FBM KLCI 1761.78 1.79 KLCI FUTURES 1758.00 3.50 STI 3356.73 35.78 RM/USD 3.9835 CPO RM2336.00 18.00 OIL US$73.44 2.50 GOLD US$1276.30 29.90 Najib may face charges of money laundering, misappropriation of property — source PAGE 2 FINANCIAL DAILY www.theedgemarkets.com MAKE BETTER DECISIONS PP 9974/08/2013 (032820) PENINSULAR MALAYSIA RM1.50 MONDAY JUNE 18, 2018 ISSUE 2671/2018 4 HOME BUSINESS 5 HOME BUSINESS 6 HOME BUSINESS 6 HOME BUSINESS 8 PROPERTY 10 HOME Stocks with forward momentum amid volatility Analysts see further upside for retail stocks Minimum wage increase a bane for plantation players — Rabobank LEAP-listed JM Education upbeat about a better FY18 with Johor expansion UEM Sunrise to expand rent-to-own scheme Muhiyiddin: Immigration and police to be revamped Failure is said to result in costs not only to Malaysia but to China as well. Samantha Ho has the story on Page 3. F ailure is said d toresult ECRL POSER clouds China’s Belt and Road ambitions Is it time to bet on oil and gas? 5 HOME BUSINESS BERNAMA There is no mystery about a Girard-Perregaux, simply more than two centuries of craftsmanship and a perpetual commitment to perfection. 1966, PINK GOLD CASE, 40 MM MID VALLEY MEGAMALL , LOT G-053, KUALA LUMPUR. TEL: (03) 2202 2882
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Slow traffi c on major highways as at 9pmKUALA LUMPUR : Traffic flow as at 9pm remained slow along several major highways, as travellers be-gin leaving their hometowns after celebrating Aidilfitri. A PLUS Malaysia Bhd spokes-man said the affected routes were Ipoh to Simpang Pulai and Gua Tempurung to Sung-kai as well as Bukit Berun-tung to Rawang. “Traffic is also slow at Changkat Jering towards Sg Perak as well as Terowong Menora to Jelapa-ng,” he said when contacted here. Meanwhile, a Malay-sian Highway Authority (LLM) spokesman said traffic flow at Gombak Toll Plaza and Ben-tong Toll Plaza towards Len-tang was also reported to be slow. The public may obtain updates through Plusline’s toll free line at 1800-88-0000, and www.twitter.com/plustrafik or LLM at 1800-88-7752 or www.twitter.com/llminfotrafik. — Bernama
Seven nominations for Umno president’s postKUALA LUMPUR: Seven nom-ination forms were received for the post of Umno presi-dent by the submission dead-line at 5pm. Umno executive secretary Datuk Seri Ab Rauf Yusoh said it was the high-est number contesting in the party’s history for the num-ber one post. He said the fi-nal list of eligible candidates for all posts contested in the June 30 party election will be announced today by Umno secretary-general Datuk Seri Tengku Adnan Tengku Man-sor. “The candidates will have to undergo a vetting process with the party and the Insol-vency Department,” Ab Rauf told a press conference after the nominations at Menara Dato´ Onn here yesterday. — Bernama
Najib, Rosmah in Langkawi for holidayALOR SETAR: Former prime minister Datuk Seri Najib Razak and his wife Datin Seri Rosmah Mansor arrived in Langkawi on Saturday night for a holiday with their family in the island resort. It is learnt that Najib and his wife came with 13 family members for a three-day holiday. Langkawi Umno division head Datuk Ir Nawawi Ahmad said yesterday evening that the visit of the former prime minister was only for holiday. — Bernama
I N BR I E F
The Edge Communications Sdn Bhd (266980-X) Level 3, Menara KLK, No 1 Jalan PJU 7/6, Mutiara Damansara, 47810 Petaling Jaya, Selangor, Malaysia
The Edge Communications Sdn Bhd (266980-X) Level 3, Menara KLK, No 1 Jalan PJU 7/6, Mutiara Damansara, 47810 Petaling Jaya, Selangor, Malaysia
Editor-in-Chief Azam ArisExecutive Editors Ooi Inn Leong, Kathy Fong, Jenny Ng, Diana KhooSenior Editors Cindy Yeap, Jose Barrock, Kang Siew LiAssociate Editors R B Bhattacharjee, Vasantha Ganesan, Adeline Paul Raj Deputy Editor Tan Choe Choe Assistant Editors Khairie Hisyam Aliman, Kanagaraju S SithambaramChief Copy Editor Halim YaacobSenior Copy Editor Melanie ProctorCopy Editor Tham Kid ChengArt Director Sharon KhohChief Graphic Designer Cheryl LohDesign Team Valerie Chin, Mohd Yusry, Aaron Boudville, Aminullah Abdul Karim, Noorain Duasa, Tun Mohd Zafi an Mohd Za’abah
PRODUCT DEVELOPMENT & CUSTOMER ADVISORYSenior Manager Elizabeth Lay
KUALA LUMPUR: Malaysian au-thorities investigating scandal-hit state fund 1Malaysia Development Bhd (1MDB) are considering charg-ing former prime minister Datuk Seri Najib Razak with money laun-dering and misappropriation of property, a source familiar with the matter said.
Najib, who founded 1MDB in 2009, is the subject of a money laun-dering and corruption probe, af-ter reports that millions of dollars made their way into his personal bank accounts from the fund and its former subsidiary, SRC Inter-national. Th e former premier has consistently denied any wrongdo-ing in relation to 1MDB.
Najib, 64, suff ered a shock loss in the May 9 general election, the fi rst change of government since Ma-laysia gained independence from
Charges considered against NajibTh ey include money laundering, misappropriation of property
Britain in 1957. Tun Dr Mahathir Mo-hamad, who was elected prime min-ister, has vowed to bring back funds allegedly siphoned from 1MDB and punish those responsible.
Malaysia’s new Attorney-General Tommy Th omas said last Tuesday that his offi ce was studying possi-ble criminal and civil action, after receiving investigation papers on 1MDB from the Malaysian Anti-Cor-ruption Commission (MACC).
A source close to the investiga-tions told Reuters that Najib may be charged with dishonest misap-propriation of property under the Malaysian Penal Code. Th e source declined to be identifi ed as they were not authorised to speak on the matter.
Th e off ence carries a maximum jail sentence of fi ve years, a fi ne and whipping. Th e law, however, forbids men over the age of 50 years from being whipped.
Any fi ne would be decided by the court depending on the off ence and amount misappropriated.
According to the source, Najib may also face money laundering charges, which would carry a max-imum sentence of 15 years’ jail and a fi ne of no less than fi ve times the value of the laundered proceeds.
It is now up to the attorney-gen-eral to decide whether or not to accept the recommendations, fi le different charges or call for fur-ther investigations. Th e previous attorney-general cleared Najib of wrongdoing in relation to 1MDB.
MACC and the attorney-gen-eral’s offi ce did not respond to re-quests for comment.
Najib’s spokesman did not re-spond to requests for comment. Najib said last week that if he was charged on “political grounds” he was confi dent the courts would fi nd him innocent. — Reuters
KUALA LUMPUR: Rubens Menin, Brazil’s leading low-income hous-ing builder, has been named EY World Entrepreneur Of Th e Year (WEOY) 2018 at an awards cere-mony held in Monaco’s Salle des Etoiles on Saturday night.
Picked from among 761 pro-gramme participants, including 56 country winners from 46 countries and regions vying for the title, the 62-year-old Menin is the fi rst-ev-er EY WEOY winner from South America, read a statement from EY.
“Th roughout my life, I have pur-sued the purpose of bringing the dignity of homeownership to peo-ple for whom this is an unobtain-able dream. I am very proud to be recognised in this way but the work does not stop here.
“Th e construction industry is well positioned to further enact positive civil impact. I believe economic em-powerment is not just about wealth generation but also social develop-ment and MRV’s legacy will continue for generations to come,” Menin said.
Brazilian low-income housing builder is EY World Entrepreneur of 2018
Menin founded MRV Engen-haria e Participações SA, a home-builder and real estate company, in 1979, which he then grew into Latin America’s largest real estate developer by units sold. Menin is the chairman of the company now.
MRV employs more than 24,000 people, operates in 150 cities and has built some 300,000 properties. In these cities, one in 200 people lives in a property built by MRV, said EY.
EY global chairman and chief ex-ecutive offi cer Mark Weinberger said that Menin’s leadership is exemplifi ed by his persistence to succeed against a backdrop of national economic challenges and turbulent years to create Brazil’s largest public housing provider and become Latin America’s largest real estate developer.
“Rubens is a truly inspiring World Entrepreneur Of Th e Year winner,” he added.
Menin: I am very proud to be recognised in this way but the work does not stop here.
KUCHING: Th e Sarawak state gov-ernment will use Malaysia Agree-ment 1963-related documents found in London last year as a ref-erence in its fi ght for rights to oil and gas produced in its territory.
Sarawak Law, State-Federal Re-lations and Project Monitoring As-sistant Minister Sharifah Hasidah
Sayeed Aman Ghazali said the doc-uments discovered by a team of lawyers which she led would serve as evidence on the state’s rights.
“We will defi nitely use the docu-ments that we obtained in London; they are certifi ed true copies, not just photostated,” she told reporters at her Aidilfi tri open house yesterday.
Petroliam Nasional Bhd (Petro-nas) has named the Sarawak state government as a respondent in its application to the Federal Court for a declaration that the Petroleum De-velopment Act 1974 was also valid for the petroleum industry in Malaysia.
Sarawak Attorney General Da-tuk Talat Mahmood Abdul Rashid
will head the state’s legal team at the hearing.
“We wait until June 21 and see whether the court will grant Petronas leave to proceed with its application and from there we will see what fur-ther action the state government will take,” said Sharifah Hasidah, who is also the Samariang assemblyman.
London documents to be used as evidence against Petronas’ application
H O M E B U S I N E S S 3MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY
ECRL poser clouds China’s Belt and Road ambitionsFailure is said to result in costs not only to Malaysia but to China as well
BY S A M A N T H A H O
KUALA LUMPUR: China’s ambi-tious Belt and Road Initiative (BRI) could face another setback if the Malaysian government decides to scrap the 688km East Coast Rail Link (ECRL), according to Koh King Kee, head of the Belt and Road desk at Baker Tilly Malaysia.
A failure to see the project ma-terialise will result in costs not only to Malaysia but to China as well, Koh said, as the latter’s credibili-ty in delivering BRI-related infra-structure projects will be hit with a fresh round of scepticism.
“Both Malaysia and China are in damage control mode [over ECRL],” he told Th e Edge Financial Daily in an interview, adding that it will not be in China’s interest to see the project fail.
However, it is unlikely that the project will be derailed completely as progress has been made of up to 20% of the railway’s fi rst phase, which stretches 600.3km from Gombak to Kota Baru.
A source close to the matter said that although the main con-tractor, China Communications Construction Co Ltd (CCCC), has not stopped work on the ECRL, which has an overall completion rate of more than 14% currently, the contractor is proceeding “very cautiously”.
“Ultimately, CCCC is a [Chi-nese] state-owned company. Th ey need to wait for instructions from the top,” the source told Th e Edge Financial Daily, adding that there has so far been no renegotiations made with the contractor on the subject of cost.
However, Koh said competition among China’s state-owned
Troubled Belt and Road projects in Asia
COUNTRY PROJECT VALUE COMPANY (US$ BIL)
Malaysia East Coast Rail Link 14 China Communications Construction Co LtdMalaysia Trans-Sabah gas and China Petroleum Peninsula petroleum pipelines 3.2 Pipelien BureauSri Lanka Hambantota port 1.2 China Merchant Port HoldingsPakistan Diamer-Basha hydropower dam 14 -Nepal Budhi Gandaki China Gezhouba hydropower dam 2.5 Group CorpMyanmar Kyaukpyu deepwater port 9 Citic GroupMyanmar Myitsone dam 1.5 China Power Investment CorpSources: Japan Times, Financial Times, South China Morning Post
enterprises (SOEs) themselves is intense, resulting in rules and reg-ulations being fl outed in order to secure projects overseas.
“We need to distinguish be-tween SOEs and the Chinese gov-ernment,” he said, adding that poor regulatory oversight meant that some of these companies may not be acting in the true spirit of the BRI.
Malaysia has already paid RM19.7 billion as 15% mobilisa-tion fee, drawn down by the China Export and Import Bank, accord-ing to a report by a local daily last week. Th e same report cited sourc-es as saying that at least RM15 bil-lion could be saved from the initial RM55 billion quoted for the railway.
Market talk is rife with specu-lation over what could happen to the ECRL, including the possibility that the railway could be built as a single track on a double-track for-mation, reducing the implemen-tation to just Phase 1 for the time being, or shortening it to run up to Kuantan Port City only.
However, no offi cial decision has been announced as yet after the new Malaysian government said the ECRL project, in particu-lar its terms of fi nancing, would be reviewed.
Finance Minister Lim Guan Eng has said the project would be among the issues discussed dur-ing his upcoming trip to China, on top of two pipeline contracts worth RM9.4 billion — one to transport gas in Sabah and another to carry petroleum in Peninsular Malaysia.
Koh takes the position that el-ements of corruption, rife under the former Barisan Nasional ad-ministration, have tainted China’s
image as a trade and investment partner in Malaysia, and that
this results in a short-term pullback by China.
“In the long run, however, I think pros-pects are positive for the relationship between China and Malaysia,” he said.
Having recently re-turned from a visit to Chi-
na’s major think tanks, in-cluding the Center for
China and Globali-zation, Koh shared that Chinese par-ties remain keen on working with Malaysia.
“In fact, great-er transparency under the new g o v e r n m e n t c o u l d b e n e -fi t them if they can show that they have the capability and capacity when
bidding for jobs [here],” Koh shared.President of the Council of Em-
inent Persons, Tun Daim Zainud-din, has said in a media interview that China is “very important” to Malaysia, and that the former may have been misled by former ad-ministrators.
Still, Prime Minister Tun Dr Mahathir Mohamad’s recent trip to Japan and his remarks about closer ties with the eastern nation were seen by observers as a move to show that the Southeast Asian country does not need to rely on China alone for economic growth, despite the republic being its larg-est single trading partner.
Both Dr Mahathir and Japan’s ambassador to Malaysia Dr Makio Miyagawa have spoken up about collaboration between both coun-tries in areas such as education, trade and investment, as well as defence.
Th e apparent hedging of bets may not be unwarranted given that Malaysia is not the fi rst nation that has run into financial concerns over infrastructure projects led by Chinese companies.
What happened in Sri Lanka has raised red fl ags among those who were eyeing some of the easy money coming from China under the BRI. In 2008, the Sri Lankan government borrowed from China to build a deepwater port in Ham-bantota via a joint venture with a Chinese fi rm. When Colombo could not repay the loan for the project, it had to ink an agreement mid last year to cede the port to China for 99 years, to ease the debt burden.
Following that, the BRI, which
ture project ... it should be treated as a public good that the govern-ment [must] provide,” he said.
While the BRI may seem to be solely an infrastructure push by China, Koh said Malaysian com-panies should be aware that the initiative also involves policy co-ordination, trade and investment cooperation, besides fi nancial in-tegration and establishing peo-ple-to-people eff orts such as de-veloping human capital.
Koh shared that he himself is involved in advising a top pub-lic-listed energy consulting fi rm from China, which is interested in investing here, and is now seeking to incorporate a subsidiary in Kua-la Lumpur.
Malaysian industries could also tap into China’s advancements in robotics and artifi cial intelligence, he said. The Digital Free Trade Zone, which will see the Malay-sian government working with Ali-baba Group to establish the latter’s regional logistics hub, represents an example of policy and industry collaboration.
Not so smooth sailingAnother key element of China’s BRI is retaining its sovereign power in open seas, which is vital to sustain trade. Historically, China has been cut off from the world via naval blockades, Koh said.
So is it likely that China will heed Dr Mahathir’s call for a reduction in naval power in the South Chi-na Sea?
While Koh declined to comment on China’s commitment to growing a physical fl eet, he believes that the country “will not compromise” and “will defend its interest in the South China Sea at all costs”.
China has also poured invest-ments into shipping ports and al-liances across the world. A report by the Economist Intelligence Unit showed that Chinese companies had seaport investments in 34 countries as at September 2017, with planned investments in an additional eight countries.
In Malaysia, these include in-vestments in the Melaka Gateway deepsea port, besides the Kuala Linggi Port, the Penang Port, and the Kuantan Port. Th ere are now nine Malaysian ports and 11 Chi-nese ports in the China-Malaysia Port Alliance.
On the fl ip side, China is also extending its economic corridor across land via its alliance with Pakistan under the China-Pakistan Economic Corridor. According to Koh, this acts as a “back door” into China’s western provinces, which not only serves to benefi t econom-ic development in that part of the country but also reduces China’s reliance on the Strait of Malacca for its energy supplies and trade.
Koh: We need to distinguish between SOEs and the Chinese government. Photo by Sam Fong
spans more than 68 countries ac-counting for over 30% of global gross domestic product, has hit snags in other developing coun-tries.
Th e governments of Pakistan, Nepal, and Myanmar poured cold water on major hydroelectricity projects, worth a total of almost US$20 billion, that were planned by Chinese companies late last year. Th e projects were either cancelled or sidelined, with reasons cited including tough fi nancing terms and fi nancial irregularities by the Chinese fi rms.
Koh, however, maintained that without China, none of these de-veloping countries would have had the fi nancial muscle to achieve in-frastructure developments.
“Th e lending rules of other glob-al financial institutions such as the World Bank have been more stringent, whereas China’s terms are more relaxed,” Koh said.
But have looser lending terms resulted in more bad loans being dished out? “Every bank is bound to have a few bad loans, so this is not surprising,” Koh said.
The quest to stay‘moderately ahead’ According to Koh, China’s model of development and infrastructure expansion may seem excessive sim-ply because it does not fi t with the conventional Western ideology of demand and supply.
“Instead of serving current de-mand, China builds infrastructure ahead of its needs. Infrastructure is meant to act as an economic catalyst,” he said, adding that one of the main thrusts of the BRI is to achieve greater economic parity between the prosperous east coast of the republic and the less devel-oped, landlocked west.
Th e same can be argued for the ECRL, Koh said, who thinks the in-frastructure is necessary to trans-form the “economic hinterlands” of Peninsular Malaysia’s east coast.
“Conceptually, it is good. Th e cost is a separate issue because you cannot expect commercial profi t from such a large-scale infrastruc-
Instead of serving current demand, China
builds infrastructure ahead of its needs.
Infrastructure is meant to act as an economic
catalyst.
4 H O M E B U S I N E S S MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY
Stocks with forward momentum amid volatilityTh ese companies have a healthy balance sheet, expansion plans in place
BY A D A M A Z I Z
KUALA LUMPUR: After weak fi rst-quarter fi nancial results, stocks on Bursa Malaysia faced rating down-grades which largely eliminated buying opportunities following the post-general election market correc-tion and a regional sell-off in May.
Fortunately, there are still com-panies whose shares are trading at a bargain with a healthy balance sheet, earnings growth prospects and expansion plans in place.
Th e Edge Financial Daily high-lights several undervalued counters with strong fundamentals, support-ed by movements in key market forces like the ringgit and oil prices.
1. Thong Guan Industries BhdTh e poor fi rst-quarter results and the recent equity selldown have pushed down Th ong Guan Indus-tries Bhd’s share price by 38% year-to-date (YTD).
Margins for the exporter of plastic packaging products were squeezed by a stronger ringgit and rising operating costs. Its F&B divi-sion also stayed in the red, although losses have narrowed.
The ringgit has depreciated against the US dollar since April, with year-end estimates varying widely from 3.65 to 4.00 amid per-sisting headwinds on the greenback and uncertainty over policies of the new Malaysian government that could infl uence the ringgit.
Further, any potential gain in crude oil prices — which could hike the ringgit and plastic feedstock prices — could be balanced out by a pickup in US shale oil production.
To increase sales capacity, Th ong Guan plans to commission two new lines by end-2018 and anoth-er RM500 million plant in Kedah by the fi rst quarter of 2019, which could house 28 production lines.
It has also reportedly signed a contract to supply RM70 million to RM80 million worth of its organic noodles to China annually, pend-ing necessary approvals.
Th e company had cash balances of RM138 million as at March 31, against RM65.75 million in current borrowings, while its gearing ratio stood at 0.19 times.
Th e counter has one “underper-form” call by Kenanga Research with a target price (TP) of RM2.25, where-as CGSCIMB Research has given it an “add” call, with a TP of RM4.48.
Bloomberg estimated 2018 earn-ings per share (EPS) of 38.5 sen for the stock. At the latest close of RM2.59, the share price translated into 6.7 times 12-month forward price-earnings ratio (PER).
2. AirAsia Group BhdDespite a strong net profi t growth in the recent quarter, AirAsia Group Bhd shares suff ered selling pres-
RM
May 23, 2017 June 14, 2018
0
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Thong Guan Industries Bhd
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AirAsia Group Bhd
RM3.20
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Uzma Bhd
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DRB-Hicom Bhd
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OSK Holdings Bhd
RM0.99
sure in May after it supported Ba-risan Nasional in the run-up to the 14th general election (GE14), and also due to a corruption probe into AirAsia India which delayed plans for the unit to go public.
Regardless, management is de-termined to turn the 49%-owned Indian unit to profi t in 2018. AirA-sia Philippines is also on track for a listing by the second half of 2019.
Rising jet fuel prices impacted its core net profi t for the fi rst quarter ended March 31, 2018. Every US$5 (RM19.90)/bbl rise in spot jet fuel prices will reduce the group’s core earnings by 21%, according to a CGSCIMB Research note dated May 28.
AirAsia seeks to mitigate this by improving ancillary sales and group-wide effi ciency, including through higher average utilisation rates of its planes. A weaker US dol-lar could also improve margins for its Philippine and Indonesian units.
At end-March, AirAsia had cash balances of RM2.03 billion against short-term borrowings of RM1.42 billion. Its gearing ratio stood at 0.34 times in the same period.
Its shares are currently trading at 6.84 times forward-PER based on the last close of RM3.20 and Bloomberg’s FY18 EPS estimate of 46.7 sen.
It has 13 “buy” calls, three “hold” calls and one “underweight” call, with the lowest TP of RM2.90 by JP Morgan and highest at RM6.30 by Macquarie.
3. DRB-Hicom BhdNarrowing losses of 50.1%-owned Proton Holdings Bhd in the year ended March 31, 2018, turned DRB-Hicom Bhd profi table for the fi rst time in four years, with a net profi t of RM498.44 million on the back of a 6% increase in revenue to RM12.79 billion.
DRB-Hicom said the rational-isation exercise of non-industrial assets is expected to be completed by end-2018 — largely to refocus its funding on Proton’s turnaround story.
Its aviation unit Composites Technology Research Malaysia Sdn
Bhd (CTRM), which turned a profi t last year, has secured an order book of RM9.5 billion lasting until 2031.
CTRM will also have a new plant by September to add another RM200 million to its annual revenue con-tribution of around RM900 million.
Elsewhere, short-term earnings growth may be minimal from its subsidiaries Honda Malaysia Sdn Bhd and Pos Malaysia Bhd. A weak-ening ringgit could also hurt mar-gins moving forward.
As at March 31, DRB-Hicom had cash and cash equivalents of RM2.85 billion against short-term borrowings of RM2.32 billion, with a gearing ratio of 0.75 times.
Despite trading at a 10-year his-torical PER of around 9.97 times and a high forward PER of 24.03 times, analysts covering the coun-ter are “ upbeat” based on sum-of-parts (SOP) valuation with six “buy” calls and one “hold” call — with a TP ranging from RM1.99 by AmIn-vestment Bank Research to RM2.70 by CGSCIMB.
4. Uzma BhdIntegrated oil and gas services equipment (OGSE) fi rm Uzma Bhd has seen its share price decline in tandem with the decline in the FBM KLCI.
The group, which has an-nounced a change in its fi nancial year end, reported a 38.64% fall in net profi t to RM24.13 million for the 15-month period ended March 31, 2018, compared with RM39.33 mil-lion for the 12 months ended Dec 31, 2016. Revenue slipped 0.72% to RM467.64 million.
Aside from foreign exchange losses, the net profi t decline was also due to larger operating ex-penses, which the group said was necessary to incur early on as con-tracts won earlier are now starting to kick in.
Uzma has secured seven mul-ti-year umbrella contracts with Petronas Carigali Sdn Bhd since the beginning of this year — al-though the bulk of them are on a on-call basis.
It has also scaled up in technol-ogy-oriented services with high
demand in a low oil price environ-ment, such as well-testing and fi sh-ing contracts, and potential prod-ucts such as laying of non-metallic pipelines, according to analysts.
Uzma’s tender book stood at RM7.3 billion as at end-May. Its or-der book stood at RM1.4 billion, with another RM400 million expected to come from the umbrella contracts, according to analyst estimates.
It commands a 12-month for-ward PER of 8.82 times, with four “buy” calls and two “hold” calls presently. Its TP ranges from RM1.04 by Hong Leong Invest-ment Bank Research to RM1.70 by Credit Suisse.
5. OSK Holdings BhdOSK Holdings Bhd has guided that its property segment will be “quiet” in 2018 with fewer ongoing projects.
However, unbilled sales had re-mained attractive at RM1.2 billion as at March 31. Its land bank stood at 2,016 acres (815.85ha), with an estimated gross development value of RM8.5 billion.
Its construction division also has an outstanding order book of RM311 million.
Meanwhile, its 10.1%-associate RHB Bank Bhd has recently risen to be among the top analyst picks for banking counters amid strong quarterly income growth and ex-pectations of normalising operat-ing expenditure moving forward.
Additionally, a few corporate ex-ercises are brewing in the well-es-tablished conglomerate, which could prove exciting in the short to medium term.
Th ey include the proposed list-ing of its cable business unit OCC Cables Ltd on the Hong Kong Stock Exchange by end-2018 as it seeks to raise funds for OCC Cables’ future expansion.
Th e Edge Malaysia weekly also reported in January that OSK was looking to sell its 16-storey Faber Towers in Taman Desa, with a val-uation ranging between RM230 million and RM250 million.
OSK shares are trading at 4.88 times 12-month trailing PER, al-though its illiquidity could be un-attractive. With consistent dividend payouts over the years, investors can expect an annual dividend yield of 5.22% based on its last closing share price of 99 sen.
Several undervalued counters have strong fundamentals, supported by movements in key market forces like the ringgit and oil prices. Photo by Mohd Izwan Mohd Nazam
H O M E B U S I N E S S 5MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY
Is it time to bet on O&G?Oil and gas sector may be ripe for a relook on decent crude oil prices
BY B I L LY TO H
Retail stocks’ comparison
COMPANY LAST PRICE AS MARKET DEC 29 1 YEAR 52-WEEK 52-WEEK P/E AT JUNE 14 (RM) CAPITALISATION CLOSING PRICE CHANGE (%) HIGH (RM) LOW (RM) RATIO (X) (RM MIL) (RM)
Padini Holdings Bhd 5.68 3,736.93 5.217 7.86 5.8 3.391 23.28Aeon Co (M) Bhd 2.42 3,397.68 1.73 37.5 2.65 1.45 33.43Parkson Holdings Bhd 0.62 661.67 0.515 20.39 0.675 0.38 N/ABonia Corp Bhd 0.43 346.43 0.505 -14.85 0.69 0.4 16.41Marco Holdings Bhd 0.145 152.87 0.14 3.57 0.16 0.125 11.4Vertice Bhd 1.03 149.56 1.09 -5.50 1.24 0.75 N/ASource: Bloomberg
KUALA LUMPUR: More upside is seen for locally listed retail stocks which received a major shot in the arm with the zero-rating of the goods and services tax (GST) two weeks ago.
Analysts said the stocks have more room to run at least until the tax-free holiday comes to an end with the reinstatement of the sales and services tax (SST) on Sept 1.
Th ey said the eff ective removal of the GST meant the masses have bought, or are planning to buy, more items that were previously subjected to the tax.
“I believe this window of a tax-free period will spur spending, typically in retail and luxury or household products such as cars and furniture,” said Areca Capital Sdn Bhd chief ex-ecutive offi cer Danny Wong.
“Some stocks have seen a change in trends. I believe almost all con-sumer stocks will see some upside this quarter,” Wong said when con-tacted, adding that the upside dif-fers only in the extent.
The government’s announce-ment on the reduction of the GST rate from 6% to 0% eff ective June 1
Analysts see further upside for retail stocksBY TA N X U E Y I N G
was made on May 16. Within fi ve days post-announcement, the Bursa Malaysia Consumer Product Index had risen nearly 3% to an all-time high of 743.22 points. Th e index set-tled at 740.16 points last Th ursday.
Wong said the improved sentiment could continue post-tax holiday, de-pending on the strategies adopted by retailers in maintaining sales from plunging on a high-base eff ect.
Th e SST has been hailed as a less painful tax for consumers as it has a straightforward taxation concept, unlike the GST which involves mul-tiple stages.
Another analyst, speaking on condition of anonymity, said that of the retail stocks under his coverage,
the “clear-cut winner” is Aeon Co (M) Bhd, which is enjoying good sales, thanks to the zero-rating of the GST and Hari Raya festivities.
“It is one of the few retail stocks that have ‘legs’, ” he said. “But this remains contingent on not just how well they do in sales these two quar-ters, but also on how well they under-take their cost optimisation in eff orts to improve margins.”
Th e share price of Aeon Co — which operates 34 stores and 26 shopping malls in Peninsular Ma-laysia — has appreciated 37.5% year-to-date. Th e stock closed one sen higher at RM2.42 last week, and is currently trading at a price-earnings ratio (PER) of 33.43 times.
Th e retailer, which has been in operations for more than three dec-ades, turned in a record high reve-nue of RM4.09 billion for the year ended Dec 31, 2017.
According to another analyst, Bonia Corp Bhd is also a counter worth taking a look as its shares could benefit from the higher spending by consumers.
“But it is unsure how much could be translated into the com-pany’s bottom line, considering that Bonia is currently undergoing store consolidation,” he told Th e Edge Financial Daily.
Th is is despire the fact that Bo-nia shares are trading at a PER of 16.4 times, which the analyst said
is warranted given the company’s lacklustre corporate earnings in the past few quarters.
Th e fashion retailer, which main-ly sells leather goods such as foot-wear, handbags and accessories, saw its net profi t for the third quar-ter ended March 31, 2018, con-tract 73% to RM1.28 million, from RM4.76 million a year earlier.
Its share price has fallen 34.7% from its high of 65.8 sen in Octo-ber 2017 to 43 sen at the close of trading last week.
Areca’s Wong said the higher demand seen by retail stocks could also be driven by investors switch-ing from counters that were once the “darling” of the stock exchange to new counters, besides the zer-orisation of the GST.
With the government reviewing mega projects, investors are left with little choice due to the linger-ing uncertainties in stocks that are especially related to construction and building materials, he said.
Wong advised investors who have jumped on to the retail bandwagon to keep a close eye on further announce-ments, as it is expected that sales will slow down after the tax-free period.
KUALA LUMPUR: With the stock market, particularly construction counters, roiled by major policy changes under the new Pakatan Harapan administration, the oil and gas (O&G) sector may be ripe for a relook as crude oil prices have been maintained at fairly decent levels.
Pong Teng Siew, the head of re-search of Inter-Pacific Securities Sdn Bhd, told Th e Edge Financial Daily there could be selective gems, especially in the O&G space, which could benefi t from stronger oil prices as the worst appears to have passed.
Recent fi nancial results pointed to an improvement, and for some even a turnaround in their performance.
Velesto Energy Bhd is one, posting a net profi t of RM5 million for the fi rst quarter ended March 31, 2018, compared to a net loss of RM104.1 million in the corresponding quarter a year ago. In the preceeding quar-ter ended December, its loss was a whopping RM980.5 million.
“For Velesto, things will continue to improve as they continue their cost rationalisation and utilisation increases. I believe second-quarter utilisation should be between 70% and 80% and second-half utilisa-tion will likely be more than 90%,” said Abel Goon, an analyst with TA Securities.
Goon, who also covers Dagang NeXchange Bhd (DNeX), said the company’s earnings growth is likely to continue as its more recent ac-quisitions begin to deliver, includ-ing the order fl ow from production
sharing contracts, as well as the development of the 1Trade system — a web-based one-stop portal for cargo and trade management.
He observed that improved oil prices would also benefi t DNeX’s associate Ping Petroleum as its “Anasuria cluster is directly ex-posed to oil prices”.
The research arm of Rakuten Trade Sdn Bhd, which has upgrad-ed the target price of one of the largest oil bunkering players in Ma-laysia, Straits Inter Logistics Bhd, has also observed that the O&G sector is expected to see increased activities, which would bode well for the company.
Another O&G analyst also pointed out that the sector has seen emerging interest among investors as oil pric-es have made steady gains towards US$70 (RM278.60) per barrel this year, and have stayed above the level amid uncertainties involving Opec’s
decision to increase production. More clarity is expected after the Opec meeting on Friday.
“If you look at the Bursa [Malay-sia] stock exchange, you’ll notice heavy volume and trading in the oil and gas space as the appetite for risk in the energy sector has returned. Most of these counters are still rel-atively volatile at this point given some of the uncertainties ahead of the Opec meeting. But there’s defi -nitely an improved sentiment and re-newed optimism in this space,” said the analyst who wanted to remain unnamed as he is not the spokesper-son for the asset management fi rm.
Th e analyst also pointed out that most O&G companies listed in Ma-laysia do not benefi t directly from the increase in oil prices but from the increase in activities.
“In recent months, we see that some tenders for projects have been reopened and some contracts have
been awarded. Of course, the compa-nies are still cautious with their capex (capital expenditure) but things have defi nitely improved. Let’s not forget that it has been close to four years since oil prices collapsed in 2014.”
In the stock market selldown in the aftermath of Pakatan Harapan’s shock victory in the 14th general election on May 9, O&G counters were not spared the turmoil.
A number of them have seen a signifi cant price fall, including Uzma Bhd, which has plunged 17% to RM1.12.
Floating, production, storage and offl oading player Bumi Arma-da Bhd has lost 12.73% to 72 sen, while Sapura Energy Bhd has seen a slight decline of 2.99% to 65 sen.
More resilient O&G counters include Dialog Group Bhd, Hi-biscus Petroleum Bhd, DNeX and Velesto Energy — formerly known as UMW Oil & Gas Corp Bhd.
To some extent, the decline of the counters was due to concerns that falling global crude inventories and rising consumer prices would prompt Saudi Arabia and Russia to pump more crude.
Owing to the uncertainties, oil prices had fallen from a 3½-year high of US$80.50 per barrel to US$76.50 as of last Th ursday.
With Opec set to meet on Fri-day, oil prices are likely to see some downward pressure, given that Sau-di Arabia and Russia have indicated that they would likely push for higher production ceilings at the meeting.
Still, Goldman Sachs does not think that the oil rally is over.
According to reports, the invest-ment bank has forecast brent crude to average US$82.50 per barrel in the third quarter of the year, with upside risk to the projection for the rest of the year and “skewed to further up-side” next year.
6 H O M E B U S I N E S S MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY
Minimum wage rise a bane for plantation players — RabobankHigher salaries will hit the labour-intensive industry as profi t margins will be squeezed
BY S U L H I A Z M A N
BY FA I Z H A L I M & W O N G E E L I N
KUALA LUMPUR: Th e government’s plan to increase the minimum wage by as much as 50% will have a nega-tive impact on the plantation industry as this will raise production costs and shave profi t margins of palm oil pro-ducers, said Rabobank Group senior analyst for grains, oilseeds, food and agribusiness Oscar Tjakra (pic).
“It will be a bane for the industry. If you look at the basic cost of crude palm oil (CPO) production, fertil-iser and labour costs are the biggest components,” Tjakra told Th e Edge Financial Daily in a phone interview.
“Th e increase will put pressure on [operating] margins,” he said, while keeping a bearish stance on the overall plantation sector at least for the next three years.
Since taking over after the historic 14th general election on May 9, the Pakatan Harapan government has pledged to fulfi l its manifesto prom-ise of higher monthly minimum wage of RM1,500 from RM1,000 currently within the fi rst 100 days.
Human Resources Minister M Kulasegaran said the fi nal decision to raise the minimum wage will be announced in August.
The plantation sector is la-bour-intensive, with foreign work-ers making up 85% to 90% of the total labour force.
As at May 2017, data from the plantation industries and commod-ities ministry showed that there were around 428,000 workers em-
ployed in the oil palm sector.According to an analysis by
CIMB Investment Bank Bhd, every monthly increase of RM100 in the minimum wage would increase the palm oil industry’s annual costs by RM304 million to RM514 million.
Th e report on June 6 noted that the palm oil sector could be one of the worst hit by the increase in the minimum wage, given the labour-in-tensive nature of the industry.
“Also, the industry will not be able to pass on the higher costs to customers as it is a price-taker in-dustry,” it said.
“Potential cuts to our net prof-it forecasts for listed plantation companies range from 1% to 14% on net profi t in fi nancial year 2019, for every RM100 per month rise in minimum wage,” CIMB added.
In the near term, Tjakra said the seasonality factor and the anticipated high production level are expected to pressure CPO prices in the next three to six months, before clocking in an average of RM2,400 per tonne in 2018 and RM2,300 per tonne in 2019.
Tjakra said the spread between the prices of CPO and soybean oil will stay at the current level, with higher soy oil inventories in the US to continue weighing on palm oil prices.
“In the nearer term, the current low-price environment before 2022 could lead to higher oper-ational efficiency in plantation companies to reduce production costs and accelerate consolidation
RM/tonne
2,200
2,400
2,600
2,800
3,000
May 23, 2017 June 14, 2018
CPO futures
2,342
in the industry,” he added.On the supply side, Tjakra said
the global long-term supply out-look for palm oil remains abundant throughout the next four years, with palm oil production expected at 21 million tonnes in 2018, from 19.92 million tonnes in 2017, and 17.32 million tonnes in 2016.
“Production has been increas-ing since 2015, and production is anticipated to be normal on steady weather pattern throughout the third and fourth quarters of this year,” he added.
Turning to demand, Tjakra ex-pects palm oil consumption pattern to expand at a moderate pace, sup-ported by the exigencies from two traditional markets: China and India.
“Besides the two traditional countries, demand could also come in from two other South Asian na-
tions such as Bangladesh and Pa-kistan. And let’s not forget Africa, too,” he added.
As for demand from the Europe-an bloc, Tjakra expects it to soften to 5.7 million tonnes this year, from 5.9 million tonnes last year.
“Th e vote by the European Par-liament (EP) to phase out palm oil usage in biofuel has yet to be con-clusive,” it added.
Early this year, the EP voted to phase out palm oil usage in biofuel, prompting some observers to de-scribe the unprecedented move as “crop apartheid”. However, Bloomb-erg reported last Th ursday that the EP will soften its rule on the use of biofuel from food crops.
On biofuel, Tjakra said Indonesia is seeing a pickup in the demand of biodiesel products, which will be supported by the government’s
KUALA LUMPUR: Educational coun-selling player JM Education Group Bhd is targeting a better top line and bottom line for the financial year ending Dec 31, 2018 (FY18), on the back of a growing number of students recruited for counselling and local placement, according to managing director Teh Cheong Hua.
Although Teh declined to dis-close any target numbers, he said the group is planning to open its 10th branch offi ce in Iskandar EduCity in Nusajaya, near Johor Baru, by the second half of 2018 and a tentative second Johor branch in Batu Pahat.
“Johor is an important market for us. Th ere are a lot of students and educational institutions there for us to serve the market,” said Teh in an interview with Th e Edge Financial Daily recently.
Founded in 1992, JM provides counselling and alternative place-ment to Malaysian educational in-stitutions as well for students facing budgetary concerns. Th e group is
LEAP-listed JM upbeat about a better FY18 with Johor expansionthe third company to be listed on Bursa Malaysia’s LEAP market, out of the seven currently.
In FY17, JM’s net profi t slid 10% year-on-year (y-o-y) to RM2.04 million from RM2.27 million, due to one-off listing expenses of RM520,000. Excluding that, the group would have seen a 13% rise in net profi t, as revenue grew 15% y-o-y to RM11.43 million from RM9.96 million.
In FY17, the bulk or some 42% of JM’s revenue came from its Aus-tralian market, followed by the UK (35%), Malaysia (18%). Th e remain-der 5% was derived from other countries like New Zealand, Sin-gapore, the US and Canada.
Interestingly, despite being a small fi rm, JM had a track record of paying dividends prior to its listing. Teh said JM endeavours to pay out at least 20% of its profi t after tax (PAT), subject to fi nancial conditions.
JM declared a 1.4 sen fi nal div-idend to shareholders in respect of FY17.
“We want the company to be-
come effi cient in terms of deploy-ment of capital. If we think there is excess capital, we will try to [put it to good use], if not, [we will] distribute it back to shareholders,” he added.
Teh said the company is currently working with over 150 educational
institutions globally, most of which are in Australia, the UK, the US and New Zealand. Th e group most re-cently partnered with University of Sydney at the end of last year.
In 2017, JM had 1,261 students, of whom 494 were sent to the UK, while 443 went to Australia.
Th e group’s secondary business, Miraj Academy, which JM acquired in 2013, is a technical and vocation-al education and training (TVET) academy. Th e academy had 161 trainees as at 2017.
While JM’s core business in ed-ucation counselling and overseas student placement contributes al-most 90% of its revenue and profi t, Teh sees strong growth potential in TVETs, especially under the new government.
“Once a clearer direction and blueprint is out from the new gov-ernment, I think we foresee more focus, [and] better coordination for the TVET sector, so private provid-ers will play a role in uplifting the skills of our students and workers,” he added.
Part of the proceeds from the group’s listing will go to its Nusa-jaya branch, which Teh estimates will cost around RM60,000 to RM80,000.
Upon its listing on Feb 8, shares in JM have not been much trad-ed. Th ey were last traded at 54 sen apiece last Monday. “[It’s the] same across the board, not much trading. Our shareholders are fi ne, there’s not much complaint. Secondary inves-tors should know [that] it’s not for short-term trading, it’s [more of] a medium-term — three to fi ve years’ horizon — investment,” said Teh.
On JM’s plans to migrate from LEAP, investments in LEAP-listed shares are only restricted to so-phisticated investors, to the ACE or Main Market, Teh said the company does not have a fi xed time frame and will instead focus on growing and strengthening its business in the meantime.
Teh added that LEAP is a good environment to grow in, citing low-er listing cost, lower barriers to en-try, and less regulation on reporting and governance.
eff ort to increase the fuel blend to 25% (B25), from B20 currently.
Th is year, Tjakra said, “Indonesia has allocated higher volume for the government procurement at 3.22 million kilolitres, compared with 2.53 million kilolitres previously.”
At the same time, Tjakra noted that the Indonesian government is looking to expand the biodiesel programme into the rail and heavy industrial sector.
As for Malaysia, Tjakra said there is a need for the government to con-tinue its push to support the biodiesel sector, which has been experiencing slow growth due to the lack of strong policies, initiatives and demand.
“Without the support from the government, I don’t think biodiesel implementation will be success-ful,” he said, suggesting that the government could throw in some incentives to support the sector.
Meanwhile, Tjakra said it will take some time for the plantation industry to see accelerating de-mand for certifi ed sustainable palm oil, which mostly comes from the European bloc.
“Some nations have yet to look into the sustainable issue more con-tentiously. Th e demand is there but at what cost? While pricing plays an important factor, I reckon that the industry will need some time to adjust and absorb the sustain-ability concept,” he added.
CPO futures closed at RM2,336 per tonne last Friday. Year to date, the commodity has fallen 6.67%.
Teh: The company is currently working with over 150 educational institutions globally. Photo by Mohd Izwan Mohd Nazam
ST O C KS W I T H M O M E N T U M 7MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY
HAP SENG CONSOLIDATED BHD (+ve) HAP SENG CONSOLIDATED BHD
HAP SENG CONSOLIDATED BHD Valuation score*Fundamental score**TTM P/E (x)TTM PEG (x)P/NAV (x)TTM Dividend yield (%)Market capitalisation (mil)Shares outstanding (ex-treasury) milBeta12-month price range
1.301.30
22.302.433.933.54
24,622.872,489.67
0.458.48-9.89
*Valuation score - Composite measure of historical return & valuation**Fundamental score - Composite measure of balance sheet strength& profitabilityNote: A score of 3.0 is the best to have and 0.0 is the worst to have
MAGNUM BHD Valuation score*Fundamental score**TTM P/E (x)TTM PEG (x)P/NAV (x)TTM Dividend yield (%)Market capitalisation (mil)Shares outstanding (ex-treasury) milBeta12-month price range
2.001.40
14.420.271.346.41
3,329.721,422.96
0.411.55-2.34
*Valuation score - Composite measure of historical return & valuation**Fundamental score - Composite measure of balance sheet strength& profitabilityNote: A score of 3.0 is the best to have and 0.0 is the worst to have
POS MALAYSIA BHD Valuation score*Fundamental score**TTM P/E (x)TTM PEG (x)P/NAV (x)TTM Dividend yield (%)Market capitalisation (mil)Shares outstanding (ex-treasury) milBeta12-month price range
2.001.40
32.051.961.572.74
3,052.83782.78
0.963.08-5.60
*Valuation score - Composite measure of historical return & valuation**Fundamental score - Composite measure of balance sheet strength& profitabilityNote: A score of 3.0 is the best to have and 0.0 is the worst to have
Stocks with momentum were picked up using a proprietary algorithm by Asia Analytica Data Sdn Bhd and fi rst appeared at www.theedgemarkets.com. Please exercise your own judgement or seek professional advice for your specifi c investment needs. We are not responsible for your investment decisions.
Our shareholders, directors and employees may have positions in any of the stocks mentioned.
TRADING of the shares in Hap Seng Consol-idated Bhd (fundamental: 1.3/3, valuation: 1.3/3) triggered our momentum algorithm last Th ursday for the fi rst time this year. Th e group saw 937,700 shares traded.
Th e stock rose 13 sen or 1.33% to close at RM9.89, leaving it with a market capitalisa-tion of RM24.62 billion.
It was the 12th top gainer on Bursa Ma-laysia that day.
Hap Seng currently trades at 3.93 times its book value.
The plantations and consumer goods conglomerate had on June 8 completed the disposal of its entire stake in HSC Sydney Holding Ltd and 20% in Hap Seng Credit Sdn Bhd to related party Lei Shing Hong Capital Ltd for a total of RM1.68 billion.
However, its plan to acquire a 55% stake in Sabah-based plantations firm Kretam Holdings Bhd, via its subsidiary Hap Seng Plantations Holdings Bhd, was called off af-ter due diligence of Kretam yielded “unsat-isfactory and unacceptable” results.
TRADING of the shares in Pos Malaysia Bhd (fundamental: 1.4/3, valuation: 2/3), which triggered our momentum algorithm last Th ursday, saw some 3.54 million shares crossed, about two times its 200-day average of 1.25 million shares.
Closing unchanged at RM3.90, the stock stayed at its three-month high with a market capitalisation of RM3.03 billion.
Th e group’s fourth quarter net profi t for
the three months ended March 31, 2018, jumped almost three times year-on-year to RM29.03 million from RM9.89 million, fol-lowing higher revenue and improved cost management, and as the year-ago quarter’s taxation was higher.
Revenue in the quarter grew 2.8% to RM653.08 million versus RM635.55 million a year ago, driven by its acquired logistics busi-ness and strong growth in its courier segment.
TRADING of the shares in gaming group Magnum Bhd (fundamental: 1.4/3, valu-ation: 2/3), which saw 2.38 million shares crossed last Th ursday, triggered our mo-mentum algorithm.
Magnum rose 11 sen or 4.93% to a one-year high of RM2.34, giving the group a market capitalisation of RM3.35 billion and making it the 15th largest gainer on Bursa Malaysia that day.
It is trading at 1.34 times its book value.
The group posted a 79.7% increase in net profit for its first quarter ended March 31, 2018 to RM54.94 million, from RM30.57 million a year ago, on the back of higher gaming revenue and a lower prize-pay-out ratio.
On June 1, Lum Fook Seng was promoted to chief fi nancial offi cer of the group. Lum, 53, acts as the head of fi nance and adminis-tration for the group and has more than 26 years of experience in the gaming industry.
8 P R O P E RT Y MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY
UEM Sunrise to expand rent-to-own schemeIt aims to ease the burden of fi rst-time house buyers
HONG KONG: Hong Kong ty-coon Victor Li (pic) has bought a London offi ce tower for £1 billion (RM5.31 billion) as he expands his overseas portfolio after tak-ing over the business empire of his billionaire father Li Ka-shing.
Property company British Land and a Singaporean wealth fund GIC said in a statement they had sold 5 Broadgate to a subsid-iary of Li’s CK Asset Holdings.
Th e move comes days after Li’s CK Infrastructure Hold-ings made a A$12.98 billion (RM38.62 billion) takeover of-fer for Australia’s biggest gas pipeline company, APA Group, off ering a hefty 33% premium to tap into a tight gas market.
Th e London building, com-pleted in 2015, generated a property return of 18% per annum for British Land.
CK Asset fi rst entered the UK property market in 1995, and has developed a number of residential and commer-cial properties, including Royal Gate Kensington, Montevetro, Belgravia Place and Albion Riv-erside in London.
Li Ka-shing handed over the keys of his empire, which in-cludes CK Hutchison Holdings Ltd, to his elder son earlier this year. — Reuters
Hong Kong’s Victor Li pays £1b for London offi ce tower
BY R O S E M A R I E K H O O M O H D S A N I
KUALA LUMPUR: Property de-veloper UEM Sunrise Bhd plans to expand its rent-to-own (RTO) scheme, as it aims to ease the bur-den of fi rst-time house buyers.
Its managing director and chief executive officer Anwar Syahrin Abdul Ajib described the scheme as a value-added solution for those planning to buy a house but were in the midst of building their careers.
“Th is will enable the young buy-ers to plan their fi nances and facil-itate their borrowings.
“Th e scheme will also help to mitigate projects/developments be-ing empty and untenanted, which
BANGKOK: Th ailand’s Crown Prop-erty Bureau said its assets are now held in the name of King Maha Va-jiralongkorn, clarifying how a legal change last year aff ects billions of dollars of holdings.
Th e law enacted in 2017 means that “Crown Property Assets” are to be transferred and revert to the ownership” of the king and that the bureau’s investments “will now be held in the name of His Majes-ty”, the bureau said in an undated statement on its website.
All shareholdings will now be held in the king’s name and crown property assets will be subject to tax,
NEW YORK: Relatives of Michael Co-hen, US President Donald Trump’s long-time personal lawyer, are look-ing to unload condominium units in a Trump building as he faces down an expensive legal battle.
Fima Shusterman, Cohen’s fa-ther-in-law, is trying to sell all three units he owns in Trump World Tow-er in Manhattan near the UN, ac-cording to two people familiar with the process. Two of the units, in-cluding one that Shusterman and his wife Ania live in, are listed for sale on the website for Trump In-ternational Realty for a combined US$11.2 million (RM44.58 million).
Th e Shustermans, who did not immediately return a request for comment, bought the units be-tween 2003 and 2005.
Cohen is under investigation by
All shareholdings will now be held in King Maha Vajiralongkorn’s name and crown property assets will be subject to tax.
may result in unnecessary main-tenance costs,” he told Bernama.
Th e developer launched its own RTO scheme, the UEM Sunrise — Easy Own Plan, in August last year and recently began collab-orating with Malayan Bank Bhd (Maybank) through the latter’s HouzKey scheme.
UEM Sunrise off ers two key pro-jects under its RTO scheme — Verdi Eco-dominiums in Symphony Hills, Cyberjaya, and Residensi Ledang in East Ledang, Iskandar Puteri, both of which were completed in 2016.
“Our col laborat ion w ith Maybank has been encouraging as we have managed to generate interest and conclude a few sales.
“Projects under this collabora-tion include Serene Heights, Ban-gi, [Acacia Begonia & Dahlia] and Verdi Eco-dominiums,” Anwar Syahrin said.
Asked how the property sector would be affected by the govern-ment’s plan to ease the procedure for housing loan applications, he pointed out that it would not solve the core problem.
“About 25% of housing loan ap-plications were rejected with the most common reasons cited being insuffi cient income to support debt repayment, adverse credit history and inadequate income or fi nan-cial documentation.
“Banks are remaining vigilant
in assessing the sustainability of borrowers’ sources of income and financial commitments,” he ex-plained.
Stressing that about 80% of can-celled purchases were due to loan applications being rejected by end fi nanciers, Anwar Syahrin said the RTO scheme would be very helpful to property purchasers, especially fi rst-time homebuyers.
“Our RTO scheme will offer property buyers an alternative path-way to owning a house and provide a buff er period for potential house buyers to sort out their personal fi nances and build up their credit standing, before they start applying for a loan,” he added. — Bernama
Th ai king now holds billions in assetsBY S U N I L J A GT I A N I a change from the bureau’s exempt
status, according to the statement. Th e full value of the bureau’s real es-tate and other holdings is not clear. Its stakes in Siam Commercial Bank PCL and Siam Cement PCL, two major listed Th ai fi rms, are worth more than US$7 billion (RM27.86 billion) combined, according to data compiled by Bloomberg.
ShareholdingsKing Maha Vajiralongkorn ascend-ed to the throne in 2016 after the death of his father, King Bhumibol Adulyadej. He increased his control over the eight-decade-old bureau in July last year, when he was given discretion over the crown’s assets.
In October, the bureau trans-ferred a 3.3% stake in Siam Commer-cial Bank, worth more than US$500 million at the time, in the name of the king. In March 2018, the mon-arch emerged with a shareholding worth more than US$100 million in Siam Cement, with the bureau’s stake dropping by a similar amount.
Siam Commercial Bank, estab-lished over a century ago by royal charter, is Th ailand’s oldest home-grown lender and the nation’s sec-ond-largest by assets. Siam Ce-ment was set up in 1913 following a royal decree to produce more of the building material. It is the sixth-biggest fi rm in Th ailand by market capitalisation. — Bloomberg
Cohen’s in-laws look to sell units in Trump World Tower building
BY C A L E B M E L BY & S H A H I E N N A S I R I P O U R
federal authorities in Manhattan over a wide range of business activ-ities. He has been racking up exten-sive legal bills since his properties were raided by the Federal Bureau of Investigation (FBI) in April.
Documents, cell phones and other records seized in the raid are being reviewed to determine how much is protected by attorney-cli-ent privilege. A special master ap-pointed by the court is asking to extend the deadline for that review until June 25. Last Friday, the gov-ernment said that prosecutors had reconstructed 16 pages of shredded documents and large amounts of data from encrypted messaging software like WhatsApp and Sig-nal, as well as a BlackBerry device.
Cohen is parting ways with his lawyers and is expected to hire a crim-inal defence lawyer with experience with the prosecutors in the Southern District of Manhattan.
Trump World Tower is lined with black-tinted curtain wall facades, and stands as one of the tallest residential buildings in the world.
Among Cohen’s business trou-bles is a tax-medallion business that has declined in value. One of his associates is cooperating with authorities putting together a case
against Cohen. Cohen and the Shus-termans invested side by side in taxi businesses in New York and Chicago.
Th e Shustermans have been im-patient to sell the units and frequent-
ly call real estate agents for updates on potential sales, one of the people said. Th e Trump realty company be-gan listing the units earlier this year.
Th e Manhattan luxury market has grown sluggish as a glut of new products has come on line. It has been especially diffi cult to sell older vintage inventory amid all the new available units. Th e Shustermans have been unwilling to budge on prices, the person said.
One three-bedroom unit, 57B, is listed for US$6.7 million on the web-site. Th e Shustermans purchased it for US$3.6 million in 2005.
Another, a two-bedroom unit, 42A, is listed for US$4.5 million. Th e Shus-termans paid US$2.2 million in 2004.
Th e third unit owned by the fam-ily, 43C, was purchased for US$1.85 million in 2003. It is not listed on the Trump realty website, but the people said that it, too, is for sale. — Bloomberg
BY A N N E M A R I E R O A N T R E E A N D D O N N Y K W O K
1 0 H O M E MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY
Khairy to contest for Umno president‘I want party members to have a choice on the future direction of the party’
Khairy had earlier stated that he was only contesting for the vice-president’s post. Photo by Bernama
KUALA LUMPUR: As the Umno party election nomination closed yesterday evening, Youth chief Khairy Jamaluddin made a last minute dash to contest for the pres-ident’s post.
Khairy announced through his Instagram page that he had up-loaded his nomination form to join the fray for the number one post of the party.
Earlier, the Rembau member of parliament stated that he was only contesting for the vice-pres-ident’s post.
“After having joined the band-wagon in the election, I may as well fi ght for the top post. Bismillahir-rahmanirrahim,” he said.
So far, apart from Khairy, Umno vice-president Datuk Seri Dr Ah-
mad Zahid Hamidi who is carrying out the duties of the president and party veteran Tengku Razaleigh Hamzah have also announced their candidacies for the party president.
Apart from that, blogger Rahmat Azim Abdul Aziz also expressed the same intention after submitting his nomination form.
The Umno party election is scheduled for June 30.
On his Facebook page, Khairy clarifi ed that the decision to run for president was not easy but it was made after thinking about the future survival of Umno.
“I took the decision to stand for the Umno president’s post because I want party members to have a choice on the future direction of the party,” he said.
Umno, he stressed, must return to the spirit of openness in all as-pects — open to contest, open to criticisms and open to criticising
leaders without getting expelled, open to accept new members un-conditionally, and open to del-egates to determine who would lead Umno, free from the clutches of warlords.
He said that whatever the out-come of the election, his loyalty to Umno would not waver and that he would support whoever chosen to become the new party president.
Khairy said it is important for the election to be carried out in the spirit of the Umno family so that it would become stronger to take on the coming challenges. — Bernama
MUAR: Th e Immigration Depart-ment and the Royal Malaysia Po-lice will be revamped due to their “confusing” structure, said Home Minister Tan Sri Muhyiddin Yassin.
He said the revamp would only be undertaken after he meets with Prime Minister Tun Dr Mahathir Mohamad to give an explanation on the matter as the two depart-ments received the highest num-ber of complaints from the public and should be resolved urgently.
“Th e purpose is none other than to ensure that the role of agencies under our ministry is run by ad-hering to the policies set because we faced all kinds of negative per-ception.
“As minister, I’m aware this mat-
ter is not good in terms of image as well as public confi dence and trust towards the ministry,” he told reporters after the Pagoh parlia-mentary constituency Aildifitri open house at the Pagoh Sports Complex here yesterday.
Muhyiddin said the revamp was expected to rectify and resolve some of the shortcomings detect-ed in the agencies previously, in-cluding the whitening process of illegal immigrants.
On another issue, Muhyiddin said he is confident the police would take the necessary steps to arrest Jho Low, the individual believed to be the main suspect in the 1Malaysia Development Bhd (1MDB) case. — Bernama
Muhyiddin: Immigration, police to be revamped
Dr Mahathir (left), Muhyiddin (centre) and Economic Aff airs Minister Datuk Seri Mohamed Azmin Ali at the Hari Raya Aidilfi tri open house in Seri Perdana last Friday. Photo by Bernama
MUAR: Th e Bersatu youth wing wants the culture of “recom-mendation letters” halted.
Th e move was to stop the abuse of power among politi-cians and civil servants, said its chairman Syed Saddiq Abdul Rahman.
(It is believed this is a com-mon practice among some pol-iticians to write such letters for individuals seeking gov-ernment approval to start a project or secure a deal.)
Syed Saddiq said civil serv-ants should also be courageous and refrain from accepting such letters or lend their sup-port on matters that are against the law.
“The prime minister has said that if there is an ele-ment of abuse of power, or if it overlaps with existing laws, civil servants must have the courage to speak up,” he said after attending an Aidilfitri open house in the Pagoh par-liamentary constituency here yesterday.
He was asked to comment on a Bersatu youth leader’s alleged abuse of political po-sition at the Ramadan bazaar in Kuala Lumpur recently.
Th e youth leader had pur-portedly abused his position by securing 80 stalls on Jalan Masjid India and then rented them out for up to RM5,000 each, notching a profi t of about RM400,000.
Syed Saddiq said he was in-formed that the incident was linked to the culture of “rec-ommendation letters”, adding that the Bersatu Youth Integri-ty Bureau had lodged a police report to ensure a thorough investigation.
It was also in line with the commitment of the Pakatan Harapan administration in tackling corruption at both the party and government levels, he said. — Bernama
Halt usage of letters of support — Bersatu youth chief
KUALA LUMPUR: “Challenging, being challenged and for me it is one of the most crucial places in a government”.
Th at was the reaction of De-fence Minister Mohamad Sabu when asked about his feelings when he fi rst served the ministry.
Mohamad or better known as Mat Sabu, however, said that after more than three weeks, he was now adjusting to the new envi-ronment in the ministry and the role he should play as the defence minister.
“Th is Mindef (defence minis-try) family is a family that is full of protocol, mostly during meetings with the sultan and royal heads of state who are patrons of a par-ticular branch of service in the Malaysian Armed Forces.
“So, as a regular person, I now
have to adhere to protocol, es-pecially regarding my attire and other matters and for me, this is something new and challenging but I can, God willing, adapt my-self in a short time,” he said in an exclusive interview with Bernama at Wisma Bernama here recently.
Mohamad, along with 12 other cabinet members, took their oath of offi ce before Yang di-Pertuan Agong Sultan Muhammad V at Istana Negara on May 21 following the victory of Pakatan Harapan in the 14th general election.
Mohamad, who is also Parti Amanah Negara’s president, said despite the exacting task of helm-ing a ministry that played an im-portant role in safeguarding the security and sovereignty of the country, he was confi dent in ex-ecuting it with the help of expe-
rienced offi cers in that ministry.He said although he is known
as a person with a sense of hu-mour and likes to joke, he took seriously any decisions being made pertaining to the ministry besides ensuring such decisions were being implemented as soon as possible.
“When decisions are made at our meeting, we have to be serious and for any decisions being taken, we have to be fi rm and resolute about these decisions. So, those who know me well will know how to diff erentiate which one is a joke and which one is serious,” he said.
Asked whether he knew he would be appointed as defence minister, Mohamad said initially he was expected to be appointed as home minister and had re-ceived many congratulatory mes-
sages from his friends.However he said Prime Min-
ister Tun Dr Mahathir Moham-ad later announced that he was appointed as defence minister, while Tan Sri Muhyiddin Yassin was named as home minister.
On his family life following his appointment as minister, Moham-ad said it did not change much but his new job demands meant that he has to leave home early and return home late at night.
“Sometimes I feel that at my age, I should have retired, but at an age over 60, I have only start-ed working, so my children are also making jokes and teasing me about it.
“Of course I feel a bit tired but to admit being tired at age 60 is out of the question because my boss, Tun Dr Mahathir Mohamad,
at age 93 is still working, so Tun is motivating me to continue work-ing,” he said.
Mohamad also said he and his family will move from their home in Shah Alam to a new residence being provided by the federal gov-ernment soon.
“I live in a terraced house. Ear-ly in the morning, riders would come to fetch me and the peo-ple around it are definitely ex-cited to live next to a minister as neighbours but another two, three months [later] they probably will be uncomfortable with the siren sounds and so on.
“I will move to a government house, God willing, located around Bukit Persekutuan, an old house that some people dubbed as the Dracula house,” he added with a laugh. — Bernama
Mohamad Sabu adapts to challenging defence minister role in Mindef
1 2 B R O K E R S’ C A L L MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY
KPJ expected to benefi t from switchback to SST
Construction sectorMaintain neutral: Th e ongoing reviews of public-sector infra-structure projects have raised uncertainties over the status of ongoing and planned infra-structure projects. Th is has led to volatility in the share prices of construction stocks. Prime Min-ister Tun Dr Mahathir Moham-ad said the Kuala Lumpur-Sin-gapore high-speed rail (HSR) project has been postponed, and not scrapped as stated pre-viously, leading to a relief rally for impacted fi rms.
Th ese developments indicate that the infrastructure spending cuts may not be as severe as in-itially portrayed in statements made by the new government previously. We believe part of the reason is due to costly cancellation clauses in govern-ment-to-government contracts signed for the East Coast Rail Link (ECRL) and the HSR. If the HSR is revived, companies involved such as Gamuda Bhd, Malaysian Resources Corp Bhd, YTL Corp Bhd and HSS Engi-neers Bhd are potential ben-efi ciaries.
‘HSR postponed, not scrapped’ comes as a relief to construction companies
KPJ Healthcare Bhd(June 14, RM1.06)Downgrade to hold with an un-changed target price (TP) of RM1.07: Considering KPJ Health-care Bhd’s recent share price surge (+22% since our upgrade), we believe its risk-reward profi le is now more balanced. Th e run-up could be due to increasing market appetite for defensive stocks and the view that KPJ is a potential benefi ciary of the switchback to the sales and servic-es tax (SST) regime. Th at said, the company is trading at its fi ve-year forward mean price-earnings ratio (PER) and its share price is now close to its three-year high.
Seeing that KPJ’s share price has shot up 22% post our upgrade to “buy” in early April, we are now re-examining our investment thesis and risk-reward profi le of the stock.
KPJ’s revenue and earnings growth chugged along well in the fi rst quarter of 2018 (1QFY18) (increased 5% to 6% year-on-year [y-o-y]), large-ly led by its Malaysian operations, which made up more than 95% of its top line. Domestically, the company was fi ring on all cylinders where: i) the number of inpatients and out-patients grew 4% to 5% y-o-y; ii) fees charged per patient were also higher by around 1% y-o-y; and iii) the oc-cupancy rate rose 1% y-o-y to 69%. Collectively, these aided in Malay-sia’s revenue and profi t before tax expansion of 6% to 14% y-o-y. Th at said, other country operations (like Indonesia) were lacklustre, capping KPJ’s overall progress.
KPJ’s Indonesian operations con-tinued to be poor. Revenue dropped 19% y-o-y, dragging its 1QFY18 per-formance into the red for the sec-
ond consecutive quarter (from a low base). The competitive envi-ronment has led to the number of patients and fees declining 4% to 28% y-o-y at Rumah Sakit Medi-ca Bumi Serpong Damai. Also, the occupancy rate dropped to a low of 37% (declined by 12 percentage points y-o-y). Nevertheless, growing the Indonesian’s presence (via joint ventures) remains a part of KPJ’s regional aspiration despite some short-term pain.
Th e hospital opening timelines in Bandar Dato’ Onn, Miri and Kuching were all pushed back by one quarter to 3Q18, 2Q19 and 2Q19 respectively; this is not a huge concern as KPJ still has space for inpatients. Separately, Jeta Gardens (a 57%-owned aged care business in Australia, which was acquired in 2010 for RM19 million)
is still up for sale. Th e disposal could free up KPJ’s capital to pare down debts or for reinvestment purpos-es. In 1Q18, the group’s net gearing stood at 0.7 times (1Q17: 0.8 times).
Th e new ruling government, Pa-katan Harapan, has kept its manifes-to promise to switch back to the SST system from the goods and services tax (GST) regime. To recap, the GST partially led to a rise in medical cost as the 6% input tax on drugs under the non-National Essential Medicine List was absorbed by private health-care providers. According to Willis Towers Watson, Malaysia’s 2016 to 2017 real healthcare infl ation shot up by 8% to 9%. Th at said, medicines were not subject to tax under the pre-vious SST system. Hence, we believe the transition back to the SST has a net positive impact on KPJ.
Scientex Bhd(June 14, RM6.55)Downgrade to hold with a lower target price (TP) of RM7: We project Scientex Bhd to report a net profi t of RM60 million to RM70 million for the third quarter of the fi nancial year ended April 30, 2018 (3QFY18), a decline from 9.8% and an increase of 5.3% year-on-year. Factors aff ect-ing its 3QFY18 results performance include: i) the recent rally in global crude oil prices may increase pro-duction costs; and ii) resilient de-mand for aff ordable housing. We reduce our earnings forecasts by 18.8% and 27.6% for the fi nancial year ending July 31, 2018 (FY18) and FY19 respectively.
Fossil fuel resins make up for more than 50% of production cost for the group’s manufacturing division. Although Scientex uses various types of polymers in its plastic packaging manufacturing division, we often use the price of global low-density polyethylene (LDPE) to analyse the
Resilient 3Q seen for Scientex’s property unit
Th ere’s no change to our fore-casts. Key downside risks include: i) market share losses; ii) a delay in hospital openings; and iii) inability to pass on higher operating costs to customers.
KPJ’s share price has shot up 22% since our upgrade in early April. We believe this was due to a combina-tion of the market developing an affinity towards defensive stocks post Malaysia’s 14th general elec-tion and the healthcare sector being viewed as a potential benefi ciary of the switchback to the SST regime. It is still the cheapest proxy for the healthcare sector in our coverage (28 times PER vs the sector mean of 36 times). As a stand-alone, KPJ is trading at its fi ve-year forward mean PER. However, its share price now is close to its three-year high.
We downgrade our call to “hold” but maintain our TP of RM1.07, based on 28 times 2019 forecast PER. Th is is in line with its fi ve-year for-ward mean PER of 28 times, but below the sector’s 36 times. We be-lieve the discount is fair as KPJ has a stretched balance sheet (net gear-ing of 0.8 times versus the sector’s 0.4 times) and generates an anae-mic return on equity (ROE) of 10% versus the sector’s 15%. Similarly, our PER-ROE regression analysis suggests pegging the stock at 26 to 28 times forward PER. Despite our “hold” call, we acknowledge that KPJ still appeals to long-only investors, given that it is blessed with positive structural trends like: i) an ageing population; ii) “lifestyle” diseases; and iii) rising affl uence that will con-tinue to support and drive organic growth. Th e entry level is 90 sen. — UOB Kay Hian, June 14
price trend of raw material cost. We fi nd that LDPE resin’s global price moved in line with the movement of global crude oil prices until end-2017. Industry experts believe the LDPE price will continue to increase in line with increasing global de-mand and increasing crude oil pric-es. Th e Brent crude oil price has in-creased by about 9.8% year-to-date,
surpassing the US$70 (RM278.60) per barrel (bbl) mark in May, then coming back to US$65/bbl level cur-rently. We reduce Scientex’s FY18 and FY19 earnings projections by 18.8% and 27.6% respectively after revising our FY18 in-house crude oil price assumption to US$70/bbl from US$60/bbl previously. In our sensitivity analysis, every US$5/bbl
increase in crude oil prices would re-duce our earnings forecast by 18.5% for FY18, ceteris paribus.
Scientex’s property division is expected to chalk up a resilient 3QFY18. Th e group will continue to focus on aff ordable housing as the take-up rate has been healthy between 90% and 100% in the past’s project launches. In our forecast, we project the company to rake in property sales of RM794 million for FY18 and RM814 million for FY19.
Scientex has a total of 2,200 work-ers and of this, about 30% are foreign workers. Most of the workers work within the manufacturing segment and account for about 6.5% of man-ufacturing-segment sales. We do not foresee a big impact from an increase in minimum wage follow-ing the general election. Manage-ment also guided previously that the implementation of foreign worker levies in January 2018 would have no material impact on Scientex’s earnings. — TA Securities, June 14
If construction of the ECRL project continues, Malaysian contractors pursuing subcon-tracts such as IJM Corp Bhd, WCT Holdings Bhd and Ad-vancecon Holdings Bhd are po-tential benefi ciaries. Th e can-cellation risk for HSS’ ECRL contracts, worth about RM130 million (19% of its order book of RM673 million), is also reduced.
Th ere was good investor in-terest in our recent macroe-conomics/construction-sector outlook analyst meetings. We met up with 23 foreign insti-tutional investor fi rms in Sin-gapore and Hong Kong. Most investors were concerned about the short-term impact from the transition to a new government but acknowledged the good long-term prospects of a more transparent and effi cient gov-ernment.
We reiterate our “neutral” call on the construction sector due to potential delays in im-plementation of infrastructure projects and a reduction in gov-ernment infrastructure spend-ing. Th is will reduce the order book replenishment prospects of contractors. Our top buys are IJM (large-cap), Sunway Con-struction Group Bhd (mid-cap) and HSS (small-cap). — Affi n Hwang Capital, June 14
These developments indicate that the
infrastructure spending cuts may not be as severe as initially portrayed.
B R O K E R S’ C A L L 1 3MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY
Kawan Food to produce ‘fresh-frozen’ breads
Transport sector faces various headwinds
Gas Malaysia Bhd(June 14, RM2.94)Downgrade to market perform with an unchanged target price (TP) of RM3.05: Last Wednesday, Gas Malaysia Bhd announced that the government had approved the half-yearly natural gas base tariff rate revision for non-power sec-tors in Peninsular Malaysia to RM31.92 per million British ther-mal unit (mmbtu) on average for July 2018 to December 2018 from RM30.90/mmbtu in January 2018 to June 2018, which is in line with the national rationalisation plan and gas cost pass-through (GCPT) announced in December 2016. In addition, under the GCPT frame-work, a surcharge of 77 sen/mmbtu will apply to all tariff categories due to higher actual gas costs against the reference gas costs, translating into an average eff ective tariff of RM32.69/mmbtu, which is slightly higher than RM32.52/mmbtu for the fi rst half 2018.
Th is is not a surprise to us as it is a scheduled half-yearly revi-sion while the tariff revision has neutral impact on Gas Malaysia on a six-month lagged basis as it is a cost pass-through under the GCPT mechanism. Meanwhile, with the implementation of GCPT in January 2016, which is similar to the imbalance cost past-through for the power sector in Peninsular Malaysia, upward revisions in the natural gas tariff are expected in the upcoming reviews until the gas price reaches market price. Having said that, Gas Malaysia’s profi ta-bility would not be aff ected as its profi t margin spread is determined under the incentive-based regu-lation framework based on asset return of 7.5%, which is estimated at between RM1.80/mmbtu and RM2/mmbtu currently. As such, any price hikes will have neutral impact to Gas Malaysia via GCPT adjustment.
Like the other two regulated utility companies, Tenaga Nasion-al Bhd and Petronas Gas Bhd, Gas Malaysia also faces the concern of any changes in the GCPT mecha-nism that may negatively aff ect it under the Pakatan Harapan gov-ernment’s populist policy. In our opinion, it is unlikely that the au-thority will review the base tariff under the current GCPT’s regulato-ry period of 2017 to 2019 as it does not impact the public directly given that it deals only with businesses.
We downgrade the stock to “market perform” from “outper-form” as we believe all positives have already been priced in follow-ing a 7% run in the past two weeks. Nonetheless, we remain positive on Gas Malaysia’s outlook for its steady volume growth coupled with the margin spread certainty. Th erefore, any price weakness would off er buying opportunity. We maintain our discounted cash fl ow-driven TP of RM3.05. Th e “market perform” call is also supported by its decent yield of 3% to 4%. — Kenanga Re-search, June 14
Higher eff ective tariff rate seento have neutral impact onGas Malaysia
Transport sectorMaintain neutral: We are neutral on the transportation sector over the next 12 months. While there are plen-ty of opportunities in store for play-ers, particularly, in the tourism and e-commerce space, we are mindful of various headwinds such as the in-creased regulatory risk on the back of the change in the political landscape following the 14th general election, potential dial-back of certain major initiatives by the preceding adminis-tration and rising fuel costs.
Tourism Malaysia has projected Malaysia’s tourist arrivals to surge by a whopping 28% to 33.1 million in 2018 from 25.9 milliom in 2017, and to hit 36 million in 2020 in con-junction with the Visit Malaysia Year 2020 campaign. We fi nd the projec-tion a tad optimistic given that the numbers had stagnated at about 26 million over the last three years. Nonetheless, we do agree that the trend for tourist arrivals in com-ing years is upwards, as Malaysia is slated to host a series of high pro-fi le international events including the Commonwealth Heads of Gov-ernment Meeting, the Asia-Pacif-ic Economic Cooperation summit and World Congress of Information Technology. Low-cost carrier AirA-sia and airport operator Malaysia Airports are the main benefi ciaries of the growing tourist arrivals.
Th e rapidly expanding e-com-merce sector, particularly, online shopping, has created huge oppor-tunities for parcel delivery service providers such as Pos Malaysia. Ma-
Kawan Food Bhd(June 14, RM2.35)Maintain add with an unchanged target price (TP) of RM3.14: At the end of last week, we arranged a tel-econference call for Kawan Food Bhd managing director Timothy Tan with around 20 buy-side fund managers and analysts. Th e com-pany indicated that almost all the required government approvals for its new factory have been secured and it is just waiting for a halal certi-fi cation from the Malaysian Islamic Development Department (Jakim). Commercial operations at the new factory in Pulau Indah is slated to start in July 2018.
Kawan Food stated that total cap-ital expenditure for its new factory in Pulau Indah is around RM200 million. Th e new factory has three to four times the roti paratha and chapati production capacity of its existing factory. Th e existing factory was already running at full capacity and Kawan Food was unable to in-troduce other product varieties as it could only focus on bestselling prod-ucts. With just the existing factory, it would also be unable to launch
Tourist arrivals in Malaysia
Million tourists
Source: Tourism Malaysia
5
10
15
20
25
30
35
40
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
F
20
20
F
laysia’s presence in the regional and global e-commerce market is on the cusp of a quantum leap, driven by the Alibaba-backed Digital Free Trade Zone (DFTZ) project in the KLIA Aeropolis. Th e DFTZ will serve as a regional e-fulfi lment centre as well as an e-commerce logistics hub. Apart from Malaysia Airports, we believe local logistics players are poised to garner a slice of action in the physical zone of the DTFZ.
On the other hand, regulated businesses may face a higher reg-ulatory risk, as the new administra-tion strives for better deals for the rakyat, as promised in its election manifesto. Under these circum-stances, it is unlikely, for instance, for airport operator Malaysia Air-ports to secure an upward revision in passenger service charges (PSC). In fact, in the run-up to potential-ly new rates in 2019, the transport ministry now says that PSC should
be determined in accordance with the quality of facilities in the air-port, which means certain smaller and older airports may even see a reduction in PSC.
Also, there are concerns over whether the DFTZ project, a Chi-na-Malaysia initiative of the preced-ing administration, will go ahead as planned. All China-Malaysia deals signed in recent years will now come under scrutiny. Th is follows the rev-elation of unconventional contrac-tual terms the preceding adminis-tration entered into with Chinese lenders and contractors with regard to the East Coast Rail Link and two multi-product petroleum pipeline projects, where the payment sched-ules are based on timeline mile-stones (which are eff ectively auto-matic), versus the industry’s norm of percentage of completion. Th is has resulted in the payments being way ahead of the actual work done,
which is nonsensical. Meanwhile, trans-shipment sea-
port operator Westports will still feel the negative impact from the recent reorganisation of the global shipping alliance, resulting in the diversion of trans-shipment cargo volumes to Singapore. On a brighter note, we expect gateway cargo volumes to continue to grow in coming years, thanks to Malaysia’s robust exports and imports. Meanwhile, Bintulu Port will be weighed down by start-up costs at its newly completed Sa-malaju Industrial Port.
We may upgrade our “neutral” stance on the transport sector to “overweight” if tariff s are adjust-ed upwards, volume performance beats expectations, yields surprise in the upside on reduced competi-tion, and fuel cost comes down on weaker crude oil prices.
We may downgrade our “neu-tral” stance on the transport sector to “underweight” if volume perfor-mance misses expectations, yields surprise in the downside on height-ened competition, and fuel cost goes higher on stronger crude oil prices.
Our top pick for the sector is AirAsia. AirAsia is a good proxy for the growing low-cost air travel market in the region, underpinned by rising per capita incomes and a young demographic. Its strong mar-ket presence enables it to compete eff ectively against its rivals. It has struck a chord with investors with its plans to monetise some of its auxiliary businesses. — AmInvest-ment Bank, June 14
new products for export. For exam-ple, one new product Kawan Food is looking at launching is wholemeal paratha bread.
One of the exciting new products that Kawan Food would be produc-ing at its new factory is “fresh-frozen” breads. Th e breads would be frozen immediately after production, for ex-
port. At the shops, they would chilled at 10°C to ensure shelf life of two weeks. Such “fresh-frozen” products have been gaining popularity in the US and Europe in the past few years. Kawan Food plans to launch its own “fresh frozen” bread product in the US in the third quarter of 2018.
for Kawan Food’s bread products to remain strong this year with the zero-rated goods and services tax (GST) eff ective June 1. Its domestic revenue growth was fl at in fi nancial year ended Dec 31, 2015 (FY15) as domestic demand was negatively af-fected by the implementation of GST that year. However, its domestic rev-enue recovered in FY16 and FY17, as more households ate at home instead of going out. Kawan Food benefi ted from this trend. Domestic revenue constituted 39% of group revenue in FY17 (70% in FY12), with export sales rising over the past six years.
We continue to like Kawan Food’s defensive food and beverage (F&B) business, and believe revenue growth will likely come from new products such as “fresh-frozen” breads. We maintain our earning per share fore-casts and TP, based on 20 times cal-endar year 2019 forecast price-earn-ings (PE) (at a 20% discount to our 25 times target PE for the F&B sector). Potential key rerating catalysts are the successful takeoff of the new factory and higher export revenue. A key downside risk is weak export sales. — CGSCIMB Research, June 13
1 4 C O M M E N T MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY
Crackdown and cashHun Sen’s recipe for victory in Cambodian poll
BY TO M A L L A R D & P R A K C H A N T H U L
It is Trump sanctions — not Opec — that are boosting oilBY J U L I A N L E E
Drenched in sweat and more than an hour into a speech urging 16,000 garment facto-ry workers to vote for the rul-ing party, Prime Minister Hun Sen of Cambodia revived the
restless crowd by announcing that everyone would receive a cash gift.
“Nephews and nieces, it is just a little,” he said as the audience cheered and applaud-ed. “You each get 20,000 riels (RM19.60) as a gift. For nieces who are pregnant, you each get an extra envelope.”
Cambodians go to the polls on July 29 and Hun Sen, who has ruled Cambodia for more than 30 years, is trying to ensure vic-tory after two close elections in 2013 and 2017 with cash inducements and a series of punishing measures against the opposition.
In doing so, according to critics, he has delivered a hammer blow to Cambodia’s status as a liberal democracy, which is en-shrined in the country’s constitution forged by a United Nations peace deal in 1991.
Kem Sokha, the leader of the main op-position Cambodia National Rescue Party (CNRP) was arrested in September for alleg-edly treasonous remarks in a speech made four years earlier.
Two months later, the CNRP was dis-solved with almost all of its elected offi cials replaced by members of the ruling Cambo-dian People’s Party (CPP).
Meanwhile, civil liberties and freedom of speech have been quashed as independent media outlets close and critics and journal-ists are detained.
Huy Vannak, under-secretary of state at the interior ministry, defended the cash payments at rallies, saying “it’s government money”. A CPP spokesman, Sok Eysan, how-
ever, said the party did not hand out money. Hun Sen’s cabinet chief, Ho Sothy, could not be reached for comment.
Sophal Ear, a Cambodia analyst at Oc-cidental College in Los Angeles, said Hun Sen, spooked by recent election setbacks, has “stacked the deck” to ensure victory.
“He determined that the only way forward would be to retain power by any means neces-sary,” Sophal Ear said in emailed comments.
“He is setting the stage for whatever may happen next but with him and his family in control, always.”
Th e opposition does not typically hand out cash at rallies, according to political analysts and opposition members.
However, the National Election Commit-tee, which is supposed to be independent, has supported Hun Sen’s practices.
“As the head of the royal government, he has the right to organise things in society,” said Hang Puthea, a spokesman for the committee, when asked about the cash handouts.
Never had it so goodTh e close calls for the CPP in the 2013 national election and local elections in 2017, in which the CNRP received more than 40% of the vote, refl ected two fundamental shifts in Cambodi-an society, said Caroline Hughes, an analyst at the University of Notre Dame.
Th e fi rst is the spread of the Internet and social media; the second, a bulging youth de-mographic with no memory of the genocide and civil war that convulsed Cambodia for more than two decades. Th e younger genera-tion is driven by economic concerns, she said.
“Th ey don’t work on the family farm like their parents. Th ey work in factories — either in Phnom Penh or maybe Th ailand or South Korea,” Hughes said. “Th is is a generation that is saying ‘what have you done for us’.”
Many factory workers joined mass pro-
tests after the 2013 election amid claims of voting irregularities.
At the recent Hun Sen rally, outside a fac-tory on the outskirts of Cambodia’s capital, Phnom Penh, Hun Sen addressed a crowd of mainly young and female workers. As they sat in tents emblazoned with slogans of the CPP, Hun Sen’s message was that they had never had it so good.
Th e minimum wage for factory workers and civil servants had more than doubled since the last election, he said, the dividend of the CPP securing peace and stability.
Do not believe those who say the elec-tion is fl awed, he said. Th ere are 20 parties registered to compete, he added.
“It’s good to hear what he has to say, to know what’s happening with wages,” said Khom Siem, a pregnant factory worker clutching an envelope which she said contained US$200.
“Under Hun Sen, it’s better. We have more benefi ts than before.”
Other workers, who asked not to be iden-tifi ed, said variously that they had come for the money, a day off work and because their boss had ordered them to.
BoycottTh e CNRP has called for a boycott of the election, a step its exiled leader, Sam Rainsy, says will allow his supporters to cast judg-ment on Hun Sen’s legitimacy.
Hang, the National Election Committee member, said calls for a boycott were illegal, even though voting is not compulsory.
“It is legal if you call for people to vote,” Hang said. But “if you encourage them not to vote, it violates other people’s rights.”
Refl ecting nervousness about discussing the boycott call, eight workers interviewed by Reuters at Hun Sen’s rally all declined to comment.
“I could say [something about the boycott]
but I would get into trouble,” said one worker.Korn Savang, co-ordinator at the Com-
mittee for Free and Fair Elections in Cambo-dia, said the interpretation of the country’s election laws were “politically motivated” and favoured the government.
Calling for a boycott was an “expression of opinion”, not obstructing citizens’ voting rights, he said.
Kung Raiya, a 27-year-old activist, is one of the rare voices of open dissent in Cambo-dia. He spent 18 months in prison for crit-icising the government and said he shared a four by 4 metre cell with 30 other inmates.
“I would like to hold a banner that says people have the right not to vote,” he said. “But my supporters said don’t do it, you might be arrested. But it’s legal. And I will do it.”
Th e fi rst Cambodian imprisoned for an-ti-government comments on social media, Kung said there were now fewer critical posts about the regime on Facebook, the most popular platform.
“Th e quantity has declined,” he said. “Peo-ple will write in a lighter way. Also, they don’t want to share or comment on them. Fear is rising after a lot of arrests.”
In March, another activist, Sem Sokha, was sentenced to two years in prison for posting a video of herself throwing a shoe at a CPP billboard featuring Hun Sen’s image.
Last week, citing concerns about “insta-bility”, Cambodia’s government said it would deploy staff from three ministries to monitor and control content on the Internet.
Huy Vannak, the interior ministry offi cial, said media companies had been closed be-cause they had broken the law.
Th e crackdown was required to stop cha-os, he said.
“It’s not important that you say everything, but you choose what is best to say.” — Reuters
AS Opec oil ministers prepared to meet in Vienna later this week, US President Donald Trump fi red another twitter-shot across their bows. But it is his decision to slap sanctions back on Iran that is the real driving force behind the rising price of oil.
Th e US president has accused Opec of being “at it again” for the second time in as many months. Quite what “it” is, he has never specifi ed.
I am always a bit confused about what people actually mean when they accuse the group of artifi cially raising the price of oil. Opec does not set it — and has not done so for more than 30 years.
Perhaps the president is railing at the fact that some members of the group have spent millions of dollars creating production capac-ity that they are not using. But that surplus is a vital safety valve in the event of a sudden loss of supply — such as the one that occurred when US-led forces invaded Iraq in 2003, or when Western-backed rebels overthrew Libya’s Muammar Gaddafi in 2011. Opec’s spare capacity has been used to compensate for sudden supply disruptions more often than America’s strategic petroleum reserve.
BLOOMBERG
Th ere is no reason that Opec should pump as much oil as Trump, or anyone else, wants. Th e organisation exists to look after the in-terests of its members.
It was less than two years ago that candi-date Trump’s energy adviser Harold Hamm told Bloomberg Businessweek that Opec was “irrelevant.” A little over a month later the same Harold Hamm said it was “high-time” for the irrelevant Opec to agree on a production freeze to raise prices.
No one expects politicians, or their ad-visers, to be consistent. And oil at US$67
(RM266.66) a barrel is very diff erent to oil at US$46. Back then, US shale oil produc-tion was on the slide and needed a saviour. It found one in Saudi Arabia’s then deputy Crown Prince Mohammed Salman and oil minister Khalid Al-Falih, who reversed the kingdom’s “pump-at-will” policy and be-gan to set oil prices on the path to recovery.
Now Saudi Arabia is once again at the forefront of a group of Opec countries urg-ing other members to do as America wishes — this time by raising output.
Th e about-face comes hard on the heels of
Al-Falih’s assertion just eight weeks ago that Opec’s market-balancing job was not yet done and that output restraint needed to be pro-longed (see chart — Buyers Beware).
What changed in that eight weeks? Th e outlook for the availability of Iranian oil. Trump’s decision to pull out of the nuclear deal and reimpose sanctions will reduce the volume of crude available from the country by an unknown amount.
I have said from the outset that the amount of Iranian oil that will be forced off the mar-ket will be more than when sanctions were previously in force — even without the EU bans on purchases that accompanied US curbs last time around.
Analysts are now starting to ratchet up their forecasts of the volume that could be lost.
Th e curbs will be more extensive than under president Obama — targeting Iran’s exports of condensates as well as crude oil — and waivers will be harder to come by. Tanker owners and insurers may already be reacting to the imposition of sanctions, even before they come into eff ect.
It is the fear that the world is about to lose as much a million barrels a day of Ira-nian crude oil exports by the end of the year, and possibly another 500,000 barrels from Venezuela, that has really driven oil prices higher — not Opec. — Bloomberg
W O R L D B U S I N E S S 1 5MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY
Samsung loses FinFet patent disputeChipmaker told to pay US$400m, pledges to appeal
BY S U S A N D EC K E R & D E N N I S R O B E R T S O N
BY B R E T T FO L E Y
BY N E I L U N M A C K
BY N I C L A S R O L A N D E R
A fi lepic of the Sydney Opera House (foreground) and buildings in the fi nancial district standing illuminated at dusk in Sydney, Australia. The nation has been mired in an energy crisis that has pushed up local power prices. Photo by Bloomberg
WASHINGTON/TEXAS: Samsung Electronics Co Ltd was told to pay US$400 million (RM1.59 billion) after a federal jury in Texas said it infringed a patent owned by the li-censing arm of a South Korean uni-versity. Samsung pledged to appeal.
Q u a l c o m m I n c a n d GlobalFoundries Inc also were found to have infringed the patent but weren’t told to pay any damag-es to the licensing arm of the Korea Advanced Institute of Science and
STOCKHOLM: Now that investors have stopped badgering Telia AB chief executive offi cer (CEO) Johan Dennelind about how his plan to exit Central Asian markets is pro-gressing, he’s turning to an eyesore closer to home: Denmark.
Th e phone company executive’s patience with the Danish unit, where Telia’s fi xed-line business is small and the wireless arm is “subscale”, is dwindling, Denne-lind said in an interview in Stock-
Technology (KAIST), one of South Korea’s top research universities.
Th e dispute centres on the tech-nology known as FinFet, a type of transistor that boosts performance and reduces power consumption for increasingly smaller chips. KAIST IP US, the university’s licensing arm, claimed in its initial complaint that Samsung was dismissive of the FinFet research at first, believing it would be a fad. Th at all changed when rival Intel Corp started licens-ing the invention and developing its own products, according to KAIST IP.
Samsung, the world’s largest
chipmaker, told the jury that it worked with the university to de-velop the technology and denied infringing the patent. It also chal-lenged the validity of the patent.
Samsung’s infringement was found to be “willful”, or intentional, meaning the judge could increase the damage award to as much as three times the amount set by the jury. Th e company said it was dis-appointed by the verdict.
“We will consider all options to obtain an outcome that is reasona-ble, including an appeal,” Samsung said in a statement. — Bloomberg
Telia seeks solution for Denmark as Asian chapter draws to close
holm. He’s reviewing options in the country and wants to announce a solution — which could mean a sale of the unit — before year end.
“We shouldn’t be afraid of leaving a country where we can’t make mon-ey,” Dennelind said. “We don’t see a path to a company there that meets our fi nancial criteria stand-alone.”
When Dennelind took over as the CEO in 2013, Telia had a com-plex structure of holdings in Central Asia, some of which were dogged by corruption concerns. After a num-ber of divestments and a near US$1
billion (RM3.98 billion) fi ne to US and international authorities to set-tle a graft probe in Uzbekistan, what remains of that business has faded in importance. Dennelind, 48, has turned to building fibre in Swe-den, integrating Norwegian carrier Phonero, and scouting the Nordic market for media assets. Denmark remains key on his agenda.
In the country of 5.7 million people, four wireless carriers com-pete in a market plagued by price wars that have crimped profi tabil-ity. — Bloomberg
MELBOURNE: Australia’s energy retailers face further government intervention in the market if they don’t move to lower power pric-es for consumers after a drop in wholesale charges, according to Energy Minister Josh Frydenberg.
Wholesale charges have fallen by about 30% from last year and that should start to fl ow to custom-ers, Frydenberg said yesterday on Sky News. While the companies are “on notice”, the government will await a report from the Australian Competition and Consumer Com-mission later this month before deciding if more intervention is required and in what form.
PARIS: Paris and Berlin are very close to an agreement on eurozone reform after months of divisions, French Finance Minister Bruno Le Maire has said.
“An agreement is close at hand,” Le Maire said on Twitter late on Saturday after final nego-
tiations on the subject with this German counterpart in the north-ern German city of Hamburg. The minister added that he hoped an agreement could be finalised tomorrow, when German Chan-cellor Angela Merkel and French President Emmanuel Macron are
scheduled to meet near Berlin.Paris and Berlin are racing to
bridge the gap between Macron’s vision of grand European Union reforms and Merkel’s more prudent approach by a crunch eurozone summit on June 29.
“Th ere are two or three remain-
ing issues” to sort out, a European source close to the negotiations told AFP. “But these are clearly defi ned and limited.”
The source added that “real progress had been made on the sensitive issues that remained to be decided, especially regarding
the eurozone budget”.Germany and other northern
European states have baulked at Macron’s calls to give the eurozone its own big budget, fearing the more fi scally prudent north will have to pick up the tab for overspending by the more profl igate south. — AFP
LONDON: A staggered exit from quantitative easing (QE) is the most Mario Draghi can do. Th e European Central Bank (ECB) said last Th urs-day it expected to stop adding to its bond portfolio via purchases of sovereign and corporate debt. But the exit is qualifi ed by caveats, and a pledge to keep rates low. Trade wars and a weak eurozone mean the ECB president has little choice but to keep his options open.
Th e ECB’s statement that it ex-pects to stop increasing the size of its bond portfolio at the end of December marks the offi cial end of the money printing experiment begun in 2015. It looks about time: Growth is healthy, and the central bank expects infl ation to average 1.7% over the next two years, close to its target. Employment in the euro area is at a record high.
Yet it’s an awkward time to take risks. Growth, while above the euro-zone’s potential, is still expected to fall this year to 2.1% from last year’s 2.5%. Political risks are growing: Th e US is threatening Europe with a trade war. Th e Italian government meanwhile wants to push up its defi cit and unpick reforms.
France, Germany close to agreement on eurozone reform
Australian energy retailers may face further intervention in prices
“We need to see prices come down more,” Frydenberg said. “Prices have moved, but certain-ly it’s not enough. We want to see prices come down more and we’re confi dent that will be the case.”
Energy ministers from Australia’s six states and two territories met last week as the federal government seeks an agreement by August on its contentious National Energy Guar-antee, which aims to lower electric-ity prices and require generators to guarantee reliable supply and limit emissions. Th e nation, one of the world’s biggest coal and gas ex-porters, has been mired in an en-ergy crisis that has pushed up local power prices and cast doubt on the reliability of its grid. — Bloomberg
ECB’s staggered retreat from quantitative easing makes sense
Th at puts the ECB in a tricky po-sition: If it keeps buying bonds, it can be accused of facilitating Italy’s rebellious government. If it stops abruptly, and market expectations of rate increases cause bond yields to rise sharply, investors could wor-ry about Italy’s ability to service its debt, currently 132% of gross do-mestic product.
In that tricky context, the ECB’s complex move looks sensible. It an-ticipates ending QE in December, but that is contingent on infl ation numbers. And it said rates would not rise until September next year. Moreover, principal proceeds from the €2.4 trillion (RM11.15 trillion) of bonds it already owns will be invested for as long as necessary.
The euro fell, as did German bond yields. Th e relatively benign market reaction will make it easier for the ECB to creep towards the exit. Yet its task will probably get harder. Th e Italian government’s demands for fi scal leniency and tougher migration rules could hurt confi dence, and increase fears over the eurozone breaking up. A global trade war would particularly hurt Germany, Europe’s largest econo-my. QE is ending, but normal mon-etary policy is way off . — Reuters
1 6 W O R L D B U S I N E S S MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY
Saudi oil chief faces toughest Opec testAl-Falih needs to ensure smooth exit strategy from output cuts
China state media attack US tariff s
‘Global markets just lost their goalie’
BY J AV I E R B L A S & WA E L M A H D I
BY J E F F C OX
BY A N D R E W G A L B R A I T H
BY K E R I S L A H I F F
NEW JERSEY: Th e Federal Reserve may have telegraphed a fourth in-terest rate hike this year, but markets didn’t quite get the message.
After the conclusion last Wednes-day of its two-day meeting, the Federal Open Market Committee, through the so-called dot plot of individual members’ expectations, indicated that it would increase rates two more times before 2018 ends. Th at would come on top of the quar-ter-point rate increase the commit-tee approved at the meeting, as well as one already enacted in March.
While the more aggressive tilt nor-mally would trigger a corresponding move in the Fed funds futures mar-ket, where contracts for the central bank’s benchmark rate are traded,
Fed says it’s hiking rates four times this year
Powell speaking at a news conference in Washington DC on June 13, 2018. The Fed raised the benchmark lending rate last Wednesday, the second increase of the year. Photo by AFP
SHANGHAI: China responded vigorously in state media on Sat-urday after the administration of US President Donald Trump said it would impose tariff s on US$50 billion (RM199 billion) of Chinese imports, but some commentary left room for fur-ther negotiations.
Late last Friday, China said it would impose additional 25% tariff s on 659 US goods worth US$50 billion, in response to the US imposition of tariff s.
“Th e wise man builds bridges, the fool builds walls,” the offi cial Xinhua news agency said in an editorial, echoing offi cial com-ments that China would defend its interests in a trade war.
“Th e wise man builds bridges, the fool builds walls,” the offi cial Xinhua news agency said in an editorial, echoing offi cial com-ments that China would defend its interests in a trade war.
“Following the path of ex-panding and opening up is Chi-na’s best response to the trade dispute between China and the United States, and is also the
NEW YORK: It’s been a big week for central banks, with both the Federal Reserve and European Central Bank each tinkering with monetary policy.
This represents a change in the winds for global markets, ac-cording to Wells Fargo’s Michael Schumacher.
“For many, many years, the central banks have really been a great tailwind for investors,” Schu-macher, head of interest rate strat-egy at Wells Fargo, told CNBC’s Futures Now last Th ursday.
“Th ey’ve had these massive bond buying programmes ef-fectively supporting and en-couraging people to go out and take more risk, to buy equities, to buy high-yield bonds, lever-
SINCE he became Saudi Arabian en-ergy minister two years ago, Khalid Al-Falih has had a good run: he per-suaded a fractious Opec (Organi-sation of the Petroleum Exporting Countries) to cut oil production, convinced Russia to join the cartel in curbing output, and then saw Brent crude rise nearly 75% to US$80 a barrel.
But his toughest test comes this week when Opec holds what’s like-ly to be its most diffi cult meeting in years. As economic growth, re-newed sanctions on Iran and the collapse of Venezuela’s petroleum industry stretch the global oil mar-ket, he needs to ensure a smooth exit strategy from the cuts without causing a crash in prices.
To make things more compli-cated for the mechanical engineer turned oil diplomat, Opec is being buff eted by competing geopolitical agendas. While Riyadh and Moscow have agreed to open the taps, Cara-cas and Tehran want higher prices to compensate for the impact of US sanctions.
“Th e consensus is imploding,” said Roger Diwan, a veteran Opec watcher at consultant IHS Markit Ltd. “I don’t see how you can rec-oncile the positions of Russia, Sau-di Arabia, Venezuela and Iran. Th e contradictions are too many.”
“Th is is the most political Opec meeting in a long time,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd.
Mohammed al-Shatti, the na-tional representative at Opec from Kuwait, said that Al-Falih delivered two new things to the cartel.
“Th e fi rst is his good cooperation with non-Opec and that’s one of the
the response was minimal.As of last Friday afternoon, trad-
ers were implying just a 55% chance of a fourth hike in December — a little better than a coin fl ip and just 10 percentage points or so above the chances before the meeting and the surprise dot-plot change.
Th ere are multiple reasons why the market is not buying into a more hawkish Fed.
responsibility that major coun-tries should have to the world,” it added.
An editorial in the ruling Com-munist Party’s offi cial People’s Daily condemned what it called the Trump administration’s “ob-session with playing the disgrace-ful role of global economic dis-ruptor”. “Th ere is no winner in a trade war, and the US instigation of a trade war is extremely de-structive to global trade, econom-ic globalisation, multilateral trade systems and global production supply chains.”
In an editorial, the official English-language China Daily said the measure was “a stark violation of the core spirit of re-cent trade talks between China and the United States.”
While calling Trump’s ad-ministration “inconsistent and precarious,” it expressed hope a trade war might yet be averted.
“Given the frequent fl ip-fl op-ping of the Donald Trump ad-ministration, it is still too early to conclude that a trade war will start,” the editorial said, adding that China’s stance had been consistent. — Reuters
aged loans, whatever it might be,” he added.
Th at kind of easy money is dis-appearing from markets as global central banks turn the spigot on accommodative monetary policy, Schumacher said.
“You’ve got the ECB saying we’re going to stop buying bonds at the end of this year; the Fed’s been shrinking its portfolio,” he said. “Who is the support? Or, if you want to think about it in World Cup terms, who’s the goalie?”
“It’s always nice to have a back-stop or to have some protection when things go wrong,” said Schu-macher. “We’re not saying the central banks are completely out of the picture but I think the hur-dle for them to re-engage is much higher than its was 6 months ago to 12 months ago.” — CNBC
reasons behind the success of the current production cut agreement,” he said. “Th e second feature is his ability to think outside of the box and look for new ideas all the time.”
Inside Opec, few would besmirch Al-Falih’s achievements, but private-
Primarily, they centre on the be-lief that the central bank will have limited room to move considering the dovish position of many of its global counterparts. Th ere also are fears that a Fed that is too hawkish could invert the curve on govern-ment bond yields and signal a re-cession.
Chairman Jerome Powell said that while the Fed is “not ready to declare victory” on its price stabil-ity mandate, he added that growth looks strong and able to support the central bank’s continued march back toward normalisation. Last Wednesday’s move pushes the tar-get range for the rate to 1.75% to 2%. — CNBC
For more, visit www.cnbc.com
ly offi cials and delegates sometimes complain about his methods. To some, the Saudi minister is overly direct, occasionally bordering on undiplomatic. For others, he’s a mi-cro-manager. It’s certain Al-Falih has brought a business-like approach to Opec — creating dashboards to check whether countries deliver on their promises, for example.
For now, the oil market is the pri-ority. After his visit to Moscow, he’ll be Vienna this week, dashboards in hand, trying to hold the Opec alli-ance together and keep his good run going. — Bloomberg
This is the most political Opec meeting in a
long time.
W O R L D 1 7MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY
S Korea, US to announce military drill suspensionIt is likely to aff ect major exercises, not routine ones — Yonhap
BY J O S H S M I T H
BY W I L L I A M J A M E S & E S T E L L E S H I R B O N
BY D I EG O U R D A N E TA
BY E WA K R U KO W S K A & J O N AT H A N S T E A R N S
SEOUL: South Korea and the US are expected to announce the suspen-sion of “large-scale” military drills this week, with the provision that they would restart if North Korea failed to keep its promise to denu-clearise, news agency Yonhap said yesterday.
Citing an unnamed govern-ment source, the South Korean news agency said the suspension was likely to aff ect only major joint exercises, not more routine mili-tary training.
KABUL: Th e Taliban yesterday ordered its fi ghters in Afghan-istan to avoid gatherings of se-curity forces and civilians, a day after a suicide bomber killed 25 people including members of the militant group celebrating an unprecedented ceasefi re.
Saturday’s attack on the out-skirts of Jalalabad in the eastern province of Nangarhar marred an otherwise extraordinary Eid holi-day as Taliban members hugged, posed for selfi es and prayed with Afghan police and troops, poli-ticians and civilians around the country — scenes that would have been unthinkable only a few days ago.
It was the fi rst formal nation-wide ceasefi re since the 2001 US invasion and the display of jubila-tion and unity has fuelled hopes among war-weary Afghans that peace is possible.
Th e attack on a crowd cele-brating the truce in Rodat district also wounded 54 people and was blamed by offi cials on the Islamic State (IS) group.
After the bombing the Talib-
LONDON: British Prime Minister Th eresa May pledged yesterday to increase funding for the National Health Service (NHS) by £20 bil-lion (RM106.15 billion) after Brex-it, partly from tax hikes and partly from money that will no longer be going to the European Union (EU).
The announcement of more cash for the country’s healthcare system, a regular issue at nation-
VALENTCIA (Spain): Th e 630 mi-grants whose rescue sparked a ma-jor migration row in Europe began disembarking in Spain yesterday, after a turbulent week that saw It-aly turn away the Aquarius ship.
Th e fi rst of three ships transport-ing the group, an Italian coastguard vessel called the Datillo, pulled into Valencia harbour just before 6.30am (0430 GMT) with 274 migrants on board, according to the Red Cross.
Th e other migrants were to arrive on an Italian navy ship, the Orione, and the Aquarius itself by noon, regional authorities said.
Th e migrants, mainly from Afri-ca, were to be welcomed by a team of more than 2,000 people, includ-ing 1,000 Red Cross volunteers and 470 translators.
Dozens of reporters who were on hand to cover their arrival were kept at a distance and no top gov-ernment offi cials were expected at the port.
The migrants come from 26 countries, mainly from Africa but
BRUSSELS: Th ere are more wom-en in the European Union (EU) than men. But you wouldn’t know it from top jobs in the bloc’s busi-ness, politics or civil society.
Th at’s what an activist group in Brussels wants to fi x. With less than a year to go before EU legis-lative elections, Women Enablers Change Agent Network, or Wecan, tomorrow plans to kick-start a campaign to push for women in top EU posts and on company boards.
Women make up more than 51% of the EU’s population, and while there are advances, Europe has plenty more to do on gender equality, the group says. Its goal: to seek an irreversible breakthrough.
“It’s about changing the mind-set so that it’s a natural thing — whenever you have to make a de-
US President Donald Trump surprised officials in Seoul and Washington when he pledged to end “war games” after his summit with North Korean leader Kim Jong-un in Singapore last week.
Immediately after the an-nouncement, US forces in Korea said they had received no guidance on stopping any drills, and South Korean offi cials said they were try-ing to fi gure out which exercises Trump was referring to.
However, in a sign Seoul may be open to suspending drills, South Korean President Moon Jae-in
said last Th ursday his government would need to be fl exible when it came to applying military pressure on North Korea if it was sincere about denuclearisation.
Yonhap also reported yester-day that during military talks be-tween the two Koreas last Th ursday, South Korean offi cials asked their northern counterparts to relocate artillery 30km to 40km away from the military demarcation line that divides the two countries.
The South’s defence ministry denied it made such a request, Yon-hap said. — Reuters
Afghan Taliban tells fi ghters to stay at posts after ceasefi re attack
Aquarius ship migrants fi nally reach SpainWomen mount yes-we-can gender campaign in run-up to EU elections
May pledges extra £20b for healthcare post Brexital elections, comes after a row in parliament over Brexit highlight-ed the fragility of May’s minority government.
In a pre-recorded interview for LBC Radio broadcast on Sunday, when May was asked about tax in-crease, she said her fi nance min-ister would set out plans before a government spending review ex-pected next year. She said the in-creased contribution from taxpay-ers would be done in a “fair and balanced” way.
Th e announcement is timed to mark the 70th anniversary of the NHS, which delivers free access to care for everyone living in Britain. It aims to foster unity in the gov-ernment and the country after two years of bitter divisions over Brexit.
It was also tailored to send a pos-itive message to the 48% of Britons who in 2016 wanted to remain in the EU — many of whom are still unconvinced about Brexit as the March 29, 2019 exit date approach-es. — Reuters
also Afghanistan, Bangladesh and Pakistan, according to Doctors Without Borders.
Chartered by a French aid group, Aquarius rescued the migrants off Libya’s coast last weekend.
Italy’s new populist government and Malta refused to let Aquarius dock at their ports, accusing each
other of failing to meet their hu-manitarian and European Union (EU) commitments.
Spain eventually stepped in and agreed to receive the refugees as a “political gesture” to “oblige Europe to forge a common policy to a com-mon problem”, Foreign Minister Josep Borrell said. — AFP
Refugees disembarking the Dattilo rescue ship in the port in Valencia, Spain, yesterday. Italy’s new populist government and Malta refused to let Aquarius dock at their ports, accusing each other of failing to meet their humanitarian and EU commitments. Photo by Reuters
an ordered fi ghters to stay at their posts or in areas which are under its control.
Some Taliban commanders told AFP they disapproved of their fi ght-ers visiting government-controlled areas and celebrating with securi-ty forces.
President Ashraf Ghani’s an-nounced on Saturday extending the government’s eight-day ceasefi re with the Taliban that was due to end tomorrow and his call for the Taliban to do the same.
Ghani also said 46 Taliban pris-oners had been released, a trend that “is going to continue”.
Other militants, including IS, are not part of the government’s ceasefi re.
The Taliban had agreed to a truce but only for the first three days of Eid, which started last Fri-day, promising not to attack Af-ghan soldiers or police. Th ey would, however, continue attacking US-led Nato troops.
Ghani’s extension of the cease-fi re drew immediate international support and calls for the Taliban to reciprocate. — AFP
cision about a position — to think about a male candidate and a female candidate,” Connie Hedegaard, a former EU climate chief from Den-mark, said in a phone interview. “It’s not about quotas. It’s just about mak-ing qualifi ed women more visible, bringing them into the discussion.”
With the European Parliament due to hold elections in May 2019, the empowerment of women is slat-ed to be a major campaign theme along with other emotive issues such as immigration, unemployment, security and the bloc’s post-Brex-it future.
Spanish Prime Minister Pedro Sanchez, a Socialist who took of-fi ce this month after engineering the removal of Christian Demo-crat Mariano Rajoy in a no-confi -dence vote, signalled the political resonance of gender equality by appointing a cabinet that includes more women (11) than men (sev-en). — Bloomberg
1 8 H O M E B U S I N E S S MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY
WEEK IN FOCUS
1 CIMB Group Holdings Bhd chairman Da-tuk Seri Nazir Razak (centre) with CIMB Foundation volunteers at the Mobile Ram-adan Bazaar in Kuala Lumpur on June 12. CIMB Foundation’s Mobile Ramadan Ba-zaar was a programme whereby two mo-bile food trucks were deployed around the Klang Valley to promote and sell products by 50 home-based producers.
2 Malayan Banking Bhd (Maybank) head of community financial services Malay-sia Datuk Hamirullah Boorhan (left) and head of virtual banking and payments, community financial services Kalyani Nair unveiling the new My Raya QR service recently. Maybank’s My Raya QR was the first peer-to-peer instant transfer service
in Malaysia which enables Maybank App customers to instantly send and receive Duit Raya by scanning a QR code using their mobile devices.
3 Perodua Sales Sdn Bhd managing direc-tor Datuk Dr Zahari Husin (right) pre-senting a “GearUp” child seat to a lucky motorist at a Petronas petrol station in Rawang, Selangor on June 12. The com-pany gave away a total of 100 “GearUp” child seats to motorists travelling with children aged between two and six at Petronas petrol stations in Rawang, Sel-angor; Bentong, Pahang; and Seremban, Negeri Sembilan as part of its ongoing five-year Road Safety Campaign launched last October.
4 (From left) RHB Banking Group act-ing head of group retail banking Nazri Othman, head of group business and transaction banking Jeffrey Ng Eow Oo, and group chief communications officer Norazzah Sulaiman at the launch of RHB SME Financing portal in Kuala Lumpur on June 11. The RHB SME Financing portal enables customers to apply for small and medium enterprise term loans online in 10 minutes with minimal data input and obtain financing within five working days.
5 CIMB Group Holdings Bhd chief risk officer David Richard Thomas (centre) receiving the Achievement in Enterprise Risk Management Award on behalf of the
group by The Asian Banker internation-al resource director Bill Chua (first from left) and Rona Morgan (second from left), chairman of The Future of Finance Summit and Leadership Achievement Awards Advisory Council Alain Cheva-lier (fourth from left), and former Hong Kong Exchanges and Clearing Ltd chief executive officer and The Asian Bank-er Leadership Achievement Advisory Council member Paul Chow (fifth from left) at The Asian Banker Risk Manage-ment Awards 2018 held in Beijing, Chi-na recently. In addition to that, Thomas was also named Chief Risk Officer of the Year at The Asian Banker Risk Leader-ship Achievement Awards 2018. Photo by The Asian Banker
SPREADING FESTIVE JOY ... (From right) CIMB Foundation chairman Tan Sri Md Nor Yusof, CIMB Group Holdings Bhd chairman Datuk Seri Nazir Razak, group chief executive offi cer (CEO) Tengku Datuk Seri Zafrul Aziz, Zafrul’s spouse Datin Seri Raja Johanna Arshad, and CIMB Foundation CEO Datuk Hamidah Naziadin distributing goodies in conjunction with the Hari Raya Aidilfi tri festival to children from Rumah Anak Yatim dan Asnaf Kampung Sijangkang at Masjid Ar-Rahah in Kuala Lumpur on June 12.
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H O M E B U S I N E S S 1 9MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY
6 Affin Bank Bhd group chief risk officer Wong Kok Leong (centre), chief financial officer Ramanathan Rajoo (second from left), and group risk management vice president Loh Von Jack (first from left) receiving The Achievement in Liquidity Risk Management Award on behalf of the group from The Asian Banker inter-national resource director Rona Morgan (fourth from left) and managing editor Foo Boon Ping at The Asian Banker Risk Management Awards 2018 held in Beijing, China recently. Photo by The Asian Banker
7 (From left) Boduo Investment Group vice president Henry Chen, Associated Chinese Chambers of Commerce and Industry of Malaysia president Tan Sri Ter
Leong Yap, Zhejiang Boduo International Trade Co Ltd executive director (ED) Yu Tong, Loob Holding Sdn Bhd chief exec-utive officer Bryan Loo, Shanghai Panfei International Trade Co Ltd ED Pan Junfei, Malaysia Retail Chain Association dep-uty president Datuk Vincent Choo, and Malaysian Franchise Association chair-man Datuk Radzali Hassan at a signing ceremony in Petaling Jaya, Selangor on June 12. Loob, the creator of Malaysia’s Tealive bubble tea brand, has entered into a joint venture with Zhejiang Boduo and Shanghai Panfei to open 500 stores in China within three years.
8 (From left) I-Bhd executive chairman Tan Sri Lim Kim Hong, Tourism and Culture
Ministry deputy secretary general Hasli-na Abdul Hamid, and Visa Worldwide Southeast Asia regional group country manager Mandy Lamb at the launch of a joint strategic partnership between Visa Worldwide and I-Bhd in Shah Alam, Selangor on June 12. The collaboration underscores Visa Worldwide’s support of i-City’s digitisation initiative through its digital capabilities and Visa as the preferred partner in the new payment solutions project, which is in line with Malaysia’s National e-Commerce Stra-tegic Roadmap.
9 Sheraton Imperial Kuala Lumpur Ho-tel managing director Frank Beck (left) receiving a certification on behalf of the
hotel from Ticadoc executive chairman Richard Stevens at a ceremony held in Kuala Lumpur on June 12. Sheraton Im-perial Kuala Lumpur Hotel was the first certified Medi-Secure-Safe hotel certified by Ticadoc in Malaysia.
10 Sumatec Resources Bhd executive vice chairman Tan Sri Halim Saad (right)
and managing director Abu Talib Ab-dul Rahman speaking to reporters after the company’s annual general meeting in Kuala Lumpur on June 12. Sumatec is confident it will be declassified as a Practice Note 17 company by 2019, as it looks to submit its regularisation plan to Bursa Malaysia ‘very soon’. Photo by Suhaimi Yusuf.
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20 live it! W E L L B E I N G . T H E A R T S . W I N E + D I N E . S T Y L E + D E S I G N . L E I S U R E
MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY
PersonalASSISTANTC O M P I L E D BY C H A N G Y E E Z H W E N
W O R K . L I F E . B A L A N C E
NOW in cinemas, Jurassic World: Fallen King-dom is the sequel to the highly successful Jurassic World. In the fi lm, set three years after the events of Jurassic World, Owen Grady and Claire Dearing return to the abandoned theme park on Isla Nublar, in an attempt to save the remaining dinosaurs from a volcano that is about to erupt. They soon encounter terrifying new breeds of gigantic dinosaurs, while uncovering a conspiracy that threatens the entire planet. For show times and more information on Jurassic World: Fallen King-dom, log on to http://www.cinema.com.my.
ODDLY Quirky is a group exhibition featuring four up-and-coming local artists: Chok Ming Hoong, Alicia Lau, Viko Zhijune and Low Kuan. Though these artists diff er in delivery, they are bonded by their observations of human-kind and their ‘quirky’ traits. Chok’s artwork examines the queerness of society, while Lau puts herself inside the thought processes of people. Viko engages herself with the beau-ty she discovers behind the neglected, while Low takes us back in time to explore our con-stantly moving world. Oddly Quirky is now on at Suma Orientalis, Petaling Jaya, Selangor, until June 24. For more information, log on to www.sumaorientalis.com.
G13 Gallery’s latest exhibition is Silence Speaks by Thai painter Chayanin Kwangkaew. On display are 12 paintings that reveal the artist’s deep conversations through still-life portrayal, as inspired by his contempla-tion on the connection between man and inanimate objects. Silence Speaks will run until June 23 at G13 Gallery, Kelana Jaya, Selangor. For more information, log on to www.g13gallery.com.
EVERY night, 69-year-old Edin-son chooses one of his 11 pairs of dance shoes, slips into a smart suit and heads out to dance tango in the clubs of Montevideo, a city that is look-
ing to breathe new life into an old tradition, one that has long been eclipsed by its more famous neighbour, Buenos Aires.
“I’ve been dancing for 10 years now,” said Edinson, a retired soldier, and this stylised exit from his house has become a nightly ritual, “no matter what the weather is”.
With a nod of his carefully coiff ured head, he invites a woman onto the par-quet dance floor, where they skilfully glide past other couples in a club that is almost hidden behind a covered market.
It is here that the Joventango (young tango) association organises so-called “milongas” every week, evenings of dance that are open to initiates as well as to the merely curious and the passing tourist.
Tango was born in the late 19th cen-tury, behind the closed doors of salons in Montevideo and Buenos Aires because the spectacle of dancers pressing passionately against each other was originally deemed to be too steamy to be performed in public.
It later gained popularity and then re-spectability after it spread to Paris.
In an ironic twist of history, today in Uruguay tango is “relegated to something old people do”, fumed Martin Borteiro, who like his wife Regina Chiappara is a former professional dancer.
At the start of the year, Borteiro and Chiappara were called on by the may-or’s offi ce to come up with a diagnosis of
Montevideo is no longer the ‘forgotten capital’ of tango
what is ailing tango in Montevideo, with an eye to developing a strategic plan to revive the dance.
Th e picture painted by the couple was bleak: fewer and fewer milongas, older dancers and less public support. In a sign of how far the decline has gone, only one local maker of tango shoes still exists in the Uruguayan capital.
“Th e current tango community is very fragile,” said Borteiro. “Montevideo is the city where tango was born, so there is a danger of something vanishing which is part of our identity, part of our tradition.”
‘Like losing football’Esteban Cortez, a 43-year-old tango teach-er, refuses to countenance it: Losing this dance would be “like losing football for me; it’ll never happen” in a country where football is almost like a religion.
“If our tango disappears, we will dis-appear as a country,” he said.
His wife Virginia Arzuaga, 40, who is herself a teacher, noted that the dance had been named part of the world’s cultural heritage by Unesco in 2009.
“And when something is named a cul-tural heritage, it’s because it’s about to die out,” she said.
“Th ere are those who’ll tell you, ‘when the tango bug bites you, you are lost; it’s a voyage of no return,’” said Arzuaga, re-fl ecting on the growing popularity of the dance overseas, in particular in countries like Turkey, Russia and France.
“It’s a shame that here, in a city with so much tango in its history, it’s not ap-preciated, valued or cherished,” lament-ed Joselo Ferrando, 45, who runs one of the city’s main tango events, Chamuyo.
A far cry from ArgentinaUruguay’s tango afi cionados gaze envi-ously across the waters of the Rio de Plata in the neighbouring Argentinian capital,
where tango is king, and its fame has spread around the world.
“Th e most obvious comparison is with Buenos Aires, which has made it a question of their identity and worked to promote it both inside the country and abroad, as a selling point for tourism, which is an im-portant source of revenue,” said Ferrando.
In Montevideo, “we still have so much to do, including broadcasting the music in the media, teaching the dance in schools and training teachers”, he said.
But in recent months, the tide may have begun to turn: A tango museum has opened and a major new festival, dubbed “Montevideo Tango”, is scheduled to take place on Oct 27.
Pianist Alberto Magnone, 71, works in an area of the historic city centre that is fi lled with statues and painted murals to remind locals and tourists alike of the capital’s role in the history of tango. It was here, in 1917, that La Cumparista — the most famous tango tune of all time — was composed.
“Tango was a joint product of both Uru-guay and Argentina, but it was we who didn’t give it the place it deserved,” he said.
Th e mayor’s offi ce hopes to launch its plan in July, based on the diagnosis set out by Chiappara and Borteiro, the former pro dancers.
“Th e strategic plan will be: Montevi-deo, local tango, a far cry from the tan-go spectacle, on the stage,” said Jorge Navratil, the director of the city’s cultural promotion campaign.
Th e aim will be to “create new audi-ences, both on the local and international levels, and put Montevideo back on the world map” of tango, including the cre-ation of a municipal orchestra dedicated to tango music, plus a public outreach to high schools, shows and a public works project to preserve the heritage.
Because tango is “like a language: When you stop speaking it, it dies,” he said. — AFP
DANCEIS LIKE A LANGUAGE
People dancing the tango at the Chamuyo milonga in Montevideo in April. The Montevideo mayor’s offi ce is getting ready to launch a strategic plan to put the city back on the world map of tango. Photo by AFP
live it! 21
W E L L B E I N G . T H E A R T S . W I N E + D I N E . S T Y L E + D E S I G N . L E I S U R E
MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY
WINE BY T H O M A S B U C K L E Y & T H O M A S M U L I E R
Swiss wine upstart takes on old world auctioneersTHE Burgundy wines of Henri Jayer are prized for their seductive expression of the French region’s pinot noir grapes, as well as their scarcity. Jayer died in 2006, having produced his fi nal vintage fi ve years earlier. When old vintages turn up at auction, pric-es can top US$15,000 (RM59,700) a bottle.
So, fans perked up at news of a treasure trove of Jayer wines — 1,064 bottles unearthed from the winemaker’s cellars in the Burgundy village of Vosne-Romanee, described by his daughters as the last that he owned. Th ey are now being stored at a warehouse for art and other valuables in Geneva. Bidders were set to gather at the Michelin-starred restaurant Domaine de Chateauvieux, in Swiss wine country, for an auction that is expected to fetch as much as 13 million Swiss francs (RM52.07 million) yesterday.
As intriguing as the chance to buy one of these rare and precious wines is, the choice of the auctioneer is even more curious. Rather than selling through established houses such as Christie’s or Sotheby’s, Jayer’s daughters turned to Geneva-based Baghera Wines, founded three years ago by former Christie’s employee Michael Ganne and based in a graffiti-covered building near the city’s main train station.
“I think there are sources that are bet-ter known to vet the wines,” said Maureen Downey, an expert in authenticating old wines who has urged clients to avoid the sale. “Why did these women give this to Ganne and not to Sotheby’s?”
Even in its short history, Baghera has attracted controversy. In 2016, the fi rm pulled bottles from two auctions, includ-ing one featuring wines from Burgundy’s Domaine de la Romanee-Conti, after Don Cornwell, a Los Angeles-based lawyer who works with wine-authentication experts, questioned their authenticity.
Romanee-Conti winesBaghera said the Romanee-Conti estate examined every bottle in the sale and en-dorsed their authenticity. Th e fi rm also said it would refund any bidders if lots they purchase turned out to be fake but has never had to do so.
Th e auction house said the Jayer daugh-
A magnum of Richebourg grand cru wine by Jayer.
ters picked Baghera over two other auction houses because of their familiarity with Ganne, who handled an earlier sale of the estate’s wines when he was at Christie’s. Geneva was chosen because it is a relatively short 150 miles (250km) from Vosne-Ro-manee, reducing the risk of damage during transportation, Baghera said.
Baghera’s promotional campaign has sought to highlight the provenance of the wines through interviews with the sisters that are posted on its website. Transporta-tion to Geneva in February — the fi rst time the lots left the cellar — was supervised by a sworn bailiff , the fi rm said.
‘Father’s legacy’“It took Henri Jayer’s daughters time to part with their father’s legacy,” said Julie Carpentier, the deputy director of Baghera. “Lydie and Dominique knew that selling these wines meant turning the last page of Domaine Henri Jayer.”
Each bottle was labelled for the fi rst time shortly before being dispatched for sale, as per custom in Burgundy, and stamped with a digital token to demonstrate that it is the real deal, Baghera said. Th e fi rm could tell which ones were from prized vineyards such as Cros-Parantoux by how they were stocked and because Jayer’s estate had been catalogued, Carpentier
said. Jayer listed them in his cellar book and registered them in his annual inven-tory for French customs, according to the auction house.
Jayer was a “magician” who could turn even some of the more unassuming stretch-es of Burgundian soil into extraordinary wines, said Giles Burke-Gaff ney, the buy-ing director for the region at Justerini & Brooks, an importer of Jayer wine based in London. Th e key for collectors is to fi nd bottles that are in good condition.
Th e wine levels in some bottles from the 1976 and 1987 vintages that Baghera is off ering are much lower than expected, Burke-Gaff -ney said. While it is normal for some wine to evaporate as bottles age, unusually low levels can indicate spoilage. “It does seem a lot of money for that risk, but it’s not a given that they won’t be enjoyable,” Burke-Gaff ney said.
Carpentier said that in 79% of the nor-mal-size bottles, the wine comes to within 3cm of the cork — considered excellent for wines at least a quarter-century old. Th e levels of larger magnums are even better, she said. In the auction catalogue, Ganne said the bottles he has tasted show that the wine is “still young enough to be kept for an impressive length of time”.
High endIf the sale reaches the high end of the esti-
mate range, Ganne will surpass Christie’s auction of Jayer wines six years ago in Hong Kong, which raised about US$8 million.
London wine merchant Berry Bros & Rudd said it is often off ered old Jayer Bur-gundies, “but due to diffi culty in proving the wines’ provenance, more often than not, we walk away”, according to a spokes-man who declined to comment on whether the fi rm had been given the chance to sell the collection being auctioned in Geneva.
“I would’ve thought it would have been the big auctioneers like Christie’s and So-theby’s,” said Michael Egan, a wine au-thenticator based in Bordeaux.
Baghera described the bottles as rep-resenting Jayer’s “personal reserve, a se-lection that he himself had made of his greatest wines”. As part of the campaign, Ganne penned a letter addressed to the deceased winemaker, describing his per-sonal “adoration, this amusing — and at times frightening — veneration” of him.
Even if it is the real Jayer, the question of how good these bottles are on the inside still remains. “Jayer, like any other vign-eron, made some great wines and some less-good wines,” said Jasper Morris, the author of the book entitled Inside Burgun-dy. “I’ve tasted the wines from time to time over the years and had some really excel-lent bottles. But not always.” — Bloomberg
PHOTOS BY AFP
Ganne, the executive director of auction house Baghera Wines, holding a magnum of Vosne-Romanee 1er cru Cros Parantoux wine from the late, renowned winemaker Jayer.
Magnums of Vosne-Romanee 1er cru Cros Parantoux wine, from the late French winemaker Jayer.
The fi nal bottles of Jayer’s collection include some of the world’s most expensive wines and will go on auction in Geneva.
2 2 S P O RT S MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY
PYONGYANG: North Korean sports administrators are hoping the coun-try will come in from the sporting cold in the wake of leader Kim Jong-un’s summit with US President Donald Trump in Singapore.
Isolated and subject to UN Se-curity Council sanctions over its banned nuclear weapons and bal-listic missile programmes, North Korea does not often host inter-national sporting events.
An AFC Women’s Asian Cup qualifying group last year — when North played South — was the highest-profi le event it had held for years.
But as tensions mounted, it lost the right to hold the junior world championships for judo and weightlifting, both of which it had been awarded.
Even so, it has held on to an an-
North Korea hopes for sporting change in wake of summit
Federer beats KyrgiosTh e Swiss ace regains world No 1 spot with this win
BY N E I L R O B I N S O N & I A N C H A D B A N D
BY A N D R E W B OT H
BY A L A N B A L D W I N
Beaten Felix eyes Tokyo Olympics and Bolt record MARSEILLE: Allyson Felix, an 11-time world champion and six-time Olympic gold medallist, fi nished third over 400m at a meeting in Marseille on Saturday before insisting that she has not given up on matching Usain Bolt’s record of eight Olympic titles in Tokyo in 2020. American star Felix was beaten on Saturday by Italy’s Libiana Grenot, the Eu-ropean champion, with Dray-ton Shakes of Great Britain taking second place. “It wasn’t a great evening for me. I hope to do better but this year is very diff erent,” said 32-year-old Felix, the most decorated female athlete with a total of nine Olympic medals and 16 at the worlds. — AFP
Konta reaches Nottingham fi nalLONDON: Home favourite Johanna Konta kept her nerve through an hour’s rain delay to defeat defending champi-on Donna Vekic and reach her second successive Not-tingham Open final. Konta appeared close to winning by default at the end of the fi rst set when Vekic received treat-ment for a back injury before the rain forced both players off court to give Vekic a slight respite. But Konta was not to be denied and overcame a couple of minor wobbles to win through. “It is never easy with the rain delay and it was defi nitely challenging,” said Konta. — Reuters
US makes history by rallying to upset Scotland HOUSTON: Th e US stunned Scotland 30-29 on Saturday, rallying from a 15-point fi rst-half defi cit to record their fi rst win in history over the world No 6 squad. “We made it scrap-py and defended like hell,” said US captain Blaine Scully. “We might not have the cap count but we know how hard we are going to work for each other.” Th e 15th-ranked Americans fell behind 24-13 at the break but stormed back to take a 30-24 lead when AJ MacGinty converted after fl anker Han-co Germishuys scored a try halfway through the second half. — AFP
Gasquet, Chardy set up all-French fi nal at Rosmalen LONDON: Richard Gasquet and Jeremy Chardy set up an all-French fi nal at the Libema Open in Rosmalen after both saw off Australian challengers in Saturday’s semi-fi nals. Sec-ond-seeded Richard Gasquet ended Bernard Tomic’s recent resurgence by winning 6-4, 6-7(6), 6-2 while Chardy beat Matthew Ebden 6-4, 7-5. Tom-ic, who was playing his fi rst ATP semi-fi nal in two years, had to qualify for the grass-court event in the Netherlands and threatened an upset in the fi rst two closely contested sets. — Reuters
I N BR I E F
LONDON: Roger Federer will be back as world No 1 in the new rank-ings this week after coming from behind to beat Nick Kyrgios 6-7(2), 6-2, 7-6(5) in the semi-fi nals of the ATP Mercedes Cup in Stuttgart.
Th e 36-year-old Swiss was to play Canada’s Milos Raonic in yesterday’s fi nal as he seeks a 98th tour-level title.
Federer, who has won 15 suc-cessive matches on grass since be-ing beaten in his opening match in Stuttgart last June, knew he had to win on Saturday to knock Rafael Nadal off the top of the rankings.
He will begin a record-extend-ing 310th week at the top today, his third stint at No 1 this year as he and his old Spanish rival Nadal vie for supremacy.
“I’m very happy, very relieved. I thought it was a tough match [like] I expected against Nick. We’ve played so many breakers already, I’m losing count,” Federer told the ATP website.
“It was close. It could have gone either way, naturally. But I’m happy I got it and get back to world No 1 [on] Monday, so it’s very exciting. And I’ve
SOUTHAMPTON, New York: Of-fi cials found themselves in a fi re-storm of criticism for opting not to disqualify Phil Mickelson after the fi ve-time major champion de-liberately hit a moving ball during the third round of the US Open at Shinnecock Hills on Saturday.
Th e incident happened on the 13th green in what the American said was a deliberate action to “take advantage of the rules” — a comment that did not sit well
LE MANS (France): Fernan-do Alonso’s hopes of winning the Le Mans 24 Hours race at the fi rst attempt were on the rise yesterday after his No 8 Toyota regained the lead from the Japanese manufacturer’s seven car.
Th e Spaniard put in a re-markable stint during the night to reduce a two-minute defi cit after a stop-go penalty and teammates Sebastien Buemi and Kazuki Nakajima then did their bit to take back control.
“Tell me if you want anoth-er stint, eh? I’ve got into the rhythm of the night,” Alonso had said over the team radio as he closed the gap.
Instead, he handed over to Nakajima, who then passed f e l l o w -Ja p a n e s e K a m u i Kobayashi for the lead.
With seven hours remain-ing and both cars handed further stop-go penalties for speeding in slow zones, Buemi was 46 seconds down the road from Britain’s Mike Conway in the other TS050 hybrid.
Th e turnaround also fuelled conspiracy theories that Toyo-ta wanted Alonso to win for the extra publicity value, although the manufacturer has denied any favouritism.
Th e double Formula One (F1) world champion and Mo-naco Grand Prix winner has made a big play about becom-ing only the second driver to take the “Triple Crown of Mo-torsport” and Le Mans is the second piece of the puzzle.
Th e McLaren driver still has to win the Indianapolis 500, a race he led last year before an engine failure, to match the late Graham Hill’s achieve-ment.
A Le Mans win could hasten the 36-year-old’s departure from F1. — Reuters
got another fi nal, so it’s great news.”It is Federer’s fi rst tournament
in 11 weeks, with the Australian Open and Wimbledon champi-on having decided to give the clay court season a miss.
But he was made to work hard to regain the top spot as Kyrgios, also playing in his fi rst tournament after two months out with an elbow injury, refused to buckle in a contest that last-ed just short of two hours. — Reuters
Mickelson stands fi rm over moving ball hitwith some former players.
Th e controversial moment oc-curred after Mickelson missed a short downhill putt and his ball continued to trickle away from the cup, aided by both gravity and a strong tailwind.
Rather than waiting for it to stop, he broke into a trot and when the ball was about 4.6m below the cup, and still in motion, he hit it back up the slope and it came to rest above the hole.
Mickelson, who is well out of contention for victory, said he
knew the action would bring a two-shot penalty, and that he had hit the ball to prevent it from roll-ing all the way off the green and behind a bunker.
Hitting a moving ball incurs a two-stroke penalty, and Mickelson was eventually assessed with a six-over 10 at the par-four hole.
He could have been disqualifi ed had offi cials deemed it a serious breach of another rule that states “a player must not take an action with the intent to infl uence the move-ment of a ball in play”. — Reuters
Alonso’s Le Mans hopes on the rise as day dawns
nual International Table Tennis Federation (ITTF) Challenge-level event, the Pyongyang Open, cur-rently underway.
In the wake of the Singapore summit, when Kim and Trump shook hands in front of the cameras, tournament director Kim Chong-il said he hoped his country would now be able to host more interna-tional sporting occasions.
Th e North was capable of hosting, he said, adding that previously “the limitations were not set by our side”.
Table tennis has had a diplomatic role in the past — matches between China and the US helped break the ice ahead of Richard Nixon’s his-toric visit to Beijing in 1972 which led years later to Washington’s rec-ognition of the People’s Republic.
And at the world championships in Sweden last month North and
South Korea unifi ed their teams rather than play against each other in the quarter-fi nals.
“For us it’s very important that table tennis is for all and that we can play table tennis all over the world,”
ITTF fi nance vice president Petra Soerling told AFP in Pyongyang.
“For us this is very important. If instead of closing the door we can open the door, we would love to be part of that.”— AFP
Pyon Song-gyong of North Korea serving during a match at the Pyongyang Open ITTF event yesterday. Photo by AFP
Federer returning the ball to Kyrgios during their semi-fi nal match at the ATP Mercedes Cup tennis tournament in Stuttgart, southwestern Germany, on Saturday. Photo by AFP
S P O RT S 2 3MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY
Fifa’s US$25b backers could end up on losing team
Taxi ploughs into Moscow pavementSeven injured on third day of World Cup
MOSCOW: A taxi driver who ploughed into a Moscow pavement on the third day of the World Cup, injuring at least seven people, said in a video released by authorities yesterday that he had been work-ing for 20 hours solid before the incident.
Th e unnamed man said he had slept for only two or three hours before the shift and confused the brake and the accelerator, leading to an “unexpected” loss of control, according to the video on the web-site of the local interior ministry.
“I do not know how it happened,” he said, adding that he had not been drinking and was “very sorry”.
Th e man, who authorities earlier identifi ed as a 28-year-old nation-al of the central Asian republic of Kyrgyzstan, said he ran from the scene fearing he would be killed there, before being taken into cus-tody by police.
The incident occurred about 200m from Red Square with Mos-
ROSTOVONDON (Russia): Ney-mar made his World Cup bow yes-terday as fi ve-time winners Brazil kick-off their quest for redemption while defending champions Ger-many launch their bid for back-to-back titles.
Four years after injury cut short his World Cup and Brazil went on to suff er a humiliating 7-1 semi-fi -nal defeat to Germany without him, Neymar is once again spearheading his country’s hopes.
Th e Paris Saint-Germain striker’s participation at the fi nals in Russia
GELENDZHIK (Russia): Four years ago, Sweden’s Gustav Svensson, then on the books of Ukrainian club Tavriya Simferopol, fl ed the country after Russia invaded the Crimea peninsula in 2014.
Now, the midfi elder is back in the region at Sweden’s World Cup training base in Gelendzhik, less than 200km along the Black Sea coast from the region annexed by Russia.
“I’m very close to where I used to be,” Svensson, 31, told reporters as the Nordic side prepared for their World Cup opener against South Korea today.
“Some memories are coming back, but not all bad ones — I most-ly remember the positive ones from there,” he said.
Th e former IFK Goteborg and Bursaspor stalwart signed for Tav-riya Simferopol in 2012 and played 21 times for the club.
Th en in February 2014, pro-Rus-sian militia suddenly appeared in Simferopol, the capital of Crimea, taking over the airport and other strategic locations in the city.
By April, Russian President Vladimir Putin had ordered mil-itary units to enter the peninsula, prompting Svensson and foreign
teammates to fl ee from Crimea on a bus past militia checkpoints into mainland Ukraine.
“Power and military enter and take over what they think is theirs. Th ere are other ways to solve things, it was a very wrong way to act,” said Svensson.
Th e player had hoped to return to Ukraine, but decided it would be wiser to return to his former Swed-ish club Gothenburg.
After moving back to Sweden, Svensson, who now plays for Major League Soccer side Seattle Sound-ers, said he lost contact with his former Tavriya teammates. — AFP
LONDON: Gianni Infantino, presi-dent of Fifa, is cooking up a US$25 billion (RM99.5 billion) payday for football’s governing body and the sport’s top players. However, his fi nancial backers will only make their money back in extra time — if at all.
Almost all the US$5.7 billion in revenue Fifa expects to generate in its current four-year cycle comes from the World Cup, which kicked off last Th ursday. Infantino’s plan is to supplement the 32-nation tournament with a revamped Club World Cup, involving top teams like Manchester United. Mean-while, national sides like Germany and Argentina would compete in a new Nations League.
Th ere is logic to the idea. Th e last Club World Cup, which pit-ted Europe’s Real Madrid against minnows from other continents, generated a measly US$37 mil-lion in revenue. Compare that with Europe’s Champions League, which brought in about US$2.5 billion by matching star-studded sides like Real Madrid and Par-is Saint-Germain. A bigger Club World Cup featuring more stars and games might be as lucrative as the Champions League. And competitive leagues for nation-al sides would draw more fans than current friendly exhibition matches.
Th e problem is prize money. Football associations and top clubs
ST PETERSBURG: Iran coach Car-los Queiroz made a plea for football to be separated from politics, min-utes after his team beat Morocco 1-0 in their fi rst match of the World Cup last Friday.
Iran’s preparations have been disrupted by US sanctions against the country, with American sports-wear giant Nike refusing to sup-ply equipment to the team and both Greece and Kosovo cancel-ling friendly matches against them last month.
“We come here without World Cup preparations because a cou-ple of teams didn’t want to play against us,” Portuguese Queiroz told a news conference.
“We don’t have camps; we have problems.
“As I said before the game, to make these diffi culties a source of inspiration, a source of motivation, is really something very special.”
cow packed with foreign football fans snapping pictures of the Krem-lin.
Police said seven people had
been injured but Russian news agencies quoted the city’s health department as saying eight people were hurt. — AFP
Security offi cers gathering around a taxi that ran into a crowd of people in Moscow on Saturday. Photo by Reuters
Neymar to make World Cup bow as Germany launch campaignBY S TA N I S L A S TO U C H OT
had been cast into doubt after he suff ered a broken bone in his right foot in late February.
However, the 26-year-old forward
has shown few signs of rust since re-turning for Brazil, scoring in consecu-tive friendlies on the eve of the fi nals.
Brazil coach Tite, who master-minded a dominant qualifying cam-paign that saw the “Selecao” fi nish 10 points clear of their rivals, said Neymar was “not 100%”. “But he has exceptional physical qualities, his speed in particular. In any case, he is in a suitable state to play,” Tite said.
Neymar is the focal point of one of the most menacing attacks in the tournament, and could line up in a front four that includes Gabriel Jesus, Philippe Coutinho and Wil-lian. — AFP
BY L I A M P R O U D
BY S I M O N J E N N I N G S
are mostly interested if the tourna-ments bring in more cash to help them pay for players. Step in Soft-Bank, the Japanese tech conglom-erate led by Masayoshi Son, and private investors from China, Saudi Arabia and the US. Th e consorti-um has promised to put up US$25 billion over 12 years from 2021 to fund the two new tournaments, the Financial Times reported.
Th e investors are underwriting about US$3 billion of revenue per Club World Cup and US$2 billion for each Nations League cycle, according to the Associated Press. Th at means they will only begin to earn a return if the Club World Cup generates more income than the last Champions League and the national tournament taps into new sources of revenue, or sucks view-ers away from other competitions.
It is a huge risk. Tradition-al broadcasters are losing out to streaming services like Netfl ix and Amazon. Th e new entrants, howev-er, are yet to spend much on sport. Staging matches in fast-growing markets like China and India may help, but fans there are not used to paying through the nose to watch live football.
Infantino’s plan may yet fail: Avote on the new tournaments has been postponed until after this year’s World Cup, and European leagues oppose his plans. But if it goes ahead, Son and his fellow in-vestors will take all the risk, while football’s insiders walk away with the match ball. — Reuters
Iran coach calls for unity and fairnessA late own goal by substitute
Aziz Bouhaddouz broke Moroc-can hearts in St Petersburg and sent Iran into raptures as they celebrated their second win at a World Cup with unrestrained joy.
Queiroz said victory felt much sweeter in light of the problems facing Iranian football.
“We train and we play under [bad] conditions,” he added. “No pitches, no camps, no friendly games because of the sanctions. I think it’s my duty to say, ‘let our boys play football’. Th ey are just football players.
“Let them enjoy football like all the other football players in the world. Th ey are not against nobody or against nothing. Th ey just want to express themselves and play football.”
The 65-year-old pleaded for fairness and unity, calling for the sport to be freed from the influence of global politics. — Reuters
World Cup returns to confl ict zone for Sweden’s Svensson
2 4 F E AT U R E MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY
AGRICULTURE is increasingly be-coming a lot more like manufac-turing and no country in the world is better equipped for this change than Taiwan, says Lin Tsung-hsien, chairman of the Executive Yuan’s Council of Agriculture (CoA).
In fact, the future of agriculture in Taiwan is going to be amazing as far as CoA is concerned.
“Imagine these Agricultural 4.0 scenarios with smart technolgies”, says Lin.
“An unmanned aircraft will fl y over fi elds to monitor crop growth and transmit data to the cloud for analysis of the use of pesticides and fertiliser as well as water resources with results of the analysis lower-ing costs and minimising impact to the environment. All their farmers would need to do is to connect to the cloud using a cell phone or tablet.”
“Farmers — via big data analysis — will gain a better grasp of their crops, microelements and nutrients in the soil, irrigation schedules, crop rotation, and other conditions af-fecting crop growth.”
“Vane sensors can measure the pressures of plant moisture while soil sensors can track water move-ment, soil moisture levels, and car-bon and temperature changes, all of which can be used to optimise irri-gation and decrease crop damage.”
Lin says pictures of crops can be uploaded to a database to serve as a reference for daily pricing updates. Thus, farmers no longer need to leave their farms to participate in global economic activities.
From the comfort of their homes, consumers can scan QR codes on packages to view the clean auto-mated control processes of king
oyster mushroom production and harvest procedures taking place in plant factories.
Overseas retailers can remotely access supply chain systems and rapidly distribute Taiwan’s exported agricultural products to internation-al retail stores. Fresh mushrooms ordered seven months in advance can be prepared for export through an RFID system.
All the above are possible future scenarios of Agricultural 4.0, says Lin, adding the future of agricul-ture will look very diff erent.
Th e days of tilling the soil and relying on armies of immigrant fruit pickers are over; agriculture is in-creasingly becoming a lot more like manufacturing.
What does smart farming need? Whether it is indoors in multi-sto-rey hydroponic farms or small-size plots of land, whether under-ground cultivation or large-scale
warehoused plantations, smart farming needs the following tech-nologies: Solar technology (for energy needs), lighting technology (diff erent plants grow best at dif-ferent wavelengths), drone tech-nology (modelling of terrain, soil, water, etc), IoT (Internet of Th ings) (smart sensors), semiconductors (to create those nifty sensors), soft-ware, in particular control software and data mining algorithms, and robotics (for planting and har-vesting) — Lin says Taiwan is an industry leader in most of these technologies.
This agriculture minister says switching Taiwan’s agriculture from traditional to smart will guarantee thousands of jobs.
Th e farmer of the future is a data engineer, says Lin but on top of that — such as farmer would also be an electrical engineer and an artifi cial intelligence (AI) specialist.
TAIWAN’S outstanding research and development (R&D) achieve-ments and excellent products such as automation in the country’s ag-ricultural sector were featured at the 2018 Taoyuan Agriculture Expo from April 4 to May 13.
Th e event at Xinwu district in Taoyuan city — incorporating the idea of “Smart Technology, Green Life” — featured 23 pavilions with six main themes: “Smart Technol-ogy”, “Unique Industry”, “Cultur-al and Creative Arts”, “Local Life”, “Multiple Cultures” and “Sustain-able Environment”.
It was organised by the Execu-tive Yuan, Council of Agriculture (CoA), which was also the organis-er of the “Taiwan Innovative Agri-cultural Machinery Pavilion” that was part of the expo.
Within 2,100 sq m, nine affi liat-ed agricultural research institutes and extension stations of the CoA, as well as 28 agricultural machin-ery companies, displayed their in-novative R&D achievements and top-notch agricultural machinery.
A total of 62 agricultural ma-chinery and R&D achievements were showcased in fi ve major cat-egories — “Special Crops and Tea”, “Vegetables, Flowers and Seed-lings”, “Rice and Miscellaneous Grains”, “Fruit Trees” and “Green-houses, Facilities and Equipment”.
The progress in agricultural machinery has been vital in the development of agricultural tech-nology and cultivation effi ciency in Taiwan.
Economical small machines like cultivators, mowers and spray-ers as well as grain dryers, grain cooler silo system, and greenhouse environment control equipment,
are touted for their quality. Taiwan’s tropical agricultural
technology is popular locally and abroad too.
Th is was evident at the expo, where large crowds were seen at the “Taiwan Innovative Agricultur-al Machinery Pavilion” showcasing the nation’s technological capa-bilities in agricultural machinery.
Th e pavilion was set up to pro-mote bilateral exchanges and co-operations in agricultural tech-nology.
Taiwan’s agricultural technol-ogy and agricultural machinery products make it a strong partner to domestic and foreign entities seeking to improve agricultural production effi ciency, quality and output.
In addition, 25 manufacturers — members of Taiwan Agricul-tural Machinery Manufacturers Association — exhibited their fi ne agricultural machinery for the ex-port market.
This included an intelligent temperature control greenhouse, integrated sensor system, a drip ir-rigation and irrigation system, all introduced to visitors via demon-strations and other promotional activities.
Back at the Agricultural Ma-chinery Hall, we were delighted to have discovered more unique machinery such as one built to cut a pineapple’s skin and another made to rip out fruit seeds.
Other attractions here includ-ed harvesting machines ideal for small farmers to harvest vegetables without incurring high labour cost.
However, these machines use environmentally friendly and en-ergy-saving Li-Polymer battery.
Smart technology at the 2018 Taoyuan Agriculture Expo
Biotech meets farming in TaiwanRise in indoor farming technology and research investments boosts verticle farming — expert
S TO R I E S BY H A L I M YA A C O B
Vertical farming in Taiwan is becom-ing more popular as indoor farming technology and re-search investments
increase, says Tsai Wen-chin.YesHealth iFarm in Taoyuan’s
Luchu township is a Taiwan-based agriculture fi rm that operates such a farm.
The firm is the largest indoor plant producer in Asia, currently employing 130 people, according to its 53-year-old chairman Tsai.
In relating how he started the farm, Tsai recalled — during the Smart City Brands Media Tour host-ed by the Taiwan External Trade Development Council for journal-ists — that he was in his 30s when he noticed ample business poten-tial in the then fruit market. Tsai was at the time also much involved in
the information and communica-tions technology industry (ICT).
However in 2008 Tsai was di-agnosed with liver cancer and he needed to change his exhausting lifestyle. Leaving the high pressured work environment in the ICT indus-try, he devoted himself to indoor farming research, nutritional learn-ing, and started YesHealth iFarm.
According to Tsai, YesHealth iF-arm only uses fertiliser made from organic soybeans. He says the plants also listen to music.
Tsai says his fi rm is proud of its “4 zeroes 2 lows” standards and achievements: Zero pesticide res-idue, zero toxic heavy metals, zero E coli, zero parasites, low nitrates, and low bacteria count. He says
Moving towards Agricultural 4.0 in Taiwan with smart technology
Lin (left) and Mitagri Co chairman Chen Yu-jan both holding an atemoya posed for photos during a visit to a local supermarket in Kuala Lumpur as part of a business trip to Malaysia in early March. They were in Kuala Lumpur to promote Taiwan-produced atemoyas as well as to gain a deeper understanding about importing fruits from Taiwan to Malaysia. Photo by Taiwan Today
YesHealth iFarm’s Tsai operates the largest indoor farm in Asia. Photo by YesHealth iFarm
the farm’s unique growing process gives its produce a unique crunch and taste.
“Not only is YesHealth iFarm an excellent template for organic farm-ing, it is also a technology-driven 14-storey vertical farm covering 2,645 sq m”, says Tsai.
The farm is two stories taller than the largest vertical farm in Japan and grows over 40 varieties of vegetables, including arugula, ice plant and mustard leaf, says Tsai, adding various spectrums of LED lights are used depending on the plant.
He says YesHealth iFarm pro-duces over 100 times what a tradi-tional farm can while using only a tenth of the water the latter uses. Tsai added that YesHealth iFarm produces 1.2 tonnes of vegetables a day and that it supplies vegetables and herb spices to hotels in Taiwan such as the Grand Hyatt and Wes-tin Hotel. Its products also end up
in in-fl ight meals of EVA Air and China Airlines through the fi rm’s catering affi liates.
YesHealth iFarm also has a direct business-to-customer line via its ready-to-eat salad packs and other vegetable-based products. Th ese are distributed by French super-market brand Carrefour, says Tsai.
Th e chairman of YesHealth i-farm says the fi rm is prepared to export its technology and production sys-tem as a turnkey package for com-panies that want to develop their own brands.
“The Taiwan government has published a policy which encour-ages companies to do business in Southeast Asia. Th is, I think, would be a good opportunity for us to ven-ture into Southeast Asia to do this kind of vertical farming.
“But, in order to do this, we would need a local partner; a lo-cal strategic partner will help us do this,” says Tsai.
2 5
MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY
YEAR YEAR DAY DAY CODE COUNTER CLOSING +/– VOL VWAP* PE# DY MKT CAP HIGH LOW HIGH LOW (RM) (RM) (‘000) (RM) (X) (%) (MIL)
Bursa Malaysia Main Market YEAR YEAR DAY DAY CODE COUNTER CLOSING +/– VOL VWAP* PE# DY MKT CAP HIGH LOW HIGH LOW (RM) (RM) (‘000) (RM) (X) (%) (MIL)
Bursa Malaysia
KLSE COMPOSITE 1,761.78 -1.79 -0.10
KLSE INDUSTRIAL 3,165.25 -22.94 -0.72
CONSUMER PRODUCT 740.16 1.57 0.21
INDUSTRIAL PRODUCT 167.59 -1.21 -0.72
CONSTRUCTION 210.50 -2.19 -1.03
TRADE & SERVICES 216.93 0.58 0.27
KLSE FINANCIAL 17,492.84 -41.74 -0.24
KLSE PROPERTY 1,043.49 -3.48 -0.33
KLSE PLANTATION 7,782.65 44.65 0.58
KLSE MINING 911.89 4.05 0.45
INDICES CLOSE +/- %CHGTECHNOLOGY 36.06 -0.06 -0.17
MarketsG L O B A L M A R K E T S . B U R S A M A L A Y S I A E Q U I T Y D E R I V A T I V E S
MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY 2 9
Please refer to the Bursa Malaysia website for the prices of loan stocks, bonds and overseas structure warrants
Wall Street ahead — US stocks ends high-volume session lower on trade jitters
NEW YORK: Wall Street stocks ended lower last Friday, capping a day of heavy trading with investors mostly pulling back from initial concerns over an escalating trade dispute between the US and China. US President Donald Trump unveiled an initial list of strategically important goods that would be subject to a 25% tariff effective July 6, a move China’s commerce ministry called “a threat to China’s economic interest and security.” China issued its own list of US imports subject to tariffs, targeting soybeans, aircraft, autos and chemicals. Since early May, the two countries have held several rounds of talks but have yet to reach a deal, as the US pressures China to narrow a US$375 billion trade defi cit. “A lot of people may have over-reacted at the very beginning of the day,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York. “I don’t think a trade war is going to be inevitable,” Pavlik said. “I think [the president is] posturing, I think he’s chest-pounding, I think he’s doing exactly what he thinks he got elected to do.” Last Friday also marked “quadruple witching day,” the quarterly simultaneous expiration of US options and futures contracts, which tends to boost trading volume as
investors replace expiring positions. Volume hit the highest point since Feb 8, when the S&P 500 Index sank to its lowest level of the year so far. Companies considered the most sensitive to trade war worries were among the day’s biggest drags. Shares of Boeing Inc, the single-largest US exporter to China, fell 1.3%, while tariff-sensitive construction equipment maker Caterpillar Inc and chemical company DowDupont Inc were down 2% and 0.9% respectively. The Dow Jones Industrial Average fell 84.83 points or 0.34% to 25,090.48; the S&P 500 lost 3.07 points or 0.11% to 2,779.42; and the Nasdaq Composite dropped 14.66 points or 0.19% to 7,746.38. For the week, the Dow was down 0.9%, while the S&P 500 rose 0.01% and the Nasdaq gained 1.3%, its fourth consecutive weekly advance. Of the 11 major sectors of the S&P 500, six ended the day in negative territory. The energy sector was the biggest percentage loser, down 2.1% as oil prices tumbled more than 3% ahead of this week’s Opec meeting. Decl ining issues outnumbered advancing ones on the New York Stock Exchange by a 1.21-to-one ratio; on Nasdaq, a 1.02-to-one ratio favoured advancers. The S&P 500 posted 23 new 52-week highs and four new lows; the Nasdaq Composite recorded 152 new highs and 40 new lows.
Global market — Simmering trade tensions set stocks up for weekly loss
LONDON: World shares fell and were set to end the week in the red last Friday while the dollar hit a seven-month high, as investors braced for a list of Chinese goods targeted in a fi rst round of announced trade tariffs by the US. The MSCI All Country World index, which tracks shares in 47 countries, lost 0.48% in Europe and was set for a weekly loss. The outbreak of a global trade war has been the most frequently cited “biggest tail risk” by investors this year in Bank of America Merrill Lynch’s monthly survey of global fund managers, on the back of ramped-up protectionist rhetoric and measures by the US administration. It is not clear when US President Donald Trump will activate the measures, but rising Sino-US trade tensions will put more pressure on China’s economy, which is starting to show signs of cooling after a multi-year crackdown on riskier lending. Andrew Milligan, head of global strategy at Aberdeen Standard Investments, said that in the context of trade fl ows, the sum of goods targeted was small. “The big question is do we fall into tit for tat? What’s the response going to be from China and the European Union? Can it remain at a technical level or will we see a series of high-profi le failing conversations between Mr Trump and other leaders?
“That may not affect gross domestic product growth all that much in the short term, but it will have a noticeable impact on cross-border capital fl ows and business sentiment,” Milligan said. The Asia Pacifi c MSCI index ex-Japan edged down 0.3% and was set for a weekly loss of more than 1%. Many markets in Asia were closed last Friday for holidays celebrating the end of Ramadan. Chinese stocks led the losses, with the benchmark Shanghai Composite index plumbing a 20-month low, as investors worried about the economic damage from the trade tensions with the US. Japan’s Nikkei 225 closed up 0.5% and Australian shares ended 1.3% higher. European shares were set for their best week in more than three months as investors pushed back expectations for an interest rate increase after last Thursday’s European Central Bank meeting. The pan-European STOXX 600 Index fell 0.4%, as a recovering euro weighed. Both stocks and the euro dipped briefl y on a report that said Germany’s Christian Social Union party would dissolve its alliance with Chancellor Angela Merkel’s Christian Democrats. They recovered after the report was denied, and found to be a hoax. The single currency was headed for its worst weekly loss in 19 months after the European Central Bank last Thursday signalled interest rates would be left at record lows into at least mid-2019. — Reuters
MarketsI N S I D E R M O V E S . T R A D I N G T H E M E S . E V E N T S . F O R E X
MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY 3 0
Local event to watch out for today
While every eff ort is made to ensure accuracy, the information presented is not an exhaustive list and is not an offi cial record of shareholder fi lings. Direct and indirect share are combined due to space constraints. Readers who are interested should check the offi cial fi lings fi led with Bursa Malaysia. Note: * denotes Ace Market
AEMULUS (1,290,000) AEMULUS VENTURE S/B 42,928,749 11 & 12/6AMMB (1,088,400) EMPLOYEES PROVIDENT FUND BOARD 263,882,837 8/6AXIS REAL ESTATE INVEST TRUST 516,100 EMPLOYEES PROVIDENT FUND BOARD 193,948,713 8/6BARAKAH OFFSHORE PETROLEUM (5,500,000) FELDA INVESTMENT CORPORATION S/B 54,000,000 12/6BARAKAH OFFSHORE PETROLEUM (7,000,000) FELDA INVESTMENT CORPORATION S/B 59,500,000 11/6BERJAYA ASSETS 1,150,000 DYMM SULTAN IBRAHIM JOHOR 315,900,000 7, 8, 11, & 12/6BOUSTEAD 415,000 LEMBAGA TABUNG ANGKATAN TENTERA 1,198,315,018 8 & 11/6BUMI ARMADA 2,256,000 EMPLOYEES PROVIDENT FUND BOARD 413,600,080 8/6BUMI ARMADA (566,100) EMPLOYEES PROVIDENT FUND BOARD 413,033,980 11/6CAPITALAND MALAYSIA 1,000,000 EMPLOYEES PROVIDENT FUND BOARD 212,159,300 8/6MALL TRUSTCCM DUOPHARMA BIOTECH 318,300 EMPLOYEES PROVIDENT FUND BOARD 20,299,576 11/6D.B.E. GURNEY RESOURCES 93,896,712 DOH PROPERTIES S/B 519,488,496 13/6DESTINI (34,800,000) BPH CAPITAL S/B 197,805,212 12/6DESTINI 34,800,000 DATO’ ROZABIL @ ROZAMUJIB 299,947,012 12/6 BIN ABDUL RAHMANDIALOG GROUP (3,721,900) KUMPULAN WANG PERSARAAN 387,452,833 11 & 12/6 (DIPERBADANKAN)DIGI.COM 13,474,100 EMPLOYEES PROVIDENT FUND BOARD 1,242,592,050 5 & 8/6DRB-HICOM (1,433,600) EMPLOYEES PROVIDENT FUND BOARD 170,798,726 5 TO 7/6EASTERN & ORIENTAL 455,200 KUMPULAN WANG PERSARAAN 94,946,409 12/6 (DIPERBADANKAN)EASTERN & ORIENTAL (503,900) LEMBAGA TABUNG HAJI 97,751,700 11/6ECO WORLD DEVELOPMENT 581,900 EMPLOYEES PROVIDENT FUND BOARD 158,206,700 8/6GLOBETRONICS TECHNOLOGY 677,700 EMPLOYEES PROVIDENT FUND BOARD 80,118,089 8/6HARN LEN CORPORATION (5,500,000) LOW NAM HUI UNITED S/B 34,744,679 12/6HONG LEONG BANK (1,056,600) EMPLOYEES PROVIDENT FUND BOARD 269,531,821 8/6IGB REAL ESTATE INVEST TRUST (1,441,900) EMPLOYEES PROVIDENT FUND BOARD 367,988,813 8/6IHH HEALTHCARE 2,465,000 EMPLOYEES PROVIDENT FUND BOARD 718,805,447 7 & 8/6IJM CORPORATION 858,000 EMPLOYEES PROVIDENT FUND BOARD 524,449,118 8/6IJM CORPORATION (1,408,100) KUMPULAN WANG PERSARAAN 185,426,700 12/6 (DIPERBADANKAN)INARI AMERTRON 1,083,400 EMPLOYEES PROVIDENT FUND BOARD 161,461,050 8/6INARI AMERTRON (4,641,800) KUMPULAN WANG PERSARAAN 434,066,375 11 & 12/6 (DIPERBADANKAN)IOI CORPORATION 937,500 EMPLOYEES PROVIDENT FUND BOARD 799,473,573 8/6IOI PROPERTIES GROUP (308,500) EMPLOYEES PROVIDENT FUND BOARD 370,686,732 8/6IRIS CORPORATION (4,946,200) FELDA INVESTMENT CORPORATION S/B 420,860,281 12/6LUSTER INDUSTRIES (3,750,000) LIANG WOOI GEE 24,023,257 11/6MAH SING GROUP 896,300 EMPLOYEES PROVIDENT FUND BOARD 226,264,861 11/6MALAYSIA AIRPORTS 482,500 EMPLOYEES PROVIDENT FUND BOARD 171,301,992 8/6MAXIS 321,798 EMPLOYEES PROVIDENT FUND BOARD 919,423,162 6 & 8/6MBM RESOURCES (338,400) EMPLOYEES PROVIDENT FUND BOARD 61,505,891 8/6MGB 1,118,600 LBS BINA GROUP 276,745,415 12/6MISC 1,080,006 EMPLOYEES PROVIDENT FUND BOARD 279,595,323 5 TO 7/6MUHIBBAH ENGINEERING (M) 744,000 FIL LIMITED BERMUDA 31,539,800 8/6NEXTGREEN GLOBAL (2,000,000) DATO DR KOE SENG KHENG 450,602 11/6OCK GROUP 375,000 EMPLOYEES PROVIDENT FUND BOARD 53,531,900 8/6PETRONAS CHEMICALS 336,900 EMPLOYEES PROVIDENT FUND BOARD 568,758,600 8/6PROTASCO (1,289,100) EMPLOYEES PROVIDENT FUND BOARD 27,450,978 8/6PUBLIC BANK 2,797,500 EMPLOYEES PROVIDENT FUND BOARD 540,337,200 8/6QL RESOURCES (440,700) EMPLOYEES PROVIDENT FUND BOARD 81,189,140 8/6S P SETIA 400,000 EMPLOYEES PROVIDENT FUND BOARD 367,665,867 8/6SERBA DINAMIK 3,195,300 KUMPULAN WANG PERSARAAN 144,711,300 7, 8, 11 (DIPERBADANKAN) & 12/6SIME DARBY PLANTATION 2,820,000 EMPLOYEES PROVIDENT FUND BOARD 954,924,731 7 & 8/6SIME DARBY PROPERTY 700,000 EMPLOYEES PROVIDENT FUND BOARD 723,800,410 8/6SUNWAY 398,700 EMPLOYEES PROVIDENT FUND BOARD 304,086,714 8/6SUPERLON 498,000 KUMPULAN WANG PERSARAAN 18,475,100 11/6 (DIPERBADANKAN)TA WIN 700,000 TENGGARA KAPITAL S/B 6,550,000 12/6TDM (5,000,000) KUMPULAN WANG PERSARAAN 93,297,640 12/6 (DIPERBADANKAN)TELEKOM MALAYSIA 3,395,000 EMPLOYEES PROVIDENT FUND BOARD 672,626,346 8/6TENAGA NASIONAL (8,431,500) EMPLOYEES PROVIDENT FUND BOARD 696,299,482 7 & 8/6TENAGA NASIONAL 980,000 KUMPULAN WANG PERSARAAN 327,969,125 7, 8, 11 (DIPERBADANKAN) & 12/6TIGER SYNERGY 1,100,000 TAN LEE CHIN 20,286,700 12/6TIME DOTCOM (185,800) EMPLOYEES PROVIDENT FUND BOARD 58,349,500 8/6TIONG NAM LOGISTICS (109,200) EMPLOYEES PROVIDENT FUND BOARD 24,739,590 7/6UMW (672,633) KUMPULAN WANG PERSARAAN 73,125,967 8, 11 & 12/6 (DIPERBADANKAN)WESTPORTS 397,700 EMPLOYEES PROVIDENT FUND BOARD 179,195,800 8/6YTL CORPORATION 5,750,000 YEOH TIONG LAY & SONS S/B 5,310,338,594 12/6
COMPANY SHARES ACQUIRED DIRECTOR/SUBSTANTIAL SHARES HELD TRANSACTION (DISPOSED) SHAREHOLDER AFTER CHANGE DATE
Insider moves (Filings on June 13, 2018)Insider Moves show what substantial shareholders are doing with their stakes, which could be a signal of their views on the company’s outlook.
Note: Run your fi nger down the left-hand side until you reach the country of origin you plan to exchange. Then move your fi nger until that line intersects with the vertical column of the currency you wish to buy. The fi gure is how much you will get. The above rates are subject to change and provided by Thompson Reuters.
Foreign exchange rates NZ EURO US SWISS BRIT CANADA BRUNEI S’PORE AUST M’SIA CHINA BANGL’H DENM’K UAE INA INDIA JAPAN NORWAY PHIL QATAR SAUDI SWEDEN THAI HK
This table shows stocks that are trading near their year low. This could suggest a build-up in selling momentum, or the possibility that bargain hunting could set in later.
This table shows stocks that are trading near their year high. This could suggest a build-up in buying momentum, or the possibility that profi t-taking activities could set in later.
Trading themes
Stocks closest to year high Stocks closest to year low
Australia’s wine exports
• Woodlandor Holdings Bhd’s annual general meeting at Eastin Hotel, Ballroom 2, Level LG, Jalan 16/11, Pusat Dagang Seksyen 16, Petaling Jaya at 10am.
Australian winemakers have faced delays getting products through Chinese customs this year amid a diplomatic rift between Canberra and Beijing. Australian wine companies have until recently benefi ted from an insatiable thirst for wine among China’s growing middle class.
MarketsF U T U R E S . M O N E Y M A R K E T . C O M M O D I T I E S
3 1
MONDAY JUNE 18, 2018 • THEED G E FINANCIAL DAILY
Index futures
FUTURES FAIR VALUECONTRACT DAYS TO EXPIRY KLIBOR DIVIDEND FAIR VALUE
FUTURES ROLL OVER BID OFFER CLOSE
JUN/JUL 2.5 2.0 2.0
INDEX AND FUTURES OPEN CHANGE INCONTRACT LAST CHANGE VOLUME INTEREST OPEN INTEREST
Money market
Commodities
JUN/JUL -18JUN/AUG -17JUN/SEP -19JUL/AUG 1
CPO FUTURES INDICATIVE ROLL-OVER
CPO/SOYOIL FUTURES BASIS (USD)CURRENT -74.293 MONTHS AVERAGE -72.716 MONTHS AVERAGE -85.37
OPEN CHANGE INCONTRACT LAST CHANGE VOLUME INTEREST OPEN INTEREST
CPO prices react to various factors including soyoil prices, weather conditions and stockpiles. Open interest shows either increasing or decreasing market participation.
Oil slumps 3% on Opec supply, China tariff s
METAL & PRECIOUS METALSTIN US$/TON KLTM 20,900 -50COPPER USC/IBS CMX 3.1555 -0.0765GOLD US$/TROY OZ CMX 1,276.30 -29.90PLATINUM US$/TROY OZ NYMEX 889.80 -23.10PALLADIUM US$/TROY OZ NYMEX 981.80 -24.80SILVER USC/TROY OZ CMX 16.48 -0.78ALUMINIUM RMB/TON SHF 14,515 -160ZINC RMB/TON SHF 24,115 -230
MONTH SETTLEMENT CHANGE VOLUME OPEN PRICE INTEREST
Klibor
Malaysian palm oil futures rose last Th ursday, pulling back from a more-than-22-month low hit in the previous session, as traders took the opportunity to buy at low prices ahead of Eid festivities during the weekend. The benchmark palm oil contract for August delivery on Bursa Malaysia Derivatives Exchange was up 0.8% at RM2,336 per tonne at the closing trade, after logging eight straight sessions of falls. It fell to as low as RM2,300 last Wednesday, its lowest since July 28, 2016. Traders were covering ahead of the long weekend as the market was oversold, a trader based in Kuala Lumpur said. “Market has achieved the technical objective at RM2,300 per tonne, suggesting that the recent low level is attractive to buy. Recovery in overseas commodities markets added support for the correction,” the trader said. Palm oil prices track the performances of other edible oils, as they compete for a share in the global vegetable oils market. Th e Chicago Board of Trade’s July soybean oil contract rose 0.1%. The September soybean oil on China’s Dalian Commodity Exchange (DCE) climbed as much as 0.5%, while the DCE September palm oil contract rose as much as 0.2%. “I trust the market is on a correction phase since it has been on a bear run since last week (previous week),” another trader said. — Reuters
REGION GRADE A GRADE B GRADE C OER (RM/TON) OER (RM/TON) OER (RM/TON)
(IN RM/TON) JUL’18 AUG’18 SEP’18
CPO DELD 2,291 2,320 NO TRADEPK EX-MILL NO TRADE NO TRADE NO TRADECPKO DELD NO TRADE NO TRADE NO TRADERBD P.OIL FOB NO TRADE NO TRADE NO TRADERBD P.OLEIN FOB NO TRADE NO TRADE NO TRADERBD P. STEARIN FOB NO TRADE NO TRADE NO TRADE
MPOB Palm oil physical
Oil prices fell more than US$2 a barrel last Friday after two of the world’s biggest producers indicated they might increase output at this week’s Opec meeting, while US exports were threatened by potential Chinese tariff s on crude oil and refi ned products. Oil investors have been nervous ahead of the coming Opec summit in Vienna. Saudi Arabia and Russia have already boosted production modestly, and have indicated they are prepared to increase output at that meeting. Brent crude oil fell US$2.50 or 3.29% to settle at US$73.44 a barrel. US light crude settled US$1.83 lower at US$65.06 a barrel. In post-settlement trading, US crude retreated further, falling US$2.25 or 3.4% to US$64.64 a barrel. Brent crude was on track to end the week down more than 4%, while US crude was heading to fall 1.7%. — Reuters
Commodities
likely to extend its downtrend on lack of catalysts. — Bernama
CPO & Open Interest
CPO RM/tonne Open Interest
Jan 6, 2008 June 14, 2018
10000
57500
105000
152500
200000
1200
1950
2700
3450
4200
(+18)2,336
CPO vs Soyoil
CPO RM/tonne Soyoil US$/Ibs
Jan 6, 2008 June 14, 2018
0.3044(RM2,673/tonne)
2,336(+18)
0.000
0.175
0.350
0.525
1100
2425
3750
5075
6400 0.700
The US dollar edged lower against the Japanese yen last Friday, as US President Donald Trump announced hefty tariffs on US$50 billion of Chinese imports and Beijing threatened to respond in kind, raising tensions between the world’s two largest economies. Th e US dollar slipped 0.05% to ¥110.57, retreating from a three-week high of ¥110.9. Th e yen, a perceived safe haven often sought in times of geopolitical tensions and market turmoil, had touched a more-than-three-week low against the greenback earlier in the session. Trump, whose hardline stance on trade has seen him wrangle with allies, said in a statement a 25% tariff would be imposed on a list of strategically key imports from China. — Reuters
US dollar shaky as China trade worries weigh
Th e FBM KLCI futures (FKLI) contracts on Bursa Malaysia Derivatives ended mostly lower last Thursday amid the weaker underlying cash market. Spot month June 2018 fell 3.5 points to 1,758; both July 2018 and December 2018 decreased fi ve points each to 1,760.5 and 1,757 respectively; September 2018 went up 1.5 points to 1,762. Turnover slid to 6,768 lots from 6,984 lots last Wednesday, while open interest went up to 37,529 contracts from 37,205 contracts. Th e underlying benchmark FBM KLCI fell 1.79 points to 1,761.78. Th e FKLI on Bursa Malaysia Derivatives will likely trade lower this week on the back of an anticipated weaker cash market, said a dealer. Th e dealer also said the local bourse is
MONDAY JUNE 18, 2018 • THEEDGE FINANCIAL DAILY 3 2
Markets Y O U R D A I L Y F I N A N C I A L M A R K E T S R O U N D U P
F U T U R E S . M O N E Y M A R K E T . C O M M O D I T I E S PA G E 3 1
I N S I D E R M O V E S . T R A D I N G T H E M E S . E V E N T S . F O R E X PA G E 3 0
G L O BA L M A R K E T S . B U R SA M A L AY S I A E Q U I T Y D E R I VAT I V E S PA G E 2 9
M A I N M A R K E T . A C E M A R K E T L I ST I N G PA G E 2 5RESEARCH: TAI TS [[email protected]]
CONTRACT SETTLEMENT CHANGE HIGH LOW
KUALA LUMPUR: Th e FBM KLCI narrowed its losses at market close last Th ursday, but remained in the red in line with its regional peers, dragged by losses at Genting-related stocks and CIMB Group Holdings Bhd. At 12.30pm, the FBM KLCI was down 1.79 points to 1,761.78. Th e index had earlier slipped to its intraday low of 1,745.45. Losers led gainers by 372 to 361, while 372 counters traded unchanged. Volume was 1.62 billion shares valued at RM3.02 billion. Th e top losers included British American Tobacco (M) Bhd, Petronas Gas Bhd, Aeon Credit Service (M) Bhd, Ajinomoto (M) Bhd, Hartalega Holdings Bhd, Genting Malaysia Bhd, CIMB and Genting Bhd. Th e actives included Malayan Banking Bhd (Maybank), Sapura Energy Bhd, My EG Services Bhd, YTL Corp Bhd, Sanichi Technology Bhd, TDM Bhd and Barakah Off shore Petroleum Bhd. The gainers included Nestle (M) Bhd, Petronas Dagangan Bhd, Supermax Corp Bhd, Focus Lumber Bhd, Bursa Malaysia Bhd and Apollo Food Holdings Bhd. Asian shares eased last Th ursday after the US Federal Reserve raised interest rates and took a more hawkish tone in forecasting a slightly faster pace of tightening, while concerns about US-China trade frictions kept investors on edge, according to Reuters. Affi n Hwang Capital Research said the FBM KLCI closed fl at last Wednesday and volatility was low with market trading within a range of 9.12 points only. — by Surin Murugiah
FBM KLCI narrows loss, but remains in the red as Genting, CIMB weigh
KLCI CHANGE CLOSE VOLUME POINTS (RM) (RM) ('000)PETRONAS DAGANG 1.42 0.880 25.820 970.3NESTLE (M) 1.18 3.100 148.000 223.6IOI CORP 1.02 0.100 4.700 13224.3TENAGA NASIONAL 0.92 0.100 14.500 16093.3RHB BANK 0.65 0.100 5.810 3341.7SIME DARBY 0.55 0.050 2.600 5802.1SIME DARBY PLANTATION 0.55 0.050 5.510 24436.2HAP SENG CONSOLIDATED 0.53 0.130 9.890 937.7PUBLIC BANK -0.25 -0.040 24.040 8090.1KLCC PROP REIT -0.35 -0.120 7.530 660.0AXIATA GROUP -0.44 -0.030 4.770 7688.9DIGI.COM -0.51 -0.040 4.480 7185.9GENTING -0.56 -0.090 8.550 5733.9GENTING MALAYSIA -1.35 -0.140 5.090 9713.9CIMB GROUP -1.68 -0.110 5.970 19758.9PETRONAS GAS -1.80 -0.560 17.500 1483.0SUB-TOTAL -0.11 OTHERS -1.68 GRAND TOTAL -1.79
STOCK VOLUME CHANGE CHANGE CLOSE HIGH LOW ('000) (%) (RM) (RM) (RM) (RM)
Table above is from Reuters Volume break 3x 5-day average volume, meaning the total number of shares traded for a particular counter on the previous trading day is more than triple the average volume for the last 5 trading days. The table captures the build-up of interest in these companies and is thus a gauge of market expectations for these counters.
UNUSUAL MARKET ACTIVITIES
* How stock price changes affected the index on the previous trading day
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Moving average - 20-dayKL Composite Index
Volume (’mil)
Jan 2, 2008 June 14, 2018
1,761.78(-1.79)
1,784.69
820.0
1122.5
1425.0
1727.5
2030.0
0
300
600
900
1740.0
1742.4
1744.8
1747.2
1749.6
1752.0
1754.4
1756.8
1759.2
1761.6
1764.0
17:1516:3015:3014:3012:4511:3010:309:308:45
Index point
KL Composite Index
KLCI futures1,758.00
(-3.50)
1,761.78(-1.79)
JUN 18 1,758.00 -3.50JUL 18 1,760.50 -5.00SEP 18 1,762.00 -1.50
Never look backwards or you’ll fall down the stairs. — Rudyard Kipling