Top read business stories from Nov 1 to 6


Economy

Bank Negara expected to tighten monetary policy in 2H22

·Moody's Analytics (Moody's) expects Bank Negara Malaysia to pull the trigger on a rate hike in the second half of next year (2H2022), as Malaysia's economic outlook is looking brighter going into 2022.

·Last Wednesday, Bank Negara retained the Overnight Policy Rate (OPR) at 1.75% at its final Monetary Policy Committee (MPC) meeting of the year, making the policy rate unchanged since July 2020.

· Analyst Denise Cheok said factors nudging Bank Negara towards monetary normalisation in 2H2022 include inflation pressures that are steadily compounding from supply-chain disruptions and rising commodity prices, and crude oil prices which are expected to surge further towards the beginning of next year.



Asia tourism reopens with big-spending Chinese stuck at home

·SYDNEY: Asia's gradual easing of international travel curbs is proving a welcome relief for the region's hard-hit tourism operators slowly opening up to visitors from around the world - with one giant exception.

·China, previously the world's largest outbound tourism market, is keeping international air capacity at just 2% of pre-pandemic levels and has yet to relax tight travel restrictions as it sticks to zero tolerance for Covid-19.

·That has left a US$255 billion annual spending hole in the global tourism market for operators such as Thailand's Laguna Phuket to try and fill.



Three LLCs announce RM520mil expansion in Penang

·Three large local companies (LLCs) in the equipment manufacturing supply chain are expanding their respective footprints in the Batu Kawan Industrial Park, with total investments of RM520 million for their expansion projects.

·In fact, Penang is home to the majority of the LLCs in the electrical and electronics (E&E) and machinery and equipment (M&E) sectors.

·Chief Minister Chow Kon Yeow said the three -- Greatech Technology Bhd (Greatech), Pentamaster Corporation Bhd (Pentamaster) and UWC Bhd (UWC) -- are collectively taking up 14 hectares and all three projects are slated to commence in the first quarter of next year.



Commodities

Iron ore tumbles as China’s curbs on steel output roil market

·Daily crude steel output in the final third of October dropped to the lowest since March 2020, according to researcher Mysteel, which cited a survey of 247 blast furnaces and 71 electric-arc furnaces.

·There were frequent requests from local governments to curb production, while lackluster steel demand and softening prices have dampened mills' willingness to produce, it said.

·China's top industry group has previously said steel volumes fell in early and mid-October, while official data showed output plunged to the lowest since 2017 in September.

Corporate news

Petronas awards PSC contract to Posco, Petronas Carigali

·Petroliam Nasional Bhd (Petronas) has awarded a production sharing contract (PSC) for Block PM524 to POSCO International E&P

·POSCO International, a wholly owned subsidiary of South Korean POSCO International Corporation, is the operator with 80% participating interest, while PCSB, Petronas' wholly-owned subsidiary, holds the remaining 20%.

·Block PM524 is located in the prolific area of the Malay Basin, surrounded by several key producing fields including Tangga Barat that supply gas to the Peninsular Malaysia market.

Green Technology

Sime Darby aims to play key role in EV ambitions

·Sime Darby Bhd aspires to play a leading role in Malaysia's push towards low-carbon mobility with a suite of products and services, and capabilities across the automotive value chain to support the country's electric vehicle (EV) plans.

·The group said its regional EV ambitions is bolstered by an expanding EV line-up, complemented by partnerships with new EV brands such as Nio, Weltmeister and Li Auto.

·It added that its stronghold in China, the world's largest and most sophisticated EV market, provided the group with unrivalled insight into the fast-evolving EV industry; learnings which could be adapted to support the development of a robust EV ecosystem in Malaysia.

ESG

Rubber glove players take ESG more seriously

·Hartalega remains its top pick in the rubber glove sector, given the group's innovative approach towards automated production and focus on mitigating ESG issues, which are grave concerns among investors, said the research house.

·It noted that Hartalega management expects demand to start surging in January next year.

·The uptick in demand was evident since October and saw utilisation rate back up to 70%-80% compared with 60%-70% currently, added Kenanga Research.

Technology

TCS, Celcom partner for large-scale digital transformation

·Tata Consultancy Services (TCS), a leading global information technology (IT) service provider, is expanding its partnership with Celcom Axiata Bhd (Celcom) for large-scale transformation of core business support systems using TCS platforms hosted on Microsoft Azure.

·Celcom will adopt and integrate TCS microservices-enabled modular digital BSS core based on cutting-edge of the fourth industrial revolution (IR4.0) technologies, including artificial intelligence, business intelligence, machine learning and cloud technologies, according to a statement issued by both companies.

·This also enables Celcom to have access to real-time data and customer insights, allowing improved simulated business scenarios for revenue, cost and operational optimisations.

Aviation

AirAsia interested in potential Airbus A321neo freighter

·Malaysia's AirAsia Group Bhd is in talks with Airbus SE about its interest in the manufacturer developing a new factory-built freighter version of the A321neo passenger plane, the head of its cargo arm said on Wednesday.

·AirAsia would seek to convert some of its 362 orders for the passenger version of the A321neo narrowbody to a dedicated freighter, said Pete Chareonwongsak, CEO of AirAsia cargo division Teleport.

·Airbus did not respond immediately to a request for comment.

Telco

Analysts getting more positive on TM

·Kenanga Research reckons that the one-off prosperity tax is likely to reduce Telekom Malaysia's earnings per share by 9%, resulting in its dividend per share to drop from 17.5 sen to 17 sen.

·The research house says the one-off prosperity tax in financial year 2022 does not impact its assessment of TM's 10-year discounted cash flow and enterprise value and earnings before tax, interest, depreciation and amortisation valuations.

·TM pays about 40%-60% of its net profit in dividends each year.
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