Summary of business stories from Oct 18 to 23


CIMB Bank has entered into a sustainability-linked derivative (SLD) transaction with Standard Chartered Malaysia in the form of an interest rate swap with a notional value of RM2.45bil for hedging purposes.

Summary of business stories from Oct 18 to 23

Economy

Malaysia's retirement scheme third in Asia

  • Malaysia went from a C+ rating to a C grade this year, connoting a pension system that has some good features, but also major risks or shortcomings that should be addressed.
  • The 2021 Global Pension Index also found that Asia's retirement systems continue to lag the world's.
  • Asia's overall index value average was 52.2, against a global average of 61.
Pressure on ringgit
  • AmBank Group chief economist Anthony Dass said the cautious market sentiment due to Covid-19, the Fed's tapering signal, fallout of China Evergrande Group's debt crisis, and a temporary rise in the US debt ceiling are expected to lend support to the dollar.
  • With 90% of the adult population in Malaysia having been vaccinated, the reopening of the economy and stability on the political front should bode well for the local economy to regain momentum in the final quarter, he pointed out.
  • Dass, who is also a member of the Economic Action Council Secretariat, said it should also entice portfolio inflows which would lend strength to the ringgit.

Corporate News

AirAsia X proposes paying 0.5% of US$8.1b debt owed to creditors

  • AirAsia X Bhd (AAX) is proposing to pay just 0.5% of debt owed to each of its creditors and to terminate all existing contracts so that it can restructure 33.65 billion ringgit ($8.1 billion) of liabilities, a document seen by Reuters shows.
  • The Malaysian low-cost long-haul airline, a sister carrier to AirAsia Group Bhd, on Monday told the stock exchange it had set a date of Nov 12 for creditor meetings to vote on the restructuring proposal.
  • AAX also proposed that if it were to garner more than RM300mil (US$72mil) in annual earnings before interest, tax, depreciation and amortisation, lease rentals and restructuring costs during its 2023-2026 financial years, all creditors except Airbus would be entitled to 20% of those earnings.
Mitsubishi Motors Malaysia appoints new CEO
  • Mitsubishi Motors Malaysia has appointed Shinya Ikeda as its new CEO, effective from Oct 11.
  • In a statement, Mitsubishi said Ikeda succeeded Tomoyuki Shinnishi who was in the role since October 2016.
  • Ikeda was previously general manager in the automotive business in Mitsubishi Corp.
Grocery platform raises RM6.18mil from ECF
  • BALOY, an e-commerce platform made for grocery shopping with an online-to-offline (O2O) and consumer-to-market (C2M) business model, has raised more than RM6.18mil in one of the largest equity crowdfunding (ECF) campaigns in Malaysia.
  • Co-founder and chief executive officer Yen Chee Yung says the campaign also drew participation from investors abroad.
  • Since 2019, Baloy has leveraged the customer-to-manufacturer model to help lower expenses on essential goods, especially for B40 households.

Banking

CIMB inks landmark RM2.45b SLD transaction with Standard Chartered

  • CIMB Bank has entered into a sustainability-linked derivative (SLD) transaction with Standard Chartered Malaysia in the form of an interest rate swap with a notional value of RM2.45bil for hedging purposes.
  • According to the joint statement on Wednesday, this landmark deal is the world's first ringgit denominated SLD transaction and to date Asia's largest environmental, social and governance (ESG) linked derivative transaction by notional value.
  • Importantly, this landmark SLD transaction has been structured to involve a pricing mechanism whereby a discount (cost reduction) or premium (penalty) will be applied depending on whether CIMB Group achieves pre-agreed sustainability performance targets (SPTs).
China

Evergrande's US$2.6b unit stake sale fails as Chinese officials seek to calm nerves

  • Once China's top-selling developer and now reeling under more than $300 billion of debt, Evergrande was in talks to sell a 50.1% stake in its Evergrande Property Services arm to smaller rival Hopson Development Holdings.
  • Worries that a cash crunch at Evergrande, whose liabilities are equal to 2% of China's gross domestic product, could cause economic contagion have seen swathes of other heavily-indebted developers hit with credit rating downgrades, while some smaller ones have already defaulted.
  • Evergrande, which has epitomised China's freewheeling era of borrowing and building, has been scrambling to raise funds to pay its many lenders and suppliers, amid expectations it is about to formally default on one of its international bonds.
Taxation

Simplifying the tax administration process

  • Businesses in the private and public sectors are finding creative ways to leverage on technological tools and solutions to change their operating models to drive revenue and generate new business opportunities as the economy recovers.
  • They are also upgrading their technology to cater for online business transactions, webinars, and user-interface to allow end-to-end seamless connectivity with their customers.
  • Furthermore, many businesses have changed their operating strategies to be more centralised and to allow more flexibility by having remote working environments.
  • In line with this new reality we operate in, the Inland Revenue Board (IRB) should consider enhancing its systems and processes to facilitate the tax obligations of employers.

Palm Oil

CPO futures poised for technical correction next week

  • Palm oil trader David Ng said he expected the CPO prices to trade higher, within the range of RM4,700 to RM5,100 per tonne, amid concerns over weaker output in the near term.
  • On Wednesday, local CPO futures rallied to a new all-time high of RM5,071 per tonne for the January 2022 benchmark contract due to concerns over weak production in the coming weeks as well as solid gains in soybean oil on the Chicago Board of Trade and the crude oil market.
  • On a Friday-to-Friday basis, November 2021 increased RM89 to RM5,188 a tonne, and December 2021 gained RM75 to RM5,036 a tonne.
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