook in 2021,” it said.
CGS-CIMB noted that the negative impact from an OPR cut would be the greatest on BIMB and Alliance Bank, at an estimated 7-8% of their FY21 net profits.
For BIMB, this is because it has the highest floating-rate loan ratio (over total loan) of 88.2% projected in FY21 against an average of 77.3% for banks under its coverage. Alliance Bank’s
floating-rate loan ratio is also high at its forecast 82% in FY21.
“The impact of a 25bp OPR cut would be smallest at 1.2% for Public Bank’s FY21 net profit, due to its high non-CASA ratio of 74.6% in FY21 (vs sector average of 72.4%). Most of these deposits are
fixed deposits which would be repriced downwards in the event of OPR cut,” it added.
CGS-CIMB’s top picks for the sector are Public Bank, Hong Leong Bank, RHB Bank and AMMB.
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Bintai Kinden proposes to diversify into property development and management (Thu, 21 Jan 2021)
PETALING JAYA: Bintai Kinden Corp Bhd has proposed a diversification into the property development and management business and intends to undertake
two mixed property development and management projects – Holistica Melaka and Holistica Penang.
At present, Bintai Kinden and its subsidiaries are principally involved in the provision of specialised mechanical & electrical (M&E) engineering, provision of turnkey, structural, civil,
infrastructure project and project management, concessionaire arrangements and trading activities.
The two mixed property development and management projects that it plans to undertake will be designed to provide a holistic living environment, with a focus on providing comprehensive healthcare
and wellness services as well as assisted living for better community lifestyle.
Holistica Melaka is an integrated holistic and wellness themed project which will comprise wellness condotels, wellness condominiums, retirement and lifestyle apartments, wellness club as well a
medical specialist centre measuring 4.744 acres, with a gross development value (GDV) of RM558 million.
Holistica Penang is a 21-storey lifestyle condotel in George Town, Penang, measuring 0.598 acres, with a GDV of RM83.7 million.
“The mixed development projects are expected to contribute 25% or more of the net assets and/or net profits of the Bintai group. As such, the board proposes to seek the prior approval from the
shareholders of the company at an EGM to be convened for the proposed diversification.
The board intends to continue with the group’s existing business activities, Bintai Kinden said.
The expansion of Bintai Kinden group’s property development business segment is part of the company’s strategy of diversifying into other industries with strong growth prospects instead of
depending solely on its existing core M&E engineering business. The group has past experiences and expertise in undertaking and completing various construction of property development and related
projects across a span of 36 years.
The board believes that the mixed development projects would contribute positively to the future earnings and improve the financial position of the Bintai Kinden group. The additional revenue
contribution from the mixed development projects is expected to enhance the group’s profitability and returns on shareholders’ funds.
Bintai Kinden also proposed a private placement of up to 30% of its existing issued shares at an indicative issue price of 52 sen per share, to independent investors to be identified later, to
raise RM58.43 million. The proceeds will be used mainly for the mixed development projects.
The proposals are expected to be completed by the second quarter of 2021.
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Securities Commission expands grant scheme to boost green financing via SRI sukuk and bonds (Thu, 21 Jan 2021)
PETALING JAYA: The Securities Commission Malaysia (SC) today expanded its Green SRI Sukuk Grant Scheme to encourage more companies to finance green,
social and sustainability projects through Sustainable and Responsible Investment (SRI) sukuk and bonds issuance.
With this expansion, the grant is now renamed as SRI Sukuk and Bond Grant Scheme and applicable to all sukuk issued under the SC’s SRI Sukuk Framework or bonds issued under the Asean Green, Social
and Sustainability Bond Standards (Asean Standards).
With a size of RM6 million, the Green SRI Sukuk Grant Scheme was established in 2018 to assist issuers in defraying up to 90% of the external review costs for green SRI sukuk. Thus far, it has
benefitted eight issuers involved in renewable energy, green building and sustainable projects.
“As a regional leader in sustainable and responsible investment, Malaysia’s capital market offers companies efficient and reliable access to financing of sustainable projects that can positively
contribute to the environment and society, in alignment with the country’s commitment to the Sustainable Development Goals and the climate change agenda,” said SC chairman Datuk Syed Zaid Albar.
Already recognised as a pioneer in Islamic finance and more recently for climate-friendly sukuk offerings, Malaysia made up 19% of sukuk and bonds issued under the Asean Standards. As at December
2020, RM5.4 billion SRI sukuk have been issued under the SRI Sukuk Framework, out of which 58% are also recognised under the Asean Standards, and another RM635 million bonds issued under the Asean
The SRI Sukuk and Bond Grant Scheme is now opened for application where eligible issuers can claim the grant to offset up to 90% of the external review costs incurred, subject to a maximum of
RM300,000 per issuance.
As announced in Budget 2021, income tax exemptions are provided for the recipients of the SRI Sukuk and Bond Grant Scheme for a period of five years until 2025.
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Maxis says 2020 targets for Jendela delivered, initiatives for this year well under way (Thu, 21 Jan 2021)
PETALING JAYA: Maxis said it has delivered all of its own 2020 targets for Jalinan Digital Negara (Jendela), accelerating capacity with upgrades of more than 35% of the total upgrades of
16,367 sites by the industry.
According to a statement, it has built more than 150 new sites and completed upgrades at more than 5,500 sites in key market centres in both Peninsular Malaysia and Sabah and Sarawak in continuing
its commitment to strengthen 4G network coverage. At the same time, it continues to expand its fibre footprint with more than 6,500 premises passed in 2020.
In line with its ambition to become Malaysia’s leading converged solutions provider, Maxis has commitments in both mobile and fixed rollouts for Jendela. Meanwhile, it is also leveraging its
mobile, fibre, WiFi and satellite communication capabilities to bring a better network experience to highly remote locations.
Maxis CEO Gokhan Ogut (pix) said the Covid-19 pandemic has levelled the field for people from all walks of life and this has brought digitalisation to new levels, as Malaysians began to
fully leverage and experience technology in the true sense – from personal life, to learning, in businesses big and small, and running the economy.
“We continue to invest significantly in our network to support the increasingly sophisticated digital lifestyles of everyone. Maxis’ vision is to build the best network for the nation, driven by
our purpose to bring together the best of technologies,” he said in a statement.
For the months ahead in 2021, Maxis will remain focused on optimising its network in anticipation of the continuing surge in internet traffic. 4G coverage expansion is also being accelerated to
rural and underserved areas as part of the USP projects, while strengthening quality of experience in urban, residential and industrial areas with upgrades to mobile sites in several states including
Perak, Kelantan, Pahang, Johor, Sabah and Sarawak.
Concurrently, Maxis will be rolling out fibre in Kuala Lumpur, Selangor, Negri Sembilan, Malacca, Penang and Johor, with greater focus on rural and remote locations, while collaborating with
access providers to connect even more premises in the country. To provide further support and awareness to its customers, Maxis will also be amplifying its communications on 3G sunsetting scheduled
for end 2021, including 4G device campaigns.
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E-wallet operator TNG Digital in advanced talks with investors to raise at least US$150m (Thu, 21 Jan 2021)
KUALA LUMPUR: A Malaysian e-wallet operator owned by CIMB Group and China’s Ant Group is in advanced talks with investors to raise at least US$150
million (RM606 million) to fund expansion plans, four sources familiar with the matter said.
The coronavirus pandemic has propelled demand for digital payment services around the world, but Malaysia’s market is particularly competitive with nearly 50 players. The venture, TNG Digital Sdn
Bhd, says its Touch ‘n Go e-wallet is the country’s biggest with more than 15 million registered users.
TNG Digital is negotiating with global banks, asset managers and others, the sources said, declining to be identified as they were not authorised to speak to media.
Two sources said the fundraising is expected to give TNG Digital a valuation of more than US$700 million and it could end up raising about US$250 million in total this year.
“TNG wants to step up its presence in financial services. This is where the market growth is,” said one of the sources.
The two sources said the new fundraising will result in CIMB and Ant Group paring their stakes but they will remain the biggest investors in the business.
CIMB and its unit Touch ‘n Go Sdn Bhd which owns 51% of TNG Digital declined to comment. Ant Group, which holds 49%, said it would defer to its partners when asked for comment.
Ant Group has cut funding and staff support to many of the overseas e-wallet firms it has invested in as it pivots away from earlier ambitions of becoming a global payments leader.
TNG Digital has secured approval from the Malaysian securities regulator to directly distribute capital market products including money market unit trust funds. It is partnering with Principal
Asset Management, one of the country’s biggest fund managers.
Rival e-wallet firms are also keen to expand and last year insurer Great Eastern invested US$70 million in the fintech business of Malaysian telecoms firm Axiata, which operates the e-wallet
Boost. – Reuters
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Mavcom: Air traffic rights application rate in Q4 2020 soars 233% from previous quarter (Thu, 21 Jan 2021)
PETALING JAYA: The Malaysian Aviation Commission (Mavcom) saw a 233% jump in air traffic rights (ATR) application rate for the final quarter of 2020, compared with 12 applications received
in the previous quarter, attributed to higher scheduled air cargo services and new domestic routings, according to its quarterly report.
For fourth-quarter 2020, the commission approved 93% out of 43 ATR applications received from airlines, with 14 ATRs approved for international destinations and the remaining 26 for domestic
It said that out of the 14 international destinations approved, four were given to destinations in China, two Europe, and two India. The remaining six were for other Asian destinations.
In terms of allocation by airports, Mavcom stated that 17 ATRs were issued for flights originating from KL International Airport, six from Sultan Abdul Aziz Shah Airport, five from Kota Kinabalu
International Airport and 12 from other Malaysian airports.
On the breakdown by airlines, it said Malaysia Airlines received the highest number of approvals with a total of 11 ATRs, followed by AirAsia Group with 10 ATRs approved.
This is followed by MyJet Xpress Airline, Raya Airways and Fly Firefly with nine, six and four ATR allocations respectively.
The commission’s executive chairman Datuk Seri Saripuddin Kasim commented that while the path to recovery for the aviation sector will be a long one, there are pockets of growth in the cargo
“The commission observes that the cargo segment has been growing in tandem with logistics needs and we are seeing the local players adapting to this new need,” he said in a statement.
In addition, Saripuddin stated that as an economic regulator, Mavcom recognises the difficulties faced by airlines from the ongoing Covid-19 pandemic and the need to facilitate airlines as they
endeavour to resume full services.
With that in mind, the commission has temporarily relaxed the condition that automatically revokes unutilised ATRs within six months from the date of approval since June 4, 2020.
He explained that this move is to alleviate the administrative challenges faced by airlines and allow scheduled airlines to keep their current ATR portfolio active.
“As a result, no ATRs have expired between Oct 1 and Dec 31, 2020 and we will continue to work towards reviving the aviation sector,” the executive chairman added.
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Focus Dynamics sets up Focus Medicare for healthcare venture (Thu, 21 Jan 2021)
PETALING JAYA: Focus Dynamics Group Bhd is venturing into healthcare with the establishment of Focus Medicare Sdn Bhd, to create a digital platform
for over-the-counter (OTC) healthcare products as part of its strategic plan to incorporate an entire suite of food-based consumer products into its ecosystem.
Aside from basic OTC medical products such as disposable nitrile gloves, organic plant oil-based sanitisers and disposable surgical masks, its product line will include food supplements.
The group highlighted that it will also spearhead the development of ePharmacies, automated pharmacies and health monitoring mobile applications, to provide seamless access to medical supplies and
health products to consumers.
Executive director Benson Tay commented that healthcare and hygiene have been the focus of consumers for some time now as over the past nine months, the food and beverage industry has been forced
to contend with the new norms, and the awareness for healthy foods and hygienic products has escalated.
He elaborated that Focus Dynamics’ strategy for the healthcare division is to apply digital technology and automation to create an end-to-end platform with its partners focused on healthy food
products, nutritional supplements, and general health consumables.
“This move into OTC medical and health consumables is a low hanging fruit in the short term, however, it will be a long and interesting journey in developing new markets, as we will source
extensively from our networks globally for the best-of-breed products,” said Tay in a press release.
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US jobless benefits claims dip, housing starts and manufacturing power ahead (Thu, 21 Jan 2021)
WASHINGTON: The number of Americans filing new applications for unemployment benefits decreased modestly last week as the Covid-19 pandemic tears through the nation, raising the risk that
the economy shed jobs for a second straight month in January.
Despite the labour market woes, the economy remains anchored by strong manufacturing and housing sectors. Other data on Thursday showed homebuilding and permits for future residential construction
surged in December to levels last seen in 2006. Factory activity in the mid-Atlantic region accelerated this month, with manufacturers reporting a boom in new orders.
The services sector has borne the brunt of the coronavirus crisis, disproportionately impacting lower-wage earners, who tend to be women and minorities. Addressing the so-called K-shaped recovery,
where better-paid workers are doing well while lower-paid workers are losing out, is one of the major challenges confronting President Joe Biden and his new administration.
Initial claims for state unemployment fell 26,000 to a seasonally adjusted 900,000 for the week ended Jan. 16, the Labor Department said. Economists polled by Reuters had forecast 910,000
applications in the latest week.
Unadjusted claims dropped 151,303 to 960,668 last week. Economists prefer the unadjusted number because of earlier difficulties adjusting the claims data for seasonal fluctuations due to the
economic shock caused by the pandemic. Including a government-funded programme for the self-employed, gig workers and others who do not qualify for the regular state unemployment programmes 1.4
million people filed claims last week.
Out-of-control coronavirus infections are disrupting operations at businesses like restaurants, gyms and other establishments where crowds tend to gather, reducing hours for many workers and
pushing others out of employment.
Consumers are also hunkering down at home, leading to a weakening in demand. Covid-19 has infected more than 24 million people, with the death toll exceeding 400,000 since the pandemic started in
the United States.
Some of the elevation in claims reflects people reapplying for benefits following the government's recent renewal of a US$300 (RM1,209) unemployment supplement until March 14 as part of the nearly
US$900 billion in additional fiscal stimulus. Programmes for the self-employed, gig workers as well as those who have exhausted their benefits were also extended.
Claims data is also difficult to adjust for seasonal fluctuations at the start of the year, a task that has been made even harder given the shock caused by the coronavirus.
Nevertheless, recent data have shown the labour market recovery has stalled. The claims data covered the week during which the government surveyed establishments for the non-farm payrolls
component of January's employment report. Claims were little changed between the December and January survey period. The economy shed 140,000 jobs in December, the first job losses since April when
authorities throughout the country enforced stay-at-home measures to slow the spread of the virus. Retail sales fell for a third straight month in December.
Though jobless claims have dropped from a record 6.867 million in March, they remain above their 665,000 peak during the 2007-09 Great Recession.
The claims report showed the number of people receiving benefits after an initial week of aid decreased 127,000 to 5.054 million during the week ending Jan 9.
About 16 million people were on unemployment benefits under all programmes at the start of the year. The economy has recovered 12.4 million of the 22.2 million jobs lost in March and April.
Economists say it could take several years for the labour market to recover from the pandemic.
In a separate report on Thursday, the Commerce Department said housing starts jumped 5.8% to a seasonally adjusted annual rate of 1.669 million units last month, the highest level since September
2006. Economists had forecast starts would rise to a rate of 1.560 million units in December. Starts totalled 1.380 million in 2020, up 7.0% from 2019.
Permits for future homebuilding accelerated 4.5% to a rate of 1.709 million units in December, the highest since August 2006. Permits, which typically lead starts by one to two months, totalled
1.452 million last year, a 4.8% increase from 2019.
The housing market is being underpinned by cheaper mortgages and an exodus from city centres to suburbs and other low-density areas as companies allow employees to work from home and schools shift
to online classes because of the pandemic. About 23.7% of the labour force is working from home.
A third report from the Philadelphia Federal Reserve showed its business conditions index soared to a reading of 26.5 this month from 9.1 in December. A measure of new orders at factories in the
region that covers eastern Pennsylvania, southern New Jersey and Delaware, vaulted to a reading of 30.0 from 1.9 in December.
Factory employment measures also improved. While manufacturers reported paying more for raw materials, they were also able to increase prices for their goods. Manufacturers were upbeat about
capital investment plans in the six months ahead. – Reuters
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European Central Bank holds pat, warns Covid infections surge poses risk to eurozone’s recovery (Thu, 21 Jan 2021)
FRANKFURT: The European Central Bank (ECB) warned on Thursday that the recent surge in Covid-19 infections posed a risk to the eurozone's recovery and reaffirmed its pledge to keep
borrowing costs at record lows to help the economy weather the pandemic.
Having extended stimulus well into next year in December, the central bank for the 19 countries that share the euro kept policy unchanged, keen to let governments take over the task of keeping the
economy afloat until business can resume as usual.
But its president Christine Lagarde warned that a new rise in cases and the ensuing restrictions to activity would dampen activity in the near term and said the ECB was prepared to provide even
more support for the economy if needed.
"The resurgence of the pandemic and the associated intensification of containment measures have likely led to a decline in activity in the fourth quarter of 2020 and are also expected to weigh on
activity in the first quarter of this year," Lagarde told a news conference.
Fresh lockdowns, a slow start to vaccine rollouts across the bloc, and the currency's strength are all challenging the ECB's forecast of a robust recovery starting in the second quarter.
But Lagarde saluted the start of vaccinations as "an important milestone" and argued that an orderly Brexit and the conclusion of the US presidential election were mitigating risks so the ECB's
growth projections remained valid.
Lagarde nevertheless kept a closely watched reference to "downside" risks facing the euro zone economy, which has been a reliable indicator that the ECB saw policy easing as more likely than
tightening, not least because a strong euro was putting a dampener on inflation
The euro was up 0.3% against the dollar on the day at US$1.2143 a 1431 GMT after Lagarde said the ECB was "very carefully" monitoring the exchange rate. The euro has dropped 1% on a trade-weighted
basis since the start of the year, but is up nearly 7% over the last 12 months. Against the US dollar, that number rises to over 10%.
"The ECB remains happy at the sidelines and has kept all options open," ING economist Carsten Brzeski said. "As boring as this might sound, it probably was the best thing to do. In the absence of
any severe economic accident, the ECB is likely to stick to this line at least until late summer."
Keeping the door open for more stimulus if needed, Lagarde confirmed the ECB would continue buying bonds until it judges that the coronavirus crisis phase is over. She also reaffirmed a pledge
that all of the ECB's instruments remained in play and that the bank would adjust them as needed.
"Once the impact of the pandemic fades, a recovery in demand, supported by accommodative fiscal and monetary policies, will put upward pressure on inflation over the medium term," Lagarde
Benign market indicators support Lagarde's argument. Stocks are rising, interest rates are steady and government borrowing costs are trending lower, despite some political drama in Italy.
There is also around €1 trillion (RM4.9 trillion) of untapped funds in the Pandemic Emergency Purchase Programme (PEPP) to back up her pledge to keep borrowing costs at record lows.
Lagarde indicated the ECB may not even need it to use it all, saying: "If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net
purchase horizon of the PEPP, the envelope need not be used in full."
Recent economic history also favours the ECB. When most of the economy reopened last summer after initial coronavirus lockdowns, activity rebounded more quickly than expected, indicating that
firms were more resilient than had been feared.
Uncomfortably low inflation is set to remain a thorn in the ECB's side for years to come, however, even if surging oil demand helps put upward pressure on prices in 2021.
With Thursday's decision, the ECB's benchmark deposit rate remained at minus 0.5% while the overall quota for bond purchases under PEPP was maintained at €1.85 trillion.
Lagarde confirmed the ECB will continue buying bonds until it judges that the coronavirus crisis phase is over. – AFPPIX
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Thailand economy may grow 3-4%, less than forecast, this year as Covid-19 re-emerges (Thu, 21 Jan 2021)
BANGKOK: Thailand's economy could grow 3-4% this year, less than earlier forecast, following its biggest coronavirus outbreak yet, while the key interest rate should remain low to support
domestic activity, the finance minister said on Thursday.
Southeast Asia's second-largest economy will be helped by government stimulus and exports, while the outbreak should be contained by March and vaccines will be administered starting next month,
Arkhom Termpittayapaisith told Reuters in an interview.
"If the outbreak is contained, the impact may not be much," he said. "Growth of 3-4% should be satisfactory," he added. "The worst case should be 3%".
The World Bank predicts gross domestic product (GDP) growth of 4% for Thailand this year.
The export and tourism-reliant economy is also expected to grow in the first quarter from a year earlier, Arkhom said.
With coronavirus cases tripling since last month, the government on Tuesday approved $7 billion of additional stimulus, which Arkhom said could lift growth by 0.5-0.6 percentage point this
Tourism is far from recovering, but exports should grow about 3% this year after last year's decline, Arkhom said.
The ministry in October forecast GDP growth of 4.5% in 2021, with exports up 6%.
The economy likely shrank 6% in 2020, the deepest in over two decades, with a decline of 3-4% in the December quarter, Arkhom said.
The government's 1 trillion baht (RM134.5 billion) borrowing plan should be enough to help ease the virus impact, but there is room to borrow more, Arkhom said, adding the government was open to
The ministry is considering relaxing rules on the central bank's 500 billion baht soft loans to help smaller firms and plans to extend a property tax cut for another year, he said.
With the baht up nearly 11% since April, the central bank should ensure the currency is stable so companies can plan their business, Arkhom said, while the policy interest rate, now at a record
low 0.5%, was appropriate.
"The rate is very low and should remain at this level for a while to ensure that our economy fully recovers," he said. – Reuters
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AirAsia Group to raise up to RM454.5 million via private placement (Thu, 21 Jan 2021)
KUALA LUMPUR: AirAsia Group plans to undertake a private placement to raise up to RM454.5 million to address immediate and near-term cash flow requirements, the low-cost airline group said
The struggling airline, which reported a fifth straight quarterly loss in November as the Covid-19 pandemic took its toll on travel, has been seeking to raise US$2.5 billion (RM10 billion) from
loans and investors.
The proposed exercise announced on Thursday entails issuance of up to 20% of its total existing shares, or 668.4 million shares, to be placed with third party investors to be identified later,
AirAsia said in a bourse filing.
It will enhance the group's financial position with a marginal increase in net assets and an improvement in the group's gearing, or leverage. The issuance could be implemented in tranches, within
six months of regulatory approvals.
AirAsia said the funds will be for fuel hedging settlement, aircraft lease and maintenance payments, technology development costs, product and market expansion costs, marketing expenses and
general working capital.
"The proposed private placement will not fully address the Group's current financial concerns as the estimated gross proceeds of up to approximately RM454.51 million would not be sufficient to
meet its long-term cash flow requirements," it said.
AirAsia said it will continue to explore other fundraising options or corporate proposals to improve the group's financial performance in the longer term.
It shut its Japan operations last year and is planning to sell 32.67% of its stake in an Indian operation to majority shareholder Tata Sons for US$37.7 million. – Reuters
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KLM says it will cut 800 to 1,000 more jobs (Thu, 21 Jan 2021)
THE HAGUE: Dutch airline KLM said on Thursday it will shed between 800 and 1,000 more jobs as the coronavirus pandemic is hitting the aviation sector for longer than expected.
The job losses come on top of 5,000 layoffs that were already announced in July by the embattled carrier, which is part of the Air France-KLM group.
"The reality is that the recovery is taking considerably longer than expected, especially for long-haul destinations, partly due to ongoing and new international restrictions and travel
restrictions," KLM said in a statement.
"This means that KLM will have to cut another 800 to 1,000 jobs."
The jobs cover 500 cabin crew, 100 flight crew and between 200 and 400 ground crew.
KLM CEO Pieter Elbers said recent restrictions announced by the Dutch government on flights to the Netherlands had "added to" the airline's problems but were not the direct cause of the new job
The measures include a ban on flights to the Netherlands from Britain, South Africa and South America.
Dutch media said KLM was also being forced to cut some long-haul routes because extra coronavirus tests for travellers announced by the government would make it difficult to move crew around.
"This reduction is independent of the new measures taken by the cabinet in the past 48 hours," Elbers said.
"The new measures are exemplary of the restrictions and dynamics that we have faced worldwide since the outbreak of the pandemic."
KLM has made huge losses despite being granted a €3.4 billion (RM16.6 billion) Dutch government bailout last year. Pilots agreed to a five-year pay cut deal in November to unblock the deal.
In another development, Lufthansa is losing €1 million every two hours, "a significant improvement" over the low point of the Covid-19 crisis, the German airline group's chief executive said on
Lufthansa, which was racking up losses at twice that rate at one point last year, has cut costs and pared back flights to those generating positive cash thanks to buoyant cargo rates, CEO Carsten
Spohr said in a webcast interview hosted by Eurocontrol.
The group last year received a €9 billion bailout in which the German government took a 20% stake. Lufthansa has so far used about €3 billion of its cash injection, Spohr said, and may end up not
needing the full amount.
The airline is still hoping for a strong travel recovery from the northern summer onwards, Spohr added, and expects to run at 40-60% of pre-crisis capacity for the year as a whole. – AFP,
The Dutch airline’s latest job cuts cover 500 cabin crew, 100 flight crew and between 200 and 400 ground crew. – AFPPIX
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Norway government says it’s ready to help save Norwegian Air (Thu, 21 Jan 2021)
OSLO: The Norwegian state said on Thursday it was ready to offer aid to Norwegian Air, after the ailing low-cost airline presented a new plan to survive its Covid-induced crisis.
Hit hard by the Covid-19 pandemic's impact on travel, and with its finances having already been under stress, Norwegian applied for bankruptcy protection in both Ireland and Norway in December to
buy time to work out a solution with its creditors.
The low-cost airline presented a series of proposals on Jan 14, including an end to its long-haul flights in favour of a refocusing on Europe, and a massive debt reduction target coupled with
raising new capital.
The government was asked to support the plan and has now signalled its willingness, on condition that private investors "do their part".
"The plan seems more robust than the one we said no to in October. That's why we are ready to contribute," Trade Minister Iselin Nybo said in a statement.
Norwegian's shares were up by almost 12% in the early afternoon trading on the Oslo Stock Exchange, although they are still down by more than 98% year on year.
The state, which extended 3 billion kroner (RM1.43 billion) in public guarantees to Norwegian last year before turning off the tap, could offer aid in the form of a "hybrid" loan that can be
converted into shares later.
But the government made clear it had no intention of becoming an owner.
"Norwegian needs, among other things, to bring in long-term strategic shareholders. The state has no ambition to become a shareholder," Nybo said.
Oslo said its condition would be that Norwegian manage to raise 4.5 billion kroner in new capital "mainly" from strategic institutional investors.
Of the total, the state's share could amount to 1.5 billion kroner, according to broadcaster NRK.
An airline statement welcomed the government's response, saying "it significantly increases Norwegian's chances of working through the crisis caused by the pandemic."
"We still have a lot of work ahead of us, but a participation from the government underscores that we are heading in the right direction," Norwegian chief executive Jacob Schram said
Norwegian, Europe's third largest low-cost airline until the pandemic paralysed global air transport last year, has seen its debt and losses pile up since 2017.
The airline had a pre-Covid fleet of 140 aircraft, of which only six are currently in use, and the number of employees is down to 600, from more than 10,000 before the crisis.
The company plans to reduce debt to 20 billion kroner and put some 50 aircraft back into operation this year, followed by about 70 more in 2022.
It will also scrap long-haul subsidiaries in Britain, France, Italy and the US. – AFP
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Oil slips on surprise rise in U.S. crude stocks (Thu, 21 Jan 2021)
MELBOURNE: Oil prices fell on Thursday after data showed U.S. crude stocks unexpectedly rose last week, reigniting worries about pandemic restrictions cutting into fuel demand.
U.S. West Texas Intermediate (WTI) crude futures fell 27 cents, or 0.5%, to $53.04 a barrel at 0147 GMT, following two days of gains on hopes of massive COVID-19 relief spending under new U.S.
President Joe Biden.
Brent crude futures similarly dropped 26 cents, or 0.5%, to $55.82 a barrel.
U.S. crude oil inventories rose 2.6 million barrels in the week to Jan. 15, according to data from the American Petroleum Institute, an industry group, compared with analysts' forecasts in a
Reuters poll for a fall of 1.2 million barrels.
"Oil prices look a tad vulnerable to potential profit-taking after U.S. crude stockpiles bearishly rose 2.56 million against consensus draw," Axi chief market strategist Stephen Innes said in a
note to clients.
However gasoline stocks and distillate inventories, which include diesel, distillate and jet fuel, rose by less than analysts had expected.
The U.S. Energy Information Administration is due to release its weekly inventory report on Friday.
Axi's Innes said COVID restrictions on mobility were hurting the near-term outlook for oil demand, though traders had been looking beyond that on the hopes that vaccine rollouts would ease
"Simultaneously, the near-term China crude demand forecast looks high and susceptible to revision lower as lockdowns spread in the country ahead of the Lunar New Year," he said.
The Biden administration has committed to curb carbon emissions and among his first actions as president, Biden announced America's return to the Paris climate accord and revoked a permit for the
Keystone XL oil pipeline project from Canada.
The administration is also committed to ending new oil and gas leasing on federal lands, Biden's press secretary said, although Biden has not laid out a timeline for achieving that goal. -
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Bank Negara holds benchmark interest rate at 1.75%, warns of downside risks to economy (Wed, 20 Jan 2021)
PETALING JAYA: Bank Negara Malaysia’s (BNM) Monetary Policy Committee has retained the Overnight Policy Rate (OPR) at 1.75%, citing the recovery in the global economy led by improvements in
manufacturing and export activity.
However, it noted that the recent resurgence in Covid-19 cases and subsequent containment measures have affected activity in several major economies.
“The expedited rollout of mass vaccination programmes, together with ongoing policy support, is expected to lift global growth prospects going forward. Financial conditions also remain
supportive,” the committee said in a statement.
It said the overall outlook remains subject to downside risks, primarily if there is further resurgence of infections and delays in mass inoculation against the pandemic.
For Malaysia, the central bank said the resurgence of cases and the introduction of targeted containment measures have affected the recovery momentum in the final quarter of last year. As a
result, growth for 2020 is expected to be near the lower end of the earlier forecast range.
Similarly, it foresees near-term growth for 2021 will be affected by the reintroduction of stricter containment measures, although the impact will be less severe than that experienced last
The committee stated that the growth trajectory is projected to improve from the second quarter onwards, driven by the recovery in global demand, turnaround in public and private sector
expenditure amid continued support from policy measures, and higher production from existing and new manufacturing and mining facilities.
Furthermore, the rollout of vaccines in the coming months will lift sentiments.
“Downside risks to the outlook remain, stemming mainly from ongoing uncertainties surrounding the dynamics of the pandemic and potential challenges that might affect the rollout of vaccines both
globally and domestically,” it said.
In line with earlier assessments, the central bank expects average headline inflation to be negative in 2020 due mainly to substantially lower global oil prices. Meanwhile, the headline inflation
is projected to average higher this year, primarily due to higher global oil prices.
BNM noted that the underlying inflation is expected to remain subdued amid continued spare capacity in the economy. “The outlook, however, is subject to global oil and commodity price
In a separate statement, the central bank said the statutory reserve requirement (SRR) ratio remains unchanged at 2%. However, it is extending the flexibility for banking institutions to use
Malaysian Government Securities and Malaysian Government Investment Issues (MGS and MGII) to meet the SRR compliance until Dec 31, 2022.
“The decision to extend this flexibility is part of Bank Negara Malaysia’s continuous efforts to ensure sufficient liquidity to support financial intermediation activity,” it said.
Since March 2020, the reduction in the SRR ratio by 100 basis points and flexibility to recognise MGS and MGII as part of SRR compliance have released approximately RM46 billion worth of liquidity
into the banking system.
In a note, OCBC Treasury Research said that against the backdrop of an economic outlook that remains rather upbeat despite the changing circumstances, it does not look like BNM is in a hurry to
cut rates just yet.
“We are less assured than the central bank may be, in how growth rate can pick up all that effortlessly in Q2 on the back of mass vaccination efforts, however.
“The apparent baseline assumption of a smooth rollout of vaccines both globally and domestically – and how this might naturally lead to a steady growth uptick may come to be tested, as well,” it
OCBC said the downside risks that the central bank highlighted, namely the ongoing uncertainties surrounding the dynamics of the pandemic and potential challenges that might affect the rollout of
vaccines both globally and domestically, are well warranted.
“A recovery is coming, indeed, and in large part driven by the start of vaccination efforts especially in major economies. But we see the ongoing challenges of case resurgence hurting things more
– even if a lot less than in 2020 – and we have probably attached a lower probability of a smooth vaccine rollout,” it said.
Overall, it still sees a further easing in the OPR by BNM, likely in the second quarter.
Meanwhile, Centre for Market Education Dr Carmelo Ferlito applauded BNM for keeping the policy rate at its current level, opining that a further cut may have pushed inflationary tendencies.
“In fact, from the inflation perspective, at the moment we experience contending trends: the Covid-19 crisis pushes for prices to go down, while the different fiscal stimuli push in the opposite
direction. If inflationary tendencies would prevail, purchasing power would be compromised during an already difficult moment. On the contrary, now we need purchasing power to be restored and savings
to be rebuilt in order to grant the creation of funds available for investment,” he said in a statement.
He added that at its present level, it would be unlikely that a further cut could make a significant difference in attracting more investments.
“You see, the cut is a signal and its consequences depend very much on how this signal is interpreted by market players. If it is interpreted as a signal of nervousness, then investors will remain
on ‘wait and see’. Not to mention that too low an OPR could eventually incentivise malinvestment (bad investments), because investments are done than would not be done in different
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Hibiscus Petroleum arm fully executes two UK licence agreements, third in process (Wed, 20 Jan 2021)
PETALING JAYA: Two licence agreements pursuant to the UK Oil and Gas Authority’s (OGA) offer for award received by Hibiscus Petroleum Bhd’s indirect
wholly‐owned subsidiary Anasuria Hibiscus UK Ltd (AHUK) for three licences at the 32nd UK Offshore Licensing Round have been fully executed.
The licence agreement for the third offer for award for Licence P2532 (Block 21/19c and Block 21/20c), contagious to the Cook field, is in the process of being fully executed.
These licences are located in mature, producing areas close to existing infrastructure, under flexible terms of the innovate licence which enables companies like AHUK to define a licence duration
and phasing that would result in the execution of an optimal work programme.
The licence terms commenced from Dec 1, 2020 for a period of four years (field development plan or FDP phase) with a subsequent term (production phase) to begin for a period of 18 years from the
completion of the FDP phase.
For License P2535 (Block 21/24d), the block which has an area size of 57.86 sq km contains the Teal West discovery, which is contiguous to the Teal field and is 4km from the Teal manifold of the
Anasuria Cluster. The block will be held by AHUK (70%) and Zennor Petroleum Ltd (30%).
The Teal West discovery is expected to be a potential tieback candidate to the Anasuria floating production and offloading facility in which AHUK has significant interests. AHUK is to prepare a
FDP for the Teal West Discovery for OGA’s approval by end 2022, as part of the terms of the agreement.
For License P2518 (Block 15/17a), this block of 9 sq km is located 8km from the Marigold field and will be wholly held by AHUK. It contains part of the Kildrummy discovery plus a minor part of the
Beaumaris discovery and the Udny prospect.
It is hoped that the Kildrummy discovery may become a potential tieback candidate to infrastructure implemented as part of the Marigold development.
As part of the terms of the agreement, AHUK is to provide a technical update to the OGA by December 2022, pursuant to carrying out seismic interpretation work.
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