Friday 29 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on April 2, 2018 - April 8, 2018

ASEAN finance ministers and central bank governors are slated to meet in Singapore this week (April 2 to 6) as fears of an impending US-China trade war dissipate (at least, for now). The latter and the reason for the lack of global market volatility last year may be among the areas of discussion.

On the equities front, the impact of increased scrutiny on the so-called FAANG (Facebook, Apple, Amazon, Netflix, Google) stocks — which represent the new titans of the Fourth Industrial Revolution — will likely be closely watched after US tech stocks came under pressure last week.

In Malaysia, investors are likely to keep a close eye on movements of several large capitalised stocks ahead of the next FBM KLCI constituent review in May, which is about the same time as the next round of quarterly earnings reporting. At the time of writing, pundits see the possibility of AMMB Holdings Bhd and Astro Malaysia Holdings Bhd being replaced by Hartalega Holdings Bhd and Dialog Group Bhd.

In parliament, the sixth and final term of the 13th sitting is scheduled to end this Thursday. Having passed the controversial redelineation report (129 voted for and 80 voted against) on March 28, the focus this week will be on the continuation of the debate on the proposed anti-fake news law.

Last Thursday, two amendments were proposed. The first is to cut the maximum jail term from 10 years to six while keeping the RM500,000 maximum fine. The second amendment would make it a crime to “maliciously” create fake news instead of “knowingly” create fake news. The proposed bill only requires a simple majority to pass. (See also infographic, “The story behind fake news”, on Page 64.)

After poring over Bank Negara Malaysia’s 2017 annual report, market attention will turn to the strength of the country’s exports data in February, slated for release on Thursday. Exports growth rebounded to 17.9% in January (versus 4.7% in December), widening the trade surplus to RM9.71 billion, which is positive for the current account surplus and ringgit.

On Friday, Bank Negara will announce its reserves data for end-March. At US$103.9 billion in mid-March, the reserves were 1.1 times short-term external debt and sufficient to finance 7.3 months of retained imports.

The Reserve Bank of Australia has a key rate announcement on Tuesday while the Reserve Bank of India is scheduled to make one on Thursday. The Bank of Japan, meanwhile, will publish its quarterly Tankan business sentiment survey on Monday.

Other key economic data releases this week include the Consumer Price Index data for Thailand and Indonesia on Monday, South Korea on Tuesday, and the Philippines and Switzerland on Thursday. Also slated for release on April 5 is Thailand’s latest consumer confidence data.

The eurozone will see the release of its Harmonised Index of Consumer Prices as well as the latest unemployment data on Wednesday. Canada will release its unemployment data on Friday.

Several countries are slated to release their respective Purchasing Managers’ Index (PMI) reading this week: Singapore’s manufacturing PMI and China’s Caixin manufacturing PMI on Monday, the US’ ISM manufacturing index and the eurozone’s manufacturing PMI on Tuesday, and the eurozone’s composite and services PMI as well as the UK’s CIPS/Markit services PMI on Thursday.

Over in the US, data releases include the ADP Employment Survey and ISM non-manufacturing index (Wednesday), trade balance (Thursday) and latest average hourly earnings, payrolls and unemployment data (Friday).

On the Malaysian corporate front, Syarikat Takaful Malaysia Bhd is having its annual general meeting on Tuesday while HLT Global Bhd and Zecon Bhd are having their respective extraordinary general meetings on Friday.

Glove-dipping lines maker HLT — which raised RM17.82 million in gross proceeds (RM15.42 million net) from its floatation on the ACE Market on Jan 10 last year — wants to diversify into the manufacturing and trading of rubber gloves.

It also wants shareholders’ approval to buy 55% of HL Rubber Industries Sdn Bhd (HLRI) for RM33 million, to be paid with 113.79 million new HLT shares issued at 29 sen each. The purchase consideration values HLRI at 12 times earnings. The vendors — Suntel International Co Ltd, AXG Capital Sdn Bhd and Lee Sow Yin — have guaranteed that HLRI will see profit after tax of at least RM10 million between Jan 1 this year and Dec 31 next year. HLT shares closed at 23.5 sen last Thursday, below its adjusted initial public offering price of 29.5 sen but just above its 52-week low of 23 sen on March 8.

HLT also wants shareholders’ permission to change the use of RM10.5 million unutilised IPO proceeds — originally earmarked for capital expenditure (land purchase and factory construction) — to the upgrading of eight of its 16 glove-dipping lines at HLRI’s factory in Kuala Pilah, Negeri Sembilan (RM3.6 million to boost production by 30% to 624 million gloves per annum), the setting up of one new line that can produce up to 12,000 pieces of gloves per hour (RM4.5 million) and working capital (RM2.4 million).

Sarawak-based engineering and construction firm Zecon will seek shareholders’ approval to dispose of a 49% stake in its wholly-owned subsidiary, Zecon Medicare Sdn Bhd, to the State Financial Secretary of Sarawak for RM155 million. According to its circular to shareholders, Zecon could save RM4.8 million interest cost per year by using RM80 million of the proceeds to pare bank borrowings (totalling RM373.4 million). That would cut its gearing from 2.92 times to 0.99 times.

 

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