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FBM KLCI 1622.

64

5.91

KLCI FUTURES 1618.00

3.00

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37.76

RM/USD 4.3930

CPO RM2469.00

5.00

OIL US$29.07

0.13

GOLD US$1090.60

0.10

PP 9974/08/2013 (032820)
PENINSULAR MALAYSIA RM1.60 (INCLUSIVE OF 6% GST)

TUESDAY JANUARY 19, 2016 ISSUE 2089/2016

FINANCIAL
DAILY
MAKE
BETTER
DECISIONS

AG returns SRC
International,
RM2.6b
investigation
papers to MACC
6 HOME BUSINESS

www.theedgemarkets.com
6 HOME BUSINESS

Boustead to raise
RM1.05b via rights
issue, proposes
2:5 bonus
7 HOME BUSINESS

CAB to place 9.1%


of its shares to
Salim Group
8 HOME BUSINESS

Malaysias five-year
bond yield declines
9 PROPERT Y SNAPSHOT

Nangang hosts
Taiwans first
smart public
housing project
13 H O M E

Put Form 3 system in


order first NUTP

COURT DISMISSES
APPEAL BY TAJUDIN,
BISTAMAM
AGAINST TRI
The duo and another former
director were ordered in 2013 to
repay monies in compensation
payments, EPF contributions
and incentive payments to the
company. Meena Lakshana has
the story on Page 4.

16 F O C U S

Meet Henrik
Fiskers new,
Force 1 supercar

Mid- and small-cap stocks take another


beating amid weak global sentiments
4 HOME BUSINESS

T U ESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

For breaking news updates go to


www.theedgemarkets.com

ON EDGE T V
www.theedgemarkets.com

No more job
cuts this year
CIMB

Europe struggles
to lift global gloom
Markets, oil prices slump to multi-year lows
BY JAMIE MCGEEVER

Prasarana steps
up security
at stations
following arrest
of militant
suspect

The Edge Communications Sdn Bhd


(266980-X)

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Editorial
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Surinder Jessy, Ooi Inn Leong
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LONDON: An attempted rebound


in European stocks quickly fizzled
out yesterday, after markets around
the world and oil prices slumped
to multi-year lows amid persistent
worries over global growth.
Middle Eastern stocks plunged
overnight, catching up with the fall
across global bourses last Friday,
while the prospect of a jump in Iranian crude exports after the lifting
of sanctions against the country
weighed heavily on oil.
With US markets closed for the
Martin Luther King Day holiday,
equity bulls were relying on Europe
to fight back from the worst-ever
start to a year. The main European

indices have lost as much as 10%


in just two weeks.
Yesterday saw early gains for the
FTSEuroFirst 300 Index of leading
shares, but it had given up most of
them by midday to trade up just
0.1% higher. Britains FTSE 100
Index and Frances CAC 40 were
flat, while Germanys DAX was
down 0.2%.
In the absence of major economic data today ... risk-off flows
are dominating the session, said
Ipek Ozkardeskaya, a market analyst at London Capital Group.
There was little to cheer about in
Asia, either. MSCIs broadest index
of Asia-Pacific shares outside Japan
fell to its lowest since October 2011,
falling 0.5%.

Japans Nikkei 225 tumbled as


much as 2.8% to a one-year low
before closing 1.1% lower. It has
lost 20% from its peak hit in June,
meeting a common definition of a
bear market.
MSCIs emerging stock index
dropped to a six-and-a-half-year
low yesterday, and was last down
0.6% on the day.
The volatile Shanghai Composite index initially pierced through
intraday lows last seen in August,
before paring the losses and closed
up 0.4%. It was still down nearly
18% this month.
In Wall Street, the S&P 500 Index hit a 15-month low last Friday, ahead of yesterdays market
holiday. Reuters

Credit recognition for MOOCs


PUTRAJAYA: In paving the way to
flexible education, Malaysia is en
route to becoming the first country to create a platform to award
credit recognition and transfers
for massive open online courses
(MOOCs), said Higher Education
Minister Datuk Seri Idris Jusoh.
He said the Malaysian Qualifications Agency (MQA) had been
given the mandate to develop the
MOOC platform, so that all MOOCs
from Malaysia and overseas could
be registered under the platform
and be given credits.
Students can enjoy flexible
learning at several local and foreign universities registered under
MOOCs, and their credits can be
transferred for certificate, diploma and degree awards, he said in

his 2016 New Year address for the


ministry here yesterday.
He said with the credit transfer
initiative, education in Malaysia will
be more flexible, open and attractive
to local as well as foreign students.
This policy will be a key policy
of the country and will be the first
of its kind in the world, he said.
On another note, Idris said the
MQA had agreed to abolish the
need for public universities and
higher learning institutions to obtain the certificate of quality compliance (CQC) to receive accreditation to conduct any programmes,
starting this year.
He said abolishing the CQC will
speed up the duration for the overall
evaluation of a certain programme.
Idris said the MQA had also

IN BRIEF
Scan Associates makes
about-turn
on AGM results
KUALA LUMPUR: In an aboutturn, Scan Associates Bhd said
the resolutions to re-elect two
retiring directors, Datuk Nik
Ismail Nik Yusoff and Roy Winston George, tabled in last Fridays annual general meeting
(AGM), were withdrawn. In its
amended announcement to
Bursa Malaysia yesterday, the
ICT security solution provider
said the two retiring directors
were not re-elected in the AGM,
as they had decided not to seek
re-election. Scan Associates
said a resolution to approve
the payment of directors fees
of RM156,000 for the financial
year ended June 30, 2015 was
also rejected in the AGM.

SingPost combines
e-commerce businesses
to form new unit
SINGAPORE: Singapore Post
Ltd (SingPost) is combining its
e-commerce division with two
recent acquisitions to form a
new business unit called SP
Commerce, according to a
Business Times report. SP Commerce includes US e-commerce
provider TradeGlobal, which
focuses on high-end apparel and beauty products, and
US e-commerce logistics firm
Jagged Peak, which serves the
fast-moving consumer goods industry. Marcelo Wesseler, chief
executive officer (CEO) of SingPosts current e-commerce arm,
will be CEO of SP Commerce.

Opec sees oil price collapse hurting rival output

Idris says the MQA has been given the


mandate to develop the MOOC platform.

agreed to accept forecast results


at the higher education department before public universities
and higher learning institutions
submit their applications for MQA
accreditation. Bernama

LONDON: The Organization of


the Petroleum Exporting Countries (Opec) forecast yesterday
that oil supply from non-member countries will post a larger-than-expected decline this
year, due to the collapse in prices, boosting the need for crude
from the producer group. The
Opec said in a report that supply
outside it will decline by 660,000
barrels per day in 2016, led by
the United States. Reuters

No breach or default under Bandar Malaysias sukuk agreement


BY YIM IE YO NG

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) said yesterday it raised only RM1.5 billion
from the sukuk issued via Bandar
Malaysia Sdn Bhd two years ago,
and that the proceeds of the funds
raised had been used in accordance
with the terms and conditions of
the issuance.
It stressed that no default had
arisen under the sukuk documents
by 1MDB executing a share sale
agreement for the disposal of its
60% stake in Bandar Malaysia with
the Iskandar Waterfront Holdings
Sdn Bhd-Chinese Railway Express
Corp (IWH-CREC) consortium.
Its statement came after Pandan
member of parliament Rafizi Ramli accused the state-owned firm of
having violated its RM2.4 billion

sukuk agreement when it agreed to


sell 60% of Bandar Malaysias equity.
He also urged Lembaga Tabung
Haji and Retirement Fund Inc
(KWAP) to recover their RM1.5 billion
from 1MDB, as it had allegedly violated the terms of its sukuk financing,
claiming that one of the covenants
of the deal was that Bandar Malaysia
had to remain a wholly-owned unit
of 1MDB Real Estate Sdn Bhd.
It was reported that Tabung Haji
had subscribed to RM920.8 million of 1MDBs sukuk, the balance
RM579.2 million was believed to
have been subscribed by KWAP.
1MDB, in its statement yesterday, said the sukuk is structured
as a near-zero coupon, i.e. with [a]
cash-pay sukuk profit rate (coupon)
of only 0.35% per annum.
The remainder of the profit rate
is not paid in cash, but accrues and

adds to the principal amount outstanding every year. This results in


a final principal amount at maturity
between 2021 and 2024, of RM2.4
billion, with effective profit rates
between 5.85% and 6.05%, it said.
The sukuks proceeds, it said, can
be used for various objectives: to
part-finance the cost of the Pengkalan Udara Kuala Lumpur (PUKL)
relocation, pre-fund the fees and
expenses of the sukuk programme,
and to fund the requisite financing
reserve accounts and working capital
requirements of 1MDB Real Estate
(now known as TRX City Sdn Bhd).
Accordingly, the proceeds can
be used for purposes other than the
PUKL relocation, said 1MDB.
As for the sale of its 60% interest to the IWH-CREC consortium,
1MDB said the share transfer is
conditional upon certain consents

being procured, one of which is the


consent of sukuk holders.
Until all CPs (conditions precedent) are met and completion
occurs, no shares in Bandar Malaysia Sdn Bhd will be transferred,
and accordingly, there is no breach
or default under the sukuk documents, it added.
As for the PUKL relocation, 1MDB
said the cost remains at RM2.7 billion, and that for undertaking the
project, it would be reimbursed
in land (RM1.6 billion) and cash
(RM1.1 billion) by the government.
Certain tracts valued at RM1.6 billion, comprising the Bandar Malaysia project, have been transferred to
1MDB. The remaining RM1.1 billion
will be reimbursed upon actual construction costs being incurred, it said.
Any cost overruns or penalties
will be borne by 1MDB, it added.

T U ESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

4 HOME BUSINESS

Court dismisses appeal


by Tajudin, Bistamam
Duo and another former director were ordered by High Court in 2013 to repay TRI RM37.84m
BY MEENA L A KSHANA

KUALA LUMPUR: An appeal by Tan


Sri Tajudin Ramli (pic) and his younger brother Datuk Bistamam Ramli
against a judgement of the Kuala
Lumpur High Court dated March
20, 2013 in favour of Technology
Resources Industries Bhd (TRI), a
wholly-owned subsidiary of Celcom
Axiata Bhd, has been dismissed.
In a filing with Bursa Malaysia
yesterday, Axiata Group Bhd said the
Court of Appeal yesterday dismissed
the appeal with cost of RM30,000 to
be paid by Tajudin and Bistamam.
Tajudin and Bistamam have one
month to file an application for leave
to appeal to the Federal Court against
the decision, said Axiata.
Axiata will make further announcements from time to time

in respect of any material developments in this matter, it added.


The duo left the TRI board in July
2002, following a bitter power tussle
with Telekom Malaysia Bhd after the
latter bought a 31.25% stake in TRI.
The High Court on March 20,
2013 decided, after a full trial, against
Tajudin, Bistamam and Datuk Lim
Kheng Yew in a suit brought by TRI
to reclaim RM37.84 million in compensation payments, Employees
Provident Fund (EPF) contributions
and incentive payments paid to the
trio when they were directors of the
company.
The decision by the High Court
included interest to be paid at a rate
of 3% per year from the judgement
date to the date of full realisation,
but without including other costs
to be assessed.

TRI in September 2006 filed the


suit for recovery of the sums paid by
it to the trio as alleged compensation for loss of office and incentive
payments.
Tajudin, the former Malaysian
Airline System Bhd chairman, was
ordered to repay RM15.76 million in
compensation payments, to return
RM2.7 million in EPF contributions
and RM3.4 million in incentive payments to TRI. Bistamam and Lim,
meanwhile, would have to repay
RM6.92 million and RM9.05 million, respectively.
Tajudin and Bistamam, in September 2006, counterclaimed
against TRI, seeking a declaration that they had been appointed
chief executive and group executive
vice-president of the company.
Their counterclaims also sought

Mid- and small-cap stocks


take another beating again
BY GHO C H EE Y UAN

KUALA LUMPUR: Mid- and smallcap stocks took a beating again yesterday amid the prevailing state of
cautious global sentiment that has
weighed on ACE Market counters
with heavy selling.
The FBM Small Cap Index (FBMSCAP) slipped 205.5 points or 1.32%
to close at 15,492.04 points, while the
FBM ACE Index, which features ACE
Market-listed counters, fell 139.99
points or 2.25% to settle at an eightweek low of 6,074.82 points. The
fall was in tandem with the weaker
global market sentiments.
Year to date (YTD), the FBMSCAP
has fallen 2.84%, while the FBM ACE
has declined 4.92%.
Meanwhile, the benchmark FBM
KLCI dropped 5.91 points or 0.4% to
close at 1,622.64 points yesterday,
recording its third consecutive day
of losses. YTD, it has lost 4.13%.
The continued drop in oil prices fuelled the selling in the equity
markets, particularly in the Middle
East, where worries of oil glut are
mounting after the sanctions against
Iran were lifted over the weekend.
The intensive selling on smallcap stocks raises concerns that the
bubble of high valuations among the
lower liners might have burst; thus
there is a rather bleak outlook on the
horizon for this breed of stocks. But
others beg to differ, believing that
earnings growth could be more exciting than the heavyweights.
The fall was expected as companies with smaller market capitalisations had begun to get overheated, Inter-Pacific Securities head of
research Pong Teng Siew told The

FBM ACE
Vol (bil)
2

7,000

1.5

Vol (bil)
2

BY SURIN MURUGIAH

Points
20,000

15,492.04

1.5

6,000
1

0.5

Dec 28, 2010

6,074.82

15,000

5,000
4,000
3,000

Jan 18, 2016

Edge Financial Daily over the phone


yesterday.
A good majority of small-cap
stocks are overvalued. It may take
one whole year for the valuation to
normalise, he said, noting that majority of the stocks were trading at a
high price-earnings ratio (PER) of 13
times to 15 times, compared with a
normal single-digit PER of eight or
nine times.
Hence, Pong said that the smallcap stocks are no longer safe and
attractive to investors at the moment. I suggest investors to sell their
shares at least for now and accumulate them back when the valuation
starts to normalise, Pong said.
Over at the derivatives market,
the spot month FTSE Bursa Malaysia
KLCI Futures gained three points to
close at 1,618 points yesterday, but
still traded at a slight discount to the
key index, indicating investors remain bearish on the broader market.
RHB Research Institute technical
analyst Rijel Sid said the FBMSCAP is

0.5

10,000

Dec 28, 2010

6, 2015 that it had reached a settlement with Lim, but did not disclose
details of the settlement.
Axiata shares closed one sen
or 0.64% higher at RM1.58 yesterday, with a market capitalisation of
RM54.14 billion.

Foreign funds sell Malaysian


equities for second week running

FBM Small Cap


Points
8,000

declarations that TRIs board had offered and paid them compensation
for the termination of their employment to the sum of RM23.44 million
and RM6.19 million, respectively,
that the settlement was in exchange
for their agreement not to enforce
their legal rights against the company arising from their termination,
and that all compensation payments
were paid in accordance with the law.
However, the defendants counterclaims were also dismissed by
the High Court on March 20, 2013,
which ordered that costs be assessed on April 18, 2013.
Then on April 17, 2013, TRI was
served with the Notice of Appeal
filed by Tajudin and Bistamam
with the Court of Appeal against
the judgement of the High Court.
Axiata announced on March

Jan 18, 2016

likely to continue heading south for


this week as there is no significant
bullish pattern on the technical chart.
The index has fallen too close
to the 200-day moving average line.
Technically, this indicates that the
immediate sentiment is weak, he
said. Our immediate support remains at 15,441 points. On the flip
side, we keep our immediate resistance at 16,040 points, he added.
Nevertheless, one mans meat is
another mans poison. Some investors see the share price weakness as
good bargain-hunting opportunities.
While many fund managers are
switching their investment portfolio
to defensive stocks, given the current market volatility, Areca Capital
chief executive officer Danny Wong
remains optimistic about the smallcap stocks.
I think there is still room for
small-cap stocks to perform as they
have better chance of faster earnings
recovery compared with big caps,
he said.

KUALA LUMPUR: Foreign investors sold Malaysian equities


for the second week running last
week, according to MIDF Research.
In his weekly fund flow report
yesterday, MIDF Research head
Zulkifli Hamzah said it was as
bad as the week before, but as
foreign liquidity overhang in the
local market is low, the intensity
of the selldown was not as severe
as that seen last year.
He said the total amount of equities sold last week was RM762.9
million.
This is estimated based on
transactions in the open market
and excluded off-market deals.
It was RM613.7 million the week
before.
Foreign funds were net sellers throughout the week but the
amount did not exceed RM200
million during any of the days.
Foreigners have been net sellers for seven consecutive trading
days now, he said.
Zulkifli said again, selling was
heavy last Monday when RM186
million was offloaded.
He said the rate of attrition was
relatively unchanged last Tuesday, but receded last Wednesday,
adding that selling picked up
pace again last Thursday and by
last Friday, the offloaded amount
surged to RM190.3 million, the
highest for the week.
Year to date, foreigners have
sold RM1.38 billion net.
That reduces the estimated
amount of foreign liquidity overhang in the market to only RM7
billion, based on our estimate.
Foreign participation rate

[average daily volume] rose last


week, but the amount remained
below the RM1 billion mark at
RM990 million.
In comparison, participation
averaged RM1.05 billion per day
last year, he said.
Zulkifli said local investors
supported the market last week,
with local institutions and retailers absorbing RM665.1 million and RM97.8 million respectively.
In 2015, local institutions
absorbed a whopping RM21.2
billion, and the market support
seemed to be continuing in the
first two weeks of the year. The
participation rate of local institutions remained elevated at
RM2.03 billion.
He said, except for the last
week of 2015, retailers have been
conspicuously nibbling in the
market in the last six weeks.
Zulkifli said retail participation was healthy last week at
RM905 million.
Meanwhile, Zulkifli said turbulence in the global equity markets receded in the second opening week of trading this year.
However, he said markets remained in the red zone, adding
that last Fridays precipitous fall
on Wall Street is rather ominous
for the week ahead.
He noted that the price of
Brent crude oil plunged 6.3% to
US$28.94 (RM127.34) per barrel
last Friday, its lowest in 12 years,
heightening fears over further
depression in commodity prices.
The outflow from Asian equity remained elevated last week.
Still, it was not as severe as that
seen during many weeks last
year, he said.

T U ESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

6 HOME BUSINESS

AG returns
investigation
papers to MACC
Wants more info on SRC International, RM2.6b donation cases
KUALA LUMPUR: The Attorney-Generals Chambers (AGs
Chambers) yesterday returned investigation papers into SRC International Sdn Bhd and the RM2.6 billion
donation to the Malaysian Anti-Corruption Commission (MACC), seeking more information.
Attorney-General Tan Sri Mohamed Apandi Ali said in a statement he wanted additional information on the suggestions and
recommendations the MACC made
on the two cases.
After examining thoroughly
the testimonies in the investigation papers, the AGC (AGs Chambers) today (yesterday) returned
the investigation papers to obtain

an explanation from [the] MACC


on several suggestions and actions
that [the] MACC recommended.
The AGC has also ordered that
the investigation papers be returned
soon, said Mohamed Apandi.
The AGs Chambers received
from the MACC the investigation
papers on SRC International, a former subsidiary of 1Malaysia Development Bhd (1MDB), and the donation made to Prime Minister Datuk
Seri Najib Razak on Dec 31, 2015.
MACC chairman Tan Sri Abu
Kassim Mohamed previously said
the recommendations it made in
the investigation papers were truly
based on merit and free from external influence.

MACC director of special operations Datuk Bahri Mohamad


Zin said the commission could not
publicly disclose the outcome of its
investigations or its recommendations to the prosecutor.
Mohamed Apandi on Jan 8 vowed
that he would go through in detail
the investigation papers that the
MACC submitted, but said he needed time to do so.
Najib said the RM2.6 billion
deposited into his personal bank
accounts was a donation and the
transactions were all above board.
The prime minister also denied the
RM2.6 billion was from any public
fund nor had any link to 1MDB.
The Malaysian Insider

Boustead to raise RM1.05b via


rights issue, proposes 2:5 bonus
BY KAMARUL ANWAR

KUALA LUMPUR: Boustead Holdings Bhd is looking to raise up to


RM1.05 billion via a two-for-five
rights share issue to pare down its
gearing, to fund its property development and property investment
activities, and for working capital.
The group also proposed to give
out two bonus shares for every five
Boustead shares held after the proposed rights issue.
In a statement yesterday, Boustead said the issue price of the rights
shares, which entail an issue of up
to 413.67 million new shares, will
be determined based on a discount
of 30% to the theoretical ex-rights
price, which will be based on the
volume-weighted average market
price of Boustead shares to be determined.
Its deputy chairman and group
managing director Tan Sri Lodin
Wok Kamaruddin said the cash
call will help to improve Bousteads
financial flexibility and enhance
its liquidity.
We are confident that the attractive 30% discount to the theoretical ex-rights price offered through
the proposed rights issue will resonate with astute investors, said
Lodin.
The Boustead group has had
a sterling track record in terms of
dividend yields despite the headwinds in the market. A discount
of this nature should factor in well
with long-term investors, who are
eyeing solid investment in a diversified conglomerate, he added.

In a filing with Bursa Malaysia,


Boustead said more than half of
the proceeds from the rights issue, or RM507 million, will be used
for property development activities. Breaking down this amount,
RM300 million will be used for
landbanking purposes, RM127
million to construct the Royale
Chulan Cherating Pahang resort,
RM50 million for construction activities of its property development
business and the remaining RM30
million for development works on
the Boustead Cruise Centre in Port
Klang, Selangor.
Another RM486 million of the
proceeds from the rights issue will
be used to repay bank borrowings.
As at Sept 30, 2015, the total outstanding bank borrowings of the
group were at RM7.96 billion,
which would be reduced to
RM7.47 billion upon the
completion of the proposed rights issue and the
repayment of bank borrowings of RM486 million.
A total of RM55.9 million
will be used for working capital, with the rest to fund exLodin: The Boustead
group has had a
sterling track
record in terms
of dividend
yields despite
the headwinds
in the market.
Photo by
Kenny Yap

penses arising from the proposals.


Bousteads share base will be
nearly doubled to 2.03 billion after
the rights issue and bonus issue,
from 1.03 billion. It expects these
exercises to be completed by the
third quarter of this year.
Boustead also said it intends to
seek undertakings from its parent
Lembaga Tabung Angkatan Tentera, which owns 58.75% of the
group, and Lodin, who has a 2.73%
stake in Boustead, to subscribe in
full to their entitlements under the
rights issue.
Boustead shares fell five sen or
1.18% to close at RM4.19 yesterday,
valuing them at RM4.38 billion.

MOST VIEWED STORIES ON


theedgemarkets.com

AmFirst REIT secures RM250m loan


for land acquisition in Penang
BY DA N IA L ID R A K I

KUALA LUMPUR: AmFirst Real


Estate Investment Trust (AmFirst REIT) has secured a RM250
million syndicated-term loan facility from Public Bank Bhd and
AmBank (M) Bhd to acquire six
pieces of land in Seberang Perai
Tengah, Penang.
The land parcels come together with a three-storey hyper mall,
as well as 1,242 car park bays and
1,236 motorcycle bays.
In a filing with Bursa Malaysia
yesterday, Am ARA REIT Managers Sdn Bhd, the manager of
AmFirst REIT, said the tenure of
the borrowing is five years, commencing from the date of the first
drawing, with an option to extend
at the absolute discretion of the
two lenders.
It added that the borrowing will
increase AmFirst REITs gearing
to 45.7%, based on the audited
total assets as at March 31, 2015,

which is below the gearing limit of


50% prescribed by the Securities
Commission Malaysias guidelines
on real estate investment trusts.
The groups gearing stood at
38.27%, based on its first half of
financial year ending March 31,
2016 (1HFY16) results.
AmFirst REIT said the borrowing is secured by an openall-monies first-party charge over
the Mydin property, as well as an
open-all-monies first-party charge
over a freehold seven-storey office
tower with a two-level basement
car park, known as Prima 10.
It has RM1.35 billion worth of
assets under management and
RM541.8 million in borrowings,
according to its 1HFY16 results.
AmFirst REITs share price has
declined some 20.19% over the
past one year, Bloomberg data
showed. It closed 1.38% or one
sen lower at 71.5 sen yesterday,
with a market capitalisation of
RM497.6 million.

Abric plans 43 sen cash distribution,


to be followed by delisting
BY DA N IA L ID R A K I

KUALA LUMPUR: Practice Note


16 (PN16) company Abric Bhd
has proposed a cash distribution
of 43 sen per share of 30 sen each,
after which it will exit Bursa Malaysias Main Market for failing to
identify a new business.
Abric has been a PN16 or cash
company since December 2014,
after disposing of its security seal
business. In a filing yesterday,
Abric said the cash distribution
is to be implemented via a capital
reduction and repayment exercise,
and a special cash dividend, the
ratio of which is yet to be fixed.
Based on its issued and paidup capital as at last Friday, comprising 140.5 million Abric shares
and 8.06 million outstanding warrants (2011/2016), the proposed
distribution and delisting will
involve up to RM63.9 million.

It intends to fund the exercises


with its cash reserves, including
those in its custodian account. As
at Dec 31, 2015, Abrics cash and
bank balances were at RM69.9
million, of which RM64.8 million
were in the custodian account.
Upon completion of the exercises,
its board intends to sell Abrics
remaining assets and wind up.
Abric shareholders will hold
unlisted Abric shares until the
completion of the winding-up,
and be entitled to a further cash
distribution arising from the recoverability of the remaining assets, including [the] unutilised
cash balance (net of liabilities),
on a pro rata basis, it said.
The proposed exercises, subject to the approval of its shareholders in an extraordinary general meeting to be convened, are
expected to be completed in the
second quarter of this year.

BNM okays talk extension for


MBSB-Bank Muamalat merger
BY ME E N A L A K S H A N A

KUALA LUMPUR: Bank Negara


Malaysia (BNM) has no objection to the one-month extension
until Feb 2 that is being sought by
Malaysia Building Society Bhd
(MBSB) and DRB-Hicom Bhd to
conclude their talks on the proposed merger between MBSB and
Bank Muamalat Malaysia Bhd.
DRB-Hicom owns 70% of Bank
Muamalat, while Khazanah Nasional Bhd holds the remaining
30% stake.
In a filing with Bursa Malaysia,
AmInvestment Bank, on behalf of
MBSB, said BNM, via its letter last
Friday, had informed MBSB of its
position in response to MBSBs

application for the time extension.


CIMB Investment Bank, representing DRB-Hicom, also made
a similar announcement to the
local bourse.
On Dec 23, 2015 MBSB and
DRB-Hicom announced that both
entities were seeking a one-month
extension from Dec 30, 2015 to
Feb 2, 2016 from the central bank
to conclude negotiations on the
proposed merger between MBSB
and Bank Muamalat.
MBSB shares closed one sen or
0.68% lower at RM1.45 yesterday,
valuing them at RM4.14 billion.
DRB-Hicom shares closed five
sen or 4.42% lower at RM1.08,
with a market capitalisation of
RM2.07 billion.

T U E SDAY JA N UA RY 1 9 , 2016 T HEED G E FINA NCIA L DA ILY

HOME BUSINESS 7

CAB to place 9.1%


of its shares to
Salim Group
Exercise expected to be completed by the second quarter of 2016
BY SU PRI YA SU RENDR AN

KUALA LUMPUR: Penang-based


poultry farmer CAB Cakaran Corp
Bhd has proposed to undertake a
private placement of 15.06 million
new shares, representing a substantial 9.1% stake, to Indonesias
Salim Group for RM31.18 million
or RM2.07 per placement share.
The issue price of RM2.07 represents a premium of 26.22% to the
five-day weighted average market
price of CAB shares up to and including Jan 15.
In a filing with Bursa Malaysia
yesterday, CAB said it had entered
into a placement agreement with
Plant Wealth Holdings Ltd, a company controlled by KMP Investments Pte Ltd, which in turn is 67%
owned by Salim Group chairman,
Anthoni Salim.
Anthoni controls some 45%
of the Salim Group. According to
Forbes, the Salim family was Indonesias third-richest family in
2015, with a net worth of US$5.4
billion (RM 23.76 billion).
CAB said the proceeds from the
placement will enable the company to reduce its bank borrowings
from RM193.13 million as at Sept
30, 2015 to RM183.13 million and
will be used as general working
capital, and will help reduce its
gearing from 1.05 times to 0.74
times.
The equity participation of

KMP Private Ltd via Plant Wealth


as a strategic investor in CAB will
indirectly allow CAB to strengthen
the companys alliance with KMP
Private Ltd and maintain a collaborative relationship.
By leveraging on KMP Private
Ltds market presence in Indonesia
in the aspects of agribusiness and
fast moving consumer goods, KMP
Private Ltds capital relationship
with CAB via Plant Wealth may
facilitate CABs growth in the regional front, which as a result will
contribute to the benefits of CABs
customers and the existing shareholders of CAB, said CAB.
The proposed private placement
is expected to be completed by the
second quarter of 2016.
The Edge Financial Daily on
Dec 7 reported that Salim Group
could be eyeing as much as a 20%
stake in CAB, as the two companies
were understood to be in talks for
quite some time.

On the same day, CAB announced to the local bourse its


joint-venture agreement (JVA) with
Salims special purpose vehicle
(SPV) company in Indonesia for
the purpose of establishing a fully integrated poultry business in
Indonesia.
Under the JVA, the SPV will set
up and hold a 90% stake in the new
joint-venture company and CAB
to hold the balance 10%. However, CAB will have the option to
increase its shareholding up to
30% in the next three years after
the initial set-up, depending on
its financial condition.
CAB, the largest poultry company in the northern region of Malaysia, is looking for more merger
and acquisition activities domestically to enlarge its current production capacity. It targets to produce
over 5 million birds per month
next year.
The company currently has
10 breeder farms and 140 broiler farms throughout Peninsular
Malaysia.
It currently produces 4.2 million
broiler birds per month, which is
20% higher than the 3.5 million
birds it produced last year. The increase was mainly contributed by
its newly acquired farm in Johor.
CAB shares closed up 7 sen or
4.22 % to RM1.73 yesterday, with a
market capitalisation of RM259.1
million.

Repco Lows sentencing


postponed to Friday
BY CHEN SHAUA FU I

KUALA LUMPUR: The sentencing


of former executive chairman of
Sabah-based Repco Holdings Bhd,
Low Thiam Hock, better known as
Repco Low in the stock market circle, who was on Jan 11 found guilty
of market manipulation involving
Repco shares 19 years ago, has been
postponed to Friday, according to
the Securities Commission Malaysia (SC).
Low, 53, was scheduled to be
sentenced today. Under Section 91
of the Securities Industry Act 1983
(SIA), Low is liable to a minimum
fine of RM1 million and up to 10
years jail.
A SC spokesperson told The Edge
Financial Daily yesterday that Lows
defence team had requested a postponement in the sentencing of Low.

The regulator has sent out a notice


yesterday regarding the deferment
to Friday.
Low was convicted for acts calculated to create a misleading appearance with respect to the price
of Repco shares on the then Kuala
Lumpur Stock Exchange (KLSE)
on Dec 3, 1997, an offence under
section 84(1) of the SIA. The purchases of Repco shares on the said
day caused Repcos share price to
rise from RM103 to finally close
at RM113.
The trial that began on Oct 30,
2000 saw the prosecution call 25
witnesses, while the defence called
eight witnesses.
On Jan 11, Kuala Lumpur Sessions Court Judge Mat Ghani Abdullah, who has presided over the
case since it was passed back to the
Sessions Court in 2013, said that af-

ter looking into all the proceeding


notes, evidence from Low and the
witnesses, the court was satisfied
with the prosecutions case.
He held that the court was satisfied that Low, through the manner
of buying 227,000 Repco shares on
Dec 3, 1997, had in fact created a
misleading appearance as to the
price of Repco shares on the stock
exchange.
Repcos stock was a high-flyer during the 1996 Second Board
stock market bull run. The companys shares hit a high of RM140.50
per share in September 1997, but
collapsed to just RM2.98 less than
a year later. In October 2000, the
stock was suspended from trading on Bursa Malaysia as it did not
have an adequate level of financial
condition and was delisted in August 2003.

No more MSS or retrenchment


at CIMB, says CEO
BY C H E S T E R TAY

KUALA LUMPUR: CIMB Group


Holdings Bhd, Malaysias second-largest lender by assets, does
not plan to cut any more jobs after
its decision to retrench 32 staff at
its Hong Kong investment banking
and equities operations, according
to the groups chief executive officer
Tengku Datuk Seri Zafrul Aziz.
Tengku Zafrul said the groups decision to let go of the 32 employees
in Hong Kong was due to very tough
capital market condition across Asia,
especially in Hong Kong itself.
But we are not planning on doing any more MSS (mutual separation scheme) in Malaysia, nor in
Indonesia. The focus this year will be
looking at improving our productivity, and continuing our T18 agenda.
In short, there will be no more MSS
nor retrenchment, he said. Unveiled
in February 2015, T18, short for Target 2018, is CIMB Groups mid-term
strategy statement.
Bloomberg reported last Friday
that CIMB was cutting 32 jobs or
about one-fifth of its investment
banking staff at its Hong Kong operations, due to a downturn in regional business.
It quoted Tengku Zafrul, in a text
message response to its questions,
as saying that CIMB is not spared
from the harsh realities of the deteriorating capital markets faced by
players with investment banking
and equities businesses in Asia.
This came on the back of several job cuts last year. In the first
half of 2015, CIMB had cut about
50 jobs across Asia. Then in July, it
announced the departure of 1,891
employees in Malaysia under a MSS,
with another 1,708 in Indonesia.

Tengku Zafrul: The focus this year will


be looking at improving our productivity
and continuing our T18 agenda. Photo
by Kenny Yap

Meanwhile, Tengku Zafrul said


yesterday that the group is satisfied
with its current capital position and
is not looking at initiating any corporate exercise to raise funds.
We are happy with the capital
position that we are in. We will
see a lot of our initiatives regarding capital optimisation come into
play, Tengku Zafrul told pressmen
after the grand finale of the CIMB
Asean Stock Challenge 2015 here
yesterday.
Last year was a difficult year
for us. We have to undertake MSS,
which cost us money, and the rationalisation of our investment
bank. So these hit our capital. But
our retained earnings is enough
and going forward, with our initiatives, [we] will see an increase in
our CET1 (common equity tier 1).
So we are not looking at any capital call, rights issue, or placement
[exercise], he said.

Nomura cautious about


Malaysian banks
KUALA LUMPUR: Asean banks will
likely continue to face slower loan
growth and higher credit costs in
2016, Nomuras equity research said,
but is of the view that attractive valuations together with a favourable
change in the direction of interest
rates could lead to stronger share
performance for Indonesia and Singapore banks.
However, the research firm is
cautious about Malaysia banks
as it believes that they will likely
continue to face net interest margin (NIM) compression and high
credit costs.
We are neutral on Malaysia
banks despite their strong balance
sheets and attractive valuations because we are concerned about their
weak top-line growth, due to slower
loan growth and narrower NIMs, it
said in a report dated Jan 15, which
was released yesterday.
We think [Malaysia banks] earnings in 2016 would be constrained by
a combination of lower loan growth,
NIM compression and high provisioning. We think NIMs will likely
continue to be under pressure as
the banks chase deposits in order to
defend their positions under the liquidity coverage ratio requirements.

We think this is a multi-year


theme, it added.
Nomura noted that the slowdown in the countrys gross domestic product growth leads to lower loan growth of 6% to 7% in the
near term.
The lower loan growth and narrower NIMs should result in only
mid single-digit earnings growth in
2016F, which we think is unlikely to
excite the market, it said.
Nomuras top pick among Malaysian stocks is Malayan Banking
Bhd (Maybank) as it believes that
its formidable current account and
savings account deposit franchise
together with a diversified asset
base augurs well in the current environment.
Our least preferred is CIMB
Group Holdings Bhd because we
think its Indonesian exposure could
keep its provisioning high for some
time, and its lower capital ratios
could limit dividend payouts, it said.
Maybank shares closed down 3
sen or 0.36% at RM8.29 yesterday,
bringing a market capitalisation of
RM81.02 billion, while CIMB shares
ended the day 2 sen or 0.5% lower to
RM3.99 with a market capitalisation
of RM34.02 billion.

T U ESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

8 HOME BUSINESS

Malaysias five-year
bond yield declines
On talk that nations debt is luring investors amid stock sell-off
KUALA LUMPUR: Malaysian government bonds rose, driving the
five-year yield to its lowest level
since 2013, on speculation the nations debt is luring investors amid
a sell-off in stocks.
The yield on the notes has
dropped 18 basis points in the
past month, while the benchmark
stock gauge lost 1.5%. Malaysias
10-year bonds, which are rated the
fourth-lowest investment grade by
Standard & Poors, offer the second-highest yields among Southeast Asias three biggest economies.
The government will take measures
to cut spending, including studying
the privatisation of projects, the
finance ministrys top bureaucrat
Tan Sri Dr Mohd Irwan Serigar Abdullah said.

In this part of the world, Malaysian bonds offer higher returns vis-vis the ratings, said Nik Mukharriz Muhammad, a fixed-income
analyst at the investment banking
unit of CIMB Group Holdings Bhd,
the countrys second-biggest lender by assets.
The yield on the five-year securities dropped for a fifth day, declining one basis point to 3.42% as of
12.41pm yesterday, the lowest level
for a benchmark of that maturity
since November 2013, according to
prices from Bursa Malaysia. The 10year bond also fell one basis point
to 4.16%, the lowest since November. The FTSE Bursa Malaysia KLCI
Index of shares slipped 0.6% in a
third straight day of losses.
The ringgit fell for a third day,

weakening 0.2% to 4.4095 a US dollar, as Brent crude extended declines after international sanctions
on Iran were lifted. The currency is
headed for its longest run of declines since November. Malaysias
government stands to lose RM300
million for every US$1 drop in the
price of the commodity, according
to government estimates.
Bank Negara Malaysia will keep
the overnight policy rate unchanged
at 3.25% at a review on Thursday,
according to all 12 economists in
a Bloomberg survey. The central
bank has kept borrowing costs unchanged since July 2014 and governor Tan Sri Dr Zeti Akhtar Aziz
said in Hong Kong yesterday that
the monetary policy is accommodative. Bloomberg

First new train for Kelana Jaya line to


be operational by May Prasarana
BY A H MA D NAQ I B IDRIS

KUALA LUMPUR: Prasarana Malaysia Bhd said the first of its 14 new
Innovia Metro 300 trains will be operational by May this year, while the
remainder of the trains will be delivered one each month by Bombardier
Transportation and its consortium
partner Hartasuma Sdn Bhd.
The new four-car trains, to increase
capacity and improve the quality of
public transportation in Kuala Lumpur, will be deployed along the extended Kelana Jaya light rail transit
(LRT) line, which is also on tract for
its scheduled completion by June 30,
said Prasarana group managing director Datuk Azmi Abdul Aziz.
The new trains will offer a quieter
ride, dynamic station indicators, and
handicap facilities. We also expect
to improve waiting time, reducing
headway (the average interval between vehicles moving in the same
direction on the same route) to less
than the current 2.8 minutes.
It is not about injecting the trains
throughout the whole line. We have
to look at where demand is building up and well set the new trains
there, said Azmi at a press briefing
yesterday.
The Kelana Jaya line extension,
which will begin from the Kelana
Jaya station and pass through 13
new stations, including Ara Damansara, Subang Jaya and USJ before ending at the Putra Heights integrated station, covers a distance
of 17.4km. The lines full length,
upon completion of the LRT, will
be 46.4km.
Azmi added that the new trains
will be able to handle up to an additional 20 passengers per car, from the

(From left) Prasarana Group chairman Tan Sri Ismail Adam, Hartasuma managing
director Datuk Dr Abdul Rahman Abdul Halim, Azmi and Attendu posing in front of a
new Innovia Metro 300 train yesterday. Photo by Shahrin Yahya

existing capacity of 200 passengers


per car, and expects the new trains
to boost public transportation usage.
According to him, the last of the
trains should be delivered by the
Bombardier-Hartasuma consortium by June 2017.
Bombardier president of division systems for Asia and Australia,
Pierre Attendu, said the plane and
train maker is currently working on
train set No 5, with one in transit to
the facility in Westport.
We have two months of transit time between Canada and Malaysia, and the trains will be kept
here (Westport facility) for an additional three weeks to a month. So
it takes about four months for the
new trains to become operational,
said Attendu.
The trains, designed, constructed and tested at Bombardiers Cen-

tre of Competence for Mass Transit


Systems in Kingston, Canada, are
transferred to Hartasumas Westport facility for the installation of
interiors, final completion, as well
as final testing.
The contract for the 14 four-car
trains was awarded by Prasarana to
the Bombardier-Hartasuma consortium two years ago, for a contract
value of RM577.6 million.
Azmi assured yesterday that the
fluctuation in foreign-exchange rates
has not affected the original provisions or value of the contract.
As for the LRT Line 3 project,
which will cover a distance of 36km
from Bandar Utama to Klang, Azmi
said the pre-qualification for the civil
contractors was closed last year and
that the pre-qualification for the
system works will be completed
sometime in February.

NEWS IN BRIEF

EKA Noodles eyes liquid fructose


production as new income source
BY S UPR IYA S UR E N D R A N

KUALA LUMPUR: Rice vermicelli


manufacturer EKA Noodles Bhd
has entered into a memorandum
of understanding (MoU) with a
China-based company for the
transfer of technology to produce
liquid fructose, which it sees as a
culmination of its search for new,
strategic business opportunities.
The production of liquid fructose and rice protein powder extraction, if successfully carried out,
will provide EKA with an additional source of steady income, according to its bourse filing yesterday.
EKA said the MoU with Anhui Huijia Biological Science and
Technology Co Ltd encompasses the extraction of rice protein
powder from its by-product, subject to commercial feasibility and
financial viability studies to be
conducted.
The estimated cost and production capacity of the proposed
production line will be deter-

mined upon completion of the


relevant studies, read the groups
announcement.
Pursuant to the MoU, Huijia shall
provide the technology transfer and
support in producing liquid fructose, in accordance with the needs
of EKAs business. EKA, in turn, shall
provide the relevant market information to Huijia to facilitate the
technology transfer, among others.
The parties will finalise the
specifications in relation to the
technology transfer in 180 days
from the date of the MoU, and shall
enter into a definitive agreement
to effect the tie-up, said EKA.
The board is optimistic [about]
the prospects of the production
of liquid fructose as well as its
by-products like rice protein powder extraction due to the new products wide industrial applications
and ready market in the region, as
well as the new products higher
profitability margins and lesser
competition compared to its existing product range, said EKA.

Ranhill forms rm in China to


undertake waste-water plant job
BY S UPR IYA S UR E N D R A N

KUALA LUMPUR: Ranhill Holdings Bhd has incorporated a


company named Ranhill (Yongxin) Water Co Ltd in China to
build a waste-water treatment
plant for Maoping Industrial
Park in Yongxin County, Jiangxi
Province.
In a filing with Bursa Malaysia yesterday, Ranhill said
Ranhill (Yongxin) has yet to
commence its business. Ranhill (Yongxin) is deemed a wholly-owned subsidiary of Ranhill
Water Hong Kong Ltd, which in
turn is a unit of Ranhill.
The formation of Ranhill
(Yongxin) is not expected to
have any material effects on

the earnings or net assets of


the company for the financial
year ending Dec 31, 2016, said
Ranhill.
The board of directors is of
the opinion that the formation
is to undertake future business
expansion and is in the best interest of the company, it added.
Ranhill, which is scheduled
to be listed on Bursa Malaysia
on Feb 18 via a reverse takeover
of Symphony House Bhd, said
in its prospectus that proceeds
from its initial public offering
(IPO) will be used to cut debt
and finance its water projects
in China.
Its IPO shares are priced at an
indicative RM1.70 each, which
would raise up to RM637.5 million.

DNeX taps into renewable energy


BY B IL LY TO H

KUALA LUMPUR: E-commerce


specialist Dagang NeXchange
Bhd (DNeX) plans to tap into the
Asian renewable energy (RE) market after inking a memorandum of
understanding (MoU) via its unit
Forward Energy Sdn Bhd (FESB)
with three companies in Shenzhen,
China recently.
In the pipeline of its expansion
into the RE market is solar power
and wind turbine generation, said
DNeX in a statement yesterday.
The three companies are Hong
Kong-based China Everbright International Ltd, Malaysia-based
Broadgate Engineering (M) Sdn
Bhd, and China-based HydroChina International Engineering
Co Ltd.
Under the MoU, the parties will
collaborate and cooperate specif-

ically in submitting business proposals for waste-to-energy technology projects in Malaysia and
regional markets, said DNeX.
Through the MoU, DNeX will
be making the first step into the
waste-to-energy sector with strong
international partners, namely China Everbright and HydroChina, as
the technology providers. Broadgate, meanwhile, is DNeXs partner
for engineering and subcontracting
works within Malaysia and in the
region, DNeX said.
According to DNeX, its energy
sector diversification comprises
power generation, upstream oil
and gas (O&G) ventures, and O&G
support services.
Through FESB, it has already
invested in a small independent
power producer (IPP) in Bangladesh and is pursuing small mini
hydro IPP projects in Indonesia.

TU E SDAY JA N UA RY 1 9 , 2016 T HEED G E FINA NCIA L DA ILY

P R O P E RT Y S NA P S H
FREE
transaction
data

latest
classied
listings
news

analytics

trend
analysis

T 9

and more
Source: TheEdgeProperty.com

Whats affordable in South


West Penang?
As North East Penang is traditionally the more upmarket part of the
island, there are many relatively affordable finds in South West Penang.
This part of the island is becoming more appealing with numerous
projects underway catalyzed by the Penang Second Bridge.
Based on theedgeproperty.coms analysis of transactions in the 12
months to 1Q2015, the average transacted price psf was RM408 psf
in 1Q2015, while the average transacted price per unit stood at about
RM389,000.
The Penang strata housing market is diverse. Some 15.3% of transaction
in the 12 months to 1Q2015 were within the RM50,001 RM100,000 price
range, 14.2% within the RM300,001 RM400,000 range and another
15.2% within the RM500,001 RM600,000 range. Only 1.4% were over
RM1,000,000.
Many of the units priced over RM1 million were from Putra Marine
Resort Condominium in Bayan Indah. The seaside condominium is the
most expensive project in South West Penang, with an average unit price
at RM1,417,000 with typical unit sizes ranging between 2,027 to 2,730 sq
ft,
Gold Coast Resort Condominium (RM735,000) and Summerton
Condominium (RM712,000) are neighbours to Putra Marine along the
Pantai Jerejak beach and enjoy seaside views. These projects are also
located between Queensbay Mall and the upcoming Penang World City
development.

South West Penang top 5 most expensive condominiums/apartments


by average transacted price

Source: TheEdgeProperty.com

South West Penang top 5 least expensive condominiums/apartments


by average transacted price

The Analytics are based on the data available at the date of publication and may be subject to further revision as
and when more data is made available to us.

Australia orders
sales of foreignowned houses
over concerns
SYDNEY: The Australian government said it ordered the sale of
another eight residential properties bought in breach of foreign
ownership laws, in a response to
concerns that offshore buyers
were driving up house prices.
Australian capital city homes
are considered among the most
overpriced in the world, and the
federal government announced
penalties for foreigners who
breach existing rules that restrict
them to buying new homes only.
Treasurer Scott Morrison said
yesterday the forced sale of eight
properties takes to 27 the total
number of homes the government had declared were bought
illegally by foreigners.
Since the foreign ownership
crackdown began last year, the
government said it had investigated more than 1,300 property
sales and had another 800 under investigation. Severe penalties apply to buyers who have
breached the rules.
The latest set of forced sales
amounts to more than A$8 million (RM24.33 million) and includes a A$5.1 million house in
Victoria. Reuters

Nangang hosts Taiwans first


smart public housing project
TAIPEI: Taiwans first information
and communications technology (ICT)-enabled public housing
project was launched by the local
government last Friday in Nangang
District, Taipei, Taiwan.
The NT$2.67 billion (RM350.7
million) Dongming Public Housing
complex comprises three 21-floor
high-rises and a six-floor building on
an 8,348-sq m site in the south-eastern district. Construction gets under
way next month and is scheduled
for completion by end-2018.
Leveraging the experience and
expertise of collaborators Acer
Group, Chunghwa Telecom Co Ltd
and Fortune Construction Co Ltd,
Dongming features an innovative
turnkey ICT solution with pre-installed fibre-optic cables.
Taipei mayor Ko Wen-je said he
expects this public-private sector
tie-up to serve as a model for social
housing development nationwide.
The project takes into consideration the disparate needs of housing justice, urban aesthetics and
technological advances.
In addition, it introduces a new
standard of social involvement by
incorporating a wide range of onsite welfare services.
According to Ko, the lower

MOST READ ON

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of foreign-owned
properties after breach
of ownership laws
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Bangsar, Bukit
Bintang, Hartamas;
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this year
UOA to launch four
new projects this year

Dongming in Taipeis Nangang District will boast an enhanced ICT infrastructure and
eco-friendly environment. Photo by TCG

levels of the buildings will house


public day and long-term care
facilities, as well as community
centres, employment agencies and
organisations for the disabled.
Dongming is to also grow into
an activity hotspot for the people
of Nangang, he added.
Up to 700 families are expected
to call the complex home, enjoy-

ing rents capped at 85% of average


rates. The Taipei City Government
sees this as a way of enticing young
people back to the city and spurring a new wave of urban growth.
There is every reason to believe
Dongmings success will bring us
closer to our goal of creating 20,000
housing units in the next three
years, Ko said. Taiwan Today

Homebuyers and
investors remain
cautious in Kota
Kinabalu

T UESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

10 ST O C KS W I T H M O M E N T U M

Stocks with momentum were picked up using a proprietary algorithm by Asia Analytica Data Sdn Bhd and rst appeared at www.theedgemarkets.com.
Please exercise your own judgement or seek professional advice for your specic investment needs. We are not responsible for your investment decisions.
Our shareholders, directors and employees may have positions in any of the stocks mentioned.

DUFU TECHNOLOGY CORP BHD (+ve)

DUFU TECHNOLOGY CORP. BHD

SHARES of hard-disk drive (HDD) component


maker Dufu (Fundamental: 1.7/3, Valuation:
2.4/3) continued to see heavy trading volume
since it received an unusual market activity
query from Bursa Malaysia last Wednesday.
Loss-making from 2011-2013, the Penangbased company has diversified into non-HDD
businesses such as sensor controls and medical devices.
Dufu returned to the black in the financial year ended Dec 31, 2014 (FY14) with a net
profit of RM6.3 million, mainly due to a one-off

Financials
Turnover
EBITDA
Interest expense
Pre-tax prot
Net prot - owners of company
Fixed assets - PPE
Total assets
Shareholders' fund
Gross borrowings
Net debt/(cash)

DUFU TECHNOLOGY CORP. BHD

disposal gain of RM6.2 million. Export sales,


mostly US dollar-denominated, accounted for
75% of its revenue in 2014.
For 9MFY15, revenue grew 32% y-o-y to
RM122.7 million on a 77% increase in HDD
sales. Meanwhile, core net profit expanded
10.3 times to RM7.8 million, boosted by forex
gains of RM6.2 million.
Dufu subsequently declared its first dividend
(2 sen) since FY10, giving a 5% yield. The company
has been paring down its borrowings over years
and has turned into a net cash company in 2QFY15.
Valuation score*
2.40
1.70
Fundamental score**
15.02
TTM P/E (x)
0.09
TTM PEG (x)
0.92
P/NAV (x)
3.48
TTM Dividend yield (%)
100.90
Market capitalisation (mil)
175.47
Shares outstanding (ex-treasury) mil
1.16
Beta
0.26-0.64
12-month price range
*Valuation score - Composite measure of historical return & valuation
**Fundamental score - Composite measure of balance sheet strength
& protability
Note: A score of 3.0 is the best to have and 0.0 is the worst to have

NYLEX (M) BHD (-ve)


SHARES of Nylex (Fundamental: 0.75/3, Valuation: 2/3) rose 1.6% to close at 64.5 sen yesterday.
Some 1,147,300 shares changed hands, compared
with its average 200-day volume of 106,011 shares.
Nylex last featured in our Stocks with Momentum on November 18, 2015 and had risen
by 4.0% ever since.
For the first quarter ended Aug 31, 2016
(1QFY16) results, Nylex saw its revenue decline
10% y-y to RM322.8 million, hit by weaker demand in the polymer division and lower selling prices for industrial chemicals following

NYLEX (M) BHD

significant drop in crude oil prices. Net profit


also fell 41.5% to RM1.7 million.
According to Bursa Malaysia filing, the group
had buy back an accumulated of 63,200 units
shares since December 2015.
The group mainly manufactures and trades
polymer and industrial chemical products, including geotextiles, vinyl-coated fabrics, and
petrochemicals. In FY15, domestic market
contributed 48.8% of its revenue, with the remainder derived from export markets including
Singapore, Indonesia and Vietnam.
Valuation score*
2.00
0.75
Fundamental score**
19.80
TTM P/E (x)
(0.71)
TTM PEG (x)
0.38
P/NAV (x)
3.15
TTM Dividend yield (%)
122.20
Market capitalisation (mil)
Shares outstanding (ex-treasury) mil 192.44
0.59
Beta
0.46-0.66
12-month price range

RESINTECH BHD (-ve)

RESINTECH BHD

DUFU TECHNOLOGY CORP. BHD


RATIOS

DPS ($)
Net asset per share ($)
ROE (%)
Turnover growth (%)
Net prot growth (%)
Net margin (%)
ROA (%)
Current ratio (x)
Gearing (%)
Interest cover (x)

NYLEX (M) BHD

*Valuation score - Composite measure of historical return & valuation


**Fundamental score - Composite measure of balance sheet strength
& protability
Note: A score of 3.0 is the best to have and 0.0 is the worst to have

PLASTIC products manufacturer Resintech


(Fundamental: 1/3, Valuation: 2.6/3), which last
triggered our momentum algorithm in early
December, rose 6.9% in active trade to close to
a 3-year high of 47 sen yesterday.
The low-profile company attracted investors attention on Nov 30 when it announced
an interim dividend of 2.5 sen per share its
first dividend since 2011, giving a yield of 8.7%.
For its financial year ended March 31, 2015 (FY15),
net profit jumped 18% y-o-y to RM5.9 million on the

(ALL FIGURES IN MYR MIL)

(ALL FIGURES IN MYR MIL)

Financials
Turnover
EBITDA
Interest expense
Pre-tax prot
Net prot - owners of company
Fixed assets - PPE
Total assets
Shareholders' fund
Gross borrowings
Net debt/(cash)

NYLEX (M) BHD


RATIOS

DPS ($)
Net asset per share ($)
ROE (%)
Turnover growth (%)
Net prot growth (%)
Net margin (%)
ROA (%)
Current ratio (x)
Gearing (%)
Interest cover (x)

RESINTECH BHD

back of a 7% growth to RM91.9 million. The plastics


company attributed the improved performance to
the pre-goods and services tax buying rush and lower
crude oil prices, which lowered raw material costs.
However, the company expects a challenging FY16 due to weaker domestic demand and
ringgit. For 1HFY16, net profit declined 17%
y-o-y to RM0.7 million, affected by a 22% drop
in sales and higher operating costs.
The stock trades at a trailing P/E of 9.7 times
and half its book value.
Valuation score*
2.60
1.00
Fundamental score**
9.66
TTM P/E (x)
0.30
TTM PEG (x)
0.49
P/NAV (x)
5.75
TTM Dividend yield (%)
59.68
Market capitalisation (mil)
137.20
Shares outstanding (ex-treasury) mil
0.31
Beta
0.23-0.44
12-month price range
*Valuation score - Composite measure of historical return & valuation
**Fundamental score - Composite measure of balance sheet strength
& protability
Note: A score of 3.0 is the best to have and 0.0 is the worst to have

(ALL FIGURES IN MYR MIL)

Financials
Turnover
EBITDA
Interest expense
Pre-tax prot
Net prot - owners of company
Fixed assets - PPE
Total assets
Shareholders' fund
Gross borrowings
Net debt/(cash)

RESINTECH BHD
RATIOS

DPS ($)
Net asset per share ($)
ROE (%)
Turnover growth (%)
Net prot growth (%)
Net margin (%)
ROA (%)
Current ratio (x)
Gearing (%)
Interest cover (x)

FY12

FY13

FY14

FY2015Q3

31/12/2012

31/12/2013

31/12/2014

30/9/2015

114.5
13.7
2.5
(1.9)
(2.2)
95.3
115.3
83.5
57.9
51.4

104.2
10.1
2.6
(5.4)
(5.5)
89.5
121.0
91.7
53.8
40.1

136.0
15.2
2.3
7.2
6.3
70.0
115.8
100.0
37.9
23.0

48.0
10.1
0.5
6.3
4.6
64.0
119.6
109.1
15.0
(1.9)

FY12

FY13

31/12/2012

31/12/2013

31/12/2014

FY14 ROLLING 12-MTH

0.70
(2.58)
(4.00)
(1.92)
(1.88)
1.43
61.62
5.46

0.52
(6.32)
(9.02)
(5.32)
(4.69)
1.74
43.75
3.93

0.57
6.53
30.55
4.60
5.29
1.92
23.02
6.64

0.02
0.62
6.82
39.40
169.11
4.06
5.74
3.35
13.11

FY13

FY14

FY15

FY2016Q1

31/5/2013

31/5/2014

31/5/2015

31/8/2015

1,728.6
29.4
8.2
15.8
7.8
65.5
292.1
284.6
198.3
151.4

1,566.0
34.4
7.8
16.8
8.0
59.8
305.8
288.9
153.6
76.9

1,272.7
28.7
6.5
18.4
7.4
92.7
327.3
301.2
171.1
74.8

322.8
6.0
1.9
3.2
1.7
97.8
344.1
318.6
172.4
89.9

FY13

FY14

31/5/2013

31/5/2014

31/5/2015

FY15 ROLLING 12-MTH

0.02
1.47
2.73
16.15
(44.10)
0.45
2.64
1.27
53.21
3.56

0.03
1.50
2.78
(9.41)
2.63
0.51
2.66
1.43
26.61
4.40

0.02
1.56
2.50
(18.73)
(7.20)
0.58
2.33
1.39
24.83
4.40

0.02
1.66
2.08
(18.01)
(27.81)
0.50
1.93
1.38
28.23
4.26

FY13

FY14

FY15

FY2016Q2

31/3/2013

31/3/2014

31/3/2015

30/9/2015

84.7
10.9
2.0
3.0
2.8
76.1
101.5
86.4
32.0
21.4

86.2
6.8
1.9
5.8
5.0
67.9
104.3
91.4
27.2
21.5

91.9
13.6
1.8
9.9
5.9
95.5
142.5
122.1
24.3
21.7

18.3
2.3
0.3
0.5
0.3
93.5
141.5
122.4
29.7
20.6

FY13

FY14

31/3/2013

31/3/2014

31/3/2015

FY15 ROLLING 12-MTH

0.63
3.34
(12.75)
0.04
3.35
2.80
1.68
24.72
5.56

0.67
5.58
1.75
74.66
5.76
4.82
1.44
23.49
3.66

0.89
5.49
6.69
18.02
6.37
4.75
1.68
17.79
7.41

0.03
0.89
6.00
(5.57)
32.45
7.52
5.24
1.62
16.80
7.61

TU E SDAY JA N UA RY 1 9 , 2016 T HEED G E FINA NCIA L DA ILY

B R O K E R S C A L L 11

Kimlun ventures into


quarry operations
Kimlun Corp Bhd
(Jan 18, RM1.57)
Maintain buy with a higher fair
value of RM2: Last Friday, Kimlun Corp Bhd announced that its
wholly-owned subsidiary KL Building Materials Sdn Bhd (KLBM), is
purchasing existing shares (and
subscribing to additional shares)
in Rock Project Sdn Bhd.
KLBM is purchasing one share
in Rock Project for RM1, and subscribing to 1,019,999 million new
shares in cash for RM979,999.
Upon completion, Rock Project
will become a 51%-owned subsidiary of KLBM.
According to the announcement,
Rock Project signed a quarry operational agreement (QOA) with Koperasi Pena in September last year.
Koperasi Pena has a conditional
approval from Jabatan Perhutanan
Negeri Johor for quarry extraction
on 50 acres (20.23ha) of land in the

Gunung Pulai Forest Reserve. This


approval was granted in February
last year.
The approval for the quarry extraction is conditional upon obtaining several licences and approvals
(e.g. use permit, minor licence, environmental impact assessment)
and the replanting of the land.
Under the QOA, Rock Project
is granted the exclusive right and
authority for: (i) land clearing, extraction, approval, and marketing of
timber of the land; and (ii) extraction, management and marketing
of the rock materials.
In turn, Koperasi Pena is entitled to cash payment comprising:
(i) RM1.5 million on the execution
date of the QOA; (ii) RM1.5 million within 30 days from the date
of issuance of minor licence and
use permit; and (iii) RM700,000
upon the commencement of logging activities.

Kimlun Corp Bhd


FYE DEC (RM MIL)

2014

2015F

2016F

2017F

Revenue
1,206.4
Core net profit
33.8
9.4
FD core EPS (sen)
FD core EPS growth (%) (21.1)
Consensus net profit
3.8
DPS (sen)
17.2
PER (x)
6.2
EV/Ebitda (x)
2.4
Dividend yield (%)
12.7
ROE (%)
19.1
Net gearing (%)

1,116.1
66.8
18.5
97.5
56.8
3.8
8.7
4.6
2.4
15.6
8.0

1,084.5
72.3
20.0
8.3
56.8
3.8
8.0
4.1
2.4
14.9
nm

1,073.9
75.6
21.0
4.7
57.5
3.8
7.7
3.4
2.4
13.8
nm

Source: AmInvestment Bank

Koperasi Pena is also entitled


to 35% of net profit of the works
by Rock Project.
The cash payment mentioned
earlier that was paid to Koperasi
Pena is deductible from the latters
share of net profit.

Pintaras Jaya bags Central Plaza


I-Citys RM72.8m contract
Pintaras Jaya Bhd
(Jan 18, RM3.60)
Maintain buy with a higher target
price of RM4.08: Last Friday, Pintaras Jayas wholly-owned subsidiary, Pintaras Geotechnics Sdn Bhd,
received a letter of award from Central Plaza I-City Real Estate Sdn Bhd
to undertake piling and basement
structural works for a proposed
shopping complex in Section 7,
Shah Alam, Selangor.
The contract is valued at RM72.8
million and will commence immediately with a completion period of
13 months. We are excited about the
latest contract win as it is by far the
largest project won this year after
a quiet start to FY16.
Year to date, new contract wins
stand at RM121.8 million (RHBs
financial year end 2016 [FY16] estimate: RM250 million). The prospects
for the piling segment remain strong,
backed by various mega infrastructure projects like mass rapid transit 2
(MRT2) and light rail transit 3 (LRT3)
as well as a structural shift towards
high-rise developments.
We expect more contract wins
by Pintaras Jaya going forward although recently secured contracts
would have limited contribution in
FY16. Therefore, we cut FY16 earnings estimate by 14.4%, but revise
up FY17/FY18 profit forecasts by
3.3%/2.4%.
Pintaras Jayas key strengths are
its: i) full range of piling machines,
tools and accessories, ii) ability to
improvise piling solutions to suit
diverse ground conditions given its
more than two decades of experience in the local piling sector, and
iii) ability to secure cash discounts

Scomi Energy awarded job


extension worth US$41.6m

Pintaras Jaya Bhd


FYE JUNE (RM MIL)

2014

2015

2016F

2017F

2018F

Total turnover
202
Reported net profit
54.2
Recurring net profit
54.2
Recurring net
3.7
profit growth (%)
0.45
Recurring EPS (RM)
0.15
DPS (RM)
8.1
Recurring PER (x)
1.90
P/BV (x)
6.9
P/CF (x)
4.1
Dividend yield (%)
3.83
EV/Ebitda (x)
Return on
18.8
average equity (%)
Net debt to equity (%) net cash
Our vs consensus
EPS (adjusted) (%)

243
51.9
51.9

207
37.6
37.6

319
59.9
59.9

339
65.7
65.7

(4.3)
0.32
0.18
11.3
1.71
8.4
4.9
4.74

(27.7)
0.23
0.18
15.8
1.67
11.8
4.9
6.10

59.5
0.37
0.19
9.9
1.55
12.5
5.2
4.10

9.8
0.40
0.20
9.0
1.42
7.8
5.5
3.47

15.9
10.7
net cash net cash

16.2
net cash

16.4
net cash

0.0

0.0

0.0

Source: Company data, RHB

Filepic of
Pintaras Jayas
headquarters.
The prospects
for Pintaras
Jayas piling
segment
remain strong,
backed by
various mega
infrastructure
projects like
MRT2 and
LRT3. The Edge
le photo

for key inputs, given its strong balance sheet.


We value the company at
RM4.08, derived from 10 times
FY16 price-earnings ratio (PER)

This development represents


a diversification from Kimluns
existing construction, manufacturing and property development
businesses.
We are neutral on the news
pending further details, such as

the expected earnings contribution, concession period, required


capital expenditure, and materials
to be extracted at the quarry.
Since our upgrade on Nov 27,
Kimluns share price has risen 25%.
We believe Kimlun is favoured to
supply tunnel lining segments and
segmental box girders for the Klang
Valley MRT2, given its experience in
the Klang Valley MRT1 (delivery of
RM270 million worth of products).
Apart from that, Kimlun may
benefit from upcoming infrastructure jobs in the market.
We expect Kimlun to secure
RM650 million worth of jobs this year
(FY15: RM554 million). Its outstanding order book is about RM1 billion.
We maintain our numbers, but
increase our target price-earnings
ratio (three-year mean: 10 times)
on the back of better prospects and
improving margins. AmInvestment Bank, Jan 18

(low end of the target PER range


of 10 times to 18 times for the construction sector) plus net cash per
share as at Sept 30, 2015. RHB
Research Institute, Jan 18

Scomi Energy Services Bhd


(Jan 18, 23 sen)
Maintain hold with an unchanged
target price of 22 sen: Scomi Energy Services Bhd reported that it
had been awarded a one-year contract extension from PT Total E&P
Indonsie worth US$41.6 million
(RM183.04 million). This is a continuation of the three-year contract
award signed back in 2012.
With the slowdown in drilling
activities globally, Scomi Energys
ability to secure drilling fluid contract continues to reflect clients
confidence in the company. However, the biggest main concern is
Scomi Energys earnings delivery

despite currently sitting on a large


order book of US$1.78 billion.
We make no changes to our
earnings forecast as this is within our order book replenishment
assumption.
In lieu of the rather subdued outlook on the sector, we maintain our
hold call. Recent further weakness
in global crude prices, which fell
under US$30 per barrel, also poses
uncertainty in earnings contribution
delay as Scomi Energys clients may
now delay the drilling programme
until further clarity and more visible
improvement in macroeconomics,
and oil and gas market dynamics.
BIMB Securities Research, Jan 18

Scomi Energy Services Bhd


FYE MARCH (RM MIL)

Turnover
Ebit
Pre-tax profit
Net profit
EPS (sen)
PER (x)
NTA/share (RM)
Margins
Ebit margin (%)
Pre-tax margin (%)
Effective tax rate (%)
ROE (%)
ROA (%)
Net gearing (x)
Growth ratios
Turnover (%)
Ebit (%)
Pre-tax profit (%)
Core net profit (%)
Note: * - 15 months result
Source: BIMB Securities Research

2013*

2014

2015

2016E

2017E

1,471.7
151.2
134.7
90.1
3.8
6.0
0.19

1,416.0
154.9
127.9
81.9
3.5
6.6
0.24

1,560.2
142.1
117.9
77.1
3.3
7.0
0.28

1,244.5
88.8
67.0
51.3
2.2
10.5
0.31

1,386.8
116.2
92.0
70.4
3.0
7.6
0.34

10.3
9.2
27.9
16.0
6.0
0.6

10.9
9.0
36.7
12.2
4.9
0.4

9.1
7.6
36.1
9.9
4.3
0.3

7.1
5.4
25.0
6.2
3.2
0.2

8.4
6.6
25.0
7.8
4.1
0.2

276.6
-241.5
-222.4
-179.4

-3.8
2.4
-5.0
-9.1

10.2
-8.3
-7.9
-5.8

-20.2
-37.5
-43.2
-33.5

11.4
30.9
37.3
37.3

T U ESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

12 B R O K E R S C A L L

El Nino expected
to impact Simes
FY16 output
Sime Darby Bhd
(Jan 18, RM7.09)
Maintain hold with a lower target
price (TP) of RM7.85: Sime Darby
Bhds (Sime) plantation and energy
and utilities divisions comprised
37% and 4% of Simes financial year
ended June 30, 2015 (FY15) earnings before interest and tax.
Overall, we are slightly negative
as the group expects the El Nino to
impact output and is targeting FY16
fresh fruit bunch (FFB) output of
10 million to 10.1 million tonnes,
which is lower than the target of 11
million tonnes without the El Nino.
Sime revealed that the El Nino
has resulted in three to four months
of rainfall deficit at its estates in the
first half of FY16 (1HFY16).
The group expects FFB output
for Malaysian and Indonesian estates, ex-New Britain Palm Oil Ltd
(NBPOL), to fall by 5% to 9% in
FY16.
However, overall production will
still be up by around 5% in FY16,
due to the acquisition of NBPOL
in March last year.
Should La Nina start in September this year and bring ideal rainfall
to estates, future FFB yields may
be boosted.
The group expects higher crude
palm oil prices of RM2,500 per
tonne to RM2,600 per tonne in
2HFY16 and initiatives to reduce
its costs of production to mitigate
the negative earnings impact from
the lower FFB output.
It hopes to bring down current
costs of production (ex-replanting costs) of RM1,300 per tonne
to RM1,200 per tonne by lowering

Demand for AmProps luxury


properties remains

Sime Darby Bhd


FY JUNE (RM MIL)

Revenue
Operating Ebitda
Net profit
Core EPS (RM)
Core EPS growth (%)
FD core PER (x)
DPS (RM)
Dividend yield (%)
EV/Ebitda (x)
P/FCFE (x)
Net gearing (%)
P/BV (x)
ROE (%)
% change in core
EPS estimates
CIMB/consensus EPS (x)

2014A

2015A

2016F

2017F

2018F

44,568
5,404
3,353
0.53
(4.8)
13.35
0.36
5.06
8.99
29.70
21.3
1.50
11.5

43,729
4,276
2,313
0.32
(39.3)
21.73
0.25
3.51
13.45
65.45
44.2
1.46
6.8

47,103
4,465
1,884
0.31
(3.1)
23.46
0.15
2.13
12.62
33.26
43.4
1.42
6.1

49,540
5,066
2,291
0.38
21.6
19.28
0.18
2.59
11.25
42.23
44.3
1.38
7.3

52,003
5,565
2,661
0.44
16.1
16.60
0.21
3.01
10.30
31.95
44.5
1.34
8.2

(5.07)
0.92

(3.58)
0.92

(0.00)
0.94

Source: Company data, CIMB forecasts

overheads and administrative costs.


Sime plans to replant 30,000ha
of oil palm estates in Malaysia and
10,000ha in Indonesia with rubber
trees and plant up to 40,000ha to
50,000ha of new rubber estates in
Liberia.
If it successfully plants 80,000ha
to 90,000ha of rubber estates over
the next few years, the group would
become a significant rubber producer, with close to 100,000ha of
rubber estates.
The slowdown in the Chinese
economy has had a minimal impact
on its port businesses in China as
it focuses on domestic cargoes for
local consumption.
The utilisation rate for the port is

currently 70%, above the 40% rate


to break even at the profit before
interest and tax level.
We gathered that Simes 2.8 billion yuan (RM1.87 billion) master
expansion plan to construct eight
berths in Wei Fangs ports is expected to reach its final stages in
FY16 and be operational in 1HFY17.
We are cutting our earnings per
share forecasts by 4% to 5% for FY16
to FY17 to reflect the lower FFB output assumptions due to the El Nino.
This has led to a reduction in
our sum-of-parts-based TP to
RM7.85 from RM8.43. We maintain our hold call as the share
price is supported by its rich assets.
CIMB Research, Jan 17

Globetronics production
should normalise in 2Q16
Globetronics Technology Bhd
(Jan 18, RM5.98)
Maintain buy with a lower target
price of RM7.10: Globetronics Technology Bhd had been asked by its
end-customer to cut back production
of its proximity sensors in December
last year, with a further 20% to 25%
cut also expected in the first quarter
of 2016 (1Q16).
Though there is no visibility yet,
we think production should normalise in 2Q16 as channel inventory
should be more in line with lower
end-demand after the 1Q16 cut.
We understand there had been
a delay for the 3D imaging sensor
as the end-customer is still looking
to drive overall unit costs down and
fixing certain algorithm issues.
Because of those issues, the

end-customer has yet to give a final confirmation to Globetronics


on the Phase 2 capital expenditure
investment to bring capacity up to
40 million units per month.
This causes a bit of uncertainty for
Globetronics since the consensus is
already forecasting that the 3D imaging sensors will be included in both
4.7 and 5.5 smartphone models.
Taking a more conservative
stance, we now forecast volume for
the 3D imaging sensor to be 180 million to 360 million units in financial
year 2016 (FY16) to FY17F (forecast)
versus 280 million to 480 million
units previously.
Our FY15F to FY17F earnings are
cut by 7% to 14% after adjusting for
the lower proximity and 3D imaging
sensor volume. Year-on-year earn-

ings growth is still a respectable 29%


to 42% in FY16 and FY17F, albeit from
a lower base.
We expect earnings to blip in 1Q16
before growth resumes from 3Q16
with the 3D imaging sensor going
into mass production.
This year is clearly a year of two
halves for Globetronics. Hence, we
prefer to use FY17F as our valuation
base year, but pegged it to a lower price-earnings ratio of 15 times
(from 18 times previously).
We continue to like Globetronics due to its strong relationships
with both the Swiss customer and
end-customer, where the company
stands to benefit from the proliferation of sensor content in smartphones and wearable devices.
AllianceDBS Research, Jan 18

Amcorp Properties Bhd


(Jan 18, 83 sen)
Maintain buy with an unchanged target price of RM1.53:
Contrary to the broader slowdown in the United Kingdom
(UK) property segment, we believe the ultra high-end or luxury property segment selectively
remains unaffected.
In fact, in our recent meeting, management stated that the
broader property market appears
to have seen some stabilisation.
In any case, demand for Amcorp
Properties Bhds (AmProp) luxury properties remains solid.
The take-up rate of its Campden Hill project remains on an
upward trajectory, hitting 50%
compared with 40%+ in early
December 2015.
The take-up for AmProps
other major London project,
Burlington Gate, is also fast approaching the 90% mark.
AmProp also expects to close
the sale of its final penthouse
unit in Neo Bankside (about 6
million or RM37.7 million) by the
late first quarter of 2016.
Apart from being in the right
segment, being in strategic locations in London (within Zone 1)
and offering the right products,
we attribute the strong take-up
for AmProps projects to its part-

nership with Singapore-listed


Hotel Properties Ltd (HPL) and
UK-based Native Land, which
lend a hand in terms of credibility, quality, track record and
marketing.
AmProp will team up with
Singapore sovereign wealth
fund, Temasek Holdings Ltd,
alongside HPL and Clan SPV
for its future 1.1 billion gross
development value Bankside
Quarter development. This project is, nevertheless, still two to
three years away.
Management remains on the
lookout for new investment opportunities, although it does not
seem pressured, as there should
be sufficient projects in the pipeline for a steady earnings base
over financial year 2016 (FY16)
to FY18, with a three-year earnings per share compound annual
growth rate of 64%.
Apart from AmProps attractive valuations, this is the other
reason we like the stock as its
past earnings volatility is likely
removed.
We like the counter for its
strong earnings growth, attractive valuations and appealing
dividend yields of 5% to 8% for
FY17 to FY18E (estimate).
Affin Hwang Capital Research,
Jan 18

Amcorp Properties Bhd


FYE MAR 31 (RM MIL)

Revenue
Ebitda
Pre-tax profit
Net profit
EPS (sen)
PER (x)
Core net profit
Core EPS (sen)
Core EPS growth (%)
Core PER (x)
Net DPS (sen)
Dividend yield (%)
EV/Ebitda (x)

2014

2015

2016E

2017E

2018E

170.2
10.7
153.7
171.3
29.4
2.9
40.1
6.9
(58.9)
12.3
25.0
29.4
49.5

173.6
50.3
41.2
35.5
5.9
14.3
35.5
5.9
(13.6)
14.3
3.0
3.5
11.2

170.8
100.9
110.2
97.7
16.4
5.2
80.0
13.4
125.2
6.3
4.1
4.8
3.5

136.2
34.8
110.8
104.8
17.6
4.8
104.8
17.6
31.0
4.8
4.4
5.2
10.4

136.7
36.0
163.0
156.4
26.2
3.2
156.4
26.2
49.3
3.2
6.6
7.7
10.3

Source: Company, Affin Hwang forecasts

Globetronics Technology Bhd


FY DEC (RM MIL)

2014A

2015F

2016F

2017F

Revenue
Ebitda
Pre-tax profit
Net profit
Net pft (Pre ex.)
Net pft gth (Pre-ex) (%)
EPS (sen)
EPS pre ex. (sen)
EPS gth pre ex (%)
Diluted EPS (sen)
Net DPS (sen)
BV per share (sen)
PER (x)
PER pre ex. (x)
P/Cash flow (x)
EV/Ebitda (x)
Net dividend yield (%)
P/BV (x)
Net debt/Equity (x)
ROAE (%)

355
110
76.2
64.3
64.3
22.3
23.1
23.1
22
23.1
21.0
102
25.5
25.5
20.1
13.5
3.6
5.8
Cash
23.0

376
109
84.3
71.7
71.7
11.4
25.7
25.7
11
25.7
25.0
103
22.9
22.9
15.1
13.7
4.3
5.7
Cash
25.1

477
150
117
102
102
42.2
36.5
36.5
42
36.5
34.0
105
16.1
16.1
12.2
10.1
5.8
5.6
Cash
35.1

577
188
151
132
132
29.2
47.2
47.2
29
47.2
42.0
111
12.4
12.4
9.8
8.0
7.1
5.3
Cash
43.8

Source: AllianceDBS Research

T U E SDAY JA N UA RY 1 9 , 2016 T HEED G E FINA NCIA L DA ILY

H O M E 13

Put Form 3 system


in order first NUTP
Ministry should not be hasty in implementing the format for UPSR
BY NA B I H A H HA MI D

KUALA LUMPUR: The Education


Ministry should ensure that the
Form 3 Assessment (PT3) which
is 40% school-based assessment
and 60% examination-based is
successful before thinking about
applying a similar format to the
Ujian Penilaian Sekolah Rendah
(UPSR), the teachers union says.
National Union of the Teaching Profession (NUTP) president
Hashim Adnan said implementing

such a format now would only invite problems, because teachers


and students are still trying to familiarise themselves with the PT3
concept introduced in 2014.
We have yet to see what is in
the ministrys proposal. Many students and parents were unhappy
when PT3 replaced the Penilaian
Menengah Rendah, he told The
Malaysian Insider.
He said the ministry should not
be hasty in implementing the format for UPSR as it would not ben-

efit pupils in the long run.


The losers here will be the pupils. They will become the victims.
If there are still many unresolved problems in PT3, how can
we implement such a format for
UPSR? he asked.
Hashim said the NUTP was not
against the ministrys plan to improve the education system, but
felt that the risk was too high if
done hastily.
[The] NUTP is not hindering
any education development plan.

Filepic of primary school students at an assembly. Teachers and students are still trying
to familiarise themselves with the PT3 concept introduced in 2014. The Edge le photo

We just want weaknesses within


the PT3 to be settled before moving
on with changes to UPSR, he said.
Education Minister Datuk Seri
Mahdzir Khalid last Tuesday reportedly said the ministry would
meet all stakeholders in stages

this year to get their views on the


proposal.
He said the proposal to change
the UPSR examination to a schoolbased assessment could materialise in one to two years. The
Malaysian Insider

PAS MP retracts statement against Guan Eng


BY LOOI SU E- C H ERN

GEORGE TOWN: PAS information


chief Nasrudin Hassan retracted
yesterday an article he posted two
years ago, which allegedly contained defamatory statements
against Penang Chief Minister Lim
Guan Eng.
The Temerloh member of parliament (MP) told the Penang High
Court that after studying the documents presented to the court, he
regretted causing any misunderstanding.
He said as both sides did not
want to prolong the matter, he was
retracting his article dated Aug 6,
2014, containing points made without basis against Guan Eng.
In the article, Nasrudin had
compared the treatment Guan
Eng and former Selangor menteri
besar Tan Sri Abdul Khalid Ibrahim received from Pakatan Rakyat

over their handling of Penangs billion-ringgit undersea tunnel and


the controversial Kinrara-Damansara Expressway (Kidex).
He asked why Abdul Khalid was
attacked over the federal-funded
Kidex project when Guan Eng was
left off easily for backing the tunnel project, which he alleged was
awarded to Consortium Zenith Sdn
Bhd via direct negotiations despite
objections.
Guan Eng sued Nasrudin for
defamation after the latter did
not respond to his demand for
an apology.
In his witness statement, Guan
Eng said the article by Nasrudin
had disparaged his reputation and
personal standing as chief minister,
Bagan MP, Air Putih assemblyman
and DAP secretary-general.
He also clarified allegations
made by Nasrudin, saying the
tunnel project was awarded via

an open tender and that the Penang


government had not recorded a
deficit since taking over the administration.
Judicial commissioner Lim
Chong Fong, in the consent judge-

Sorry, no sex services here, Rafizi


says after number hijacked
KUALA LUMPUR: PKRs Rafizi
Ramli said yesterday he has been
receiving calls and messages requesting sex services over the
past few days, after his mobile
number was used in fake advertisements featuring a woman
named Rara.
Someone did a fake advert
for Rara sex service with my no.
Ive been getting calls for sex
service like this ha3, Rafizi tweeted, along with a screenshot of
his WhatsApp conversation with
someone who had apparently
been duped by the advertisement.
According to the screenshots
Rafizi shared on his Twitter account, many aspiring customers,
mostly youths, had contacted him
with requests for Raras services and photographs of her body.
This prompted other Twitter
users to quip that Rafizi had tak-

en the #2kerja, or two-jobs issue


to another level.
Twitter user DoubleZ (@doubleZsMum) shared a photo of
what appeared to be a flyer with
the pictures of seven girls, each
with a phone number underneath
her face.
The flyer bore the words, Are
you lonely? Call/SMS/WhatsApp.
@rafiziramli this could be it ..
it was in our mailbox in Subang
Jaya, tweeted DoubleZ.
Yeah this is the one. I think
all those nos are politicians :D
@doubleZsMum, Rafizi replied.
Last month, Bersih chairman
Maria Chin Abdullah, her predecessor Datuk Ambiga Sreenevasan and Bersih activist Mandeep Singh also received calls of a
sexual nature when their numbers
were used in illegal advertisements. The Malaysian Insider

Clinton
countering
Sanders
revolution
Page 20

ment, ordered Nasrudin to pay


RM10,000 in costs.
Nasrudin, who was represented by law firm Tengku Amalins
A-Ishah Putri, Faizi and Wan Rohimi, later explained to reporters

outside the court his decision to


retract the article.
I retracted the article I wrote on
my Facebook page as certain points
in my statement caused misunderstanding. The Malaysian Insider

T U ESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

14 H O M E

Working group activated


to tackle El Nino
It will meet periodically based on needs, in coordinating quick action
PUTRAJAYA: The national disaster
management agency has activated
a working group to immediately tackle the hot and dry weather
condition brought about by the El
Nino phenomenon.
Its director-general Datuk Zaiton
Ab Samah said this condition is expected to prevail in the first quarter
of the year, with the potential of a
chain reaction of forest fires, haze,
and a drop in water levels of the dams.
This working group will meet
periodically based on needs, in monitoring the situation and coordinating quick action, she said at a news
conference after chairing the cen-

Beheaded
hostages family
tells govt to
protect citizens
BY JEN N I FER G OM EZ
& A NGEL I NE TAN

PETALING JAYA: The family of


Sarawakian Bernard Then, who
was beheaded by Abu Sayyaf militants in southern Philippines last
November, said the government
should look after the safety of the
nation and its citizens.
In the eulogy for Bernard at
a funeral mass at a church here
yesterday, his older brother Gerald said the family had lived on
the edge during the 188 days he
was held hostage.
We pray that the government
will live up to its responsibility
to take the safety of our nation
seriously, he said.
It is not easy to forgive, but
we are called to be merciful as
God is merciful, Gerald said.
We also hope God shows
mercy to his perpetrators and
those responsible for Bernards
suffering.
He also said the family hopes
no one else would have to suffer
like Bernard did, or have to bear
the heartache of the family.
Mass celebrant Father Alberto Irenus said in his sermon that
even as Bernards family grieved,
they found in their hearts the
need to give to charity by donating to a church in Manila,
Philippines.
Federal lawmaker Steven Sim,
who was among several members of parliament present at the
church, said: Bernard paid a
heavy price, too big to bear.
Friends of the Then family
who attended the funeral were
sombre, with Michael FG saying:
What happened was unnecessary, but at least theres closure.
The Malaysian Insider

tral disaster management high-level


committee meeting: Preparing for the
Hot and Dry Weather here yesterday.
The group comprises members
of state disaster management committees and district disaster management committees, which are
led by state secretaries and district
officers respectively.
Zaiton said yesterdays meeting
decided on, among others, monitoring and activating the open
burning-prevention action plan
and banning order, if required.
Among the areas of emphasis is the need for the authorities
of the states to inform the central

bodies about the locations that are


often facing chronic water supply
shortages during the hot season
to make it easier for them to make
early preparations, she said.
According to Zaiton, the Malaysian
meteorological department (MetMalaysia) predicted that the current
situation could become worse than
the El Nino phenomenon that hit
the country from 1997 to 1998, with
temperatures reaching 40.1C.
MetMalaysia has forecast an increase of around 0.5C to 2C in
temperatures, with maximum intensity occurring this month.
Zaiton said MetMalaysia is also

prepared to do cloud seeding to form


rain clouds or rainfall over the dams.
MetMalaysia director-general Datuk Che Gayah Ismail said the El Nino
level is now in the very strong category
and the intensity of the phenomenon
will reach a climax this month.
It will gradually weaken from
February and the condition will be
neutral after June.
She said the strong impact of
El Nino will continue until April
in several states, including Perlis, Kedah, Kelantan, Terengganu,
Johor, Melaka and Sabah, as well
as the Limbang and Miri areas of
Sarawak. Bernama

Bauxite mining has adverse


impact on food chain geologist
KUANTAN: A geologist has expressed
hope that the government would
make use of the three-month moratorium on bauxite mining in Pahang
to draw up a more stringent standard
operating procedure for the activity.
Associate Prof Dr Habibah Jamil
from the Science and Technology
Faculty of Universiti Kebangsaan
Malaysia stressed that bauxite mining could adversely impact the food
chain and should therefore be carried out in isolated places.
She said long-term exposure to
the chemical elements of bauxite,
which can enter the body directly or
through food, could threaten health.
Bauxite has a high content of
aluminium hydroxide, iron oxide
and chromium, besides clay.
These elements are inside the fine
dust that is stirred up during mining

and can be absorbed into the body


through inhalation. Also, when they
enter the river or sea, they might be
consumed by small marine animals
on the riverbed and fish, she told
Bernama.
The chemicals would then enter
the human body, which consumes
the contaminated river and marine
resources.
She said the bauxite in Kuantan,
Pahang, contained 32% to 52% of
aluminium hydroxide and 14% to
32% of iron oxide, which were what
gave Kuantan the appearance of
planet Mars.
Long-term exposure to aluminium hydroxide can cause Alzheimers
disease, while iron oxide when inhaled will damage the liver, she said.
She said the bauxite in Kuantan
also contained a high level of chro-

mium, between 409 and 1227 parts


per million, compared to soil.
Habibah said plants react differently to chemicals, particularly
heavy metal.
If the exposure is high, the
leaves will turn yellow, or the tree
will not bear fruit or die quickly.
Some plants can store the heavy
metal in their trunks, leaves and
fruits. The contaminated fruits may
be eaten by humans and animals, resulting in an unhealthy food chain.
She said the consequences will
be similar when the heavy metals
pollute the river or sea, which are
the habitat of fish and marine life.
When we catch and eat the fish,
the metals gets into our body system.
The adverse effects on humans
may only be seen after many years,
she said. Bernama

IGP warns people against spreading unverified info


KUALA LUMPUR: Inspector-General of Police (IGP) Tan Sri Khalid Abu
Bakar warned of police action against
anyone, even VIPs, who spread on
social media unverified information
on terrorist threats in the country.
Dissemination of such information could cause anxiety and fear in
the people, he told a news conference
in Bukit Aman here yesterday.
I warn everyone not to share unverified news on terrorist threats on
social media, even by citing sources,
because this equates to spreading
rumours, he said.
Khalid said those who wish to ascertain or confirm any matter should
refer to authentic reports.
The act of spreading unverified
reports on social media is not a joke
that anyone can indulge in because
it is something serious and actiona-

Khalid (left) elding


questions during a
press conference in
Bukit Aman, Kuala
Lumpur, yesterday.
He says those who
wish to ascertain or
conrm any matter
should refer to
authentic reports.
Photo by Bernama

ble, said Khalid.


To prevent this, the police will
continue to monitor social media
and online media, and work with
the Malaysian Communications and
Multimedia Commission, he said.
Khalid said the people should report to the authorities if they come
across anything in their areas they

suspect has something to do with


terrorist activities.
Asked whether existing laws are
adequate to handle terrorist threats,
he said the Security Offences (Special Measures) Act 2012, Prevention
of Crime Act 2013 and Prevention
of Terrorism Act 2015 are sufficient.
Bernama

IN BRIEF
MoH wants report on air
conditioning systems in
public hospitals
KUALA LUMPUR: The Ministry
of Health (MoH) will ensure
that the air conditioning systems in all public hospitals are
working optimally at all times
to bring comfort and convenience to the people, its minister
Datuk Seri Dr S Subramaniam
said. As such, he said all public
hospital directors nationwide
had been instructed to submit
a report on the condition of the
air conditioning system of their
respective hospital to enable
immediate action to be taken
to avoid disruption in the service delivery. Some hospitals
are very old; some of their instruments and air conditioning
systems are old ... they might
break down, he told reporters
after attending the MIC Ponggal
Festival celebration at the partys headquarters here yesterday. The Malaysian Insider

Two sta members plead


not guilty to receiving
bribe in bauxite case
KUANTAN: Two staff members
of the Pahang land and mines
department (PTG) pleaded not
guilty in the Sessions Court
here yesterday to receiving a
RM8,500 bribe from an illegal
bauxite miner two weeks ago.
The pleas by Mohd Nurfirdaus
Rahmad, 28, and Abdul Rahim
Sulaiman, 53, were recorded
before judge Habibah Mohamed Yusof after the charges were read out to them separately. Mohd Nurfirdaus, a
general assistant at the state
PTG, is alleged to have received
the bribe in cash from Anurul
Hiraq Abu Bakar, 33, at 6.05pm
on Jan 6 in Lorong Bukit Ubi 26,
Bukit Sekilau here. Bernama

Chef, consultant claim


trial to acting for terrorists
KUALA LUMPUR: Two men
claimed trial in the High Court
here yesterday to a joint charge
of arranging to facilitate acquisition and control of property
for Islamic State terrorists. Mohamad Fauzi Misrak, 36, who
worked as a chef in Singapore,
and Rohaimi Abd Rahim, 39, a
financial consultant, allegedly committed the offence at
Maybank, Subang Jaya branch,
Jalan SS15/4D, between December 2013 and July 2014. The
charge under Section 130P of
the Penal Code, read with Section 34 of the same code, carries
the death sentence or up to 30
years jail, and liable to a fine
upon conviction. Bernama

Ministry planning stier


penalties for polluters
SHAH ALAM: The natural resources and environment ministry plans to amend the Environment Quality Act 1974 to
give it more bite to act against
environment polluters. Its minister, Datuk Seri Dr Wan Junaidi Tuanku Jaafar said it is
time the act gets amended to
give the ministry some clout to
deal with increasingly complex
pollution issues. Bernama

TU E SDAY JA N UA RY 1 9 , 2016 T HEED G E FINA NCIA L DA ILY

COMMENT 15

A new dawn for Taiwan and China


Should both sides exercise moderation in the coming months
BY ED I TORI A L B OA RD

Tsai rein in radicals in her own party,


who might otherwise be emboldened by the size of their victory.
Tsai has so far been vague about
her views on ties with the mainland. She has refused to embrace
the so-called 1992 Consensus, under which the two sides agreed that
there was only one China but disagreed about what that meant. Her
foremost task in the interregnum
period should be to find a new
formula, one that is acceptable to
Xi as well.

sweeping victory for


Taiwans independence-minded Democratic Progressive
Party in the last
weekends elections
seems to guarantee a renewal of
tensions with mainland China,
which considers the island part
of its sovereign territory. In fact,
the vote could put relations on a
more solid footing, if both sides
exercise moderation in the coming months.
However striking the vote, this
was not a call for independence.
While fewer and fewer Taiwanese
want to reunify with the mainland,
not that many more favour de jure
independence only about a fifth
of the population, according to
recent polls.
Indeed, while opinions vary
about how closely Taiwan should
or should not integrate its economy with the mainlands, there is
little doubt most Taiwanese would
like to maintain the ambiguous
political status quo. That means
threats from Beijing and adventurism from Taiwans new rulers are
equally likely to provoke a popular backlash.
Neither side can afford that. Chinese President Xi Jinping is wrestling
with a difficult economic transition
that is roiling global markets. And
president-elect Tsai Ing-wen staked

See related story on Page 21

her campaign on revitalising Taiwans contracting economy.


That is going to require maintaining stable relations with the
mainland which absorbs around
40% of Taiwans exports even
as she seeks to expand trade with
other nations. China could easily
block any bid by Taiwan to join
the Trans-Pacific Partnership, for
instance a pact that could oth-

erwise provide a major boost to


the islands economy.
Xi already made a gesture of
goodwill in meeting with Taiwans
incumbent President Ma Yingjeou in November the first such
summit since 1945 even if his
goal was to bolster the electoral
strength of Mas Kuomintang Party.
Any credit Xi might have earned,
though, would quickly be lost if he

now sought to isolate the leader


Taiwanese have chosen.
It would be more productive
to leave open the option of sitting
down with Tsai who handled
relations with the mainland under
her partys previous administration
after her inauguration in May.
If Xi begins now to establish communication channels, it could both
avoid misunderstandings and help

The fact is, while her supporters


have valid concerns about the hollowing out of Taiwans economy as
entrepreneurs and businesses shift
to the mainland, the island would
probably benefit from opening up
further to Chinese investment and
services, as South Korea and other
Asian countries have. Tsais challenge is to lay the political groundwork for that opportunity.
The new administration may indeed pose a greater possibility for
friction with China, but it also offers the potential for a more stable
rapprochement. In 2014, when Ma
attempted to ram through a services
trade pact with the mainland, angry
students occupied the legislature.
Tsai has more credibility to make
deals with China, and both she and
Xi would do well to take advantage
of the opening. Bloomberg View

Oils plunge is great news for most of us


BY NOAH SMITH

THE collapse in the price of oil is


a huge source of anxiety for many
financial market participants. I suppose that is understandable.
Investors have been very excited
for the past several years about the
promise of tight oil, which is extracted by hydraulic fracturing, or
fracking, of rock formations where
oil is present. This was a powerful,
simple story that asset managers
and the financial media could understand, since oil is something
that almost everyone uses.
The fracking boom lured trillions
of dollars in investment, and domestic oil output soared, pushing
the US close to energy independence and lowering demand for imports from big crude producers.
With the recent dive in oil prices,
that all seems like ancient history
now (see chart).
The price plunge will wipe out
many small companies involved in
fracking, as well as plenty of others
in oil services. It will cause many
high-yield bonds to go into default.
It will generate big losses at major energy companies, and will lead

to job losses throughout the industry. In the short term, a negative


shock to the world economy and the
financial markets will probably be
the main effect of the oil collapse.
But only in the short term. Most
US industries are consumers of oil
and other fossil fuels, not producers. The US is less of a net energy
importer than it used to be, but it
still consumes more fossil fuel than
it produces. The fall in oil prices
means that trucking companies are
going to be able to buy less expensive gas for their fleets.
Construction companies will
be able to build office towers and
houses more cheaply. Farmers will
spend less to plant and harvest
their crops. Intel will not have to
pay as much to run its microchip
plants, nor Boeing to run its aircraft factories.
It will take time for investment
to shift to all the industries that will
benefit from lower energy prices
but not too much time. The initial
shock from the oil collapse might be
negative, but it will be outweighed
by the positive effects before too
long. In other words, most Americans should be celebrating the oil
drop, not lamenting it.
The real danger is not the decline in oil prices, but the thing that

caused most of the decline in the


first place China. The dramatic
slowing of China, which has become the workshop of the world,
is behind much of oils latest fall.
The slow unwinding of a property
bubble, with its attendant debt crisis, will probably continue to exert
a major drag on Chinese growth
during the next few years.
That means a long slowdown
in demand for oil. But more importantly, it also means a drop
in global growth. Chinas slump
will ripple across much of the
global economy resource exporters in Latin America, Africa,
Southeast Asia and the Middle
East will all feel the pain. Countries that export industrial machinery to China, such as Germany and Japan, will also be hit,
as will countries like South Korea
and Taiwan whose economies are
closely linked with Chinas.
Although the United States and
Europe export relatively little to
China directly, the reduction in
global growth will hurt their economies too. The slowdown in global
trade is not a huge threat to the US
economy, but it is a bigger threat
than the oil price collapse.
In the long run, we want oil prices to fall, but for the right reasons.

We want oil prices to go down as


new technologies solar power,
battery storage, biofuels, hydrogen
or whatever make the practice
of digging up and burning dead
dinosaurs obsolete. Eventually we
want oil to go the way of whale oil
once a critical energy source,
now a historical curiosity.

Today, the tumble in the oil price


is partly a result of negative developments in the global economy.
But in the future, as electric cars
and solar power advance, oil prices
might fall for economically positive
reasons. Let us hope that someday
new technologies will keep oil prices low forever. Bloomberg View

T U ESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

16 FO CU S

TUE

PHOTOS BY BLOOMBERG

The VFL Automotive Force 1 made its


debut at the 2016 Detroit Auto Show.

Meet Henrik Fiskers new,


Force 1 supercar

Its aggressive, its ostentatious and thats the point

BY

BY HA NN A H EL L IOTT

ston Martin has nothing to


worry about.
Reports surfaced earlier
last week that Aston lawyers
sent celebrity designer Henrik Fisker a letter warning him
not to unveil his VFL Automotive Force 1
supercar in Detroit, the United States last
Wednesday. They were said to have claimed
that the car looked too similar to the Aston
Martin DB10 and to have demanded that
Fisker change the design in order to avoid
conflict with Aston Martins copyrights.
Following the VFL Automotive Force 1s
debut last Wednesday, nobody would confuse Fiskers car with anything so beautiful.
Yes, the rear end has elements that, from
some angles, could resemble that DB10, but
the rest of it is aggressively differentiated.
The massive, long hood has air vents like a
rib cage with the arrogance of a Corvette;
the carbon fibre wing sits so far up on the
top of the carbon fibre roof that it looks as
if it has been misplaced. (One man I know
compared it to a poorly rendered lower
back tribal tattoo; no comment.) The sides
are cut out and low, like a radiator scooping the ground.
The cars best feature is its tiny, curved
side windows, which follow the line pulling from the front nose through the side,
ending in elegant wisps that point down
toward the rear. Fisker said theyre a new
element in keeping with the main idea of
the car: to show off.
This is an American supercar, and American cars are always about show what you
got be upfront, Fisker said. European

01
01. The side windows on
the VFL Automotive
Force 1 are the
best of detail in
this outwardly
aggressive design.
02. This is an American
supercar, and
American cars are
always about show
what you got be
up front.

cars are more about whats underneath. But


this is all about showing the power.
The long hood, too, is there for a reason. It
makes up more than half the car in order to
house a 8.4-litre V10, 745-horsepower (hp)
engine. Force 1 will go 218mph (351kph) and
will hit 60mph in three seconds. It all makes
sense, again, because Fisker says the car is
an exercise in ostentation.

02

We will have electric cars in the future,


but just like we dont want to eat salad every
day, we want a steak every once in a while,
or maybe a dessert. This is steak and dessert, he said.
Fisker isnt yet allowing test drives of this
beast. But with a chassis supplied from Karma Automotive, a bunch of torque in the
lower gears, and that V10 engine, suffice it

to say that Force 1 will be extremely unique.


(He told me proudly that itll be something
you can have a lot of fun in without breaking the speed limit.)
One thing Force 1 really isnt about: making money. Fisker said the reason he made
this car is so wealthy men will have an American option for spending US$268,000 (RM1.18
million) on a car. (It will be sold globally, but
I expect most buyers will be American.) He
said he expects that these men will already
own several other luxury cars Land Rovers, maybe a McLaren and will relish the
opportunity to buy something born in the
US. Better yet, he doesnt really need to make
that many of them his new venture with
GM icon Bob Lutz, VFL Automotive, is using
pre-existing design facilities in California
and manufacturing facilities in Michigan
to make the new model, not to mention
chassis supplied by Fisker Automotive. That
means their costs, even when they use such
elements as that pure carbon fibre rooftop,
are pretty low.
Fisker has a lot on his plate as it is. He
will unveil a Benetti yacht in February at
the Miami Boat Show, host a TV show with
Esquire that will offer a competition among
car designers, and develop an as-yet unnamed company that will deal with electric
cars. (He sold the rights to make the Fisker
Karma but retains rights to the name.) The
Force 1, more than anything, is an exercise
for a prolific designer who just loves cars.
When I design a car, I want people to
look at it and go, Wow, thats kind of interesting and do a second take, Fisker said.
When you are pulling into a restaurant for
dinner, you will be the only one to have this
car. We want to be a little niche player with
this company, to offer that to people.
Hell make only 100 or so of them this
year. Production starts in April. Bloomberg

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T U E SDAY JA N UA RY 1 9, 2016 T HEED G E FINA NCIA L DA ILY

FO CU S 17

BERG

PHOTOS BY BLOOMBERG

01

02

What to expect at the years first luxury watch show


BY STEPH EN PU LVI RENT

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FOR watch lovers, 2016 officially starts this


week, when the Salon International de la
Haute Horlogerie (SIHH) kicks off in Geneva, Switzerland next Monday (Jan 18). There
are 25 brands showing at this years show
(instead of the usual 16), and these will set
the tone for what will show up on wrists the
rest of the year. Details are still scant, but
that doesnt mean we dont have a few good
guesses as to whats coming out next week.
Here are three things we can expect to see
in Geneva:
Crazy complications
Part of what makes SIHH so exciting is that
every year there are a few true show stoppers.
You know theyre coming, but its impossible
to predict what theyll actually be. German
experts A Lange & Shne always bring some
heat (2015 saw both an updated Datograph
Perpetual and Decimal Minute Repeater),
and last year Vacheron Constantin showed
a line of in-house chronographs, including a
wild automatic split-seconds edition.
And this year I expect SIHH to up the
ante. The show is hosted by luxury conglomerate Richemont and usually includes the
groups 11 watch brands, a few brands in
which Richemont has minority stakes, and
big independents such as Audemars Piguet
and Richard Mille. For the first time, though,
nine small independent watchmakers have
been invited to participate. These include
MB&F, Kari Voutilainen, Laurent Ferrier,
and H Moser, watchmakers that are at the
forefront of new complications, painstakingly hand-finished movements, and funky
designs. Its a chance for them to steal the
spotlight from the big boys and to impress
on a big stage. I cant imagine theyll waste it.

High tech
The time when the Swiss could ignore smartwatches and wearable technology is over. It
has been for a few months now, if were being
generous, longer if were not. In November,
TAG Heuer released its full-on Android Wear
smartwatch, and by all accounts sales are so
good the company is actually ramping up
production. Breitling soon followed with its
own take on a connected watch, with the
Exospace B55, more of a middle ground
between a traditional watch and a gadget.
I dont think well be seeing an Audemars
Piguet smartwatch or a Jaeger-LeCoultre fitness tracker, but I have a funny feeling well
see at least one thing that requires a battery
and a Bluetooth connection at SIHH 2016.
Whether we finally get more information
about the upcoming IWC Connect, a small
strap-worn device, or another iteration of
the Montblanc e-Strap, or a new device from
the likes of Baume & Mercier or Cartier that appeals to a different sort of
customer than the more traditional
products on offer.
Lower prices
Its no secret that this has been
a rough year for the Swiss
watch industry. It started with
currency problems last January,
continued into the mid-year
Apple Watch hype zone, and
then soft Asian markets prevented a second-half comeback. But
watchmakers are adjusting to new
market conditions after a few
pretty cushy years, and lowering
prices is one way to get people
shopping again.
Montblanc has made a splash the
past few years with affordable takes
on usually expensive complications.
We already know Montblanc will be
continuing that push in 2016, but
other brands are getting onboard,

too. IWC is revamping its flagship line of


pilots watches, including introducing a new
entry-level pilot that will sell for US$3,950
(RM17,380), the first watch in IWCs current
stable thats less than US$4,000. I expect
well see similar additions at the bottom
end from such brands as Panerai and Jaeger-LeCoultre, too, as they try to woo new
customers with something a little more
approachable.
SIHH is taking place in Geneva, Switzerland until Friday. It began yesterday.
Bloomberg

01. Last year, A Lange & Shne


released both a decimal
minute repeater and a
new perpetual calendar
chronograph.
02. IWCs new 36mm pilot
watch will sell for less than
US$4,000 (RM17,609).
03. A Montblanc E-strap.

03

T U ESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

18 W O R L D B U S I N E S S

Asian shares fall to 2011 levels


As oil slump intensifies coupled with weak US economic data
BY HI DEY U K I SA NO
& SHI NI CHI SAOSHIRO

TOKYO: Asian shares slid to their


lowest levels since 2011 yesterday
after weak US economic data and
a massive fall in oil prices stoked
further worries about a global economic downturn.
Spreadbetters expected a subdued open for European shares,
forecasting Londons FTSE to open
modestly higher, while seeing Germanys DAX and Frances CAC to

Lower yuan
would be no
panacea for
China Inc
BY RAC H EL MORARJEE

BEIJING: A lower yuan would be no


panacea for China Inc. The currencys recent drop against the dollar
has renewed fears that China could
use foreign exchange rates to get a
competitive edge over rivals, perhaps even resorting to a sharp devaluation. That would yield some
winners and losers. But it would do
little overall for the real economy.
Besides, exports matter less than
they used to for Chinese growth.
To be sure, some companies
would cheer. Equipment makers
and shipping firms that bill their
customers in dollars would benefit
especially. For example, a 15% slide
in the yuan would lift operating income 38% at China Machinery Engineering and 23% at Cosco, Morgan
Stanley analysts estimated in August.
But even most exporters would
not enjoy a clear-cut win. For many
the benefits would be offset by having to pay more for commodities
and components. After all, the
strong yuan has made it cheaper
to buy inputs such as computer
chips from Japan.
Airlines, which buy fuel and aircraft in dollars and sell tickets in
yuan, would suffer. Other losers
would include any companies with
lots of interest to pay on foreign
debt, like property developers such
as Soho China. Broadly though, the
impact on most listed companies
would be limited, since both revenues and costs are largely in yuan.
It would be a similar story for Chinas unlisted companies.
Chinas recent growth has depended more on building tower
blocks, highways, airports and so
on than on selling to the rest of the
world. Exports were 36% of gross
domestic product in 2006, but just
23% by 2014, World Bank data shows.
That doesnt mean Beijings planners would not like an even weaker
currency. But the main advantage
would be to preserve the ability to
cut interest rates, rather than boost
sluggish exports. Reuters

start flat to slightly weaker.


Crude prices faced fresh pressure
after international sanctions against
Iran were lifted over the weekend,
allowing Tehran to return to an already oversupplied oil market.
Brent oil futures fell below US$28
(RM123) per barrel, touching their
lowest level since 2003.
Iran is now free to sell as much
oil as it wants to whomever it likes at
whatever price it can get, said Richard Nephew, programme director for
Economic Statecraft, Sanctions and

Energy Markets at Columbia Universitys Center on Global Energy Policy.


MSCIs broadest index of Asia-Pacific shares outside Japan fell to its
lowest since October 2011 and was
last down 0.5%.
Japans Nikkei tumbled as much
as 2.8% to a one-year low. It has
lost 20% from its peak hit in June,
meeting a common definition of a
bear market.
The volatile Shanghai Composite
index initially pierced through intraday lows last seen in August before

paring the losses and was last up 1%.


It was still down 17% this month.
An unexpected drop in retail sales
and the third consecutive monthly
fall in industrial output in December
added to the latest indication that US
economic growth braked sharply in
the fourth quarter.
Investors further cut back their
Fed rate hike expectations, with shortterm interest rate futures pricing in
only one rate hike by the end of the
year, compared with two hikes priced
in at the start of year. Reuters

China to implement RRR for


offshore banks domestic deposits
BY SUE-LIN WONG & MICHELLE CHEN

BEIJING/HONG KONG: Chinas central bank said yesterday it will start


implementing a reserve requirement
ratio (RRR) on offshore banks domestic deposits, in what appears to
be its latest attempt to stem speculation in the yuan and manage money
flowing in and out of the country.
Confusion over Chinas foreign
exchange policy and its commitment to reforms have sparked mayhem in global financial markets in
recent weeks as the Peoples Bank
of China (PBoC) allowed the yuan
to fall sharply and then moved in
aggressively to try to steady it.
Sources told Reuters on Sunday
that the PBoC is preparing to raise
the reserve requirement ratio next

week for yuan deposits placed in


yuan clearing banks to the normal
level. The rate is currently at zero.
The PBoC yesterday confirmed
the move would be effective on Jan
25, saying it would help set up a
long-term mechanism to regulate
cross-border yuan fund flows and
would help offshore financial institutions better manage their yuan
liquidity. But it made no mention of
increasing restrictions on banks in
its statement, adding to uncertainty in markets about Chinas policy
intentions. The normal RRR rate in
China is 17.5% for large banks and
15.5% for smaller banks.
Some analysts said the announcement may at this stage be a more
symbolic warning to banks, aimed
at discouraging them from being too

active in cross-border yuan transactions as part of the PBoCs broader


campaign to stabilise the yuan.
The offshore yuan, or CNH, fell
earlier this month to its lowest level
since trading began in 2010 on fears
that China was planning to sharply
devalue it to boost its ailing economy.
The market sees that this is a
gesture by PBoC to warn speculators
that are betting on a fast depreciation
of its currency, said Zhou Hao, senior emerging market economist for
Asia at Commerzbank in Singapore.
If it forces banks offshore to hold
more yuan in reserve, it would reduce the amount of the currency
available in the market, squeezing
supply further and making it more
difficult and expensive for speculators, some analysts say. Reuters

Commodity-exporter currencies rebound


BY ANCHAL E E WO RRAC HATE
& NETTY IS M AI L

LONDON/SINGAPORE: Currencies
from commodity exporters rebounded and the yen dropped from close
to a four-month high after Chinas
central bank helped calm investors
nerves by strengthening the yuan fixing by the most in almost a month.
The Australian dollar outperformed 15 of 16 major peers after
slumping last week to the lowest
level in almost seven years. China, which is due to publish a slew
of economic data this week, will
report today that fourth-quarter
gross domestic product grew at an
annual rate of 6.9%, according to
economist estimates. The country
is a major export destination for
Australia and Canada. The Canadian dollar climbed for the first
time this year.
We are seeing stability in sentiment which has been the primary
driver of the foreign-exchange market, said Peter Rosenstreich, head
of market strategy at Swissquote
Bank SA in Gland, Switzerland.
That has given well-oversold com-

IN BRIEF
HSBC CEO Gulliver
sees 6.7% growth
HONG KONG: HSBC chief executive Stuart Gulliver forecast
yesterday Chinas economy to
grow at 6.7% this year, in line
with official estimates, but higher than many economists who
say the data is over optimistic.
We do think the data are accurate, we think any errors in
the data are compensated for
by the fact a lot of the service
economy is not included [in
the numbers], Gulliver told the
annual Asia Financial Forum in
Hong Kong. Gulliver said he did
not foresee a so-called hard
landing for China, the bearish
scenario foretold by many economists in which the countrys
slowing growth results in widespread corporate defaults and
economic collapse. Reuters

JGBs rm on safe-haven
bids as equities slump
TOKYO: Japanese government
bonds (JGB) blossomed yesterday as stocks wilted, sending
JGB futures to another record
high. The Nikkei stock index shed
1.1% to its lowest close in a year.
March 10-year JGB futures ended up 0.14 of a point at 149.67,
marking another record high of
149.72, while the benchmark 10year yield edged down one basis
point to 0.205%, not far from a
record low of 0.19% plumbed last
Thursday. The Bank of Japan offered to buy a total of 890 billion
(RM33.4 billion) of JGBs, including 450 billion in the five-year
to 10-year zone, 260 billion in
the 10-year to 25-year zone, and
180 billion of JGBs maturing in
more than 25 years under its asset
purchase programme. Reuters

BoJ says regional rms


cautious on raising wages
TOKYO: The Bank of Japan (BoJ)
kept its upbeat outlook for most
of the countrys nine economic
regions yesterday, but said small
firms remained cautious about
raising wages despite a tightening job market. The central
bank said some firms in big cities were keen to raise base salaries, but it struck a cautious tone
about wage-setting behaviours
nationwide, which could keep
alive market expectations it may
ease monetary policy as early as
this month. Many small- and
medium-sized companies in
regional areas of Japan remain
cautious about raising regular
pay for permanent employees,
the central bank said. Reuters

Steel rms suered


53.1 billion yuan in losses
Filepic of the headquarters of the Peoples Bank of China in Beijing. Chinas central bank
helped calm investors nerves by strengthening the yuan xing by the most in almost a
month. Photo by Reuters

modity currencies room to recover.


However, we dont expect this bullish momentum to be extensive.
The Peoples Bank of China raised
its daily reference rate for the yuan
by 0.07% yesterday, the most since
Dec 21, after weaker-than-expected
fixings earlier this month rattled financial markets worldwide.
The central bank said it will impose reserve-requirement ratios on

yuan deposited onshore by overseas


financial institutions from Jan 25,
without saying what level would be
used. While a slowdown in China
continues to hurt exporters, signs that
the worlds second-biggest economy
is stabilising and increased clarity on
the timing for US rate increases are
bolstering speculation that commodities will rebound from their worst
year since 2008. Bloomberg

BEIJING: Chinas major steel


firms lost 53.1 billion yuan
(RM35.5 billion) from January
to November last year, as prices fell because of overcapacity and slumping demand, the
China Iron and Steel Association (CISA) said yesterday. Chinas steel sector, responsible for
around half of global output, has
been one of the biggest casualties of the countrys economic
slowdown, with prices now at
multi-decade lows as a result of
a massive supply glut. Reuters

TU E SDAY JA N UA RY 1 9 , 2016 T HEED G E FINA NCIA L DA ILY

W O R L D B U S I N E S S 19

Gold firms as Asian equities falter


BY MA N OLO SERA PI O JR

MANILA: Gold opened the trading


week higher yesterday, buoyed by
safe-haven bids after Asian equities
tumbled to their lowest since 2011
as investors shunned risky assets
on the heels of weak United States
economic data.
US retail sales fell in December
along with industrial production,
the latest indication that economic
growth braked sharply in the fourth
quarter. Oil prices slid to the lowest
since 2003.

Airline operating
margins to reach
50-year high
SYDNEY: The low oil price is
poised to propel airline operating margins to the highest level
since the mid-1960s this year,
although margins will decline
slightly next year as the oil price
rises and fleets grow more rapidly
than usual, according to a leading
aviation analysis group, said The
Sydney Morning Herald.
Capa Centre for Aviations
World Airline Profit Outlook
2016 found operating margins
for global airlines, which were
just 5.5% in 2014, rose to 7.2%
last year and should reach 8.2%
this year, before declining to 7.5%
next year. The 2015 figure was
better than any year in the last
five decades, with 2016 set to
top it.
Beyond [2017], a challenge
for the industry will be to try
to sustain margins in a similar
range rather than allow a margin
peak to be followed by a rapid downturn, as has invariably
happened in the past, Capa
said, according to a report by
The Sydney Morning Herald.

The renewed weakness in the


worlds top economy raises doubts
about whether the Federal Reserve
will raise interest rates again in
March, boding well for non-interest bearing assets like gold.
It will be increasingly difficult
for another hike in March, considering that China will continue to be
weak, said Daniel Ang, investment
analyst at Phillip Futures. A further
hike may be possible only in the
third or fourth quarter.
The unabated decline in oil prices further fanned worries over a

global economic downturn, pushing investors to assets deemed safe


including gold, said Ang.
Spot gold was up 0.1% at
US$1,090 (RM4,796) an ounce by
0606 GMT, after losing 1.4% last
week.
US gold for February delivery
was flat at US$1,089.90 an ounce.
Hedge funds and money managers switched to their first bullish
bet in Comex gold in two months
and lifted their bullish bet on silver
in the week to Jan 12, US Commodity Futures Trading Commission

IN BRIEF
data showed last Friday.
But gold could face resistance
at US$1,140, said Ang, citing slow
physical demand from top consumers China and India, with Chinese
spending seen dented by its slowing economy.
Im bearish on gold despite the
recent uptick weve seen, he said.
China will release its gross domestic product data for full-year
2015 today and economists polled
by Reuters have forecast that growth
cooled to 6.9%, the slowest in a
quarter of a century. Reuters

Oil slides to lowest


since 2003
As the market braces for a jump in Iranian exports
BY ROSLAN KH AS AWNE H

SINGAPORE: Oil prices hit their


lowest since 2003 yesterday, as the
market braced for a jump in Iranian exports after the lifting of sanctions against the country over the
weekend.
The United States on Saturday
revoked sanctions that had slashed
Irans oil exports by around 2 million barrels per day (bpd) since its
pre-sanctions 2011 peak to little
more than one million bpd.
On Sunday, Iran a member of
the Organization of the Petroleum
Exporting Countries (Opec) said
it was ready to increase its exports
by 500,000 bpd.
Iranian exports come at a very

bad time, said Barclays analysts.


Worries about Irans return to
an already glutted oil market drove
down Brent to US$27.67 (RM121)
a barrel early yesterday, its lowest
since 2003. The benchmark was at
US$28.17 by 0733 GMT, down 2.7%
from its settlement last Friday.
US crude was down 64 cents at
US$28.78 a barrel, not far from a
2003-low of US$28.36 hit earlier
in the session.
The additional Iranian supply
would arrive at a time when oil
markets are already trying to absorb excess production from the
US, Russia, and the Middle East.
Major producers are currently
delivering 2-2.5 million bpd more
than demand, so the question is

how long they can continue to overproduce for at that level, said Stuart
Gulliver, chief executive officer of
HSBC yesterday.
Traders and analysts, however,
have described the plunge in prices as a knee-jerk reaction, saying
Irans ambitions to export 500,000
bpd were not very realistic.
If you track Irans rhetoric over
the past 12-18 months, officials
were projecting a one million bpd
rise in exports as soon as sanctions
were lifted, said analyst Virendra
Chauhan at Energy Aspects, adding
that the most recent downgrade in
the number is indicative of the challenges that face Iranian upstream
and the markets capacity to absorb
its supply. Reuters

GE making wicked smaht HQ move to Boston


BY ROB COX

NEW YORK: Despite hosting the tea


party that kicked off Americas revolution against British rule, Boston
has not easily shaken the unwelcome distinction as the capital of a
state derided as Taxachusetts. That
did not deter General Electric (GE),
the industrial behemoth adept at
minimising its tax liabilities, from
moving there. Beantown ticks many
boxes for a company whose motto
is Imagination at Work.
While it was dunderheaded tax
policy in GEs home state of Connecticut that triggered chief executive Jeff Immelt and his board to
consider relocating, the choice announced last Wednesday suggests
that more than just the bottom line
informed the decision.
Money matters, of course. GE
will receive some US$20 million
(RM88 million) in property-tax
relief over two decades, according to The Boston Globe. And the
Commonwealth of Massachusetts
may kick in some US$120 million

A General Electric display at an appliance store in Westminster, Colorado, US. GE will


receive some US$20 million in property-tax relief over two decades, according to The
Boston Globe. Photo by Reuters

more. That is a lot of inducement


for a headquarters that will house
about 800 employees. Other cities
probably proffered similar goodies,
meaning the final decision sends
a strong signal about both Boston
and GE.
The nearly US$300 billion com-

pany is undergoing a wrenching


process of exiting the financial
services trap that nearly buckled
it seven years ago. It is refocusing
on making things that power the
world, move people, purify water,
connect cities and, for now at least,
fit kitchens.

Boston is home to some 250,000


students at more than 55 colleges
and universities, including worldclass research hubs like Massachusetts Institute of Technology and
Harvard University. In that sense,
GE is hitching its brand to the innovation that emanates from their
labs and classrooms, and eventually supplies it more new recruits.
By packing up from a sleepy
Connecticut suburb the company is also tapping into an urbanisation trend taking root with younger
Americans, enabling it to attract engineers and executives who might
be considering jobs in New York
City and San Francisco.
What is more, Logan International Airport is just a 12-minute
ride from the city centre, and Boston boasts a decent transportation
system. Despite the cost overruns
of the Big Dig a few years ago,
its traffic mostly flows. The only
obvious drawback to GEs choice
is that the top brass may need to
leave their New York Yankees caps
behind. Reuters

European shares regain


some ground as Ericsson
and LVMH rise
LONDON: European shares
picked up yesterday from their
lowest level in more than a
year, helped partly by gains at
mobile telecoms gear marker Ericsson and luxury goods
group LVMH. The pan-European FTSEurofirst 300 index,
which had fallen 2.8% last Friday to its lowest level since
mid-December 2014, rose
0.9%. The eurozones bluechip Euro STOXX 50 index
gained 0.7% and Germanys
DAX rose 0.6%, although the
DAX remains 22% a record
high reached last April. Investors added that European stocks were being further
supported by a rise in US equity futures, helping to offset
another drop in oil prices.
Reuters

NAB values UK unit


Clydesdale at up to
A$4.3b
SYDNEY: National Australia
Bank Ltd (NAB), the countrys
biggest lender by assets, has
valued its UK unit, Clydesdale Bank Plc, at up to A$4.3
billion (RM13.01 billion), according to IPO pricing terms.
The indicative pricing range
was quite wide at 175-235
pence per share or a A$3.2
billion valuation for the unit
at the lower end. But Bell Potter analyst TS Lim said NAB
may have to settle for even
less, given declines in share
markets. What theyve put
out is aspirational, he said.
Reuters

Wolseley says CEO


Meakins to retire,
promotes CFO
BENGALURU: Heating and
plumbing products supplier
Wolseley Plc said chief executive officer (CEO) Ian Meakins
would retire on Aug 31 and that
it promoted chief financial officer (CFO) John Martin as its
new CEO. Switzerland-based
Wolseley also named British
engineering firm Cobham Plcs
Simon Nicholls as CFO. Martin, who was appointed CFO in
April 2010, previously served
in a similar role at foreign exchange firm Travelex and recruitment company Hays.
Reuters

Thai Central says keen to


bid for retailer Casinos
Thai, Vietnam stores
BANGKOK: Thailands biggest
retailer, Central Group, said it
may bid for French supermarket firm Casino Groups Thai
and Vietnam stores, seeking
control of a business it already
partly owns as a platform for
growth in fast-growing Southeast Asia. We are interested in
both [Casino-controlled] Big
C in Thailand and Vietnam,
Prin Chirathivat, deputy chief
executive officer told Reuters
in a phone call. If the prices
are not too expensive, we will
be keen to bid, Prin said.
Reuters

T U ESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

20 WORLD

Clinton countering
Sanders revolution

IN BRIEF
Tehran denounces
new US sanctions on
missile programme

Sparring over plans for healthcare, guns, battling IS extremists, reining in Wall Street
BY TI MOTHY C L ARY & M ICHAEL
MATHES I N WA SHINGTON

CHARLESTON (United States): Democratic presidential candidates clashed


late on Sunday in their final debate
before first votes are cast in Iowa, with
Hillary Clinton presenting herself as
best qualified as she parried attacks
from pugnacious rival Bernie Sanders.
The pair, along with former Maryland governor Martin OMalley, took
the stage in Charleston, South Carolina
as front runner Clinton feels the heat
from challenger Sanders in a tightening nomination race.
All three are aware that their performance could be the best opportunity to reshape the race ahead of Iowa,
which votes two weeks from yesterday.
Sanders and Clinton sparred,
sometimes intensely, over plans for
universal healthcare, guns, battling
Islamic State extremists and reining
in Wall Street.
Clinton raced out of the gate touting her vast experience as former secretary of state, senator and point-woman for her husband Bill Clintons efforts
to reform healthcare, saying Americans need a president who can do

Four-nation
meeting in
Kabul seeks to
revive Taliban
KABUL (Afghanistan): A second round of four-country talks
aimed at reviving peace negotiations with the Taliban began
in Kabul yesterday, even as the
insurgents wage an unprecedented winter campaign of violence
across Afghanistan.
Delegates from Afghanistan,
Pakistan, China and the United
States convened in the Afghan
capital for a one-day meeting
seeking a negotiated end to the
bloody 14-year insurgency.
This meeting is important as
it will focus on the roadmap to
bringing peace in Afghanistan,
foreign ministry spokesman Ahmad Shekib Mostaghni told AFP.
Afghan Foreign Minister Salahuddin Rabbani will open the
four-way meeting.
The first round of the roadmap talks was held in Islamabad
last week as the four nations try
to lay the groundwork for direct
dialogue between Kabul and the
Islamist group. But analysts caution that any substantive talks are
still a long way off.
The Taliban have stepped up
attacks on government and foreign targets in Afghanistan this
winter underscoring a worsening
security situation. AFP

Clinton speaking at the NBC


News YouTube Democratic
presidential candidates debate in
Charleston, South Carolina, the US
on Sunday. Photo by Reuters

all aspects of the job and signalling


that her rivals were not up to the task.
I understand that this is the hardest job in the world. Im prepared and
ready to take it on, she said.
Clinton, whose campaign has been
surprised by the resilience of what
Sanders called his political revolution, said she was best qualified to

bring our country together during


polarising times.
Sanders, who polls show is nearly
even with Clinton in Iowa, sent shockwaves hours before the debate when
he unveiled his Medicare for All
proposal, which he said would save
average American families thousands
of dollars per year.

But the plan would raise taxes


across the board and require a 6.2%
healthcare payroll tax on businesses,
while slapping taxpayers with a 2.2%
premium based on income.
Sanders, an independent US senator and self-described democratic socialist, said his plan would save US$6
trillion (RM26 trillion) over 10 years
compared to the current system.
Clinton has assailed Sanders for
peddling a government-run single-payer system that would be too
expensive. On Sunday she added that
the plan would shred President Barack
Obamas Affordable Care Act, which
has helped 19 million new people get
health insurance.
To tear it up and start over again
... I think is the wrong direction, Clinton said in a debate broadcast by NBC
News.
Clinton also criticised Sanders for
his positions on gun control.
OMalley has made little headway
with voters despite considerable debate stage time. He squeezed into the
conversation on Sunday, indicting the
Clinton political juggernaut by stressing that it was time for voters to let go
of the past and move forward. AFP

Three US prisoners freed by


Iran arrive in Germany
BERLIN: Three of the four United
States citizens freed by Iran in a
prisoner swap arrived in Germany on Sunday, Secretary of State
John Kerry said, where they were
expected at an American military
base.
The released prisoners, all of
whom have dual US-Iranian citizenship, landed in Germany after a
brief stopover in Geneva, Switzerland. They include The Washington
Posts Tehran correspondent Jason
Rezaian, who had been detained in
Iran for nearly 18 months, Chris-

tian pastor Saeed Abedini and former US Marine Amir Hekmati.


Today (on Sunday), Jason
Rezaian, Saeed Abedini and Amir
Hekmati arrived in Germany, and
soon they will be reunited with
their families, Kerry tweeted.
Kerry also confirmed the release of the fourth Iranian-American freed in the prisoner swap,
Nosratollah Khosravi-Roodsari,
and American Matthew Trevithick, who was released in a separate process. Today (Sunday), all
Americans celebrate the freedom

of our fellow citizens, he tweeted.


The group arrived in Geneva
from Tehran aboard a Swiss air
force plane, touching down at
around 1700 GMT before changing planes to head to Germany.
According to US media, their
destination was the Ramstein air
base in western Germany, where
the freed men were expected to
undergo medical exams.
The fourth Iranian-American
released as part of the swap, Khosravi-Roodsari, has not yet left Tehran, senior US officials said. AFP

United States seeks three missing citizens in Iraq


BAGHDAD: United States and local
authorities are searching for three
American citizens who were reportedly kidnapped in Baghdad, officials from the two countries said on
Sunday.
Kidnappings are a major problem
in Baghdad and other parts of the
country and most frequently target
Iraqis, but Qatari and Turkish citizens have also been seized in recent
months.
We are aware of reports that
American citizens are missing in
Iraq, US State Department spokes-

man John Kirby said.


We are working with the full cooperation of the Iraqi authorities to
locate and recover the individuals,
Kirby added, without providing details about their number or the circumstances of their disappearance.
An Iraqi police colonel said on
condition of anonymity that three
Americans and an Iraqi translator were kidnapped in southern
Baghdad, and that Iraqi forces have
launched an operation to find them.
The officer said that according
to information he had received, the

kidnappers were militiamen wearing


military uniforms.
Dozens of foreign nationals have
been kidnapped in the past five
months, but kidnappers also frequently target Iraqis for ransoms or
to settle scores. Last month, gunmen
kidnapped more than two dozen
Qataris who had come to southern
Iraq to hunt. Their whereabouts are
still unknown, as are the identities
of their kidnappers. But Shiite militia groups have a major presence
in southern Iraq, while the Islamic
States does not. AFP

TEHRAN: Iran yesterday denounced illegitimate new


sanctions by the United States
on its ballistic missile programme, days after Tehrans
historic nuclear deal with world
powers was confirmed. Irans
missile programme has never
been designed to be capable of
carrying nuclear weapons, foreign ministry spokesman Hossein Jaber Ansari said, according
to the ISNA news agency. He
added that Tehran saw fresh
economic sanctions as illegitimate. The US announced
new penalties on Sunday related to Irans ballistic missile
programme after the lifting of
punishing measures aimed at
its atomic activities as the deal
with world powers was confirmed in Vienna. AFP

IAEA chief to meet


Irans president
TEHRAN: The head of the United Nations atomic watchdog
Yukiya Amano arrived in Tehran, Iraq yesterday for talks with
President Hassan Rouhani, two
days after Irans nuclear deal
with world powers went into
force. The International Atomic Energy Agency (IAEA) confirmed late on Saturday that
Tehran had complied with its
obligations under last summers accord, leading the United
States and the European Union to lift sanctions imposed
over Irans disputed nuclear
programme that crippled its
economy for a decade. AFP

Dozens rescued from


blazing boat o NZ coast
WELLINGTON: Fifty-seven passengers and crew were forced to
leap for their lives from a charter boat that burst into flames
off New Zealands east coast
yesterday, police said. The vessel, packed with tourists, was
returning from White Island,
an active volcano in the Bay
of Plenty, when the fire broke
out. The blaze took hold of the
vessel forcing those on board
to jump into the water, police
said in a statement. A coastguard boat and a number of
small local vessels went out
to assist in recovering passengers and crew from the water.
The cause of the blaze was not
immediately known. AFP

US vows it wont rest until


Iran frees ex-FBI agent
WASHINGTON: While five
American citizens were freed
from detention in Iran over the
weekend, the United States government vowed on Sunday to
work tirelessly for the release of
another missing for nine years.
Ex-FBI agent Robert Levinson
disappeared in mysterious circumstances in March 2007 during a visit to the Iranian island
of Kish. He was reportedly investigating cigarette counterfeiting in the region.Levinson,
67, is considered to be the longest-held hostage in US history,
if still alive. AFP

TU E SDAY JA N UA RY 1 9 , 2016 T HEED G E FINA NCIA L DA ILY

W O R L D 21

Laos secretive Communist Party gathers to pick leaders


BY JEROME TAY LOR

BANGKOK: The secretive ruling


Communist Party of Laos yesterday
opened its five-yearly congress, a
gathering which decides who runs
the tightly-controlled country and
sets economic priorities.
The communists have ruled the
impoverished Southeast Asian nation since 1975 at the end of the

Abe seeks
Western
rapprochement
with Putin
TOKYO: Japanese Prime Minister Shinzo Abe, currently chair
of the G7, has said he wants to
bring Russian President Vladimir
Putin back into the fold to engage
Moscows help over a litany of
crises in the Middle East.
Abes remarks, in a joint
interview with Japans Nikkei
business daily and the Financial Times (FT) published yesterday, come with Washington
and Moscow taking opposite
sides over the years-long civil
war in Syria, with the region also
wracked by conflict in Yemen, a
Saudi-Iran row, as well as countless other issues.
We need the constructive
engagement of Russia, Abe told
the news outlets. I believe appropriate dialogue with Russia,
appropriate dialogue with President Putin is very important.
Abe said he was willing to go
to Moscow, or to invite Putin to
Tokyo for talks.
Russia counts Iran and Syrian President Bashar al-Assad
among its strongest allies in the
Middle East, and Moscow
which also holds a permanent
veto-wielding seat on the UN
Security Council is seen as a
powerbroker in the region.
In a video excerpt of the interview posted on the Nikkei
website, Abe also said that as
the chair of the G7 he would
consider a visit to Russia at the
appropriate time, which the Nikkei newspaper interpreted as
meaning ahead of the G7 summit in May.
The remarks came after Abe
said on Jan 4 that the international community must encourage Russias participation in the
global fight against terrorism,
the crisis in Syria and relations
with Iran.
Abe at that time also renewed
his call on Putin to make progress on a territorial dispute with
Tokyo dating from the closing
days of World War II.
Japan and Russia have never
officially struck a peace accord
due to the territorial row over
four Japanese islands seized by
Soviet troops at the wars conclusion.
In the Nikkei-FT interview,
Abe also said the international community should raise its
voice against Chinas construction of artificial islands in the
South China Sea. AFP

Vietnam War, which spilt into Laos


and saw the country blanketed by
bombs in a secret war led by the
CIA.
State media said 684 delegates
representing more than 200,000
party members would attend
the five-day meeting in the capital
Vientiane.
The congress will select the
members of the partys politburo

and central committee, the key


bodies governing the landlocked
but resource-rich country.
It comes as Laos assumes the
year-long chairmanship of the Asean regional bloc that will see a cascade of diplomatic meetings and
open the cloistered, tightly-controlled nation to greater scrutiny.
Launching the congress, Prime
Minister Thongsing Thammavong

IN BRIEF

highlighted a decade-long boom


which has seen average annual
growth of 7.4%.
Outlining a vision for lifting the
country out of poverty, he told delegates that the difference between
city and countryside will narrow ...
human resources will develop, citizens rights will be protected, the
environment will be preserved.
AFP

Media warn Tsai


against hypocrisy
Beijing will not hold unrealistic delusions about her
BEIJING: Chinas state-run media
yesterday warned Taiwanese president-elect Tsai Ing-wen against pursuing a pro-independence path and
that a formal split from the mainland
would be a dead end.
Tsai and her Democratic Progressive Party (DPP) won a landslide
victory on Saturday as voters turned
their backs on closer China ties.
The DPP has traditionally backed
independence for the island, but
Tsai has moderated its rhetoric,
promising to maintain the status
quo.
But Zhou Zhihuai, head of the
Institute of Taiwan Studies at the
Chinese Academy of Social Sciences,
wrote in the Chinese-language edition of the Global Times that if Tsai
parts ways with the mainland, she
will go down a dead end.
Beijing will not hold unrealistic
delusions about her, Zhou added,
saying that whether cross-Strait relations take the road of peace or
antagonism, it is up to Tsai Ing-wen
to make the choice.
Although Taiwan is self-ruling
after it split with China following
a civil war in 1949, it has never de-

clared independence and Beijing


still sees it as part of its territory
awaiting reunification.
Tsai wasted no time in warning
China that suppression would
harm cross-Strait ties, in her first
comments to international media
following her win, adding that our
democratic system, national identity and international space must
be respected.
In the English-language edition
of Global Times, columnist Zhang
Hua from the same institution
as Zhou accused Tsai of a hypocritical cover-up for her pro-independence advocacy.
An editorial in yesterdays English-language China Daily newspaper insisted that the Kuomintang lost
the election due to issues such as
rising unemployment and inequality, rather than its Beijing-friendly
approach.
But it added that Tsais policy
towards the mainland remains
ambiguous.
She has a responsibility to keep
the peaceful development of crossStraits relations on track, it said.
AFP

Taiwan president
Tsai Ing-wen
Wins January 16 election
Democratic Progressive Party

Age: 59
China-sceptic
Victory of the DPP tapped into
frustrations and fear that
the islands sovereignty is being
eroded by China
Promises to maintain the
status quo in China relations
Pledges a stronger Taiwan
that is proud of its identity
Warns that Chinese
suppression would
damage ties

Rights activists cast doubt on


missing bookseller confession
HONG KONG: Rights campaigners cast doubt yesterday over the
apparent confession by a missing
Hong Kong bookseller paraded on
Chinese state television saying he
had surrendered to authorities over
a fatal drink driving accident.
Gui Minhai, a Swedish national, is
one of five missing booksellers from
a Hong Kong-based publisher . Their
disappearance has sparked alarm in
the southern Chinese city which is
guaranteed a range of freedoms not
seen on the mainland.
Gui failed to return from a holiday
in Thailand in October, according to
local media.
In his confession on state broadcaster CCTV on Sunday he said

he had returned to China to take


legal responsibilities for killing a
college student in a car accident
11 years ago.
Weeping Gui said he had fled the
mainland after he was convicted of
the crime, despite only receiving a
two-year suspended sentence.
But Amnesty Internationals East
Asia director Nicholas Bequelin said
the broadcast raised more questions
than answers.
Of the five booksellers who have
gone missing, the latest to have disappeared, Lee Bo, sparked the biggest backlash as he was the only one
of the five to have disappeared from
Hong Kong.
That raised fears that Chinese se-

curity authorities were working in


Hong Kongs territory.
All five men worked for the Mighty
Current publishing house which operates a bookstore in the commercial
heart of Hong Kong.
CCTVs website ran a news report in 2005, in which a man named
Gui Minhai was said to have fled
overseas in 2004 after he was given
a two-year suspended sentence for
killing a 23-year-old college student
in the eastern city of Ningbo.
While the report could relate to
the missing bookseller, there are nevertheless discrepancies. CCTV says
Gui was 46 in 2005, but on Sunday
state news agency Xinhua gave his
current age as 51. AFP

Top Chinese university


hacked by IS inltrator
reports
BEIJING: A hacker proclaiming
allegiance to the Islamic State
(IS) jihadist group infiltrated
the internal network of one
of Chinas top universities to
display images of masked and
mounted militants, reports said
yesterday. The hacker also reprogrammed pages of Tsinghua
Universitys in-house course
portal to display Arabic verses from Islamic scripture accompanied by music, a student
newspaper at the Beijing institution reported. Instead of displaying links to class resources
and departmental information,
the site showed a photo of four
hooded fighters on horseback
riding beneath the flag of IS,
according to screenshots. The
cyber-intruder identified himself as an Islamic State Hacker. AFP

Maldives disappointed
Nasheed will not
travel to Britain
MALE (Maldives): The Maldives government said yesterday it was disappointed that
jailed former leader Mohamed
Nasheed would not travel to
Britain for surgery after he rejected a demand that a relative
stay behind to guarantee his
return. The government had
said Nasheed, whose conviction last year on terror-related
charges has been widely criticised, could travel to Britain
for 30 days to receive urgent
spinal cord surgery. He was
due to leave late on Sunday,
but his lawyer accused the government of introducing the illegal last-minute condition to
the deal, brokered by diplomats
from India, Sri Lanka and Britain. AFP

Seoul says N Korea


scattered million
propaganda leaets
SEOUL: North Korea has scattered nearly one million propaganda leaflets in South Korea over the past week, Seoul
said yesterday, in an escalating
propaganda battle triggered
by Pyongyangs latest nuclear
test. The leaflets, floated across
the border by helium balloons,
are an apparent response to
South Koreas decision to blast
a mix of K-pop and propaganda messages into North Korea
using giant banks of speakers
on the heavily militarised border. AFP

British PM attacks
isolation of Muslim women
LONDON: British Prime Minister David Cameron yesterday
said more needs to be done
to help Muslim women learn
English to tackle discrimination and gender segregation in
their communities. Writing in
The Times newspaper, Cameron said it was time to confront
the backward attitudes held
by a minority of Muslim men
who were exerting damaging
control over the women in
their lives. AFP

22

T U ESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

live it!

TUE

WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE

A NOBLE
PARTNERSHIP
Louis Vuitton and Unicef
team up to help children
in need

Pendentif
Silver Lockit.

CO
les
of t
Jes
tha
wid

a lo
spi
its
in 3
firs
Jew
Th
com
sui
eas
do
in s
of t
pla
off
the

BY HANNAH M ER ICAN

ouis Vuitton and the United Nations


Childrens Fund (Unicef) have teamed
up to help provide humanitarian aid for
vulnerable children around the world.
This global partnership will help raise
funds for Unicef and improve the life of
children who live in areas of poverty and hardship.
As the worlds leading humanitarian and development organisation, Unicef is there to help before,
during and after a crisis by providing children with
healthcare, protection, safe water, nutrition and
education. Children who live in conflict zones are
at high risk of contracting disease, of malnutrition
and violence. With the lack of education and source
of clean water, kids living in these areas are likely
to die before their fifth birthday.
With its partnership with Louis Vuitton, funds
will be raised to support the organisations efforts
in protecting the lives of children everywhere. The
maison has created a specially designed product
called the Silver Lockit that will be available in
Louis Vuitton stores worldwide in both pendant
and bracelet form. Both the pendant and bracelet are made from sterling silver and the design
takes inspiration from Georges Vuittons unpickable tumbler lock in 1890. The lock was used to
protect clients precious belongings and seen as
a symbol of protection. For every sale of the Silver Lockit, US$200 (RM880) will be donated to
Unicef. With proceeds from the sale of the Silver
Lockit, it will help protect children who are in
vulnerable situations.
Unicef is a strong and reliable leader in hu-

E
d

cha
nife
for
gla
by
and
at t
bra
cha
03
LVforUNICEF Pinky Promise.

manitarian action. Together, we can make a real in line of the sixth biennial Unicef Ball which was
difference to children in the most vulnerable sit- held in Los Angeles last Tuesday.
uations, said Michael Burke, chairman and chief
This campaign aims to encourage as many
executive officer of Louis Vuitton.
people as possible to join Louis Vuittons efforts
in helping out children in need. With the help of
#MAKEAPROMISE
many high-profile and influential personalities,
Aside from the launch of the Silver Lockit, Lou- Louis Vuitton wants people to seal their commitis Vuitton for Unicef is also running an ongoing ment through a pinky promise and invite people
#MAKEAPROMISE campaign. The digital campaign to join them in doing so. As a popular sign to make
is another effort to help raise awareness and funds among school children in Asia, the pinky promise
gesture between two people encapsulates how a
promise has been sealed. People are encouraged
to get involved with this campaign by making a
pinky promise with the hashtag #MAKEAPROMISE
on social media.
When children make a promise, they take it
seriously. said Burke. These are promises that
A close-up of
come straight from the heart. The pinky promise
Pendentif Silver
is an instinctive and sincere way to seal a promise
Lockit.
and to share it with someone close.
Commenting on the luxury brands efforts, he
highlights, Charity starts at home. Our 20,000 staff
members have joined forces to generate strong
ideas for this cause. Our goal is to reach as many
people as possible, ask them to share our promise
and to make a real difference.
To take part in the #MAKEAPROMISE campaign, choose a partner who is willing to make a
pledge and help children in need. Take a photo of
both of you crossing your pinkie fingers and share
it with the #makeapromise hashtag on Facebook,
Twitter or Instagram. To spread the word further,
tag your friends and encourage them to take part
in this campaign as well.
Purchase the Silver Lockit online on www.louisvuitton.com/lvforunicef and in Louis Vuitton stores
worldwide. To find out more on Louis Vuitton for
Unicef initiatives visit www.unicef.org/lvforunicef.

P
A
C

T U E SDAY JA N UA RY 1 9, 2016 T HEED G E FINA NCIA L DA ILY

live it! 23
WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE

FASHION

BY HANNAH M ERICAN

Endless Jewelry makes its


debut in Malaysia
COLOURFUL Danish fashion jewellery brand, Endless Jewelry has just arrived on our shores with a line
of trendy bracelets. Created by Danish entrepreneur
Jesper Nielsen, Endless Jewelry is born out of the idea
that designer jewellery can be made affordable to a
wider demographic of customers.
Prior to starting the brand, Jesper Nielsen has had
a long history in the jewellery business and was inspired to create a brand with a broad appeal. Since
its launch in 2013, Endless Jewelry is now available
in 30 countries. Malaysia has the honour of being the
first country in Southeast Asia to open an Endless
Jewelry boutique and the second in Asia after Taiwan.
The brand features a range of leather bracelets that
come in 25 colours and more than 600 charms that
suits any mood, personality or outfit. Colourful and
easily customisable, the bracelets come in single,
double or triple wrap styles and the charms come
in sterling silver plated while also having the option
of them being rhodium, gold plated and rose gold
plated. As a result, it allows women to easily show
off their personal style by creating and choosing
their own designs.
Apart from the normal range of bracelets and
charms, Endless Jewelrys celebrity ambassador Jennifer Lopez currently has an award-winning collection
for the brand. The J Lo collection is a combination of
glamorous and edgy designs inspired and designed
by Lopez herself. Consisting seven bracelet colours
and more than 100 charms, the collection is available
at the Endless Jewelry store in Sunway Pyramid. The
bracelets are priced from RM299 onwards while the
charms are priced from RM119 onwards.
03

PICK OF THE DAY

01

PREVENT the harsh effects of weather and city pollution


by treating your skin with the Infusion de Rose skincare
by Laura Mercier. It is enriched with rose hip seed oil that
softens and hydrates skin by helping to rejuvenate skins
appearance and strengthening its moisture barrier. The
limited edition collection includes nourishing oil (30 ml),
nourishing crme (30 ml) and nourishing lip balm (10
ml). The Infusion de Rose Nourishing collection is priced
at RM445 and can be purchased from all Laura Mercier
counters in leading shopping centres.

02

04

01. Endless Bracelets


02. White Heart Flowe gold
03. Heart Love gold
04. Secret Heart silver

Personal
ASSISTANT
CO MPI L ED BY SHALINI YEAP

WORK. LIFE. BALANCE

MAKE plans to usher the Year of the Monkey


with your loved ones at Ti Chen, The Saujana
Hotel. The restaurant is oering a decadent
menu consisting of dishes like steamed cod sh
with crispy radish and soy sauce, deep fried sea
prawn with sand powder spice and braised abalone with Australian sea cucumber and broccoli. One of the promotions is the eight course
Auspicious Set Menu for six the Auspicious
Good Luck Set Menu at RM798 or the Auspicious Good Health Set Menu at RM898. Both
comes with free ow of soft drinks but you can
also add RM100 for 1 bottle of Saujana Hotels
and Resorts wine. Ti Chen is situated at The
Saujana Hotel Kuala Lumpur. Contact dine@
the saujana.com or contact (03) 7843 1234 (ext
6122) for reservations.

VIEW a showcase of new works by popular


Malaysian artists at Galeri Taksus Locals Only
2016 exhibition. The line-up includes Nizam
Abdullah, Cinta Ayuandrea, Syed Fakaruddin,
Fazrin Abd Rahman, Ong Cai Bin, Eman Aimilan, Agnes Lau, Syahmi Jamaluddin, Khairul
Arshad, Nabil Adnan, Aq Faris, Mark Tan,
Mohsin Aminuddin, Nor Tijan Firdaus and
Azizi Saad. The gallery, located at 17, Jalan
Pawang, 54000 Kuala Lumpur is open from
10am to 7pm today and admission is free. Call
(03) 4251 4396 or visit www.taksu.com for
more.

WATCH Japanese travelling duo Gamaharu at


Minut Init Art Social tonight as they perform
for the second time here in Malaysia. Enjoy
the acoustic performance with the vocals of
Haru on the guitar and Gama Oil on the percussions. Other acts include artist on canvas
1am May, ute artist Pendekar Bambu as well
as singer/songwriters Endee Ahmad, Hilmy
Amim, Hameer Zawawi and Ian Tai. The event
is free but guests may support the venue by
buying drinks from the Cantina Bar. The show
will take place at 29B, Jalan SS 21/37, Uptown
Damansara Utama, 47400 Petaling Jaya, Selangor from 8pm onwards. Visit www.facebook.
com/Minut-Init-art-social or call (03) 7499
5895 for more.

T UESDAY JAN UARY 1 9, 2 0 16 TH EEDGE F I N AN C I AL DAI LY

24 F E AT U R E

Behavioural economics
wins US$1.5b US lottery
It takes more than the dollar and a dream marketing ploy of yesteryear to woo gamblers
BY JEFFREY GOLDFARB

NEW YORK: Three lucky Americans


were at least US$1.5 billion (RM6.6
billion) richer when last Wednesday ended. The biggest-ever lottery
jackpot that could go to a single
ticket holder (John Robinson was
one of them) went to three people.
Its size is no mathematical fluke.
State officials helped engineer the
Powerball frenzy by tapping into
the sorts of behavioural economic
ideas advanced by Nobelist Daniel Kahneman and others. It takes
more than the dollar and a dream
marketing ploy of yesteryear to woo
gamblers these days.
Lottery-ticket sales slowed in
many US states following the financial crisis, reducing the slice
of revenue that goes toward education and into government coffers. So-called jackpot fatigue was
blamed for a 40% decline in Powerball sales in the second half of

2014 from a year earlier. Kitties of,


say, a mere US$200 million simply were not enough to persuade
occasional players to take a US$2
chance at life-changing wealth, or
so the theory went.
The somewhat counter-intuitive
solution was to make the lottery
harder, not easier, to win. Instead
of picking five numbers correctly
out of 59, players since last October
have been forced to choose from
69. That, along with decreasing the
choice for the extra sixth ball to 26
numbers, extended the odds of winning from one in 175 million to one
in 292 million. Less frequent wins
means the prize is more likely to
roll over, eventually reaching a size
that generates just the sort of buzz
happening now. The sum available
even exceeds the US$999 million
maximum that can be displayed
on electronic billboards.
If this kind of manipulation is
needed to keep people interested,

Powerball jackpot cowinners John (left) and


wife Lisa speaking to the
media at the headquarters
of the Tennessee Lottery in
Nashville, Tennessee in the
United States last Friday.
Photo by Reuters

though, it is bound to create a different sort of jackpot fatigue. It will


be exhausting for officials to keep
trying to create record payouts. Other cognitive biases may have to be
brought into play. Whether it is the
gamblers fallacy of wrongly believ-

ing something is more or less likely


to happen after certain other events
occur, or the bandwagon effect of
following the crowd, lottery promoters have a rich field to exploit.
Kahnemans thesis about fast
and slow modes of thought es-

sentially instinct as opposed to logic is probably worth studying,


too. Regardless of whether someone picked the correct Powerball
numbers this time, behavioural
economics should come out a winner. Reuters

Arab winter has become markets chief worry


BY A N DY C RI TC HLOW

LONDON: For financiers, the Middle East has turned from a source
of oil-rich clients to a major anxiety. That was the view of around
200 guests at the Breakingviews
Predictions summit in London last
Thursday. They voted the region as
the main reason for losing sleep
this year ahead of Chinas economy and collapsing commodity
markets. Worries about an Arab
winter are well founded.

Falling oil prices are testing


Middle East economies and their
regimes which depend politically on the wealth pumped from
below their deserts to breaking point. Brent crude was below
US$30 (RM132) per barrel last Friday, marking an almost 20% decline in the first two weeks of the
year. Saudi Arabia and its oil-rich
Arab allies are tightening their
belts and falling back on their sovereign funds. They may have to
sell almost US$500 billion worth

of assets this year to cover budget


shortfalls should oil hit US$20, according to Breakingviews analysis
of their break-even costs.
Liquidating almost a quarter
of the US$2.3 trillion of sovereign
funds amassed by sheikhdoms
would hit already struggling markets. It might already be happening. The MSCI International World
Price Index a broad measure of
stocks across 23 developed markets has fallen more than 13%
over the last six months. These

declines, especially in European and Asian markets where Gulf


funds are heavily invested, could
accelerate should crude prices
cause more economic turmoil in
the Middle East.
Then there is the fraught politics. The year started badly with
Saudi Arabia cutting diplomatic
ties with its main rival Iran. Both
regional powerhouses are already
supporting opposing sides in proxy
sectarian wars in Syria and Yemen. Along with the rise of Islamic

extremism, these conflicts have


turned the region into a tinder
box and led to a flood of refugees
that is feeding tensions in Europe.
In such circumstances, its almost
impossible for either Riyadh, or
Tehran, to cooperate on oil policy
and prevent crude hitting US$20
per barrel.
The economic and political
storm brewing in the Middle East
has sent a wintry chill around the
world. This year expect the Arab
world to top the agenda. Reuters

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