KLCI Road to 1550, as BNM cut its OPR by 25bps (Highlights from TheEdge 23thJan)

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Malaysia
  • None of us expect the OPR coming so fast, at least not the analyst. BNM announced yesterday 3pm to cut the overnight policy rate (OPR) to 2.75%, as BNM consider it appropriate to sustain economic growth. This will in turn require banks operating in Malaysia to lower their Base Rate (BR), in response to BNM’s statement. For context, base rate is the floating rate that is applied to housing and financing loans. Base rate of each financial institution in Malaysia is shown here as of May 2019. CIMB Bank and CIMB Islamic lowered their base rate and fixed deposit rates by 25 basis points, effective Jan 30th.
  • Malaysia’s inflation is expected to rise according to analyst from United Overseas Bank. Although it seems like a wonder to why BNM raise OPR despite them stating in last year November that inflation is expected to be higher than 2019, BNM felt the necessity to spur the economic growth amidst global uncertainties.
  • BNM reserves up 0.1% to RM422 billion (Jan15th), and it is sufficient to finance 7.4 months of retained imports and 1.1 times of Malaysia’s short term debts. Biggest foreign currency reserves remain as US dollar but slipped 0.3 billion to $96.9 billion dollar from last year.
  • Bursa’s latest IPO Powerwell Holdings, an electricity distribution product manufacturer debut on ACE market yesterday had surged a 14% gain over its initial price. Its main product includes design, manufacturing and trading of electrical distribution products such as switchboards, voltage switchgears and other related products.
  • Palm oil business between Malaysia and China will not be affected, despite Beijing pledging to boost soybean purchases from US, said International Trade and Industry Minister Datuk Darell Leiking at the World Economic Forum. He opine that the Chinese will continue its effort to maintain a good bilateral relationship with Malaysia, as China’s demand continue to grow.
  • Digi net profit for its 4Q19 dropped 9%, as its prepaid revenue fall, higher depreciation, amortization, impairment and finance cost affected its profit margin. Nevertheless, the group’s total revenue year-on-year rose by a small margin of 0.6%. As postpaid revenue continue to grow 9.6%, prepaid declined 9.7% y-o-y. It also announced a dividend of 4.4 sen a share, which makes its dividend yield 3.9%, given Digi’s share price of RM4.51 now.
  • Gadang 2Q net profit dropped 36.3% as they put the blame on fair value loss on investments that amounted to RM3.2 million.
  • Supply of small home offices (SOHOs) and small office virtual offices (SOVOs) currently take up 20% of total unsold property in Malaysia, and Zerin properties MD said it will take the next five years to clear unsold SOHOs and SOVOs.
  • UOB KayHian recommended Scientex, the plastic manufacturing giant as its share price retraced 7% from the recent peak. Low plastic resin price, new monolamination packing product, and its high amount of unbilled sales in the property division was the main selling point for Scientex Bhd.
  • Affin Hwang remain cautious on glove sector, as share prices tend to consolidate as the incremental real demand varies, even with the recent spike in glove stock prices. TopGlove is likely to benefit from the viral outbreak, with its utilization rate of 85% and a 15% remained capacity,
  • Sabah Temporary Pass (PSS) program is halted, as Sabah Chief Minister Shafie Apdal said the state Cabinet has agreed to not proceed with the PSS. PSS will replace the kad burung-burung, IMM13 refugee card and census certificates in Sabah.
Globally
  • Death caused by the viral outbreak in China has increased to 9, from 4 yesterday. China is trying hard to understand the pathogen, which has infected multiple medical workers despite heavy protective gear (OMG). Taiwan wants China to share ‘correct’ information about the new coronavirus.
  • Boeing 737MAX will still be grounded at least until midyear. Its European rival Airbus’s shares rose to record highs yesterday. FYI, All AirAsia and AirAsiaX’s airplanes are AIRBUS.
  • Singapore’s Prime Minister Lee Hsien Loong says Asia is at a ‘turning point’ where China has became more and more substantial in terms of its economy and influence, catching up to the United States. At one point, SEA region countries might have to make a choice between being a China-backed country or a US-backed country. First-phase agreement doesn’t indicate that the trade tension between US-China will not suddenly turns worse.
  • Hong Kong and Thailand’s central bank confirmed they are trying to issue digital currency that could be used to smoothen payments between two countries. Many central banks are trying to build CBDC (Central Bank Digital Currency), which is similar to bitcoin which is produced by solving difficult code puzzles using computer power. As the world move towards embracing Industrial 4.0, it is inevitable that local currency is going to be replaced by cryptocurrency. Good move to actually invest slowly in computer graphics company like Nvidia, which share price has rose to record high $250.
  • Capitaland Commercial Trust and Singapore’s CapitaLand Mall Trust plan to merge as an effort to consolidate the management expertise and build a bigger bank account for future acquisitions.




Disclaimer: This is simply to note down the major incidents that I should take note in TheEdge NewsPaper. I cover as much local news as possible and do not include global news that do not interest me. Please subscribe and read the original TheEdge for more information.

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