Malaysia
- SerbaDinamik is in acquisition talks with Sarawak sate-owned integrated engineering firm Brooke Dockyard and Engineering Works Corp. Sources said it is not economically viable for the state to hold on to the loss-making firm as they allegedly slipped into RM100 million loss from contracts. Both SerbaDinamik and BD has a presence in maintenance, repair and overhaul (MRO) and it should be expected that SerbaDinamik will be able to expand its market presence should the acquisition happen. SerbaDinamik has a target of securing RM5 billion on top of its existing orderbook of around RM10 billion.
- Mercedez-Benz distributor C&C Bintang (CCB) plummeted over 10.5% before their EGM today as the company seek approval for company's privatisation via selective capital reduction (SCR) and repayment of RM2.20 per share. Since the announcement of the RM2.20 share repayment on Nov 11 last year, the counter has raised to over RM2, before plunging to RM1.81 last Friday. Some opine that the offer price is not fair and Affin Hwang bank valuated CCB based on equity value at a price of RM3.64 per share.
- Opportunity arise in oil & gas counter as they plunged to three-months low as crude oil prices nosedive. China which consumes about 20% of global oil demand has severely affected investors' appetite and it became rather a question when will the demand bounce back. For a complete list of listed oil & gas companies, please click here. It is still too early to quantify the impact of Wuhan virus to the oil & gas sector.
- Announcement of PBB, CIMB and MAYBANk as D-SIB last week should not affect the banks' valuation significantly as the banks are already adequately capitalized and are above the Basel III capital requirements. Asset quality has been improving where the gross impaired loan ratio has came down to 1.5% in December from 1.6% in November, while total provisions has fallen by 4.4% month-on-month. MAYBANK had a CET1 ratio of 14.4%, and both CIMB and PBB had 13.1% which is well above the CET1 ratio of 10.5%. CET1 is the minimum reserve that the banks' are required to comply.
- Malaysia has extended its travel ban to travellers from Zhejiang and Jiangsu provinces with immediate effect.
- TheEdge said rubber glove sector should continue to trend upwards as the Wuhan virus does not seem to subside anytime soon. With hygiene standards enforced by the respected regulatory getting stricter, they recommend Kossan, Harta and TopGlove as they anticipate better earnings in the upcoming quarters. As demand continue to compress utilization rate to almost 90% for most glove players, oversupply no longer become a concern for the counter.
Globally
- Federal Reserve might consider another interest rate cut as US real estate sales fell 4.9%, the steepest decline since 2010. Median home prices were up 8% in December, and Chief Economist Lawrence Yun opine that "areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth." To balance this, price appreciation should be around 3% to be in line with US annual wage growth. As Wuhan virus outbreak expand its claw bringing economy down globally including the US, it is only matter of time when Powell has to cut down again to fight back against the rising troubles.
- Bank of Italy said the country's economy might be impacted bigger than expected from the Wuhan virus economy. Italy's public debt stands at 133% of its GDP and it has the world's third-largest national debt. The impact however could be minimal as the Italy's central bank began to assess the epidemic's impact on the domestic economy.
- Death toll from Wuhan virus is currently at 811, exceeded the total fatality numbers from 2003 SARS epidemic. For the past two weeks, majority cities in China has been empty as the government ordered virtual lockdowns, cancelled flights, closed factories and kept schools shut. "More than 20,000 doctors and nurses around the country has been sent to Hubei, but why are the numbers are still rising?" a Chinese citizen asked.
Disclaimer: This is simply to note down the major incidents that I should take note in TheEdge NewsPaper. Reading this will be just enough for you to understand Malaysia’s finance. I tryI cover as much local news as possible and exclude global news that’s uninteresting. Please subscribe and read the original TheEdge for more details and information.
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