Short Position - EV assembly plant, Banking on changes, Market fizzles

Malacca chief minister sulaiman md ali

EV assembly plant

THIS week, the Melaka Chief Minister Datuk Seri Sulaiman Md Ali (file pic) said that his state would soon see a massive RM1bil investment by a company looking to build the country’s first electric vehicle (EV) assembly plant.

The investment will be by local company Fieldman EV Sdn Bhd, which was set up in 2018 to hunt for renewable energy resources that can be brought into Malaysia, according to information on its website.

It says it has a current project in bringing the very first EV taxi into Malaysia.

The project is being planned to be constructed on 200ha at the Elkay Lipat Kajang Industrial Area in Jasin.

The Chief Minister also said Fieldman EV had obtained exclusive rights to distribute EVs in Malaysia and South-East Asia from China’s Changan Automobile Corp.

Changan is an established auto maker, one of the big four in China and has joint ventures with Mazda and Ford.

It isn’t clear yet if the manufacturing plant will assemble Changan EVs.

The EV plant is expected to create 5,000 job opportunities and a downstream industry for local players.

The news is clearly a positive one, what with EVs being all the rage these days.

However, the EV industry, while booming, is not an easy one to venture into.

Detractors say that EVs will not have an easy journey to penetrate into the Malaysian market.

One reason is cheap fuel still enjoyed by Malaysians.

Secondly, there will always be concerns by users about the “range anxiety” namely, the worry about how far one can use an EV before needing to charge it, and the availability of lack thereof, of charging stations.

While EVs do enjoy tax exemptions in Malaysia, there is still no subsidies to purchase them, like in some countries such as China, Japan and the west.

Finally, Malaysians constantly worry about the second-hand value of their cars and that could work against EVs.

That said, EVs have their attraction. It is often said that EVs are better in terms of energy efficiency, performance, convenience, maintenance, and lower tax, plus they are also greener with much lower emissions.

Clearly the project by Fieldman EV will one that will be closely watched.

Banking on changes

IT’S the start of a new year and already the local banking fraternity has been seeing some human capital changes within the industry.

Are the industry movements a sign that banking activities like deal-making is on a recovery path?

No doubt, 2021 was an “unusually difficult year” for the investment banking (IB) industry, according to Asia Money.

Lagging behind pre-pandemic levels, IB activities in Malaysia were fairly muted last year, no thanks to the murky uncertain prospects brought about by the pandemic.

Bankers say most investors adopted a wait-and-see attitude last year, hoping to cut deals amid a more stable political and economic environment.

Closest neighbour Singapore, however fared relatively well.

According to reports, IB activities in the city-state raised over US$1bil or some RM4.2bil in 2021, a jump of more than 34% from 2020 even as merger and acquisition (M&A) deals reached a record high.

Investment bankers in Singapore walked away with hefty bonuses as a result.

Their employers however said they were paying these individuals to “retain talent” and not merely to “reward” them.

Back to Malaysia, it remains to be seen whether fresh appointments and industry movements can make a difference to the fortunes of those that hired them.

RHB Investment Bank Bhd appointed this week former CIMB Investment Bank’s Harris Ishak as its new regional head of M&A.

It was also announced tthat Malayan Banking Bhd group president and CEO Datuk Seri Abdul Farid Alias will not be seeking a renewal of his contract that expires on Aug 1 this year.

It remains to be seen who will succeed Farid and where he will move on to.

No doubt there will be more changes to come as the banking industry gears itself up for a completely different landscape this year.

The market is waiting patiently to see which parties will obtain the five digital banking licences that are expected to be dished out in the coming months.

Market fizzles

TWENTY twenty-two is off to a rough start. Foreign shareholding in Malaysia equities is at an all-time low and trading volume and value have come off substantially from the recovery bounce we saw in 2020, fuelled by low interest rates and liquidity.

With the market now returning to pre-pandemic levels, it will not be good for the market and companies that will rely on a hot market to get things moving.

Generally, a vibrant stock market is a barometer of what is happening economically in a country.

Some will say that it is a leading indicator and when a market is hot, deals start to materialise.

Companies too will be embolden to make forward-moving decisions that will generally lift investment, risk-taking and hiring that will then translate into other aspects of the real economy.

But with the market listless, and on a streak where it has had more down years than up years in recent times, the the feeling of being aimless starts to permeate the market.

Having foreign investors is the key.

It is argued they are the fifth-gear for the market and often add to the sizzle of any sustainability in the stock market.

But with shareholding now at its lowest, it increases the risk that the Malaysian equities will just be a merry-go-round for the large institutions and even retail interest, which is already starting to ebb compared with the frothy period after the first movement control order and stimulus packages were announced.

The reality is that those factors should serve as a wake-up call for Malaysian corporates to make the necessary changes to woo back foreign interest and also regain the confidence of the local investors.

If the market persistently becomes listless, it will likely perpetuate the interest of Malaysian investors elsewhere, albeit the foreign markets or even cryptocurrencies.

Such an occurrence would make it even harder for listed companies to regain favour among investors near and far, and will have long-lasting implications for the future of the domestic stock market.

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