The Week Ahead: Forfeiture hearing against PetroSaudi in focus; FOMC meeting, Brexit, US stimulus to dominate headlines

This article first appeared in The Edge Malaysia Weekly, on December 14, 2020 - December 20, 2020.
The Week Ahead: Forfeiture hearing against PetroSaudi in focus; FOMC meeting, Brexit, US stimulus to dominate headlines
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The lack of local economic data releases this week may be offset by developments elsewhere in the country.

In parliament this week, the Dewan Rakyat will continue to debate at the committee stage the Budget 2021 allocation for the defence, education and home ministries. Once voted upon, the budget will move to the Senate for the final vote.

On Monday, at the Kuala Lumpur High Court, the hearing of the Malaysian government’s forfeiture bid to recover US$340.26 million (about RM1.4 billion) from PetroSaudi International Ltd and its subsidiary PetroSaudi Oil Services (Venezuela) Ltd (PSOSL) is scheduled before Judge Mohd Nazlan Mohd Ghazali. The hearing had been adjourned twice as PSOSL is said to be seeking a settlement with Putrajaya.

The Edge understands that in such a settlement, the amount that the government could get will be less that the amount sought. The case is the government of Malaysia and the Malaysian Anti-Corruption Commission’s first international forfeiture action in relation to the 1Malaysia Development Bhd (1MDB) scandal.

Another case to be heard this week that could be of interest to Corporate Malaysia is the trial of former Silver Bird Group Bhd managing director Datuk Jackson Tan Han Kook and its former CEO Derec Ching Siew Cheong for providing false information to Bursa Malaysia. The case will be heard at the Sessions Court on Dec 16 and 17.

Tan and Ching are accused of furnishing Bursa Malaysia with falsified statements contained in Silver Bird’s eight unaudited quarterly financial accounts for the financial years ended Oct 31, 2010 and Oct 31, 2011.

On June 10, the Court of Appeal had acquitted Tan and Ching on all 134 charges of cheating and purportedly using forged documents to cheat Malayan Banking Bhd of close to RM67.4 million. The appellate court upheld the decision by the Sessions Court and High Court to acquit them.

Silver Bird — which was delisted from Bursa Malaysia in 2014 — was known for its High 5 brand of bread loaf and Silverbird brand of cake. It ceased operations in June 2016 following a court order to vacate its operating premises.

Across the Causeway, Singapore will be releasing the November non-oil domestic exports on Thursday. UOB Global Economics and Market Research expects NODX to increase by a faster 6.2% month on month seasonally adjusted from -5.3% m-o-m in October. Compared with a year ago, it expects NODX to rise by just 0.3% (down from -3.1% year on year in October).

Labour data for the third quarter is expected on Thursday. UOB expects overall unemployment to stay elevated at 3.6% and resident unemployment at 4.7%.

In China, economic data out this week include industrial production for November, retail sales, jobs and home prices.

Key central bank decisions in Asia-Pacific this week will be from Bank Indonesia (BI), the Philippine Central Bank and the Central Bank of the Republic of China (Taiwan).

“We expect BI to stay on hold this month but we keep the view that it may cut the BI 7 Day Reverse Repo rate by another 25bps in 1Q2021 to 3.50% as growth recovery could still be at best uncertain and require further monetary support while fiscal disbursement remains a little lagged in supporting the broader pace of the economic recovery. However, this is likely to be the last rate cut for BI,” says UOB.

BI cut its benchmark rate by 25bps to a record low of 3.75% last month.

Meanwhile, in the US, the Federal Open Market Committee (FOMC) will meet on Tuesday and Wednesday, when it is expected to keep the Fed funds target rate at 0% to 0.25% until at least 2023. But market watchers will also be looking for guidance from the FOMC on asset purchases, which currently stand at US$80 billion of Treasuries and US$40 billion of Mortgage Backed Securities each month

Other central banks in developed markets meeting this week are the Bank of England (BoE), Bank of Japan and the Swiss National Bank.

UOB says that while it is not expecting any more quantitative easing from BoE for December, the potential for action from the monetary policy committee has emerged given the ongoing deadlock in Brexit talks with the EU and a second lockdown hitting the UK economy.

Politics is expected to dominate the headlines in both the US and the UK, as stimulus talks drag on between US lawmakers while British Prime Minister Boris Johnson warned that the country could be leaving the EU without a deal.

In terms of economic data, notable releases on tap in the US include the Empire Manufacturing Survey for December, November industrial production, December Markit PMI Surveys for manufacturing and services, November advance retail sales and initial jobless claims.

Meanwhile, locally listed companies that are holding their annual general meetings this week include Multi-

Usage Holdings Bhd, Latitude Tree Holdings Bhd, Berjaya Corp Bhd, Borneo Oil Bhd, Prolexus Bhd, Hiap Teck

Venture Bhd, RGT Bhd and Scientex Bhd.

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