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This article first appeared in The Edge Malaysia Weekly on June 18, 2018 - June 24, 2018

The possible announcement of the full Cabinet line-up could be among the highlights this week, even as businesses continue to cash in on the World Cup 2018 fever and the zero-rated Goods and Services Tax (GST) “tax holiday”. There was no Cabinet meeting last Wednesday (June 13) with Prime Minister Tun Dr Mahathir Mohamad just returning from a work trip in Japan (June 11 and 12) and Hari Raya Puasa festivities on June 15 and 16. Thirteen ministers have been appointed to date.

Also in focus are developments in the ongoing 1Malaysia Development Bhd (1MDB) investigations as well as news on how government expenditure excesses are being cut.

The Organisation of the Petroleum Exporting Countries (Opec) meeting in Vienna on June 22 and 23 will also be closely followed here. Iran and Venezuela, both subject to US sanctions, stand to lose market share if Saudi Arabia and Russia proceed to raise oil production.

In Malaysia, all eyes are on oil prices as the Ministry of Finance had worked in an oil price of US$70 per barrel in the recently revised Budget 2018 compared with the US$52 per barrel used in preparing Budget 2018 last October. When announcing that the 2.8% targeted budget deficit for 2018 can be maintained, the government had estimated RM5.4 billion in additional revenue from higher oil prices versus RM3 billion of estimated spending to subsidise and stabilise the price of RON95 and diesel to help ease the burden of consumers.

Brent crude oil was hovering at US$75 a barrel at press time on June 13, off its recent high of US$79.80 (closing) on May 23 this year, but it has more than doubled from as low as US$27.88 on Jan 20, 2016. Brent has traded between US$48.65 and US$80.50 (intraday) in the past year. It hit US$116.61 a barrel on Aug 28, 2013, but slipped below US$100 in the second half of 2014. Saudi Arabia, which pushed plans for a Saudi Aramco IPO to 2019, is believed to want oil prices at above US$80 a barrel.

The ringgit, which has benefited from a stronger oil price, was hovering at 3.9950 to the greenback at the time of writing. Its highest in the past year was 3.8620 on April 2 while its lowest was 4.3008 on July 7, 2017.

The main data to be released in Malaysia this week is the Consumer Price Index (CPI) for May on Wednesday (June 20). With the zero-rating of GST from June 1, the May number will be the last headline inflation reading where prices still included the 6% consumption tax. Consumption is expected to rise in the run-up to the reintroduction of a revised Sales and Services Tax (SST) from Sept 1. Inflation, however, is expected to be contained at below 3%. Headline inflation was 1.4% in April, inching up from 1.3% in March, bringing the average for the first four months of the year to 1.7%.

CPI releases are also scheduled in Japan on June 21 and Canada on June 22 while the eurozone will announce the latest Consumer Sentiment Index on June 21. Other key economic releases this week include the latest trade balance for Japan (June 17) and Indonesia (June 20), Singapore’s latest non-oil domestic exports (NODX) data on June 18 and the eurozone’s Composite, Manufacturing and Service Purchasing Managers’ Index (PMI) data on June 22.

There are also several key interest rate announcements this week, starting with the Bank of Thailand on June 20. Philippine central bank Bangko Sentral ng Pilipinas, Norway’s Norges Bank and the Bank of England will make interest rate decisions on June 21.

Bank Negara Malaysia, whose next monetary policy committee (MPC) meeting is scheduled for July 11, will announce its foreign reserves position for mid-June 2018 on June 21. As at end-May, foreign reserves stood at US$108.5 billion — down about US$1 billion from end-April’s over three-year high of US$109.5 billion — but still above end-March’s US$107.8 billion.

In Malaysia, companies having their annual general meetings (AGMs) this week include Press Metal Aluminium Holdings Bhd (June 19); AirAsia Group Bhd, Sunway Construction Group Bhd, Xidelang Holdings Ltd and Crest Builder Holdings Bhd on June 20; AEON Credit Service (M) Bhd, Sunway Bhd, Mitrajaya Holdings Bhd, Amverton Bhd and Malaysia Steel Works (KL) Bhd on June 21; as well as Kretam Holdings Bhd, Kimlun Corp Bhd and Choo Bee Metal Industries Bhd on June 22.

Companies holding extraordinary general meetings (EGMs) this week include Excel Force MSC Bhd on June 19 and Leading Entrepreneur Accelerator Platform (LEAP) market-listed, Singapore-based IT solutions provider Cloudaron Group Bhd (June 21).

Excel Force is asking shareholders to approve its proposed disposal of its office premises in Tower A, Level 13 of Plaza33 to the owner of the building for RM15.67 million. The selling of the property, tenanted by Panasonic Appliances Asia Pacific for three years from Feb 15, is expected to result in a RM1.52 million gain on disposal and would allow the company to reduce its outstanding bank borrowings of RM3.99 million.

Cloudaron — the cloud-service company that listed on the LEAP market (only accessible to sophisticated investors) on Oct 3 last year — is seeking shareholders’ approval to buy the remaining 90% stake in Realtors8 Pte Ltd for S$4.23 million (RM12.58 million) by issuing 52.4 million new Cloudaron shares at 24 sen each, making Realtors8 a wholly-owned subsidiary. The seller is Australia Stock Exchange-listed 8common Ltd.

Cloudaron also wants shareholders to give the green light to buy 100% of DACS Network Solutions Sdn Bhd for RM7.2 million or 7.6 times FY2017 earnings from Edmund Low Chun Hoong, who is providing a guarantee to ensure profit after tax for FY3/2019-2021 is at least RM1.2 million every year. The purchase consideration is RM2 million cash and 16.51 million new Cloudaron shares issued at 31.5 sen each.

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