Dott. Giulio Perrotta
Dott. Giulio Perrotta

    From 2 May 2012 ...




Tutte le notizie dal "The Sun Daily" (Regno Unito)










Pestech awarded RM93.74m contract in the Philippines (Thu, 12 Dec 2019)
PETALING JAYA: Pestech International Bhd’s wholly-owned subsidiary company Pestech Sdn Bhd has been awarded a RM93.74 million contract from the National Grid Corporation of the Philippines (NGCP) for the Cebu-Bohol 230kV Interconnection project (substation portion). The contract’s offshore portion is worth US$13.89 million (RM57.74 million) while the onshore portion is worth 439.90 million peso (RM36 million). This is the third power infrastructure project awarded by NGCP to Pestech after the TIWi and Calamba projects. Under the project, Pestech will deliver a new 230kV outdoor substation at Bohol as well as 138kV extension works at the existing substation at Bohol. Pestech will provide design, engineering services, testing and commissioning as required for supply and delivery of equipment, civil works, foundations and building for the project. NGCP has lined up an array of projects to improve the country’s transmission networks and is expected to continue investing in the electrical infrastructure backbone in order to support the robust growth of Philippines. The duration of the project is 450 days and the commencement date of the project will be determined by NGCP later. “The project will contribute positively towards the revenue and earnings of Pestech in accordance to the stage of project progress to be recognised in the financial years ending June 30, 2020 to June 30, 2021,” Pestech said.
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RHB Bank calls off talks to sell insurance arm to Tokio Marine (Thu, 12 Dec 2019)
PETALING JAYA: RHB Bank Bhd said it will no longer proceeds with talks to sell up to 94.7% of its shares held in RHB Insurance Bhd to Tokio Marine Asia Pte Ltd. In a Bursa filing, the group said after much negotiations and deliberations, both parties had not been able to reach an agreement on mutually acceptable terms and conditions for the proposed disposal. “Accordingly, RHB Bank and Tokio Marine have mutually agreed to cease negotiations, and will not proceed with the proposed disposal,” it said. RHB had first proposed the disposal in July this year, and the deal had been expected to be completed in 1Q20. RHB Insurance had total assets of RM1.78 billion and liabilities of RM1.2 billion as of last year. It is the 10th largest insurer in Malaysia with a 4.4% market share, according to RHB Bank’s 2018 annual report.
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US Fed says will focus on low inflation, global economy (Thu, 12 Dec 2019)
WASHINGTON: The Federal Reserve kept its key lending rate unchanged on Wednesday but said it will turn its sights to low inflation and developments in the world economy. That was a signal that central bankers, who have repeatedly pledged to change course if needed, are monitoring the global slowdown and persistent absence of price pressures, which open the door to further rate moves. At its final meeting of 2019, the Fed’s policy-setting Federal Open Market Committee left the benchmark interest rate in the target range of 1.5-1.75 percent, as expected, where it has been since the third rate cut of the year in October. The vote this time was unanimous, following several meetings where one or more FOMC members dissented. The decision, though widely expected, is unlikely to please President Donald Trump who has repeatedly berated the Fed and called on its Chairman Jerome Powell (pix) to slash rates to zero to supercharge the US economy, which Trump says is at a disadvantage against foreign economies with lower rates. Powell will hold a press conference starting at 2:30 pm (1930 GMT) to explain the rationale behind the decision. Prior to the meeting, Powell and other Fed officials clearly signaled they were likely to stand fast as they wait to see the effects of the stimulus provided this year. But in a key change to the policy statement, the FOMC said officials “will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures.” The statement notes that despite robust household spending, business investment and exports remain weak. Fewer leaning towards rate hike Trump’s trade war with China has created uncertainty for American businesses, which for over a year have reported curtailing investment, while US manufacturing has fallen into recession. As the tariff battle rages some prices have been distorted, and exports of farm goods in particular have suffered. But even so and despite unemployment at a 50-year low of 3.5 percent, price pressures have not appeared. That has baffled Fed policymakers, but also allowed them to lower interest rates to keep the record 11-year US economic expansion going, even as key economies worldwide slow. There were few surprises in the Fed’s quarterly economic forecasts, with the policy interest rate expected to remain steady in 2020 and end the year at a median of 1.9 percent. And fewer central bankers now lean towards a rate hike next year. Inflation and growth are expected to hold steady around 2 percent for the next two years, while unemployment is seen holding around the current 3.5 percent level. Futures markets as of Tuesday predicted the Fed will be on hold until September of next year. But some economists think another rate cut could come before the summer as dark clouds gather on the horizon. -AFP
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Hong Kong’s role in global finance remains intact despite months of protests: Fitch (Thu, 12 Dec 2019)
BANGALORE: Hong Kong’s role in global finance is intact, with little evidence to suggest recent protests and social unrest in the city have adversely impacted that role, global credit rating agency Fitch Ratings said on Thursday. However, the rating agency added that the prolonged protests are undermining perceptions that Hong Kong is a stable international business hub and that a weaker view of its governance could impact its credit rating directly. The Chinese-ruled city has seen more than six months of anti-government demonstrations sparked by a controversial and now-withdrawn extradition bill. The often violent protests have morphed into calls for greater democratic freedoms and an end to alleged mainland Chinese meddling in the semi-autonomous former British colony. In September, Fitch had downgraded Hong Kong’s long-term foreign currency issuer default rating to “AA” from “AA+” following months of protests. The latest protests began in March amid fears that Beijing is eroding the autonomy granted to Hong Kong when it was handed back to China in 1997. China has denied the charge of meddling and said Hong Kong is an internal affair. Fitch said on Thursday that while Hong Kong’s short-term outlook continues to deteriorate, the medium-term prospects seem more positive. The economy has sunk into its first recession in a decade, with businesses under pressure from the protests and protracted U.S.-China trade war. The rating agency added that the recent listing of Alibaba Group on the Hong Kong stock exchange portrays Hong Kong’s role as the “flagship off-shore financing centre” for Chinese companies. Commenting on a recent U.S. legislation supporting protesters, which has angered China, Fitch said that it was largely symbolic but shows that changing international perceptions of Hong Kong could have economic spill-overs. -Reuters
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Manufacturing sales up 2.2% in October 2019 (Thu, 12 Dec 2019)
PUTRAJAYA: Malaysia’s manufacturing sales grew 2.2% in October 2019 to RM74.6 billion as compared to RM73.1 billion a year ago. Chief statistician Malaysia Datuk Seri Dr Mohd Uzir Mahidin said this was driven by the increase in transport equipment & other manufactures products (6.8%), non-metallic mineral products, basic metal & fabricated metal products (5.5%) and electrical & electronics products (2.1%). On a month-on-month basis, manufacturing sales went up 2.5% (RM1.8 billion) while on a seasonally adjusted terms, sales increased 1.4%. The number of employees engaged in the manufacturing sector in October 2019 increased 1% to 1.09 million persons compared with 1.08 million persons in October 2018. Salaries & wages paid amounted to RM4 billion, up 2.5% in October 2019 as against the same month of the preceding year. Simultaneously, the sales value per employee grew 1.2% to RM68,680 as compared with the same month in 2018. Meanwhile, the average salaries & wages per employee was RM3,678 in October 2019.
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IPI up 0.3% in October 2019 (Thu, 12 Dec 2019)
PUTRAJAYA: Malaysia’s Industrial Production Index (IPI) grew 0.3% in October 2019 year-on-year, driven by the increase in the index of manufacturing (2.2%) and electricity (0.5%). The index of mining recorded a decline of 5.8%. Chief statistician Malaysia Datuk Seri Dr Mohd Uzir Mahidin said the manufacturing sector output rose by 2.2% in October 2019 year-on-year after recording a growth of 2.5% in September 2019. The major sub-sectors contributing to the increase in October 2019 were transport equipment and other manufactures (4.3%), non-metallic mineral products, basic metal and fabricated metal products (3.1%) and electrical and electronics products (2.4%). The electricity sector output increased 0.5% in October 2019 as compared to the same month of the previous year. The mining sector output dropped 5.8% in October 2019 year-on-year due to the decrease in both indices under mining sector which are crude oil and condensate index (-5.1%) and natural gas index (-6.3%).
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Ringgit higher on moderate demand for the local note (Thu, 12 Dec 2019)
KUALA LUMPUR: The ringgit opened higher against the US dollar in early trade today due to sluggish demand for the greenback after the US Federal Reserve (Fed) held interest rates on hold and signalled it would not be changed anytime soon, said dealers. At 9 am, the ringgit was traded at 4.1520/1570 against the greenback from 4.1630/1660 at Wednesday’s close. AxiTrader chief Asia market strategist, Stephen Innes said the Fed’s less hawkish move offered mild disappointment for the dollar bulls. “The ringgit has opened on a favourable tone on the back of the less hawkish Fed, and firm oil prices supported by the latest OPEC+ agreement,” he told Bernama. The ringgit was traded mixed against a basket of major currencies. The local note declined against euro to 4.6237/6309 from 4.6139/6180 and trimmed against the British pound to 5.4835/4906 from 5.4689/4745 at Wednesday’s close. It improved against the yen at 3.8271/8324 from 3.8298/8333 and better against Singapore dollar to 3.0601/0650 from 3.0613/0639 previously. -Bernama
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MISC, Petronas counters lift Bursa Malaysia higher in early trade (Thu, 12 Dec 2019)
KUALA LUMPUR: Bursa Malaysia opened lower but rebounded thereafter in early trade lifted by buying interest in MISC and Petronas-linked counters. At 9.09 am, the FTSE Bursa Malaysia KLCI (FBM KLCI) increased 2.91 points to 1,566.10 against Wednesday’ close of 1,563.19. The index opened 3.36 points weaker at 1,559.83, following quick profit-taking activities in IHH, Sime Darby Plantation and MAHB after steady gains recorded by the counters yesterday. Market breadth was positive as advancers overtook the decliners 162 to 114, while 186 counters unchanged, 1,509 untraded and 18 others suspended. Turnover amounted to 178.69 million shares worth RM86.77 million. Malacca Securities Sdn Bhd said though yesterday’s rebound was mild, the recovery may power the key index higher as investors bargain hunt from the recent pullback. It said the accommodative stance from the U.S Federal Reserve may also provide some support to the rebound. In addition, Wall Street also closed higher following the Fed’s decision to leave interest rates unchanged. “We expect the recovery in the local market to remain intact taking the key index towards the 1,580 level, but upsides may be capped by the unrelenting foreign fund selling, coupled with the uncertainty over the implementation of next wave of tariffs in Chinese goods over the weekend. “Hence, bouts of profit-taking may take precedence, limiting the gains,“ it said in a note. Locally, investors are looking forward to October industrial and manufacturing production data to be released later today by the Department of Statistics Malaysia. Among heavyweights, MISC added 37 sen to RM8.67, Petronas Gas rose 62 sen to RM15.96, PetChem went up one sen to RM7.00 while Tenaga was 10 sen better at RM13.18. Petronas Dagangan edged up 40 sen to RM23.70. In contrast, IHH and Sime Darby Plantation dropped one sen each to RM5.39 and RM5.29 respectively. MAHB declined 16 sen to RM7.96. Of actives, Eco World increased 4.5 sen to 79 sen, Sapura Energy was flat at 26 sen and Khee San depreciated half-a-sen to 49 sen. The FBM Emas Index increased 18.74 points to 11,142.74 and the FBM Emas Shariah Index appreciated 38.57 points to 11,751.88 while the FBMT 100 Index up 19.43 points to 10,942.68. The FBM Ace went up 15.57 points to 4,940.71 and the FBM 70 improved 21.10 points to 13,932.32. Sector-wise, the Financial Services Index dropped 1.65 points to 15,210.66, the Industrial Products and Services Index declined 0.04 of-a-point to 150.03 and the Plantation Index fell 32.29 points to 7,454.29. -Bernama
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China’s 2020 crude steel output expected to drop - govt research body (Thu, 12 Dec 2019)
BEIJING: China's crude steel output in 2020 is expected to ease from a record high this year, a government consultancy said on Thursday. The world's top steel producer is expected to churn 981 million tonnes of crude steel in 2020 and 988 million tonnes in 2019, according to Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute. Steel demand in China is expected to fall 0.6% year-on-year to 881 million tonnes in 2020, but rise 7.3% to 886 million in 2019, Li said. "Steel consumption in 2019 is better than expected mainly due to rapidly growing infrastructure investment and real estate development, while industrial production is also generally stable," Li said. Demand for steel in the construction industry is expected to rise 11.2% this year to 478 million tonnes. But it is seen slipping 0.6% to 475 million tonnes in 2020, Li said. China produced 829.22 million tonnes of steel in the first 10 months of the year, up 7.4% from the same period last year. A rapid growth in output this year has stoked worries about China's years of efforts to cut over-capacity, leading to a joint probe on production capacity at its steel mills by the National Development and Reform Commission and other government entities in November. The research body also anticipated iron ore demand in China to reach 1.225 billion tonnes in 2020 and 1.264 billion tonnes in 2019. China brought in 1.06 billion tonnes of iron ore last year and exported 69.34 million tonnes of steel products. China's pig iron output is expected to contract to 775 million tonnes in 2020 from 800 million forecasted for 2019. - REUTERS
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Blow for AB InBev’s $11 bln asset sale to Asahi as Australia raises concerns (Thu, 12 Dec 2019)
AUSTRALIA's competition regulator raised concerns over an $11 billion deal by Anheuser-Busch InBev to sell its local operations to Japan's Asahi, dealing a blow to the world's largest brewer's efforts to cut debt. The Belgium-based brewer, weighed down with some $100 billion net debt after its 2016 acquisition of rival SABMiller, has been selling assets and took its Asian business public this year to reduce debt and focus on other fast-growing markets. It hoped to close the sale of Carlton & United Breweries (CUB) to Asahi in the first quarter of 2020 and use the bulk of the proceeds to cut debt. But the Australian Competition and Consumer Commission (ACCC), in a preliminary view, said that the deal will reduce competition in the cider market and may also do so in the beer market, adding it will make a final decision in March. "The proposed acquisition would combine the two largest suppliers of cider in a highly concentrated market," it said, stating the combined business would control about two thirds of cider sales. It also said Asahi may act as a competitive constraint on the two largest beer brewers - CUB and Lion - and has "the potential to be an even bigger threat in future". "Because of these concerns, it is unlikely that the deal will get passed. Asahi and AB InBev have to negotiate the price again," said Jeanie Chen, senior equity analyst, Morningstar. She added that Asahi may need to divest its cider business or AB InBev would need to find another buyer. CUB said it has nothing to add. An Asahi spokesman did not have an immediate comment. Shares in Asahi fell 1.6% on Thursday to a three-month low, lagging the broader Japan market's 0.2% rise. For Asahi, the deal would turn the Japanese firm into the world's third biggest brewer after AB InBev and Heineken. It would also gain leading Australian beer Victoria Bitter, placing it in more direct competition there with Japanese rival Kirin, which produces the XXXX Gold brand through its Lion subsidiary. Asahi, whose beer brands include Asahi Super Dry and Peroni, is the second largest supplier of premium international beers in Australia. ACCC has invited submissions from interested parties by Jan. 22 and plans to issue a final decision on March 19. - REUTERS
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7-Eleven says to privatise Caring Pharmacy after MGO (Wed, 11 Dec 2019)
PETALING JAYA: 7-Eleven Malaysia Holdings Bhd said it does not intend to maintain the listing status of Caring Pharmacy Group Bhd on Bursa Malaysia if the offerors Convenience Shopping (Sabah) Sdn Bhd (CSSSB) and persons acting in concert (PACs) receive valid acceptances for the mandatory general offer (MGO). In a filing with Bursa Malaysia, 7-Eleven said CSSSB intends to invoke the provisions of Section 222(1) of the Capital Markets and Services Act 2007 (CMSA), subject to Section 224 of the CMSA, to compulsorily acquire any remaining shares from the holders who have not accepted the offer and/or failed or refused to transfer their shares to CSSSB. This comes as the board decided that CSSSB will not be taking any steps to address any shortfall in Caring’s public shareholding spread upon completion of the proposed MGO. Recall that last month, CSSSB and PACs proposed to take over Caring for RM2.60 per share after triggering the 33% MGO threshold. Currently, the collective shareholding of CSSSB and PACs in Caring stands at 63.62% after Motivasi Optima Sdn Bhd, being the vendor, has been regarded as its PAC. The other PACs are 7-Eleven, Tan Sri Vincent Tan Chee Yioun, Jitumaju Sdn Bhd and U Telemedia Sdn Bhd. As such, the proposed MGO, when implemented, will be unconditional as the collective shareholding of CSSSB and PACs would have exceeded 50%, said 7-Eleven. “The board has also decided to extend the proposed MGO to its PACs, as allowed under the rules, in order for CSSSB to consolidate its interest in Caring.” 7-Eleven added that CSSSB is in the midst of carrying out its due diligence exercise and additional PACs could potentially be identified along the way. As at Aug 31, 2019, Caring has a total of 129 community pharmacies, and the deal will allow 7-Eleven to have immediate access to a new network of retail stores and to widen its product range through the combined operations.
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OPR cut next year ‘overwhelmingly certain’, says MIDF Research (Wed, 11 Dec 2019)
PETALING JAYA: MIDF Research believes another 25 basis point (bp) cut to the Overnight Policy Rate (OPR) is “overwhelmingly certain” next year, but it will only be a single cut as a gross domestic product growth of above 4% can still be considered solid. Moreover, aggressive OPR cuts might cause a significant depreciation in the ringgit. “Lower interest rates tend to be unattractive for foreign investment, reducing the demand for and relative value of the currency. In addition, the decision of Norway’s sovereign wealth fund to retain Malaysia on its Fixed Income Watch List until further update after the interim review in March 2020 would pose some pressure on ringgit as it raises the risk of capital flight,” the research firm said in a note today. At the same time, the US Presidential election would likely boost the greenback and the dollar is expected to appreciate further assuming Trump’s victory in the election, which in turn will cause the ringgit to depreciate. “Given that other factors determining the value of the ringgit such as domestic policy stability are still in flux, we believe that trimming the rate more than once might not be the right move at this juncture as it will result in high depreciation of the ringgit,” said MIDF. As of October 2019, the ringgit averaged at RM4.14, higher than 2018’s average of RM4.03. Despite more challenges ahead, MIDF only foresees a single rate cut for the full year of 2020. It pointed out that in response to the 2008/09 global financial crisis, Bank Negara Malaysia engaged in a series of rate cuts during the period of November 2008 to February 2009. The total reduction was 150bp with the largest one time cut was 75bp in Jan-09. The lowest OPR on record was reached in the following month at 2%. “Therefore, at current OPR level of 3%, we believe that BNM has relatively limited room for rate cuts in the event of any crisis. Besides this, during the GFC, the government also had used of fiscal policy significantly to stimulate the economy along with monetary policy, resulting in a fiscal deficit of 6.7% in 2009, the largest deficit since 1987. “In comparison, fiscal deficit recorded at 3.8% in 2018 and government projected lower deficit moving forward. Sizeable national debt level will somehow restrain government from spending generously in the nearest future. Hence we opine there will be a cautionary stance on monetary policy tools,” it said. Meanwhile, MIDF said weak exports on top of easing domestic demand will affect the manufacturing sector and this could also weigh on employment opportunities. “Manufacturing sector has the second biggest share of total employment in the country at almost 20% after services sector. Therefore, another rate cut might be needed to boost private investment and support domestic demand. “We do expect inflation to trend higher next year but we view that any rise in fuel prices is expected to be gradual to prevent shocks. Taking this into consideration, we opine that BNM might want to get a rate cut in Q1’20 while the environment is still conducive as cutting rates generally increases inflation,” it said.
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Terengganu may consider buying ‘reasonable amount’ of equity in Petronas (Wed, 11 Dec 2019)
KUALA TERENGGANU: The Terengganu state government says it will consider buying a stake in Petroliam Nasional Bhd (Petronas) if it is for a reasonable amount of equity. Mentri Besar Datuk Seri Dr Ahmad Samsuri Mokhtar said the state government does not have the financial capacity to buy the entire shareholdings of the national oil company. “It will depend on the relevant assets i.e. oil wells, as to size and price, among others. If it amounts to billions (of ringgit), we (the state government) cannot afford it. (But) states like Sabah and Sarawak have large cash reserves compared to Terengganu. “But if it’s in the form of equity, say 5% or 10%, then we can probably consider, (buying) a reasonable amount of equity. In Terengganu we have many oil wells. If one oil well comes to only RM10 million or RM20 million, then we can buy,” he said when met by reporters after chairing a state executive council meeting at Wisma Darul Iman today. Primer Minister Tun Dr Mahathir Mohamad reportedly said on Tuesday that the government is considering selling stakes in Petronas to states where the company’s oil and gas fields are located, in an effort to raise funds for the debt-laden government. However, Ahmad Samsuri said the state government has not been officially informed about the proposal and will need detailed information before making any decision. Meanwhile, he said Terengganu continues to receive a 5% oil royalty from the federal government and has not made any demand to raise the royalty payment to 20% as has been done by Sabah and Sarawak. – Bernama
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HPP Holdings to offer 108.7 million shares in IPO (Wed, 11 Dec 2019)
PETALING JAYA: HPP Holdings Bhd is heading for listing on the ACE Market, with an initial public offering consisting the public issue of 88.7 million shares and an offer for sale of 20 million shares, totalling 108.7 million shares. HPP Holdings is involved in the printing. production as well as sales and marketing of paper-based packaging, both corrugated and non-corrugated, and trading and production of rigid boxes. According to the group’s prospectus exposure, part of its future plans and business strategies include increasing its printing capacity by acquiring two additional standard format printing machines, expanding its rigid box business by acquiring an additional rigid box production line, and increasing its marketing initiatives to expand its customer base in both local and overseas markets. Proceeds from the IPO will be used for capital expenditure and expansion, repayment of bank borrowings, working capital as well as sales and marketing expenses. For FY19 ended May 31, the group posted a net profit of RM13.3 million, on RM82.7 million in revenue. Some 94.36% of the group’s revenue was contributed by sales from Malaysia, while the remainder was accounted for by sales from Singapore, Thailand, Myanmar, the US, Germany and Australia. HPP’s substantial shareholders are Aurora Meadow (67.02%), Kok Hon Seng (7.7%), Lau Tee Tee @ Lau Kim Wah (2.57%), Ng Soh Hoon (7.97%), Chong Fea Chin (3.99%) and Ang Poh Geok (10.75%).
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Not easy to secure buyer for Tesco Malaysia (Thu, 12 Dec 2019)
PETALING JAYA: Hypermarket operator Tesco Stores (Malaysia) Bhd (Tesco Malaysia) is not expected to exit the country anytime soon, opined independent retail research firm Retail Group Malaysia managing director Tan Hai Hsin, as securing a buyer is not easy at all. “However, this has happened before for Carrefour and Makro Cash & Carry many years ago. In the event it (Tesco sells the Malaysian business) takes place, I do not expect it to have major or negative impact on the Malaysian retail industry based on previous experiences from Carrefour and Makro,” he told SunBiz. Recall that in 2012, Japanese retailer Aeon Co acquired Carrefour’s operations in Malaysia for US$276 million. In 2007, Tesco took over Dutch company Makro Cash & Carry stores in Malaysia for an undisclosed sum. Earlier this week, Tesco confirmed that it has started a review of strategic options for its businesses in Thailand and Malaysia, including an evaluation of a possible sale of these businesses. The evaluation of strategic options is at an early stage and no decisions concerning the future of Tesco Thailand or Malaysia have been taken. Tan said many Malaysians have overreacted to the news. On the closures of numerous hypermarkets and supermarkets in Malaysia, he said many blame the rapid rise of internet shopping and many believe the future of grocery shopping will be done online, but this is far from the truth. “Supermarket and hypermarket operators in Malaysia are going through a consolidation stage. They expanded aggressively throughout the country during the 2000s. With the current economic condition that has not improved, it is not a surprise for them to close underperforming stores,” explained Tan. He said the closure of brick-and-mortar grocery store is not expected to worsen in 2020, unless a recession takes place. Giant was recently in the media spotlight for its store closures. In the last few years, Aeon, Aeon Big, MaxValu, Jaya Grocer, Econsave, Ben’s Independent Grocer and The Store have closed underperforming outlets as well. “Malaysian consumers are not replacing hypermarkets with mini-markets such as 99 Speedmart and KK Super Mart. Based on our observations and the feedback we received, consumers are indeed shopping less in hypermarkets and buying more often in mini-markets.” The hypermarket format (80,000 sq ft and more) was introduced to Malaysians in 1994 with the arrival of France’s Carrefour. This format became popular among Malaysian families because it was able to offer a wide variety of goods under one roof. Malaysians enjoyed hours of shopping at a leisurely pace in this super-large grocery store. It was a family outing, especially on weekends. “In recent years, we notice many Malaysian families are getting tired of spending hours in hypermarkets for their basic necessities. They are still visiting hypermarkets for purchases in large quantity, but they are not going as often as 10 years ago. For purchases in small quantity, they are shifting to supermarkets and mini-markets. In addition, these small-format grocery stores are now able to offer competitive prices compared with hyper-markets.” Tan said this change in consumers’ buying pattern is making major hypermarket operators (such as Tesco, Giant and Aeon Big) open new grocery stores in smaller sizes. Smaller size is one of the winning formulas for Jaya Grocer, Village Grocer, Ben’s Independent Grocer, HeroMarket, Urbanfresh and De Market. He pointed out that Target, the eighth largest retailer in the US, has opened more than 160 small-format stores in US downtown areas, urban neighbourhoods and college campuses. A traditional Target store is about 135,000 sq ft. A small-format Target store is 50,000 sq ft or less.
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Tesco Malaysia reported RM44m net loss for FY19 (Thu, 12 Dec 2019)
PETALING JAYA: Tesco Stores (Malaysia) Bhd’s loss-making business could be one of the main reasons why its parent Tesco PLC of the UK is mulling a sale of its Malaysian operations. For the financial year ended Feb 28, 2019 (FY19), Tesco Malaysia posted a net loss of RM44.29 million on revenue of RM4.38 billion. In FY18, it saw a net profit of RM22.81 million on revenue of RM4.37 billion. The hypermarket chain bled a net loss of RM136.71 million on revenue of RM4.45 billion in FY17. An analyst said it could be challenging for Tesco Malaysia, which has 74 stores in the country, to sell its business. “Tesco has the network and system set-up. Another hypermarket-cum-supermarket player could be able to take over if it wants to. It should be a new player or an existing player that wants to expand its market share. But it’s always down to pricing,” the analyst told SunBiz. According to the Guidelines on Foreign Participation in the Distributive Trade Services Malaysia by the Ministry of Domestic Trade, Cooperatives and Consumerism (now Ministry of Domestic Trade and Consumer Affairs), hypermarkets are not allowed to operate within 3.5km radius of residential areas and town centres, and only one hypermarket is allowed for every 250,000 residents. “There are restrictions so hypermarkets cannot just open anywhere even if they want to open,” the analyst pointed out. Tesco Malaysia is 30% owned by conglomerate Sime Darby Bhd. “If Sime Darby’s stake is loss-making, most likely Sime Darby is also looking at how to sell and recover their investments,” the analyst said. It has been reported that Sime Darby is looking at trimming its non-core assets, which include the 30% stake in Tesco Malaysia, as part of its five-year plan to create value for the group, but is not rushing to do so. With the current weak consumer sentiment, hypermarket sales are likely to be affected given consumers’ cautiousness on spending and ongoing lifestyle changes. “Many people are doing weekly purchases and topping them up with convenience store purchases. Fewer people are doing monthly or bulk purchases,” opined the analyst.
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Ringgit closes unchanged (Wed, 11 Dec 2019)
KUALA LUMPUR: The ringgit ended unchanged against the US dollar today, closing at 4.1630/1660 on lack of fresh leads, said an analyst. Axi Trader Asia-Pacific market strategist Stephen Innes said the ringgit and the yuan were likely to trade on a tight band ahead of the United States (US)-China negotiations. “China’s Central Economic Work Conference is the risk to watch for tomorrow, as it should set the policy theme for 2020. “More fiscal spending from the Chinese government could help the local currency sentiment,” he told Bernama. Meanwhile, IQI Global chief economist Shan Saeed expected the US dollar to remain weak in 2020, saying that the greenback is peaking at the moment and financial markets are nervous as policy levers in the US and Europe have reached their limits and cannot go any further. At the close, the ringgit traded mixed against other major currencies. The local note fell against the Singapore dollar to 3.0613/0639 from 3.0610/0637 on Tuesday and declined versus the euro to 4.6139/6180 from 4.6105/6155 previously. However, it went up against the yen to 3.8298/8333 from 3.8330/8368 yesterday and strengthened against the British pound to 5.4689/4745 from 5.4768/4816 previously. - Bernama
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Bursa Malaysia back in positive territory (Wed, 11 Dec 2019)
KUALA LUMPUR: Bursa Malaysia returned to positive territory after recording two straight days of losses. At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) increased 1.40 points to 1,563.19 compared with Tuesday’s close of 1,561.79. The index opened 3.03 points weaker at 1,558.76 and moved between a low of 1,558.76 and a high of 1,568.03 throughout the day. An analyst said the mild but continuous support helped lift the market to end higher. “The market enjoyed a slight rebound as some investors went bargain-hunting, but worries over the US-China trade war escalation kept them on a cautious mode,“ he told Bernama. He said a new report posited that the US and Chinese trade negotiators are laying the groundwork for a delay of a fresh round of tariffs due to take effect this Sunday has spurred hope for a trade deal. “However, there are still no clarity what Washington’s decision will be,“ he added. The US is due to impose new tariff hikes on US$160 billion worth of Chinese goods if the two sides fail to reach an accord before Dec 15. “In addition, all eyes are on the US Federal Reserve’s (Fed) monetary policy final meeting for 2019 outcome to be released later today, although the Fed is widely expected to leave interest rates unchanged,“ he the analyst said. Among heavyweights, IHH rose 15 sen to RM5.40, Press Metal added 11 sen to RM4.71, Petronas Dagangan improved 80 sen to RM23.30, and CIMB went up six sen to RM5.17. Of the actives, Eco World rose 10 sen to 74.5 sen, AT Systematization was flat at 5.0 sen and WCE edged up three sen to 33.5 sen. The FBM Emas Index increased 13.27 points to 11,124.00 and the FBM Emas Shariah Index put on 8.21 points to 11,713.31, while the FBMT 100 Index rose 11.83 points to 10,923.25. The FBM Ace went up 5.17 points to 4,925.20 and the FBM 70 added 23.51 points to 13,911.22. Sector-wise, the Financial Services Index rose 26.81 points to 15,212.31, the Industrial Products and Services Index improved 0.47 of-a-point to 150.07, and the Plantation Index increased 20.75 points to 7,486.58. On the broader market, gainers outpaced losers 421 to 379, with 382 counters unchanged, 790 untraded and 18 others suspended. Volume, however, declined to 2.37 billion units valued at RM1.71 billion from 2.66 billion units worth RM1.5 billion on Tuesday. Main Market volume dropped to 1.67 billion shares worth RM1.55 billion from 1.93 billion shares worth RM1.36 billion. Warrants turnover went up to 315.4 million units valued at RM55.52 million from 243.6 million units valued at RM40.05 million yesterday. Volume on the ACE Market contracted to 384.9 million shares worth RM100.84 million from 487.27 million shares worth RM104.84. Consumer products and services accounted for 232.72 million shares traded on the Main Market, industrial products and services (209.40 million), construction (155.94 million), technology (88.57 million), SPAC (nil), financial services (80.61 million), property (231.17 million), plantations (149.21 million), REITs (11.59 million), closed/fund (11,700), energy (414.43 million), healthcare (15,63 million), telecommunications and media (42.79 million), transportation and logistics (20.10 million), and utilities (18.53 million). - Bernama
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IATA revises down 2019 airline profits, sees stability in 2020 (Wed, 11 Dec 2019)
GENEVA: Global airlines reduced a forecast for industry-wide profits in 2019 under the weight of trade tensions, but predicted a modest recovery next year on the assumption that tariff wars will recede in the run-up to the U.S. presidential election. Airline net profits are now expected to fall to $25.9 billion from $27.3 billion last year, before recovering to $29.3 billion in 2020, the International Air Transport Association said. In June it had forecast $28 billion in profit for 2019. The starkest deterioration is being felt in airlines' cargo businesses - where a 3.3% drop in freight demand marked the sharpest decline since the 2009 financial crisis, with revenue down 8% year-on-year. Growth in world trade has all but evaporated to an expected 0.9% this year, sharply down from the 2.5% forecast in June and the 4.1% expansion predicted a year ago, IATA said. Underpinning the partial recovery predicted next year, IATA forecast more robust trade growth of 3.3% as "election-year pressures in the U.S. contribute to reduced trade tensions". - Reuters
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Credit Suisse cuts profit goals as revenue hopes fall short (Wed, 11 Dec 2019)
ZURICH: Credit Suisse cut a key profitability target for this year and next as a drop in dealmaking, negative interest rates and uncertainty caused by global trade tensions dimmed the outlook. Switzerland's second-largest lender said on Wednesday it expects to hit a return on tangible equity (RoTE) above 8% this year, below its previous target of 10-11%. The Zurich-based bank also cut its forecast for next year. "If markets are constructive and support revenue growth, we would expect our year-end 2020 RoTE to be approximately 11%," the bank said in a statement ahead of an investor day in London. "Conversely, should markets remain challenging in 2020, we have identified up to 50 basis points of additional cost measures in order to protect our RoTE ambition of approximately 10%." Credit Suisse previously aimed to achieve 11-12% RoTE in 2020. The bank will present its first investor update since completing a three-year restructuring in 2018 which cut back its investment banking activities, boosted cooperation with wealth management, and whittled down costs. While performance at its Global Markets trading division, the focus of previous criticism, has picked up in 2019, revenues have fallen in its investment banking and capital markets business due to floundering M&A activity. Credit Suisse now expects the division to make a loss this year. The bank last month appointed new leadership to the division and aims to bolster its M&A activity by adding more bankers to advise deals in growth industries including technology and healthcare. "Looking ahead to 2020, we are working on actions that will reinvigorate the division, building on a strongly improving pipeline, which we expect will put us in a more advantageous position compared to 2019," it said on Wednesday. The Swiss lender said it expected to distribute at least 50% of net income to shareholders looking ahead to 2020 by growing its dividend at least 5% annually, and through a share buyback of 1-1.5 billion Swiss francs. - Reuters
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