The week that was - Ringgit rising, Genting HK, Palm oil, loan growth


  • Forex
  • Friday, 04 Sep 2020

On Thursday, the local currency was traded at 4.1465 for one US dollar, up from a low of 4.45 in mid-March. One reason is the steady inflow of foreign funds into the local bond market, spurred by the high-yielding appeal of Malaysian bonds amid Bank Negara overnight policy rate cut to a record low of 1.75%.

Ringgit rising

THE ringgit exchange rate against the US dollar strengthened to its highest level since February this year, boosted by improving local economic data and the greenback weakness.

On Thursday, the local currency was traded at 4.1465 for one US dollar, up from a low of 4.45 in mid-March.

One reason is the steady inflow of foreign funds into the local bond market, spurred by the high-yielding appeal of Malaysian bonds amid Bank Negara overnight policy rate cut to a record low of 1.75%.

Analysts are now expecting Bank Negara to further reduce the key rate by another 25 basis points in September, taking advantage of the strong ringgit and steady consumer prices.

Meanwhile, the US Federal Reserve has pledged to keep its key interest rate near zero. boosting the appeal of ringgit assets.

Genting HK sells Zouk

CRUISE operator Genting Hong Kong Ltd has sold Singapore-based nightclub operator Zouk Group to a Malaysian company owned by Lim Keong Hui, the son of its controlling shareholder Tan Sri Lim Kok Thay, for about US$10mil.

The disposal, Genting HK said on Tuesday, was part of its strategy to offload non-core assets and raised much needed funds.

Worries about Genting HK financial health has seen its share price plummet 60% since January as the Covid-19 pandemic forced cruise operators worldwide to suspend sailings.

The company said last month it has suspended all payments to creditors as it seeks to conserve cash for critical operations.

It owed creditors US$3.4bil as of July 31.

Last Friday, Genting Hong Kong reported a US$742.6mil net loss for the first half of the year.

Meanwhile, UOB Kay Hian Malaysia Research, on Wednesday, said Genting HK has assured investors that it would be able to raise enough funds from the market.

The company also ruled out any need for other entities in the Genting group to bail it out.

The Hong Kong-listed company owns the Star, Dream and Crystal Cruises brands, operates shipyards and has a stake in Resorts World Manila.Palm oil price on the upswing

Palm oil price on the upswing

THE price of the benchmark crude palm oil (CPO) futures contract on Bursa Derivatives climbed to a seven-month high on Tuesday, as the market shrugged off concerns about weaker exports in August on hopes that demand from India will pick up ahead of the Diwali festivities in November.

Higher palm oil prices had helped planters such as FGV Holdings Bhd, IOI Corp Bhd and Kuala Lumpur Kepong Bhd post strong quarterly profits in the three months ended June 30.

The trend is likely to continue in the third quarter as CPO price soared from a low of RM1,950 a tonne in early May to above RM2,800 a tonne yesterday.

This, coupled with higher production, points to another bumper profit season in the third quarter for planters.

Faster loan growth

LOAN growth in the banking industry expanded 4.5% in July, growing at a faster rate than the 4.1% in June, according to the latest banking statistics released by Bank Negara.

The growth, analysts said, was driven by a pick-up in household loans as the easing of the movement control order and the various Covid-19 stimulus packages that encouraged consumers to spend on big ticket items such as cars and properties.

The returning consumers’ confidence is good news for the economy, that is expected to rebound after a steep contraction in the second quarter.

CGS CIMB Research has raised its loan growth forecast from zero to 3% for this year.

The firm, however, remained neutral on the sector as the faster loan growth could help offset the negative impact from OPR cuts.

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