This article first appeared in The Edge Malaysia Weekly on April 30, 2018 - May 6, 2018

With the candidates named on April 28, the countdown to the long-awaited 14th general election (GE14) enters its final few days before polling day on May 9 in the middle of next week, which is now a public holiday, just ahead of the May 13 Mothers’ Day weekend.

This is a holiday-shortened week for many countries to mark Labour Day (May 1), more so for Japan, which unfortunately is seeing a measles outbreak in Okinawa ahead of this week’s “Golden Week” break.

The US Federal Open Market Committee is expected to keep its policy rate unchanged on May 2. Federal Reserve chief Jerome Powell is not scheduled to give an economic update after this meeting. In the US, investors’ attention will be on earnings releases by several large names, including Apple, Tesla and Warren Buffett’s Berkshire Hathaway.

Meanwhile, rate announcements are due from the Reserve Bank of Australia on Monday (April 30) and Norway’s Norges Bank on Thursday (May 3).

In Malaysia, key data releases this week include the Producer Price Index (PPI) for March on Monday, but exports and trade data for March, slated for release on Friday (May 4), will be closely watched.

Exports fell 2% year on year in February, coming in below expectations after growing 11.6% in January. Some economists have attributed the surprise decline to a shorter working month, and believe March’s data will show growth again, although not as strong as January’s.

Developments in the ongoing US-China tit-for-tat tariff war as well as crude oil price will be closely watched. Oil prices remained at new multiyear highs last week, hovering above US$74 a barrel at the time of writing, on geopolitical tensions in the Middle East.

The ringgit fetched 3.9195 to the greenback at the time of writing — still near three-year highs, although not as strong as 3.8620 on April 2. The ringgit breached the old 3.80 peg against the US dollar in July 2015.

Elsewhere, the latest trade data will be released — Thailand and South Korea (April 30) as well as Australia and the US (May 3). The Consumer Price Index (CPI) data is also slated for release in South Korea, Thailand and Indonesia on May 2 and the Philippines on May 4. The eurozone will release its Harmonised Index of Consumer Prices (HICP) on May 3.

Also slated for release this week is China’s manufacturing Purchasing Managers’ Index (PMI) on Monday and the Caixin manufacturing PMI on May 3. The UK will see the release of the Markit manufacturing PMI on April 30. Japan will release its services PMI on May 2. Also on May 2 are PMI manufacturing index from Singapore, India and the eurozone.

The US’ ISM manufacturing index will be released on May 1 while the non-manufacturing data will be out on May 3, but eyes will be on the US ADP employment survey on May 2 and the US April labour market report with unemployment and payroll data on May 4.

On the Malaysian corporate front, companies having their annual general meetings (AGM) this week include Petronas Gas Bhd and Bintulu Port Holdings Bhd on Monday and Petronas Chemicals Group Bhd on Wednesday.

Sinmah Capital Bhd, meanwhile, is having its extraordinary general meeting (EGM) on May 2. Formerly known as Farm’s Best Bhd, Sinmah is seeking approval for several proposals, including a renounceable five-for-two rights issue that comes with a free detachable warrant for every four rights shares taken. At an indicative price of 20 sen, the rights issue will raise up to RM44.42 million, or at least RM15.27 million if its major shareholder FCH Holdings Sdn Bhd (FCH) takes up its rights entitlement plus another 22.7 million excess rights shares.

The poultry company also wants shareholders’ approval to diversify into property development and construction, and to enter into a joint venture (JV) with Encorp Bhd’s subsidiary to carry out a mixed-use development on a 77.94-acre tract in Mukim Bukit Katil, Melaka. Money from the rights issue will be used to cover the land cost as well as development and construction expenditure. Sinmah’s obligation would be 48.76 million for its 70% stake in the JV.

Sinmah is also seeking an exemption for FCH and parties aligned to it from being obliged to undertake a mandatory general offer, as well as the establishment of a share issuance scheme for directors and employees. Together with parties aligned to it, FCH’s collective 36.14% stake stands to increase to 81.76% post-rights issue under the maximum scenario, but before the exercise of the rights warrants, Sinmah’s circular reads.

MainStreet Advisers Sdn Bhd, an independent adviser, said the proposed exemption is “fair and reasonable”, noting that gearing will fall from 0.95 times as at the end of last year to between 0.36 times (maximum) and 0.51 times (minimum). It also noted that non-interested shareholders will be diluted, from 63.86% to 18.24%, if they do not subscribe for the rights issue, which is at a discount of 88.89% to the audited net asset as at end-2017.

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