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Jun 2017 5

Ringgit firmer vs US$, pound sterling early Monday

KUALA LUMPUR: The ringgit extended last week's gains to open higher against the US dollar on MOnday, prompted by continued buying support in the emerging currencies, including the local note, a dealer said. At 9.10 am,...

KUALA LUMPUR: The ringgit extended last week's gains to open higher against the US dollar on MOnday, prompted by continued buying support in the emerging currencies, including the local note, a dealer said.
 

At 9.10 am, the local unit was quoted at 4.2670/2710 against the greenback from Friday''s close of 4.2790/2820.


Against a basket of major currencies, the ringgit traded mostly lower.

It slightly weakened against the Singapore dollar to 3.0878/0918 from 3.0873/0901 on Friday and depreciated against the yen to 3.8622/8669 from 3.8380/8417.

The local unit strengthened against the British pound to 5.4899/4968 from 5.5062/5105 last week but went down against the euro to 4.8102/8151 from 4.8015/8053. - Bernama

Soruce: The Star

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Jun 2017 2

Corporate earnings grow

PETALING JAYA: After two years of disappointment, corporate earnings in the first quarter of 2017 grew, as banks and technology firms benefited from stronger economic growth.At least one analyst described the first-quarter...

PETALING JAYA: After two years of disappointment, corporate earnings in the first quarter of 2017 grew, as banks and technology firms benefited from stronger economic growth.

At least one analyst described the first-quarter results as the fastest growth in recent years.

Analysts reckoned that the encouraging start to the first-quarter corporate earnings growth in 2017 after two years of decline heralds a positive outlook for corporates.

 
 
 

“This year is the first time we could see a positive growth in corporate earnings after two years of consecutive decline,” CIMB Investment Bank head of equity research Ivy Ng told StarBiz.

She said that from CIMB’s universe of stocks, first-quarter corporate earnings grew 11% year-on-year (y-o-y), the fastest growth since the first quarter of 2013.

However, the research house expects corporate earnings to grow 8% this year, lower than its earlier forecast of between 9% and 10%.

This is because it expects the corporate earnings momentum to taper off in the later part of the year.

“The first quarter is usually the strongest quarter, and there is also a low base effect from last year,” Ng said.

Nonetheless, she said the ratio of companies that underperformed was higher than the outperformers.

“There could be an earnings downgrade in some segments of our universe of stocks,” she said.

Among the companies that underperformed in the first quarter were in the automotive and transportation sectors.

For the coming quarters, Ng reckoned that companies in the construction and utility sectors would be the research house’s top picks.

MIDF Research has also lowered its corporate earnings forecast for this year to 10.7% from 11.2%, as it expects the growth momentum to soften in the coming quarters.

“The first-quarter results were in line, with good export numbers and a weaker ringgit. Sectors such as technology and manufacturing surprised the market,” said MIDF head of research Mohd Redza Abdul Rahman.

He added that the banking sector performed well in the first quarter, backed by a higher-than-expected loan growth of above 5%.

“Moving into the second half of the year, we expect exporters to continue to do well, especially with the stable ringgit againt the US dollar,” Redza said.

Banking stocks, which have gained favour among foreign investors since the beginning of the year, have been the main driver of the rally in the local stock market.

Bursa Malaysia’s leading indicator, the FBM KLCI, has soared 7% year-to-date led by the banking sector, which makes up the largest component of the benchmark index.

Four out of the five largest public-listed banking groups have seen a huge increase in their profits during the quarter, in line with analyst expectations.

However, moving further into the year, several research houses have lowered their expectations on the banking sector on modest earnings and loan growth, and asset quality concerns.

UOB Kay Hian said it has downgraded Malayan Banking Bhd and Affin Holdings Bhd to a “hold” and “sell”, respectively.

“Sharp share price outperformance and pockets of asset quality concerns were the drivers of our downgrades.

“As for CIMB Group Holdings Bhd, we would advocate a ‘sell into strength’ strategy, as valuations are no longer appealing,” it said in a report.

It has upgraded Hong Leong Bank Bhd to a “buy” on the back of a solid recovery in earnings and attractive valuations.

Meanwhile, CIMB Research said although the industry’s loan growth increase at end-April was a tad higher than its 5%-6% projection, it expected the loan growth to moderate in the coming months.

“The growth in the industry’s loan applications and approvals moderated from 6.4% and 28.9% y-o-y, respectively, in March to less than 1% y-o-y (for both) in April.

“This was mainly due to the slowdown in the indicators for residential mortgages. Also, the approvals of working capital loans even contracted 9.2% y-o-y in April compared to a surge of 35.5% y-o-y in March,” it said in a sector report.

Source: The Star

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Jun 2017 1

RHB-AMMB to begin merger talks

PETALING JAYA: After more than a year of speculation, RHB Bank Bhd and AMMB Holdings Bhd are to begin talks for a merger.Both banks will make an announcement about this today.RHB and AMMB had requested for a...

PETALING JAYA: After more than a year of speculation, RHB Bank Bhd and AMMB Holdings Bhd are to begin talks for a merger.

Both banks will make an announcement about this today.

RHB and AMMB had requested for a suspension in the trading of their shares yesterday evening, “pending a material announcement”.

Sources said that the banks would announce that they had received the nod from Bank Negara to initiate merger talks.

 
 
 

If the deal materialises, then the merged entity would end up becoming the country’s fourth-largest bank by asset size.

According to banking sources, RHB is likely to be the acquiring bank, making an offer to the shareholders of AMMB that may involve cash and shares.

AMMB’s major owner is Australia and New Zealand Banking Group Ltd (ANZ) of Australia with a 23.78% stake, while its second-largest shareholder is founder Tan Sri Azman Hashim, who has an effective stake of 12.97%.

RHB, meanwhile, is 41%-owned by the Employees Provident Fund (EPF).

Both banks have a common shareholder in the EPF, with the pension fund also holding a 10.04% stake in AMMB, according to Bloomberg data.

The other substantial shareholders of RHB are Aabar Investments PJS with a 17.75% stake and OSK Holdings Bhd with 10.13%.

Based on the figures as at the end of last year, the combined assets of RHB-AMMB stood at RM368.3bil, trailing behind Public Bank Bhd’s RM389.73bil. RHB is currently the fourth-largest lender, while AMMB is the sixth largest based on asset size.

In terms of branch network, RHB has 278 branches, while AMMB’s totals 175 branches.

An analyst said while RHB and AMMB would make a good fit, both banks are operating in the same space that would see duplications that could likely cause potential layoffs.

AMMB had in the recent past been seen as a merger and acquisition candidate, considering that its major shareholder ANZ reportedly had a plan to exit from the banking group as part of a larger plan to exit from minority banking stakes in the region.

Last year, the Melbourne-based bank made a A$260mil (RM773.07mil) impairment loss on its stake in AMMB, which was read as a signal of its intention to dispose of its strategic stake. ANZ had bought into AMMB in 2006 in two tranches averaging RM3.63 a share or RM2.58bil, which translated into a price-to-book (P/B) ratio of 1.96 times.

According to banking sources, Azman may also be more open to selling, as he is retiring from almost all his positions within the banking group over the next two years.

The veteran banker is also said to have a say in who takes up the ANZ stake, as he has the first right of refusal to it.

Over at RHB, its previous banking deal was the proposed three-way merger deal involving itself, CIMB Group Holdings Bhd and Malaysia Building Society Bhd.

However, the deal was called off in January 2015 because RHB’s substantial shareholder Aabar had reportedly sought a high exit price.

AMMB closed up 11 sen to RM5.21 and is trading at a P/B value of 0.98 times. RHB was last done at RM5.39, which translated to a P/B of 0.97 times.

Meanwhile, earlier in the day, AMMB reported a 20% increase in earnings to RM335.81mil from RM280.02mil a year ago, boosted by higher net interest income for its fourth quarter ended March 31.

Its revenue came in at RM2.14bil compared with RM2.10bil a year ago. Earnings per share was at 11.17 sen compared with 9.32 sen previously.

The banking group has announced a dividend of 12.6 sen a share.

Source: The Star

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May 2017 31

RM ends at 4.28 against USD

KUALA LUMPUR: The ringgit closed easier today as traders were still unimpressed with the outcome of the Organisation of the Petroleum Exporting Countries (OPEC) meeting last week, which had a negative impact on the foreign...

KUALA LUMPUR: The ringgit closed easier today as traders were still unimpressed with the outcome of the Organisation of the Petroleum Exporting Countries (OPEC) meeting last week, which had a negative impact on the foreign exchange market, a dealer said.

At 6 pm, the local unit was quoted at 4.2810/ 2840 against the greenback from Monday’s close of 4.2705/2735.

The dealer said oil prices again slipped below US$50 per barrel and currency traders were likely to continue selling at this level.

FXTM Vice-President for Corporate Development and Market Research Jameel Ahmad said the negative impact on the oil market was not due to a lack of effort from the side of OPEC, but it is more linked to the belief that US Shale producers would turn the volume up on increased production.

“The ongoing threat to investor sentiment, when it comes to the oil markets, is that no matter what OPEC tries to do to rebalance the ongoing oversupply in the markets, US Shale producers will be able to offset the efforts by increasing inventories from their side,” he said.

Against other major currencies, the ringgit was traded lower.

It fell against the Singapore dollar to 3.0881/0909 from 3.0858/0891 on Monday and declined to 3.8540/8574 from 3.8345/8386 versus the Japanese yen.

The local unit depreciated against the British pound to 5.5032/5088 from 5.4825/4872 and vis-a-vis the euro it dropped to 4.7789/7839 from 4.7770/7816. --BERNAMA

 

Source: New Straits Times

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May 2017 30

Bank Negara kicks off fintech sandbox

PETALING JAYA: Bank Negara has approved four firms to operate within its “regulatory sandbox”, marking a significant milestone in the growth of financial technology (fintech) in Malaysia.Bank Negara opened applications for...

PETALING JAYA: Bank Negara has approved four firms to operate within its “regulatory sandbox”, marking a significant milestone in the growth of financial technology (fintech) in Malaysia.

Bank Negara opened applications for parties intending to create innovative ways to improve the quality, efficiency and accessibility of financial services in Malaysia last year, in line with global trends.

It also saw the central bank creating a unit called the Financial Technology Enabler Group (FTEG) which would oversee the entry of technological innovations in financial services.

Companies operating in the sandbox will be allowed to commercially launch their services albeit within limits set by the central bank and under close watch by the regulator.

 
 
 

FTEG’s website posted the names of the four approved participants in the sandbox, which cover the areas of insurance and money transfers which in turn are areas hotly pursued by fintech startups globally.

GoBear Ltd and GetCover Sdn Bhd are described as being both financial advisers and insurance aggregators while WorldRemit Ltd and MoneyMatch Sdn Bhd are allowed to conduct remittance services while the latter is also enabled to provide money changing services.

Fintech differs from other areas of technology innovation because it operates in a highly regulated space. In other words, without the approval of the relevant bodies, innovative financial solutions may not be allowed to operate in those markets.

However regulatory standards differ in each country although there are efforts by some regional bodies to standardise regulations.

Interestingly, two of the four getting into the Bank Negara sandbox are foreign-owned entities namely GoBear and WorldRemit. GetCover and MoneyMatch are Malaysian owned start-ups.

So what new financial services are the players going to bring to the market? GoBear is owned by Dutch investors seeking to provide an independent comparison website for insurance and financial products in Asia.

It has a presence in Singapore, Thailand and Malaysia and plan to get into The Philippines, Vietnam and Indonesia.

GetCover will be offering a free mobile application that allows users to buy motor insurance directly from insurers. It is expected to be the first of its kind in the market.

GetCover’s aim is to leverage on the efficiencies of digital distribution channels to benefit end-consumers.

The idea is to make it easier for consumers to research insurance products available in the market and for providers to streamline operations and save distribution costs.

Paul Khoo, founder and CEO of GetCover has been quoted by the media as saying that the global insurance industry has not seen a lot of innovation and that only a very small number of users currently buy motor insurance online.

According to Khoo, GetCover intends to provide a fully automated transactional platform which will drive down costs and provide consumers with more cost savings. He added that due to strategic tie-ups that GetCover has pursued, it would be able to extract relevant data when consumers key in their basic information, enabling a seamless purchase of the insurance product by the consumer.

Meanwhile MoneyMatch is a local startup allowed entry into the sandbox to provide cross border remittances and money changing services.

MoneyMatch is creating its own platforms to match individual buyers and sellers of currencies. It also aim to cater to the SME market which do a lot of cross border transfers in the normal course of business.

When contacted, co-founder Naysan Munusamy said: “We’re really grateful to Bank Negara for being so forward thinking in allowing us to bring our unique fintech solutions to the Malaysian market which will bring down the cost of remittance and money changing to end consumers.

“We’re gearing up for our official launch soon. We are confident of making a positive impact on the financial services industry.”

Meanwhile WorldRemit was started by refugee turned entrepreneur Ismail Ahmed and has to-date raised more than US$145mil (RM620mil) in funding and the company helps mainly foreign workers send cash to 142 countries.

The London-based firm has reportedly been valued at US$500mil (RM2.1bil) in its latest funding round.

WorldRemit is among the many remittance companies – including incumbents such as Western Union and startups like itself and TransferWise – that are chasing to capture the global remittance market that the World Bank estimated was worth US$610bil (RM2.6 trillion) in 2016.

Source: The Star

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May 2017 29

Zukri: Islamic banking sector ripe for M&As

PETALING JAYA: There are too many Islamic banks in the country which means that this segment of the local financial sector is ripe for merger and acquisition (M&A) activities, according to outgoing Bank Islam managing...

PETALING JAYA: There are too many Islamic banks in the country which means that this segment of the local financial sector is ripe for merger and acquisition (M&A) activities, according to outgoing Bank Islam managing director Datuk Seri Zukri Samat.

Zukri is also advocating direct listings of such banks.

“The industry is overcrowded... I hope there will be some M&As among Islamic banks to create a couple of mega Islamic banks that can rival the size and capabilities of conventional banks,” he said.

There are 16 Islamic banks in Malaysia of which two are full-fledged banks, eight are subsidiaries of conventional banks and the remaining, foreign banks.

 
 
 

The 59-year-old Zukri, credited with helping to turn around the once ailing Bank Islam was given a grand send-off by his colleagues last Friday after spending 11 years at the country’s oldest Islamic lender.

“Hopefully the industry will grow beyond Malaysian shores with careful strategic positioning. I hope to see the creation of mega Islamic banks that can potentially become regional champions particularly under the Asean banking integration framework,” he told StarBiz.

While there have been several M&A attempts in the Islamic banking space in recent years, all have fallen through.

In 2011, Bank Islam itself had attempted but failed in a merger with Bank Muamalat that is owned by DRB-Hicom Bhd. Following the effects of the Asian financial crisis in the late 1990s, Bank Negara had called for a consolidation of the country’s then almost 60 financial institutions of which over 20 were local commercial banks.

Today, the country has eight local banking groups.

Nevertheless, while consolidation has happened in the conventional banking industry, new licences had been issued within the Islamic banking space to more Islamic banks like Bank Muamalat, Kuwait Finance House, Asian Finance Bank and Al Rajhi Bank.

On the issue of direct listings of Islamic banks, Zukri said more of such companies being listed would lead to the creation of a new asset class which can appeal to syariah investors.

Zukri joined the BIMB Holdings Bhd-controlled Bank Islam in June 2006 when the bank was technically bankrupt.

Bank Islam is wholly-owned by BIMB while in turn Lembaga Tabung Haji (LTH) controls 52.5% of BIMB.

It is also one of LTH’s core investments.

“Bank Islam suffered RM480mil and RM1.3bil losses in 2005 and 2006 making it technically a bankrupt bank as shareholder’s funds were in negative territory.

“I was aware of the fact that Bank Islam is the first Islamic bank in Malaysia and the failure to manage it may have caused a systemic risk to the banking system in general and Islamic banking in particular,” he said.

Taking on the mammoth task of turning things around, Zukri and his team implemented a three-year plan, which contained two broad strategic objectives to be achieved within a three year timeframe, to return the bank to profitability and position the bank for sustainable growth.

“Within 12 months, the bank recovered and posted its highest profit up until that time of RM256mil while net non-performing financing had also declined sharply to 8.8%, from 12.2% posted in the previous year.”

At the end of 2016, the bank posted a pre-tax profit of RM720mil with net non-performing financing at -0.75%.

The biggest challenge in his view was changing the work culture at the bank.

Zukri who was executive director of investment at Khazanah Nasional Bhd and managing director at Pengurusan Danaharta Nasional Bhd before assuming his position at Bank Islam said “nothing could have prepared me for the difficulty in executing change in the working culture.”

“Although Bank Islam is a private sector-owned entity, the bank used to be run very much like a public sector organisation. So, when we started to implement new policies such as pay-by-performance, sales culture and injecting new blood from other organisations there was a lot of resistance, it was not easy.”

“Continuous communication was what we practised so everyone was on the same page on the progress the bank was making.”

The challenges in the banking industry are aplenty, he said.

“Regulatory requirements such as Basel III and Internal Capital Adequacy Assessment Process or ICAAP were introduced mainly to achieve financial stability... I see this as another form of competition for capital and premium assets.”

He also pointed out that the rapid emergence of companies doing the business of lending using financial technology (fintech) only means that banks have no choice but to embrace the new development.

“Some estimate that fintech may take up to 40% of the banking business going forward, so it makes sense for banks to collaborate with or invest in a fintech company.

While it is not yet known who will replace Zukri, it is learnt that after a careful selection process, one name has been submitted to Bank Negara for approval.

Notably, Bank Islam’s parent company BIMB is at the same time contemplating a group-wide restructuring, something that it has been mulling for years, partly to fulfil regulatory compliance requirements.

Source: The Star

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May 2017 24

Ringgit at 6-month high

PETALING JAYA: The ringgit reached a six-month high against the US dollar, extending recent gains following Malaysia’s faster-than-expected gross domestic product (GDP) expansion in the first quarter.The higher price of...

PETALING JAYA: The ringgit reached a six-month high against the US dollar, extending recent gains following Malaysia’s faster-than-expected gross domestic product (GDP) expansion in the first quarter.

The higher price of crude oil is also helping to boost sentiment on the local unit.

The ringgit cracked the 4.30-level against the US dollar for the first time since December, as the greenback weakened against major world currencies.

Having appreciated 0.23% against the US dollar, the local note finished the day at 4.2945 against the greenback, off an intra-day low of 4.2935.

 
 
 

Dealers noted that the ringgit’s strength was also attributable to growing investor optimism that crude oil prices would remain firm in the medium term, and that the growth prospects of the Malaysian economy would continue to improve.

According to media reports, Iraq will support a joint proposal by Saudi Arabia and Russia to extend oil production cuts for another nine months up to March 2018, clearing the path for a deal when the Organisation of the Petroleum Exporting Countries or Opec meets in Vienna later this week.

“The extension of a production cut would support crude oil prices, with which the ringgit continues to have significant correlation,” a dealer said. Crude oil prices on the international benchmark Brent eased 1.1% yesterday to US$53.27 per barrel.

Meanwhile, the US dollar index – a gauge of the greenback’s performance against a basket of major currencies such as the euro, yen and pound sterling – fell to 96.908 as at 5pm yesterday from 96.984 a day earlier.

Separately, private-sector economists recently upgraded their 2017 growth forecast for Malaysia to arosund 4.8%-5.1% from their earlier forecast of around 4.1%-4.4%, following a strong showing in the first three months of the year.

Malaysia’s GDP grew at its fastest rate in two years at 5.6% in the first quarter of 2017. Last year, the country’s GDP expanded 4.2%.

Standard Chartered Bank (StanChart) in a recent note pointed out that ringgit-supportive factors - such as exceptionally attractive valuations, underweight foreign investor positioning and improving external balances - have been in place for some time now.

“The key hurdle, however, has been weak sentiment, which now seems to be improving,” the international financial institution said.

It pointed out that foreign investors have been net buyers of Malaysian equities for four straight months, with net inflows of US$2.2bil year-to-date, and more importantly for the ringgit, foreign investors also turned net buyers of Malaysian debt in April.

“We think this improved sentiment and flow picture has been as much a result of domestic factors, that is allowing foreign investors to hedge up to 100% of ringgit exposure without documentary evidence, as of global factors, that is continued inflows to emerging markets leading to stretched valuations elsewhere,” StanChart explained.

“Given the scale of portfolio outflows in the past four years, there is significant room to catch up, which should support further ringgit gains,” it added.

StanChart said it forecasts a return to “fair value” of around 4.10 for the US dollar-to-ringgit exchange rate in the first half of 2018, although the possibility of this happening sooner has increased.

MIDF Research in its report early this month said there was room for the ringgit to further strengthen to RM4.20 per US dollar by the end of next month.

Meanwhile, the ringgit performed mixed against most major currencies.

It strengthened to 3.0960 from 3.1055 against the Singapore dollar; 3.8612 from 3.8671 against the Japanese yen; and 5.5776 from 5.5928 against the British pound yesterday. Against the euro, the ringgit weakened to 4.8309 from 4.8146.

Source: TheStar

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May 2017 8

Ringgit higher against US$ early Monday

KUALA LUMPUR: The ringgit rose at the opening against the US Dollar today on positive spillover from the French presidential election, where Emmanuel Macron clinched victory over Marine Le Pen. At 9.03 am(0103gmt), the...

KUALA LUMPUR: The ringgit rose at the opening against the US Dollar today on positive spillover from the French presidential election, where Emmanuel Macron clinched victory over Marine Le Pen.

 At 9.03 am(0103gmt), the ringgit was quoted at 4.3330/3360 against the greenback from 4.3350/3400 on Friday.

Dealers said investors were relieved as Macron''s stance doused fears of another populist resurrection after England voting out of the European Union, as well as Donald Trump winning the US presidential election last year.

The ringgit was traded mixed against most major currencies.

 

It rose against the Singapore dollar to 3.0814/0846 from 3.0856/0896 and was higher against the Japanese yen at 3.8403/8440 from 3.8616/8671 on Friday.

The ringgit declined against the British pound to 5.6121/6186 from 5.6052/6129 and trimmed against the euro to 4.7529/7579 from 4.7490/7562 previously. 

Source: Bernama

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Apr 2017 14

Ringgit back in favour among global funds

KUALA LUMPUR: Asia’s worst-performing currency is starting to come back into favour.Malaysian assets are coming back onto the radar for global funds after they fled last November when policy makers clamped down on trading in...

KUALA LUMPUR: Asia’s worst-performing currency is starting to come back into favour.

Malaysian assets are coming back onto the radar for global funds after they fled last November when policy makers clamped down on trading in offshore ringgit forwards to halt a slide in the currency.

Neuberger Berman Group LLC says the ringgit may be among the region’s better performers in coming months, while an improving economy has convinced Nikko Asset Management Co to change its view of Malaysian bonds to “neutral” after earlier cutting holdings.

“The ringgit has a few things going for it now,” Prashant Singh, Neuberger’s senior portfolio manager for emerging market debt, said in an interview in Singapore last week.

 

“If you look at the overall balance of payments, with the increase in commodity prices, the current account has improved. Foreign direct investment in Malaysia has improved so that has helped.”

While still expecting the ringgit to weaken along with most Asian currencies against the dollar, analysts have boosted forecasts for three straight months.

They now see it falling to 4.46 per dollar by mid-year, a smaller decline than the earlier prediction of 4.55, according to a Bloomberg survey. The ringgit has been the worst performer of 11 Asian currencies in the past six months, losing 4.8%, as the election of US president Donald Trump in November and rising US interest rates saw investors take money out of the most liquid emerging markets.

Bank Negara responded to the ringgit’s slump in November by clamping down on the trading of offshore non-deliverable forwards. That had the effect of stemming declines, but also damped interest from overseas investors as they found it harder to hedge their positions in the country’s assets.

While global funds have cut holdings of ringgit bonds to a five-year low, sentiment is starting to improve as the focus shifts to the nation’s improving current-account surplus and trade outlook.

As crude prices recover and the global economy stabilises, the outlook for the net oil exporter has brightened and its current-account surplus widened to the most in more than two years in the last quarter of 2016. Prime Minister Datuk Seri Najib Tun Razak aims to shrink the budget deficit for an eighth year, with the shortfall expected to fall to 3% of gross domestic product, from 3.1% in 2016.

The improving outlook is cause for optimism for Nikko Asset. The Tokyo-based fund-management company is neutral on Malaysian bonds after reducing its exposure following the central bank’s clampdown on non-deliverable forwards.

“From a bond investor’s perspective, the budget is consolidating and fundamentals are decent,” said Edward Ng, a fixed-income portfolio manager in Singapore at Nikko Asset, which oversees about US$171bil.

Bank Negara is also trying to revive interest in its financial markets. In December it revised rules to encourage investors to hedge their currency exposure onshore and ordered exporters to hold at least 75% of export proceeds in ringgit.

“The new rule which forces exporters to convert at least 75% of their export revenues into ringgit definitely helps,” Neuberger’s Singh said. “That has alleviated some of the outflow pressure on the balance of payments.” – Bloomberg

 

Source: The Star

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Apr 2017 4

M'sia regional favourite, gets the most from inflow of funds

PETALING JAYA: Malaysia has emerged as the most favoured emerging market in South-East Asia year-to-date based on foreign liquidity flow in the local stock market, beating Thailand, Indonesia and the Philippines.Overseas...

PETALING JAYA: Malaysia has emerged as the most favoured emerging market in South-East Asia year-to-date based on foreign liquidity flow in the local stock market, beating Thailand, Indonesia and the Philippines.

Overseas investors were again net buyers of Malaysian equities, adding RM180mil worth of stocks yesterday to their portfolio.

They have so far this year pumped close to RM6bil into the local stock market.

The inflow reversed the RM3bil outflow seen last year.

 

“The strong foreign liquidity flow into local equity is an inevitability that the market has been waiting for,” MIDF Research said.

The FBM KLCI added 5.40 points, or 0.3%, yesterday to 1,745.49 points, opening its account in the second quarter on a strong note.

The index is up 6.3% so far this year, rising faster than bourses in Indonesia and Thailand.

“Relatively low foreign ownership of stocks, strong corporate fundamentals and an unjustifiably weak currency makes Malaysian equity hard to ignore,” MIDF Research said.

The FBM KLCI is projected to record a 7.2% and 8.3% growth in earnings for the financial years 2017 and 2018, according to AmInvestment Bank in a recent note, against the backdrop of a more stable currency outlook.

The ringgit exchange rate against the US dollar steadied at 4.427 yesterday.

According to MIDF Research, foreign liquidity flow to Bursa Malaysia had remained elevated for the third consecutive week, with foreigners buying RM1.14bil worth of shares in the open market during the week ended March 31.

The net foreign inflow excluded off-market deals.

For regional comparison, net foreign inflows to Malaysian equities in the first quarter totalled US$1.29bil (RM5.71bil), the highest within the emerging Asean market.

This compared with Thailand, which saw total net foreign inflows of US$680.3mil into its equities, and Indonesia, which registered net foreign inflows of only US$184.9mil into its equities.

The Philippines, on the other hand, has registered net foreign outflows of US$347.9mil from its equity market year-to-date.

MIDF Research pointed out that for the week ended March 31, foreign participation on Bursa Malaysia remained at an elevated level, with the foreign average daily trade value at RM1.05bil.

This compared with RM1.26bil in the preceding week.

In general, Bursa Malaysia had seen eight consecutive weeks of net foreign inflows.

“As of last Friday, foreign net buying had extended for 15 trading days, the longest streak since March last year,” MIDF Research said.

Cumulative foreign net purchases in March 2017 totalled RM4.7bil, which represented a four-fold increase from RM956mil in the preceding month.

In the region as a whole, said MIDF Research, global money flow into Asian equities had remained strong for the fourth week running.

Statistics compiled by the brokerage on net foreign purchases in the seven Asian markets that it tracked totalled US$2.94bil for the week ended March 31.

This compared with US$2.06bil in the preceding week.

Elsewhere, stocks in Indonesia hit a record high yesterday with the benchmark index at 5,606 points on better-than-expected earnings for the quarter ended March.

Markets in the region continued their rally in March, buoyed by growing evidence that further interest rate hikes in the United States will come at a gradual pace.

Source: The Star

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