Landed residential properties much sought after with resilent demand, Market insights


CBRE|WTW managing director Foo Gee Jen (pic) said that in spite of confidence issues among property buyers, there was still good demand for “the right products,” especially for landed units.

PETALING JAYA: Demand for landed residential units is still promising despite the current property glut, said an official from a local real estate services provider.

CBRE|WTW managing director Foo Gee Jen (pic) said that in spite of confidence issues among property buyers, there was still good demand for “the right products,” especially for landed units.

“Despite the issue with the confidence levels, some developers are still registering good sales for landed and affordable homes. High rise developers meanwhile are having to offer a lot more freebies, with some even offering their own financing.

“But you don’t see that for landed property as the demand is still there,” he said at a press conference announcing the joint venture (JV) between real estate agencies CH Williams Talhar & Wong Sdn Bhd (WTW) and CBRE last week.

He emphasised that one of the biggest issues facing the current property sector is not oversupply, but instead a mismatch of supply and demand.

“Developers are putting the wrong products in the market and this is not what the masses want. The demand is there but it’s not the correct product. So the question is, how long will the market take to absorb (these products)?”

As an example of a mismatch between demand and supply, Foo cited low-cost housing in areas that were not accessible to the proper target audience.

“For instance, there are low-cost properties built in Bukit Beruntung. But the daily toll and fuel cost of travelling to Kuala Lumpur for work is heavy for the type of people living in such homes.

“Also, there are so many high-end shoebox units now and Malaysia is unlike Singapore or Hong Kong. We still have plenty of land. If you’re putting the right property in the right location – you’ll still see a long queue of people attending the launches.”

CBRE, the world’s largest commercial real estate services firm and a Fortune 500 company, announced yesterday that it had acquired a significant interest in Malaysia’s largest real estate service provider, WTW, WTW Real Estate Sdn Bhd and WTW Property Services Sdn Bhd.

The business will rebrand as CBRE|WTW effective immediately, with WTW holding a 51% stake in the JV. WTW network of 13 offices in Peninsula Malaysia.

CBRE Asia Pacific chief executive officer Steve Swerdlow said the collaboration was consistent with the firm’s strategy to grow in South-East Asia.

“At a time when planning is underway to link Malaysia and Singapore via high speed rail and with the Asean Economic Community and the Trans Pacific Partnership facilitating greater collaboration for both countries and their wider partner countries, this offers many opportunities for cross border activities when they arise.”

With CBRE as a strategic partner, Foo said the firm can now help its clients expand their activities beyond Malaysia, providing them with more options through a diverse means of expertise. “Conversely we can be a party to help bring greater meaningful inbound investments into the Malaysian market via the CBRE global network.”

By Eugene Mahalingam The Star

Top Story -market insights
An outlook on Malaysia’s property market

May 26, 2016
According to PropertyGuru’s Malaysia Property Market Sentiment
Survey Report H1 2016, things are expected to improve in 2016 as people
are warming up to the idea of purchasing properties.  

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Fintech – disruptive technology


https://players.brightcove.net/4405352761001/default_default/index.html?videoId=4903561099001

http://www.thestar.com.my/business/business-news/2016/05/21/fintech-disruptive-technology/

Businesses are embracing it by coming up with their innovations and startups

A BUZZWORD growing in popularity in the financial world today is “fintech”, short for financial technology, which in a nutshell refers to the use of technology to deliver faster and cheaper financial services.

Going by some predications, fintech could take a big chunk of business away from traditional banks as it is being run by smaller more nimble start-ups. But the debate is still out there as to how much that chunk will be. In Malaysia in particular, fintech’s presence is still nascent and small. Fintech transactions totalled a mere US$6.37mil this year compared with a global figure of US$769.3bil, according to Statista, an online statistics provider.

It however predicts that fintech transaction values to grow to US$14.4bil by 2020. A significant number of fintech companies, especially those in the digital payments space, actually work alongside local banks.

Still, fintech is not to be taken lightly. Top bankers themselves are speaking of its imminent threat to their business. Former Barclays CEO Anthony Jenkins referred to it as banking’s “Uber moment” to describe technological advances that could see bank branches close down and people laid off.

Last April, Jamie Dimon the CEO of the US’ largest bank JP Morgan in his letter to shareholders warned that “Silicon Valley is coming.” “There are hundreds of start-ups with a lot of brains and money working on various alternatives to traditional banking,” Dimon wrote.

On the home front, just last month prominent banker Datuk Seri Nazir Razak echoed such views. Speaking at the Star Media Group’s PowerTalk: Business Series held at Menara Star, Nazir opined that fintech companies are disrupting banking.

“Bankers must respond to this Uber moment. People actually dislike banks today, since the global financial crisis. Recent data suggests that in the US, the cost of banking intermediation has not changed for 100 years in real terms. This simply means banks have not gotten more efficient over the years, so its right that banks get attacked by ‘Silicon Valley’, which has identified banking as an industry that is very ‘ripe’ or juicy to disrupt.”

Even the central bank is echoing these views.

In his maiden keynote address at an Islamic finance conference in Kuala Lumpur last week, Malaysia’s newly-appointed Bank Negara governor Datuk Muhammad Ibrahim gave a grim reminder to banks of the threats posed by fintech. In particular, Muhammad quoted from a report by McKinsey that 10% to 40% of banking revenue is possibly at risk by 2025 due to innovations outside banking institutions that are able to offer a significant pricing advantage and that technologically-driven applications had spread to nearly every segment of the financial sector, with the number of fintech start-ups having doubled in the last year. “Fintech is challenging the status quo of the financial industry,” he said.

To be fair, Malaysian banks are quick to point out that while fintech does represent a disruption to business, they are embracing the movement, by coming up with their own fintech innovations or by working with fintech startups.

So what is fintech?

In a nutshell, fintech is an economy of companies using technology to improve efficiencies and effectiveness in the financial services industry. To illustrate the offerings of fintech companies, consider the business model of homegrown start-up MoneyMatch, which is modelled after UK-based TransferWise which began in 2011 and today moves US$10bil a year through its platform.

MoneyMatch has created a platform to match individual buyers and sellers of currencies, with the attraction of both sides enjoying better exchange rates than what banks and even money changers offer. The rate used by the MoneyMatch site is the middle rate of the currency exchange spread. So an individual for example, willing to buy US$100 for his travels will be matched with someone wanting to change his US$100 into ringgit. The parties will be matched on this application and then proceed to make their exchange in an agreed location. MoneyMatch is also entering the area of cross border fund transfers.

“For example, someone in Singapore wishing to transfer money to Malaysia can be matched with someone here wishing to send an equal amount of money across the Causeway. Hence the parties can make the respective transfers to local accounts of their choice after an exchange of information. This means the transfer is done minus any cross-border transfer fees,” explains MoneyMatch co-founder Naysan Munusamy, who had spent many years as a forex trader with a number of banks before venturing out to start MoneyMatch.

Peer lending

One key growth area in fintech is peer to peer or P2P lending, online platforms that match borrowers with lenders, bypassing the traditional financial institutions. The business had even attracted big names such as Goldman Sachs. The most notable name in this space is Lending Club, which had launched its service as far back as 2007 and became the US’ largest technology IPO in 2014, raising around US$1bil.

Lending Club claims that its platform – which enables borrowers to get unsecured loans of US$1,000 to US$35,000 – has now helped originate close to US$16bil in loans.

Locally, last month the Securities Commission (SC) launched a regulatory framework for P2P lending, paving the way for small and medium-sized companies to access this new avenue of debt funding. Under SC’s rules though, individuals are not allowed to raise money on the local P2P platforms. Rather it is meant to only fund projects and businesses and a number of safeguards are in place. For example, those behind the operator of the P2P platform need to pass the “fit and proper” test; the rate of financing cannot be more than 18% (as that would be deemed predatory lending) and that the P2P operator has to disclose information related to the issuer and the risk assessment and credit scoring parameters adopted by the operator. There is no authorized P2P platform in Malaysia yet as parties wishing to run such platforms have to submit their application to the SC soon.

In China, P2P lending has virtually exploded. As a recent report by Citibank highlights, “China is past the tipping point”, with fintech companies having similar number of clients as the major banks. The report notes that China is the largest P2P lender in the world, with transactions topping US$66bil, compared with the US with only US$16.6bil.

Regulating fintech

But there are problems. Some unregulated P2P platforms in China had run scams. Others helped fuel an equity roller-coaster by offering funding for stock investments. This led to the Chinese benchmark index rallying more than 150% in the 12 months to last June before abruptly crashing. The Chinese authorities are now cleaning up the P2P sector.

So what are the risks of fintech regulation in Malaysia? And do companies like MoneyMatch need be regulated and licensed?

In an emailed reply to StarBizWeek, Bank Negara says: “Fintech start-ups that engage in activities under the purview of the central bank must comply with existing laws”. Bank Negara explains that regulated businesses include banking, insurance or takaful, money changing, remittance, operating a payment system or issuing payment instruments.

“A fintech company that engages in any activity that falls within the definition of a regulated business must be properly authorised to do so under the relevant laws.

“As an example, collecting deposits via a fintech platform would require approval from Bank Negara.

“A fintech company that is authorised to conduct a regulated business under the laws that Bank Negara administers will be subject to the oversight of Bank Negara pursuant to those laws.”

What this indicates is that Bank Negara is going to regulate fintechs the same way it does banks. But exactly how, it still isn’t clear.

But the good news is this: Bank Negara says it is engaging with firms in this space (and presumably that includes the likes of MoneyMatch), “to understand and where appropriate facilitate their business and provide guidance on aspects on regulation that would be applicable to them.”

Bank Negara adds that it is in the process of formulating a framework that “encourages innovation without undermining financial stability, the integrity of the financial system or the adequate protection for financial consumers.”

The SC has also been pushing for fintech innovation to develop in Malaysia. Last year, Malaysia became the first country in the region to introduce the regulatory framework for equity crowd funding. (While P2P is about companies raising debt, crowd funding is for entrepreneurs to sell equity to investors.)

The SC has also launched aFINity@SC, a fintech community aimed at industry engagement and more recently launched the P2P financing framework, which is aimed at addressing the funding needs of small businesses.

Chin Wei Min, the SC’s new head of innovation and digital strategy, says: “We think fintech can provide solutions to some of the unserved and underserved needs in the capital market.”

Chin adds: “We are also mindful of the risk, fraud and all the pitfalls. We continue to enhance our engagement model. We want to remain very close to the industry.”


Fintech’s hiccups

Some recent developments in the fintech space, however, point to weaknesses in fintech companies. LendingClub, the poster boy company for P2P lending has seen its shares tumble, wiping out about a third of its market value.

This came as it faces scrutiny after its founder and CEO resigned following an investigation into improper loan sales.

The US Treasury has released a report criticising the P2P lending business, recommending it to be more tightly regulated. Some commentators are liking P2P lending to the early days of the subprime mortgage bubble of 2006-07.

It is more likely though that the experiences of fintech in mature markets like China and the US will serve as good guides as to how this business will grow in this part of the world, with the requisite regulations put in place.

And the jury is still out as to whether traditional banks here will lose significant parts of their businesses to fintech start-ups.

Or as one industry observer puts it, fintech is more likely to usurp the business of the shadow banking market here, as some unserved borrowers now have the option to move away from loan sharks or “Ah Longs” and into the crowd funding or P2P platforms. But after that, banks could be next.

By Risen Jayaseelan, Wong Wei-Shen, a Zunaira Saieed The Star


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Jack Ma, Asia’s richest envisions the newspaper to leverage Alibaba’s technology & resources


Video:

//players.brightcove.net/4405352761001/default_default/index.html?videoId=4874322743001

http://www.thestar.com.my/business/business-news/2016/05/03/let-our-readers-see-china-from-more-angles-and-perspectives/

 

Ma: 20 more years of enviable growth for China

 

In an interview with the South China Morning Post, Alibaba founder Jack Ma shares his views on the Chinese economy and the importance of entrepreneurship in supporting development.

CHINA’S economy will face “a difficult three to five years” but the slowdown will be good for its long-term development, Alibaba executive chairman Jack Ma told the South China Morning Post (SCMP) just before the e-commerce giant’s takeover of the 113-year-old newspaper.

Ma said the Chinese economy was indeed grappling with structural problems and that the authorities were working hard to steer it onto a new growth path.

But he dismissed fears that China would follow Japan’s route to stagnation, saying the country still had huge potential waiting to be tapped.

The rapid growth of China’s Internet economy and consumer culture could help the country through its temporary difficulties, Ma said.

China would likely continue to grow at a rate “enviable to most other major economies for 15 to 20 more years”, he said.

Ma gave the two-hour interview in Hangzhou, eastern Zhejiang province, during which he also discussed his vision for the SCMP, cultural differences between the east and west, and his concerns for Hong Kong’s next generation.

Commercial and residential buildings in Guangzhou, Guangdong province.

China’s economy has been grappling with structural problems but Beijing is working hard to steer it onto a new growth path.

On China’s economy, the businessman said it was unrealistic to expect an economy of such scale to maintain double-digit growth indefinitely.

“There is no reason to expect that an economy of such size can maintain such a growth rate indefinitely, nor is it good for China to continue to grow at such speed,” Ma said.

“After more than 30 years’ growth, spending a few years to adjust its course is reasonable.

“Some say the actual (growth) number could be just 5%. But even with 5% growth, there is no other economy of such size growing at that speed in today’s world.”

Comparing China with an ocean liner, Ma said the Chinese leadership understood that the country’s old growth model was unsustainable and that they needed to chart a new course.

“It is easy for a small boat to change its course. But as the world’s second-largest economy, China is like an ocean liner… we have to choose either to not slow down and overturn the ship, or to slow a bit to make the turn,” he said.

The key was to create enough jobs to keep the economy stable and buy time so the country could complete its much-needed transformation, Ma said.

Fortunately for China, he said, the rise of its Internet economy happened at the right time.

China’s gross domestic product grows 6.7% in first quarter – a good start to 2016

“The traditional industries are struggling, but we also see growth in domestic consumption, the services industry and the hi-tech sector, and young talents are flocking to these areas,” he said.

“The logistics and delivery industries create plenty of jobs for low-skilled workers. We still have a lot of room for growth.”

Ma said the deciding factor in a true economic transformation would be the country’s ability to unleash the entrepreneurial spirit among the young and create an environment to help it flourish.

“I believe there will be some great enterprises arising from China,” he said.

“The monetary policy and supply-side reforms are very important and can help rejuvenate China’s economy.

“But to me, the most important thing is entrepreneurship. If this can flourish in China, China will become successful.”

China’s slowdown had triggered panic among foreign investors, with some choosing to leave the country.

But this actually created fresh opportunities, Ma said.

History had proven that those who bucked the trend to invest in China during difficult times always received good returns, he added.

“China needs to develop its rural areas; China needs to develop its cultural industry. It is also shifting focus to services and IT industries. There are still plenty of opportunities around,” Ma said.

Global media agency in the making

Video:

//players.brightcove.net/4405352761001/default_default/index.html?videoId=4874322743001

http://www.thestar.com.my/business/business-news/2016/05/03/global-media-agency-in-the-making/

In the second part of an interview with SCMP, Ma says he envisions the newspaper to leverage on Alibaba’s technology and resources.JUST why does Jack Ma want to own a newspaper, and what will he do with it?

Those are the biggest questions that have confronted readers of the South China Morning Post (SCMP) since news broke of Alibaba Group’s acquisition of the 113-year-old English-language newspaper late last year.

Now, for the first time since the Chinese e-commerce giant’s takeover earlier this month, Ma has outlined his vision for the newspaper.

The acquisition has raised eyebrows, with some suggesting that the SCMP – which has for decades been reporting aggressively on China – would change its direction.

A few even believed the newspaper might henceforth gloss over sensitive or controversial issues that risked incurring the wrath of the Chinese leadership.

In a face-to-face interview with the SCMP in Hangzhou, eastern Zhejiang province, Ma addressed these concerns, explaining why he believed in having a narrative on China that was different from that of both the mainstream Western media and Chinese state media.

“I don’t see it as an issue of (coverage) being ‘positive or negative’,” the Alibaba executive chairman said. “It is about being impartial and balanced… We should offer a fair chance to readers (to understand what is happening in China), not just a fair chance to China.”

China’s growth will remain enviable for the next 20 years, says Ma.

As a reader, Ma said, he valued the importance of obtaining unbiased information in order to draw his own conclusion based on the undistorted facts presented to him.

“I believe the most important thing for the media is to be objective, fair and balanced. We should not report a story with preconceptions or prejudice,” he said.

With its access to Alibaba’s resources, data and all the relationships in its ecosystem, the SCMP can report on Asia and China more accurately compared with other media who have no such access.

“Sometimes, people look at things purely from a Western or an Eastern perspective – that is one-sided. What the SCMP can do is to understand the big ‘why’ behind a story and its cultural context.

“I want to stress the importance of being fair to our readers. You should not impose your own view and prejudice on the readers and try to lead them to a conclusion. As a reader, I understand what a fair report is.”

The tech tycoon said his vision was to transform the SCMP into a global media agency with the help of Alibaba’s technology and resources.

Alibaba, the world’s biggest online trading platform, is aggressively developing big-data and cloud technology. Every day, it analyses and processes a massive volume of data that can provide powerful insight into the world’s second largest economy.

Ma reiterated his promise that Alibaba’s management would not take part in the SCMP’s newsroom operations. Rather, it wanted to represent readers’ interests and give feedback on how to improve readers’ experience, he said.

“As I said to Joe (Tsai), you are going to the SCMP as a representative of its readers. You don’t have to represent shareholders. You speak for the readers,” Ma said, referring to Alibaba’s executive vice-chairman who is now the chairman of the SCMP.

Ma, who last year unveiled a HK$1bil fund to help Hong Kong’s young entrepreneurs start up their businesses, said he invested in the newspaper because he “loves Hong Kong”.

Hong Kong was stuck in a rut and in danger of losing its direction, the billionaire said, urging Hong Kong’s youth to hold on to the city’s uniqueness and have faith in its future.

“The city has lost its can-do spirit. The big businesses are less willing to take risks. I talked to some young people in Hong Kong and they said they are lost. Young people indeed have fewer opportunities than before. But is it true that there are no more opportunities for them? No!” he said.

Hong Kong had many strengths that were unique to the city, Ma said.

“It has the best location. The ‘one country, two systems’ allows it to enjoy the good things from China’s growth and the best things from the West… The quality of Hong Kong’s graduates can match the finest from any other city. Its services industry is first class,” he said.

“Hong Kong people say Hong Kong needs to preserve its uniqueness. I say Hong Kong’s uniqueness is in its diversity, its tolerance of difference cultures… China does not want to see Hong Kong in decline. I have full confidence in its future.” – SCMP

By Chow Chung-Yan The Star

Related:

In talks: A photo illustration shows the South China Morning Post website displayed on a computer in Hong Kong. Jack Ma is in talks to buy a stake in the publisher of SCMP. – Reutersicon videoLet our readers see China from more angles and perspectives’

Bearish market: An employee is seen behind a glass wall with the logo of Alibaba at the company’s headquarters on the outskirts of Hangzhou. Alibaba is trading below its initial public offering price of US68 after plunging 20 in the past year as it grapples with slowing growth, the result of its reliance on a decelerating Chinese economy. — Reuters

 

 Jack Ma’s potential entry lends fire to SCMP

Investments to pour into Malaysia, Boston Scientific plant in Penang to be ready by 2017


 

BATU KAWAN: Malaysia is targeting to attract RM40bil worth of investments from the manufacturing and services sectors this year.

Malaysian Investment Development Authority (Mida) chief executive officer Datuk Azman Mahmud said that of the RM40bil, about RM800mil would be for the medical device segment.

“For the first quarter of the year, we have approved RM651mil investments for the medical sector, compared to RM194.7mil achieved in the same period of 2015.

“The approved medical device investments would create 1,610 job opportunities,” he said.

Azman said this after the ground-breaking ceremony of Boston Scientific new plant at the Batu Kawan Industrial Estate.

The RM40bil investments would come mainly from the United States and Europe, according to Azman.

“We are now negotiating for these investments,” he added.

Deputy Minister of International Trade and Industry (Miti) Datuk Lee Chee Leong represented Minister Datuk Seri Mustapa Mohamed at the event to officiate the groundbreaking ceremony.

Lee also read out Mustapa’s speech.

In the speech, Mustapa said in 2015, the exports of medical devices increased by 15% to RM15.5bil from 2014.

“According to the National Export Council (NEC), revenues from the export of medical devices are projected to grow to RM26bil by 2020.

“In this regard, industry players in Malaysia will be able to enhance their exports by capitalising on the liberalisation of markets such as Asean, facilitating access to the region’s 620 million strong market,” Mustapa said. Also present at the event was Penang Chief Minister Lim Guan Eng.

Boston Scientific’s new medical device manufacturing plant, which will involve investments running more than hundreds of millions of ringgit, is scheduled to be operational in the fourth quarter of 2017.

By David Tan The Star/ANN


Boston Scientific plant in Penang to be ready by 2017 

GEORGE TOWN: Boston Scientific’s new medical device manufacturing plant in Batu Kawan Industrial Park, which will involve investments running more than hundreds of millions of ringgit, will be operational in the fourth quarter of 2017.

Boston Scientific vice-president (operations) Dave Mitchell told StarBiz the group would move production equipment into the facility in the second quarter of 2017.

“The plant will be operational in the fourth quarter of 2017, and we expect to ship our first “Made-in-Malaysia” product before the end of 2017,” Mitchell said in an e-mail.

The construction of the facility will begin in the first half of 2016 and scheduled for completion in the second half of 2017.

Mitchell said the site and facility were designed to accommodate at least 10 years of growth, including new products, additional volume and added capabilities, which might include research and development (R&D) or distribution.

“We anticipate having more than 400 employees at the Penang site within four years of operation, with room to grow significantly beyond that.

“Initially we will focus on building manufacturing capability and capacity in the Penang facility.

“We have the space and ability for additional capabilities at the site, including both R&D and distribution,” he said.

On the outlook of the global medical device market, Mitchell said that according to research firm Euromonitor, in 2016 the medical device industry was expected to record strong growth of almost 6% to reach US$315bil.

“Unlike the traditional markets such as Western Europe and the US, the Asia-Pacific medical device market is projected to to grow and gain a wider market in 2016,” he said.

Boston Scientific was founded in 1979 and is the worldwide developer, manufacturer and marketer of medical devices.

Its products and technologies are used to diagnose or treat a wide range of medical conditions, including heart, digestive, pulmonary, vascular, urological, pelvic health, and chronic pain conditions.

The group has 23,000 employess in 40 countries.

By David Tan The Star/ANN

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Malaysia’s ringgit has done a stunning about-face as China starts buying Malaysian bonds


The market is saying that this recovery in oil prices will be pretty positive for the Malaysian economy,” said Kelvin Tay, chief investment officer for southern Asia Pacific at UBS Wealth Management in Singapore.

SINGAPORE: Malaysia’s ringgit has done a stunning about-face this year, with surging capital inflows turning it into Asia’s best-performing currency from the region’s worst in 2015.

Still, few expect the ringgit to regain all the ground lost last year, as inflows may have peaked as Malaysian risk assets are starting to look pricey to investors and analysts.

The ringgit strengthened 10 percent against the U.S. dollar in January-March, its largest quarterly gain since 1973, Thomson Reuters data shows.

In 2015, the ringgit had its worst year since 1997, shedding 18.5 percent on the back on plunging oil prices, anticipated higher U.S. interest rates and a financial scandal at state-owned 1Malaysia Development Berhad (1MDB).

Driving the currency’s U-turn is the return of foreign investors, who have poured into Malaysian stocks and bonds on better crude oil prices, a surprisingly resilient economy and easier monetary policies from major central banks.

“The market is saying that this recovery in oil prices will be pretty positive for the Malaysian economy,” said Kelvin Tay, chief investment officer for southern Asia Pacific at UBS Wealth Management in Singapore.

In February, exports rose faster than expected. Sales of electrical and electronic products, the biggest item, increased 8.9 percent from a year earlier.

JACKED-UP HOLDINGS

Through the week ended April 1, foreign investors bought a net 5.5 billion ringgit ($1.4 billion) of Kuala Lumpur stocks this year, data from the research arm of Malaysian Industrial Development Finance showed. Last year had total outflows of 19.5 billion ringgit, it said.

Offshore investors have raised their local bond holdings by 11.8 billion ringgit in January-March, central bank data shows, with increased interest in longer-tenor debt. For all of last year, foreigners slashed holdings by 11.1 billion ringgit.

The cautious stance of Federal Reserve Chair Janet Yellen on U.S. rate hikes has caused investors to seek higher yields in Asia, aiding flows into Malaysia.

“This combination of an attractive currency valuation and higher yields in a world of low or negative interest rates is drawing foreign investors back to the local Malaysian market,” said Eric Delomier, Asia fixed income investment specialist for Capital Group of the U.S.

Analysts and investors have concerns, including valuations of Malaysian assets and leadership of the central bank as its internationally-respected governor, Zeti Akhtar Aziz, retires at the end of April, and her successor has not been named.

Malaysian bonds seem “a bit rich,” said Maybank Investment Bank’s fixed income analyst Winson Phoon in Kuala Lumpur. Earlier this month, the 10-year yield fell to 3.77 percent, the lowest since February 2015.

SMALL INFLOWS AHEAD?

“I don’t expect to see a repeat large inflows in months ahead, although the direction should remain slightly positive,” Phoon said.

On share valuations, “Malaysia is actually not particularly cheap or attractive, compared to other markets,” Tay of UBS said. “We don’t think earnings growth has actually improved among Malaysian corporates.”

Local stocks were trading at about 17.3 times the past 12 months’ earnings, according to Thomson Reuters data. That compared with 11.8 times for Indonesian stocks, according to exchange data.

Zeti has led Bank Negara Malaysia (BNM) since 2000, and investors are hoping for a successor with her credibility to help Malaysia’s standing at a time of political crisis for Prime Minister Najib Razak, chairman of 1MDB’s advisory board.

“Given the near-term challenges to a new BNM governor, oil prices and festering political risk from 1MDB, among other things, the ringgit’s upside is limited,” said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.

His year-end target for the ringgit is 3.70 per dollar, 16 percent appreciation from its 2015 closing. Late Friday, the ringgit was at 3.90.- Reuters

China starts buying Malaysian bonds

Ong: ‘The Chinese government is keen to buy more Malaysian bonds

KUALA LUMPUR: China’s government has started buying more Malaysian government securities (MGS) and this inflow of new foreign money could rise to 50 billion yuan (RM30bil) in total, according to International Trade and Industry Minister II Datuk Seri Ong Ka Chuan.

In an exclusive interview with The Star, Ong said a senior representative of the Bank of China told him about this development recently when he met with the bank on issues pertaining to the use of yuan and ringgit in Malaysia-China direct trade.

“This could be one of the key factors contributing to the strength of the ringgit lately. China’s purchase of our MGS, which I am under the impression could rise to 50 billion yuan, will be very positive for our currency as it shows China’s confidence in our economy,” Ong said.

Other factors that had contributed to the strength of the ringgit in recent weeks included the recovery of crude oil prices, softer US dollar and the successful debt rationalisation of 1MDB, he added.

If China were to buy RM30bil worth of MGS, it would mean supporting 8.5% of Malaysia’s debts in the current MGS market. According to Bank Negara’s website, the value of outstanding MGS stood at RM352.06bil as at April 5, 2016.

Meanwhile, Malaysia’s debt markets saw inflows of RM11.5bil, versus RM1.4bil of outflows in February. The March foreign inflow was the largest monthly inflow since May 2014, according to a Nomura research note on April 7.

The inflows pushed foreign holdings of MGS to a historical high of RM171.5bil, the Japanese research house said. As a result, foreign ownership in outstanding MGS has risen to 48.7%.

Ong noted that Chinese Premier Li Keqiang had pledged to support the Malaysian economy – which was hit by a slowdown, local political problems, heavy outflow of funds and consequent plunge of the ringgit – when he visited Kuala Lumpur last November.

On Nov 23, the Chinese leader announced at a local forum that China would buy more MGS, issue yuan bonds in Kuala Lumpur and grant local institutional funds a quota of 50 billion yuan under the Renminbi Qualified Foreign Institutional Investor programme to invest directly in Chinese equities in the mainland.

The following day, the ringgit reacted positively gaining about 1% and the currency stabilised at around 4.25 to a US dollar in early December. MGS also gained.

“I was told China would use its reserves to buy our bonds. Its international reserves are high, at US$3.21 trillion (RM12.5 trillion) in March. With this development, I don’t think our ringgit will fall to 4.46 again,” said Ong.

Last month, Bank Negara said there were now more foreign governments and central banks holding MGS. A total of 29% was held by these two groups and 13% by pension funds.

The presence of these long-term investors is seen as reducing the risk of Malaysia facing sudden and massive outflows of capital in the event of unfavourable conditions, just like what had occurred last September, which saw the ringgit weakening to a multi-year low of 4.46.

Foreign inflow into the local stock market might be another factor that has boosted the ringgit. According to a Credit Suisse report, Malaysia saw a record net foreign equity inflow of RM6.1bil in March, which contributed to the ringgit’s 10.3% rise against the dollar in January-March 2016. At late trades on Friday, the ringgit stood at 3.9096.

Due to the recent new inflows, Bank Negara’s foreign exchange reserves had risen to RM412.3bil (US$96.1bil) as at March 15 from RM408.5bil (US$95.1bil) as at Jan 15.

This reserves figure is an important buffer against capital flows and has an impact on the ringgit and the sovereign credit rating of the country. Moody’s recently noted this buffer has improved.

Ong also said China would like to see Malaysia conducting roadshows in the mainland so that there is better understanding of Malaysia’s fundamentals and its bonds.

“The representative of Bank of China also told me the Chinese government is keen to buy more MGS, but they also hope our central bank could go there to market our MGS. I have conveyed this to Bank Negara. It is up to them to act,” says Ong.

Ong, who is also MCA secretary-general, noted that China’s huge direct investments had also boosted the ringgit’s sentiment.

The ringgit rose sharply in March partly due to the conclusion of the sale of 1MDB’s energy assets to China’s state-owned China General Nuclear Power Corp for RM9.83bil, as the absorption of all the debts of Edra Global Energy Bhd has reduced the systemic risk to pubic finance, banking system and economy.

Ong is confident that Kuala Lumpur is able to attract more major Chinese investments into the country this year due to Malaysia’s strong bilateral ties with China as well as the many free trade agreements – including the Trans-Pacific Partnership Agreement – Malaysia has signed with various countries and groupings.

By Ho Wah Foon The Star

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Malaysian home prices may go up 5~8%; heart-warming CNY family ties with EcoWorld 全家福


From Left :- Director of Valuation Services Chee Kok Thim , Rahim & Co Executive Chairman Senator Tan Sri Dato’ Abdul Rahim Abdul Rahman, DIrector Real Estate Agency Robert Ang and Director of Research & Strategic Planning Sulaiman Saheh after Press conference and Q&A session – Review on Malaysian Property Market and the prospects of 2016 – on Thursday Feb 4 2016.

KUALA LUMPUR: The property market is expected to remain challenging, with the hike in house prices slowing to between 5% and 8% this year, compared with 7% to 10% last year.

Rahim & Co Chartered Surveyors Sdn Bhd director Sulaiman Akhmady Mohd Saheh expects prices to rise but sees only marginal price gains for the residential sector.

“Depending on location and type of property, some may see price consolidation as the gap between sellers’ asking prices is closing towards the buyers’ expected prices,” he said during the firm’s property market review.

He said that there were concerns that the number of transactions may drop this year, as new property launches could face more challenges and slower take-up.

He said that based on average annual household incomes to the price of average terraced homes, housing affordability could have slightly improved last year compared with 2014 although house prices in general continued to increase.

“Nevertheless, housing affordability is still a big concern especially in urban centres and major towns throughout the country.

“The ratio improved from 3.6 in 2014 to 3.4 last year, which indicates that an average terraced house would cost an average household or family in Malaysia 3.4 times its annual gross income,” said executive chairman Tan Sri Abdul Rahim Abdul Rahman.

Note that the least affordable terraced house in Malaysia last year was in Sabah, with a 5.7 times ratio, Penang, 5.3 times, Kuala Lumpur, 5.2 times and Sarawak, at 4.5 times.

He said that home ownership continued to be beyond the reach of many Malaysians, especially the younger generation.

“The ratio indicate that generally our houses are still moderately unaffordable. For Sabah, Penang and Kuala Lumpur, average prices of terraced houses are even categorised as severely unaffordable,” he said.

He added that the pace of construction and completion for affordable housing needed to be improved in order to address the issue of affordability.

“It is progressing but there should be more effort, for example in PR1MA. Among these, PR1MA is to provide 175,000 units where 74,399 units are currently in various stages of construction. “At present, only 10,000 units is due to be completed by the end of the year.

“That 74,399 units under construction should be intensified instead of completing 10,000 units by the end of the year,” he noted.

For the commercial sector, particularly the office sector, it will still remain challenging as absorption of new supply coming into the market is expected to slow down.

More office buildings are expected to undergo refurbishment to prevent tenants from relocating to newer office buildings.

However, there are concerns on whether the retail property sector might be heading into a glut in supply as a number of malls are being launched within Klang Valley.

Last year, retail sales were affected by the goods and services tax, which was implemented from April as well as a weakening ringgit, driving up costs and lowering consumer spending.

By Nadya Ngui The Star/Asia News Network

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Heartwarning CNY video on family ties goes viral

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Building strong ties: A video grab from EcoWorld’s ‘Family Portraits’ on its official YouTube page captures the essence of maintaining family values.

PETALING JAYA: A heart-warming Chinese New Year video showing a man’s life as seen through his family photographs has been released by EcoWorld Development Group Bhd.

The three-minute video titled Family Portraits, which can be seen on YouTube, has been viewed more than 78,000 times so far yesterday. It is meant to educate the viewer on maintaining strong family values. The video shows glimpses of the man’s life-long journey from early childhood until adulthood.

All throughout, viewers will notice that family plays a huge role in the main character’s life as he encounters the pivotal moments in life that are familiar to many of us. The loving embrace of his family is never too far away even as he grows up and leaves his parents to pursue a career and start a family of his own.

Family Portraits successfully conveys its message through very little dialogue, relying mostly on visual images that reflect the mood and spirit of the central theme of the video.

The touching video, while light hearted and filled with funny moments, sends a strong message that clearly emphasises the importance of family ties and the togetherness that is an integral part of the Chinese New Year festival.

“The love of a family is life’s greatest blessing. This Chinese New Year, capture the warmth and happiness with a family portrait and start a collection of beautiful memories to look back on for generations to come,” posted the company on its YouTube page.

Those who wish to view the video may do so at EcoWorld’s official YouTube page.

Earlier this week, the company announced that it was offering a special Chinese New Year treat for buyers of the few remaining units of EcoWorld’s Eco Meadow Phase 1 homes by giving rebates of RM22,888 on top of an additional 5% early bird rebate from now until Feb 22.

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Public Bank Q4 profit up 19%; RM5bil earnings for 2015


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Public Bank Head Office in Kuala Lumpur – Founder and chairman Tan Sri Teh Hong Piow said expectations were for intense competition for market share

Public Bank Q4 profit up 19% but warns of challenges ahead


Public Bank Bhd, the country’s third largest bank, reported an increase of 19% in its fourth quarter net profit which stood at RM1.49bil compared to the net profit of RM1.25bil for the same period a year earlier but warns of challenges ahead.

Founder and chairman Tan Sri Teh Hong Piow said expectations were for intense competition for market share.

“And the more stringent capital and liquidity requirement will continue to put pressure on net interest margin and return on equity,” Teh said in a statement.

The bank’s increase in its fourth quarter ended Dec 31, 2015 net profit was boosted largely by a net writeback of loan impairment allowances and higher net interest income, it said in the statement yesterday.

It also announced a second interim divided of 32 sen per share for shareholders, bringing total dividends for the year to 56 sen per share or a total payout of 42.7% of the bank’s net profit last year.

For the entire FY15, Public Bank’s net profit stood at RM5.06bil which translates to a net return on equity of 17.8%, against a net profit of RM4.52bil in FY14 while revenue stood at a higher RM19.18bil compared with RM16.86bil earlier.

Public Bank continued to be the most efficient banking group in the country with its low cost-to-income ratio of 30.5% compared to the banking industry’s average cost-to-income ratio of 45.5%. It also continued to maintain a healthy level of capital with its common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio standing at 10.9%, 12.0% and 15.5% respectively as at the end of 2015, after deducting the second interim dividend, it said.

In FY15, the bank grew its loans by 11.6%, aided by its retail banking segment and extension of credits to small and medium enterprises while total customer deposits saw a growth of 8.9%.

Its domestic customer deposit grew by 7.5%, higher than industry’s growth of 1.8%.

As at the end of 2015, the group’s impaired loan ratio was at 0.5%, significantly lower than the industry ratio of 1.6% while its loan loss coverage ratio of 120.8% as at the end of last year was also higher compared to the local banking industry’s ratio of 96.2%.

Teh said growing fee-based revenue remained a key strategic focus of the Public Bank group.

“Arising from the group’s initiative to drive growth of its non-interest income in order to sustain better return for its shareholders, the group’s non-interest income increased by 22.4% in 2015 as compared to 2014, mainly contributed by higher income from its unit trust business, foreign exchange related transactions and fee income from banking operations,” he said.

Shares of Public Bank finished yesterday higher at RM18.38, up 4 sen.

 

Public Bank’s 2015 earnings cross RM5bil mark 

 

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Public Bank’s Founder and chairman Tan Sri Teh Hong Piow

KUALA LUMPUR: Public Bank Bhd recorded a stellar set of results, with net profit surpassing RM5bil for the financial year ended Dec 31, 2015. It rewarded shareholders by declaring a second interim dividend of 32 sen per share, bringing the full-year dividend to 56 sen.

The total dividend paid and payable for 2015 amounted to RM2.16bil and represents a total payout of 42.7% of the group’s net profit for 2015.

Public Bank posted a net profit of RM5.06bil, up 12% from RM4.52bil it recorded a year ago, translating to a net return on equity of 17.8% for 2015. Revenue was 13.8% higher at RM19.18bil compared with RM16.86bil in 2014.

In its filing with Bursa Malaysia on Wednesday, the bank said it owed its improved earnings to higher net interest income, higher non-interest income and lower loan impairment allowances.

However, these were partially offset by higher operating expenses due to higher personnel costs.

Gross loans grew 11.6% to RM273.4bil driven by growth in property financing, financing of passenger vehicles and lending to SMEs.

Deposits from customers were 8.9% higher to RM301.2bil, which partly contributed to the higher net interest income during the year.

“The results reflected the consistent execution of the group’s organic growth strategy which continues to deliver favourable results to our customers and our shareholders,” said founder and chairman Tan Sri Teh Hong Piow in a statement.

He added that the bank’s robust funding position was mainly supported by its strong retail franchise and large domestic depositor base of over five million customers who continue to place their trust and confidence in the group in safeguarding their funds.

Public Bank’s impaired loan ratio improved to 0.5% as at end-December 2015.

For the fourth quarter, the bank posted a 19% year-on-year gain in net profit to RM1.49bil while revenue was 8.8% higher at RM4.93bil.

Moving forward, the group said it will leverage on its internal strength and capitalise on its customer service and service delivery to maintain its leading market share in the domestic retail segment, supported by steady demand for home mortgages, vehicle financing and SME lending.

By Wong Wei-Shen The Star/Asia News Network

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