The Week Ahead: Corporate earnings, Saudi crown prince’s KL visit to take centre stage

This article first appeared in The Edge Malaysia Weekly, on February 18, 2019 - February 24, 2019.
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Corporate earnings and Saudi Arabian Crown Prince Mohammed Salman’s maiden visit to Malaysia on Feb 17 will take centre stage this week.

A slew of prominent companies, including Axiata Group Bhd, Kuala Lumpur Kepong Bhd (KLK), Public Bank Bhd and Sime Darby Bhd are expected to release their financial results for the final quarter of last year.

The stream of earnings releases will pick up pace from this week as companies have to report their earnings for the October-December quarter by the end of this month.

On Monday afternoon, Prince Mohammed and Prime Minister Tun Dr Mahathir Mohamad are scheduled to jointly inaugurate the Refinery and Petrochemical Complex of Pengerang Refining and Petrochemical (PRefChem) in Kuala Lumpur.

PRefChem is a joint venture between Petroliam Nasional Bhd (Petronas) and Saudi Arabia’s national oil company, Saudi Aramco.

In 2017, Saudi Aramco invested a massive US$7 billion in the Petronas Refinery and Petrochemical Integrated Development (RAPID) project in Pengerang, Johor.

Saudi Arabia has invested heavily in refineries in Asia to lock in demand and fend off rivals, hence, there is a likelihood that more investments could be made in the RAPID project, Bernama reported last Friday, quoting MIDF Amanah Investment Bank Bhd head of research Mohd Redza Abdul Rahman.

There are only a few economic data releases this week, the key one being January’s inflation rate, as measured by the Consumer Price Index. The Department of Statistics Malaysia is scheduled to release the CPI data on Friday.

CPI in December rose 0.2% year on year, similar to the month before, marking the country’s lowest inflation growth rate since February 2015, which was just two months before the Goods and Services Tax was implemented. Inflation growth has been muted ever since the GST was removed in June last year. Inflation grew 1.8% in May last year, just prior to the consumption tax being abolished.

Bank Negara Malaysia will announce its latest foreign reserves data on Friday.

Meanwhile, negotiations between the US and China to end their trade war will continue in Washington this week. Talks between the two parties in Beijing last Friday broke up without a deal.

The negotiations come ahead of further US tariffs that are supposed to be imposed on March 1.

“We feel that we have to make headway on some very, very important and very difficult issues,” top US trade negotiator Robert Lighthizer said after the talks last Friday. He added that he was “hopeful” of progress.

China President Xi Jinping voiced hope that the talks this week would continue to work hard to promote a mutually beneficial and win-win agreement.

“We maintain our base case projection that negotiations will be extended beyond the March 1 deadline. We believe the extension could initially start with a one-to-three month extension from March 1,” says UOB Global Economic and Markets Research in its weekly outlook report last Friday.

“Tariff rates and scope of products tariffed would be maintained at current levels while negotiations continue. Along the way, US and Chinese officials may announce some achievements (like China buying more US goods) but a more comprehensive trade deal may not materialise until the second half of the year, which may mean a further extension,” it adds.

Last week, the US government managed to avert another shutdown after US President Donald Trump agreed to ink a spending bill that did not include finance for a controversial border wall with Mexico. However, Trump has said that he plans to use executive action, including declaring a national emergency, to get access to funds to pay for the wall. As at press time last Friday, no such emergency was declared.

US markets will close for the Presidents’ Day holiday on Feb 18.

Meanwhile, minutes from the US Federal Open Market Committee’s latest monetary policy meeting will be released on Feb 21.

It is a fairly quiet week for data releases in China, with the key one being new home prices for January, on Friday.

Thailand will report its fourth quarter 2018 gross domestic product data on Monday. Economists surveyed by Bloomberg expect the economy to see slightly faster growth of 3.6% y-o-y, bringing full-year growth to 4.1% compared with 3.9% in 2017. The country’s stock markets will close for Makha Bucha Day on Tuesday.

Bank Indonesia is the only major central bank in Asia with a monetary policy decision this week, on Thursday. It is expected to keep its policy rate at 6%.

On the home front, companies with annual general meetings include KLK and Batu Kawan Bhd (both on Feb 19), Pacific & Orient Bhd (Feb 21), as well as KSL Holdings Bhd and Aemulus Holdings Bhd (Feb 22).

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